• Feds fail to fight Medicaid fraud in home health care services, report finds

    By Joe Eaton
    Center for Public Integrity

    Like a growing number of disabled Americans on Medicaid, Keith Foreman, a 57-year-old in Metropolis, Ill., qualified for a personal caregiver to help him with daily activities like dressing, shaving, and preparing meals.

    Foreman, who prosecutors say suffers from a spinal injury, hired his girlfriend, Sheila McDonald, for the job. In 2011, McDonald received almost $5,000 from Medicaid for six months of care she provided to Foreman.

    These personal care services, which are available in all 50 states, are designed to help the sick, elderly, and disabled remain in their homes — and out of expensive nursing facilities.

    But Foreman was not living at home. During the days marked on McDonald’s timesheets, Foreman was housed in the Massac County jail in Illinois, serving time for forging a stolen debit card signature at a local liquor store.

    Like Foreman and McDonald, who both pleaded guilty to charges of making false statements, unscrupulous beneficiaries and home health workers are increasingly targeting personal care services programs for illegal money-making schemes, according to a new federal report. Investigators say lax requirements for both caregivers and patients, along with poor state and federal oversight, has made the rapidly growing programs a lucrative target for fraud.  And this isn’t the first time they’ve issued such a warning.

    Report faults federal oversight of state programs
    A Health and Human Services Office of the Inspector General (OIG) report scheduled to be released Thursday faults the Centers for Medicaid and Medicare Services (CMS) for inadequate oversight of personal care services programs, whose costs are shared by states and the federal government, as is the norm for Medicaid.  The report, which brings together six years of OIG investigations and 23 reports on the topic, describes a program hindered by poor claims documentation, insufficient monitoring of claims data for fraud and waste, and a crazy-quilt of varied requirements for personal care workers in different states.

    “Historically, CMS has left a lot of the responsibility for overseeing waste, fraud and abuse to the states,” said Christi Grimm, special assistant to the principal deputy inspector general. “As a result, we have 301 different sets of requirements for caregivers across the states.” 

    Although some states mandate criminal background checks and licensing for home health workers, Grimm said others lack even the most basic requirements, including age minimums,

    which has led to cases in which juveniles escape prosecution for fraud and abuse. Worker requirements are set by counties in a number of states, she added, which has led to a hodge-podge of rules that are difficult to enforce, and nearly impossible to monitor.

    “We are asking CMS to step up to the plate,” Grimm said, and use its authority to regulate and monitor the state programs.

    The report includes six previous OIG recommendations to CMS and state agencies which have gone unimplemented. In a 2008 report that found five states may have paid up to $11 million in error for personal care services during one quarter of 2005, OIG recommended that the CMS work with states to stop payments for personal care when patients were receiving care in institutions, not at home. The agency agreed with the recommendation, but according to the OIG, the work has not been completed.

    In addition to asking the agency to address previous recommendations, the report offers four new goals for CMS to improve oversight and monitoring of state plans, including standardizing rules for personal care workers to set minimum age and education levels, and require criminal background checks.

    The report, however, seems unlikely to spur the agency to follow the OIG’s specific suggestions..  In a written response, CMS — part of the Department of Health and Human Services — explicitly concurred with only one of  the OIG recommendations: that it should provide states with claims data to help root out cases in which beneficiaries are simultaneously receiving both institutional care and home health services.  In response to the recommendation on establishing federal guidelines for personal care workers, CMS pointed out there is a shortage of care attendants.

     “Personal care services are an important part of keeping people in their homes and out of nursing homes, which lowers costs and improves the quality of life of the patient,” said CMS spokesman Brian Cook. “We are working to protect personal care from fraud and abuse by promoting stronger training programs for workers who provide personal care, working with states on background check programs for these workers, and developing new data methods to analyze claims for potential fraud and abuse."

    Grimm called the CMS response to the report unacceptable. “It’s not uncommon for CMS … to identify things on the horizon, or things they hope to do, but not necessarily commit to doing something,” Grimm said, adding that CMS’s efforts so far simply have not worked. “[CMS] has the authority to do what we are asking. It has not done it yet. And it hasn’t committed to doing it after reading our report.”

    A wealth of opportunities
    According to investigators, most fraud schemes in personal care services involve billing for care that was not provided or was not allowed. Self-directed programs, which allow beneficiaries to hire and manage their helpers, may be particularly vulnerable, but some prosecutions have also involved home health care agencies.

