Concurring Opinions » Health Law

Not many policymakers or scholars can write with the authority of Gregg Bloche. Bloche is not only a law professor, but a physician, who knows his way around a hospital. Throughout The Hippocratic Myth, Bloche cements his authority in the mind of the reader by relating stories of his experience as a clinician. In each of these stories, his humane and insightful approach as psychiatrist shines through. These fluently-written passages strike one as the work of one of those rare practitioners who manages to care deeply about the patient at hand while simultaneously contextualizing the encounter in a larger framework. Thus The Hippocratic Myth should take its place among other well-received books by physicians with a sense of the big picture, including Atul Gawande’s The Checklist Manifesto and Better and Jerome Groopman’s How Doctors Think.

In The Hippocratic Myth, Bloche leverages this authority to advocate for a more cost sensitive health care system, where individuals frankly acknowledge that they should expect trade-offs between cost and access to certain forms of care. My concern in this review is that Bloche the caring and expert physician would have a tough time in a health care world too deeply influenced by Bloche the cost-conscious author.

Bloche’s book is one of those rare volumes that merits a careful read by scholars, classroom reading by students, and a broad popular audience.

X-Posted: Health Reform Watch.

Landscape of the Amici Supporting Florida’s Medicaid Brief

Nicole Huberfeld — Fri, 27 Jan 2012 05:35:08 +0000

Reporting results for its monthly Health Tracking Poll published today, the Kaiser Family Foundation introduced the summary of its findings thus: “As the Supreme Court prepares to hear legal challenges to the health reform law in March, most Americans expect the Justices to base their ruling on their own ideological views rather than their interpretation of the law…. Other key findings include: The public doubts the Supreme Court renders judgments based solely on the law. Three-quarters (75%) say they think that, in general, Justices let their own ideological views influence their decisions while 17 percent say they usually decide cases based on legal analysis without regard to politics and ideology….” Notable for a term that has the potential to render a few blockbuster cases. (The public’s opinion of the Court is worthy of its own conversation, but it’s best left for another post.)

It is not just the general public that believes politics will win out; amici supporting the states seem to be appealing to ideology. In reading all of the amicus briefs supporting Petitioners’ claim that the Medicaid expansion is unconstitutionally coercive, several themes reflecting this strategy emerge, such as:

Rejection or non-acceptance of New Deal era programs and precedents (the foundation of spending programs such as Medicare and Medicaid).
Asking the Court to invent a coercion doctrine to limit the power to spend and/or seeking a return to U.S. v. Butler, the 1936 decision that articulated a Hamiltonian understanding of the power to spend as a separate enumerated power but that also declared the provision of the act at issue to be unconstitutional as infringing on states’ rights. (One brief even seeks reversal of Butler’s adoption of the Hamiltonian view in favor of the Madisonian view that the power to spend only supports the other enumerated powers.)
Eschewing precedent - paragraphs unfold with no cites (the Texas brief is a good example). Citations that do exist are often to concurrences, dissents, scholarship, or think-tank reports. Justice Kennedy’s concurrences and dissents are well represented.
Providing a limited picture of the Medicaid Act and the expansion by failing to account for prior mandatory modifications to the program as well as the statutory architecture of the program (which contains both mandatory and optional elements).
An assertion that states cannot leave Medicaid because the federal government somehow improperly taxes state citizens, therefore states cannot tax their populations enough to pay for a state-based Medicaid equivalent. (This reflects an argument articulated by Professor Lynn Baker in her spending power articles, though it is not always attributed.)
Hyperbolic analogies (such as characterizing states as drug addicts).

A couple of additional thoughts come to mind in reading the amicus briefs:

State dependence on federal funding speaks to state behavior, not federal.
Coercion is too nebulous and perverse to be a coherent constitutional doctrine. This is illuminated by the amicus briefs, which essentially assert that the more money the federal government offers, the less control it should be able to exercise over either the money or the states.
The Court has no standard by which to judge whether the federal government offers too much money to states. Too much money relative to what? If healthcare is expensive, then in a cooperative federalism arrangement the federal government must offer sufficient money to encourage a state to implement a program that will be costly. The sum of money speaks to the nature of the program, but it does not dictate whether the federal government may permissibly offer the money to the states.
The tax argument is a distraction that denies the existence and purpose of the 16th Amendment as well as long-standing reliance on redistributive tax policy.

Despite the Medicaid expansion being the surprise question before the Court for many observers, it may dictate the outcome of the case. The Court could dodge the Commerce Clause question by virtue of the Anti-Injunction Act but still limit congressional authority by adopting the anti-federal spending position of the states and their amici. An additional theme - that Medicaid is essential to the minimum coverage provision – could make it so that Medicaid is the downfall of PPACA rather than the individual mandate. Such a result would fly in the face of severability jurisprudence; but, much about this litigation is unprecedented.

The Yale Law Journal Online: “Early-Bird Special” Indeed!: Why the Tax Anti-Injunction Act Permits the Present Challenges to the Minimum Coverage Provision

Yale Law Journal — Wed, 25 Jan 2012 16:14:49 +0000

The Yale Law Journal Online recently published an essay by Michael C. Dorf and Neil Siegel entitled “Early-Bird Special” Indeed!: Why the Tax Anti-Injunction Act Permits the Present Challenges to the Minimum Coverage Provision. In the Essay, Dorf and Siegel examine whether the Tax Anti-Injunction Act (TAIA) bars the Supreme Court from reviewing the current challenges to the Patient Protection and Affordable Care Act (ACA). While most of the commentary on the TAIA issue has focused on the question of whether the ACA’s penalty provisions fall within the TAIA’s definition of “tax,” Dorf and Siegel adopt an alternative and original approach. They argue that the TAIA does not bar the review because “the present challenges to the ACA do not have ‘the purpose’ of restraining tax assessment or collection.” For a purpose to bar review, it must be immediate because if the TAIA extended to challenges with the indirect purpose of restraining tax assessment or collection, it would also bar tax refund suits. ACA challenges cannot have the direct purpose of barring review because “the very authority to assess or collect will not exist until long after the litigation is concluded.”

