Chairman Roskam, Ranking Member Lewis, and members of the committee, thank you for the opportunity to testify today on the use of administrative actions to implement the Affordable Care Act.

My name is Grace-Marie Turner, and I am president of the Galen Institute, a non-profit research organization focusing on patient-centered health policy reform. I served as an appointee to the Medicaid Commission from 2005-2006, as a member of the Advisory Board of the Agency for Healthcare Research and Quality from 2005 to 2007, and as a congressional appointee to the Long Term Care Commission in 2013.

The U.S. Supreme Court is considering a question that goes to the heart of the issue before the committee today. Did the Obama administration, through the Internal Revenue Service, have legal authority to allow premium assistance tax credits to be available in federally-facilitated health insurance exchanges? Or are the credits available only through an "Exchange established by the State," as the law specifies numerous times.

The court will decide that question within a month. I understand other witnesses today will be addressing issues in KingvBurwell. But this is by no means the administration's only controversial action involving regulatory interpretation that challenges the language of the statute. The Galen Institute has been chronicling changes made to the Affordable Care Act since it was enacted in 2010, and we count at least 50 changes - 31 of them made by the administration. In addition, there have been 17 changes passed by Congress and signed into law by President Obama, and two changes made by the Supreme Court. I have appended our list to my testimony. n1

Today, I will discuss 1) examples of actions by the administration that are clearly contrary to the statute; 2) failed and successful congressional actions to provide legal authority to changing the law; and 3) additional changes only now being uncovered.

Administration actions contrary to the statute

Many of the changes the administration has made through regulation are not based upon the language of the statute. A few examples:

* Employer mandate delay: An announcement leaked on July 2, 2013, that the administration would not take enforcement action until the beginning of 2015 against employers that fail to comply with the law's employer mandate requirements. n2 The ACA requires the provision to have taken effect on January 1, 2014. The administration subsequently announced an additional change, allowing employers with at least 50 but fewer than 100 employees an additional year to comply with the law.

* Self-attestation: Because of the difficulty of verifying income and employment after the delay of the employer reporting requirement described above, the administration decided to allow "self-attestation" of income and eligibility by people applying for health insurance in the exchanges. n3 Besides being contrary to the requirements in the statute, this has caused a cascade of hardship for people who understated their income. When they filed their income tax returns with the IRS this spring, they were required to reconcile the amount of subsidy they received with their actual income. More than half by one estimate had to pay back some or all of the subsidy the government had paid to health insurance companies on their behalf to reduce their monthly premiums. H&R Block estimates that 52 percent of its customers who received health coverage through the insurance exchanges in 2014 owed an average subsidy repayment of $530. n4

* Medicare Advantage cuts: The administration continues to resist efforts by government auditors to comply with the law regarding payments to Medicare Advantage plans. To pay for expanded Medicaid and exchange insurance, the ACA calls for significant cuts to the popular MA program, which provides seniors with access to private health plans within Medicare.

The nonpartisan Government Accountability Office called for the administration to cancel an $8.3 billion program it has tapped to pay "quality bonuses" to Medicare Advantage insurance plans. The administration has used the bonus payments to postpone the pain of cuts to MA plans that are called for in the law. Most of the money has gone to plans rated average or worse. The GAO concluded, "The Secretary of HHS should cancel the MA Quality Bonus Payment Demonstration and allow the MA quality bonus payment system established by PPACA to take effect. If, at a future date, the Secretary finds that this system does not adequately promote quality improvement, HHS should determine ways to modify the system, which could include conducting an appropriately designed demonstration." n5 The administration ignored the GAO's recommendation, and it also has ignored demands from Congress to stop the illegal payments.

Other controversial administration actions include several decisions to permit insurers to renew noncompliant policies in the individual and small group markets until in some cases October 1, 2016, even though the law explicitly says that plans must be compliant with the law's coverage standards no later than January 1, 2014. n6 The administration also has created special enrollment periods that have exempted individuals from fines and penalties called for in the statute. n7 I refer you to the appendix in my testimony for additional examples of the administration's regulatory changes to the law.

Lack of transparency

The administration also has been criticized for its lack of transparency in its financing of the implementation of the law. For example:

* Co-op funding: The administration released a list on December 22, 2014, of $300 million it had allocated in "solvency funds" last year to Consumer Operated and Oriented Plan (co-op) plans. n8 There is no explanation of the criteria used to determine why some co-ops received added federal funding and others didn't and why some received very generous awards and others much smaller amounts - or nothing. Nor is there any explanation about who decides which co-ops fail and which get additional infusions of federal funds. The branch of CMS in charge of overseeing the co-op program, the Center for Consumer Information & Insurance Oversight (CCIIO), is supposed to allow the various co-ops to draw down the funds in increments as they meet or exceed developmental milestones -but those milestones remain confidential contractual agreements that have not been disclosed to the public.

