Last week, HHS Secretary Kathleen Sebelius released a letter which could open intriguing possibilities for hospitals. In the letter, Sebelius said that hospitals can help uninsured patients pay for private health insurance through the new insurance exchanges without violating federal anti-kickback statutes.
This isn't the last word on the subject—nonprofits still have to work out whether the IRS will allow such a payment—and state laws may block hospitals from moving ahead in some cases. But where it's possible, it may very well make sense for hospitals, especially nonprofits, to pay premiums for some of their patients.
The idea is already in play, notes Chad Mulvany, director of healthcare finance, policy, strategy and development for the Healthcare Financial Management Association. "We have been approached by a number of hospitals about paying premiums for uninsured patients," Mulvany said."[Hospital executives] are trying to deal with a lot of other mechanics that have to be thought through, but with the HHS go-ahead I imagine this will evolve pretty quickly."
So, why should hospitals make an investment of this kind? A few reasons that come to mind:
- For ED "frequent fliers" with no insurance, it may be cheaper to pay a comparatively modest premium than swallow all of the labor and materials costs that go into ED treatment.
- Nonprofit hospitals can point to the premiums paid as evidence that they're providing enough community benefits to justify their tax exemption.
- Hospitals participating in ACOs can do more to treat the whole patient—and avoid no-nos like frequent readmissions—if chronically ill patients who can't afford the premiums get insured.
- If your hospital owns medical practices, paying premiums for those who can't afford them makes sure the doctors get paid, too, which also adds to the bottom line.
None of this is to suggest that hospitals become the insurers of last resort for the entire community; that's a role they're not set up to play. But if hospitals pay premiums for the right patients, specifically, those would otherwise cost the facility far more, it could address some of their existing financial problems.
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