Fetal Gender and Abortion

Gerard Magliocca — Mon, 23 Jan 2012 20:25:13 +0000

Recently I put up a post asking if a state statute prohibiting doctors from disclosing the gender of a fetus to the parents would be constitutional. I received the following thoughtful reply from Margo Kaplan, a Visiting Assistant Professor at Brooklyn Law School. Here response is below the fold:

Your post on statutes prohibiting physicians from disclosing the sex of the child was interesting and timely. I recently read an article in the Canadian Medical Association Journal by Dr. Rajendra Kale advocating a similar policy for Canadian physicians. And I think the comments in response to your blog brought up some wonderful points about the potential constitutional problems this raises.

Another issue that I find fascinating that seems to receive less attention is the possibility that this may violate physicians’ ethical and legal requirements to obtain informed consent. The American Medical Association Opinion 8.08, for example, requires physicians to disclose “relevant medical information” and states that “[t]he quantity and specificity of this information should be tailored to meet the preferences and needs of individual patients.” While these ethical guidelines are not law, several states use professional standards of conduct to determine if a physician has violated a patient’s legal right of informed consent.

This raises the really interesting question of whether and in what context sex of a fetus is relevant medical information. In his article, Dr. Kale dismisses sex as “not medically relevant” when sex-linked genetic diseases are not a concern. For most women obtaining an abortion, the sex of the fetus is not relevant and, in fact, might be something they would prefer not to know.

But, as morally abhorrent as many find it, the sex of the fetus is clearly relevant to many women choosing whether to undergo a medical procedure. For example, consider a woman who is obtaining an abortion based on her belief that the fetus is female. The physician who will perform the abortion, however, determines the fetus is male during a preliminary ultrasound. Is he ethically required to inform his patient of this information before the procedure? The question becomes particularly thorny where patients cannot obtain the information elsewhere.

Sex of the fetus is clearly relevant to many women making treatment decisions; but is it relevant medical information? Informed consent does not require physicians to disclose non-medical information that would be relevant to the patient’s decisionmaking, such as whether a patient’s spouse is planning to leave him should the surgery result in scarring. But sex of the fetus does not fall neatly into the category of “non-medical” information. On the one hand, barring genetic illnesses, sex of the fetus is not information that will influence the health of the mother or fetus. On the other hand, it is information about her pregnancy and its outcome that the physician obtains solely through treatment of the patient and to which he alone has access.

The answer to this question has implications in other contexts. For example, if sex is not medically relevant, is paternity? A particularly sympathetic hypothetical is that of a married woman who was raped by a man not her husband, and who only wants to continue the pregnancy if the child is her husband’s. Is it ethical for a physician to refuse to disclose her paternity test results until the choice of an abortion is foreclosed to her?

This also raises questions in the context of intersex children; if a physician is aware that a fetus is intersex, is he obligated to disclose that information to the mother? The answer reflects the current debate over whether the medical profession should view as a “disorder” sex that does not fit into the binary classification of male or female.

These questions reflect a deeper problem in the proposed policies. Our interpretations of “relevant medical information” in the context of these hypotheticals are often simply code for “appropriate reasons for terminating a pregnancy.” Even if the state can regulate these disclosures—or physicians can collectively agree to adopt a non-disclosure policy—without running afoul of informed consent principles, do we want them to?

Lombardo on Legal Archaeology

Frank Pasquale — Sat, 21 Jan 2012 18:51:40 +0000

Paul A. Lombardo published an essay “Legal Archaeology: Recovering the Stories behind the Cases” in the Fall 2008 issue of the Journal of Law, Medicine, and Ethics. It reminded me of the wonderful chapters in this volume of “health law stories.” Here are some excerpts that may be of interest:

Every lawsuit is a potential drama: a story of conflict, often with victims and villains, leading to justice done or denied. Yet a great deal, if not all, that we learn about the most noteworthy of lawsuits — the truly great cases — comes from reading the opinion of an appellate court, written by a judge who never saw the parties of the case, who worked at a time and a place far removed from the events that gave rise to litigation.

Rarely do we admit that the official factual account contained in an appellate opinion may have only the most tenuous relationship to the events that actually led the parties to court. The complex stories — turning on small facts, seemingly trivial circumstances, and inter-contingent events — fade away as the “case” takes on a life of its own as it leaves the court of appeals.

How can a law professor correct this bias? Here are some of Lombardo’s suggestions:

The best starting point for doing legal archaeology is the case record itself. We all begin our investigation of cases by reading an appellate opinion. With some extra effort, we can retrieve the records and briefs that the judges relied on as they wrote that opinion. Of course, the case record that is printed for submission to an appellate tribunal will include only a small portion of the documents that make up the lawsuit’s paper trail.

Much of the material contained in the case record is now filed electronically, and for recent cases, may be available on the Web. But even for most pre-Internet cases, finding the proper repository for all these records is not difficult. A visit to your school’s reference librarian with copies of the articles referenced here should get you started.

Lombardo also suggests consulting newspapers and magazines, professional journals, and material generated by the parties and their lawyers. Though some students may complain of “reading overload,” skillful editing can make the effort to contextualize the cases well worth everyone’s while. I also anticipate that internet archives of particular helpful case studies will accumulate over time.

Selected References from Lombardo:

P. Brooks and P. Gewirtz, eds., Law’s Stories: Narrative and Rhetoric in the Law (New Haven: Yale University Press, 1997).

J. L. Maute, “The Value of Legal Archaeology,” Utah Law Review 2000, no. 2 (2000).

D. L. Threedy, “Legal Archaeology: Excavating Cases, Reconstructing Context,” Tulane Law Review 80, no. 4 (2006)

C. Geertz, “Thick Description: Toward an Interpretive Theory of Culture,” in The Interpretation of Cultures: Selected Essays.

X-Posted: Health Law Profs.

Getting the Facts Right

Nicole Huberfeld — Thu, 19 Jan 2012 16:37:15 +0000

For those of you following the Medicaid expansion issue before the Court: Sara Rosenbaum and Katherine Hayes, experts on the Medicaid program and health policy at GW, have posted a thoughtful response on the Health Affairs blog to the states’ misleading discription of the Medicaid program (which I also mentioned in my initial impressions of the states’ merits brief). Briefs supporting the states’ coercion position were just filed, and I will post initial impressions of the amici soon.

Positive Rights

Frank Pasquale — Mon, 16 Jan 2012 19:00:42 +0000

I’ve always been a big fan of Charles Taylor’s essay “What’s Wrong with Negative Liberty,” but I haven’t done much to advance the idea of economic, social and cultural rights. Here are two efforts to rectify the situation:

1) An opinion piece in the Bergen Record, A Constitutional Right to Health Care.