* Cost-sharing reductions: Treasury Department has rebuffed a request by Ways and Means Chairman Rep. Paul Ryan to explain $3 billion in payments the administration has made to health insurers even though Congress never authorized the spending through annual appropriations. n9 The payments to insurers are known as cost-sharing subsidies designed to limit out-of-pocket costs for certain low income individuals for health insurance deductibles, co-payments, and co-insurance. But Congress never authorized any money to make these payments to insurers in its annual appropriations. The administration made the payments anyway.

The issue is part of the lawsuit filed by House Speaker John Boehner. Administration lawyers contend that congressional leaders are wrong, saying in a legal brief, "The cost sharing reduction payments are being made as part of a mandatory payment program that Congress has fully appropriated." But the administration undercut its own argument when HHS asked n10 Congress for an annual appropriation of $4 billion to finance the costsharing payments in 2014 and another $1.4 billion "advance appropriation" for the first quarter of fiscal year 2015, "to permit CMS to reimburse issuers ..." The request was an acknowledgement that HHS needs congressional appropriations to make the payments. Congress rejected the request, but the administration made the payments to insurers anyway.

Congressional attempts to provide statutory authority to administrative changes to the law

There have been numerous instances when the administration has made what many Members of Congress consider to be an illegal change to the law but a change with which many in Congress agree. Congress has attempted to pass legislation to give legal standing to the change but has been rebuffed by the administration. For example:

* Employer mandate delay: When the administration issued its blog post on July 2, 2013, announcing the employer mandate delay, the House of Representatives later that month passed legislation that would have given legal standing to the delay. But the White House issued a Statement of Administration policy saying that the president would veto the legislation if it were to reach his desk. The legislation, which passed the House with bi-partisan support to grant a legal delay of the employer mandate, never reached the president's desk because it died in the Senate. n11

* Keep your Health Plan: Similarly, the House passed on November 15, 2013, with bipartisan support the Keep Your Health Plan Act of 2013. It would have permitted health insurance companies to continue to offer individual coverage that was in effect as of January 1, 2013, even if the policies did not meet ACA requirements. The administration threatened to veto the legislation had it reached the president's desk (which it did not), even though it would have codified a change made by the administration to permit states to allow insurers to renew non-compliant plans. n12

Legislation which was enacted to provide statutory authority to changing the law

The administration has claimed it made the changes through regulation because Congress refused to consider legislative fixes. But the record proves that wrong. At least 17 changes to the law have been passed by both houses of Congress and signed into law by President Obama. Here are three examples:

* CLASS Act repeal. After extensive study, the Department of Health and Human Services concluded that the Community Living Assistance Services and Supports (CLASS) Act could not be self-sustaining as required by law. The CLASS Act was repealed on January 2, 2013. n13 (The legislation called for creation of a Long-Term Care Commission, on which I served, that developed an extensive and impressive list of reform recommendations for Congress. Our report was issued on September 30 of that year. n14)

* 1099 repeal. On April 14, 2011, Congress repealed the controversial 1099 reporting provision that would have required businesses to report (on IRS Form 1099) whenever they pay a vendor more than $600 for goods in a single year. n15

* Medicaid fix. Couples earning as much as $64,000 a year would have been able to qualify for Medicaid because of definitions of income calculations in the ACA. Congress saved taxpayers at least $13 billion when it amended this provision on November 21, 2011. n16

More changes revealed

We continue to discover new evidence that the administration is not following the statute in its implementation of the law. The latest example was uncovered by Prof. Andy Grewal of the University of Iowa College of Law. n17 n18

Coverage for some people under 100% FPL and for unlawful immigrants: The ACA provides tax credits to U.S. citizens with incomes between 100 and 400% of poverty, but IRS rules expanded the eligibility to extend the credits to citizens below 100% FPL in some cases. n19

Also, Section 36B of the ACA grants credits to some non-citizens with low-incomes only if they are themselves lawfully present in the U.S. and cannot obtain Medicaid coverage. However, IRS regulations contradict the statute and allow subsidies if "the taxpayer or a member of the taxpayer's family is lawfully present in the United States," and "the lawfully present taxpayer or family member is not eligible for the Medicaid program." n20

Health reform was needed, and people have received coverage

Our health sector definitely needed reform, especially to expand coverage to millions of people who had been shut out of insurance in the past. The Affordable Care Act has extended health insurance coverage to many people who needed insurance but could not afford it or obtain it because of pre-existing conditions. There was bi-partisan support in Congress when bills were being debated to achieve these goals, but instead of pursuing a bi-partisan solution, the Affordable Care Act was pushed through on a strictly partisan basis with unusual parliamentary maneuvers. This process did not leave Congress the usual ability to fix problems with the language in the Senate bill in conference.

