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Here We Go Again: The Return of Medicaid Block Grants

            Last month, the Trump Administration unveiled a new demonstration program that has the potential to dramatically overhaul the way Medicaid operates.  Currently, Medicaid is designed as a federal-state partnership in which the federal government matches the money a state spends to cover its Medicaid population. The new program, Healthy Adult Opportunity (HAO), would provide a route for states to receive a capped amount of federal dollars (i.e., a block grant) in exchange for fewer restrictions on determining who qualifies and what services are available to them. Seema Verma, the Administrator of the Centers for Medicare and Medicaid Services (CMS), celebrated this plan as an innovative approach to ensure the long-term financial sustainability of Medicaid. While Medicaid’s financial maintenance is an ever-present concern, HAO may reduce access to important healthcare services, create greater financial risk for states, and present significant legal barriers.

            Changing Medicaid’s financing scheme creates greater financial risks for states that pursue HAO. Medicaid’s current open-ended financing structure was designed to broaden states’ ability to provide healthcare coverage to their low-income residents by adjusting federal funding depending on the state’s level of need. For example, if a recession hits and Medicaid enrollment grows, federal funding would increase to cover most of the additional costs. However, states adopting the new approach must accept responsibility for costs higher than the caps. This change would shift financial risk to states, with federal funding cuts likely to occur when states have the least ability to accommodate them— such as during recessions, public health emergencies, and other instances when states must balance high demand for coverage and budgetary strain. The risk of hitting the funding caps would put pressure on states to control spending by cutting coverage.

            States that adopt HAO will likely face litigation. By offering funding through a capped fund scheme, the Trump Administration claims expansive authority to overturn explicit statutory requirements for Medicaid eligibility, cost sharing, and financing. The legal basis of HAO lies in the “expenditure authority” outlined in section 1115 of the Social Security Act. This section authorizes federal matching funds for expenditures not typically allowed under Medicaid, if these expenditures are needed to implement an experimental project likely to assist in promoting Medicaid’s objectives. However, two legal problems exist for this framework. First, the ability of block grants to promote the objectives of Medicaid, the legal standard for the authorization of these waivers, is unclear. The U.S. Court of Appeals for the D.C. Circuit recently affirmed that Medicaid’s main objective is to provide health coverage to low-income people, but block grants would incentivize coverage of fewer people. Second, the part of the Medicaid statute that governs its open-ended financing structure is not listed as a provision that is alterable through waiver.

            The heightened discretion offered by the demonstration program may reduce access to services and impact millions of people. To receive federal matching funds, states must provide core benefits (e.g. hospital services) to mandatory populations (e.g. low-income pregnant women) without imposing waitlists or enrollment caps. States may also receive matching funds to cover “optional” benefits, such as prescription drugs. Conversely, states that adopt HAO would receive broad, and in some instances unprecedented, authority to change benefits. The demonstration project encourages states to include the millions of low-income adults without children who obtained coverage through the Affordable Care Act’s Medicaid expansion under capped funds, which would likely negatively impact their ability to access health care. Moreover, states would also gain the ability to deny coverage for costly but necessary prescription drugs, including those for diabetes and cardiovascular conditions. Finally, states may impose new out-of-pocket costs for physician visits and prescription drugs on low-income enrollees. Cost sharing in Medicaid, even in the amount of a $1 copay, has been shown to deter people from accessing care.   

            The idea of capped funds to meet Medicaid’s financing challenges is far from new. Policymakers have discussed block grants for Medicaid since the Nixon Administration and as recently as the 2017 repeal-and-replace. In light of this history, the Trump Administration should consider why prior administrations and congresses have chosen not to take up this policy, as well as its potential to create financial risks, lead to litigation, and reduce access to healthcare for millions of low-income people.

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Involuntary Hospitalization or Incarceration: Why Our Choices Are So Limited

A severe mental illness can be a death sentence, but not for the reasons you might think. Individuals living in the United States with untreated mental illness are 16 times more likely to be killed during a police encounter than any other civilian approached or stopped by law enforcement. The reality is, police officers are often the “first responders” to individuals with severe mental illness–answering calls about “disturbances”, suicidal ideation, or crimes committed– but are ill-prepared for dealing with these complex psychiatric cases.

According to the Treatment Advocacy Reports, 1 in 5 inmates in America have a serious mental illness; even more have diagnosable mental illness. First responders (including police) are reluctantly taking over the role many believe that should involve psychiatrists or other mental health professionals. The justice system in turn is tasked with solving the social problems that occur as a consequence of a severe mental illness. It is abundantly clear that prison is not the answer for solving serious mental health issues. Rather, reports compiled by organizations such as the WHO show that incarceration will only exacerbate these problems. Still, law enforcement see few options apart from arrest and/or incarceration when dealing with mentally ill individuals; when they are tasked with balancing individual well-being against public safety.

