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A recent United States Supreme Court decision heightens concern about the ability of federal agencies to manage healthcare

| Jan 30, 2013 | Access to Health Care, Administrative appeals, Affordable Health Care Act, health, healthcare, Legal, Medical, Medicare, Obamacare, Reimbursement, Uncategorized |

I confess support for much within Obamacare. The Act, for instance, acknowledges undeniable failures in our healthcare system and enacts programs that aspire to achieve needed reform. But increased federalization of American healthcare poses legitimate concerns. Can federal agencies that are so remote from the critical relationship between the healthcare provider and the patient possibly manage healthcare fairly?

Unfortunately, much Obamacare criticism is little more than ill-informed hysteria. Though often entertaining, rants about socialism, lack of patriotism, and the doom of Constitutional governance miss the point and muddle the issues. The often used argument that Obamacare is “over 900 pages long” is particularly bizarre. So what? This complaint screams of a critique made by persons who find reading wasteful and probably haven’t read a single page of the Act.

These superficial attacks are not simply ineffective. They detract from acutely troubling questions about increased federalization of American healthcare management. For example, can federal agencies possibly manage American healthcare fairly?  The answer is probably not– unless the role of the federal agencies is carefully limited by specific Congressional action.

To illustrate, consider the January 22, 2013, United States Supreme Court opinion in Sebelius v. Auburn Regional Medical Center, No. 11-1231.

Auburn Regional Medical Center was brought by hospitals that were systematically underpaid by Medicare as managed by the United States Department of Health & Human Services. As passed by Congress, the Medicare Act provided that hospitals that serve a disproportionate share of low income Medicare patients should be reimbursed at a higher per-patient rate, because they generally absorb higher patient costs.

The Department of Health & Human Services calculated this reimbursement rate. In so doing, it informed hospitals of the amount of their reimbursements, but kept secret its method of calculation.

In 2006, after many years of undisclosed miscalculations, the public was informed that the Department had used a “flawed process to determine the number of low-income beneficiaries treated by hospitals.” This resulted in a “systematic undercalculation” for hospitals like Auburn Regional.

When the “systematic undercalculation” was disclosed, Auburn Regional and other under-reimbursed hospitals promptly filed administrative appeals. Although this was more than 10 years after their statutory administrative appeal deadline had passed, the hospitals relied on the equitable presumption that the deadline was tolled during the time the miscalculations were kept secret.

But a unanimous Supreme Court, reversed the circuit court decision in favor of the hospitals, and denied the hospitals’ claims. The hospitals were left holding the bag despite years of undisclosed and systematic under payment by the Department.

The result of the case is not particularly surprising. Undoing years of misdoings by the Department would be costly, burdensome and embarrassing.

More importantly, the case starkly confirms the power of a federal agency to administer a federal program is directly related to the size of the program—the bigger the program, the greater the agency’s power.

Auburn Regional Medical Center makes clear that the Department of Health & Human Services has immense power to manage Medicare as it wishes. And the well-spring of this power is the “huge program” it administers. Since Medicare is “huge,” the management decisions made by the agency administering it are awarded extraordinarily great deference. Pragmatically, this result is inevitable.

The “huge” role of the federal government in American healthcare will increase exponentially with Obamacare. And the power of the agencies administering it will grow as well. Significantly, Obamacare does not limit administrative responsibilities to the Department of Health & Human Services. It empowers many federal agencies, including the Internal Revenue Service. The IRS is a principle enforcer of the Acts mandates.

As we have learned, private businesses “too big to fail” are powder kegs waiting to blow. It follows that federal programs can become “too big to work reasonably and play fairly.”

The concerns raised here are real. But solutions are available. Most obviously, Congress has the power to define and limit the authority of the agencies that administer Obamacare.

Obamacare does not threaten constitutional governance. But federal healthcare reform is both threatened and threatening without a vigilant, reasonable, responsible and functioning Congress.

© Jack Edward Urquhart—January 30, 2013