Question: Our hospital wants to provide premium assistance for uninsured patients who seek treatment at our hospital (but are not eligible for Medicaid in our state) to purchase a qualified health plan (“QHP”) on the health insurance exchanges. Are we allowed to offer this type of premium assistance?
Answer: Before doing so, your hospital would have to take into account a number of federal laws, such as the Anti-Kickback Statute, to be sure that the premium assistance does not violate those laws. For example, the question of whether premium assistance for QHPs violates the Anti-Kickback Statute depends on whether QHPs are federal health care programs. These questions have suffered from less than clear guidance in the latter part of 2013. The issue first gained attention when Congressman Jim McDermott sent a letter to Kathleen Sebelius, Secretary of the U.S. Department of Health and Human Services (“HHS”), asking “whether ‘qualified health plans’ represent ‘federal health care programs’ for purposes of participating in the federally-facilitated exchanges and the state-based exchanges….” Congressman McDermott’s question was based on some individuals being eligible to receive premium tax credits and cost?sharing subsidies to enable them to purchase health insurance on the exchanges. According to Congressman McDermott, the question of whether these government contributions qualify the exchanges and/or QHPs as federal health care programs has not been answered by HHS.
In a reply letter dated October 30, 2013 from Secretary Sebelius to Congressman McDermott, the Secretary wrote that:
The Department of Health and Human Services does not consider QHPs, other programs related to the Federally-facilitated Marketplace, and other programs under Title I of the Affordable Care Act to be federal health care programs. This includes the State-based and Federally-facilitated Marketplaces, the cost?sharing reductions and advance payments of the premium tax credit; Navigators for the Federally-facilitated Marketplaces and other federally funded consumer assistance programs; consumer?oriented and operated health insurance plans; and the risk adjustment, reinsurance, and risk corridors programs.
As such, Secretary Sebelius’s response indicates that premium assistance would not violate the Anti-Kickback Statute, because the plans purchased on the exchanges are not considered “federal health programs.” However, her response does not fully address other federal laws that this type of premium assistance may implicate.
On November 4, 2013, HHS Centers for Medicare & Medicaid Services (“CMS”) posted a Q&A on its website. The question asked whether hospitals, other health providers, and other entities were “permitted to make premium payments to health insurance issuers for qualified health plans on behalf of enrolled individuals.” HHS answered as follows:
[HHS] has broad authority to regulate the Federal and State Marketplaces (e.g., section 1321(a) of the Affordable Care Act). It has been suggested that hospitals, other health providers, and other commercial entities may be considering supporting premium payments and cost-sharing obligations with respect to qualified health plans purchased by patients in the Marketplaces. HHS has significant concerns with this practice because it could skew the insurance risk pool and create an unlevel field in the Marketplaces. HHS discourages this practice and encourages issuers to reject such third party payments. HHS intends to monitor this practice and to take appropriate action, if necessary.
It should be noted that CMS’s Q&A is not the law and if CMS wanted to enforce its opinion expressed in the Q&A, it would have to go through the rulemaking process by first issuing proposed regulations that solicit feedback from the public and then finalizing the regulations after considering the feedback.
Nonetheless, some hospitals are trying to minimize the risk of “self-dealing” by using independent third parties to provide premium assistance. For example, the University of Wisconsin Hospital and Clinics donated $2 million to a local charity to provide assistance in purchasing QHPs on the health insurance exchanges rather than providing the money directly to individuals in need of such assistance.