Court Awards $1.2 Million in Cost Sharing Reduction Payments to Montana Co-op

The United States Federal Court of Claims, which hears monetary claims against the United States, has determined that the federal government owes Montana Health Co-op $1.2 million in cost-sharing reduction payments established under the Affordable Care Act but not funded by Congress.

Article at Healthcare Dive.


Judge Elaine Kaplan, an Obama appointee to the bench, wrote the following in her opinion:

"The parties' cross-motions present a single, purely legal issue: whether the federal government had a statutory obligation to provide Montana Health with the cost-sharing reduction payments described in § 1402 of the ACA, notwithstanding the lack of appropriations to fund such payments. Montana Health contends that such an obligation was imposed by the plain language of § 1402. The government's central argument, on the other hand, is that Congress could not have intended to impose such an obligation because, while it made arrangements to fund the premium tax credits of § 1401 through a permanent appropriation, it has never appropriated money to fund § 1402 payments, whether on a permanent or annual basis."

Kaplan's opinion does not contradict U.S. District Court Judge Rosemary Collyer's 2016 decision that cost-sharing reduction payments without an appropriation from Congress are unconstitutional.  Instead her opinion relies on the obligation of the federal government under the Affordable Care Act as outlined in Section 1402 of the ACA.

Kaplan writes:

". . . the lack of a permanent funding mechanism suggests that when it enacted the ACA, Congress anticipated that the CSR payments it obligated the government to pay in § 1402 would ultimately be funded through the annual appropriations process. And, for the reasons set forth above, the Court cannot infer intent to vitiate the obligation imposed by § 1402 based solely on Congress's subsequent failure to make such appropriations."

The decision adds yet another dimension to the ongoing argument over repeal of the Affordable Care Act.  While the Trump Administration rightly stopped CSR payments, lacking an appropriation from Congress, Kaplan determined that such a move does not remove the underlying obligation of Congress to make such payments, appropriation or not.

State Health Plan of North Carolina Launches Reference-Based Pricing Reimbursement Plan

The Pilot has the story here.

For decades, the state plan has used Blue Cross and Blue Shield of North Carolina’s commercial network of providers. Blue Cross NC and medical providers consider fee schedules, what they charge, associated with this network to be “confidential.” Subsequently, the fees charged for medical services are not provided to the plan or its members despite the fact that there are state and federal guidelines that demand transparency.

“We’re going to be asking a little from a lot of people, and a lot from a few. I’m asking health care providers in the state to help us sustain this benefit for teachers, public safety officers and other public servants,” Folwell said. “For years, the plan has paid medical claims after the fact without knowing the contracted fee. It is unacceptable, unsustainable and indefensible. We aim to change that. This new pricing model will help us ensure the delivery of quality care to our members and better control health care costs, preserve the sustainability of the Plan, and promote transparency for Plan members and state taxpayers like them.”

Starting on January 1, 2020, the plan will move away from a commercial-based payment model to a reference-based government pricing model based on a percentage of Medicare rates to reimburse health care providers for their services.

North Carolina joins Montana, which launched a reference-based (or transparent) pricing program in 2016.

More on the North Carolina plan:

The State Health Plan is paid with employee contributions and tax dollars. It has $35 billion in unfunded liabilities. Blue Cross and Blue Shield of North Carolina administers the plan, and will continue to do so under the new model.
During a July forum, Folwell challenged BCBSNC and key state medical providers to cut costs annually by $300 million. His impatience bubbled over at an Aug. 30 State Health Plan meeting when he said the insurance giant keeps so much billing information secret he can’t determine how much of charged expenses were waste, fraud, and abuse.
“We share the treasurer’s concern of unsustainably high health care costs, and we will work with the Plan and providers to implement this new strategy,” BCBSNC spokesman Austin Vevurka said in a written statement to CJ. “We hope that providers will continue working with us and the State Health Plan to bring costs down, not just for our state employees but for North Carolinians across the board.”

Under these programs, preferred provider organizations (PPOs) and provider networks go away or are diminished in use, allowing employees to go to any provider they choose with a transparent upfront reimbursement schedule for services.

Reports are that Montana settled on 234% of Medicare for reimbursement.  That seems high.

Insurance carriers that have built their business models around PPO networks with byzantine reimbursement arrangements and a frustrating set of mother-may-I-rules designed to steer patients to preferred contracting arrangements.

The other threat from reference-based pricing arrangements is that many carriers have negotiated one set of pricing arrangements with hospitals, physicians, and other healthcare providers, while passing along a less lucrative deal to employers and health plan members, using the discount "spread" between what they negotiated and what they pass along to enhance their financial performance.

Welcome to Healthcare Finance Review

A clear-minded look at healthcare finance.

There are hundreds of healthcare blogs out there.  Combine these sources with e-newsletters, subscription services and the general press coverage, and you have a narrative on healthcare that takes one of several common forms. 

First, there are the pieces that plunge wonkishly into the unfathomable depths of healthcare minutiae.  These are delivered by suitably wonkish people who seem to take great pride in dragging us along through their jargon-filled environs until we are begging for mercy, eyes glazed over, and ready to accept their often misguided interpretations of healthcare finance policy and trends.  They are "smart people" after all; why shouldn't we just listen.  It's easier to read their conclusions anyway.  And they have charts!

Then there are the press releases parading as news.  These pieces too often spout an industry line and are delivered in newsletters and publications by writers who just a few years ago were blogging about real estate, car insurance, or some other narrow industry subject.  With this crowd you get the mile wide, inch deep coverage of this business.

Of course, there is also the traditional media coverage which is read or heard popularly but reminds us of Michael Crichton's famous Gell-Mann Amnesia Effect:

“Briefly stated, the Gell-Mann Amnesia effect is as follows. You open the newspaper to an article on some subject you know well. In Murray's case, physics. In mine, show business. You read the article and see the journalist has absolutely no understanding of either the facts or the issues. Often, the article is so wrong it actually presents the story backward—reversing cause and effect. I call these the "wet streets cause rain" stories. Paper's full of them.
 

In any case, you read with exasperation or amusement the multiple errors in a story, and then turn the page to national or international affairs, and read as if the rest of the newspaper was somehow more accurate about Palestine than the baloney you just read. You turn the page, and forget what you know.” 

There are variations on these themes but they all leave room for a view informed by years of active experience in healthcare finance.  That is the aim of this site.  There is exciting news in healthcare.  There are massive changes moving through the system.  But it is a complex system, heavily regulated, financed, and shrouded by massive advertising and public relations budgets.  Entire industries exist to keep it confusing to even heavy users of the healthcare finance system.

Some clear-mindedness is in order.