Despite a series of letters from HHS Secretary Kathleen Sebelius and FAQs addressed by the Centers for Medicare & Medicaid Services (CMS), it’s unclear what role hospitals can play in purchasing coverage for economically challenged individuals. Hospitals, because of EMTALA, have a pretty good idea of who’s uninsured and sick in a community. Allowing them to purchase coverage for sick individuals who lack the means to obtain coverage would seem to be the most efficient way to achieve the goal under the Affordable Care Act (ACA) of making affordable health care available to those who need it most. Allowing hospitals to fulfill this role is particularly reasonable because, for some families, coverage through a healthcare insurance exchange isn’t affordable even after the subsidy.
Initially, a letter from Secretary Sebelius to Congressman Jim McDermott (D-Wash.) found the exchange subsidies weren’t a federal program. This finding appeared to open the door for direct purchase by providers. However, that interpretation was cast into doubt almost immediately.
Even though the IRS rules related to premium assistance appeared to permit third-party purchase of coverage, CMS’s Center for Consumer Information & Information Oversight (CCIIO) discouraged the practice in a response to an FAQ issued Nov. 4, 2013, just days after McDermott’s letter. Further, payers were encouraged to reject insurance payments from third parties. The CCIIO’s comments regarding the FAQ were in response to an inquiry from Sen. Chuck Grassley (R-Iowa) and concerns from the payer community about increased risk of adverse selection. Payer concerns are certainly warranted given lower-than-expected exchange enrollment and the various tweaks to ACA implementation allowing relatively healthy individuals to remain outside of the exchange risk pool for an extended period of time.
On Feb. 7, 2014, due to concerns that some health plans were using the CCIIO’s response to the Nov. 4 FAQ to justify rejecting payment for exchange coverage using federal Ryan White/AIDS Program funds, CMS issued its response to a second FAQ. The agency clarified that the November FAQ didn’t apply to payments for premiums and cost sharing made on behalf of enrollees by federal programs and Indian tribes. Further, CMS stated that not-for-profit, private foundations also could make premium and cost-sharing payments as long as they were means tested, did not consider the individuals’ health status, and were made for the entire year. Under both scenarios, payers were “encouraged” to accept third-party payments.
The unfortunate effect of this regulatory waffling is that patients with real needs (both clinical and financial) continue to suffer despite the ACA’s prohibition on medical underwriting. Even after the February FAQ, it appears some payers aren’t accepting third-party payments from sources deemed permissible in CMS’s response to the FAQ. In a court case that will bear watching, an advocacy group has filed a class action suit against three payers in Louisiana for failing to accept Ryan White subsidies to assist with the purchase of an exchange plan.
The confusion also has stalled provider efforts to offer a more effective form of financial assistance. A small number of organizations have made donations to independent local charities who then oversee the purchase of coverage for individuals with demonstrated financial need.
Although CMS’s response to the Feb. 7 FAQ appears to sanction this type of arrangement, many providers are still weary. First, a change in stance by CMS or the Office of Inspector General to a less permissive position with respect to the FAQ would not be surprising to providers, if past experience is any indication. Should such a change in position occur, an added consideration is that FAQ responses have tended to lack the force in court of a regulation published in the Federal Register. Given such concerns, most organizations that HFMA has spoken with are waiting for further clarity and working with their internal and external counsel to determine the most effective way to facilitate health insurance enrollment for those in the community who need it most.
Providers have already seen some fresh guidance—at least to a degree. On March 14, CMS issued an interim final rule (IFR) on third-party payments to qualified health plans. Unfortunately, the IFR provided little additional clarity on the issue, beyond mandating that health plans accept third-party payments from Ryan White HIV/AIDS Program, Indian tribes, tribal organizations, and urban Indian organizations; and for state and federal government programs, the IFR mainly codified CMS’s earlier positions. HFMA will submit comments to CMS on the rule and would encourage provider organizations to do likewise.
Chad Mulvany is director, healthcare finance policy, strategy and development, in HFMA’s Washington, D.C., office.
Publication Date: Tuesday, March 18, 2014