Oops. Here Is a Reversal, per JP Morgan
Contrary to indirect indications made last week, HHS issued explicit guidance yesterday discouraging providers from subsidizing patient premiums on health exchanges and encouraging issuers to reject such payments. In an FAQ, (see text below or direct link), HHS says it has significant concerns about third-parties supporting premium payments or cost-sharing obligations, due to potential adverse selection in the exchange risk pool. The guidance is not an absolute legal prohibition, HHS now says it “discourages” the practice and intends to monitor it; so, we are not sure how hospitals will react here. The HHS directive will likely moderate the interest level of hospitals to pursue direct subsidies versus the previous AHA legal advisory on the topic (note link here – call for copy of previous AHA advisory). We contacted the AHA, and they are working on a new legal advisory in response to the latest HHS guidance which will likely be out this week. We think the HHS guidance is positive for managed care (hospitals helping patients already seeking care get covered could negatively skew the risk pool on exchanges) and a modest negative for hospitals versus previous. However, we note that our modeling of hospital benefits from coverage expansion does not include any upside from hospitals’ ability to subsidize patient premiums. (More)
Is there any “big picture” benefit gained from having hospitals support/help with these various cost?
They might be able to balance out the risk?
Let’s try to keep as many payers out of this as possible.
Since it’s not “illegal” I would assume that this will be practiced by many third parties.
Any guess to what the penalty might be, down the line? “Appropriate action” is pretty vague.
If I were a carrier, I would write it into the contract with the hospital that this was not allowed. However, it would be difficult to enforce.
(I have never actually read a contract between a hospital and a carrier, so I can’t say if this is a feature of such contracts.)
Interesting link:
HHS: Hospitals Can Help Uninsured Patients Purchase Coverage Through ACA
HHS last week issued new policy guidance that states hospitals can help uninsured patients purchase coverage through the Affordable Care Act’s health insurance exchanges.
http://www.advisory.com/Daily-Briefing/2013/11/04/HHS-Hospitals-can-help-patients-pay-for-ACA-exchange-plans
Tomorrow will probably result in a new understanding of what the restrictions are.
Just more confusion for this program. Seems to be the theme of the ACA so far.
I lose trust in this administration every day. I’m glad my name isn’t tied to this program.
The regulations provide subsidies based on the second lowest silver benchmark plan in the state. This seems to incentivize insurers to provide premiums equal to the benchmark premium, in order to maximize subsidies and still have “affordable” premiums, based on a percentage of household income.
What incentives are there for insurers to provide lower premiums than the benchmark, with less coverage, similar coverage, or even more coverage than the benchmark plan?
Don Levit
I’m not quite sure I understand the question, but I think it depends on two things: If the beneficiary can get the bronze plan for “free” that is even better for the insurer than the beneficiary having to pay even a small part of the premium, because the carrier can be highly confident that the beneficiary will never default (http://tinyurl.com/lrf83fb).
Even if the beneficiary has to pay only a small share of household income as premium, there is some risk he will drop out, especially if he remains healthy.
Second, we don’t know if insurers anticipate that bronze or silver plans are more profitable. It may not be the same answer for each insurer. Nevertheless, some may believe bronze plans will be more profitable, therefore, encourage more enrollment in them.
I would assume those individuals who are enrolled into insurance plans by hospitals will be enrolled in Medicaid as they currently are now.
Not necessarily. As John Goodman has written about the Parkland Memorial hospital in Dallas (http://tinyurl.com/487jxmx), it is very difficult for hospital staff to enroll people in Medicaid because their status (Medicaid versus uninsured) has no impact on how they are treated in the ER.
For people who are eligible for Obamacare exchange coverage, I doubt the effect would be different. Besides the challenge that the ER patients (especially if illegal immigrants) have no incentive to enroll in Medicaid at the hospital, I wonder how many of them really know if they are eligible for Medicaid?
This will be even more difficult with respect to Obamacare exchange subsidies. I can’t imagine someone in the ER being prepared to answer questions about whether his or her household income is less than 400 percent of the Federal Poverty Line!