The 50 changes already made to the law show that the law would have been difficult if not impossible to implement as it was written and passed. However, it is not the job of the administration to fix the law but to implement it as written. The U.S. Constitution requires the executive branch to seek new legislation, as it has done at least 17 times with the ACA, if changes to the law are needed. I would oppose these illegal administration actions no matter who was in the White House because they undermine the rule of law.

Companies inside and outside the health sector have spent countless billions of dollars trying to comply with the ACA. When the administration makes what some call "minor temporary course corrections," it causes a new cascade of disruption and expenses for companies and makes it even harder for them to comply not only with the law but with ever-changing regulations.

We have a process by which laws are to be enacted and changed, and that process has not been followed in implementing key provisions of the Affordable Care Act, as I have described here. I thank the committee for holding this hearing today to shed light on this issue. If our constitutional system of government is to survive, it must be based upon the rule of law.

ENDNOTES

n1 Grace-Marie Turner, "Fifty Changes to ObamaCare...So Far." Galen Institute, May 18, 2015. www.galen.org/newsletters/changes-to-obamacare-so-far/

n2 Internal Revenue Service, "Transition Relief for 2014 Under [Subsec.] 6055 (Information Reporting), 6056 (Information Reporting) and 4980H (Employer Shared Responsibility Provisions)," Notice 2013-45, July 9, 2013, http://www.irs.gov/pub/irs-drop/n-13-45.PDF.

n3 Federal Register 42159, http://www.gpo.gov/fdsys/pkg/FR-2013-07-15/pdf/2013-16271.pdf

n4 Anna Gorman, "For Many Middle-Class Taxpayers On Obamacare, It's Payback Time," February 26, 2015. Kaiser Health News. http://kaiserhealthnews.org/news/for-many-middle-class-taxpayers-on-obamacare-its-payback-time/

n5 Government Accountability Office, "Medicare Advantage: Quality Bonus Payment Demonstration Undermined by High Estimated Costs and Design Shortcomings." GAO-12-409R: Published: March 21, 2012. Publicly Released: April 23, 2012. http://www.gao.gov/products/GAO-12-409R

n6 Department of Health & Human Services, Centers for Medicare & Medicaid Services, "Insurance Standards Bulletin Series - Extension of Transitional Policy through October 1, 2016." March 5, 2014. http://www.cms.gov/CCIIO/ Resources/Regulations-and-Guidance/Downloads/transition-to-compliant-policies-03-06-2015.pdf.

n7 Congressional Research Service, "Implementing the Affordable Care Act: Delays, Extensions, and Other Actions Taken by the Administration." March 3, 2015. http://fas.org/sgp/crs/misc/R43474.pdf

n8 CCIIO, CMS, HHS, "Loan program helps support customer-driven non-profit health insurance," December 22, 2014. http://www.cms.gov//CCIIO/Resources/Grants/new-loan-program.html

n9 Philip Klein, "Treasury Won't Explain Decision To Make $3 Billion in ObamaCare Payments," February 26, 2015. Washington Examiner. http://www.washingtonexaminer.com/treasury-wont-explain-decision-to-make-3-billion-in-obamacare-payments/article/2560739

n10 http://www.cms.gov/About-CMS/Agency-Information/PerformanceBudget/Downloads/FY2014-CJ-Final.pdf

n11 Authority for Mandate Delay Act passed the House 264-161 on July 17, 2013, H.R. 2667. It would have codified the administration's announcement delaying the employer mandate and reporting requirements. Similarly, the House passed on that same date the Fairness for American Families Act 2510174 H.R. 2668 that would have delayed enforcement of the individual mandate by a year. Both died in the Senate.

n12 Keep Your Health Plan Act of 2013 passed the House 261-157 on November 15, 2013. It would have codified the administration's action allowing continuation of non-compliant health plans beyond the statutory deadline.

