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(This article by Stuart Taylor Jr. was made available for reprint by Kaiser Health News.)

supreme-courtThe U.S. Supreme Court is poised to issue a decision this month in a case that could again threaten a key aspect of President Barack Obama’s health law.

But this time around, unlike three years ago when the court rejected a constitutional challenge to the law’s individual mandate, the case, King v. Burwell, focuses primarily on statutory interpretation.

The issue is whether section 36B means what it seems to say if read literally and in isolation from the rest of the law: that Affordable Care Act subsidies are available only to people “enrolled … through an exchange established by the state.”

And the different interpretations have proven dicey — so much so that each side in the case is having trouble explaining away the evidence supporting the contrary position.

Solicitor General Donald Verrilli and other defenders of the subsidies have failed to suggest any very plausible reason — other than sloppy draftsmanship, on which Verrilli has not much relied — why Congress said “established by the state” if it intended that subsidies also be available in the federally established exchange.

On the other hand, ACA opponents who read “established by the state” literally have produced little evidence that the law’s drafters deliberately and quietly planted in an obscure subclause the words that could become the seeds of the law’s destruction.

Plaintiffs in the case suggest that the drafters inserted these four words in order to pressure states to establish their own exchanges. But the legislative history offers scant evidence of this intent. And the three dozen states in question either failed to notice or disregarded it.

How these explanations sway the justices — or at least five of them — will determine whether the language drafted by Congress means that nearly 6.4 million low-and-middle-income people are not eligible for the overhaul’s tax subsidies because they live in a state that chose to rely on the federal government’s, rather than establish its own online insurance marketplace. The subsidies make insurance affordable to many of the people who seek Obamacare coverage because they don’t get health coverage through their employers.

If the court rules that the subsidies are available only in states — mostly blue — that established their own exchanges, insurance markets in the other three dozen or so states might collapse. Unless Congress or the states reliant on were to move fast to limit the damage, few people in those states would buy individual insurance. Those who did would likely have health problems and premiums would soar.

Many ACA opponents say that section 36B “means what it says,” as conservative Justice Antonin Scalia implied at the March 4 oral argument, even if the wording “may not be the statute [Congress] intended” and even assuming that it might “produce disastrous consequences.”

To the contrary, say Verrilli and other supporters, the law’s overall text, structure, design and history make clear that Congress intended to make subsidies available in all 50 states. They say the challengers’ interpretation would defeat the law’s purpose of making health insurance widely affordable. The Internal Revenue Service came to the same conclusion in an interpretive rule, to which Verrilli argued the justices should defer if in doubt.

As in 2012, the stakes in King v. Burwell are so high that Obama has made it clear that he would attack any decision that would cripple the health law as legally indefensible and politically motivated.

“[T]his should be an easy case,” Obama said June 8. “Frankly, it probably shouldn’t even have been taken up … based on a twisted interpretation of four words. … I’m optimistic that the Supreme Court will play it straight.” The next day, he added (without specific reference to the court) that “it seems so cynical to want to take health care away from millions of people.”

These shots across the court’s bow came even though Scalia and Justice Samuel Alito had strongly suggested during the argument that they would vote against the administration’s position.

Alito also suggested the possibility of delaying until 2016 the effective date of any decision against the administration. Such a delay, he said, would give the states and Congress time to avoid the disruption that would be caused if the court ruled the premium subsidies now available in the three-dozen states using are illegal.

Justice Clarence Thomas, who was silent as usual during the arguments, is expected to vote with Scalia and Alito. The four liberal justices — Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor and Elena Kagan — seemed poised to line up with Obama. So the president will win if either Chief Justice John Roberts or Justice Anthony Kennedy sides with him.

Justice Anthony Kennedy

While Kennedy’s vote is still up in the air, ACA supporters were cheered by his assertion to the lawyer challenging the subsidies that “there’s a serious constitutional problem if we adopt your argument.” Kennedy reasoned that the states are being unconstitutionally “coerced” if, as the challengers argue, the law requires them either to establish their own exchanges or see their residents disqualified from the subsidies.

