With health insurance exchanges on the horizon, some controlled by HHS, will federal laws fighting fraud and abuse have new teeth for physicians and practices?
As the planned rollout of Obamacare continues, with CMS administering federal Health Insurance Exchanges, (or marketplaces) expected to begin accepting individual applications later this year, many important questions remain unanswered. According CMS' website, "these state-based, competitive marketplaces, which launch in 2014, will provide millions of Americans and small businesses with "one-stop shopping" for affordable coverage."
As it currently stands, the False Claims Act (FCA) and the other federal fraud, waste, and abuse laws only apply to some, or all governmentally funded healthcare programs (Medicare, Medicaid, TRICARE, and the Federal Employees Health Benefit plan.) A physician could safely avoid the constraints and fear of penalties under Stark Law, the Anti-Kickback Statute (AKS), and the FCA by simply refusing to accept government insurance, primarily Medicaid and Medicare.
This "refuge," or "self-imposed "exile," (depending upon how you look at a half-filled glass) would still leave around half of the patient population covered by private insurance plans, or better still, paying cash. However, the Affordable Care Act (ACA) changes the way private plans are funded, and converts uninsured cash patients into governmentally-subsidized patients.
The U.S. Supreme Court ruled last year that the healthcare law cannot be used to force states to participate under the threat of losing Medicaid funding. Therefore, depending upon which state you live in, exchanges or marketplaces are available through state-based exchanges, or provided by the federal government. Under either, those patients earning less than 133 percent of the federal poverty level (around $31,000 for a family of four) should be added to Medicaid roles. This clearly means Stark Law and the AKS would apply to a whole new segment of the population which previously paid cash.
Beginning next year, those earning more than 133 percent of the federal poverty level should qualify for subsidized plans through one of the exchanges. This means that the federal government, through HHS, will partially fund the cost of an insurance policy. Again, more federal dollars will be used to provide health insurance plans for more people.
The ACA provides that an employer that has 50 or more full-time employees or full-time employee equivalents (a "large employer") must provide health coverage, or pay one of two penalties. As the maximum penalty per employee is far less than the cost of coverage, many fear that employers possessing even a rudimentary understanding of basic mathematics will find it less costly to drop group plans, and simply pay the penalty. These employees will then either qualify for Medicaid or a plan subsidized or partially funded by the federal government. If this happens on a large scale, it likely will become more and more difficult, if not impossible for a physician or other provider to avoid Stark Law and the other federal fraud, waste, and abuse regulations.
This new headache will add insult to the injury which comes from the already low reimbursement rates paid by Medicaid and Medicare. It is not entirely clear how a physician is expected to know whether a patient’s coverage is under a policy being subsidized by state or federal dollars, nor whether and to what extent Stark Law will apply, to a plan which is privately purchased, but partially subsidized depending upon the income of an individual. Nevertheless, as the government continues to work its way through the rollout of Obamacare, is a question which needs to be considered.