On May 31, 2017, 184 legislators wrote a bipartisan letter to Secretary Tom Price of the Department of Health and Human Services (“HHS”) to request that HHS revisit and roll back a 2013 policy memo that discourages insurance companies selling Qualified Health Plans on the exchanges from accepting payments from hospitals and other third parties seeking to assist patients of limited financial means in securing health insurance coverage. Lawmakers are now requesting that HHS issue a new rule to allow such individuals to receive premium and cost-sharing assistance from nonprofit charities, places of worship and local civic organizations.
This request comes at a time of growing interest in alternative methodologies for improving access to health insurance, and health care generally, for individuals of limited financial means outside of reliance on state Medicaid programs. Most recently, the head of the Centers for Medicare and Medicaid Services (“CMS”) stated that low-income adults covered by the Affordable Care Act (“ACA”) through its expansion of Medicaid should obtain insurance coverage in the private market instead of using government health care programs. Along this line, CMS noted that there could be some type of assistance or subsidies for certain individuals in the private market, which may open the door for more opportunities for third party premium payment arrangements.
CMS addressed premium assistance payments for Qualified Health Plans sold on the exchanges created by the ACA with a series of mixed responses beginning in November of 2013. Through this guidance, CMS ultimately permitted certain third party premium payments (i.e., payments based on financial need, that covered an entire policy year and made by independent charitable organizations), but it also cautioned insurance companies selling Qualified Health Plans against accepting such payments depending on the payment source. For example, CMS released guidance in 2013 and 2014 encouraging insurers selling Qualified Health Plans on the exchanges to reject premium payments from hospitals, other health care providers and other commercial entities, citing concerns that such third party payments could skew insurance risk pools and create an imbalanced marketplace. CMS issued such guidance despite significant industry opposition and despite the fact that numerous advisory opinions issued by the HHS Office of Inspector General make clear that key industry stakeholders can support financially needy individuals, including federal health care program beneficiaries, by contributing to disease funds established by bona fide charitable assistance programs, provided such programs contain certain mechanisms to avoid patient steerage (e.g., Advisory Opinion 15-06).
While CMS’s conflicting guidance on third party premium arrangements does not prohibit premium support payments by third parties, it has had a chilling effect on the ability of nonprofit organizations to support financially needy individuals in obtaining health insurance. Thus, a new rule that encourages or requires insurers to accept third party premium payments for Qualified Health Plans could result in more freedom to structure arrangements that increase access to care and provide an opportunity for more nonprofit organizations to fulfill their charitable mission in supporting the health and welfare of the communities they serve.
With the current changes and instability in the health care market, there may be growing support to structure and implement third party premium assistance programs to help the most financially needy individuals obtain health insurance coverage. This is especially the case if funding and coverage under government health care programs decreases and more individuals are forced to look for health insurance coverage via the exchanges or on the private commercial insurance market. While it is yet to be seen whether CMS will change its position on third party premium support payments, the issuance of a bipartisan letter from Congress is a strong indication that there will be more to come on the topic of third party premium support. Accordingly, health care entities interested in such arrangements should remain vigilant for future developments from CMS in this area.