The week of September 16, 2013, has been quiet on the Affordable Care Act regulatory front. Most of the noise has emanated from Capitol Hill, where the House of Representatives seems poised to enact legislation that would “defund Obamacare” as part of a continuing budget resolution.  Although this legislation has no chance of being enacted by the Senate and would be vetoed by the President in any event, it is interesting to speculate on what it would mean if the ACA were “defunded.”

The legislation apparently prohibits any federal funds being spent to carry out the provisions of the ACA and revokes all entitlements created under the ACA. (Although I have not yet seen text of the bill, it presumably resembles defunding legislation introduced in the House earlier this term.)  Defunding is obviously intended to block implementation of the individual and employer responsibility provisions, the premium tax credits, and the Medicaid expansion.  It would also, according to HHS Secretary Sebelius, reverse the implementation of provisions closing the Medicare prescription drug “doughnut hole” and expanding preventive services under Medicare. Indeed, it could ends payments for Medicare Advantage plans and other Medicare providers, since payments are currently being made under payment rules promulgated to incorporate changes under the ACA.

Defunding Obamacare would also entail defunding expansions of federally qualified community health centers and the National Health Services Corps.  Presumably it would also defund antifraud initiatives under the ACA’s program integrity provisions and revoke loans and grants to health care professionals in training under the ACA’s workforce initiatives.   Finally, defunding the ACA without the repeal of the ACA’s insurance reforms would mean that insurers in the nongroup market would face guaranteed issue, community rating, and a ban on preexisting condition clauses with no individual or employer mandate and no premium tax credits.  This would effectively destroy the nongroup insurance market in the United States.

The alternative to defunding may well be a “government shutdown.”  As the Congressional Research Service noted in a recent report, the most important provisions of the ACA — including the premium tax credits, the Medicaid expansions, the individual mandate, and possibly the implementation of the exchanges — would not be immediately affected by a shutdown under current law because they involve mandatory spending, the collection of taxes, operations necessary to implement mandatory spending, or funds already appropriated—all of which would continue under present law in the face of a shutdown.   One interesting twist is that, according to the CRS, the cost-sharing reduction payments to insurers could be eliminated if funding for them is not appropriated, but insurers would still be legally obligated to reduce cost-sharing for individuals entitled to the reductions even in the absence of funding.  Of course, a government shutdown lasting into 2014 seems, to say the least, unlikely.

A conservative Republican alternative to the ACA.  The Republican Study Committee also unveiled on September 18, 2013, The American Health Care Reform Act, its alternative to the ACA.  The proposal contains long-standing Republican health reform proposals: repeal of the current deduction for employer-sponsored health insurance, replacing it with a flat deduction of $7,500 for individuals and $20,000 for families to purchase health insurance coverage; enhanced availability of health savings accounts; support for state-high risk pools; sale of health insurance across state lines; repeal of comparative effectiveness research; expansion of association health plans; and limits on plaintiff’s recoveries and attorney’s fees in malpractice cases.

The proposed legislation is 180 pages long and contains particularly detailed and well-developed proposals for expanding the availability and flexibility of health savings accounts, for “cooperative” regulation of insurance sold across state lines, and for greater availability of association health plans.  The legislation would repeal the McCarran-Ferguson Act, permit wellness program incentives of up to 50 percent, make available Medicare claims and payment data, and provide grants to the states to establish optional portals for providing standardized information on insurance plans (like exchanges, except they would be optional and not available for plan enrollment).

The legislation presents a striking contrast to the ACA.  The ACA focuses on making health care available to lower-income Americans through premium tax credits and expanded Medicaid. It outlaws consideration of health status and pre-existing conditions in the sale of health insurance.  The AHCRA provides benefits primarily for middle- and higher-income Americans, who will be able to take advantage of its tax deductions and invest in tax-subsidized health savings accounts.  A $20,000 tax deduction is of great value to a family in a high income tax bracket, but is of no value to a family without income.

The AHCRA high-risk pools — the primary protection the proposal offers to those with high cost medical conditions — will be able to charge premiums up to 200 percent of the average premium in the state, making them unaffordable to lower-income, and probably many middle-income, Americans.  Only individuals transferring from one form of insurance to another would be protected from pre-existing condition requirements.

The AHCRA has no chance of becoming law as long as President Obama remains in office, but offers a vision of what health reform could look like were the Republicans to gain control of Congress and the presidency.

ACA contraceptive coverage litigation hits the Supreme Court.  There have also been significant developments in the courts.  On September 19, 2013 petitions were filed in the Supreme Court both by Conestoga Wood Specialties, an employer challenging a decision by the Third Circuit federal court of appeals upholding a regulatory requirement that employers cover contraceptive services for their employees as a preventive service under the ACA; and by the United States appealing a decision of the Tenth Circuit en banc enjoining the enforcement of that requirement.

