DIXIE HFMA 2015Elizabeth S. Richards, Esq., FHFMA

Clinton A. Harkins, P.C.

Overview on Status of Exchanges and Employee sponsored Health Insurance

90 Day Grace Period

Paying Patient Premiums

◦ Overview of the Official Statements on the Issue

◦ When, Why, and How

The Future of Premium Tax Credits

◦ Halbig and King

25% more choices this year

However, 7.5% premium increase expected

Average Monthly Premium will be $384, before subsidy is applied

As of February 11th, 7.75 million consumers selected a plan for 2015 (Deadline is 15th) on Healthcare.gov

87% are eligible for Premium Subsidies

2.5 million enrollees are under the age of 35

70% selecting the Silver Plan, 19% in Bronze

Alabama 148,616

Florida 1,393,068

Georgia 468,464

Tennessee 200,905

South Carolina 180,373

Alabama 41% new/ 59% reenrolling

Florida 43% new/ 57% reenrolling

Georgia 43% new/ 57% reenrolling

South Carolina 46% new/54% reenrolling

Tennessee 41% new/ 59% reenrolling

Eligible for Financial Assistance: AL (89%),

FL (93%), GA (90%), SC (88%), TN (83%)

Average total cost per employee in 2014 was $9,504, of which the average employer cost was $6,276 and average employee contribution was $3,228.

Projecting 3.9% increase in 2015

Trends- wellness programs, large employers direct contracting, spousal surcharges

SHOP exchanges for employers with 50 employees or less opened in 2015

No automatic paycheck withdrawal

The individual market is largely made up of people with tentative work histories. They may be self-employed or seasonal workers with surges of income, or they may work several part-time jobs, or they may even be fully employed in good paying positions but their employers don’t provide coverage

12 months of coverage for 9 months of premium??

Only applies to enrollees who receive an advance premium tax credit to purchase insurance and who have paid at least one month’s premium (Close to 87% of exchange enrollees)

Designed to create a continuity of care

Insurance company only required to pay claims during the first 30 days after a missed premium

Insurance company may pend claims day 31-90◦ Required to notify HHS and the Provider of patient’s

delinquent status

Can cancel plan after 90 days

Patient is considered fully insured until the 91st day, and therefore, can not be balanced billed

Applicability to prompt payment laws?

9-14% attrition for non-payment in 2014

When to do it: ◦ Uninsured Patient with chronic condition or

frequently hospitalizations◦ Trauma Patient will forthcoming long ICU and

recovery currently inpatient at your facility

This would have to occur during open enrollment

◦ Patient who was signed up for exchange, but did not pay premiums and treated at your facility during the 90 day grace period.

◦ Underinsured

Co-pays on RX to prevent readmissions

Decrease Uncompensated Care Cost

Community Health Needs

Reduces Rehospitalization

Leads to Better Patient Outcomes

Gives Patients access to outpatient services and prescriptions

September 16, 2013 CMS Webinar: Question was poised by Rich Umbdenstock of AHA to Mary Cohen Senior Adviser to CMS "One of the questions that several of our members have asked us before," Umbdenstock said, "and I see it's in here again, is the question, 'If the patient qualifies in the exchange, but still doesn't feel as though they have the money after the subsidy to buy a plan, can the hospital do that for them?'""Can the hospital buy the plan on their behalf?" Cohen stated, as if she wasn't sure she heard correctly. "You know, I don't know the answer to that question…It's a good question. I'd like to say yes. But let me check with people like lawyers.""That's a very complicated one, I know," Umbdenstockreplied.

Partly answered by Secretary Sebelious on October 30, 2013 in a Letter to Representative Jim McDermott

◦ Qualified health plans available on the health insurance exchanges under the Affordable Care Act are not “federal health care programs.” Although Secretary Sebelius did not connect the dots, if QHPs are not federal health care programs they are not subject to the federal anti-kickback statute

The federal anti-kickback statute is a broadly worded prohibition on inducements, payments or kickbacks intended to influence the referral of items or services to be paid for by a federal health care program. The government has historically interpreted the kickback statute to prohibit giving items of value to beneficiaries of federal health care programs, including, with some exceptions, paying or subsidizing any copayment, deductible or premium obligations the beneficiary may have.

November 4, 2013 CMS FAQ Statement

Q: Are third party payors permitted to make premium payments to health insurance insurers 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. 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.

