Third party payment rules open new possibilities for hospitals, pharma
With millions of Americans on new exchange plans now responsible for high deductibles, hospitals, drug makers, insurers and regulators are entering a new frontier of payment disputes.
Exchange insurers are now required to offer a three month grace period for members who fail to pay premiums, but QHPs can pend and possibly deny claims after 30 days, and hospital advocates have been asking regulators whether community health charities might be allowed to help cover the cost of patient premiums -- averting stalled or lost claims and helping patients allocate more of their personal finances to paying deductibles and co-pays.
The American Hospital Association first posed the question to the Department of Health and Human Services last fall, with the legal issue being whether the payments constitute kickbacks in federal health programs.
The answer so far has been that third parties can cover payments -- in some cases.
HHS is going forward with an interim final rule requiring insurers selling QHPs to accept third-party payments from Indian tribes and organizations, state and federal programs, and publicly-funded organizations like the Ryan White HIV/AIDS Program.
Such payments from other groups or organizations, however, could be barred by insurers through "contractual prohibitions," the regulators wrote -- a caveat that the American Hospital Association and Catholic Health Association recently challenged.
"CMS's rationale in requiring QHPs to accept Ryan White HIV/AIDS program subsidies applies equally to requiring the acceptance of payments from hospitals, hospital-affiliated and other charitable organizations," wrote Rich Umbdenstock, AHA president and CEO.
"As long as the premium for that plan is paid, the insurer has to accept that individual and enroll him or her in the chosen plan," with "limited exceptions," Umbdenstock wrote. "As in any other commercial market, it should not matter who actually pays the insurance premium -- the enrollee, the enrollee's relative or another person or organization."
Even with new plans, Umbdenstock argued, "cost can be an impediment to an individual obtaining coverage and the access it provides to important preventive and other health services. Hospital and foundation subsidy programs are especially important for individuals residing in states that have chosen not to expand their Medicaid programs and could help fill the gap in making affordable coverage available to meet the needs in those communities."
Pushback against payments
Insurance advocates have pushed back against the idea of permitting healthcare business-affiliated charities to make third-party payments. "It is a conflict of interest for hospitals and drug companies to pay patients' premiums and cost-sharing for the sole purpose of increasing utilization of their services and products," Karen Ignagni, president and CEO of America's Health Insurance Plans, said earlier this year.
In the latest attempt to offer the official interpretation of the ACA and federal law, soon-to-be departing HHS secretary Kathleen Sebelius wrote back to Umbdenstock, pointing to the previous guidance but offering an explanation that the AHA sees as a go-ahead for foundation grants
"We believe that existing guidance related to third-party payments of premiums and cost sharing made on behalf of Marketplace QHP enrollees by private, not-for-profit foundations is sufficient to put the public on notice that as a general matter, such payments are not prohibited by HHS's rules," Sebelius wrote.
In addition to Indian organizations and publicly-funded programs, the payments must be made by private, not-for-profit foundations on behalf of QHP enrollees "who satisfy defined criteria that are based on financial status and do not consider enrollees' health status," Sebelius wrote. "In this situation, CMS would expect that premium and any cost-sharing payments cover the entire policy year."
For charities associated with drug companies making third party payments and patient assistance programs, the HHS Office of the Inspector General has outlined what seems to be a similar policy, emphasizing the importance of independence for both the organizations and the drugs they're supporting.
"OIG continues to recognize that independent charities can help financially needy beneficiaries with their health care expenses, and pharmaceutical manufacturers can donate to these charities," the agency wrote in a bulletin.. "However, charities that are not sufficiently independent from drug manufacturer donors may operate PAPs that harm patients and Federal healthcare programs and may, depending on the facts, violate fraud and abuse laws."
For instance, the OIG wrote: "If assistance is available only for the highest-cost drugs, patients may be steered to those pharmaceuticals rather than to equally effective, lower-cost alternatives. If, instead, assistance is available for a broader range of equally effective treatments, patients, and their prescribers, have greater freedom of choice."
