Health Insurance

Health providers may be steering people to Obamacare to get higher reimbursement

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Are health-care providers gaming Obamacare to get more money from insurers?

Citing "serious concerns," federal health regulators say they are investigating whether some health providers — to get higher insurance reimbursements — are steering people into Obamacare plans when those patients are getting or eligible for Medicaid or Medicare benefits.

Regulators also said they are considering whether to impose civil monetary penalties related to the alleged practices by doctors, hospitals and other medical facilities.

They warned such tactics could drive up health costs nationally, and may be hurting insurers' financial performance in Affordable Care Act plans.

The probe, which comes has insurers have been voicing similar worries, is being handled by the Center for Program Integrity, a division of the federal Centers for Medicare and Medicaid Services.

CMS on Thursday issued a request for information seeking public comment on whether health providers and provider-affiliated organizations are encouraging Medicare- and Medicaid-eligible people to sign up for individual insurance plans.

Medicare is the federally run program that covers health needs of primarily senior citizens, although it also covers people receiving dialysis. Medicaid is the federal-state program that provides health coverage mainly to the poor. Both programs as a rule pay providers less than private insurance plans, including Obamacare plans, pay them.

CMS said the practice of steering to Obamacare plans could "raise overall health system costs" and "potentially be harmful to patient care and service coordination" because of changes to the networks of health providers they use and their covered medications. CMS also said it could "result in higher out-of-pocket costs for enrollees."

And, the agency warned, steering could negatively affect the so-called risk pool of the individual insurance market. If a risk pool, or group of customers, contains too many sick people and not enough healthy people, the premiums customers pay may not be enough to the costs of their medical claims, leaving insurers with a loss.

CMS's announcement comes after three major insurers have said they will sharply shrink the number of areas where they sell Obamacare plans next year, including on government-run exchanges. Those insurers have been booking steep losses in that market because, they say, the risk pools are not as strong as they expected.

"Ensuring access to high quality patient care is a top priority for us. We are concerned about reports that some organizations may be engaging in enrollment activities that put their profit margins ahead of their patients' needs," said CMS Acting Administrator Andy Slavitt.

"These actions can limit benefits for those who need them, potentially result in greater costs to patients, and ultimately increase the cost of [Obamacare] marketplace coverage for everyone," Slavitt said.

Dr. Shantanu Agrawal, CMS Deputy Administrator and director of the Center for Program Integrity, said, "It is improper to influence people away from Medicare or Medicaid coverage for the purpose of financial gain."

"Our goal is to protect patients from being unduly influenced in their decisions about their health insurance options, and to protect the integrity of all the programs we oversee," Agrawal said.

The Dialysis Differential

As part of its information request, CMS also sent a letter to Medicare-enrolled dialysis facilities and centers notifying them of the probe.

CMS said its actions reflect "ongoing efforts" by the CMS Center for Program Integrity "to address possible issues in the marketplace that could affect the integrity of the programs for both consumers and issuers, and the costs of the individual insurance market, while at the same time help ensure patients are enrolled in the right plan for them."

Last month, leading health insurer UnitedHealth Group sued the dialysis treatment chain American Renal Associates for alleged fraud by getting bigger payments from UnitedHealth through steering Medicare- and Medicaid-eligible patients to the insurers' plans. Those patients then allegedly had help paying through premiums through a charity, the American Kidney Fund.

American Renal Associates has reportedly said the suit is "without merit."

However, in the wake of the complaint, analysts questioned executives from American Renal Associates about their ACA plan revenues on the dialysis firm's second quarter conference call.

The company said that part of its year-over-year revenue increase had come from more patients who had Obamacare exchange insurance, which offers a higher reimbursement rate than government programs.

Ana Gupte, senior analyst for health care services at Leerink Partners, noted that in addition to UnitedHealth, major insurers Anthem and Aetna "have expressed concerns around this practice of third-party premium assistance to dialysis patients enrolling in public [Obamacare] exchanges though they are currently eligible for Medicaid or Medicare with the aim of arbitraging the price differential."

"There is clearly concern that this practice is contributing to adverse selection and mounting losses on public exchanges," Gupte said.

"It would appear that this practice may not be solely limited to dialysis providers as there also has been anecdotal evidence of extraordinary specialty drug spending on public exchanges that may be connected with similar third-party premium assistance."

Aetna and UnitedHealth declined to comment Thursday. An Anthem spokesman wasn't immediately available.

An end to third-party premium help?

Aetna CEO Mark Bertolini told CNBC earlier this month that "what we're finding is third parties, who have to either provide coupons or discounts, or these drugs for free, are signing up people to the exchanges, through the enrollment system and paying the bills for them — whatever their out of pocket costs are — and moving the costs of those drugs from their own programs to ours."

CMS said Thursday it is is looking into is whether health providers, in addition to steering people to Obamacare plans, are also offering to pay those people's premiums and out-of-pocket health costs in an effort to get the higher insurance reimbursements from the plans.

Such payments, CMS said, "are discouraged" by the agency as of now. But CMS added that it is also considering whether to take steps that would ban or limit premium and out-of-pocket assistance from providers to patients, according to the agency.

And CMS said it is eyeing possibly imposing "civil monetary penalties on health-care providers when their actions result in late enrollment penalties for Medicare-eligible individuals who are steered to an individual market plan and, as a result, are delayed in enrolling in Medicare.

Dr. Joseph Vassalotti, chief medical officer of the National Kidney Foundation, said the group "is concerned about allegations of dialysis patients potentially being steered into health insurance options that primarily benefit the provider; but may not necessarily be in the best interests of the patient."

However, he added, that while most patients with end-stage renal disease "choose to enroll in Medicare, there are some patients for whom Medicare may not meet their health and financial needs. As a result patients should retain the option to choose private health insurance coverage."

"Over the past few years insurance companies have developed policies, including refusal to accept third-party premium assistance, to avoid having to cover dialysis patients because of the high costs associated with their care," Vassalotti said. "The Affordable Care Act was intended to protect patients with pre-existing conditions and offer them the option to maintain or enroll in private health coverage regardless of their health status. NKF supports extending this same protection to individuals with kidney failure.

The National Kidney Foundation does not pay premiums for patients.

The president of the American Kidney Foundation, which does have a premium-assistance program, defended it Thursday, and said the group will be giving CMS comments explaining why it is necessary.

"Let's not lose sight of the critical fact that end-stage renal disease .... patients have as much right under the law as anyone to access ACA plans," AKF's LaVarne Burton said in statement to CNBC.

"For some, these plans may provide more comprehensive coverage for the full range of medical care they need, including dialysis. For others, Medicare (with Medigap if available to them) or Medicaid may indeed be the best choice," Burton said.

"What's important is that the patient has the choice. Insurers are actively working to take this choice away from low-income patients with chronic illnesses who need charitable assistance to pay their premium."