2) A post at Madisonian, Internet Access as a Human Right.

I don’t think I have much to add to the already well-developed philosophical literature on positive rights, but I’d like to do more to bring this concept to an American audience.

HealthLawProfs on Experiential Learning, Summer Teaching

Frank Pasquale — Sun, 15 Jan 2012 02:35:48 +0000

Just a quick note on two posts on the Health Law Profs blog that might interest regular readers. First, Katharine van Tassel and Jennifer Bard are developing a clearinghouse of summer law teaching opportunities. Details appear here. Second, the AALS Health Law section focused on experiential learning; some notes here.

Initial impressions of the states’ brief in Fl. v. HHS

Nicole Huberfeld — Wed, 11 Jan 2012 05:36:26 +0000

Is the sky falling? According to Florida et al., which filed their brief regarding PPACA’s Medicaid expansion today, the answer is a resounding yes. In many respects, this brief rehashes the coercion arguments made in the district court and Eleventh Circuit. The states continue to argue that they cannot afford the Medicaid expansion that will occur in 2014 (which I discussed on this blog here, here, and here), even though the federal government will pay 100% of the cost initially; and, they cannot afford not to participate in Medicaid because the costs of their medical welfare populations would be too high. Thus, the states claim to be coerced into accepting this “onerous” new condition on federal funds. Again, these arguments are not new.

One aspect of the brief that was new was the inclusion of the severability arguments through describing the Medicaid expansion within the context of the universal insurance aspirations of PPACA (see especially fn. 18). The states essentially contend that the minimum coverage requirement (“individual mandate”) gives impoverished Americans no option but to be in Medicaid, which in turn makes it so that the states cannot opt out of Medicaid. The states further assert that this was Congress’s plan – to coerce the states by giving the poor no other options for obtaining minimum insurance coverage. The fallacious assumptions underlying this argument are too numerous to unpack at this late hour, but at least two thoughts can start the job: first, New York v. U.S. does not require the federal government to offer alternatives to conditional spending programs (unlike, say, when it exercises commerce authority – the insurance exchanges in PPACA, which are a point of contrast in the brief, are an exercise of Commerce Clause authority, and states can either create them with some federal funding or reject them and the federal government will create the exchanges in the states that choose not to act — all of this fits neatly within the New York architecture). Second, suffice it to say that the impoverished are not seeking private insurance alternatives to Medicaid.

Medicaid’s history is skewed by the brief more greatly than it was at lower court levels. For example, the brief ignores the fact that Medicaid has always contained mandatory elements; these mandatory elements were one of the major defining features of the program as it was amended from Kerr-Mills, its predecessor program. The brief also misrepresents the existence of mandatory eligibility and coverage standards and how they serve the aspirations of the program. Likewise, the brief either misunderstands or misrepresents the minimum essential coverage requirement, which is actually more flexible for states than the mandatory coverage provisions for other Medicaid populations. Additionally, the brief appears to misunderstand the statutory clarification that Medicaid provides both care and service (Congress here was responding to lower federal courts that had misconstrued certain language in the Medicaid Act).

Also, decisions such as Arlington, Dole, and Pennhurst that have required clear notice of conditions on spending are cited in the brief to support the states’ position that they have not voluntarily agreed to this condition on spending. Before this point, the states have not argued that any other Dole element was violated, but the states now seem to indicate that these conditions were not unambiguous and thus the ‘contract’ with the federal government is unconstitutional. In addition, the states offer a limiting principle that adopting their view of the coercion theory does not threaten other federal spending programs because Medicaid is by far the largest federal spending program (echoes of the federal government’s argument that nothing else is like healthcare).

Bottom line, the states want the Court to revive Butler and to expand the theory of coercion that the Court merely acknowledged in Dole and Steward Machine by relying heavily on Justice Kennedy’s concurrences and dissents that have expressed an interest in such an expansion. The question is whether a majority of the Court is interested in a new limitation on Congress’s power to spend.

Stanford Law Review Online: How to Reach the Constitutional Question in the Health Care Cases

Stanford Law Review — Mon, 09 Jan 2012 17:52:28 +0000

In a Note just published by the Stanford Law Review Online, Daniel J. Hemel discusses a jurisdictional issue that might delay a ruling by the Supreme Court on the constitutionality of the Patient Protection and Affordable Care Act, and a novel way in which the Solicitor General could bypass that hurdle. In How to Reach the Constitutional Question in the Health Care Cases, he writes:

Although the Supreme Court has agreed to hear three suits challenging the 2010 health care reform legislation, it is not at all clear that the Court will resolve the constitutional questions at stake in those cases. Rather, the Justices may decide that a Reconstruction-era statute, the Tax Anti-Injunction Act (TA-IA), requires them to defer a ruling on the merits of the constitutional challenges until 2015 at the earliest. . . . Fortunately (at least for those who favor a quick resolution to the constitutional questions at stake in the health care litigation), there is a way for the Solicitor General to bypass the TA-IA bar—even if one agrees with the interpretation of the TA-IA adopted by the Fourth Circuit and Judge Kavanaugh. Specifically, the Solicitor General can initiate an action against one or more of the fourteen states that have announced their intention to resist enforcement of the health care law, and he can bring this action directly in the Supreme Court under the Court’s original jurisdiction. Such an action would be a suit for the purpose of facilitating—not restraining—the enforcement of the health care law. Thus, it would open up an avenue to an immediate adjudication of the constitutional challenges.

Read the full Note, How to Reach the Constitutional Question in the Health Care Cases by Daniel J. Hemel, at the Stanford Law Review Online.

The inter-branch turmoil continues

Nicole Huberfeld — Fri, 30 Dec 2011 20:11:27 +0000

After the Supreme Court heard oral arguments in Douglas v. ILC, the Secretary of HHS approved some of California’s deep cuts in Medicaid reimbursement. The Court requested additional briefing regarding the impact of the rate reduction approval, and the United States responded that the case was not moot because the grant of certiorari was based upon the Supremacy Clause question, not a determination as to the actual sufficiency of the state’s Medicaid payment rates. As soon as the rate reductions were approved by HHS, the California Hospital Association, the California Medical Association, and other Medi-Cal providers filed additional claims for injunctive relief.

