WASHINGTON (AP) — Tossing out the Patient Protection and Affordable Care Act of 2010 (PPACA) would have major unintended consequences for Medicare's payment systems, the Obama administration has informed the courts.
Some PPACA provisions have expanded Medicare enrollees' access to prescription and preventive benefits for seniors. About 20 other PPACA sections have changed the Medicare provider system.
In papers filed with the Supreme Court, Obama administration lawyers have warned of "extraordinary disruption" if Medicare is forced to unwind the many transactions based on the PPACA payment system changes.
PPACA opponents argue that the whole law should go. The administration counters that, even if the Supreme Court strikes down the insurance mandate, the court should preserve most of the rest of the legislation, including the Medicare program changes.
Last year, in a lower court filing on the case, Justice Department lawyers said reversing the Medicare payment changes "would impose staggering administrative burdens" on the government and "could cause major delays and errors" in claims payments.
Medicare payment policies are set through a time-consuming process that begins with legislation passed by Congress. Even if Obama's overhaul were completely overturned, the government still would have authority under previous law to pay hospitals, doctors, insurance plans, nursing homes and other providers.
"There is an independent legal basis to pay providers if the Supreme Court strikes down the entire law," said Thomas Barker, a former U.S. Department of Health and Human Services (HHS) general counsel in the George W. Bush administration.
But reversing the PPACA payment changes from one day to the next would be a huge legal and logistical challenge, raising many questions. How would the government treat payments made over the last two years, when the overhaul has been the law of the land? Would providers have a right to refunds of cuts that had been made under the legislation?
Former program administrators disagree on the potential for major disruptions. Some private industry executives predict an avalanche of litigation unless Congress intervenes.
"Medicare cannot turn on a dime," said Dr. Donald Berwick, the former head of the Centers for Medicare & Medicaid Services (CMS). "I would not be surprised if there are delays and problems with payment flow. Medicare has dealt with sudden changes in payment before, but it is not easy."
In addition to scrambling the reimbursement level rules, complete PPACA repeal could affect Medicare's efforts to pay doctors and hospitals based partly on the quality of the care provided rather than entirely on the amount of care provided.
Tom Scully, the CMS chief during former President George W. Bush's first term, does not foresee major problems, but he said PPACA repeal would be a "nightmare" for CMS officials.
"It is highly unlikely in the short term that any health plan or provider would suffer," Scully said. "They're probably likely to get paid more going forward. If you look at the way the law was (financed), it was a combination of higher taxes and lower (Medicare) payments. That's what you would be rolling back."
The White House declined to comment.
Administration officials say they are confident all of PPACA will be upheld by the Supreme Court and there is no planning to address what would happen if all or parts of it are struck down. Sharp questioning by the court's conservative justices during public arguments has led many to speculate that at least parts of PPACA will be struck.
Opponents of PPACA argue that Congress overstepped its constitutional authority by requiring most Americans to have health insurance, starting in 2014. The administration says the mandate is permissible because it serves to regulate interstate commerce, underpinning another provision of the law that requires insurance companies to accept people in poor health. A decision is expected by early summer.
"There is no doubt that striking down (the) Medicare provisions would be enormously disruptive for patients, physicians, hospitals and countless other providers and suppliers," said Rep. Sander Levin, D-Mich., the highest ranking Democrat on the House Ways and Means Committee, which oversees the program.
Former officials say it's likely that some form of high-level assessment and contingency planning is discreetly going on within the administration.
Last year, when the GOP-led House was threatening to block funding for carrying out PPACA, HHS Secretary Kathleen Sebelius wrote to Congress outlining potential consequences. She highlighted the possibility of suspending payments to Medicare Advantage plans, private Medicare alternatives that cover about one-fourth of all beneficiaries. That would have sent about 12 million seniors back into traditional Medicare. Some might have had to scramble to find new doctors,and many would have faced higher out-of-pocket costs.
PPACA also included major changes to the payment formula for Medicare Advantage plans.
Scully dismissed the notion that the program would be jeopardized if the Supreme Court throws out PPACA.
"The idea that Medicare Advantage plans would shut down and patients would be thrown into the street is just people making up arguments to stir the pot," he said.
Repeal of PPACA also could mean that seniors would lose some new PPACA-related benefits, including help with the Medicare Part D prescription drug plan "doughnut hole" coverage gap and access to annual wellness exams with no out of pocket costs.