Vital Signs Blog

Feds vow scrutiny, but systems look for legal ways to help low-income patients pay premiums

The feds have vowed to cast a critical eye on hospitals that provide money to help low-income patients buy insurance through an exchange, but they didn't ban the practice outright. Experts say scores of health systems are going to be looking for legal ways to do it, and many may turn to independent charities and foundations for help.

The CMS is concerned that hospitals' financial help could lead to too many sick people who need immediate care being added to insurance companies' risk pools, which is why the agency urged insurers not to accept hospitals' payments (PDF) on behalf of patients. However, the document stopped short of calling the practice illegal.

“It says they discourage it. But who cares? It's not prohibited. We are a society of laws, and you certainly can do things that are in your best interest,” said Kevin McAnaney, a Washington healthcare regulatory lawyer who formerly worked in HHS' watchdog office. He wrote official advisory opinions on anti-fraud laws when HHS' Office of the Inspector General started issuing them in 1997.

Healthcare providers and pharmaceutical companies have long sought to subsidize patients' care—in fact several of the first advisory opinions ever issued by HHS' Office of the Inspector General concerned that topic.

Drug companies wanted to underwrite patient co-payments, dialysis providers wanted to help pay Medicare premiums, and an ambulatory surgery center wanted to forgive certain debts for insurance premiums. Some proposals were legal, some not.

One common theme was that it can be legal to use independent third parties to excise the risk of self-dealing in such arrangements. That's why attorneys at the University of Wisconsin Hospital and Clinics decided to donate $2 million to a local charity rather than provide money directly to low-income adults who need help affording coverage through the health insurance exchange.

James Dechene, a senior VP and general counsel at UW Health, said the Madison-based health system will have no control over how its charitable partner, the United Way of Dane County, distributes the assistance or which plans the residents choose.

Does that mean that the UW Health grant will help some people buy insurance plans that don't include UW Health in their networks? “I expect that at least some of the recipients will,” Dechene said in an interview last week.

All told, the program will help as many as 7,500 people in and around Madison who were removed from the state's Medicaid program, BadgerCare, after the income-eligibility limits were lowered to 100% of the federal poverty level for 2014. The assistance will help childless adults with incomes between 100% and 133% of the poverty level afford the cost of insurance on the Wisconsin exchange.

Dechene said the Nov. 4 CMS warning didn't appear to apply to the UW program because the notice didn't mention an arrangement in which the premium assistance was provided through a neutral third party like the United Way.

The American Hospital Association has been pushing Washington officials for greater legal clarity on this topic for months because of widespread interest among hospitals. Last month the trade group published an eight-page legal advisory on the issue (PDF).

Follow Joe Carlson on Twitter: @MHJCarlson


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