Yesterday, U.S. District Court Judge Christina Snyder issued an injunction against California preventing the implementation of the HHS-approved rate reductions because they would cause irreparable harm to hospitals’ skilled nursing units (among other problems). The new injunction keeps the issues in Douglas alive, whether as a matter of payment rate adequacy or as a matter of private enforcement of state violations of the Supremacy Clause. Thus, even though HHS approved Medi-Cal rate reductions, the conflicts in Douglas have not been resolved.

There is also a fascinating real-time separation of powers quandry in this case, which is highlighted by the injunction that was just issued. Federal courts perceive states’ failure to abide by the mandate of the Equal Access provision, but HHS, whose job it is to ensure state compliance, turns a blind eye to state decisions that will limit access to medical care. In the meantime, Congress does not modify the Equal Access provision to contain stronger language or a clearer private right of action, it merely relies on implied private enforcement actions (see the amicus brief of Members of Congress). And HHS has issued paltry draft regulations to facilitate enforcement of the Equal Access provision, but the draft regulations do not guide CMS’s enforcement efforts so much as they provide some standards for states to self-report with little federal oversight. It seems that federal courts are acting because the legislative branch either can’t or won’t, and because the executive branch either can’t or won’t ensure that this federal law is followed. This makes the Obama Adminstration’s deference to state decisions all the stranger in Douglas, and courts’ patience with Equal Access litigation a bit more understandable. It also helps to explain the sort of underlying tone of confusion at oral arguments. The Court is left with the unenviable task of cutting this Gordian knot of inter-branch disfunction.

The other healthcare case with constitutional implications

Nicole Huberfeld — Wed, 21 Dec 2011 17:15:38 +0000

Another Medicaid case this term also involves constitutional challenges – Douglas v. Independent Living Center of Southern California. That certiorari was granted is notable unto itself, as no circuit split existed, the Acting Solicitor General had recommended that the Court deny the petition, and the Court does not seem to relish hearing healthcare cases. The conflict in Douglas is whether California violated the Medicaid Act by enacting 10% reimbursement rate reductions, but this is not the question before the Court. The Court will consider whether the plaintiffs (a group of Medicaid providers and enrollees) may privately enforce the Medicaid Act against the state by claiming the state has violated the Supremacy Clause. Depending upon the timing of the opinion, Douglas may give us hints as to how the Court will decide Florida v. HHS, even though the United States has taken notably different positions in the two cases (about which I have written more here.)

Medicaid was intended to mainstream the poor into American medicine. The Medicaid Act thus informs states that they must pay healthcare providers “sufficient[ly]” to ensure the same access to medicine for Medicaid enrollees as others in the geographic region enjoy. This “Equal Access” provision is a pillar of Medicaid, and it has been a source of litigation against states that pay providers too little. In fact, before Gonzaga, lower federal courts were in agreement that the Equal Access provision was enforceable via section 1983. Through this litigation, the circuits developed varying methods for deciding sufficiency of payment, as the Centers for Medicare and Medicaid Services (CMS) has not enforced the Equal Access provision vigorously against the states. Despite the lack of agency action, ”sufficiency” is key to Medicaid’s success; if states do not pay enough for the medical services they buy, Medicaid enrollees will be forced into substandard care or will not be able to find caregivers at all, and the program would be undermined. Due to Gonzaga, and because CMS infamously does not monitor the states, Medicaid providers and enrollees have sought to enjoin states from violating the Medicaid Act under the Supremacy Clause.

California argued that the Medicaid Act does not include private actions, thus the plaintiffs could not seek an injunction because the statute fails to meet the “unambiguous conditions” element of the Dole test for conditional spending. This argument speaks to clear statement advocates on the Court (such as Justices Alito, Scalia, and Thomas), because it claims that states do not have clear notice of Medicaid enforcement actions in federal court. To the surprise of many, the United States’ amicus brief not only supported California but also urged that no private right of action exists for beneficiaries of federal spending programs (generally) to enforce federal standards against states. The Acting Solicitor General’s brief thus took a much bolder position than was expected. Remarkably, members of Congress and ex-administrators of the Department of Health and Human Services strongly disagreed with the SG’s position. In fact, the ex-administrators, which represent both sides of the aisle, insist that CMS relies heavily on private enforcement to police the states.

Douglas may lead the Court to articulate a default rule that ends implied private rights of action under the Supremacy Clause, but Medicaid is a flawed vehicle for such a sweeping, federalism-based decision. [More after the jump.]

One reason is that CMS has no monetary incentive to enforce the Equal Access provision; the more a state pays its Medicaid providers, the more the federal government is obliged to match with general revenue funding. Thus, CMS saves money by allowing the states to underpay Medicaid providers in violation of the Equal Access provision, and draft regulations intended to shore up the Equal Access provision do not address this perverse incentive. So, waiting for CMS to act, as the United States has urged, is futile, and states would be free from enforcement, public or private, judicial or executive.

Douglas highlights some inconsistencies in the Rehnquist Court’s ‘federalism revolution.’ Even as it revitalized judicial enforcement of the Tenth Amendment in cases such as New York and Printz, the Court treated spending as an exception by stating that the federal government could basically buy state cooperation without running afoul of the Tenth Amendment. On the other hand, the Rehnquist Court shored up state sovereign immunity through expansive Eleventh Amendment decisions and through limiting implied rights of action, which in combination partially closed the courthouse doors to beneficiaries of federal spending programs. Douglas gives the Roberts Court a chance to consider directly some formerly peripheral thoughts regarding limiting access to federal courts when the law at issue is an exercise of conditional spending power.

This leads to another reason Douglas is the wrong vehicle and should be decided narrowly. In asking the Court to create a severe limitation on Supremacy Clause rights of action in conditional spending schemes, the United States’ brief articulated great deference toward the states in the Medicaid program, especially for their decisions regarding provider payment. But the U.S. has taken a diametically opposed position in the Florida v. HHS litigation, in which the power to spend has been articulated very broadly in defense of the mandatory Medicaid expansion. But, if the Court were to adopt the Solicitor General’s position in Douglas, then the Medicaid expansion could be eviscerated. Here’s how: if the states do not pay Medicaid providers sufficiently, then the 16 million new Medicaid enrollees will have a very difficult time finding anyone to treat them. PPACA did not add private rights of action to Medicaid, and it did not give CMS new enforcment mechanisms (money, regulatory authority, people power). So, states could resist the expansion by underpaying Medicaid providers, and Douglas would make it so that no recourse exists (unless Congress acts, which is what the Court is trying to effectuate through clear statement rules). Further, if the Court decides Douglas broadly, it may signal a willingness to decide both aspects of the Medicaid coercion question broadly, i.e., to expand the coercion doctrine and strike down the expansion itself. (I know, I predicted a different outcome in my first post on Florida v. HHS….)