The alternative to incarceration is involuntary hospitalization. The misconception held by some mental health and legal professionals is that involuntary hospitalization can be the best thing for people with severe mental illness; and protects those with severe mental illnesses from ending up in the justice system. However, there is inconclusive evidence of the effectiveness of involuntary hospitalization. Ironically, one of the reasons why there is an overrepresentation of persons with serious mental illness in the justice system is because of deinstitutionalization. Following the arrival of antipsychotics in the 1950s, the public view became that it was not necessary to detain individuals with mental illness since treatment of psychiatric symptoms was available. By the 1990s the number of psychiatric inpatients had been reduced from 550,000 in 1950 to 30,000. Nonetheless, the issue became that individuals with serious mental illness, who were disproportionately homeless or extremely low-income, could not afford access to these new treatments. As a result, the number of individuals with untreated serious mental illness within the prison population increased.

At the end of what seems to be a very complex issue is a very simple solution. The medical profession has reached a point where effective treatments are available for individuals with mental illness. Medical facilities provide access to mental health professionals beyond psychiatrists; facilities have social workers, counsellors, psychologists, occupational therapists, even specialists with specific training to treat addiction. The only remaining issue is funding. How can those who need access to mental health services get that access when the cost is so high? Well, recent research has shown that publicly funding psychiatric medication may save taxpayers money. A Desmarais study recently found that people who receive less mental health services unsurprisingly incurred higher criminal justice costs, which averaged $95,000 per person. In comparison, the study showed that people who received more mental health services had lower arrest rates bringing the criminal justice costs down to $68,000 per person

The answer is to provide better access to mental health services for people who need it the most. Simply pushing mental health issues away has caused these issues to be dealt with in inappropriate, and often detrimental, ways that are not only unhelpful but economically burdensome to society. Our choice does not need to be between involuntary and incarceration as the means to combating serious mental illness.

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Healthcare Privacy: There’s Not an App for That

There’s an app for just about everything. There’s an app for pretending to shave your beard. There’s an app for helping bread become toast. There’s even an app for timing your pee breaks at the movie theater. However pointless these apps might be, one of their functions is much more sinister…. they collect and sell your data. You might think, “Why does it matter if someone knows when I take my pee break during a movie?” Well. It probably doesn’t. But the practice of selling your data isn’t isolated to silly apps like these— apps may actually sell data about your  health and personal habits.

Let’s take an ovulation tracker, for example. Young women across the country willingly download apps to manually submit information about the schedule of their monthly period for a variety of reasons. They may be trying to get pregnant. They may be trying to avoid getting pregnant. They may just want to be as informed about their body as possible. But what they likely don’t know is the privacy policy of that app… or lack thereof.

According to a study by the British Medical Journal, 19 out of the 24 health monitoring apps they tested shared health related data with companies like Google or Amazon. Furthermore, one third of the apps that sold this personal data to companies did not even disclose the practice in any privacy policy.

In many cases, this data will be used in marketing and advertising campaigns. While targeted ads are annoying, they aren’t the real threat here. If health insurance companies gain access to your medications or medical history, it could affect insurance rates or employment benefits. The healthcare privacy rules that typically protect people simply don’t apply to information voluntarily submitted to mobile apps. The majority of health apps aren’t subject to national regulations, which can be detrimental to the financial well-being and privacy of people utilizing apps to help them with weight loss, addiction, and mental illnesses. This is even more worrisome as companies, such as Amazon, Apple, and Google, attempt to move into the healthcare market.

Thankfully, this issue has not been completely ignored. Vermont recently passed privacy laws to force companies to be transparent about the collection of health-related data. Last November, legislation was proposed in the Senate to prevent companies from mining personal health data from patients. In the meantime, if you are worried about how companies may use the information from your apps, the best advice is to read an app’s privacy policy, know your own privacy settings, and be wary of free apps.

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SCOTUS To Decide On Latest Religious Exemption For Employers

On January 17, 2020, the U.S. Supreme Court granted the writ of certiorari to hear two cases involving employers’ obligation to provide health insurance coverage for contraceptives. Employers are currently required to provide employees with health insurance including women’s preventive care under the Affordable Care Act (“ACA”). In 2011, the U.S. Department of Health and Human Services (“DHHS’) announced a rule to allow employers to use religious beliefs as an exception to providing female employees with insurance that includes women’s preventive care.  Later, in 2017, DHHS announced an interim rule which expanded upon its original exemption to include employers who had not only religious conflicts but also moral or ethical objections. 

The Supreme Court consolidated two cases relating to the DHHS’ rule.  The first case began before the new rule went into effect, when the Attorney General of Pennsylvania filed for a preliminary injunction to stop the rules enforcement. The District Court for the Eastern District of Pennsylvania entered a nationwide injunction against the rule’s enforcement;  the Third Circuit Court upheld the District Court’s decision. The second case involves a right of intervener filed by the Little Sisters of the Poor, a mission based organization led by catholic nuns  who intervened to object to the national injunction on the DHS’ rule.

