How the SCOTUS pick could threaten value-based care

Supreme Court
The Supreme Court could jettison the Affordable Care Act's value-based care programs along with the entire law in a major legal challenge next month, which experts say will put the onus on private payers to continue the transition to coordinated care. (Getty/BrianPIrwin)

The Affordable Care Act (ACA) is in peril as the Senate moves to quickly confirm a conservative replacement for the Supreme Court in the next month. But it remains unclear whether certain parts of the law—chiefly those that have helped spur the healthcare industry’s transition to value-based care—could survive a constitutional challenge the court will hear next month.

Several key provisions in the ACA helped the federal government accelerate the transition from Medicare fee-for-service to value-based care.

For instance, the law gave authority to the Center for Medicare and Medicaid Innovation (CMMI) to experiment with different voluntary or mandatory payment models, including for oncology, bundled payments and dialysis. The ACA gave the center $10 billion each decade to fund the models. The ACA also created the Medicare Shared Savings Program (MSSP), which oversees accountable care organizations that agree to take on financial risk in exchange for a cut of any cost savings.

“It would be a travesty to have the courts throw out bipartisan efforts to move to value-based payments,” Clif Gaus, CEO of the National Association of ACOs, said in a statement to Fierce Healthcare. “Those efforts are far removed from the legal arguments before the Supreme Court."

Some experts say that even if the entire law is struck down, private payers could step in to fill a void created by the loss of the ACA’s value-based care programs.

But such a move “may have less weight, since it won’t have the same emphasis in the Medicare program, and Medicare won’t have the same flexibility that it does now to test those payment models,” said Juliette Cubanski, deputy director of the program on Medicare policy for the Kaiser Family Foundation. Medicare does have some authority to test payment models outside of the ACA, but that authority has been very limited in the past, Cubanski said.

“The bar is set pretty high for these types of demonstrations, in terms of they have to be budget neutral,” she said.

Private payers have started to accelerate their adoption of value-based care.

If the court gets rid of the entire law, the Centers for Medicare & Medicaid Services could encourage Medicare Advantage to double down on risk-based programs, said Fred Bentley, managing director of consulting firm Avalere Health.

“There already is a real emphasis on growing MA and using MA to be the cost-containment mechanism for the entire Medicare program,” Bentley told Fierce Healthcare.

However, even a push from private payers would be hard to replace the reach of CMMI, especially as Medicare is a major payer for certain specialties, Bentley said.

CMMI also speaks with “one voice” as opposed to payers that may have differences between their own programs, Bentley added.  

Another avenue is Congress could step in to pass a law to enshrine the programs.

What could get struck down

The lawsuit before the court centers on the law’s individual mandate that everyone buy insurance. The 2017 tax reform law zeroed out the mandate penalty but left the rest of the law intact.

A collection of 18 red states led by Texas argue that the zeroing out of the penalty means the mandate is unconstitutional since it can no longer be considered a tax. If the mandate is unconstitutional, then the rest of the law should be struck down as the law cannot survive without the mandate.

A group of 17 states led by California is defending the law and argues that if Congress wanted to get rid of the law when they zeroed out the penalty they would have done so, but they did not.

A federal district judge agreed with the red states and invalidated the entire law in 2018. The Fifth Circuit Court of Appeals ruled late last year that the individual mandate was unconstitutional but punted to the lower court to decide on what parts of the law should be struck down and which remain.

Experts say the prospects for the ACA got worse with the death of liberal Supreme Court Justice Ruth Bader Ginsburg, especially as her potential replacement Amy Coney Barrett disparaged the law in remarks back in 2012.

But it remains unclear whether the court will get rid of the entire law or just the parts linked to the individual mandate, such as the tax credits and preexisting condition protections.

Other facets of the law that are not linked to the mandate—such as the Medicaid expansion and the value-based care programs—could survive, experts say.

“I do believe that value-based care, CMMI and the MSSP are really so different from the issues around the individual mandate that anything short of 100% invalidation of the ACA would not reach those provisions,” said Robert Shaw, a partner with Smith Anderson and head of the law firm’s healthcare practice group.

He added that an invalidation of the entire law appears unlikely, even if Coney Barrett is confirmed in time to hear the case. Oral arguments start Nov. 10, and Senate Republicans are moving to confirm the former Notre Dame law professor before the Nov. 3 presidential election.

Bentley also agreed that full invalidation is an “unlikely outcome.”

“There are … no doubt intense discussion within the Supreme Court on what is severable,” he said. “The sense it is all or nothing is just not accurate.”