AIDS patients in Louisiana may lose insurance over anti-kickback laws

Thousands of low-income Louisiana residents living with HIV and full-blown AIDS are being threatened with the loss of their health insurance next week because their plans' premiums, purchased through the reform law's new online marketplace, were paid for by the federal government.

At least three Louisiana insurers plan to cancel the policies despite government assurances that they can accept money for insurance premiums paid by the government and not-for-profits—in this case HHS' Ryan White program. The insurers cite anti-kickback laws, which they say prohibit outside payments by drug companies and healthcare providers because they could steer insurance policy beneficiaries to more costly drugs and hospital and physician services.

Critics say the insurers may have other motives—such as trying to avoid covering costly patients even though the reform law prohibits discrimination based on pre-existing medical conditions. The law also provides extra payments to insurers who sell exchange policies yet wind up with a disproportionate share of very ill and costly patients. That would describe most people with HIV/AIDS.

The legal ambiguities behind the looming cancellations triggered a federal class-action lawsuit last week against the three Louisiana insurance companies by New York-based Lambda Legal. They are requesting an emergency injunction to force the insurers to accept the Ryan White funds until the lawsuit is decided.

“This discriminatory policy keeps low-income people living with HIV off of Blue Cross Blue Shield's insurance rolls, perpetuating the deliberate insurance industry practice of denying coverage to those living with HIV that the Affordable Care Act was designed to reverse,” according to the lawsuit. Louisiana Health Cooperative and Vantage Health Plan were also cited in the litigation.

Drug companies and hospitals also are defending their right to provide outside assistance to patients who purchase insurance policies on the exchanges. While millions of low-income Americans are purchasing heavily subsidized policies on the new exchanges, they still must pay for a share of the total premium. That has led millions to ignore the opportunity to purchase subsidized coverage. They will instead pay a penalty, which in the early years of the reform law is low.

The insurance industry counters that healthcare providers have a strong financial interest in making sure the sickest low-income consumers use the new insurance exchanges to get coverage. Allowing providers to offer outside assistance to pick up individuals' share of the overall premium will skew the risk pool, they claim.

“It is a conflict of interest for hospitals and drug companies to pay patients' premiums and cost-sharing for the sole purpose of increasing utilization of their services and products,” said Karen Ignagni, president and CEO of America's Health Insurance Plans. “This practice undermines proven efforts to promote high-quality, cost-efficient care and drives up healthcare costs for patients and taxpayers.”

For its part, the federal government is trying to clear up ambiguities in the law. The CMS this month published a statement that it did not intend to discourage insurers from taking Ryan White funds on patients' behalf. Nor did the CMS intend to dissuade insurers from accepting premium-assistance payments from independent, private foundations such as those that have received money from hospitals to subsidize exchange premiums, a Q&A published on its website said.

Yet Blue Cross and Blue Shield of Louisiana confirmed last week that it still will not accept HHS' Ryan White funds to buy coverage on an insurance exchange. It cited a previous memo issued last November by the CMS that urged insurers to reject third-party payments because they could skew risk pools toward costlier patients.

The more recent CMS clarification was greeted as good news by James Dechene, senior vice president and general counsel at the University of Wisconsin Hospital and Clinics in Madison.

The healthcare system has pledged $2 million to the local United Way to create a not-for-profit called HealthConnect that will help underwrite low-income Dane County residents' insurance costs.

“The principle articulated in the CMS Q&A is certainly supportive of the United Way of Dane County program,” Dechene said. “I am pleased that CMS is recognizing the public benefit of foundations assisting the uninsured in paying their subsidized premiums under the Affordable Care Act.”

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