AHA's deputy general counsel Maureen Mudron and senior vice president/general counsel Mindy Hatton issued a legal briefing to their member hospitals stating that the Federal Government has no legal authority to prohibit Hospital from paying their patient’s insurance premiums ◦ "If HHS wanted to try to make this position enforceable, it would

have to go through rulemaking. But even then, HHS's authority to adopt the views expressed in the Q&A is highly questionable. By statute, everyone (except incarcerated individuals and undocumented immigrants) is eligible to purchase any QHP [Qualified Health Plan] offered through an exchange so long as the premium is paid.“

◦ "The ACA requires tax-exempt hospitals to have a written financial assistance policy that describes the criteria that will be applied and the financial assistance that will be provided to help patients afford health care," the AHA legal advisory said. "Premium subsidies could be one form of financial assistance.“

◦ We believe that existing IRS precedent strongly supports a determination that providing this type of subsidy advances the charitable purpose of hospitals and that any benefit to insurers is incidental to achieving the larger public good of making health care available to those with financial need. "Providing subsidy support in the name of a charitable contribution, the advisory added, "is especially important for individuals residing in states that have chosen not to expand their Medicaid programs and could help fill the gap in making affordable coverage available to meet the needs in those communities."

March 14, 2014 enacted upon publication. No comment period.

Codifies February 2014 FAQ statement. In response to LA BCBS action.

CMS clarifies their previous statements and orders insurers to accept premium payments from Ryan White HIV/AIDS program

Also states insurers can accept payments from state and federal programs and Indian tribes

Continues to encourage insurers to reject payment from hospitals

“We remain concerned that third party payments of premium and cost sharing provided by hospitals, other healthcare providers, and other commercial entities could skew the insurance risk pool and create an unlevel competitive field in the market”

“Unfortunately, even after the interim final rule there

remains a level of uncertainty as to whether providers can subsidize exchange coverage for indigent and near indigent individuals,” said Chad Mulvany, director of healthcare finance policy, strategy and development for HFMA. “While the initial letter Secretary Sebelius sent Congressman McDermott in November stating that exchange subsidies are not a federal program, seems to open to the door to this, subsequent FAQs from CMS and the IFR could suggest otherwise. Providers are rightly concerned that this could be reinterpreted in the future exposing them to fraud liabilities.”

Targeting a Very Specific Patient Class◦ Unintentional Discrimination◦ Adverse selection

Data Mining ◦ HIPAA issues

You can not require the patient to only visit your facility◦ Therefore, be very careful that the plan purchased

includes other provider options.

Non-profit tax consequences Stark Law

Creating a Scholarship Fund to provide Premium Support

Using a Foundation or Private non-profit◦ Likely must concentrate on financial need only and

not be health based◦ United Way has shown interest in a lot of markets◦ South Florida Hospital Association

Enrollment Desks in ER Health Information Fairs Hiring a Third Party Vendor to work with your

patients

“Hospitals and drug companies pay patients’ premiums and cost-sharing in order to increase utilization of treatments and prescription drugs that benefit them financially. This practice undermines efforts to reward high-quality, cost-efficient care and drives up health costs for consumers, employers, and tax payers.”

-Robert Zirkelbach, America’s Health Insurance Plans

Issue: Do they apply only to State exchanges only, or also to Federal exchanges? ◦ All Region 5 states are on Federal Exchanges, so if

subsidies on Federal exchanges are outlawed, approximately 87% of your exchange patients are likely uninsured again.

◦ Plain language of the statute states “established by the State”

Government says you must read in context of entire law. IRS has interpreted broadly to include all exchanges.

Opponents say plain reading was to encourage States to run exchanges. IRS is wrong.

Halbig v. Burwell◦ DC Circuit

◦ Originally ruled the subsidies are not available on Federal exchanges

◦ Under en banc (full panel) review

King v. Burwell◦ 4th Circuit

◦ Opposite result subsidies are available on Federal exchanges

◦ Supreme Court accepted certiorari on this case

◦ Expected to be heard Summer 2015

This is purely a textual case

The court must decide between choice between clear statutory text and notions of statutory purpose

They will use the Chevron test to do it

The Chevron test is used to assess whether agency action, here the IRS, is within the scope of the agency’s authorization, here the ACA.

The Chevron test has two prongs:

1) First, has Congress directly spoken to the precise question at issue? If Congress’ intent is clear, the court and the agency must give effect to that unambiguously expressed intent.

2) Second, if the statute is silent or ambiguous, is the agency's action based on a permissible construction of the statute?

Elizabeth Richards is an attorney with Clinton A. Harkins, P.C. Her practice specializes in Third Party Healthcare Reimbursement. She received her BBA in Finance from the University of Georgia in 2003. She completed her JD, also from the UGA, in 2006. Mrs. Richards is also a HFMA Fellow. Mrs. Richards is an active member of the Georgia Bar, Georgia Academy of Healthcare Attorneys, and Georgia Chapter of HFMA where she currently sits on the Board of Directors.

erichards@cahga.com 770-261-1065