In November of 2013, CMS became concerned that hospitals and other providers might help their patients purchase insurance by contributing to their premium payments or cost-sharing obligations. The motivation for providers was clear: if the amount they could expect to receive from an uninsured patient (likely very little, if anything) was less than the difference between the reimbursements from an insurer and the contribution the provider made to the patient’s insurance payments, it would be profitable for providers to contribute. CMS’s concern was also clear: if hospitals began paying for their patients’ insurance, they would likely be cherry-picking the sickest patients with the highest expected reimbursements, which would skew the risk pool for all consumers. So CMS issued a guidance discouraging insurers from accepting those third-party payments from providers.
What CMS did not say was that insurers should stop accepting all third-party payments. This was a point that CMS has had to clarify in light of the decision by several insurers in Louisiana–including BlueCross BlueShield of Louisiana (BCBS-LA), the largest insurer in the state–to refuse third-party payments from anyone (aside from immediate family members/blood relatives or legal guardians). Importantly, this includes the government, which provides grants through the Ryan White Program to low-income citizens with HIV/AIDS. The motivation for insurers is clear: they don’t want to have to continue paying for expensive medical care required by people with HIV/AIDS. But this desire runs directly contrary to the government’s intention to help provide insurance coverage through Ryan White grants to people with HIV/AIDS who could not otherwise afford it.
After the jump, I’ll discuss the Louisiana insurers’ response to CMS’s clarification:
Despite CMS’s clarification, the insurers are not backing down. BCBS-LA has issued a statement regarding their decision, including the following justification:
[B]ecause we are offering the majority of the Marketplace products in Louisiana, we also feel a great responsibility to maintain the integrity of the ACA and ensure that all individuals are free to choose the health plans that are best for them and their families, free of influence or manipulation, without being steered or manipulated by people or organizations trying to take advantage of their situations for their own personal gain. We developed this policy as a safeguard against this type of patient steering and other fraudulent activity. * * *
Unfortunately, we know from experience that there are people who want to game the system and take advantage of the uncertainty healthcare reform is creating. For example, there have been instances here and elsewhere in which certain providers or medical equipment suppliers will steer people to a specific health plan and offer to pay those people’s premiums so that the provider/supplier can bring in financial benefits through billing the insurance company for the member’s covered services. This kind of activity can lead to improper use of services, wasted money and increased healthcare costs for everyone.
Therefore, we are acting in the best interest of our current and future policyholders to take as many precautions as we can to protect the financial stability of our company and our customers’ premium dollars. That’s why we are strengthening our payment process to ensure we are dealing directly with our policyholders and reducing the chance that other parties could take advantage of this situation.
I have two concerns with their justification:
First, I don’t think it makes much sense to apply BCBS-LA’s logic for not accepting third-party payments to payments by the government. It seems to me that BCBS-LA has properly explained the general concern regarding third-party payments from providers or suppliers who may be seeking to “bring in financial benefits through billing the insurance company for the member’s covered services.” But notice that this concern is clearly inapplicable to government-provided payments. Unlike providers or suppliers, the government does not stand to receive financial benefits when the beneficiary submits a claim to the insurer.
Second, I don’t think BCBS-LA is actually concerned about accepting payments from the government. I presume that BCBS-LA accepts payments from the government in the form of premium tax credits, as they offer plans through the ACA-provided Louisiana marketplace all over the state. Perhaps they would justify accepting these payments by arguing that they need to offer insurance on the marketplace to compete on the individual market, and in order to function on the marketplace, they must accept premium tax credits. Maybe that’s right, but here’s the question that makes me skeptical: in the hypothetical world where BCBS-LA could refuse premium tax credits but still operate in the marketplace, would they really do so? I highly doubt it.
To be clear, I understand why BCBS-LA is straining to find a justification to apply the provider-payment logic to government payments. Absent such a justification, it seems to me that there’s a good case that BCBS-LA is violating the anti-discrimination provisions of the Affordable Care Act by discriminating against people because they have HIV/AIDS. I just find their non-discriminatory justification rather difficult to believe.
(Note: I focused on the BCBS-LA justification because the other insurers in the state that are declining third-party payments have either made no comment or simply claimed that they have no choice but to follow BCBS-LA, lest they receive a disproportionately high share of the low-income HIV/AIDS population in the state.)
Disclosure: I have been providing research on issues related to the third-party-payment decisions by Louisiana insurers for the Harvard Law School Center for Health Law & Policy Innovation as part of a clinic.