The HITECH Act Is Constitutional

Conservative and libertarian writers, some with ties to the Reagan and Bush I administrations, have written that health insurance mandates—which may end up in a final federal health insurance reform law—are well beyond the constitutional authority of the federal government to tax, spend, and regulate interstate commerce. Others have picked up on these arguments and applied them to the EHR-implementation incentives under the HITECH Act as well. The bottom line is that these arguments fail, for four reasons:

First, there is no mandate to implement EHRs in the HITECH Act. The EHR incentive provisions allow for reimbursement of certain costs, up to a stated maximum per provider, for the “meaningful use” of a “certified” EHR. Definitions of these key terms are being worked out by governmental advisory boards and should be formally adopted by the end of December. Failure to begin meaningful use of a certified EHR system will result in a penalty, or discount, being applied to payments for services provided to enrollees in federal healthcare programs after the phase-in period is complete, in 2015.

As is the case with many other initiatives promoted by the federal government when it is acting as a third-party payor, incentives are provided for early adoption of new initiatives and/or penalties are imposed for failure to comply by the end of a phase-in period, with the financial incentives for compliance increasing over time. One example of this is the Reporting Hospital Quality Data for Annual Payment Update (RHQDAPU) system of “pay for reporting” of quality indicators by hospitals. It may feel like a mandate to some, but the existence of incentives and disincentives under a Medicare provider agreement do not a mandate make. No provider is required to participate in the Medicare program.

Second, even if the HITECH Act were a mandate for the use of EHRs, it would easily survive an attack based on the Commerce Clause of the US Constitution. Due to the limited powers granted by the states to the federal government, federal laws affecting economic activity may only be adopted if they regulate interstate commerce. Such a challenge to the HITECH Act, then, would have to be based on the contention that the federal government lacks the authority to regulate the delivery of healthcare services, because healthcare is neither “economic activity” nor an activity touching on interstate commerce. Given the development of Commerce Clause jurisprudence in the US Supreme Court, it is too late in the day to assert that healthcare services—even though they may be provided locally—do not involve interstate commerce. To suggest that healthcare a $2.4 trillion sector of the US economy involves only local commerce and/or “non-economic activity” strains credulity.

Third, the argument has been made that Congress cannot tax what it cannot otherwise regulate, with the corollary being that a financial penalty associated with a decision not to adopt an EHR may not be imposed. While the basic proposition—that Congress may not tax what it cannot otherwise regulate—may have merit, the fact of the matter is that Congressional authority under the Commerce Clause is extremely broad; thus, there is indeed little that it cannot regulate and, therefore, tax. Many other sectors of the economy are constitutionally regulated and taxed; even if the HITECH Act’s disincentives were found to constitute a tax, they would be permissible under the US Supreme Court’s expansive reading of the Commerce Clause.

Finally, the HITECH Act may not be challenged as a bill of attainder, violating individual rights by imposing penalties without trial. Opponents of the law characterize the monetary penalty that may be imposed on Medicare providers that fail to make meaningful use of certified EHRs by 2015 as being similar to a government seizure of paychecks of Communists employed by the federal government in the 1940s—a legislative act that was overturned in the courts as a bill of attainder. The legitimate legislative purpose in the case of the HITECH Act is the anticipated improvement to the healthcare provided to Medicare beneficiaries served by providers adopting EHR systems, and the cost savings associated with anticipated system efficiencies; the class of persons being regulated is, appropriately, healthcare providers that participate in the Medicare program.

The promotion of meaningful use of certified EHRs by financial incentives and disincentives set forth in the HITECH Act pass constitutional muster as a rational set of rules designed to improve and streamline a significant sector of our economy.

Mr. Harlow is the Principal of The Harlow Group LLC, and is a healthcare lawyer and consultant based in Boston, MA. He helps healthcare providers and related businesses of all shapes and sizes realize their goals in an increasingly regulated environment. His blog, HealthBlawg, is recognized as a leading healthcare law and policy blog. Follow him on Twitter: @healthblawg.