The only way to avoid constitutional problems, suggested Kennedy, may be to resolve any ambiguities in Obama’s favor. This seemed inconsistent with the suggestions by Scalia, Alito and the challengers that the relevant language is free of ambiguity and without constitutional problems.

Roberts was sphinxlike during the argument in King v. Burwell. The case puts him in an unenviable position.

Chief Justice John Roberts

Chief Justice John Roberts

When Roberts stunned court-watchers by joining the four liberal justices and upholding the individual mandate in the 2012 decision, National Federation of Independent Business v. Sebelius, he was bitterly assailed by his usual allies — Kennedy, Scalia, Thomas and Alito — and was called a traitor by many other conservatives.

This barrage was intensified by a well-sourced news report that Roberts had initially voted to strike down the individual mandate and changed his mind — provoking a huge battle inside the court — after liberals led by Obama had preemptively denounced any decision to strike down the law as politically motivated, conservative “judicial activism.”

The conservative denunciations of Roberts will be even more bitter if he sides with Obama this time, too. On the other hand, if Roberts votes with the other four Republican appointees to gut the Democratic president’s signature accomplishment, it will feed the kind of attacks that the chief justice dreads on the Roberts court’s conservative majority as a bunch of robed politicians.

Looking to the future, a ruling against Obama could be extremely awkward politically for Republican members of Congress, presidential candidates and officials in the mostly red, affected states, even though it might be cheered (at least initially) by Republican voters.

In this scenario, the president and other Democrats would immediately demand that Republicans help them save the subsidies of millions of people at risk of losing their health insurance, by adopting new legislation.

Some Republicans say this would be an opportunity to extract compromises from Obama such as more choices for consumers – especially less expensive, less comprehensive health insurance options; the elimination of the mandate to buy insurance; or restrictions on medical malpractice lawsuits.

Others predict a humiliating and internally divisive Republican cave-in to avoid being blamed for the “disastrous consequences” that Justice Scalia hypothesized.

Whatever the outcome, the chief justice, in his tenth year on the Court, is in for a long, hot summer.

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(This is an excerpt from an interview with Bill Leaver, CEO of UnityPoint Health, which was conducted by Tom Cassels and Eric Larsen, and condensed by Dan Diamond, all of The Advisory Board. To read the entire interview, click here).

Q: Is it more important now to have people who take risks? It seems like the traditional ladder—of working your way up hospital administration—is not the ladder that will position you as a leader of the health system of the future.

You can’t run the physician enterprise, for example, with only the narrow experience of running a hospital.


Bill Leaver

Leaver: You’re hitting on a very important topic for the future development of our industry.

In part, it’s a cultural transformation. UnityPoint Health is on a journey from being hospital-centric, to becoming patient-centered, physician-driven.

It’s really easy to say those words. It’s incredibly hard to get people to see what you mean. To get managers to learn that if a house-bound patient needs a home care visit, your first thought shouldn’t be “how do we get paid for it?” but should be “how do I get that home nurse there?”

The other part is how to manage. We have nine regional CEOs, and each one is really the market manager responsible for an integrated delivery system—hospital, home care, physician clinic, the other collaborative partners that are part of the continuum across that market.

They’re responsible for the quality, service, and the cost at all the sites of care in their regions. They need to have enough knowledge to know to ask the right questions.

Q: Those nine regional CEOs—what’s their background?

Leaver: All of them grew up as very proficient, efficient hospital CEOs.

But we’ve been talking about [their new reality]—I tell them, your job is now different. Your job is not running a hospital. I don’t even want you in the hospital that often. I don’t want you at medical executive committee meetings.

I want you out working on the collaborations with our partners, who are going to be an incredibly important part of your delivery model. That’s going to be your job.

Again, it’s easy to say, but very hard to do. And I [reassure] them, you’re not going to do this perfectly, you’re not going to master it tomorrow.

But you need to have an understanding of how home care operates. How behavioral health will now be integrated into primary care. And so on.

