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ACA: Certainty of court's decision gives way to new uncertainties about implementation

July 5, 2012
by Alison Knopf
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Now that we know that ACA is constitutional, new uncertainties about implementation of its key provisions are coming to the fore.

Now that the Supreme Court’s ruling on the Affordable Care Act– including the individual mandate and Medicaid expansion (with an important limitation) – has had a few days to sink in, all eyes are turning toward the states to see what they will do about that limitation.

Here’s the limitation: the Supreme Court held that the federal government could provide the incentive to expand Medicaid – which under the ACA is 100 percent of the costs of expansion for the first year, with a gradual reduction to 90 percent over a 10-year period – but could not punish states by taking away any current Medicaid dollars if they did not expand.“They [the Court] thought they had to give the states something,” one Washington insider told Behavioral Healthcare, of the 26 states that opposed the ACA in the Supreme Court case.

Individual mandate

The argument for the mandate was essentially that having health insurance is the right thing to do, since sooner or later everyone will need health care and health care isn’t free. But just because it’s the right thing to do, can the federal government require it (recall the discussion about whether the federal government could require people to eat broccoli, just because it’s good for you)?

The argument against the mandate, heard in the case NFIB v. HHS was headed up by small business employers. The National Federation of Independent Businesses, the lead plaintiff in the Supreme Court case, said its small business members could not afford to buy health insurance for their employees. The unspoken question is, of course, how can their employees, many of whom are paid low salaries, afford health insurance on their own? Health insurance on the open market for a family costs at least $17,000 a year in New York State, for example.

But the majority of the Supreme Court upheld the mandate, and with that, the rest of the ACA, with the exception of the “stick” part of Medicaid expansion. The “carrot,” which is huge, is still there.

Medicaid expansion

While the individual mandate got a lot of attention in media coverage prior to the Court’s decision, the Medicaid expansion, under which people earning up to 133 percent of the federal poverty limit get free health insurance via an expanded Medicaid program, has been what public health and behavioral health treatment advocates for treatment have pinned their hopes on for 2014.

The National Council is “thrilled” that the Supreme Court upheld the ACA, but “disappointed” with the Medicaid expansion decision, says Chuck Ingoglia, vice president for public policy. Still, with Medicaid expansion paid for 100 percent by the federal government, wouldn’t every state want to do it? Probably not every state, he says. “Just looking at the math, they should,” he says. But there may be some governors who, for ideological reasons, will not want to do it. “Over the next two years, we have to work with governors and state legislatures,” he says. “There will probably be some states that choose not to expand Medicaid.”

The Medicaid expansion would, for the first time in memory, enable states to extend health coverage to childless, low-income adults, a population that is often neglected under current Medicaid programs. It would thus open up the possibility of medical and behavioral health treatment to many who have been unable to access it.

In all, the Medicaid expansion provisions of the ACA would provide coverage for 17 million currently uninsured Americans.

Medicaid managed care

When providers hear “Medicaid” in the context of the ACA decision, they should think “insurance company,” and of the need to justify each and every patient encounter, instead of providing whatever services they can with the regular check that comes from the state or county. Patrick Gauthier, director of Healthcare Solutions, a division of Advocates for Human Potential (AHP)is cautioning providers about this aspect of Medicaid expansion: it is more likely to be via managed care plans.

The majority of states are already contracting with managed care organizations to manage their Medicaid programs or are heading in that direction, says Gauthier. And economic pressures, in the wake of the Supreme Court’s ACA decision will only spur states toward greater use of Medicaid managed care contractors, even for states that might decide against a Medicaid expansion. “It may come in different guises under different names like ‘Coordinated Care Organizations’ (the term used in Illinois and Oregon) but the basic principle of having private entities — payers, administrators, utilization and benefit managers, as well as providers — integrate and assume some share of the financial risk to better control and contain finite resources will only make more sense and occur more often not less,” he adds.

This leads to other questions. Whether Medicaid managed care will have to comply with the parity rule is still unclear, says Gauthier. Medicaid managed care plans, while they do have to comply with MHPAEA the law, do not have to comply with the interim final rule (IFR) implementing the law. “The result is confusion at all levels,” says Gauthier. The field is waiting for the Centers for Medicaid & Medicare Services (CMS) to issue a final rule, as well as a specific directive that Medicaid managed care plans must comply with the final rule.

Insurance exchanges

The health insurance exchanges that states are required to set up (or allow the federal government set up for them) will be marketplaces where people whose income is too high to qualify for Medicaid (134 percent of FPL or above) can buy insurance.