Subsidizing Indigent Patients on Exchanges: Fraud and Abuse Concerns

Qualified Health Plans Are Not Considered "Federal Health Care Programs"

Many questions surround the implementation of the Affordable Care Act and how it interacts with existing laws. In an effort to gain clarity, Rep. Jim McDermott wrote to the Department of Health and Human Services to inquire about the status of qualified health plans sold on the healthcare.gov exchanges under Section 112B of the Social Security Act. Specifically the inquiry was whether the qualified health plans fell under the definition for "federal health care programs." 

The guidance was requested  to determine how the interaction of qualified health plans and other benefits known as beneficiary inducements offered with other federal programs. Rep. McDermott's concern centered around individuals receiving duplicative benefits, and the solvency of the federally-funded programs if individuals were allowed to receive benefits from multiple government healthcare programs. Rep. McDermott argued that receiving all of these benefits would generally be forbidden by the Anti-Kickback Statute or the Civil Monetary Penalty Statute. 

The Department of Health and Human Services (HHS) stated qualified health programs are not considered federal health care programs and the Anti-Kickback Statute is not applicable. HHS addressed Rep. McDermott's concerns regarding the solvency of of the federally-funded program by outlining regulation and provisions that establish oversight procedures and authority of the federal exchange marketplace for health insurance. These procedures, the Affordable Care Act, and the False Claim Act allow HHS and the Office of Inspector General to investigate and issue appropriate civil or criminal penalties to those wishing to cheat the federally-funded program. 

In practice this means that healthcare providers that assist indigent patients by subsidizing their premiums on health exchanges may be able to do so without concern about being prosecuted under the Anti-Kickback Statute. The HHS letter suggests that this extends even if the parties receive a tax subsidy. 


A link to Rep. McDermott's letter to HHS can be found here: 
http://mcdermott.house.gov/images/Letter%20August%206%202013.pdf

A link to the response letter from HHS can be found here:
http://mcdermott.house.gov/images/The%20Honorable%20Jim%20McDermott.pdf