OIG Opines that Charities Allowed to Help with Patients’ Insurance Obligations

financial hardshipBy: Jacqueline Bain

In the healthcare business, giving a patient a break on a health insurance copay is often viewed as suspicious. The reasoning for the suspicion is that the financial incentive may give one provider a competitive advantage over another, or persuade a patient to seek services that might not be medically necessary.  Moreover, any person who interferes with a patient’s obligations under his/her health insurance contract may be viewed as tortuously interfering with that contract. However, in an advisory opinion issued on December 28, 2016, the OIG opined that, in certain instances, a non-profit, tax-exempt, charitable organization could provide financial assistance with an individual’s co-payment, health insurance premiums and insurance deductibles when a patient exhibits a financial need.

The party requesting the advisory opinion was a non-profit, tax-exempt, charitable organization that did not provide any healthcare services and served one specified disease. The non-profit, tax-exempt, charitable organization is governed by an independent board of directors with no direct or indirect link to any donor. Donors to the non-profit, tax-exempt, charitable organization may be referral sources or persons in a position to financially gain from increased usage of their services, but may not earmark funds and or have any control over where their donation is directed.

The non-profit, tax-exempt, charitable organization would make its program to assist patients with their co-payment, health insurance premiums and insurance deductibles known through its website, or through pamphlets placed in the patients’ healthcare providers’ offices. In addition, a patient’s healthcare provider could also suggest the program to his/her patient.

Before applying for financial assistance, a patient must have already selected his/her health care provider, practitioner, or supplier, and have a treatment regimen in place. The non-profit, tax-exempt, charitable organization must have independently assessed each patient’s eligibility based on the Federal poverty guidelines and would apply its determinations to each patient in a reasonable, verifiable and uniform way.

The OIG scrutinized two key components of the program: (1) the donor’s contributions to the program; and (2) the non-profit, tax-exempt, charitable organization’s assistance to patients.

  • The donor’s contributions to the program. The OIG reasoned that it has long-accepted that industry stakeholders may provide for financially needy patients by contributing to bona fide charitable assistance programs. Since the donor has no control over his donation once it leaves the donor’s hands and each patient’s treatment protocol with his/her selected provider is already in process by the time financial need is assessed, the OIG reasoned that this component poses only a small risk that donors’ contributions would influence referrals.
  • The non-profit, tax-exempt, charitable organization’s assistance to the patients. The OIG stated as crucial to its conclusion that each patient is determined applicable or inapplicable for the program based solely on financial need and without knowledge of a patient’s identity or the identity of the referring provider. Moreover, patients are served on a first-come, first-served bases for so long as funding is available. Based on those facts, the OIG determined that this component presents a low risk of fraud and abuse and is not likely to influence any beneficiary’s selection of a particular provider, practitioner, or supplier for items or services.

For any person or entity who views this Advisory Opinion as applicable to their business model, we strongly suggest obtaining qualified legal counsel to ensure applicability with all steps outlined in the Advisory Opinion. This is a hot-button topic in the industry, and one that is ripe for continued scrutiny. However, it provides financially needy patients with a glimmer of hope for continued treatment in the face of ever mounting medical bills.

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