Volume 1 Issue 1 - Abstracts: Medicare After The Medicare Modernization Act

WILL MEDICARE WITHER ON THE VINE? HOW CONGRESS HAS ADVANTAGED MEDICARE ADVANTAGE—AND WHAT’S A LEVEL PLAYING FIELD ANYWAY?

Robert A. Berenson, M.D.
Melissa M. Goldstein, J.D.

ABSTRACT: While Congress debates reducing the payments Medicare Advantage (MA) plans receive in excess of what Medicare pays for the same services under the traditional fee-for-service program, the authors assert that policymakers need to explore a more fundamental question: should the playing field on which MA plans and traditional Medicare compete be level? If it should, then how can a level playing field be achieved and maintained? This article examines why the playing field is severely tilted in favor of MA plans and offers suggestions for how it might be leveled, including modifying payments to promote payment equity between plans. The authors also consider less-discussed factors that contribute to the unlevel playing field, including benefit flexibility that plans can offer, opportunities for and abuses of plan marketing, and unique advantages enjoyed by private fee-for-service plans.  The authors conclude with a discussion of how “boosterism” of private plans by the Centers for Medicare and Medicaid Services demonstrates the need for even-handedness in the administration of Medicare.

THE UBIQUITOUS FALSE CLAIMS ACT: THE INCONGRUOUS RELATIONSHIP BETWEEN A CIVIL WAR ERA STATUTE AND THE MODERN ADMINISTRATIVE STATE

Malcolm J. Harkins, III

ABSTRACT:The False Claims Act (FCA), enacted during the Civil War era, provides penalties and creates a damages remedy for “false or fraudulent” claims submitted to the United States. In addition to allowing the United States to institute suit, the Act includes a qui tam provision that authorizes private individuals to sue for damages and penalties on behalf of the United States. Since the FCA’s enactment, the federal government’s structure and role in national economic life have changed substantially. Today, unlike when the FCA was enacted, the federal government contracts with private entities to administer massive social welfare programs and provide benefits. These contractors are subject to extensive regulation and oversight by administrative agencies. The changed circumstances have caused tension between the modern administrative state and the Civil War era FCA. Federal trial and appellate courts struggle when applying the FCA to complex regulatory, enforcement, and remedial programs and the Supreme Court has yet to offer any guidance. This Article begins by discussing how the FCA was not designed to apply to claims made upon the current administrative state and uses a recent Ninth Circuit case to illustrate the disconnect between the FCA and the modern administrative state. The Article then describes how the disconnect and lack of guidance by the Supreme Court is especially problematic for Medicare and Medicaid providers who are subject to extensive regulations, focusing on the long term care survey process and the new Medicare Part D prescription drug benefit. Finally, the Article examines whether and how the FCA and administrative state could be reconciled and concludes that the lack of clarity as to what constitutes a false or fraudulent claim under the FCA places extraordinary pressure on healthcare providers to settle unmeritorious claims to avoid risking financial ruin caused by an adverse ruling under the FCA.

MEDICARE ADVANTAGE SPECIAL NEEDS PLANS FOR “INSTITUTIONALIZED INDIVIDUALS”: WHAT ADVANTAGE TO ENROLLMENT

Alissa Eden Halperin
Patricia Nemore
Vicki Gottlich
Toby Edelman

ABSTRACT: Among the many changes initiated by the Medicare Modernization Act of 2003 was the introduction of a new type of healthcare delivery vehicle called Medicare Advantage Special Needs Plans (SNPs). One type of SNP, the Institutional SNP or I-SNP, limits enrollment to those eligible for or living in long-term care institutions. The authors explore the premise behind I-SNPs, their regulatory structure, and the benefit plans they offer and discuss the areas in which I-SNP regulations are lacking, including required supplemental benefits, network composition, and care and payment coordination.  The authors conclude that the I-SNP model has potential to benefit enrollees. However, without more specific guidelines and regulations, there is no way to ensure that I-SNPs meet the needs of their enrollees and it is unclear whether eligibles have anything to gain by enrolling in an I-SNP.

