Background -

As we reported earlier this week, Rep. Jim McDermott, the ranking Democrat on the Ways and Means Health Subcommittee in the House of Representatives, received a response to his August 6 letter to Secretary of Health and Human Services, Kathleen Sebelius, on whether Qualified Health Plans (QHPs) sold on the new health care exchanges were considered “federal health care program[s]” under Section 1128B(f) of the Social Security Act. Sebelius responded that the QHPs were not considered federal health care programs and, as such, not subject to the provisions of the anti-kickback statute.

This is relevant because “federal health care programs,” as defined in the Social Security Act, are subject to the anti-kickback statute, which makes it a crime to pay or receive anything of value in return for the referral of patients or as an inducement for people to buy goods and services reimbursed by the programs (health plans). This was surprising news for most health care industry stakeholders who interpreted that the nearly $1 trillion in exchange subsidies (over the next decade) to help defray premium costs on the health exchanges, constituted a “plan… that provides health benefits… which is funded directly, in whole or in part, by the United States Government,” which would meet the definition of “federal health care program” as defined by law.