Blog Archives

Step Right Up! CMS Announces New Medicare-Medicaid ACO Model

Come one! Come all! Step right up to be one of the first 6 states to test the new Medicare-Medicaid Affordable Care Act (ACO) pilot program.


Let your elderly population be the guinea pigs for the Center for Medicare and Medicaid Services (CMS). Let your most needy population be the lab rats for CMS.

On December 15, 2016, CMS announced its intent to create Medicare/caid ACOs. Currently, Medicare ACOs exist, and if your physician has opted to participate in a Medicare ACO, then, most likely, you understand Medicare ACOs. Medicare ACOs are basically groups of physicians – of different service types – who voluntarily decide (but only after intense scrutiny by their lawyers of the ACO contract) to collaborate care with the intent of higher quality and lower cost care.  For example, if your primary care physician participates in a Medicare ACO and you suffer intestinal issues, your primary care doctor would coordinate with a GI specialist within the Medicare ACO to get you an appointment. Then the GI specialist and your physician would share medical records, including test results and medication management. The thought is that the coordination of care will decrease duplicative tests, ensure appointments are made and kept, and prevent losing medical records or reviewing older, moot records.

Importantly, the Medicare beneficiary retains all benefits of “normal” Medicare and can choose to see any physician who accepts Medicare. The ACO model is a shift from “fee-for-service” to a risk-based, capitated amount in which quality of care is rewarded.

On the federal level, there have not been ACOs specially created for dual-eligible recipients; i.e., those who qualify for both Medicare and Medicaid…until now.

The CMS is requesting states to volunteer to participate in a pilot program instituting Medicare/Medicaid ACOs. CMS is looking for 6 brave states to participate. States may choose from three options for when the first 12-month performance period for the Medicare-Medicaid ACO Model will begin for ACOs in the state: January 1, 2018; January 1, 2019; or January 1, 2020.

Any state is eligible to apply, including the District of Columbia. But if the state wants to participate in the first round of pilot programs, intended to begin 2018, then that state must submit its letter of intent to participate by tomorrow by 11:59pm. See below.


I tried to research which states have applied, but was unsuccessful. If anyone has the information, I would appreciate it if you could forward it to me.

Participating in an ACO, whether it is only Medicare and Medicare/caid, can create a increase in revenue for your practices. Since you bear some risk, you also reap some benefit if you able to control costs. But, the decision to participate in an ACO should not be taken lightly. Federal law yields harsh penalties for violations of Anti-Kickback and Stark laws (which, on a very general level, prohibits referrals among physicians for any benefit). However, there are safe harbor laws and regulations specific to ACOs that allow exceptions. Regardless, do not ever sign a contract to participate in an ACO without an attorney reviewing it. 

Food for thought – CMS’ Medicare/caid ACO Model may exist only “here in this [Obama] world. Here may be the last ever to be seen of [] and their [employee mandates]. Look for it only in [history] books, for it may be no more than a [Obamacare] remembered, a [health care policy] gone with the wind…”

As, tomorrow (January 20, 2017) is the presidential inauguration. The winds may be a’changing…

Supreme Court Upholds Obamacare! Three Judges Dissent, Calling the Decision Absurd!

Mark this day, June 25,2015 (also my daughter’s 10th birthday) as also the birth of a new state.  Our country, according to the Supreme Court’s decision in King v. Burwell, now consists of 51 states.  The Health and Human Services (HHS) is now our 51st state.

Today the Supreme Court decided the King v. Burwell case.

If you recall, this case was to determine whether the plain language of the Affordable Care Act (ACA) should be upheld.  According to the ACA, people were to receive tax subsidies or “premium tax credits” to subsidize certain purchases of health insurance made on Exchanges, but only those enrolled in through an Exchange established by the State under [§18031]. §36B(c)(2)(A).

See blog.

“Specifically, the question presented is whether the Act’s tax credits are available in States that have a Federal Exchange.”

“At this point, 16 States and the District of Columbia have established their own Exchanges; the other 34 States have elected to have HHS do so.”

In Justice Scalia’s words, “This case requires us to decide whether someone who buys insurance on an Exchange established by the Secretary gets tax credits. You would think the answer would be obvious—so obvious there would hardly be a need for the Supreme Court to hear a case about it. In order to receive any money under §36B, an individual must enroll in an insurance plan through an “Exchange established by the State.” The Secretary of Health and Human Services is not a State. So an Exchange established by the Secretary is not an Exchange established by the State—which means people who buy health insurance through such an Exchange get no money under §36B.”

However, the majority disagrees.

Apparently, HHS is now our 51st state.

The upshot of the Decision is that the majority found that, despite our country’s deep-rooted, case law precedent that when a statute is unambiguous that the plain meaning of the statute prevails.  Despite hundreds of years of the Supreme Court upholding statutes’ clear meanings, the Supreme Court, in this case, decided that “[i]n extraordinary cases, however, there may be reason to hesitate before concluding that Congress has intended such an implicit delegation.”

Therefore, when the ACA became law, and the word “state” was used, surely, Congress meant “state and/or federal government.”  Or, on the other hand, let’s just call HHS a state for the purpose of the ACA.

In Justices Scalia, Thomas, and Alito’s opinions, the decision is absurd.  In the dissent they write, “The Court holds that when the Patient Protection and Affordable Care Act says “Exchange established by the State” it means “Exchange established by the State or the Federal Government.” That is of course quite absurd, and the Court’s 21 pages of explanation make it no less so.”

