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Some Progress on Procedural Protections

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In my post of September 27, I raised the issue of the absence of procedural protections in the proposed health reform legislation. The Senate Finance Committee America’s Healthy Future Act shows some progress on these issues. Section 2225(e) of the bill obligates the states to require insurers who offer plans through the exchanges to provide enrollees with:

  • an internal appeal process,
  • an opportunity to review their file and present evidence and testimony as part of the appeals process,
  • continued coverage while an appeal is pending,
  • external review, and
  • judicial review “through available Federal or State procedures.”

(The Finance bill requires states to provide an external review process that at minimum provides the protections found in the NAIC “Uniform Review Model Act.” There apparently is no such act, but rather both a 2004 and 2008 Health Carrier External Review Model Act, but, whatever, they are trying).

Presumably this provision applies to health plans both in and out of the exchange if offered by insurers who offer plans through the exchange, but this should be clarified.

The Finance bill also establishes procedures for determining eligibility for exchange participation and premium credits and cost sharing subsidies (including determinations of whether an applicant is legally present in the United States), as well as individual coverage mandate exceptions.

Section 2238(f) provides “The Secretary [of HHS], in consultation with the Secretary of the Treasury, the Secretary of Homeland Security, and the Commissioner of Social Security, shall establish procedures by which the Secretary or one of such other Federal officers hears and makes decisions with respect to appeals of any determinations” on these issues. The section also requires a separate appeals process for employers subject to an excise tax because of subsidies their uninsured employees have received, although this appeal is apparently to the exchange. (The provision also preserves remedies available to employees for review under the Tax Code).

These are clearly steps in the right direction. In particular, appeals involving the key decisions to be made affecting individuals would, under the Finance bill, be made by officers of the federal government. Individuals denied participation in the exchange or refused premium credits and cost-sharing subsidies would no longer be left to the vagaries of fifty different state administrative law regimes. The health care reforms affecting these issues would no longer be at risk of conflicting interpretations by fifty different state courts.

But more is needed. First, although presumably the decisions of the designated “Federal officers” would be subject to judicial review under 5 U.S.C. § 702, this should be made unmistakably clear.

Second, the final legislation should include a provision that any judicial action that involves the application or interpretation of the health reform legislation should either be subject to federal court jurisdiction or removable to federal court. The complete preemption doctrine, applied in ERISA cases, should also apply with respect to the federal health reform legislation. Again, we cannot risk years of litigation in state courts stalling implementation or confusing interpretation of the federal reform law. The only exception should be enforcement actions brought against insurers by the states under state laws mirroring or implementing federal requirements.

Finally, Congress should consider issues that should be taken off the table as quasi-legislative policy determinations not subject to review. It has become commonplace under Medicare prospective payment systems to declare certain issues to be legislative decisions, not reviewable by the courts. The Senate Finance bill in fact includes fourteen different “limitation on review” provisions, declaring various methodologies, determinations, standards, or measures for Medicare payment systems not subject to administrative or judicial review. The basic decisions involving methodologies and standards that are going to need to be made to implement the health reform legislation should also not be subject to random invalidation in the courts. Quasi-judicial determinations affecting individuals should, of course, remain subject to review.

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