    In January, for example, the owner of a Minnesota home health care company outside Minneapolis was sentenced to two years in prison for cheating Medicaid out of more than $650,000 in charges for personal care services. In March, the owner of Families First Home Health Care in Sparta, N.C., pleaded guilty to fraud and money laundering stemming from a scheme in which she billed Medicaid for personal care services she did not perform and split the proceeds with plan members.

    “Fraud goes where the money is,” said Barbara Zelner, executive director of the National Association of Medicaid Fraud Units, which represents state law enforcement agencies that investigate Medicaid fraud.  After nursing homes, Zelner said, home health represents one of the larger slices of state Medicaid budgets.

    Personal care services programs have grown quickly since a 1999 Supreme Court decision held that unjustified segregation of the disabled is a civil rights violation. The ruling led to increased spending for home health services; in 2011, Medicaid paid more than $12 billion for personal care services, up 35 percent since 2005, according to the OIG. Investigators say program fraud has kept pace. In 2010, state Medicaid fraud units investigated more than 1,000 cases involving personal care services, more than any other type of Medicaid service.

    Not everyone agrees with the OIG’s views on personal care services.  In 2011, an OIG review of Medicaid claims for personal care services in New Jersey found that 40 percent should have been denied. Sherl Brand, president of the Home Care Association of New Jersey, which advocates for home health care providers, questions the OIG’s work, saying the agency often draw broad conclusions from examinations of a limited number of claims. “It is almost a bit ridiculous because of the extrapolation they do,” Brand said.

    New Jersey home health workers face criminal background checks and certification and licensure requirements, Brand said. Personal care services programs save money, she said, in addition to helping disabled people live better lives. When New Jersey was faced with budget cuts, Brand said the association determined the average weekly cost for personal care services was $242 dollars a week, only slightly higher than the cost of a single day in a nursing home.

    But as funding for the programs increase, fraud follows. Kirk Ogrosky, a former top federal health care fraud prosecutor who is now a partner at the Washington law firm Arnold & Porter, said home health has long been a hotbed of fraud, both in Medicaid and in Medicare. The fraud, he said, is not hard to uncover. Ogrosky recalled that after an extensive analysis of Medicare claims, he sent agents out to interview questionable beneficiaries. When the agents knocked on the doors, they often learned the person they were looking for was at work, Ogrosky recalled.  “That’s utterly preposterous,” he said, “since home health requires that you are homebound.”

    In other cases, Ogrosky said, agents found that home health care agencies were filing claims for beneficiaries who did not live at the homes indicated on the claims. “One of my favorite stories is about a homeless guy we found,” Ogrosky said. “He didn’t even have a home to be homebound to.”

    The Center for Public Integrity is a non-profit independent investigative news outlet. For more of its stories visit publicintegrity.org.

  • 75 percent of U.S. HIV patients lack effective care

    By Maggie Fox, Senior Writer, NBC News

    Only a quarter of Americans infected with the AIDS virus are getting effective treatment, according to a U.S. government report released Friday -- and the youngest patients are the worst off.  The numbers could worsen if states don’t broaden health care as called for under the 2010 health reform law, scientists worry.

    It’s the first comprehensive look by the Centers for Disease Control and Prevention at who is getting effective care, and it doesn’t paint a promising picture. The findings raise even more alarm bells as study after study presented at the International AIDS Conference in Washington this week show that treatment can help stop the spread of HIV.

    “The majority of people living with HIV in the United States are not on antiretroviral treatment, not in stable care,” Dr. Kenneth Mayer of The Fenway Institute and Harvard Medical School in Boston told a news conference. “They need to be in care first and then able to get treatment.”

    The study finds that just over a third of  HIV patients have steady care -- 34 percent  of African-Americans, 37 percent of Latinos and 38 percent of whites.

    Younger patients are the least likely to be getting the cocktails of drugs that can keep them healthy and help keep them from infecting others. Just 15 percent of those aged 25-34 had the virus suppressed to desired levels, compared to 36 percent of those aged 55-64. Only 22 percent of young adults were even getting HIV drugs to treat their infection, the CDC found.

