Caught in the whirl­wind

D.C. scan­dals could im­pede ACA im­ple­men­ta­tion

Modern Healthcare - - THE WEEK IN HEALTHCARE - Jonathan Block and Jessica Zig­mond

Abad week for HHS turned pro­gres­sively worse as a mael­strom of con­tro­ver­sies swirling around the Obama ad­min­is­tra­tion now threat­ens to dis­tract fed­eral of­fi­cials from ef­fec­tively im­ple­ment­ing the 2010 health­care over­haul.

As fed­eral law­mak­ers called for an in­ves­ti­ga­tion into HHS Sec­re­tary Kath­leen Se­be­lius’ fundrais­ing ef­forts for En­roll Amer­ica—a not­for-profit or­ga­ni­za­tion work­ing to ed­u­cate Amer­i­cans about en­rolling in health­care cov­er­age—the White House found it­self in dam­age-con­trol mode last week, an­swer­ing ques­tions about a se­ries of high­level scan­dals, in­clud­ing the In­ter­nal Rev­enue Ser­vice’s scru­tiny of Tea Party groups, last Septem­ber’s at­tacks on the U.S. con­sulate in Beng­hazi, Libya, and the U.S. Jus­tice Depart­ment’s seizure of phone records of As­so­ci­ated Press jour­nal­ists.

Among those, the IRS mat­ter and Se­be­lius’ fundrais­ing tac­tics have the great­est chances of in­hibit­ing HHS’ abil­ity to suc­cess­fully roll out the big­gest health­care cov­er­age ex­pan­sion the U.S. has seen in decades. And the tim­ing of those in­ves­ti­ga­tions is es­pe­cially un­for­tu­nate for HHS, just as the depart­ment is set to launch a na­tion­wide ed­u­ca­tion and pub­lic out­reach cam­paign about the Pa­tient Pro­tec­tion and Af­ford­able Care Act. A re­cent Kaiser Fam­ily Foun­da­tion poll found that 42% of Amer­i­cans don’t know the sem­i­nal law is still on the books.

The IRS con­tro­versy could bub­ble over just as the Obama ad­min­is­tra­tion de­pends on the agency to carry out ma­jor pro­vi­sions of the health re­form law that go into ef­fect next year. Some law­mak­ers are ask­ing whether the agency can be trusted in light of the rev­e­la­tion that its tax-ex­empt di­vi­sion sin­gled out ap­pli­ca­tions from some con­ser­va­tive groups. In par­tic­u­lar, Repub­li­cans in­sin­u­ated that be­cause the IRS is re­spon­si­ble for en­forc­ing the in­di­vid­ual cov­er­age man­date and de­ter­min­ing el­i­gi­bil­ity for health in­sur­ance ex­change sub­si­dies, IRS em­ploy­ees would have ac­cess to sen­si­tive per­sonal in­for­ma­tion and could wield it against po­lit­i­cal en­e­mies.

On May 15, Sen. Dean Heller (R-Nev.) in­tro­duced the IRS Ac­count­abil­ity Act to halt fund­ing to the IRS for new agents to en­force the Af­ford­able Care Act. The next day, Rep. Tom Price (R-Ga.) went fur­ther with the Keep the IRS Off Your Health Care Act of 2013, which would pro­hibit the IRS from im­ple­ment­ing or en­forc­ing any pro­vi­sion of the ACA.

“The same agency that just com­mit­ted an ap­palling vi­o­la­tion of the Amer­i­can peo­ple’s trust is go­ing to be at the fore­front of en­forc­ing the health­care law, in­clud­ing the in­di­vid­ual man­date, which will re­quire ev­ery cit­i­zen to prove to this agency that they’ve pur­chased govern­ment-dic­tated health­care cov­er­age,” Price said in a state­ment.

Then it was re­ported that Sarah Hall In­gram, who heads the IRS of­fice on im­ple­ment­ing the health re­form law, was com­mis­sioner of the IRS di­vi­sion re­spon­si­ble for tax­ex­empt or­ga­ni­za­tions be­tween 2009 and 2012. Dur­ing a May 17 House Ways and Means Com­mit­tee hear­ing on the IRS con­tro­versy, Rep. Devin Nunes (R-Calif.) said he wanted to hold an­other hear­ing on the mat­ter and have In­gram tes­tify.

