By Todd Ruger, CQ Roll Call

March 4, 2015 -- The Supreme Court appeared divided along expected lines during almost 90 minutes of oral arguments over the legal challenge threatening the health care law, with only a few clues as to how justices might ultimately rule this summer.

The clearest hints came from Justice Anthony M. Kennedy, who is thought to be a swing vote in play in the case. He repeatedly expressed concerns that the challengers' reading of the law could cause constitutional problems by violating states' rights.

The challengers' argument focuses on a six-word phase tucked in section 36(B) of the law. That section authorizes health insurance subsidies for low- and middle-income residents enrolled in "an Exchange established by the State." Challengers say that an Internal Revenue Service rule improperly interpreted the statute to allow subsidies on federal exchanges.

Cassie Boyle, 8, and her sister Helena Roberts, 11, of Pittsburgh, hold a picture of their father, Ray Roberts, and grandmother, Hannah Brown, at a rally outside the court.

Kennedy several times asked questions about whether Congress would be coercing the states to create exchanges if the subsidies are only for residents in states that created them.

"The states are being told to either create an exchange or we'll send your insurance market into a death spiral," Kennedy said. "It seems to me that under your argument, perhaps you will prevail in the plain words of the statute, there's a serious constitutional problem if we adopt your argument."

Chief Justice John G. Roberts Jr., the key vote in the 5–4 ruling that upheld the health care overhaul law in 2012, offered almost no clues to his thinking on the case. Roberts asked no questions about the issues until near the end, when he wondered whether, if the IRS rule interprets the statute, "would that indicate a subsequent administration could change that interpretation?"

The remaining justices appearing divided along expected ideological lines in the politically charged case with the highest of stakes. Justices Elena Kagan, Ruth Bader Ginsburg and Sonia Sotomayor asked pointed questions of the challengers, while Justices Samuel A. Alito Jr. and Antonin Scalia challenged the government's points.

If the justices rule against the government in King v. Burwell, the president could see his main legislative accomplishment rendered unworkable without a fix from the administration or Congress and leave millions unable to afford health insurance.

Solicitor General Donald Verrilli Jr. focused much of his argument on the states' decisions about whether to create their own exchanges. The states made decisions about whether to create insurance marketplaces but did not even consider that residents wouldn't get subsidies, he said.

"If that was really the plan, then the consequence for the states would be in neon lights in this statute," Verrilli told the justices. "You would want to make absolutely sure that every state got the message.  But instead what you have is a sub clause in Section 36(B)."

Scalia and Alito were the most vocal opponents of the government's position. Scalia questioned the idea that Congress wouldn't do anything to fix the statute if the Supreme Court ruled for the challengers.

"You really think Congress is just going to sit there while all of these disastrous consequences ensue?" Scalia asked.

"Well, this Congress, your honor," Verrilli said to laughter in the courtroom. "You know, I mean, theoretically, of course, theoretically they could."

"I don't care what Congress you're talking about," Scalia replied. "If the consequences are as disastrous as you say, so many million people without insurance and whatnot, yes, I think this Congress would act."

Alito pitched two reasons why a ruling against the health care law would not result in as much harm as predicted. 

"It's not too late for a state to establish an exchange if we were to adopt petitioners' interpretation of the statute. So going forward, there would be no harm," Alito said.

And he said the court could delay its mandate in the case until the end of this tax year if the justices do side with the challengers.

Kagan was the liveliest questioner. She asked the attorney for the challengers, Michael Carvin, why lawmakers would have put such an important part of the law outside the main portion of the legislation.

"There's at least a presumption, as we interpret statutes, that Congress does not mean to impose heavy burdens and draconian choices on states unless it says so awfully clearly," Kagan told Carvin. "I mean, this took a year and a half for anybody to even notice this language."

Carvin pointed out that the government had three years to implement the laws. 

"And no one thought the states were going to have to make a decision overnight," Carvin said. "If the IRS had done its job, every state would have been fully informed of the consequences because presumably they've read 36(B), and then they would make an intelligent decision well in advance of the 2013 deadline."

By Rebecca Adams, CQ Roll Call

March 6, 2015 -- The Utah State House may vote soon on a narrower Medicaid expansion plan than the proposal put forward by Republican Gov. Gary Herbert. The debate got more intense this week when Herbert vowed to "continue to fight" for his proposal despite a key House committee's rejection of his plan.

Herbert's measure, known as Healthy Utah, passed the state Senate late last month but then failed on to make it out of a House committee. The panel instead approved the alternative, which costs almost as much as Herbert's plan but covers a much smaller population. The House bill would bring in a much smaller pot of federal matching grant money the governor's plan.

"Healthy Utah is finished," said Chuck Gates, a spokesman for House Speaker Greg Hughes, in an email last week. "It won't be voted up or down on the floor."
But Herbert said he will continue to push the Senate to support his bill and told reporters at a press briefing that calling a special session to consider it is "an option." The current regular session is expected to end in mid-March.