    There’s no cure for the human immunodeficiency virus that causes AIDS and no vaccine. HIV has killed 25 million since it first started spreading globally in the early 1980s, and more than 33 million people are infected worldwide. About 1.1 million people in the United States have HIV, and the CDC estimates that 20 percent of them don’t even know it.

    “We have to continue to raise the alarm,” CDC’s top AIDS official, Dr. Kevin Fenton, said in an interview. “We have to find that sense of outrage.”

    The same factors are driving high transmission and poor treatment rates among some U.S. groups: poverty, a lack of access to medical care, and a lack of education about what causes HIV and what people can do about it. Policymakers need to understand that treating people with HIV saves money, Fenton said. 

    “What we now know is that treating HIV is cost-effective. For every dollar spent, you save $2,” Fenton said.

    Fenton said the U.S. should pull out the stops on providing condoms, counseling, testing and treatment.

    “We need to ensure that states have policies that support routine HIV testing,” Fenton said. “Clearly, this is going to be more challenging in some states than in others.”

    Top AIDS experts in the U.S. say no matter what people may think about the moral implications of some of the behavior that leads to HIV infection, it will benefit everyone to get people tested, treated and counseled about controlling their infection.

    “Every state really must enact the Affordable Care Act,” said Dr. Judith Aberg, president of the HIV Medicine Association and an AIDS expert at New York University. “States need to fund HIV treatment and prevention. We need to continue this fight.”

    Governors of several states have said they will not expand Medicaid, required by the health care law, because they cannot afford it. The U.S. Supreme Court ruled last month that states can decide whether to abide by that provision. States refusing expansion now include Texas, Florida, South Carolina and Louisiana. Medicaid, the state-federal health insurance plan for the poor, currently does not cover most low-income adults with HIV. AIDS activists say it’s essential to controlling the epidemic to get coverage for young adults with HIV, and at risk for HIV.

    Opening this week's International AIDS Conference was Dr. Anthony Fauci, one of the most influential, leading scientists in the decades-long search for a cure. Fauci discusses how far we've come and how far we have to go in the battle against HIV/AIDS.

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  • Families brace for mental health cuts. Will other states follow Wisconsin?

    By Lauren Hasler
    Wisconsin Center for Investigative Journalism

    Donovan Richards first attempted to take his own life at age 4. The Wisconsin boy, who has bipolar disorder and autism, already had been kicked out of three day care programs, and his doctors were sure he would be in an institution before he turned 10.

    To get the intensive treatment her son needed, but she could not afford, Paula Buege, Donovan’s mom, had to win approval from a review board made up of Dane County officials.

    “I had 10 minutes to present his case. And my argument was, ‘If we don’t help him now, you’re going to read about him in the paper one day,’ ” said Buege, of Middleton, who now helps the parents of mentally ill children with a Madison-based nonprofit, Wisconsin Family Ties.

    After years of treatment, Donovan is now a 17-year-old who plays in a band and wants to be a music teacher. While he continues to struggle, he has not been hospitalized for mental health problems in 10 years.

    What saved Donovan from suicide or another tragic fate was a mother’s perseverance and taxpayer-funded mental health services.

    But those public mental health systems in Wisconsin and across the nation increasingly face cuts as they compete for scarce resources, according to an investigation by the Center for Public Integrity, prepared in collaboration with the Wisconsin Center for Investigative Journalism and other nonprofit newsrooms.

    States, desperate to close cavernous budget gaps, have cut $2.1 billion from their mental health budgets over the past three fiscal years, according to a study from the National Association of State Mental Health Program Directors’ Research Institute, an independent nonprofit that collects and analyzes mental health services data.

    The problems go beyond money. In interviews with mental health advocates and county and state officials, the Wisconsin Center for Investigative Journalism found that Wisconsin’s public mental health system — once viewed as a national model — has become fragmented and underfunded.

    And many experts fear that as Gov. Scott Walker moves to close the state’s budget deficit, the mental health system will be weakened even further. One county official predicted Walker’s changes could “devastate” taxpayer-financed mental health care in Wisconsin.