It is possible the Court will postpone deciding Douglas until it has heard the Medicaid coercion arguments on March 28th or even until it has decided Florida v. HHS. Whenever Douglas is decided, the United States has taken a state-deferential position in the case that is at odds with the broad articulation of the spending power in defending the Medicaid expansion.

An additional thought on coercion

Nicole Huberfeld — Wed, 14 Dec 2011 21:17:01 +0000

Recently I wrote about the coercion question posed by Florida et al. in the PPACA litigation. I have a quick follow up thought: I wonder if those advocating a more robust read of coercion recognize that their position could backfire if the goal is broadening federalism protections. An expanded coercion doctrine ostensibly would introduce the possibility of judicially enforcing states’ rights against the congressional power to spend. But the states should not assume that they are the only parties that could enforce federalism principles. Just last term in Bond v. United States, Justice Kennedy wrote that individuals can have standing to enforce the principles of the Tenth Amendment against the federal government because federalism protects not just the states but also individuals. In Bond, the conclusion was foreseeable, as a criminal defendant should be able to challenge the constitutionality of the statute under which she is charged. But the idea is muddied in a conditional spending program, wherein individual beneficiaries are often at odds with the state and contest its compliance with the federal government’s statutory conditions.

States have sought to prevent private enforcement of conditional spending statutes, and they have been more and more successful in closing the courthouse doors. For example, the Court has limited implied rights of action as well as actions under civil rights law 42 U.S.C. § 1983, decisions that narrow state exposure in federal court. In fact, this type of question is before the Court now in Douglas v. ILC, which confronts private enforcement of the Medicaid Act against states via the Supremacy Clause.

If the coercion theory is expanded, then private plaintiffs could be reintroduced into the federal courts, the very thing that states have been trying to prevent. And, individuals engaging in coercion analysis may have different goals than states. Further, it is possible that coercion could inaugurate a new theory by which those conditions, and the ways in which they are or are not executed by states, can be challenged by private plaintiffs. So, not only is state coercion by the federal government an inherently sticky question, but it also may not produce results that states desire.

A Union’s Integrated Delivery System

Frank Pasquale — Mon, 12 Dec 2011 18:37:06 +0000

Robert Kuttner has an excellent article on the Local 6 Union’s health plan in the American Prospect. The plan’s success at reducing costs and improving quality may make it a good model for those who claim we need to go beyond ACO’s to integrate delivery. A few quotes from the piece:

Insurance costs generally are increasing at 9 percent to 10 percent a year, according to the Kaiser Foundation. By contrast, the costs of the hotel workers’ plan have been increasing at about 1 percent a year for the outpatient services that it provides directly and about 10 percent per year for inpatient services that are contracted with area hospitals. So the plan’s overall costs have been going up at about 3.5 percent a year. . . .

[B]y dispensing with insurance-company middlemen, the plan eliminates a whole layer of costs. A doctor treats the patient according to his or her best medical judgment. There is no army of staffers dealing with patient billing, claims, and insurance reimbursement; no arguing with insurance–company case reviewers. Second, doctors are all on salary. So there is no incentive to undertreat or overtreat . . . .

Further, the plan’s core principle is unlimited access to primary care, with all of the prevention and early–detection benefits that approach brings. . . .All doctors are salaried, with general practitioners being paid slightly more than specialists, in order to reward primary care. The scale for GPs ranges from $85 to $115 an hour, or around $200,000 a year or more. The plan has no trouble enlisting good doctors, since the conditions of medical practice elsewhere have been deteriorating under relentless pressure from insurers to cut costs and justify their medical decisions. . . .

The article also mentions tense negotiations with the RAPER specialties (Radiologists, Anesthesiologists, Pathologists, and ER doctors), which apparently have a good deal of bargaining power:

Most New York hospitals now contract out these services to specialists’ groups who charge whatever the market will bear. In recent bargaining with one of its hospitals over a proposed rate increase, the hotel workers were told that the increase partly reflected higher charges billed by anesthesiologists. Greenspan [a union negotiator] requested the hospital to push back. Not our problem, the hospital contended; we don’t control these costs. “We told them, OK, next week our members stop using your hospital,” Greenspan says. The costs came down.

The plan’s success may be complete when robots can reduce the cost of radiology and pathology.

Secret Prices: Free Market Triumph or Tragedy?

Frank Pasquale — Mon, 12 Dec 2011 14:37:08 +0000

Can a market work when buyers are kept in the dark about the prices they’ll pay? That’s an increasingly urgent question for fans of consumer directed health care. In vogue during the administration of Bush fils, CDHC is reemerging as Obamacare’s opponents seek a standard to rally around (other than “laissez mourir”). In theory, consumers could force doctors and hospitals to compete by shopping around for services. But when the rubber hits the road, informed consumption is easier said than done, as Josh Barro describes:

Recently, my employer switched to a high-deductible health insurance plan, which means I’m paying at the margin for most of my health care. As a result, I have become more aware of the true cost of the care I receive—and more aware of how difficult it is to figure out that cost. . . . if you ask doctors how much a service costs, they tend not to know. I once had an argument with my doctor, who did not want to give me a blood test for fear that my insurer would deny the claim for the expensive test. I later found out that this test costs all of $9.48 at my insurer’s negotiated rates, despite a list price of $169. When I got orthotics, my podiatrist told me they would cost nearly $600. But that was the list price; the actual insured price was less than $250. . . .

It doesn’t have to be this way. We could legally obligate hospitals and medical practices to disclose their full price lists—both the inflated list prices and the rates negotiated with each insurer that the practice accepts.

A commenter on Barro’s blog retorts:

I’m a little surprised to see a blogger at the [National Review Online] suggest that the government “require” price disclosure from private market participants. This goes well beyond the market interference that some other odious “mandates” require. Why don’t we mandate that everyone disclose exactly what they pay each employee? . . . If you have an HSA or High-deductible policy, I would suggest it’s incumbent on the insurance provider to help you figure it out. If consumers want it enough the system should respond, right? Why not switch to an HDP that is more transparent?

