Proposed Health Reform Legislation Raises (but does not resolve) Important Procedural Issues
Tim Jost | Leave a Comment
In our last post we demonstrated that Congress has the authority under Article I of the Constitution to adopt all of the health reform proposals it is currently considering seriously (or at least that the current Supreme Court would uphold the authority of Congress to do so). This does not mean, however, that Congress is operating in a Constitution-free zone as it considers health care reform. In fact, both the federal and state governments are constrained by the due process clauses of the Fifth and Fourteenth Amendments. I believe that Congress is not paying sufficient attention to this constraint as it has proceeded with drafting this legislation.
The bills pending in the House and Senate would require a host of determinations to be made affecting individuals and entities by government. These would include whether:
- individuals qualify for an affordability subsidy and to what extent;
- individuals cease to qualify for a subsidy when their income increases;
- individuals are liable to refund an excessive or improperly paid subsidy;
- individuals are covered for services by a private plan participating in an exchange (gateway) or by the public plan;
- individuals have met cost-sharing requirements of a private plan participating in an exchange (gateway) or the public plan;
- individuals have met the individual mandate requirements;
- employers have met the employer mandate requirements (or, under the Baucus bill, must pay to cover employees who receive subsidies);
- individuals or employers are qualified to participate in an exchange (gateways);
- small employers qualify for tax credits for providing insurance for their employees;
- insurers are qualified to participate in the exchange (gateways) or have complied with other statutory requirements;
- insurers have improperly denied coverage to a member;
- providers can participate in the public plan (or cooperative) and what their payments will be;
- states are properly enforcing federal law or operating a gateway or exchange (under the Senate legislation); and others.
None of the bills, however, make adequate provision for appeal rights for situations where a person or entity affected by a determination believes that the determination has been made improperly. HR 3200 requires health plans to offer insureds both internal and external appeal procedures. It also provides for appeals in its retirement reinsurance program and appeal rights for health plans that are terminated from participation in exchanges. The HELP bill requires insurance plans that participate in the exchange to provide for appeals of coverage determinations and provides for appeals of subsidy determinations. The amended Baucus chairman’s mark has similar provisions. The bills establish an ombudsman’s office that is supposed to help consumers who have exhausted internal insurer appeal processes. HR 3200 preserves state judicial review of insurance claims but the HELP and Baucus mark do not mention judicial review. Finally, HR 3200 provides that judicial remedies available to Medicare beneficiaries will be available to members of the public plan, and further provides that judicial review will not be available to review the public plan’s payment rates or methodologies.
One can hazard guesses as to how various determinations required under the reform legislation might be reviewed. In general the legislation preserves state law and ERISA provisions governing health insurance plans. The decisions of insured ERISA plans would presumably still be subject to the ERISA internal review procedures (or state procedures that were more protective of plan members) and to state external review procedures. (see Rush Prudential v. Moran (2002)) Self-insured ERISA plans would remain subject to the ERISA internal review regulations. The nongroup market and other plans not subject to ERISA would remain subject to review under state law (except insofar as state requirements were preempted by the new federal law). ERISA plan decisions would remain subject to § 502 review and non-ERISA plan decisions to review in state court. Decisions of the public plan (or of private plans) terminating providers might be subject to the common law governing managed care provider participation that exists in some states (see Potvin v. Metropolitan Life (Calif. 2000)) or to state statutes.
The individual mandate would be enforced under the reform legislation through penalties imposed under the tax code. Presumably these penalties, once assessed, would be subject to review under the tax appeals process and in tax court (if payment of the penalty was resisted) or in district court or the court of claims (in a suit for a refund). Litigating the question of whether insurance is affordable to an individual or whether an individual has a justifiable religious objection to purchasing insurance in tax court is bizarre to say the least, but this seems to be the only recourse available under the legislation.
Under the House legislation a new Health Choices Commissioner would administer the exchanges and subsidies and enforce the insurance reforms (unless the Commissioner’s authority was delegated to a state). Presumably due process would require some sort of hearing to review adverse decisions of the Commissioner, although not necessarily an ALJ hearing since there is no requirement of a hearing on the record. Federal judicial review should also be available to review the Commissioner’s decisions under the Administrative Procedures Act.
The Senate legislation largely delegates to the states the tasks of running the exchanges, enforcing the insurance reforms, and awarding subsidies. Presumably the decisions of the states are subject to review under state administrative law and state judicial review procedures. Presumably state hearing officers and courts would apply the federal law in reviewing decisions. But each state will have different procedures and afford different levels of protection to appellants. And if each state comes up with a different interpretation of the law, the Supreme Court will have a real mess to straighten out. If a state puts in place laws, regulations, or policies contrary to the federal law, or simply does not comply with it, claims might be brought by injured individuals in federal court under the Supremacy Clause or perhaps under 42 U.S.C. § 1983 to challenge the state law, as now often happens under the Medicaid program.
This post is intended only to introduce the question of procedural issues under health care reform. Specific issues will be explored in further posts. As Congress proceeds, however, it needs to consider carefully the demands of due process. It can either fix these problems now while the legislation is still a work in progress or deal with a host of headaches later.