    Among the problems facing the state’s public mental health system:

    • The Wisconsin Council on Mental Health, the governor’s mental health planning council, estimates 232,932 adults and 106,149 children in Wisconsin have serious mental health conditions.
    • Overall, 100,238 people received taxpayer-subsidized mental health services through their local county in 2009, according to the nonpartisan Legislative Fiscal Bureau.
    • Walker warned in his March 1 budget address that a “serious and long-term solution” is needed for Medicaid. Demand for existing Medicaid-funded services is expected to create shortfalls of $150 million by June 30 and $1.8 billion in Wisconsin over the next two years as federal stimulus funding ends.
    • The state Department of Health Services (DHS) plans to replace $1.3 billion of that gap with state funds and make up the difference with $500 million in cuts to the Medicaid program —possibly by cutting eligibility, benefits or reimbursement rates.

    “Services have been underfunded with the current budget, and now we’re going to see a $500 million cut to providing essential services to vulnerable populations,” said state Rep. Sandy Pasch, D-Whitefish Bay, a member of the Assembly’s committee on public health.

    Pasch estimates Medicaid cuts could leave 65,000 Wisconsin residents without subsidized health insurance to pay for mental health treatment.

    Untreated mental illness isn’t just a personal hardship; it’s a major driver of Wisconsin homeless and prison populations. Nearly one-third of all inmates in the state prison system are classified as mentally ill, the state Department of Corrections estimates.

    Wisconsin DHS secretary to make big changes
    As part of Walker’s controversial budget-repair measure, Dennis Smith, the Republican governor’s DHS secretary, has been given a mandate to reshape Medicaid-funded services to close the budget gap.

    Smith hinted that big changes may be coming. In a statement, Smith said the state will focus its mental health care dollars on models that are centered on people’s needs, are community-based and are statistically proven to work. Mental health experts say such programs are in short supply in Wisconsin.

    Smith said state officials will “examine the entire continuum of care at every age” and coordinate mental health care with other medical needs —a move long sought by mental health advocates.

    Integration of mental health care with physical health care would help identify and prevent mental illnesses and reduce social stigma, said William Greer, president and CEO of the Mental Health Center of Dane County, a nonprofit agency that provides mental health and substance abuse services.

    “The human mind and body are one and the same,” Greer said at a February symposium, adding that treatment should be available “under one roof.”

    The new health secretary vowed to work with legislators, consumers, advocates and taxpayers in an “an open and deliberative process,” to identify ideas that will improve health while controlling spending, DHS spokeswoman Beth Kaplan said.

    But some advocates are still leery about how Smith will manage a $500 million cut to the state’s health services for the poor. In a previous position as a senior fellow at the Heritage Foundation, a conservative think tank in Washington, D.C., Smith encouraged states to opt out of Medicaid to save money and shed federal control over health care spending.

    In one of his first moves, Smith announced on March 18 that enrollment for the BadgerCare Basic program, which covers adults without dependent children who were unable to enroll in BadgerCare Core, is now frozen.

    Buege is worried about how her family may be affected by changes to Medicaid. Losing the benefit would leave her son without his medications and access to psychiatrists — the tools, she said, that have kept him mentally well instead of mentally ill.

    “We’re going to still go to the hospital, we’re still going to go to the doctor,” Buege said. “People can’t afford to pay the bill. So who’s it going to impact? It’s going to impact everybody.”

    Jane Pedersen of Menomonie in northwest Wisconsin has watched someone suffer needlessly because of a lack of affordable health insurance.

    Pedersen has traveled to Madison seven times to protest Walker’s budget repair bill. She said she knows a person with a mental health disability and no insurance who stopped taking medication when he could no longer afford it. When he began to hallucinate, he spent several days in a hospital’s intensive care unit, she said.

    “These people without health insurance tend to wait until they’re very sick to get help. ER care is the most expensive,” Pedersen said.

    Counties run mental health programs
    In Wisconsin, unlike in most other states, county governments run the publicly funded mental health care system, which is supported primarily by three funding streams: Federal Medicaid dollars matched by the county, state funding and local property taxes.

    Walker has proposed cuts to Medicaid and funding to local governments. He also is seeking to freeze local property taxes to prevent officials from making up for the loss of state funding by raising taxes.

    Some local officials are alarmed by Walker’s plan.

    “This could significantly devastate mental health and substance abuse (services),” said William Orth, director of the Sauk County Department of Human Services.

    While many states have cut funding in recent years, Wisconsin has maintained support for mental health services — although advocates say the system still falls far short of meeting the state’s needs.