THE IMPACT OF THE MEDICARE MODERNIZATION ACT’S CONTRACTOR REFORM ON FEE-FOR-SERVICE MEDICARE

Susan Bartlett Foote

ABSTRACT: Medicare contractors, called carriers and fiscal intermediaries, were integral aspects of the highly politicized compromises that led to the passage of the initial Medicare statute and were conceived as buffers between healthcare providers and the government. However, criticism of the contractor infrastructure has grown along with Medicare expenditures and administrative complexity. After several failed attempts, the 108th Congress incorporated extensive contractor reforms into the Medicare Modernization Act of 2003. While these reforms are a good first step, additional efforts are needed to improve quality and support the popular fee-for-service side of Medicare.

MEDICARE: WHAT ARE THE REAL PROBLEMS? WHAT CONTRIBUTION CAN LAW MAKE TO REAL SOLUTIONS?

Timothy Stoltzfus Jost

ABSTRACT: Despite the popular characterization of Medicare as a problem, the program offers solutions for most of its constituencies. Medicare provides its beneficiaries with greater freedom of choice than most private insurers, offers competitive healthcare coverage, and significantly benefits the families of the elderly and disabled. The program’s continued viability, however, depends on rectifying several problems: the program's numerous coverage gaps and comparatively high cost sharing, its flawed methods of payment for services, and the fundamental problem that the program is unsustainable in the long term as it is currently funded. Jost contends that among the various proposals for reform, three approaches show the most promise. First, federal taxes must be increased. New program revenue should come primarily from a progressive income tax, perhaps combined with a non-regressive consumption tax. Second, Medicare must control the growth of provider payments. Medicare should use its prospective payment system aggressively to slow the escalation of healthcare costs by, for example, denying physician price increases. Third, the quality of treatment received by beneficiaries must be improved. In addition to improving public health education for beneficiaries, reform must also target the behavior of providers so that services are provided as appropriately, effectively, and efficiently as possible, thus ensuring that the number and intensity of Medicare services does not exceed the level that is in fact necessary. While these proposed changes have the potential to “save” Medicare, none offer a magic bullet, and all three present unique implementation challenges.

BEYOND DRUG COVERAGE: THE CUMULATIVE EFFECT OF PRIVATIZATION REFORMS IN THE MEDICARE MODERNIZATION ACT

Robert I. Field
Richard G. Stefanacci

ABSTRACT: In addition to implementing a new prescription drug benefit, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) experiments with expanding the private sector’s role in the Medicare program. The most controversial privatization reforms allow private health plans, rather than the federal government, to administer the drug benefit and encourage Medicare beneficiaries to enroll in private Medicare Advantage plans that offer comprehensive health services as an alternative to the traditional Medicare program. This Article focuses on seven additional, less-recognized reforms that promote the private sector. Any one of these reforms by itself does not have the power to transform Medicare. However, when viewed in combination, these reforms’ synergistic effect could push enrollment in private plans to a critical mass where beneficiaries will start to accept them as a normal part of the Medicare landscape. The authors conclude that, in light of this potentially substantial cumulative effect, these smaller privatization incentives deserve more attention. Private plan performance under the MMA is only meaningful in policy debates over Medicare privatization if it reflects a true market response rather than a structured set of legislative incentives.

COOPERATIVE FEDERALISM AND HEALTHCARE REFORM: THE MEDICARE PART D “CLAWBACK” EXAMPLE

Elizabeth A. Weeks

ABSTRACT: In 2003, Congress enacted the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) and added coverage for outpatient prescription drugs for the first time under the new Medicare Part D. Part D mandated that all beneficiaries dually eligible for Medicaid and Medicare switch from their existing Medicaid drug plans to the new federal Part D drug plans. However, the federal drug plan requires states to pay part of the cost for the new drug benefit beginning in 2006 and continually in the future. This Article examines the constitutionality of this new funding provision, known as the “clawback.” Several states, concerned about the enormous budgetary impact of the “clawback” and its distortion of state and federal powers, petitioned the U.S. Supreme Court to exercise original jurisdiction and strike down the funding provision on the grounds that it violates intergovernmental tax immunity, commandeers state regulatory powers for federal functions, and violates the Constitution’s Guarantee Clause. Although the Supreme Court declined to hear the States’ challenge, this unprecedented funding mechanism remains constitutionally suspect. After discussing the Supreme Court petition and supporting amici briefs, the Article presents additional reasons why the clawback differs significantly from traditional conditional funding structures and disrupts the accepted cooperative federalism structures of the Medicaid program. The author concludes that, in light of the current wave of healthcare reform efforts that are likely to raise additional cooperative federalism questions, the clawback merits closer Supreme Court analysis.