Grassley questions anti-kickback immunity for exchange plans

Sen. Charles Grassley says he's perplexed about why HHS doesn't want to use the federal anti-kickback law to prosecute cases where hospitals or drugmakers skew insurers' risk pools by buying coverage for patients through insurance exchanges.

The question of who exactly can buy insurance through an exchange on behalf of patients has emerged as a major headache for government and industry officials and thousands of lower-income Americans. Now Iowa's senior senator is demanding answers about a CMS policy that would seem to offer immunity from the anti-kickback law to entities that offer premium support for patients.

Insurers say such payments can encourage fraud and inappropriately steer patients to insurance plans with lucrative benefits. Some insurers—like Blue Cross and Blue Shield of Louisiana—have stopped accepting payments from third parties for individual plans bought through the exchanges. The Louisiana Blues even stopped taking payments from the federal Ryan White program, which helps thousands of low-income patients with AIDS and HIV in the U.S. afford insurance.

HHS Secretary Kathleen Sebelius made waves last October when she declared in a letter to Rep. Jim McDermott that insurance plans bought through exchanges would not be subject to the anti kickback law—to the relief of hospitals and drugmakers that planned to help lower-income patients afford coverage. That letter spurred a sharply worded request for clarification from Grassley, who questioned why the CMS was exempting a potentially large area of fraud-enforcement from scrutiny.

Sebelius noted in testimony on the issue that the False Claims Act would continue to apply, offering ample enforcement tools.

In the meantime, the CMS' Center for Consumer Information and Insurance Oversight last November urged insurance companies to reject premium-support payments because they could skew the risk pools toward costlier patients. The office clarified its guidance this month by saying it doesn't apply to programs like Ryan White or independent not-for-profit foundations like those that already administer premium-support programs from hospitals and drugmakers.

But such explanations don't address Grassley's concern that Sebelius' statements about the anti-kickback law undermine fraud protections in the insurance exchanges.

“Your reply to my Nov. 7, 2013 letter was disappointing,” Grassley wrote to Sebelius on Feb. 12 (PDF). “Although your response took three months to compose, it utterly failed to address the questions and information requests in my letter.”

Grassley gave the secretary until March 6 to explain the anti-kickback policy.

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