    Mental health expenditures in Wisconsin at the county level actually increased by about 16 percent between 2005 and 2009, to more than $428 million, according to the Legislative Fiscal Bureau.

    But those increases may not mean more services, considering that “the cost of doing business has gone up” in health care, according to Ted Lutterman, director of research analysis for the National Association of State Mental Health Program Directors Research Institute in Alexandria, Va.

    It’s not clear what’s in store for mental health care in the current budget. The few broad categories in the governor’s budget that mention mental health care, including operation of the state’s two mental health institutes, show small increases from current funding levels, but little detail is available.

    “Funding is being cut everywhere and mental health is getting increases. I think that shows where Walker’s priorities are. It clearly displays he has compassion for the mental health community,” said state Sen. Mary Lazich, R-New Berlin, a member of the Senate public health committee.

    But Pasch said she is “very concerned” how well services for the mentally ill will fare when local governments start cutting their budgets.

    “When resources start becoming more and more scarce, my experience being a psychiatric nurse for 30 years is that mental health services are one of the first things to get cut,” Pasch said.

    If fewer poor people are insured under Walker’s proposed budget, counties still will be on the hook to pay for core mental health services, including hospitalization, according to Kathy Roetter, director of Wood County Unified Services, which provides mental health care to residents in central Wisconsin. But counties would lose federal Medicaid matching funds for those newly ineligible people, she said.

    DHS statement on mental health care
    The Wisconsin Center for Investigative Journalism asked Smith to comment on the future of the state’s public mental health care system.

    On the state's overall mental health funding: We are concerned that some individuals with mental illness are under-served in the current system or must navigate through a complex delivery system on their own. We will examine the entire continuum of care at every age. Our approach will be to identify models of care that work, support them, and replicate them. These models should be person-centered, community-based, and use evidence-based practices. Individuals will benefit from the coordination of their mental health services with other acute care medical services they need. We have already met with a variety of partners in the mental health community and have heard directly from consumers themselves. We look forward to working with everyone who is involved with improving the care to individuals in need of mental health services.

    On how the governor’s plan for $500 million in cuts is reflected in the budget: The Medicaid program faces a $1.8 billion shortfall, largely because of the expiration of more than $1 billion of federal American Recovery and Reinvestment Act (ARRA) funds on July 1. We are replacing those funds for DHS with $1.3 billion in new state General Purpose Revenue (GPR). To make up the rest of this federal shortfall, we will be looking for $500 million in savings in our Medicaid program. To bend this cost curve, and reduce expenditures by the projected amount, the Department will commence an open and deliberative process with legislators, stakeholders, advocates and taxpayers to identify and implement ideas aimed at improving health outcomes and controlling spending growth.

    Care for mentally ill shifts, leaving gaps
    Over the past 50 years, public mental health care in the United States has moved away from locked hospitals to community-based programs. Shifting federal budget priorities, a movement that advocated for the least-restrictive environment for the mentally ill, and a new generation of drugs for psychiatric disorders allowed more people to remain in the community.

    In 1955, psychiatric hospitals in the U.S. housed more than 550,000 people, according to research by Dr. E. Fuller Torrey, a research psychiatrist and founder of the nonprofit Treatment Advocacy Center, which is based in Arlington, Va. By 1994, that number had dropped by 87 percent to 71,619 people.

    But as hospitals emptied out, the funding didn’t necessarily flow to those community programs. Much of it simply disappeared.

    A recent study from the federal Substance Abuse and Mental Health Services Administration (SAMHSA) found that when adjusted for population and increased medical costs, the United States spent $261.7 billion in 1955 and only $30.9 billion in 2006 in funding for mental health care.

    Wisconsin lacks services for young
    Hugh Davis, executive director of the nonprofit Wisconsin Family Ties, says funding isn’t the only problem afflicting Wisconsin’s public mental health system. One of the greatest problems he and other advocates see is the lack of adequate mental health care for children and teenagers.

    “There is ample evidence that that system has been neglected by our state for a long time,” said Davis, whose organization helps families with children who have emotional, behavioral and mental disorders.

    He points to data that show Wisconsin is last among all Midwestern states in the percentage of children with serious emotional disturbance who are served by the public mental health system.

    In an investigation of rural health care last year, the Wisconsin State Journal found the state has just 90 child psychiatrists, forcing some children in northern Wisconsin to wait up to two years to get counseling or medication.

