American Health Care Act supporters such as Paul Ryan had to acknowledge that the Act was dead on arrival Friday. Despite the fact that the Trump Administration presides over a Republican House and Senate, it became clear that the American Health Care Act will not pass. The House of Representative members were released to go home for the weekend, and no activity is planned for next week. No Senate activity as anticipated, and Congress is back to square one.
American Health Care Act Failure Ensures ACA Continues
Regarding the American Health Care Act, the New York Times reported that Speaker Paul D. Ryan conceded, “We’re going to be living with Obamacare for the foreseeable future.” Health insurance companies will soon be filing their 2018 rate plans, either on June 1, 2017 or July 17, 2017 depending on whether the issuer is in a state without an effective rate review program or with an effective rate review program, respectively. In the absence of an ACA alternative, we expect health plans to be based on actuarial values, minimum essential benefits, risk pools, and other factors as delineated in the Affordable Care Act.
According to The Hill,
“Asked if the country is stuck with ObamaCare, Rep. Michael Burgess (R-Texas) replied: “Yes.”
“We tried. We tried our hardest. There were people who weren’t not interested in solving the problem. They won today. The Freedom Caucus wins. They get ObamaCare forever.”
Affordable Care Act Caps Medical Costs for Patients, and Plaintiffs
Now that the American Health Care Act is done for, there is some certainty for litigants. In my experience medical costs may be litigated in
- malpractice litigation
- personal injury litigation (and two types of litigation sometimes categorized separately such as ‘slip and fall’ and automobile accidents)
- product liability litigation
- excessive use of force law enforcement related litigation
- other litigation where damages are requested in the form of past, present or future medical costs
Key components of the ACA that will continue to keep costs down for patients, including plaintiffs’ medical costs are:
- Insuring all Americans even though they may have pre-existing conditions
- Medicaid expansion which has insured an additional approximately 11 million Americans who live at or below 135 percent of the Federal Poverty Level (FPL) as well as all Americans who are considered disabled and are on disability benefits. More states are expected to join the ranks of Medicaid expansion. Kansas and North Carolina are likely to become the 32nd and 33rd states to expand Medicaid according to the Advisory Board.
- Out of Pocket Maximum cap (OOPM) on health care costs per year, on a sliding scale based on household income
- A subsidy system for low and some middle income families to help in the purchase of insurance on the insurance exchanges.
- Penalties for individuals and employers who fail to put health insurance in place
- Minimum Essential Coverage (MEC) guaranteeing that ACA Qualified Health Plans (QHPs) and ‘grandfathered’ ERISA / Taft-Hartley Trust employer plans provide a minimum set of health care benefits to all Americans.
The byzantine nature of the ACA suggests that counsel for defendants should consider a credible expert on the ACA to explain to the trier of fact what impact it has on future medical costs. Plaintiffs need to understand the ACA as it pertains to health care costs to ensure that they are accurately represented. It is this very fact, that the ACA is complex and cannot simply be repealed without detail examination of the consequences, that kept some Republicans from voting for the American Health Care Act.
Collateral Source Caveat for Plaintiffs and Defendants
Even though the American Health Care Act failed to be passed there are other factors to consider beyond the ACA. Qualified Health Plans can be considered when there is no collateral source rule. The collateral source rule, or collateral source doctrine, is an American case law evidentiary rule that prohibits the admission of evidence that the plaintiff or victim has received compensation from some source other than the damages sought against the defendant. The collateral source rule has been challenged by tort reform advocates who argue that if the Plaintiff’s injuries and damages have already been compensated, it is unfair and duplicative to allow an award of damages against the tortfeasor. Many states have altered or partially abrogated the rule by statute. According to the National Association of Mutual Insurance Companies (NAIC), “Our position is that The collateral source rule does not allow evidence to be introduced at trial that would show that a plaintiff’s losses have been compensated from other sources. This rule keeps important information relevant to the determination of damages from reaching the jury. NAMIC supports allowing collateral source payments at trial or offsetting the amount paid to plaintiffs by collateral sources, less the amount paid by the plaintiff to secure the benefit.
Even in states that allow consideration of a collateral source, some payors may accept a percentage of charges as a flat rate for reimbursement, which may not represent the UCR charges nationally or regionally. An analysis of UCR vs. percentage of bill may be important to determine a true customary value based on the market.
In courts where no collateral source may be used as a basis for determining health care costs, Fee for Service Medicine will continue to be a method by which medical costs may be determined using the Usual Customary and Reasonable (UCR) method based on customary charge rates, rather than net net reimbursement rates from insurance. In situations where one side is unfairly inflating or deflating medical costs, a neutral party who can articulate UCR methods such as a credible expert witness may be helpful.
I’ve been retained as an expert witness in cases where state laws are rendered convoluted after enactment of the federal Affordable Care Act. It appears to me that Collateral Source rules are one of those areas.
Unresolved Issues and Misunderstandings about Obamacare
Because the American Health Care Act failed, there will continue to be questions about some open issues with Obamacare including:
- OOPM (see above) caps expenses for health care consumers, but does nothing to cap the actual cost of care to insurance companies including Federal and State payors such as Medicare and Medicaid.