You don’t have to know how to operate it efficiently [yourself]. You need to know enough to connect the dots between the different sites of care.

Q: The question I’ve been getting, more than anything else: should we be less of a holding company and more of an operating company? That may be a false choice, but I’m curious how you deal with that balance of system initiatives and market-based focus.

Leaver: That’s a great question.

We’ve drafted out a page-and-a-half of our operating principles. An expectation of what the system will do, and what the region will do, too. What do we mean by “autonomy”—especially because we hardly ever use that word anymore.

For regional executives, it’s really around that clinical enterprise. The integration of hospitals, physicians, home care—all of our partner entities. That’s what you’re responsible for.

We can’t manage that from a distance. We just can’t.

The challenge for a [CEO] then becomes—how do you think about migrating best practices across the system? How do you standardize?

We do that by having a balanced scorecard. And really using our single physician enterprise, UnityPoint Clinic.

We’ve said to our graduates of the Physician Leadership Academy, and our leadership at UnityPoint Clinic, you need to drive the clinical transformation across all regions. You need to set the bar high. Figure out what are those clinical metrics we’re going to use. And then those same physicians work with their regional leadership to make that happen.

That causes regional leaders and their boards to think differently. “I used to be responsible for quality in this facility. I’m now responsible for quality and service metrics across the continuum.”

And I will tell you—we are still working through exactly how you’re going to do that.

The ability to get information in a timely basis, the ability to know what’s happening in multiple sites of care is pretty challenging.

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volumetovalue2The primary intent for bringing managed care to Iowa’s Medicaid program is to create value. That is also an overarching goal of Iowa hospitals. This is because value – real value – not only reduces costs, but saves time, reduces waste of scarce resources, keeps harm at bay and can save lives.

Iowa hospitals seek to create value by putting patients first, supporting medical homes and coordinating care at all times. Exactly how this is being done can be seen any day at any Iowa hospital. Meanwhile, exactly how the for-profit companies bidding for Iowa’s Medicaid business will extract value from the system remains a mystery, though past experience in other states (and in Iowa) raises far more consternation than confidence.

Those concerns are why IHA is telling the state to slow down, rethink its unrealistic timeline and ensure Iowa’s many steps forward are not sacrificed to meet an arbitrary deadline and the business goals of out-of-state companies.

In health care, providers have been learning – sometimes the hard way – that patience matters. This is particularly true with regard to the chronically ill, whose complex cases require time and resources in order for progress to be made.

Here’s an example: The patient is a 65-year-old man with diabetes, a blue collar job and limited schooling. His blood-sugar level was dangerously high, at a level that can signify a full-blown diabetic crisis. His vital signs were normal and a urine test confirmed he was not in crisis. However, this also indicates his diabetes was so out of control that his body had developed a tolerance to big spikes in blood sugar.

Unchecked, his diabetes would eventually cause kidney failure, a heart attack, blindness or wound-healing issues leading to amputation. In many cases, this man would eventually head straight to the emergency room, where, after some testing to diagnose his blood sugar issue, he would likely be admitted and treated with insulin.

But what if instead of turning to the ER for crisis care, the man had regular visits with a primary care provider who had the time and resources to truly manage his diabetes? What if among those resources was a nurse specializing in diabetes, who helped the man understand his disease and how to control it (the patient believed, for example, that if his blood sugar was normal, he didn’t need to take his medicine) and was available to him 24/7?

This is a real case, offered by surgeon and journalist Atul Gawande in a recent New Yorker article that describes how McAllen, Texas – the infamous town where obscene amounts of Medicare dollars were spent with little or no benefit to patients – is turning things around. Dr. Gawande found that, slowly but surely, McAllen providers are replacing unnecessary care with necessary care – and creating real value that has reduced McAllen’s per-beneficiary Medicare spending by almost $3,000, saving the program almost half a billion dollars.

Of course, McAllen’s spending remains much, much higher than Iowa’s, because Iowa’s medical culture already values patient-centered, evidence-based, coordinated care with a primary provider at the hub. Unfortunately, much of the rest of the health care system, particularly the payment system, does not yet fully support that culture. In fact, today’s volume-over-value payment system punishes providers who direct their time and resources toward approaches like what was described with the diabetes patient, approaches that favor thoughtful patience over uninformed action.