The problem, of course, is that lots of parties have to agree to provide transparency, and there is a great deal of inertia. If all the other insurers aren’t transparent, there’s little reason for one of them to try to distinguish itself if it already has a steady customer base. And when it stirs itself to do so, it will find a wall of resistance from providers, who say “why should we give all this information to you—no one else is demanding it?” (Moreover, the “prices” don’t really exist except on paper on a “chargemaster,” and they’re practically meaningless (except as opportunities to gouge the unlucky). The real price is the negotiated price, and that’s generated out of iterative interactions.) Moreover, many interventions involve multiple providers, as a reader of Andrew Sullivan’s blog explains:

I am a pediatric subspecialist at a major academic medical center in New York City. Many times, patients call to find out the costs of procedures if we are outside of their network. As ridiculous as it sounds, we are universally unable to tell them. The prices are so opaque that no one at my institution will admit to being able to produce them.

For example, a pulmonary function test (really a group of tests) will involve a physician’s fee and a technical fee. The MD fee is generated from my practice and I have a list of fees that most patients are charged (though their insurances all pay different rates if they have insurance). The hospital owns the technical fee. A colleague of mine once spent three months trying to get an answer to the question of what the price is for a group of tests for a research grant she was planning. No one could or would tell her.

Perhaps the “free market advocate” would like to see a coalition of insurers band together to get enough bargaining power to demand transparency. (Query the point at which that consolidation becomes so great that it approaches monopolization, another enemy of free markets.) But the record of Group Purchasing Organizations in other parts of the health care marketplace is not promising. Such intermediaries are often tempted to put their own profits ahead of the entities they’re ostensibly serving.

It’s a bit like food nutrition labeling, which almost everyone now agrees is a good idea, but could only be catalyzed on a large scale by government intervention. The government may also need to limit the complexity of contracts in the area. As Uwe Reinhardt documented,

Relative to hospitals paid under the much simpler national health insurance schemes in other countries, the contracting and billing departments of U.S. hospitals . . . are huge enterprises, often requiring large cadres of highly skilled workers backed up by sophisticated computer systems that can simulate the revenue implications of the individual contract negotiations.

You’d think that, when US doctors’ administrative costs are four times that of Canada’s, consumers would at least get a clear picture of the financial landscape here. But instead, as with the labyrinth of self-serving complexity that constitutes the over-the-counter derivatives market, the complexity mainly serves to protect insiders. I predict that if CDHC advocates ask hospitals to reveal more, a plaintive chorus will respond that true prices are, in the words of Alan Greenspan, “irredeemably opaque.” For what is market freedom if it doesn’t include the freedom to contract into a dynamically multivariate payment scheme where the present value (or cost) or any given service cannot be calculated because it depends on a hundred other variables?

Doctors and insurers are not the only ones obscuring health care costs. As Steve Pearlstein noted recently, the prescription drug market “is renowned for its lack of transparency. Drug companies not only refuse to reveal their wholesale prices, but in contracting with pharmacy chains and PBMs they insist on contracts that prohibit either party from revealing prices to anyone else.” As Annemarie Bridy shows, a medical device manufacturer has claimed that “the actual prices its hospital customers pay for implantable devices, including cardiac pacemakers and defibrillators, are protectable as trade secrets under the Uniform Trade Secrets Act.” The B2B side of the business is shrouded in secrecy, as Reinhardt shows:

Whatever an insurer’s base for paying hospitals might be, the dollar level of payments is negotiated annually between each insurer and each hospital. Under a DRG system, for example, the item to be negotiated is the monetary conversion factor for the year and, possibly, some of the DRG weights. These actual dollar payments have traditionally been kept as strict, proprietary trade secrets by both the hospitals and the insurers. Recently Aetna announced that it will make public the actual payment rates it has negotiated with physicians in the Cincinnati area.20 That this small, tentative step toward transparency made national news speaks volumes about the state of price-transparency in U.S. health care. It remains to be seen whether that first step will trigger a larger industrywide move toward removing, at long last, the veil that has been draped for so long over the actual prices paid in the U.S. health system.

Fortunately for advocates of transparency, the Affordable Care Act has some provisions that require transparency. The ultimate solution is all-payer rate setting, which radically simplifies the negotiation games that are the root cause of so much health care opacity. Such rate setting may also pave the way to more integrated delivery systems, already contemplated in the parts of the ACA devoted to Accountable Care Organizations. When primary care doctors, specialists, imagers, etc., are all part of one organization, it’s much easier to estimate costs than when they are all independent actors.

But we should note that the problems here are much broader than health care. I predict a split in free market theory between those who enthusiastically endorse the propertization of prices, and those who see open information about them as a key to real competition.

Image Credit: Frankzed.

Simulposted: Health Reform Watch.

Jumping ahead to Coercion

Nicole Huberfeld — Fri, 09 Dec 2011 18:26:37 +0000

I had intended to address Douglas next, as it is a nice gateway for discussing Florida v. HHS, but a defense of the coercion argument just published in the New England Journal of Medicine Online inspired me to address the latter first. I will begin by discussing why I think the Court granted the petition for certiorari then turn to the Medicaid coercion question.

The Rehnquist Court excluded the Spending Clause from its federalism revolution inasmuch as that would have meant limiting the power to spend by the Tenth Amendment. When Chief Justice Rehnquist authored South Dakota v. Dole, the evidence is that he believed it was an easy and relatively inconsequential case. For those sane enough not to engage in the reading of tea leaves that is deciphering the spending power, a quick review. Dole articulates typical Rehnquist categories for evaluating the constitutionality of conditions placed on federal spending: the spending must be for the general welfare; the conditions must be clear and unambiguous (as modified by Arlington Central School District Board of Education v. Murphy); the conditions must have a nexus with the federal spending (“germaneness”); and the conditions cannot themselves be unconstitutional. After providing this test, Rehnquist noted that “in some circumstances the financial inducement offered by Congress might be so coercive as to pass the point at which ‘pressure turns into compulsion.’” No theory or constitutional provision was cited, but the opinion indicated that coercion would depend on the amount of money or percentage of money withheld if the state violates the conditions. It seems that the Court meant that coercion would be a Tenth Amendment, state sovereignty problem. But, Dole also explicitly stated that the Tenth Amendment was not implicated in the bar on unconstitutional conditions. So, while Dole provides the test for conditional spending, it is undertheorized and a bit self-contradictory. Nevertheless, the Rehnquist Court reiterated that the Spending Clause is not limited by the Tenth Amendment in New York v. U.S. and held to that position in subsequent cases, disappointing many who believed spending to be the next front in judicially-enforced federalism.

