Friday, May 20, 2022

Healthcare Reform Suffers Dual Blows: Administration Continues Implementation


Healthcare Reform Suffers Dual Blows: Administration Continues

The Obama Administration continues implementation of the new healthcare
reform bill, the Patient Protection and Affordable Care Act (ACA), despite
two major recent setbacks that undercut the validity of the law itself. Last
week, the House voted largely along party lines to repeal the healthcare
reform bill, and ordered the committees of jurisdiction to produce a
replacement for the bill. In addition, this past Monday, a federal district
court judge in Florida struck down the entire bill, ruling that the
individual mandate requiring nearly all citizens to carry health insurance
coverage is unconstitutional and that the entire 1,000-page law is invalid
as a result. Both of these developments, however, are not the end of the
matter as explained below.

Governors and Attorney Generals from 26 states, almost all Republican-led,
brought the suit in Florida on the heels of the passage of the ACA. A series
of similar suits are working their way through the courts; one other US
District Judge-Henry Hudson in Richmond, Virginia-has also ruled that the
individual mandate is unconstitutional but several other judges have
rejected this argument. However, Judge Roger Vinson of the U.S. District
Court in Pensacola is the first to find the entire law void. The ACA lacks a
“severability clause,” which would explicitly allow the law to remain intact
if any single provision is found to be unconstitutional. Absent this clause,
Vinson ruled that it is illegal to separate the individual mandate provision
from the rest of the reform law.

Judge Vinson stopped short of imposing an injunction on the Obama
Administration to stop it from implementing the law, but also stated that an
injunction was unnecessary. The judge referenced a long-standing practice
that federal agencies are obligated to comply with federal court decisions.
This means that in the judge’s view, the ACA is invalid, null and void in 26
states, and that the Secretary of Health and Human Services must stop
implementing the law in those states. Not surprisingly, the Obama
Administration strongly disagrees with this view and plans to appeal this
decision to the Court of Appeals. They intend to continue implementing the
law across the country unless and until the U.S. Supreme Court tells them
otherwise. Interestingly, Judge Vinson also held that the expansion of
Medicaid to cover an additional 19 million people by 2019 was not
unconstitutional and, therefore, not a violation of state sovereignty.

Congress was also busy on health reform in the past several days. On
Wednesday, January 19, the House voted largely along party lines to repeal
the Patient Protection and Affordable Care Act (ACA) and to instruct the
House committees of jurisdiction to report alternatives to the healthcare
reform law. The House also passed an amendment to include a permanent fix of
the Medicare physician fee schedule within an alternative healthcare reform
package. Last week, House Republicans held two hearings to highlight what
they see as unsustainable costs included in the ACA. On the heels of these
hearings, opponents of the bill aim to introduce an array of bills intended
to dismantle the ACA piece by piece.. Republicans are employing this
strategy because the Senate is unlikely to repeal the new law in its
entirety. On February 2nd, the Senate voted 51 to 47 not to repeal the bill.
However, the Senate overwhelmingly passed an amendment that would repeal the
1099 requirement within the ACA that expands reporting requirements for
small businesses.

In addition to the 1099 requirements, the portions of the ACA expected to
come under attack in future
legislation include:

… The individual mandate;
… The employer “free rider fees”
… The medical device tax (a bill was introduced last week to accomplish
… The 1099 tax reporting requirement for small businesses;
… The Independent Payment Advisory Board;
… The CLASS Act Program; and
… The expansion of Medicaid eligibility in the states.

Impact of these Developments and Impact on O&P:

The impact of these developments is difficult to measure until further
developments emerge on the legal and Congressional fronts. In fact, the
legislative approach has a lower chance of materially altering the course of
the health reform law at this point than the legal challenges do. If the
health reform law were to be held unconstitutional by the Supreme Court and
if the entire law were to be invalidated, it would be one of the most
significant decisions of modern times. First, the reforms that have already
gone into effect would have to reversed in some way. This means that
lifetime insurance caps would be permissible again, young adults on their
parents’ insurance plans would have to be removed from coverage, and seniors
who hit the “donut hole” in Medicare drug spending would have to either give
back the $250 in relief or the government would have to waive these
repayments. Many other reforms, such as the state high risk pools
established in June 2010 would have to be dismantled.

There is a major question about the impact of a total invalidation of the
law on the raft of Medicare changes in the health reform law. For instance,
as the law pertains to O&P reimbursement, the newly-imposed “productivity
adjustment,” which was responsible for a modest decrease in the O&P fee
schedule in 2011, would no longer be valid. This would mean that the CPI-U
adjustment would go into effect without a decrease based on the productivity
adjustment. The medical device tax would be null and void before going into
effect. This would remove any chance that this new tax would apply to O&P
manufacturers or any other device manufacturer.

But the expansion in coverage under the law would also not go into effect,
leaving large numbers of Americans with no insurance coverage and with no
realistic path toward coverage anytime soon (unless Congress acts to
reestablish coverage and the chances of this are quite low). And insurance
companies would continue to use medical underwriting and current insurance
tactics to limit and restrict coverage of O&P services and devices to the
maximum extent possible.

Despite these recent developments, the Administration continues to pursue
implementation of the health reform law at a rapid pace. But opponents of
the ACA are also working to avoid funding key provisions of the law as early
as March 2011. Proponents and opponents of the health reform law can look
forward to continued struggles into the 2012 election season, as the
lightening rod issue of healthcare reform never seems to disappoint. NAAOP
will continue to keep you updated on this and other O&P Government Relations

Please visit our website at:

1501 M Street, NW
7th Floor
Washington, DC 20005-1700
e-mail: [email protected]
(800) 622-6740
(202) 624-0064 Phone
(202) 785-1756 Fax


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