- Lack of competition or monopolies by insurers in certain markets due to lack of participation by health insurers in some State Exchanges. It is a common misunderstanding that if insurance isn’t offered on the exchanges that it cannot be purchased via brokers “off-exchange.” In fact, it can. May qualified health plans under the ACA can be purchased via other methods than an insurance exchange. Another reason to shop for your insurance off-exchange is the network of health care providers included in the plan. In some cases, health insurance companies are controlling their costs by limiting the provider networks for exchange plans. Deductibles and drug coverage may also be better in off-exchange plans.
- Unresolved issues with respect to a mandate in the ACA specifying that the Administration consult with the National Association of Insurance Commissioners (NAIC) about standards to enable insurance companies and their subsidiaries to compete across state lines.
- Sustainability of Federal funds and the fiscal issues of continuing to fund Medicaid expansion indefinitely. Medicaid expansion was funded between 2014 and 2016 100% by the Federal Government under the ACA. Beginning in 2017 states pay 10% and the federal Federal Government pays 90% or more of Medicaid expansion. The American Health Care Act proposed to terminate Medicaid expansion in 2020.
- Increased health care utilization by previously uninsured has both favorable and unfavorable impacts on the health care industry such as a) unanticipated sicker patients needing more care and b) job creation in the health care sector as the demand for doctors, nurses, and other clinical and administrative staff increase.
- Complex Merit-based Incentive Payment System (MIPS) and MACRA formulas for calculating incentive payments to doctors and hospitals, quality of care measures and reimbursement for care will be costly for the industry to implement.
How Could the Trump Administration Weaken the ACA?
It is now likely that the repeal and replace the ACA opportunity is gone. But by making changes to the law through waivers and rule changes, the ACA could morph into a new set of standards. Medicaid waivers have been used for years in all 50 states to provide more generous coverage for people with disabilities, for example. As noted by the Kaiser Family foundation, the American Health Care Act bill called for changes to Medicaid that could have affected nonelderly adults with disabilities. Some nonelderly adults with disabilities have gained Medicaid eligibility through the ACA’s expansion, and the House bill called for eliminating the expansion’s enhanced federal matching funds. Executive orders and other waivers could still accomplish this, even though the American Health Care Act did not pass.
Our View: What is the flaw in Both the ACA and the AHCA in Terms of Controlling Healthcare Costs?
Neither the ACA or the AHCA in our opinion dealt with the heart of the issue – the lack of transparency in healthcare pricing and billing which prevents health care consumers from choosing based on real quality, price, and outcomes. (See Secretary Tom Price Explains American Health Care Act ) Instead, both Acts focus on shopping for insurance. Health insurance increases the money supply and causes inflation, just as student loans have caused the cost of college tuitions to rise over 1,000% since 1980. Student loan debt in the United States grew to over $1.2 trillion and tuition increases continued at nearly triple the rate of inflation, according to a CNN report. That is approximately a third of the entire spend on healthcare and it is rising at a higher rate than healthcare inflation. It is not surprising that conservative Republicans may want to curtail Medicaid because of this, even though it covered more of the people who can least afford healthcare, since it increases utilization of care and inflation. The conundrum is that if a healthcare consumer has no stake in whether they spend the money for health care services because they believe it is all paid for by Medicaid (which usually covers 100% of medical costs and is therefore ‘free’ to the poorest in America), and there is limited oversight as to how health care dollars are billed, it creates huge opportunities for abuse of the system and ever increasing costs that taxpayers must cover.
Current Strategies Available to Plaintiffs to Mitigate their Costs
Byzantine rules on medical coding and billing, limited enforcement and oversight of accurate documentation to support medical coding makes it easier for bad actors in the healthcare system to commit fraud. Collusion between some lawyers and health care providers cause $billions in waste each year. Much of healthcare medical coding, billing and pricing is so complex that few understand how it works. Consumers do have access to public pricing data, which can be used to mitigate their own costs. One can Google ‘cost of a knee replacement” and find web sites with pricing data. Also, though insurance is not perfect, health care payors are sophisticated in their ability to examine whether a procedure is medically necessary and what the costs should be in a certain geographic setting. Plaintiffs with insurance should use it when seeking care or considering how to pay for care. These strategies are important considerations for litigants whether they are advocating for higher or lower valuations for medical procedures.
What Payors, Providers, Employers and Government Could Do to Stem Waste and Fraud
Similar to the options now available to consumers via the Internet, modern electronic analytic capabilities are available to business and government to scan for wasteful spending and fraud. But the industry still uses methods from the 1970s – randomly sampling faxed medical records from a very small sample in the hope of detecting fraud. The data is there – but it is key to understand how to access it, structure it, and define meaning from it to make better decisions. If we sample all of the data, which could be done, we could quickly find the outliers (meaning the inappropriate, wasteful and fraudulent spending) so that we increase the likelihood that we are only spending money on healthcare that is going to do some good.