The Roberts Court has given hints now as to its approach to spending as well as federalism, and members of the Court have signaled interest in revisiting both topics. For example, Justice Kennedy’s concurrence in Comstock stated: “The limits upon the spending power have not been much discussed, but if the relevant standard is parallel to the Commerce Clause cases, then the limits and the analytic approach in those precedents should be respected.” Justice Kennedy also addressed broader federalism concerns in that concurrence, which were given free rein in his opinion for the Court in Bond v. U.S. as well. Likewise, Justice Alito’s opinion in Arlington was written as a spending power decision rather than a limited statutory interpretation, which I have written elsewhere resulted in a narrower clear statement rule for the second element of the Dole test.

Additionally, even though the Court seems to dislike hearing both spending and healthcare cases, it already has heard Douglas this term, so spending, federalism, and Medicaid are fresh in the justices’ minds. And, what could be a better vehicle for considering coercion than the largest grant-in-aid program that also constitutes the second largest portion of states’ budgets? (Education is first.) Further, numerous lower federal courts have attempted to construe coercion, but none have struck down federal legislation under the doctrine, making the issue ripe for the Court’s consideration.

Despite the idea of coercion arising repeatedly in federalism cases over the last thirty-ish years, its contours are unknown. At what point is the money being offered too much? And is the offer really the issue, or is the problem the amount or percent of money a state stands to lose if it does not comply with the conditions? (Dole indicated the latter, as South Dakota was not coerced because it would lose only 5% of its federal highway funding if it refused to comply with the minimum drinking age that the federal government sought to impose.) Can coercion only apply to an existing conditional spending program that a state could not leave because it has become dependent on the program? Or is there some federal program that would offer so much money that no state could turn it down, even at the outset, such that the new program would be coercive? If it is the former, then clear statement rules also need to be revisited, because they seem to assume some kind of regular restatement of the rules of the program to which a state actively agrees. That simply does not occur in a long-standing program like Medicaid, making me think that clear statement rules are almost meaningless in that context. Additionally, states inherently relinquish some sovereignty when they agree to the terms of a cooperative federalism program, highlighting tensions between dual sovereignty and cooperative federalism.

So, what is the upshot for the Medicaid expansion? [more after the jump]

As I wrote last week, PPACA makes anyone under the age of 65 and earning less than 133% of the federal poverty level eligible to enroll in Medicaid. Additionally, even though the federal government typically covers 50 to 83 cents on the Medicaid dollar, a match that varies by state per capita income and a few other factors, the federal government will pay 100% for the new population, which phases down to 90 cents on the dollar by 2020. The states do not quarrel with the philosophical change in the program, and they do not claim that any other element of the Dole test is violated; instead, they claim that the expansion is impermissibly coercive because it will be too expensive for the states, and they stand to lose all of their Medicaid funding if they refuse to enroll the newly eligible population. From a Dole perspective, this argument is smart, as it covers the most obvious interpretations of coercion.

But, from a Medicaid perspective, the argument is not persuasive for at least five reasons. First, the federal government has always mandated the fundamental elements of Medicaid, the baselines of who is eligible and what services they must receive, while allowing states options that expand on the baselines. At least twice before baseline Medicaid eligibility has been drastically expanded in this way, and the states remained in the program. Second, the federal government is totally funding the expansion initially, then primarily funding it after the start up period. Notably, a number of states have argued that they will benefit greatly from the Medicaid expansion, and they do not want to see it eliminated. Third, the states have a number of years to plan administratively and fiscally for the expansion. Even in 2014 they will only have to pay some of the administrative costs of the newly eligible (the federal government pays at least 50% of state administrative expenses in Medicaid in addition to matching medical expenditures). States have time to leave Medicaid if they choose. Fourth, though Florida et al. essentially argue they are locked-in to participating in Medicaid, and it is true that most states could not afford to run their own welfare medicine programs, it is not a direct line to concluding that states are coerced into participating in Medicaid. Perhaps it simply means that Medicaid fills a need. Fifth, spending legislation is the law of the land, just like any federal law, by virtue of the Supremacy Clause. Telling the federal government that it cannot set the terms of its own duly enacted conditional spending statute would be a dangerous step toward reversing our understanding of the power to spend as its own enumerated power, which was endorsed by Hamilton.

The coercion issue is being taken seriously and is likely to be decided with an eye toward reinforcing the federalism ideals recently articulated in Bond. I would not be surprised if a majority of justices are willing to expand the fifth element of Dole but then declare this particular act by Congress not to be unconstitutional – much like the 11th Circuit did. So many major public programs ride on conditional spending structures, all stakeholders will potentially be affected by this decision.

If you’ve read this far, thanks for sticking with me. I’ll get back to my tea leaves now…

Today’s denial of cert. in Blackstone

Nicole Huberfeld — Tue, 06 Dec 2011 03:24:02 +0000

Many were watching this morning’s conference to see if the petition for certiorari would be granted in Blackstone Medical, Inc. v. U.S. ex rel. Hutcheson, but it was not. The issue in Blackstone was whether a medical device company that paid illegal kickbacks to prescribing physicians could be liable under the False Claims Act (FCA) for causing false claims to be submitted to Medicare. The FCA is the rare statute that is what it sounds like – basically, if you submit claims for federal monies, the claims cannot be false or fraudulent. If they are, the federal government can recover large fines for each false claim as well as treble damages. The statute includes a qui tam relator provision that encourages whistleblowers to come forward with information about false claims; if they are successful, they share in the government’s bounty. The civil FCA has become the DOJ weapon of choice for fighting healthcare fraud, and circuit splits abound regarding the interpretive details of this statute. In part, this is because whistleblowers tend to push the envelope of false claims theory. To wit, in this case, the claim is not “factually false” (which would indicate that the services were not actually provided), it is “legally false,” which means the services are provided as claimed, but another law for which the filer has certified compliance is being violated.

A grant in Blackstone would have been notable, as the Roberts Court has decided five False Claims Act cases in five terms (October Term 2006-2010), as compared to four such decisions in the eleven years of the natural Rehnquist Court, making this potentially the sixth in seven terms. It is hard to say if the Court is hearing so many FCA cases organically, or if something more is afoot. But, the FCA decisions illustrate at least four big picture issues.

