Health Insurance Reform Update June

Congress has once again left town for a recess, until June 7, allowing two key health benefit items to expire at the end of May. One is the “doc fix,” which is needed to stave off a pending 21 percent cut in Medicare physician reimbursements. Aetna favors a multiple-year change to bring stability and certainty to the Medicare Advantage market. While the House passed a bill to extend the fix for 19 months until the end of 2011, the Senate left town without addressing the issue. Although the current short-term fix lapsed on Monday, CMS has alerted its contractors to “hold” claims for the first 10 days of June in the hopes that the “fix” will be fixed by June 10.

Similarly, the House approved, but the Senate did not, a jobs and extenders bill dealing with other expiring items. However, the House-approved package does not contain an extension of the enhanced Medicaid FMAP formula desired by the states, nor does it include an extension of eligibility for the COBRA 65 percent-subsidy program. It also expired at the end of May.

The issue of whether a non-federal government has the authority to tell an employer how to administer a self-funded health plan has been heading to the U.S. Supreme Court for well over a year. The case comes from California where the 9th Circuit ruled in 2008 in favor of the City of San Francisco by deciding that ERISA was not a barrier to San Francisco’s “play or pay” law.  Since the 4th Circuit had ruled just the opposite a few years before in a Maryland case, the conflicting outcomes makes this case ripe for resolution by the Supreme Court. Late last week, the Solicitor General’s office recommended that the Supreme Court not take up the case because, in part, the new health care reform law may dramatically reduce the number of state or local governments following San Francisco’s lead. The SG’s position is unfortunately influential, but it is not determinative. Aetna prefers that the Court take up the case as the ERISA preemption question presented is so fundamental to the employer-sponsored marketplace. Aetna also believe ERISA preemption would be re-affirmed.

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