When asked last week if his plan is dead, Herbert retorted, "I'm not dead and I can tell you that I will continue to fight for the taxpayers of Utah."

Herbert said he is willing to make some modifications to his two-year pilot project to address concerns about the fiscal sustainability of his measure.

"The fight goes on," said Herbert. "There may be other ways to do it and certainly we want to work with the legislature."

Herbert also said that he is open to suggestions floated by some lawmakers to approve both Healthy Utah and the rival plan, with one taking effect for a couple of years and the other being implemented later if the original plan doesn't work well. But Herbert insisted that Healthy Utah should be implemented initially and that the narrower plan be available as a fallback option of costs turn out to be too high.

Herbert said that his program could be capped so that if costs exceed expectations, new applicants would not get the same benefits as people who were already enrolled and would be grandfathered into that level of coverage. Herbert won assurances from Health and Human Services Secretary Sylvia Mathews Burwell that the unusual cap would be approved.

The governor also sought to portray the House version as the fiscally unsustainable option. Because that bill would not expand Medicaid under the health care law, it would attract fewer federal dollars.

The health care law provides a generous matching rate to states that expand to the population that Obama administration officials want. The administration will cover all of the costs through 2016 for people who qualify under expanded eligibility guidelines if states broaden the population to anyone with income up to 138 percent of the federal poverty level. That full financing phases down until the federal Department of Health and Human Services will cover 90 percent of the costs for those people starting in 2020.

The alternative House plan—sponsored by Utah House Majority Leader Jim Dunnigan, the chamber's second-ranked Republican—would not meet the federal requirements for the 100 percent federal matching money.

Dunnigan's measure would cost $56 million in state revenues and draw down $139 million in federal matching grants in 2021, according to House legislative estimates. The program would cover an additional 32,000 adults with comprehensive care and provide basic care to 61,000 adults. The estimates include people who qualify under previous eligibility guidelines but learn of benefits and enroll for the first time.

The governor's version would cost $78 million in state funds while attracting $648 million in federal matching money in 2021. It would cover about 146,000 people
Under Utah legislative rules, it would be rare for Dunnigan's bill and Herbert's plan to be reconciled in a conference committee.

"You can never say never, however," said Gates, the spokesman for House Republicans. "And Rep. Dunnigan is never one to close a door."

By Kerry Young, CQ Roll Call

March 5, 2015 -- Congress's advisers on Medicare will push for changes to current policies on short hospital stays, which now can sometimes put the elderly and disabled on the hook for costly rehabilitation services.

Braving a snowstorm that shuttered much of Washington, the Medicare Payment Advisory Commission (MedPAC) recently discussed a proposed package of recommendations regarding short hospital stays, such as those lasting only a night. These have proven profitable for hospitals when billed under Medicare's Part A component, according to MedPAC staff.

MedPAC Chairman Glenn Hackbarth intends to add a section addressing the issue to the commission's regular June report to Congress. Panel members present at the meeting largely agreed with his suggestions, which include updating the recovery audit contractors' program to target hospitals with the most short stays, evaluating use of a penalty for hospitals with "excess levels" of short inpatient stays to replace recovery audit contractor reviews and expanding the three-day stay requirement Medicare has in place for skilled nursing facilities to include to include time for so-called observation hours, as long as one day is classified as an inpatient stay. Advisers would also require notification to beneficiaries if their time spent in hospitals is classified as observation status, and not inpatient.

Another idea presented by Hackbarth is to shorten the time that the recovery audit contractors, or RACs, have to examine whether a short stay was needed. At this time, there is a "misalignment" between the three-year window that the recovery audit contractors have to challenge claims and the one-year window in which hospitals can alter their initial decision on whether a stay should be inpatient or outpatient payment, MedPAC said.

The Centers for Medicare and Medicaid Services (CMS) and Congress have been wrestling for several years with questions about how best to compensate hospitals certain forms of care. CMS' current approach largely defines an appropriate admission as one in which the patient will need to spend at least two midnights in the hospital.

Patients who move after having been held in hospitals under observation status, instead of being admitted as an inpatient, can face large bills if they are transferred to skilled nursing centers, because such a move doesn't fulfill a criterion for Medicare coverage of the extended care.

Changing the rules on how time spent in hospitals count toward qualifying for coverage for skilled nursing care could help several thousand people on Medicare, according to MedPAC staff.

People enrolled in Medicare benefit in many cases, though, benefit from having their hours spent in hospitals billed as outpatient care instead of as a short inpatient stay, according to David R. Nerenz, a researcher at Henry Ford Health System in Detroit and a member of MedPAC. While this discussion is outside of the scope of the MedPAC recommendations, Nerenz brought up a fairly common scenario in which patients may spend some hours at a hospital without necessarily needing to be admitted.