First, separation of powers. The Court is having a conversation with Congress that seems to further a clear statement rule project. The Court has consistently read the FCA narrowly, forcing Congress to include the language it wants to see in the statute. Twice Congress has responded, and quickly, by re-expanding the scope of the FCA, and in a third case, PPACA had already addressed the issue. (Seems fraud is one of the few things Congress can agree on these days…) The problem is that such rules are lost on whistleblowers, who dominate FCA prosecutions. Second, the cases seem to support the theory that the Roberts Court is business-friendly, as a glance at the amicus briefs reveals. The problem is that “business friendly” does not necessarily inform meaningfully or even predict outcomes. For instance, the Chamber of Commerce often sides with healthcare providers, and it advocated for narrowing the scope of the FCA in the cases before the Court, which keeps whistleblowers out of court. But in Douglas v. ILC (to which I’ll return in my next post) the Chamber advocated for hospitals, which would keep the courthouse doors open. Third, the five cases reveal a docket clearing exercise that is consistent with the theory that the courthouse doors are being closed by the Roberts Court, irrespective of the business-friendly question. Fourth, the Court’s interpretation of the FCA, and Congress’s response to the Court, will likely facilitate an increase rather than a decrease in the number of whistleblower actions brought under the FCA. PPACA will increase the number of claims flowing through federal healthcare programs, and federal money flowing into the state insurance exchanges will be subject to the FCA too.

So, even if the Court does not grant the petition in the other FCA case on the docket (Amgen, Inc. v. New York), it’s a safe bet the Roberts Court will be telling us more about the FCA soon.

The Jungle Comes to Minnesota

Frank Pasquale — Thu, 01 Dec 2011 17:47:18 +0000

I highly recommend Ted Genoways’s shocking investigative report on the impact of a leading factory meat processor. The piece focuses on Quality Pork Processors Inc. (QPP), in Austin, Minnesota. One worker alleged that the workers in the plant felt nearly as disposable as the animals:

“I feel thrown away,” Miriam Angeles says. “Before, I worked hard and willingly for QPP, but after I got sick and needed restrictions, they threw me away like trash.”

Rest assured, many other employers may be planning to emulate that example. Sickness and exhaustion are apparently a common problem at the plant. As the article notes, “The line speed at QPP had increased from 750 heads per hour in 1989 to 1,350 per hour in 2006, while the workforce barely grew.” It’s the “They Shoot Horses, Don’t They” model of management. Few parts of the production process, from cutting and slicing legs and other parts to vaporizing swine brains, are easy. Health effects are dramatic:

Workers say nearly everyone suffered from carpal tunnel syndrome or some repetitive stress injury, but by October 2007, there were signs of something else. Workers from QPP’s kill floor were coming to . . . the plant’s occupational health nurse, with increasingly familiar complaints: numbness and tingling in their extremities, chronic fatigue, searing skin pain. Bower started noticing workers so tender that they struggled with the stairs to the top-floor locker rooms, high above the roar of the factory line.

A neurologist suspects a rare autoimmune disorder, and decides it’s “time to contact the Minnesota Department of Health.” The article is a great glimpse at a model of production at the heart of industrial food systems.

The Court, Spending, Federalism, Medicaid, and Other Minor Stuff

Nicole Huberfeld — Thu, 01 Dec 2011 17:06:39 +0000

My thanks to Angel, Dan, and the rest of the regulars at CoOp for the invitation and the introduction. I am delighted to be guest blogging, especially at a time when my fields of interest are overflowing with developments. Everyone has been talking about the Commerce Clause questions raised by the minimum coverage provision of the Patient Protection and Affordable Care Act (“PPACA”). I too have been avidly following this litigation, but because I study (among other things) Medicaid as a vehicle for constitutional change – and that phenomenon is happening right now. The Court will decide two high-profile Medicaid cases this term, each of which has the potential to facilitate major movement in structural constitutional law. Oral arguments were heard in the first case, Douglas v. Independent Living Center of Southern California, on October 3d. The second case, Florida v. HHS, will be heard in the spring.

I try not to assume that folks know a lot about federal healthcare programs with their layer cakes of complexity; to wit, a justice said during oral argument, “Suppose there were a provision in the Medicaid or Medicare Act… I get the two of them confused.” (Ahem.) So, I will begin with a bit of background that I hope will help to illuminate the two cases before the Court. Later posts will explore Douglas and Florida v. HHS and their implications for conditional spending jurisprudence, federalism, and Medicaid itself more directly.

Medicaid is a forty-six year old spending program that provides federal money to the states in exchange for states agreeing to provide particular medical services to the “deserving poor.” Medicaid has been described as a classic example of cooperative federalism, but the program is structured this way for historic rather than philosophical reasons (which I detail in Federalizing Medicaid). States were responsible for welfare programs since our founding, and when they could no longer afford to provide welfare medicine, they asked the federal government for money to help care for the deserving poor. The federal government responded with almost conditionless grants to the states through the Social Security Act of 1935. Over time, the states asked for more money, and the federal government provided it, but each amendment to the SSA included more and broader rules for the federal funds to ensure they were being used properly. Fast forward to 1965 and the passage of Medicare, with Medicaid in tow. While Medicare was grounded philosophically in social insurance (but only for people 65 and older), Medicaid continued the old patterns. Indeed, the elderly convinced Congress not to allow Medicare to be a joint program between the federal government and the states. So, Medicaid is a cooperative federalism partnership between the federal government and the states, but not because it was thoughtfully constructed that way. And, this partnership seems to have fostered more disagreement than cooperation between the federal government and the states.

Why does this matter? A number of reasons. PPACA’s expansion of Medicaid is a major philosophical change in the program because it eliminates the idea of the deserving poor for the first time in our history. But, the tensions between the federal government and the states are very much alive and on display before the Court. Douglas involves a challenge to California’s Medicaid reimbursement rate reductions under the Supremacy Clause, and it raises questions regarding the nature of spending legislation, access to federal courts, private rights of action against the states, and Medicaid’s very aspirations. Florida v. HHS challenges the institutional structure of Medicaid (the federal-state partnership) and thus raises major spending questions and federalism questions, including the ever-elusive idea of “coercion.” The kicker: it has been clear for some time that certain justices were eager to decide these questions.