There has been much speculation in the health care community that it may be financially beneficial, under certain circumstances, for hospitals and other large providers to purchase health care coverage for their indigent patients. U.S. Department of Health and Human Services Secretary Kathleen Sebelius recently stated that Qualified Health Plans, which are sold on the federal health care Marketplace, are not considered federal health care programs under Section 1128B of the Social Security Act. Some believe this signaled that such plans would not be subject to the federal anti-kickback statute – and, therefore, that paying a patient's premium would not violate the federal anti-kickback law. However, on November 4, 2013, the Center for Consumer Information & Insurance Oversight issued the following guidance, which calls into question that interpretation:
Q: Are third party payors permitted to make premium payments to health insurance issuers for qualified health plans on behalf of enrolled individuals?
A: The Department of Health and Human Services (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 healthcare 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.
This November 4 guidance highlights that HHS is closely looking at this potential practice as a source of instability in the insurance market, which relies on having a substantial proportion of healthy members to help pay for the more costly, sick members. Hospitals and other providers should be leery about making patient insurance premium payments unless and until there is further guidance from HHS stating that it is acceptable.