Health­care in­dus­try ob­servers, how­ever, are split over whether the link be­tween the IRS con­tro­versy and the ACA is le­git­i­mate or just plain pol­i­tics.

“The IRS will not be hold­ing in­for­ma­tion re­gard­ing peo­ple’s med­i­cal records, nor will they have the op­por­tu­nity to go to their health plan and de­mand any such in­for­ma­tion,” said Robert Laszewski, a for­mer in­sur­ance ex­ec­u­tive and pres­i­dent of con­sult­ing firm Health Pol­icy and Strat­egy As­so­ciates. “So there is no threat that the IRS will some­how po­lit­i­cally re­tal­i­ate against any­one within the new health­care pro­gram by some­how us­ing their health­care in­for­ma­tion. Re­gard­ing Oba­macare, the IRS isn’t go­ing to know more than the iden­tity and in­come/job in­for­ma­tion they al­ready have in their files.”

But the per­cep­tion could be dam­ag­ing none­the­less, Laszewski said. “The ap­pear­ance of the man­ager at the heart of the IRS scan­dal is go­ing to add lots of fuel to the fire as crit­ics of Oba­macare, par­tic­u­larly those that see the new health law as more too big and too pow­er­ful govern­ment, just pile on this piece of news.”

Henry Aaron, an econ­o­mist and health pol­icy ex­pert at the Brook­ings In­sti­tu­tion, said that ac­cu­sa­tions from Repub­li­cans about the IRS’ role in the ACA are not valid, and there is no rea­son to be­lieve the agency’s em­ploy­ees would mis­use per­sonal in­for­ma­tion, just as

they are pro­hib­ited from do­ing so now re­gard­ing in­come tax re­turns.

He added that leg­is­la­tion to re­move fund­ing from the IRS for Af­ford­able Care Act pur­poses would be “shoot­ing our­selves in the foot.” Pres­i­dent Barack Obama’s pro­posed 2014 bud­get asks that $440 mil­lion be di­verted to the IRS to en­force the ACA.

A for­mer Se­nate aide who worked on the health­care law said that while the con­tro­versy raises ques­tions about the op­er­a­tion of the IRS, there is hope the of­fice will learn from the ex­pe­ri­ence.

“The most re­cent con­tro­versy adds to the ques­tion of whether the agency can com­pe­tently im­ple­ment and en­force the law,” the aide said. “Hav­ing said that, when the IRS faced con­tro­versy in the ’90s, the agency did a 180 and be­came a much more ef­fi­cient reg­u­la­tor,” he said, re­fer­ring to events that led to the In­ter­nal Rev­enue Ser­vice Re­struc­tur­ing and Re­form Act of 1998. “We could po­ten­tially see that here in the wake of this con­tro­versy, which could lead to smoother im­ple­men­ta­tion and en­force­ment in the com­ing years.”

Mean­while, Se­be­lius sits at the cen­ter of a fed­eral probe that House and Se­nate GOP lead­ers re­quested re­gard­ing her fundrais­ing ef­forts for En­roll Amer­ica.

As the House of Rep­re­sen­ta­tives voted a third time last week to re­peal the en­tire Af­ford­able Care Act, sev­eral high-rank­ing Repub­li­can law­mak­ers sent a let­ter to Gene Do­daro, comptroller of the Govern­ment Ac­count­abil­ity Of­fice, ask­ing the of­fice to con­duct a com­plete in­ves­ti­ga­tion of Se­be­lius’ ac­tiv­i­ties, start­ing with com­pil­ing a full list of all out­side en­ti­ties from which HHS has so­licited funds to help im­ple­ment the law.

House En­ergy and Com­merce Com­mit­tee lead­ers also sent let­ters to the chief ex­ec­u­tives of H&R Block and 11 ma­jor health in­sur­ers seek­ing in­for­ma­tion about their com­mu­ni­ca­tions with HHS. They also hit HHS and En­roll Amer­ica with lists of ques­tions.

