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Analysts eye health care law rejection for Medicare impact

May 3, 2012 - By Ricardo Alonso-Zalvidar, The Associated Press

WASHINGTON -- Medicare's payment system, the unseen but vital network that handles 100 million monthly claims, could freeze up if President Barack Obama's health care law is summarily overturned, the administration has quietly informed the courts.

Although Obama's overhaul made significant cuts to providers and improved prescription and preventive benefits, Medicare was overlooked in Supreme Court arguments that focused on the law's controversial requirement that individuals carry health insurance.

Yet havoc for Medicare could have repercussions as both parties avidly court seniors in this election year and as hospitals and doctors increasingly complain the program doesn't pay enough.

In papers filed with the Supreme Court, administration lawyers have warned of "extraordinary disruption" if Medicare is forced to unwind countless transactions that are based on payment changes required by more than 20 separate sections of the Affordable Care Act.

Opponents say the whole law must go. The administration counters that even if it strikes down the insurance mandate, the court should preserve most of the rest of the legislation. That would leave in place its changes to Medicare as well as a major expansion of Medicaid coverage.

Last year, in a lower court filing on the case, Justice Department lawyers said reversing the Medicare payment changes "would impose staggering administrative burdens" on the government and "could cause major delays and errors" in claims payment.

Former program administrators disagree on the potential for major disruptions, while some private industry executives predict an avalanche of litigation unless Congress intervenes.

AARP says it's concerned. If doctors became embroiled in a legal battle over payments, then "a general concern would be that physicians would cease to take on new Medicare patients, as well as potentially have issues seeing their current patients," said Ariel Gonzalez, top health care lobbyist for the organization.

Medicare payment policies are set through a time-consuming process that begins with legislation passed by Congress. Even if the law were completely overturned, the government still would have authority under previous legislation to pay hospitals, doctors, insurance plans, nursing homes and other providers.

"There is an independent legal basis to pay providers if the Supreme Court strikes down the entire law," said Thomas Barker, a former Health and Human Services general counsel in the George W. Bush administration.

But reversing the new law's payment changes from one day to the next would be a huge legal and logistical challenge, raising many questions.

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