July 3, 2012 –
Supreme Court opinion on the Affordable Care Act may force a decision by the State of Florida

On June 28, 2012, the United States Supreme Court issued its opinion regarding the constitutionality of the Affordable Care Act (ACA).

Overview

The Court considered issues arising out of two (2) cases from the Eleventh Circuit Court of Appeals, National Federation of Independent Business v. Sebelius and Florida v. Department of Health and Human Services, which were consolidated for review by the Court. The Court considered two (2) major provisions of the ACA, the “individual mandate” and the Medicaid Expansion. In a close 5-4 decision, the Court determined the most controversial provision — an individual mandate requiring people to have health insurance — is valid as a tax, even though it is impermissible under the U.S. Constitution’s commerce clause. “It is reasonable to construe what Congress has done as increasing taxes on those who have a certain amount of income, but choose to go without health insurance,” Chief Justice John Roberts wrote in the majority opinion. He also stated, “Such legislation is within Congress’s power to tax.” He later added: “The federal government does not have the power to order people to buy health insurance. … The federal government does have the power to impose a tax on those without health insurance.” The Chief Justice joined Justices Stephen Breyer, Ruth Bader Ginsburg, Sonia Sotomayor and Elena Kagan — in upholding the law.

Four conservative justices — Samuel Alito, Antonin Scalia, Anthony Kennedy and Clarence Thomas — dissented. “To say that the Individual Mandate merely imposes a tax is not to interpret the statute but to rewrite it,” the justices wrote in their dissenting opinion. “Imposing a tax through judicial legislation inverts the constitutional scheme, and places the power to tax in the branch of government least accountable to the citizenry.”

The Court did strike down one portion of the Act, the expansion of eligibility for Medicaid, which involves spending by the federal government and the states, and threatens to remove existing Medicaid funding from states that don’t participate in the expansion. The Court’s ruling said the government must remove that threat. It found that states cannot be penalized if they decline to comply with the Medicaid expansion, which may raise questions about the federal government’s ability to implement the act at all.

Read a copy of the Supreme Court decision.

Medicaid extension impact on Florida

This opinion will now force states, including the State of Florida to make a determination whether to accept the Medicaid Expansion or decline the same. Governor Scott announced that the State of Florida will not participate in the Medicaid Expansion. However, if the ACA remains the law of the land the Florida legislature will likely debate the issue. The decision of the State of Florida in regard to the Medicaid Expansion has a significant impact on Florida’s health care providers.

Hospitals are obligated to provide emergency care to patients who present to their facilities under the Emergency Medical Treatment and Active Labor Act (EMTALA). Although treatment obligations only relate to treatment of emergency conditions, as a practical matter most hospitals treat many patients who present to the hospital even if it is determined that an emergency medical condition does not exist. Much of this care is uncompensated. An expansion of the number of participants in the Medicaid program, could alleviate some of the economic burden on hospitals.

Impact on practitioners

Independent physicians and practices choose whether to be Medicaid providers. Traditionally, Medicaid has been available primarily to pregnant women and children under the age of 6 who meet certain financial eligibility requirements. The Medicaid Expansion would expand Medicaid to all people under the age of 65 who meet financial eligibility requirements. Thus, practitioners who may have previously chosen not to participate in the Medicaid program, will face a difficult decision regarding the economics of participating in the expanded program.

This decision becomes more complex when practitioners consider that participation in the Medicaid program is not without risk. Under the provisions of Section 456.0635, Florida Statutes, health care practitioners who have been terminated from the Florida Medicaid program typically lose their right to practice in the State of Florida. The Florida Medicaid program has an aggressive fraud and abuse inspection and prosecution program. Many health care practitioners have been subject to aggressive auditing that typically requires repayment of compensation received. However, some such audits result in termination from the Medicaid program.

Changing landscapes

Regardless of Florida’s determination on the Medicaid Expansion program, the health care landscape is changing. Both government and commercial payors continue to move away from fee for service payments to bundled payment systems based upon quality and utilization criteria. This trend is forcing many practitioners to consider consolidation into larger group practices or participation in vertically integrated healthcare systems. We anticipate that this trend will continue in the future.

Additionally, the state of Florida has not yet taken steps to set up the health care exchange as required by the law. In fact, only 14 states have set up such exchanges so far and the states have until 2014 to establish them. Florida’s Governor Rick Scott issued a formal statement indicating he would not expand the state’s Medicaid program and would not back the state setting up exchanges. He believes the Court gave the states the flexibility to determine if they wish to implement the costliest portions of the law. Because Governor Scott believes these provisions are inconsistent with growing jobs and the economy with projected costs running in the billions, Florida will not take steps to implement them.

Florida currently has approximately 4 million uninsured residents – only Texas and New Mexico ranked higher, according to Census data. How the state’s decision to not expand Medicaid and opt out of setting up the health insurance exchange will impact those uninsured residents remains to be seen.

What else does the law do?

In place of creating a national health system, like Canada’s health system, the law bans insurance companies from denying coverage to people with pre-existing medical conditions, it prevents insurers from setting a dollar limit on health coverage payouts, and requires insurers to cover preventive care at no additional cost to consumers. The law also requires individuals to have health insurance, either through their employers or a state-sponsored exchange, or face a fine beginning in 2014. There are, however, a number of exemptions. For instance, the penalty will be waived for people with very low incomes who are members of certain religious groups, or who face insurance premiums that would exceed 8% of family income even after including employer contributions and federal subsidies. Most importantly to businesses, it requires businesses employing 50 or more people, but not offering health insurance, to pay a penalty if the government has to subsidize an employee’s health care. The business community calls the penalty provision a “job killer” and is mobilizing to work toward repealing and replacing that portion of the law.