 In support of the DHHS rule, religious organization and employers contend that under the Religious Freedom Restoration Act (“RFRA”) they are entitled to exercise their religious belief.  Since the use of contraception is not supported by those religious beliefs, religious organizations claim an exemption from the ACA requirement.  However, Pennsylvania argued that the DHHS did not follow the rule making requirements under the Administrative Procedures Act, and the rule goes beyond the legislative intent of the ACA.  Further, RFRA does not create an exception for the ACA requirement because the ACA’s requirement does not put a substantial burden on religious exercise.  Finally, Pennsylvania argues that the interim rule would create irreparable harm to state citizens by limiting access to affordable health care.

This is not the first time the Supreme Court has listened to an argument regarding the religious exception to the ACA. In 2014, the court decided in Burwell v. Hobby Lobby Stores by a 5-4 decision that under RFRA, DHS could expand religious exceptions to for-profit companies since those rights were already extended to non-profit companies. In her dissent, Justice Ginsburg, disagreed with the majority’s view because for-profit companies are not allowed to declare a religion.  Additionally, judicial precedent states that a religious belief cannot “impinge on the rights of third parties”.

In the writ for certiorari in Little Sisters of the Poor Home for the Aged v. Burwell, the petitioners asked the Court to answer whether the federal government lawfully exempted religious objectors from the regulatory requirement to provide health plans that include contraceptive coverage.  Meanwhile, in Trump v. Pennsylvania, the State of Pennsylvania proposed the following questions to the Court: First, whether the agencies had statutory authority under the ACA and the RFRA, to expand the conscience exemption to the contraceptive-coverage mandate; and second, whether the agencies’ decision to forgo notice and opportunity for public comment before issuing the interim final rules rendered the final rules—which were issued after notice and comment—invalid under the Administrative Procedure Act, 5 U.S.C. 551 et seq., 701 et seq; and third, whether the court of appeals erred in affirming a nationwide preliminary injunction barring implementation of the final rules.

The Supreme Court is poised to deliver its opinion on this high-profile issue before the end of the current session. The court’s decision might finally clarify the obligations employers have to provide women’s preventative healthcare to female employees and if there are exceptions to that obligation under RFRA, the ACA or the U.S. Constitution. 

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Free Flu Shots Cost More than Expected

Typically, individuals and families with health insurance have the advantage of receiving free flu shots every season, but a recent report from the Kaiser Health Network paints a different picture of the true cost insurers pay to provide free vaccinations to its plan holders. While the cost of a yearly flu shot appears low, the millions of Americans who are vaccinated in the US do not realize that the costs of providing such services are recouped in the high insurance premiums consumers pay each month. Specifically, the true cost of this “free” service can be found in the explanation of benefits provided by insurers. Moreover,  Kaiser Health Network reported significant variations in the cost of flu shots among health care payers and insurers.

Cigna reported paying different prices for the vaccine in DC versus MD where distances between some clinics were 10 miles or less. For instance, in 2017, the Peterson Kaiser Family Foundation Health System Tracker reported flu vaccine costs ranging from $28 to $80, with a misleading median cost of $45.” Insurance payers such as Cigna indicate that geographic variations are major price factors, even in the DC/MD region.

Market dominance has also been attributed to the varied cost of flu shots. Sutter Health, a nonprofit medical network giant, tentatively settled a lawsuit with expected damages of $2.7 billion after being accused of violating antitrust laws. Self-insured employers initiated the lawsuit and were later enjoined by California’s Attorney General’s Office. The lawsuit accused the conglomerate of taking advantage of its market dominance by charging insurers higher rates to provide flu shots at affiliated health care facilities. The state alleged that Sutter Health, a major health care system in Northern California, used its market dominance to drive up the cost of services and apply an all-or-nothing approach when contracting with insurance companies.

US antitrust law prohibits the use of unfair tactics to control a market or form a monopoly. When determining whether a company engaged in antitrust behavior, the court considers the company’s effect on the market as well as if the business activity intended to remove competition. Federal and state authorities can bring charges against those who violate these laws, and both civil and criminal remedies are available to companies affected by unlawful business activity.

The Sutter Health settlement may have nationwide implications on price negotiation tactics between large hospital systems and insurance companies. The lawsuit revealed that Sutter Health uses tactics to unnecessarily increase insurance prices. For example, Sutter Health uses factors such as location, competition, and plan provider when determining the cost to administer the vaccine. But the Kaiser Foundation reported that, even in consideration of those factors, Medicaid pays significantly less for the flu vaccine, and the price appears to be comparable across locations within states. This public revelation may send a signal to other large health systems who might be involved in similar practices.

Nonetheless, it seems disadvantageous for consumers to pay the high cost of the flu vaccine when there is no guarantee of its effectiveness. The rising cost of the flu vaccine is indicative of a larger problem in the US health delivery system. While the flu vaccine has proven beneficial to most Americans, its administration across the country lacks efficiency due to unfair business practices. Lawmakers should use the Sutter Health antitrust lawsuit as an opportunity to examine this aspect of the healthcare market and develop meaningful policies to prevent unfair and predatory practices.

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