    System ‘just too complicated’
    Lori Krinke of Madison, who has three children with disabilities, said it took her a long time to get help for her youngest son. Krinke is associate director of Wisconsin Family Ties.

    Krinke said last year, it was nearly two months before she could find a bed at a state-run mental health facility for her teenager, who was no longer safe at home because he was chronically suicidal.

    “Honestly, if he hadn’t gone to Winnebago (Mental Health Institute), he would not have made it to his 14th birthday,” she said.

    Krinke says people with serious mental illnesses in Wisconsin have to jump through too many hoops to get the help they need.

    “When it came to looking for resources for mental health for children, I didn’t even know where to turn. Frequently, the people who work within the system don’t know how to navigate the system. It’s too complicated,” Krinke said. “And the funding isn’t there.”

    Smith, the new health secretary, acknowledged the complexity and gaps in the system.

    “We are concerned that some individuals with mental illness are underserved in the current system or must navigate through a complex delivery system on their own,” he said.

    Community-based programs underfunded
    The outpatient programs that partly replaced hospitalization — including drugs, counseling, case management and day programs — are cheaper and more effective for maintaining mental health for all but the most serious cases. But in some parts of Wisconsin, they’re hard to come by.

    About 30 years ago, Wisconsin was seen as having one of the top mental health systems in the country because of its strong county system, according to Shel Gross, director of public policy for Mental Health America of Wisconsin, a Milwaukee-based nonprofit advocacy group. But in recent years that system has actually become a liability, he said.

    There is significant variation from county to county in the quality of mental health care because county boards decide what to offer and how many people they can afford to help.

    As one measure, Shawano County spent the least on each person receiving services in 2009 at $1,534, while Jackson County spent $9,571 on each client — six times as much, according to figures provided by DHS and analyzed by the Center.

    “It’s not fair that residents get different services depending on where they live,” said Roetter from Wood County.

    Demand, cost up; community aid down
    State funding for human services, including mental health care, comes to counties primarily in what are called community aids. While medical costs have risen and demand has increased, the state’s community aids funding has remained nearly flat for more than 20 years, according to a report by the Wisconsin Council on Mental Health.

    Community aids funding for the current year is $257.6 million. If adjusted for inflation, the amount of community aids has actually fallen by more than $185 million in 20 years, according to the council.

    Another stream of funding from the state to counties is shared revenue, which usually goes to pay for highways and other county services. The governor’s budget cuts shared revenues to counties by $36.5 million in calendar year 2012, from an estimated $183 million in 2011.

    If the cuts in shared revenue and freeze in property taxes proposed by Walker are approved by the Legislature, counties will need to cut somewhere.

    “How do you choose?” said Sarah Diedrick-Kasdorf, a senior legislative associate with the Wisconsin Counties Association. “How do you pick? Children or the elderly? Someone with a mental illness or a mother who needs help?”

    Buege is glad that when her son needed it the most, the help was there.

    “My kid is living proof; he would be costing us all a lot of money right now if we didn’t get those services,” she said. “And instead he’s going to be a taxpaying member of society.”

    Reporter Kate Golden of the Wisconsin Center for Investigative Reporting contributed to this report. The nonprofit center (www.WisconsinWatch.org) collaborates with Wisconsin Public Television, Wisconsin Public Radio and the UW-Madison School of Journalism and Mass Communication and other news media. Lauren Hasler is at lhasler@wisconsinwatch.org.

     

  • Health care ruling could leave poorest Americans at greatest risk

    Former Medicaid and Medicare director Donald Berwick says few states were likely to reject the Medicaid funds despite the court's decision.

    By M. Alex Johnson, msnbc.com

    Updated at 7:04 p.m. ET: Now that the Supreme Court has upheld President Barack Obama's health care initiative, will Congress have to rewrite it from scratch?

    M. Alex Johnson M. Alex Johnson is a reporter for msnbc.com. Follow him on Twitter and Facebook.

    It's not a paradoxical question. The court signed off on nearly all of the Patient Protection and Affordable Care Act, but it struck down one provision, and in doing so — whether it knew it or not — it may have put the poorest Americans at the greatest risk of being left without any health insurance.