"It seems really natural to talk to the patient and say, 'You're here for chest pain. We want to get this sorted out. We don't think you are having a heart attack but we want to be careful. If we admit you to the hospital, this is going to cost you about $1,000 If we do it as an outpatient, it will cost about $200,'" Nerenz said.

March 3, 2015 -- House Ways and Means Chairman Paul D. Ryan recently told a hospital group that there isn't consensus on how to pay for a permanent repeal of Medicare's physician payment formula and that Congress "will have to buy time" and pass another short-term bill to avert cuts of about 21 percent due to take effect April 1.

Physician groups and other medical professionals have been pushing hard for Congress to permanently replace the formula—known as the sustainable growth rate or SGR—before a temporary payment patch expires at the end of March. In a recent letter, the American Academy of Family Physicians urged congressional leaders to "to move beyond these short-term, stop-gap measures that have become the accepted course of action on this issue."

Ryan, R-Wis., told a Federation of American Hospitals conference in Washington, D.C., that he supports a bipartisan, bicameral replacement policy reached last year, but that the recently-raised $174.5 billion price tag remains a problem.

While Republicans are "trying to engage" with Democrats, Ryan said the parties have opposing views on what a Medicare overhaul should look like. He characterized Democrats' general position as continuing implementation of the health care law, including a Medicare cost-cutting board he criticized earlier in his remarks, and taking money away from providers.

"There are other issues, like Medicare reform-based issues, we'd like to enter into this to try and help pay for this," he said.

Ryan also said that other fiscal issues crowding the agenda, including the budget sequester, could lead to a broader fiscal policy discussion or another budget agreement that could serve as an opportunity to move forward on the SGR.

"Sometimes you find if you have a problem that's small and intractable, if you make it a little bit bigger it's actually easier to solve, and that's kind of the way we're looking at the full-time doc fix," he said. "So we'll have to do something in the short term we believe because we don't yet have consensus on what a 10-year permanent repeal looks like."

Beyond Medicare payments, Ryan said that House Republicans will outline a plan should the Supreme Court strike down the health law's system for distributing insurance subsidies in a Wall Street Journal editorial last week and put it in legislative form by June for the expected ruling. A trio of leading Senate Republicans later offered the bare contours of their planned response in an op-ed.

"Our goal is to have legislation ready to go come June 20 or whenever this ruling will come out so that we have a bridge out of this problem, out of Obamacare, to a system where people won't get caught in the crossfire, won't get caught with collateral damage," Ryan said.

In addition, Ryan said the House will move legislation this year to repeal the health law's tax on medical devices and that he thinks the Senate will take it up. But he said he's unsure whether President Barack Obama would veto it.

By Melissa Attias, CQ Roll Call

March 2, 2015 -- A bipartisan pair of House lawmakers plans to drop legislation soon to scrap a controversial Medicare cost-cutting board created by the health care law, pitching the measure as an effort to restore authority to Congress rather than to gut President Barack Obama's signature legislative achievement.

California Democrat Linda T. Sánchez, who will introduce the repeal bill with Tennessee Republican Phil Roe, said lawmakers knew that the health care overhaul wouldn't be perfect and that the Independent Payment Advisory Board (IPAB) is "one of the parts to the bill that many Democrats were not enamored of" before it even passed.

The board was included in the law to make annual cost-cutting recommendations to Medicare, the federal health program for the elderly and disabled, if spending exceeds a target growth rate. The board's proposals would be implemented automatically unless Congress acts to make cuts that meet requirements laid out in the law.

The mere prospect of creating the board helped stoke charges that the law would lead to a rationing of patient care and create "death panels." But the conditions for triggering the panel's recommendations haven't been met, and Obama hasn't appointed any members.

Sánchez's main concern is that the provision cedes congressional authority to an unelected, unaccountable body.

"When it comes down to questions of how to cut costs, we think it's better left to the members of Congress who have constituents that we're answerable to," said Sánchez, who noted that she took over as the lead Democrat on the bill when former Rep. Allyson Y. Schwartz of Pennsylvania left at the end of last Congress.

Roe echoed Sánchez's sentiments in a joint interview, maintaining that lawmakers are directly accountable to constituents and that the power should be returned to Congress. While he acknowledged that there is a "healthy skepticism" when a conservative Republican tries to convince a Democrat to sign onto a bill, he said Sánchez brings credibility to the cause.

As of late last week, the yet-to-be introduced legislation had more than 200 cosponsors, including 17 other Democrats.

Although Sánchez said some will try to characterize the bill as an attack on the health law, she emphasized that she doesn't advocate for repeal and that the law has greatly increased access to health care in the Latino community. She's continuing to talk to fellow Democrats about the measure and about trying to find an alternative to IPAB.

