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CMS Declares Third Party Payment of QHP Premiums Not OK

Written by:  Theresa C. Carnegie and Thomas S. Crane

On the heels of HHS's recent announcement that qualified health plans (QHPs) purchased through the Affordable Care Act (ACA) insurance exchanges are not "federal health care programs" for purposes of the federal anti-kickback statute, CMS has published a Q&A in which it states that it has "significant concerns" regarding the payment of QHP patient premiums or cost-sharing obligations by hospitals, health care providers, or other commercial entities.

HHS's conclusion that the federal anti-kickback statute does not apply to QHPs appeared to open the door for the provision of premium and cost-sharing assistance and for the offer of pharmaceutical manufacturer drug coupons to QHP members.  Now, HHS, citing its broad authority under ACA to establish standards with respect to the Exchanges and QHPs,  is clarifying that it "discourages" the offer of premium and cost-sharing assistance and "intends to monitor this practice and to take appropriate action, if necessary."  It remains to be seen whether CMS will respond to the industry's conclusion that drug manufacturer coupons are permissible within the Exchanges.  CMS may choose to make a distinction between payments made directly to QHPs (such as premium assistance) and other forms of patient assistance (such as drug coupons) that are offered directly to patients.

The full Q&A reads as follows:

Q: Are third party payors permitted to make premium payments to health insurance issuers for qualified health plans on behalf of enrolled individuals?

A: The Department of Health and Human Services (HHS) has broad authority to regulate the Federal and State Marketplaces (e.g., section 1321(a) of the Affordable Care Act). It has been suggested that hospitals, other healthcare providers, and other commercial entities may be considering supporting premium payments and cost-sharing obligations with respect to qualified health plans purchased by patients in the Marketplaces. HHS has significant concerns with this practice because it could skew the insurance risk pool and create an unlevel field in the Marketplaces. HHS discourages this practice and encourages issuers to reject such third party payments. HHS intends to monitor this practice and to take appropriate action, if necessary.

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Theresa advises clients on all aspects of the pharmaceutical supply chain, including counseling industry stakeholders on a range of business, legal, transactional, and compliance matters. She provides clients with strategic counseling and creative business modeling that considers legal restrictions and regulatory risk in light of innovation and business goals.