The Department of Health and Human Services (“HHS”) recently announced that qualified health plans and other programs established by the Patient Protection and Affordable Care Act (“PPACA”) are not “federal health care programs.” This decision may bar the government and relators from alleging violations of the Anti-Kickback Statute (“AKS”) with respect to these plans and programs.

The government has frequently used the AKS as an enforcement tool in conjunction with the False Claims Act (“FCA”), alleging that false claims were submitted to federal health care programs, such as Medicare and Medicaid, and relying upon a false certification theory. As previously discussed here and here, the PPACA amended both the AKS and the FCA and expanded the government’s healthcare fraud enforcement authority. Specifically, the Act amended the AKS to clarify that any claims for items or services “resulting from” a violation of the AKS also constitute a “false or fraudulent claim” under the FCA, effectively codifying the false certification theory with respect to the AKS. The PPACA also extended the reach of the FCA to any payments made “by, through, or in connection with” any of the PPACA’s state-based health insurance exchanges, if such payments include any federal funds.

On August 6, 2013, Representative Jim McDermott asked HHS Secretary Kathleen Sebelius whether qualified health plans (the insurance plans available through the PPACA’s health insurance exchanges) are federal health care programs. A copy of Representative McDermott’s letter is available here. Secretary Sebelius responded that HHS “does not consider” these plans, as well as subsidies paid by the federal government for these plans, the PPACA’s health insurance exchanges, and exchange-related consumer-assistance programs, to be federal health care programs. A copy of Secretary Sebelius’s letter is available here.

Strongly objecting to the Secretary’s conclusion, Senator Charles Grassley recently requested additional information regarding this decision. In a letter to the Secretary and Attorney General Eric Holder, Senator Grassley stated that Congress clearly intended “to treat kickbacks under PPACA as False Claims Act violations,” and claimed that this decision would eliminate “a vital tool to investigate and prosecute fraud.” He also asked whether the Department of Justice will decline to intervene in qui tam cases that allege violations of either the FCA or the AKS in connection with PPACA programs. A copy of Senator Grassley’s letter is available here.

As Senator Grassley noted, the decision by HHS not to classify qualified health plans and other PPACA programs as federal health care programs may limit the ability of both the government and relators to use the AKS in conjunction with the FCA as an enforcement tool with respect to these programs. As discussed here and here, this decision may also permit pharmaceutical manufacturers to provide copayment assistance to individuals insured by qualified health plans; currently, manufacturers are not permitted to provide this assistance to individuals insured through federal health care programs. Finally, Secretary Sebelius’s announcement suggests that the expanded healthcare fraud enforcement authority offered to the government by the PPACA may be somewhat limited by the Administration’s implementation of the Act’s central programs.