    Chief Justice John Roberts said as part of the 5-4 decision that states can't be penalized for refusing to join the law's expansion of Medicaid eligibility. Health law experts said that had the practical effect of flipping an all but mandatory program into one a state can choose not to join.

    Here's the problem: The ACA creates state health insurance "exchanges," providing tax credits to eligible residents to buy affordable, state-certified health insurance. But the poorest Americans aren't in that eligible pool, because the law assumes they'll be covered by the expansion of Medicaid, which is no longer a given. 

    In states that reject the expansion, poor residents could be left without either form of coverage — as many as 15 million if all 50 states opt out, a circumstance that former Medicaid director Donald Berwick said was highly unlikely.

    The White House didn't address the issue in a long Q&A it issued on the court's decision. The statement touted every provision of the act but one: Medicaid expansion.

    Medicaid currently covers only some low-income people, primarily parents with children, pregnant women, people with severe disabilities and senior citizens. Adults without disabilities or children, in other words, aren't generally covered. That's the group the Medicaid expansion was supposed to help the most.

    Supreme Court upholds health care mandate

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    After the ruling: Lots left to do on health reform

    Full ruling from the court

    If their states opt out, young working adults below the poverty line could be in a Catch-22, because "they may not get Medicaid, and they may not be eligible to purchase insurance through the exchange," said Christina S. Ho of the Rutgers University School of Law, who was a member of President Bill Clinton's Domestic Policy Council. 

    It works this way:

    The insurance tax credits are targeted at people with incomes between 100 percent and 400 percent of the poverty line as determined by the U.S. Census Bureau. Congress sought to compel the states to cover everyone under the line through Medicaid.


    The federal government promised to fully cover all expenses for the expanded coverage before eventually pulling back to cover 90 percent after a few years. The states would have to pick up the extra 10 percent eventually.

    States aren't required to take part, but if they don't, the law as enacted would have turned off the flow of all Medicaid funding from Washington. 

    That enforcement mechanism is what the court invalidated Thursday, meaning there's no penalty for a state that says, "Thanks, but no thanks."

    Twitter reactions to the ruling

    Because states haven't had time to consider yet whether they will opt in or out. it's difficult to say how many people could be affected. 

    But about half of the nearly 50 million uninsured Americans have incomes below the new eligibility thresholds, according to the latest report, in October, from the Kaiser Commission on Medicaid and the Uninsured. And about 6 in 10 of them are adults without dependent children — the primary beneficiaries of the program's expansion.

    If you do the math, roughly 15 million Americans could be in the newly created gray area. In 2010, when the act was passed, the Commonwealth Fund, an independent health care policy foundation, similarly calculated that the Medicaid expansion would benefit 12 million of the 15 million uninsured Americans under the poverty line. 

    Donald Berwick, former head of the Centers for Medicare and Medicaid Services, which administers the two programs, said few states were likely to take that risk.

    "Those people are still living in your state, They're still poor. They're going to come to your emergency room. They're going to be operated on, and they're going to have diseases that get worse, and you're going to have to pay for that. That will come from the state — free care pools and charity in the state," Berwick said in an interview on MSNBC-TV. 

    "I think what's going to happen is the states are going to be under pressure from providers of care who say: 'Why are you leaving this money on the table? Let's join in with the federal dollars.'"

    But Judy Solomon, vice president for health policy at the nonpartisan Center on Budget and Policy Priorities, agreed with Ho that the decision means low-income adults could lose the promise of Medicaid coverage "even while people with somewhat higher incomes will be eligible for premium tax credits." 

    Writing on the center's policy blog, Solomon said: "The poorest adults — primarily parents and other adults working for low wages — will be left out in the cold."

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  • Medicaid ruling upholds 'carrot,' overturns 'stick'; will states sign on anyway?

    Virginia Republican Gov. Robert McDonnell said that even at 90 percent federal funding, the Medicaid expansion would be a "crushing" burden on many states.

    By M. Alex Johnson, msnbc.com

    Updated at 3:20 p.m. ET: While it upheld most of President Barack Obama's health care reform program Thursday, the Supreme Court took away the stick the White House had hoped to use to force states to expand Medicaid coverage for millions of poor Americans.

    M. Alex Johnson M. Alex Johnson is a reporter for msnbc.com. Follow him on Twitter and Facebook.

    The court, in an opinion by Chief Justice John Roberts, said states can't be penalized for refusing to join the Medicaid expansion by losing all of their federal Medicaid funds. That leaves cash-poor states in the position of deciding during an election year whether the benefits of the expansion outweigh the potential downsides — both financial and political.