Support among Democrats could depend on whether the measure is combined with other health proposals. Frank Pallone Jr. of New Jersey, the top Democrat on the House Energy and Commerce Committee, opposes the board but voted against legislation in 2012 that combined its repeal with a medical malpractice measure.

Roe said he has not yet spoken to Republican leadership about committee or floor consideration, though Sánchez pointed to the Ways and Means Committee's recent action on four bipartisan health bills and said she hopes Chairman Paul D. Ryan, R-Wis., will see this as another bipartisan measure to move forward. Ways and Means and Energy and Commerce share jurisdiction over health issues.

The panel could also play a role in finding a way to offset the price tag of killing the board, since the Congressional Budget Office estimated in 2012 that repealing IPAB would cost $3.1 billion over a decade. But Sánchez said the committee "seems to be operating without a lot of concern for pay-fors," citing tax extender legislation, and said she's not sure if finding an offset will be an imperative.

"On certain things, people tend to raise a ruckus about pay-fors," she said. "And then on the other hand, on other issues, pay-fors don't kind of seem to matter."

Roe agreed that the push for offsets comes and goes, adding that he doesn't think repeal will have a very high score and the cost shouldn't be something that stops the bill from advancing.

Lightning Rod

Intended to reduce political influence over Medicare decisions, the board has long drawn concern for its broad authority and is a favorite target for Republicans. Though some critics have raised the specter of rationing, the law states IPAB cannot "ration health care," restrict benefits, raise premiums or cost-sharing requirements, or change eligibility rules.

Last week, Republicans asked Health and Human Services Secretary Sylvia Mathews Burwell about the board at two House hearings. Andy Harris of Maryland pressed her on whether the administration plans to appoint members this year, but Burwell said officials are waiting on recommendations from Congress. Larry Bucshon of Indiana also questioned when the board will begin to make recommendations under the president's budget, and Burwell said it would not kick in until 2019.

Still, Roe said he knows it would cause disruption and pushed for Congress to act before the board is triggered. Sánchez agreed that the "wiser course of action" is to head it off before it becomes a crisis, citing Congress' tendency to wait until the last minute to act, causing panic.

"Congress doesn't exactly have the reputation for moving at a very quick pace," she said.

By Melanie Zanona, CQ Roll Call

March 3, 2015 -- A group of lawmakers introduced legislation last week to clarify how employers can implement voluntary wellness programs that offer workers financial incentives without violating anti-discrimination and disability laws.

The companion measures in the House and Senate come in the wake of an Equal Employment Opportunity Commission (EEOC) lawsuit against Honeywell International Inc. for assessing insurance surcharges for employees who don't participate in various medical testing.

The Senate Health, Education, Labor, and Pensions Committee held a hearing on the issue in January, during which Chairman Lamar Alexander hinted legislation might be forthcoming.

"More and more, employers are using outcomes-based programs to make health insurance less expensive for their employees," the Tennessee Republican said in a press release after the bill's introduction. "Nearly half of all large employers say they plan to offer one of these innovative plans in 2015, making it even more important to eliminate confusion caused by the EEOC and restore certainty for employers who want to reward their employees for leading a healthy lifestyle."

The 2010 health care overhaul allows companies to offer discount health insurance premiums of up to 30 percent to employees who maintain a healthy weight, keep cholesterol levels low, or quit smoking, among other goals.

The provision is part of a broader effort to encourage employee wellness programs, which can offer incentives such as health screenings and discounted gym memberships for achieving fitness targets. Supporters say the initiatives can drive down health costs and enhance workforce resiliency.

But some critics fear the programs may discriminate against individuals with physical or mental disabilities who are unable to meet certain goals, or force employees to provide sensitive medical and genetic information unrelated to their job duties.

The mounting concerns and lawsuits have caused some employers to question whether they can implement wellness programs without being sued by the EEOC. Bill sponsors maintain their recent introduced legislation would provide clarification on the matter.

The underlying measure, sponsored by Alexander in the Senate and Minnesota Republican John Kline in the House, would reaffirm that employers can offer wellness programs that are tied to financial incentives and allow employees' spouses to participate as well. It would give employees up to 180 days to request and complete an alternative program if it is medically inadvisable or unreasonably difficult for them to participate, according to a summary.

However, bill sponsors say the legislation would preserve the EEOC's authority to enforce civil rights laws among the programs.

"Employee wellness programs not only help control the cost of health insurance, but they also promote healthy lifestyles," said Kline, chairman of the House Education and the Workforce Committee, in a statement. "Remarkably, executive overreach by the EEOC is actually punishing employers for offering wellness plans."

Although no Democrats have signed on as co-sponsors, wellness programs enjoyed bipartisan support in the health law and any measure to strengthen or clarify those provisions could see similar praise. The health overhaul already safeguards against discrimination by requiring employers to provide a "reasonable alternative" for those who cannot participate.