As for Iowa’s plan for Medicaid managed care, it seems to be based on rash, do-something-now thinking. Iowa hospitals have learned lack of patience ignores best practices and smothers innovation while feeding approaches that are familiar but outdated and inefficient – approaches that react to the short-term drivers of business more than the long-term needs of patients.

Iowa hospitals know they can do better and, despite the obstacles, they are. The state needs to follow the hospitals’ lead and support the future of health care, not the past.

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gear380As Apple Watches makes their way onto the wrists of millions in the coming weeks, the company has demonstrated once again that success and sustainability are a direct result of innovation and modernization.  Proof lies in the fact that, like cellular phones, time keeping and personal health tracking isn’t new, but Apple has again re-imagined an old concept to develop something that feels brand new and drives consumers to line up around the block to get their hands on it.

But believe it or not, there is still a sector of our society that lags in innovation, a place where quality and speed are not incentivized and teamwork is more of a concept than reality.  That would be government.

For the most recent example, one need look no further than the request for proposals (RFP) released by the governor’s office that proposes to privatize the state’s Medicaid program.  On first glance, it would seem that privatization could indeed bring about efficiency and better outcomes.  Unfortunately, innovative products and services are only as good as the engineer’s vision and the blueprints used to build them.  And if the RFP serves as a metaphorical blueprint for Medicaid managed care, it’s anything but modern or innovative despite almost humorously being dubbed the “Medicaid Modernization Initiative.”

There’s no doubt that the Medicaid program wants for efficiency, but the companies being asked to find it must design their products using a flawed blueprint that appears to have been simply pulled off a shelf from 25 years ago and dusted off.  Imagine if Apple was preparing to release the Apple Pocketwatch or the new iRotary Phone – how well would that go over?

As Coca-Cola discovered with its “New Coke” re-branding flop in the 1980s, putting a new name on an old idea doesn’t produce anything but new consequences and consumer skepticism.  In this case, Medicaid “modernization” puts hospital payments and beneficiary access to services at risk.

So where do we go from here?  Well, Steve Jobs once said, “Innovation distinguishes between a leader and a follower.”  The state of Iowa needs to determine whether it intends to lead or follow on this initiative.  Will it go the route of New Coke or can the state muster the courage to innovate?

IHA is pushing the state toward the latter, but with a proposal anchored to a jalopy of an idea, it will take significant muscle from hospital advocates to move things in the right direction.  By following hospitals’ lead in innovation, the state itself can lead by example.  Under those conditions, just like Apple Watch hopefuls, Iowa’s hospitals, Medicaid beneficiaries and the uninsured hopefuls, just might consider lining up days in advance to get signed up.


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(This story, written by Jay Hancock, was provided by Kaiser Health News.)
Charla Douglas, who had a bad experience with TennCare, and her adopted mom, Lynda Douglas (Photo by Jay Hancock/Kaiser Health News).

Charla Douglas, who had a bad experience with TennCare, and her adopted mom, Lynda Douglas (Photo by Jay Hancock/Kaiser Health News).

Lynda Douglas thought she had a deal with Tennessee. She would adopt and love a tiny, unwanted, profoundly disabled girl named Charla. The private insurance companies that run Tennessee’s Medicaid program would cover Charla’s health care.

Douglas doesn’t think the state and its contractors have held up their end. In recent years, she says, she has fought to secure essential care for Charla.

“If you have special-needs children, you would not want to be taking care of these children and be harassed like this,” Douglas said. “This is not right.”

Across the country, state Medicaid programs, which operate with large federal contributions, have outsourced most of their care management to insurance companies like the ones in Tennessee. The companies cover poor and disabled Medicaid members in return for fixed payments from taxpayers.

That helps government budgets but sets up a potential conflict of interest: The less care these companies deliver, the more money they make. Nationwide, such firms had operating profits of $2.4 billion last year, according to regulatory data compiled by Mark Farrah Associates and analyzed by Kaiser Health News.

