Do anti-kickback laws preclude providers from paying premiums for uninsured patients?
This article was updated and revised on Nov. 11 to reflect opinions and statements from various federal agencies and law makers. For further updates on this issue, please stay tuned to HFMA News.
If the health insurance exchanges evolve as envisioned by the Affordable Care Act (ACA), more than 90 percent of the 41 million uninsured individuals in this country will qualify for a federal financial subsidy to help pay for health insurance. Even so, there most likely will be individuals who qualify for the benefit but still are unable to afford coverage. Without insurance, these patients will continue to require charity care, a scenario the ACA was meant to minimize.
In light of this, hospital and patient advocates are asking: Can hospitals and other providers assist patients in paying for an insurance plan that is purchasing through the exchanges?
After two weeks of back and forth opinions from two federal agencies, the answer remains a matter of considerable uncertainty. HFMA articles have cautioned from the beginning of this debate that there is a broader set of issues that need to be addressed and that competent legal advice should be sought.
Possible Obstacles, Many Questions
An obvious stumbling block to helping patients with premiums is the federal anti-kickback statute, which prohibits giving or receiving anything of value to induce the purchase of healthcare services paid for in whole or in part by a federal health program. Similar state kickback laws may also apply.
However, the following scenarios present opportunities to assist patients without using federal or state money:
- A hospital agrees as part of its charity care policy to make, in lieu of a discount, a one-time payment of the premium for an individual’s coverage.
- A group of hospitals in a particular area sets up a charitable foundation for the purpose of funding premiums for people who meet certain criteria.
These are interesting ideas, and as usual, the devil is in the details. Here are a few questions:
- To be independent, would the foundation need to be an entirely new entity, or could it be part of an existing charity or other organization, such as a state or local hospital association?
- Would all the contributors need to be from healthcare providers, or would funds from non-hospital benefactors be welcome?
- Who would those non-hospital benefactors be?
- What criteria would be used to decide which patients get premium support, and who makes those decisions?
- How would the decisions be made consistent with the hospitals' charity care policies?
- Would the hospitals seek publicity for their beneficent acts, or would they just count it as part of their community benefit on the Schedule H to IRS Form 990?
From the Federal Government ... So Far
Conflicting messages are emerging from Washington. In an Oct. 30 letter to Congressman Jim McDermott (D-WA), HHS Secretary Kathleen Sebelius said that HHS does not consider qualified health plans (QHPs) and other programs related to the federally facilitated exchanges to be “federal health care programs.” Her answer is significant because it is an indication that the federal anti-kickback statute may not be a bar to assisting patients with their premiums.
However, the HHS secretary’s opinion is not the end of the matter, given a Nov. 7 letter that Senator Charles Grassley (R-Iowa) sent to Sebellius and the U.S. Attorney General Eric Holder.
In addition, on Nov. 4, CMS had released a FAQ that discourages hospitals giving patients premium support: “HHS has significant concerns with this practice [of third-party premium payments] because it could skew the insurance risk pool and create an unlevel field in the Marketplaces.” The guidance added, “HHS discourages this practice and encourages issuers to reject such third party payments.”
The possibility of hospitals helping their patients pay for insurance coverage also drew opposition from American’s Health Insurance Plans, the nation's largest health insurance advocacy group.
A Court Decision?
Whether a premium payment made on an insured’s behalf would be considered a violation of the kickback laws or other anti-fraud statutes remains an open question. Regardless of an HHS opinion, or even that of the Department of Justice, it would ultimately be for the courts to decide.
J. Stuart Showalter, JD, MFS, is a contributing editor to HFMA’s Legal & Regulatory Forum.
Publication Date: Monday, November 11, 2013