Since our post about East v. Blue Cross and Blue Shield of Louisiana, Et Al., M.D. La. 3:14cv00115, CMS has issued more precise guidance on the subject of third-party premium and cost-sharing payments to insurers, in the form of an interim final rule, effective immediately, codified at 45 CFR § 156.1250:
Issuers offering individual market QHP’s, including stand-alone dental plans, must accept premium and cost-sharing payments from the following third-party entities on behalf of plan enrollees:
a) Ryan White HIV/AIDS Program under title XXVI of the Public Health Service Act;
b) Indian tribes, tribal organizations or urban Indian national organizations; and
c) State and Federal Government programs.
The cited authority for this rule does not include ACA § 1557, the non-discrimination statute at the core of the East suit. That matters.
CMS has decided to treat this as a QHP issuer misconduct problem, remediable by civil money penalties – up to $100 per day per affected individual – if the QHP was sold through an Exchange. If sold outside an Exchange, like the policy disputed in East, state law provides the remedy, if any.
A court, or another agency, might see this as a § 1557 problem, so the issue remains a live one, complicated by this statement in the preamble to the new CMS rule:
Our new standard does not prevent QHPs and SADPs from having contractual prohibitions on accepting payments of premium and cost sharing from third party payers other than those specified in this interim final regulation. In particular, as stated in our November FAQ, 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 insurance market. We continue to discourage such third party payments of premiums and cost sharing, and we encourage QHPs and SADPs to reject these payments.
The East plaintiffs argue that disparate impact theory applies to such insurer policy terms. If so, and if such terms disproportionately burden disabled customers and applicants, then the CMS guidance could conflict with § 1557.
CMS cited no statutory authority for turning its discouragement into an actual rule. There may be none. Some insurers are accepting provider and charitable COBRA premium payments without making an issue of it. But doing so may invite a § 1557 suit if they decide to reject such payments after calculating their risk pool impact. The overall message to insurers is to bring ACA lawyers, data runs and money, before this hits your fan.