    First, some background. Medicaid currently covers many families that are at or below about 63 percent of the poverty line, with some categories — such as children under age 6 — covered up to 133 percent. But most states don't cover lower-income adults.

    The Patient Protection and Affordable Care Act sought to compel states to expand coverage to nearly everyone up to the 133 percent threshold — income of about $30,000 a year for a family of four — which would add about 17 million people to the Medicaid rolls.

    The carrot was the federal government's promise to cover all of the states' Medicaid expenses for the new enrollees through 2016, gradually dropping to 90 percent by 2019. The stick was that states that refused to sign on would lose all of their federal Medicaid funding.

    Christina S. Ho of the Rutgers University School of Law told msnbc.com that the decision could leave the poorest residents of states that decline the money in a particularly vulnerable situation.

    Another provision of the law the so-called state health insurance exchanges, extends subsidies to people between 100 percent and 400 percent of the poverty line to buy coverage. But if you're below the poverty line, you're not eligible — because the law assumes you'll get the new Medicaid benefit.

    So if a state rejects the expansion of Medicaid, "there are some people that may not be able to get coverage at all," said Ho, who was a member of President Bill Clinton's Domestic Policy Council. "They may not get Medicaid, and they may not be eligible to purchase insurance through the exchange."

    States charge plan was blackmail
    Twenty-six states filed a petition with the court arguing that the provision was unconstitutional, saying it amounted to blackmail: Either they accept the added funding for a few years, with its increased burden on state coffers in later years, or they lose all of their billions of dollars of federal Medicaid distributions.

    That would be a crippling financial blow, because states can't opt out of Medicaid itself. Currently they pay about 40 percent of those expenses; without any federal funding, they would have to come up with the remaining 60 percent themselves.

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    Roberts upheld the constitutionality of the expansion itself, in essence saying the carrot was fine but the stick was illegal.

    "Nothing in our opinion precludes Congress from offering funds under the Affordable Care Act to expand the availability of health care, and requiring that States accepting such funds comply with the conditions on their use," he wrote. "What Congress is not free to do is to penalize states that choose not to participate in that new program by taking away their existing Medicaid funding." 

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    "The states claim that this threat serves no purpose other than to force unwilling states to sign up for the dramatic expansion in the health care coverage effected by the act," he added. "Given the nature of the threat and the programs at issue here, we must agree.”

    While it might be fair to say the ruling turned a virtually mandatory program into a voluntary one, few if any states are likely to reject the increased coverage for so many more of their residents, said Katherine Hayes, a lawyer who is an associate research professor for the George Washington University School of Public Health and Health Services.


    "I think, to the extent that they do, it will be largely for political reasons rather than financial or policy reasons," Hayes told msnbc.com. In an election year, it might be useful for some conservative lawmakers "to say you oppose quote-unquote Obamacare," she said.

    Jay Bhattacharya, a physician and economist at the Stanford University Center for Health Policy, disagreed, saying some state budgets are so stretched that state officials might "consider this option since they will ultimately be on the hook for financing at least a portion of this expansion."

    "If enough states decide to deny the Medicaid expansion, this may substantially reduce the ability of ACA to expand insurance coverage," Bhattacharya wrote on the center's health policy blog.

    Virginia Gov. Robert McDonnell predicted that would happen, saying that once the federal contribution begins dropping, states will still be left with a large "unfunded mandate" — $2.2 billion over 10 years in his state, he said.

    "We've already had Medicaid grow from 5 percent to 21 percent of our budget in the last 30 years, and for every governor, these mandates are crushing expenditures to endure," McDonnell, chairman of the Republican Governors Association, said in an interview on MSNBC-TV. "So this is a real hardship."

    But Hayes said that in practical terms, the incentives for states to sign on are too big to turn down: They can provide hundreds of thousands of residents with health care coverage at no cost for a few years, and even in the outlying years (when the federal government will pick up only 90 percent of the bill), they can work on strategies to mitigate the reduction, such as seeking waivers from the Department of Health and Human Services.

    "I don't know what more the federal government or (Health and Human Services) could do" to bring reluctant states on board, she said.

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