Both cases are brought by for-profit corporations complaining that the requirement violates their religious liberty rights protected by the First Amendment and the Religious Freedom Restoration Act (RFRA).  Neither plaintiff objects to all contraceptive coverage; instead, both plaintiffs object to specific contraceptives that they believe are in fact abortifacients because they prevent the implantation of an embryo.

Although both cases challenge a regulation promulgated under the ACA, they are not challenges to the ACA as such.  Rather they involve the right of corporations to refuse to cover certain health benefits for their employees because of their religious beliefs.  The plaintiffs contend that for-profit corporations can hold protected religious beliefs, or at least assert the beliefs of their owners.  The United States government contends that the RFRA does not permit a for-profit corporation to deny its employees benefits protected by federal law.

To date the Ninth and Tenth Circuits have ruled in favor of for-profit corporations on this issue, while the Third and Sixth Circuit have ruled against them.  The issue will almost certainly be decided by the Supreme Court next term.

Security of the federal data hub.  Although no regulations have been issued in recent days, the implementation agencies have issued some information and guidance.  On September 18, 2013, the Center on Medicare and Medicaid Services issued a press release and fact sheet on Securing the Health Insurance Marketplace.  CMS is undoubtedly responding to concerns expressed recently by state regulators and members of Congress about the security of personal information in the hands of exchanges and enrollment assisters and the possibility of fraud or identity theft by navigators and other persons connected with the exchanges.    There is little in this release, however, that will be new to those who have been following the implementation of the ACA.

The fact sheet first addresses IT security.  It notes that the federal data hub is being designed to minimize security vulnerabilities, monitor security carefully, and respond rapidly to any potential security problems.  Personal health information will only be requested where necessary to make an eligibility determination.  The only situations where PHI would seem to be relevant would be when eligibility for Medicaid is based on pregnancy, disability, or medical frailty.

The fact sheet notes that the data hub is not a database and will not store consumer information.  It is rather a routing tool that will provide state and federal exchanges a single secure access point to a number of federal databases, rather than requiring each exchange to develop its own connections, which would increase security vulnerabilities.

Assistance personnel — including navigators, in-person assisters, certified application counselors, and agents and brokers — will have to agree to protect personal information and to be trained in privacy and information security requirements.  Assistance personnel are also being trained to report incidents of fraud.  Enrollment assisters cannot charge a fee for assistance and enrollment, and consumers should report anyone who attempts to charge them a fee for ACA-related services.

CMS is also working to educate consumers to protect themselves against fraud, following the model of the HHS Senior Medicare Patrol, which has educated more than 28 million consumers and addressed 1.3 million individual concerns since its inception in 1997.    Consumers can call 1-800-318-2596 (TTY 1-855-889-4325) to report instances of suspected fraud.  Consumers can also access the Federal Trade Commission’s Complaint Assistant through  The FTC’s Consumer Sentinel Network will coordinate federal, state, and local efforts to get consumer complaints to the appropriate authority.

HHS intends to work together with the Department of Justice, the FTC, and state law enforcement officials to combat fraud and invasions of privacy.  These agencies will respond to consumer complaints and initiate audits, investigations, inspections, and other measures to ensure compliance with privacy and security standards.  Identity theft and other fraudulent activities can be prosecuted under the federal Identity Theft Assumption and Deterrence Law, as well as federal laws that protect against computer fraud, credit card fraud, wire fraud, mail fraud, and financial institution fraud.

Complaints vs. external review requests.  On September 5, 2013, the Office of Personnel Management issued a Multi-State Plan Program Administration Letter (for which a link is not yet available) clarifying the difference between enrollee requests for external review and complaints in the multi-state program (MSP).  The distinction is important:  requests for external review will be handled by OPM; complaints will be referred to state insurance departments.

Whereas external reviews of decisions of qualified health plans will be handled in most states through state external review in states that meet National Association of Insurance Commissioner Model Act requirements, and in other states under procedures established by the federal rules, MSP decisions will be handled through OPM.  Under the federal external review procedure, only issues involving medical judgment are subject to external review, but under the OPM rules all claim denials, whether or not based on medical judgment, will be subject to external review.  Denials based on medical judgment, however, will be handled through independent review organizations, while other claim denials will be handled internally.

The Program Administration Letter provides examples of claim denials based on medical judgment (e.g. lack of medical necessity) and claim denials not based on medical judgment (e.g. dispute over whether in-network coverage applies).  Examples of complaints, which go to the Department of Insurance, are also provided (e.g. complaint about being dropped from a plan’s network while no claim is pending).

Same-sex spouses. Finally, on September 18, 2013, the Employee Benefits Security Administration of the Department of Labor issued a technical release addressing the definition of spouse and marriage under ERISA following the Supreme Court’s decision striking down the federal Defense of Marriage Act.  Under this guidance, the terms spouse and marriage in employee benefit plans will be interpreted to include same-sex partners if the couple was legally married in a state that recognizes same sex marriages.  The law of the state in which the couple is living will not be relevant.