The U.S. Department of Health and Human Services (HHS) has come out on the record opposing the practice of hospitals and other healthcare providers paying insurance premiums for patients.

In a memo published Friday, the Center for Consumer Information & Insurance Oversight, a department within HHS’s Centers for Medicare and Medicaid Services (CMS), answered the question, “Are third-party payors permitted to make premium payments to health insurance issuers for qualified health plans on behalf of enrolled individuals?”

Although the memorandum doesn’t come out and say it, the answer is yes, it is not illegal, but CMS does not want healthcare providers or others to do it. “HHS has significant concerns with this practice because it could skew the insurance risk pool and create an unlevel field in the Marketplaces,” the memo states. “HHS discourages this practice and encourages issuers to reject such third party payments. HHS intends to monitor this practice and to take appropriate action, if necessary.”

The memo appears to be designed to temper to an earlier letter from HHS Secretary Kathleen Sebelius to Rep. Jim McDermott (D-Wash.) that stated the practice of third-parties paying health insurance premiums would not violate federal kickback laws as long as no federal funds were involved. While Secretary Sebelius expressed no approbation of the practice, the new short memo makes clear that HHS opposes the practice and also suggests that it may have the authority, under Section 1321(a) of the Patient Protection and Affordable Care Act, to regulate it.


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