Ever since the first open enrollment period for qualified health plans (QHPs) available on health insurance Exchanges under the Affordable Care Act (ACA), the Centers for Medicare & Medicaid Services (CMS) has grappled with the question of whether QHP issuers must accept premium and cost-sharing payments made by third parties on behalf of QHP enrollees. Its recently published Notice of Benefit and Payment Parameters (NBPP) for 2017, did little to move the needle in that regard. CMS clarified in certain respects the requirement that QHP issuers accept premium and cost-sharing payments made on behalf of enrollees by Indian tribes, tribal organizations, urban Indian organizations, and government programs or grantees. But it left for another day – and, perhaps, another administration – any further guidance on the larger question of whether such payments must be accepted when made by not-for-profit charitable organizations in particular.
The extent to which issuers must accept premium and cost-sharing payments from third parties on behalf of QHP enrollees has been a thorny and divisive question. Issuers contend that an expansive definition of such third party entities could contribute to adverse selection in Exchange risk pools and encourage over-utilization, thereby resulting in higher premiums and reduced affordability. Health care providers and consumer advocates, on the other hand, argue that premium and cost-sharing payments from third parties such as hospital foundations and other non-profit charitable organizations help make coverage affordable, consistent with the purposes of the ACA.
Advocates of such third party payments were encouraged by an October 30, 2013 letter from Secretary of Health and Human Services (HHS) Kathleen Sebelius to Congressman Jim McDermott, in which the Secretary stated that HHS does not consider QHPs to be “federal healthcare programs” under section 1128B of the Social Security Act. Section 1128B provides criminal penalties for certain acts involving federal health care programs, including, among others, knowingly offering or paying remuneration in return for purchasing items or services for which payment may be made, in whole or in part, under a federal health care program. The Secretary’s statement appeared to remove any potential barriers under section 1128B to premium and cost-sharing payments by entities furnishing health care items or services, or their affiliates. Just days later, however, on November 4, 2013, CMS issued an FAQ expressing “significant concerns” about “hospitals, other healthcare providers, and other commercial entities” supporting QHP premium and cost-sharing obligations, “because it could skew the risk pool and create an unlevel field in the Marketplaces.” The FAQ provided that HHS “discourages this practice and encourages issuers to reject such third party payments.”
Three months later, on February 7, 2014, CMS clarified in additional FAQs that the November 4, 2013 FAQ does not apply to premium and cost-sharing payments on behalf of QHP enrollees made by Indian tribes, tribal organizations, urban Indian organizations, and state and federal government programs or grantees, such as the Ryan White HIV/AIDS Program. Nor does it apply to payments from private, not-for-profit foundations “if they are made on behalf of QHP enrollees who satisfy defined criteria that are based on financial status and do not consider enrollees’ health status.” In that circumstance, “CMS would expect that premium and any cost-sharing payments cover the entire policy year.” Subsequently, on May 19, 2014, CMS published an interim final rule with comment period, requiring issuers offering individual market QHPs to accept premium and cost-sharing payments made on behalf of enrollees by the Ryan White HIV/AIDS Program; Indian tribes, tribal organizations or urban Indian organizations; and state and federal government programs. The requirement does not apply to not-for-profit charitable organizations.
Clarifications Under the Final Notice of Benefit and Payment Parameters for 2017
In its NBPP for 2017, CMS finalized three areas of substantive clarification regarding the interim final rule. First, not only must QHP issuers accept premium and cost-sharing payments for QHPs from the enumerated entities and programs, but so must the issuers’ “downstream entities,” such as pharmacy benefit managers, to the extent that those downstream entities routinely collect premiums or cost-sharing payments from enrollees. Second, issuers must accept premium and cost-sharing payments made on behalf of QHP enrollees by “local” government programs, including county and municipality programs, in addition to state and federal programs. And, third, the requirement applies to grantees of local, state, or federal government programs only when those grantees are directed by the government program to make payments on the program’s behalf. CMS declined to adopt a proposed requirement that entities making third party premium payments notify HHS of their intent to do so, and of the expected number of consumers for which they would make those payments, citing concerns that such reporting requirements would be unduly burdensome.
Open Question: Payments by Not-for-Profit Charitable Organizations
CMS had noted in its proposed NBPP for 2017 that it was considering whether to expand the list of third party entities from which QHP issuers must accept premium and cost-sharing payments “to include not-for-profit charitable organizations in future years, subject to certain guardrails intended to minimize risk pool impacts, such as limiting assistance to individuals not eligible for other minimum essential coverage and requiring assistance to the end of the calendar year.” Although several commenters urged that CMS move forward immediately to do just that, as well as to provide a list of not-for-profit foundation types that would satisfy the parameters set forth in the February 7, 2014 FAQs, CMS declined to do either at this time. Instead, CMS deferred any further guidance on the question of third party premium and cost-sharing payments from not-for-profit organizations to a future rulemaking. As the Obama administration’s tenure draws to a close, any additional developments in this regard may not materialize until 2017 or beyond.