The implementation of federally subsidized health insurance introduced a previously uninsured segment of the population to the payor mix of providers across the country. A major concern has been whether these newly insured patients could afford to pay their insurance premiums, even with the subsidy. Because the law allows patients a grace period of 90 days to pay missed premiums while still being eligible for coverage, the providers’ financial responsibility over the last 60 days of that 90-day period exacerbates this concern. Many astute providers have asked if they could support patients by paying their premiums for them.
Can providers pay patient premiums?
It has been argued that providers paying premiums would be a win-win-win:
- Providers make a small payment for potentially significant reimbursement and avoid concerns about financial responsibility during the grace period.
- Patients receive needed care.
- Insurance companies are not forced to track down delinquent payments and can keep patients current, although with the potential risk of paying for increased utilization.
The industry struggled with this question for most of 2013, leading up to the open enrollment period beginning in October of that year. Conflicting guidance was provided by the government in the fourth quarter of 2013 and first quarter of 2014 until a letter from outgoing HHS Secretary Kathleen Sebelius on May 21, 2014, to the American Hospital Association provided the clearest guidance yet. The letter indicated that premium support (in addition to federal subsidies) for insurance coverage could be provided to patients if the support payment was structured within clear parameters1.
- Support payments for a qualified health plan (QHP) can be made from a private not-for-profit organization, such as a charitable foundation.
- Assistance payments must be for a whole year and not just a brief episode (to avoid shifting risk due to adverse selection).
- Eligibility criteria must be in place that is based on financial situation and cannot be based on health status.
- Participation requirements cannot obligate a patient to obtain care from a specific provider entity or system.
What should my organization do?
In light of this guidance, we urge all providers to conduct a cost-benefit analysis to determine the impact of a premium support program. If you determine that such a program would be financially viable, then develop a policy for when premium support could be offered to a patient. Several key policy considerations include the following:
- Develop the premium support structure through your charitable foundation, if applicable.
- Establish a clear definition for when premium support might be available and the criteria under which a patient would be eligible to apply (e.g., financial status, enrollment period).
- Specify the amount of support that is available and for how long.
- Define a budget for how many patients could be supported under the program.
- Determine whether the program fits under a grant model or a loan model.
For additional information about how this guidance might affect your organization, or for assistance in developing your organizational policy, please contact Jason Lee or any member of the ECG managed care reimbursement and contracting team at 415-692-6060.
1In addition, Indian health organizations can also provide support payments.