Medicaid Expansion: At a Standoff

It is a standoff between the states and Obamacare.  On one side is the Obama administration and its prerogative to get as many states as possible to sign up for the Medicaid expansion. The administration has provided a financial incentive, policy incentive and political incentive for all the states to accept the Medicaid expansion. On the other side is the state, its governor and administration, which must decide whether taking the federal money to expand Medicaid is in its best interest.

My projection: North Carolina will expand Medicaid. We will accept federal dollars? Why? Because NOT accepting federal money will be political suicide for Pat McCrory.  The second McCrory announces (theoretically) that he will not expand Medicaid, the news media will be interviewing 12,000 single mothers whose husbands died in Iraq and who have children with no healthcare coverage. When uneducated people watch the messages from the single mothers with no health care coverage for  themselves or their children, the uneducated people will be outraged. Therefore, not accepting federal funds will be political suicide. The scary facts about Medicaid expansion? See my blog: “Medicaid Expansion: BAD for the Poor.”  This blog concentrates on the monetary impact of Medicaid expansion.

Financially, Obamacare will cover 100 percent of the costs for new Medicaid enrollees for the first three years. Normally the feds pay approximately 60-80%, depending on the state.

Many states are wary of the cost of the Medicaid expansion, whether those high reimbursement rates could later get ratcheted back. There are still a number of Democratic governors who have yet to commit to expanding the program. Most Republican governors expect to refuse Obamacare.

Some states have asked the administration for permission to do a partial Medicaid expansion, covering everyone under the poverty line (the full expansion goes up to 133 percent). That could help shield states from the risk of taking on lots of new enrollees.

What exactly does “Medicaid expansion” mean?  Under the Obamacare health care law, people under age 65 will qualify for Medicaid if they earn up to 138 percent of the federal poverty guideline.  (Basically, it raises the poverty level for eligibility criteria for Medicaid; thus allowing more people to be covered by Medicaid).  For a single adult, that means about $15,000 a year. There are nearly half a million people in NC who don’t have health insurance and make under $15,000 a year. The federal government will pay 100 percent of the cost to insure these newly eligible enrollees for three years beginning in 2014. Eventually, the federal government’s share of the cost begins to shrink annually until it is 90 percent in 2020, and the state pays the rest.  Overall, NC would receive about $15 billion in federal money for health care providers over the next six years.

Usually characterized as health insurance for the poor, in North Carolina the program actually covers low-income legal residents only in specific categories: children under 19; seniors also enrolled in Medicare; pregnant women; and adults with disabilities (19-64 years old). Many are surprised to learn that non-disabled adults under 65, no matter how low their income, aren’t eligible for Medicaid in our state. Reversing this “categorical” exclusion is health reform’s biggest change.

Expanding Medicaid will enroll non-disabled adults earning below 138 percent of the federal poverty limit. That’s about $15,000 annually for an individual, or $25,400 for a family of three. Nationwide, 15 million would qualify. Most are men, the majority are under age 35 and three-quarters have earnings are below the federal poverty limit mit. Ironically, without expanded Medicaid enrollment, these individuals will not have access for insurance subsidies through the benefits exchanges which begin at 100 percent federal poverty limit.

So why would a state NOT want to cover health care for more citizens? What is the downside?

There are serious and legitimate concerns about states’ costs.  Obama makes the costs appealing for states because the true costs will not balloon until 2020.  In 2020, many states may go bankrupt from Medicaid costs.  Expanding Medicaid will mean that state administrations need to expand their oversight, even though the care is supported with federal funds. Also, when the new Medicaid is advertised, some applicants will discover they were already eligible — but not enrolled — in the “old” Medicaid benefit, where the state’s share is much higher (35 percent).  Also, another huge negative for expanding Medicaid is the real and deeply concerning truth of which I wrote about in my last blog: too many Medicaid recipients with not enough Medicaid providers equals sub-par health care coverage for Medicaid recipients.

According to the federal division of Medicaid’s projections, North Carolina’s six-year cost for Medicaid expansion is $830 million. Interestingly enough, the Kaiser commission on Medicaid and the uninsured projected North Carolina’s cost of Medicaid expansion as $1 billion to 1.8 billion.  Is the federal government trying to decrease how much Medicaid expansion will actually cost? Because those numbers are far from each other.  Where will this money come from? Hmmmmm, an interesting question that no one seems to know. But here are some projections of cost:

  • New NC Medicaid Enrollees by 2019: 633,485 – 877,560 depending on outreach efforts of state and federal government.
  • Previously uninsured newly enrolled in Medicaid by 2019: 429,272 – 661,292 depending on outreach efforts of state and federal government. Costing state $811 million – $932 million.
  • Total State expenditures on expansion: $ 1 billion – $1.8 billion.

Without Obamacare, Medicaid costs Tar Heels about 25 cents out of every dollar they pay in taxes. Education costs about 55 cents. Either the legislature will have to pass new taxes to support the Obama Medicaid expansion or take the money from both education and the 20 cents set aside for the State Bureau of Investigation, ferryboats and everything else.

Costs and the serious concern that Medicaid recipients will receive sub-par health care coverage are two large negatives.  However, the drawbacks to rejecting Medicaid expansion are large too. Rejecting Medicaid expansion will block billions of dollars of federally supported medical costs from reaching the North Carolinians. But notice I wrote “costs” not “care.” Because as discussed in my previous blog, holding a Medicaid card does not equal receiving the health care needed.

No one seems quite ready to budge. The States are not making decisions, and Obama’s administration is waiting.  Health coverage for millions of Americans, meanwhile, hangs in the balance.

States’ opinions on Medicaid expansion