n13 Congressional Research Service, "Legislative Actions to Repeal, Defund, or Delay the Affordable Care Act," March 2, 2015. https://www.fas.org/sgp/crs/misc/R43289.pdf

n14 Commission on Long-Term Care. "Report to Congress." September 30, 2013. http://www.gpo.gov/fdsys/pkg/GPO-LTCCOMMISSION/pdf/GPO-LTCCOMMISSION.pdf

n15 Congressional Research Service, "Legislative Actions to Repeal, Defund, or Delay the Affordable Care Act," March 2, 2015. https://www.fas.org/sgp/crs/misc/R43289.pdf

n16 Ibid

n17 Andy S. Grewal, "Lurking Challenges to the ACA Tax Credit Regulations." May 2015. Publication pending. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2598317

n18 Andy S. Grewal, "Another 'Glitch' with the ACA Tax Credit?" March 30, 2015. Yale Journal on Regulation. http://www.yalejreg.com/blog/another-glitch-with-the-aca-tax-credit-by-andy-grewal

n19 Federal Register /Vol. 76, No. 159 /Wednesday, August 17, 2011. http://www.gpo.gov/fdsys/pkg/FR-2011-08-17/pdf/2011-20728.pdf

n20 Ibid

Read this original document at: http://waysandmeans.house.gov/UploadedFiles/2015_05_20_Oversight_Turner_Testimony.pdf

Maryland regulators fined Cigna Health and Life Insurance Company $80,000 and ordered it to stop reducing payments on certain doctor-billed services — a practice that could leave patients on the hook for more of their health care costs.

“Insurers must either pay a claim, deny it with a stated reason, or request additional information,” MedChi CEO Gene Ransom told The Baltimore Sun. “Unilaterally rewriting the physician’s code is unacceptable. This action sends a clear message that abusive insurance practices will not be tolerated in Maryland.”

MedChi, also known as the Maryland State Medical Society, advocates for physicians, residents, and medical students. A complaint from a MedChi representative in August alerted the Maryland Insurance Administration to Cigna’s policy of downcoding, or changing a submitted medical billing code to a lower-level code, reducing reimbursement for services rendered. Insurance providers often claim that the cost-containment strategy is justified when the medical documentation does not support the higher code level submitted by the provider.

Cigna’s policy took effect in October, insurance administration spokesperson Craig Ey said. Cigna covers nearly 358,000 households in Maryland, although Ey said it is unknown how many residents were impacted by downcoding.

Cigna, whose CEO David Cordani earned $23.3 million in 2024, according to Becker’s Payer Issues, singled out doctors who consistently billed for higher-cost procedures than their peers and paid them for lower-cost treatment without explaining the changes, which is illegal under Maryland law, according to the Maryland Insurance Administration order. The 10-page finding requires Cigna to pay doctors within 30 days, or acknowledge receipt of their bill and provide one of three responses: deny the claim with a reason, dispute the legitimacy of the claim, or ask for additional information.

Effectively, the order gives insurers a choice between paying the bill, asking for more information or accusing the doctor of fraud or improper billing, Ransom said. Cigna’s practice cuts or delays payment for treatments already delivered, taking doctors’ time away from caring for patients.

The practice had angered physicians and their representatives around the country, including California, Texas, and Memphis, Tennessee.

A Cigna Healthcare spokesperson emailed The Baltimore Sun a statement stating, “Our Evaluation and Management policy is based on American Medical Association guidelines to promote more accurate reimbursement, and it only impacts around 1% of the physicians in our national network.

“Consistent with the Maryland Insurance Administration’s guidance and in compliance with Maryland law, we will continue limited reviews of certain claims to help ensure customers are protected from improper billing.”

The Maryland Insurance Administration investigated the top five health insurers in the state, including Cigna, in November, looking for instances of downcoding, but did not find the four other carriers engaging in the practice, Ey told The Sun via email Thursday. Previously, the administration issued a consent order to Aetna Health for downcoding in March 2021.

Although Cigna quoted that 1% impact figure to the administration, Ey said, “the MIA is not aware of the specific number of claims impacted. Cigna did reprocess all impacted claims back to the October 1, 2025, effective date as a result of the order.”

The American Medical Association advises medical practices “must keep a vigilant eye on payment details to identify downcoded claims,” as many insurers unilaterally downcode services without notice. Its policy advocates for insurers to reach out to outlier physicians first to address coding issues. The AMA policy also supports increased notification and communication with doctors about downcoded claims.

Ransom said Cigna’s reviews take a toll on patient care.

“Downcoding is not a harmless administrative adjustment,” he said. “It undermines physician judgment, delays payment for legitimate care, and ultimately harms patients by destabilizing the physician practices that care for them.”

Downcoding may shift costs onto the patient, similar to a claim denial, but Ey said that depends on many factors.

“It is possible that the practice of downcoding has impacts on patients, but the exact nature of the impact is likely determined by the service that is downcoded and the nature of the coverage a patient has,” Ey said. “Downcoding certainly creates administrative headaches for providers, which may cause downstream impacts for patients.”

If a provider believes they haven’t been properly reimbursed even after Cigna reprocessed their claims, they can file a complaint with the Maryland Insurance Administration online or by phone.

Have a news tip? Contact Karl Hille at 443-900-7891 or [email protected]. Contact Racquel Bazos at [email protected], 443-813-0770 or on X as @rzbworks.

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