In an attempt to manage that tension, Washington regulators are about to initiate the biggest overhaul of Medicaid managed-care rules in a decade. Prompted by the growth of Medicaid outsourcing and concerns about access to care, the regulations are expected to limit profits and set stricter requirements for quality of care and the size of doctor networks.

“We want the enrollees to have timely access to integrated, high-quality care,” James Golden, who oversees Medicaid managed care for the Department of Health and Human Services, told a group of insurance executives in February.

Tennessee Medicaid contractors — operated by BlueCross BlueShield of Tennessee, UnitedHealthcare and Anthem — are among the most profitable Medicaid plans in the country, according to data from Milliman, a consulting firm.

State officials point to data on quality and survey results as evidence that the companies are doing a good job while allowing the state to spend far less on Medicaid than predicted. In a survey last year, more than 90 percent of customers using TennCare, as the program is known, said they were very satisfied or somewhat satisfied, officials note.

TennCare Director Darin Gordon worries that new federal rules could hinder states from improving Medicaid quality while controlling costs. “Don’t hamstring us,” he said.

But doctors and patient advocates say state savings and insurer profits come at the price of inadequate physician networks, long waits for care and denials of treatment. Answering another question in the survey, 30 percent of adults said the quality of their TennCare care last year was fair or poor.

More than half of Medicaid beneficiaries in the nation now receive coverage from managed-care companies. That shift helped prompt inquiries by the HHS inspector general last year that found widely varying state requirements for access to doctors and poor information for members on where to find them.

Policy experts believe that the proposed rules, expected soon, will set stricter standards.

In Tennessee, where TennCare’s member-per-doctor ratio for primary care is one of the worst among states that have such rules, views diverge sharply on whether those rules are necessary. Many, like Lynda Douglas, say the system is far from adequate.

Douglas, 69, knew that she wanted to adopt Charla a decade ago, as soon as she took the girl for foster care from the state. Charla’s problems include cerebral palsy, a badly curved spine and frequent seizures. She is 16, cannot speak, weighs less than 80 pounds and loves Barney the dinosaur.

Douglas, who lives about an hour east of Nashville, was grateful that TennCare contractors sent daytime nurses to monitor Charla’s seizures and maintain a tube that delivers medicine or nourishment eight times a day.

Then, more than a year ago, UnitedHealthcare reduced the nursing to one hour a day, even though Charla’s condition hadn’t improved. Douglas protested with the help of the Tennessee Justice Center and a pro bono lawyer and won. But TennCare appealed. It took two more rounds of adjudication before a judge ruled in Douglas’s favor late last year.

The managed-care companies “are making a mint down here,” Douglas said. “They’re getting rich at the expense of the kids. This is not right.”

UnitedHealthcare made an operating profit of $236 million last year on revenue of $2.8 billion in its Tennessee Medicaid business, according to state filings. Anthem’s operating profit for TennCare came to $53 million on revenue of $946 million. BlueCross’s operating profit for TennCare was $121 million on revenue of $1.8 billion. Those results do not include expenses for taxes, depreciation and other items not directly related to health coverage.

“Our care teams worked with the family and with [Charla Douglas’s] physicians and other providers to assure that her services were appropriate,” UnitedHealthcare said in a statement. The plan followed TennCare’s contract and care guidelines, it said.

Gordon, the TennCare director, rejects suggestions that managed-care networks are inadequate or that contractors deny needed care.

TennCare members sometimes have trouble seeing specialists, but so do patients in commercial plans, he said. Like many state Medicaid directors, he wonders how HHS can publish network rules for 50 states with widely varying geographies and health systems.

He also doesn’t accept that Medicaid plans need rules that limit profits and force them to spend a minimum portion of revenue on medical care. Written the wrong way, the standard could discourage spending on coordinators who improve care quality at decreased cost, he said.

“Yeah, we’re a little concerned,” he said. “There are some things that we think may have adverse effects.”

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