HHS Guidance that QHPs are not Federal Health Care Programs

In response to a letter from U.S. House Rep. McDermott, the Department of Health and Human Services (“HHS”) issued guidance (“Guidance”), on October 30, 2013, on the question of whether qualified health plans (“QHPs”) are considered federal health care programs for purposes of §1128B of the Social Security Act (“the Act”).

HHS stated that it does not consider QHPs, other programs related to the Federally-facilitated Marketplace, and other programs under Title I of the Affordable Care Act to be federal health care programs within the §1128B definition.   HHS confirmed that this includes State-based and Federally-Facilitated Marketplaces (“Marketplace”); cost-sharing reductions and advance payments of premium tax credits; Navigators and other federally funded consumer assistance programs; consumer-oriented and operated health insurance plans; and the risk adjustment, reinsurance, and risk corridors programs.   

Because QHPs are not considered Federal Health Care Programs under §1128B, they are not subject to the Anti-Kickback Statute (“AKS”). The AKS makes it a criminal offense to knowingly and willfully solicit, receive, offer, or pay, any remuneration to reward or induce referrals of items or services reimbursable by a federal health care program.[1]  The effect of this guidance seemed to be that hospitals and health providers may be able to subsidize premiums for patients that purchased QHP coverage on the Marketplace.  However, on November 4, 2013, HHS published a Q&A (“Q&A”) that cautions against any third party paying the premiums for QHPs purchased through the Marketplace. HHS states that it has “significant concerns with this practice because it could skew the insurance risk pool and create an unlevel field in the Marketplaces.”  HHS continues on in the Q&A to state that it discourages such practice and encourages issuers to reject third party payments. In addition, HHS will be monitoring any third party payments and plans to take necessary action to discourage such payments.  Therefore, as a result of Q&A, hospitals and health care providers will be closely monitored to ensure they are not subsidizing premiums for QHPs purchased through the Marketplace.

For questions please contact Kristen Gentry at kgentry@kdlegal.com or Meghan Linvill McNab at mmcnab@kdlegal.com.

[1] Social Security Act §1128B(b)(1) and (2).