Recent seemingly contrary determinations by the U.S. Department of Health and Human Services (HHS) have fueled industry speculation regarding whether qualified health plans (QHPs) available on the health insurance exchanges would be considered "federal health care programs," and thus subject to the various fraud and abuse laws applicable to such programs, including the federal anti-kickback statute.
A QHP's status as a federal healthcare program has been of particular interest to providers that may be considering subsidizing QHP premiums for individuals purchasing coverage on the marketplace. Federal law generally defines a "federal health care program," as "any plan or program that provides health benefits, whether directly, through insurance, or otherwise, which is funded directly, in whole or in part, by the United States Government" (other than the Federal Employee Health Benefits Program). If QHPs are found to be federal healthcare programs, such practice could arguably expose providers to sanctions under the anti-kickback statute, which is a broadly worded prohibition on the offer, payment, solicitation or receipt of remuneration intended to influence the referral of items or services to be paid for by a federal healthcare program.
Initially, providers were relieved when an October 30, 2013, letter penned by Secretary Kathleen Sebelius confirmed that HHS does not consider QHPs to be federal healthcare programs under § 1128B of the Social Security Act. The letter, in response to a request from Rep. Jim McDermott (D-Wash.) for clarification on this issue, advised that, after consultation with the U.S. Department of Justice (DOJ), HHS determined "QHPs, other programs related to the Federally-facilitated marketplace, and other programs under Title I of the Affordable Care Act" are not federal healthcare programs. This includes the state-based and federally facilitated marketplaces; navigators for federal exchanges; consumer-oriented and operated health insurance plans; the cost-sharing reductions and advance payments of the premium tax credit and the risk adjustment, reinsurance and risk corridors programs. Such determination would mean the anti-kickback statute would not apply to payments in connection with QHPs.
However, this seemingly clearer picture of the risks associated with subsidizing premiums on the exchanges was short lived. Less than a week after the letter by Secretary Sebelius, the Centers for Medicare and Medicaid Services Center for Consumer Information and Insurance Oversight (CCIIO) advised in a Question and Answer document, entitled "Third Party Payments of Premiums for Qualified Health Plans in the Marketplaces" (Q&A), that it has "significant concerns" regarding payment of QHP patient premiums or cost-sharing obligations by hospitals, healthcare providers or other commercial entities. The Q&A cautions that CCIIO "intends to monitor this practice and to take appropriate action, if necessary." The agency fails to cite any existing rules or regulations such practice would violate. Likewise, what the agency's "appropriate actions" would include, especially in light of the HHS determination, is unclear. So, while the CCIIO "discourages" such practice "because it could skew the insurance risk pool and create an unlevel field in the Marketplaces," providers may dispute this reasoning, emphasizing instead that such practice would further serve the Administration's goal of expanding access to coverage.
The determination that QHPs are not subject to the anti-kickback statute has elicited opposition from lawmakers, such as Sen. Charles Grassley (R-Iowa), who has been quick to criticize the "alarming" decision for stripping the government's "full arsenal of civil and criminal anti-fraud protections." During a November 6, 2013, Senate Finance Committee hearing titled "Health Insurance Exchanges: An Update from the Administration," Sen. Grassley questioned the Secretary on the department's reasoning behind its determination. In defending her department's position, Secretary Sebelius advised the Committee that the interpretation was the result of "a legal discussion in our department. And because these are private insurance plans -- they are not government programs -- the legal interpretation was that the insurance companies offering plans on the marketplace and offering plans off the marketplace should be treated the same." While the Secretary did not address the concerns noted in the Q&A at the hearing, she will have an opportunity to provide clarification in her response to a November 7, 2013, letter from Sen. Grassley requesting details of the decision-making process behind the determination.
For now, providers wishing to subsidize premiums for consumers on the marketplace may find some comfort in the Secretary's steadfast defense that QHPs are not federal healthcare programs and thus subject to the anti-kickback statute. However, as highlighted in her October 30, 2013, letter, HHS has numerous other oversight and enforcement mechanisms it will use to patrol the exchanges, including: (1) program integrity rules; (2) civil money penalties; (3) the general authority to investigate the "affairs of an exchange"; (4) the applicability of the False Claims Act to "payments made by through, or in connection with an exchange if the payments include federal funds"; and (5) additional federal and state criminal or civil authorities that may apply. See Consumer Fraud Complaints article. Nevertheless, providers may be able to structure a policy that allows them to assist consumers in gaining access to coverage in the marketplace while not running afoul of the law.
Click here to watch the hearings. (Questions begin around 1 hour 10 minutes 30 seconds in recording.)