- Associated Press - Thursday, September 11, 2014

MIAMI (AP) - A group of South Florida hospitals is trying to raise $5 million to donate to a foundation that would pay one year’s worth of health insurance premiums for thousands of low-income consumers who bought insurance under the Affordable Care Act. But insurance companies bristle at the idea, saying it poses a conflict of interest.

It’s an effort to keep consumers covered and ensure hospitals get paid for treating them, said Linda Quick, president of the South Florida Hospital and Healthcare Association.

It’s unclear whether the program will be ready when open enrollment begins in November, but it should be ready before the enrollment period concludes in February.

Purchasing health insurance is more cost effective than paying for emergency room care and it also gives consumers access to primary care, Quick said. It also ensures that hospitals get paid for treating those patients.

Hospitals around the country are considering similar third-party payer programs amid concerns that a provision in President Obama’s health law could leave them on the hook for unpaid bills.

Under the law, consumers who are receiving subsidies to help pay for their health insurance must get a 90-day grace period if they miss payments before their policies can be canceled. But insurers can hold off paying for the final two months and could ultimately deny payment if a consumer doesn’t end up paying the monthly premium. That means hospitals and doctors might not get paid for some services during the final two months of the grace period.

The trade industry group, America’s Health Insurance Plans, says requiring health plans to pay claims for enrollees who do not pay premiums raises costs for all enrollees.

Insurance companies also warn that if there are only incentives for people to sign-up for coverage once they are sick, it may lead to a significant imbalance in the risk pool and higher premiums overall.

“It is a conflict of interest for hospitals and drug companies to pay patients’ premiums and cost-sharing for the sole purpose of increasing utilization of their services and products. This practice undermines proven efforts to promote high-quality, cost-efficient care and drives up health care costs for patients and taxpayers,” said the insurance trade group’s spokeswoman, Clare Krusing.

Hospitals are not allowed to consider the health status of recipients and can’t accept referrals directly from hospitals or insurance companies, said Quick. Instead, she said, referrals must come from nonprofits that provide services to low-income families.

The South Florida Hospital and Healthcare Association plans to work with the United Way and other local nonprofits for referrals.

The federal government has given mixed messages on the issue.

In a letter last October to Rep. Jim McDermott, D-Washington, the administration said the insurance plans under the exchange were not considered federal health care programs and were not subject to anti-kickback laws, paving the way for hospitals and drugmakers to help subsidized policyholders pay their premiums. But a month later, the agency said such third-party payments were discouraged because they might attract more sick patients.

The American Hospital Association sought clarification and received a letter in February from then Health and Human Services Secretary Kathleen Sebelius saying that private, not-for-profit foundations were not prohibited from paying the premiums.

The American Hospital Association said the secretary’s letter clears the way for hospitals to support hospital-affiliated or other charitable foundations in providing subsidies for premiums or cost-sharing expenses.

Federal health officials issued an interim final ruling in March requiring insurance companies to immediately begin accepting third-party payments from Indian tribal organizations and the Ryan White Programs, which helps HIV and AIDS patients, and nonprofits and not-for-profit foundations.

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