A very popular question which is often asked of us is whether treatment providers may assist potential patients with the costs of obtaining insurance coverage to the extent they do not have the resources to do so. We have repeatedly advised that doing so may run afoul of the laws relating to illegal inducements for patients to patronize a specific treatment center. However, we also understand that covering premiums temporarily while the patient is getting back on their feet may be the “right” thing to do, if done altruistically and not for the specific purpose of simply getting access to the patient’s insurance card.
I am glad to see that the advice and direction we have been giving remains consistent with the recent article from the American Health Lawyers Association, in their recent Journal of Health & Life Sciences Law, Vol. 8, No. 2, Feb. 2015, which I have provided in summary below.
From: Third-Party Payment of Premiums for Private Health Insurance Offered on the Exchanges, by Catherine E. Livingston, Gerald M. Griffith, and Rebekah N. Plowman.
Although the Patient Protection and Affordable Care Act is projected to make health coverage available to a substantial proportion of the uninsured population in the United States, a significant number of people will remain uninsured or under-insured. In light of the ongoing need for financial assistance and the guaranteed availability of private health insurance starting in 2014, many hospitals, other health care providers, and charities are asking whether they may help needy individuals by paying their premiums for private health insurance. The answers to these questions are not clear under the law.
The combination of the complicated rules and subsidies created by the ACA and pre-existing fraud and abuse and tax laws affecting providers makes it difficult to establish a simple definitive rule on third-party payment of premiums. The limited guidance provided by CMS to date has been inconsistent at best. Premium subsidy programs also may be an attractive target for qui tam plaintiffs, and may be subject to criticism and calls for enforcement action from insurers that may be forced to continue unprofitable coverage to an extent not predicted in their premium rating models. Accordingly, providers face some potential compliance risk if they assist with the payment of premiums for financially needy individuals in any way other than contributing to an independent charitable organization or foundation. Even though the providers may be charitable organizations themselves, they may not be able to bridge the gaps in access to affordable coverage left in the wake of the ACA’s implementation due to lingering uncertainty over applicability of fraud and abuse laws to premium subsidy programs. Providing premium assistance through an independent charitable organization should result in no more than incidental private benefit to payers and providers and, therefore, avoid questions that could otherwise be raised about compliance with Section 501(c)(3) tax exemption requirements for hospitals and health systems that help fund the premium assistance.