HHS spokesman Ja­son Young said in an e-mail that Se­be­lius has not made fundrais­ing re­quests of any en­tity that HHS reg­u­lates, and

“The (IRS) con­tro­versy adds to the ques­tion of whether the agency can com­pe­tently im­ple­ment and en­force the law.”

—for­mer Se­nate aide

that the fundrais­ing she has done was for En­roll Amer­ica, not for the law. That’s an im­por­tant dis­tinc­tion, he noted, be­cause the sec­re­tary has au­thor­ity un­der the Pub­lic Health Ser­vice Act to urge oth­ers to sup­port not-for-profit groups pro­mot­ing health.

“Since March, the sec­re­tary has made two fundrais­ing calls on be­half of En­roll Amer­ica to two or­ga­ni­za­tions—the Robert Wood John­son Foun­da­tion and H&R Block—nei­ther of which is reg­u­lated by us and both of whom share a com­mit­ment to help­ing unin­sured Amer­i­cans,” Young said.

Pre­vi­ous HHS sec­re­taries from both po­lit­i­cal par­ties, he added, sought pri­vate-sec­tor sup­port for other pro­grams such as Medi­care Part D, the Chil­dren’s Health In­sur­ance Pro­gram and the Chil­dren’s Inn at the National In­sti­tutes of Health.

Anne Filipic, pres­i­dent of En­roll Amer­ica, said in a state­ment that the group is fo­cused on en­sur­ing that mil­lions of Amer­i­cans know that they’re el­i­gi­ble to en­roll for cov­er­age come Oc­to­ber. “That’s why we’re work­ing with a broad range of or­ga­ni­za­tions—in­clud­ing con­sumer ad­vo­cates, com­pa­nies and other stake­hold­ers—to build the team and de­velop the com­mu­ni­ca­tions tools needed to get the word out to in­di­vid­u­als who stand to ben­e­fit in just a few short months,” Filipic said, adding that her group is “proud” to be work­ing with Se­be­lius on that ef­fort.

Law­mak­ers stuck to party lines when asked about the ad­min­is­tra­tion’s headaches and how the grow­ing docket of in­ves­ti­ga­tions could di­vert at­ten­tion and re­sources from health­care.

“I think HHS can han­dle both,” Rep. Chris Van Hollen (D-Md.), rank­ing mem­ber on the House Bud­get Com­mit­tee, said in an in­ter­view. “In other words, there’s ob­vi­ously an ap­pro­pri­ate role for con­gres­sional over­sight—ap­pro­pri­ate, mean­ing peo­ple should get to the facts, in­stead of try­ing to spin con­spir­acy the­o­ries,” he con­tin­ued. “But it’s very ap­pro­pri­ate they get the facts. I’m sure HHS has the ca­pac­ity to re­spond to rea­son­able re­quests and im­ple­ment the Af­ford­able Care Act. Now to the ex­tent that the re­quests get to be to­tally un­rea­son­able, that raises other is­sues, but we’ll see when we get there.”

But Rep. Charles Bous­tany (R-La.), a physi­cian who serves as chair­man of the House Ways and Means Over­sight Sub­com­mit­tee, coun­tered that the prob­lems fac­ing the ad­min­is­tra­tion—and specif­i­cally the IRS scan­dal—don’t bode well for the Af­ford­able Care Act.

“I’ve had deep con­cerns as to whether the IRS is equipped to deal with this, but given th­ese abu­sive prac­tices, it re­ally gives me ma­jor con­cern about hav­ing this agency, with this much power, pry­ing into other per­sonal ar­eas of in­for­ma­tion be­yond just sim­ple tax re­turns,” Bous­tany said. “I think it calls into ques­tion how this whole health­care law is im­ple­mented and the ba­sic struc­ture of how it’s go­ing to op­er­ate.”


For­mer IRS act­ing Com­mis­sioner Steve Miller tes­ti­fied last week at a hear­ing on the tar­get­ing of Tea Party groups.

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