JUDGE ALLOWS HEALTHCARE REFORM CHALLENGE TO MOVE FORWARD:

On October 14, a federal judge declined to dismiss two of the six claims in a healthcare reform lawsuit filed by 20 states.

In his ruling, Judge Roger Vinson of the U.S. District Court for the Northern District of Florida allowed a claim that the individual mandate requiring most people to buy health insurance and the penalty for not doing so violate the Commerce Clause of the Constitution.  In addition, he allowed a challenge to the law’s Medicaid expansion, sparked by some states’ contention that they will be overwhelmed by costs for the program if they eventually have to pay for millions of new enrollees.

The lawsuit – filed immediately after President Obama signed the healthcare bill into law on March 23, 2010 – was brought by four Governors and 16 state Attorneys General, in addition to the National Federation of Independent Business and two individuals.

The decision was not a surprise, since Judge Vinson had already indicated in September that he would allow at least a portion of the lawsuit to continue.  At the same time, the ruling was still considered a setback for the Administration, which will now have to continue to fight the 20-state lawsuit in federal court – a battle that is expected to end up before the Supreme Court.

Judge Vinson has scheduled an oral argument on expected motions for summary judgment from both sides for December 16.

CMS ADMINISTRATOR TOUTS CREATION OF INNOVATION CENTER:

In other healthcare reform news, Centers for Medicare and Medicaid Services (CMS) Administrator Donald Berwick spent time on October 18 promoting a provision of the healthcare reform law – Public Law 111-148 – that will establish a new Center for Medicare and Medicaid Innovation (CMI).

Citing the Center’s potential to increase quality of care while lowering healthcare costs, Administrator Berwick called for collaboration with healthcare providers, insurers and other stakeholders, as he and other officials from the Department of Health and Human Services (HHS) work to implement the CMI.

Public Law 111-148 directs HHS to establish the Center by January 2011, providing $5 billion in initial CMI funding along with $10 billion for new demonstrations and pilot programs.

HHS AWARDS CONSUMER ASSISTANCE GRANTS:

The following day, HHS announced $30 million in grants in conjunction with another portion of Public Law 111-148 – the effort to strengthen consumer assistance programs.  Such grants will be used to help consumers enroll in health insurance programs, to educate consumers about their rights and to assist consumers in filing complaints and appeals.

In announcing the grants via webcast on October 19, HHS Secretary Kathleen Sebelius said, “In order for consumers to get the full benefits from the reforms we need to make sure they know their rights, and that the new protections [of the law] are also understood.”

The grants were awarded to 40 states, territories and the District of Columbia, and will go to state insurance departments and other agencies tasked with enforcing the new healthcare reform law.  Many grant recipients will partner with non-profit organizations in order to strengthen their consumer assistance programs, and HHS will offer corresponding training, will maintain a database of the problems consumers face and will share best practices with states.

NEXT STEPS:

We continue to follow news from CMS and Congress, as the implementation of healthcare reform moves forward and as other related matters arise.  We will provide timely updates when such developments occur.