Insurers wary of premium help for patients

Daryl Lebahn wouldn't be alive today without dialysis treatments that clear waste and excess fluids from his blood.

The health plan that pays for his treatment would be unaffordable, Lebahn says, without the assistance he receives from a nonprofit group.

"If it wasn't for their help, a lot of people — I don't know what we'd do," the 60-year-old Blaine resident said in an interview.

But the practice of charitable organizations covering premium costs for low-income patients is now being scrutinized as health plans allege that the payments are skewing insurance markets.

Insurers and regulators worry that some health care providers are making financial contributions to nonprofit groups to steer patients to certain private health plans.

Those private plans, in turn, pay the clinics much higher rates for dialysis services than do the Medicaid and Medicare health plans that patients otherwise would rely on for coverage.

Clinics deny the charge. Nonprofits counter that they're simply trying to help people overcome financial barriers that might otherwise block their access to care.

What's more, they contend that health insurers are simply trying to block people with preexisting conditions from coverage, just like they did before the federal Affordable Care Act (ACA).

Regulators in states like Minnesota are stepping in with new rules that try to balance the concerns of needy patients with questions about whether financial assistance programs are driving up overall health care costs.

"The allegations are that certain health care providers and organizations are manipulating the insurance coverage … for their own financial gain," said Mike Rothman, commissioner of the Minnesota Department of Commerce, in an interview. "They may receive higher payments, or inappropriate payments, when the patients could be getting, for example, public assistance or public programs."

It's not clear exactly how many patients rely on what regulators call "third-party payments" to either cover premium costs or to pay for cost-sharing requirements within their health plans.

Payments go directly to low-income patients, or their insurers.

In 2013, the federal Centers for Medicare and Medicaid Services issued a frequently-asked-questions document noting concerns that third-party payments from health care providers "could skew the insurance risk pool" and encouraged insurers to reject them. A subsequent document created an exception for payments from nonprofit groups in certain cases.

"Insurers seem to be using lack of clarity within the ACA as a loophole to effectively deny coverage to chronic disease patients," said Scott Bruun, executive director of the Oregon-based Chronic Disease Coalition, in an e-mail. "This has left it, generally, to state insurance divisions to sort out."

In June, the state Commerce Department issued a bulletin outlining how insurers should handle third-party payments.

Many are permissible, but they can be blocked from nonprofit groups that are not "financially disinterested," the department said, meaning nonprofits that receive funding from entities with a "pecuniary interest in the payment of health insurance claims."

If an insurer wants to deny a third-party payment, it must first submit its rationale to the Commerce Department for approval. Insurers also are required to tell patients about the reason for a denial and their right to file a complaint.

The Commerce Department issued the bulletin after fielding a policyholder's complaint. The department would not identify the insurer due to an ongoing investigation.

In response to questions from the Star Tribune, Eagan-based Blue Cross and Blue Shield of Minnesota said it sent letters in December to about 100 people explaining that the insurer would not accept third-party payments. In a subsequent letter in January, Blue Cross said it was retracting the letter based on direction from the Commerce Department.

Blue Cross said it would not grant an interview, because the situation is being examined by regulators. But the company said in a statement that many of the insurer's letters went to people enrolled in, or eligible for, government programs "before being approached by certain third parties to enroll in specific commercial products, where provider payment rates can be up to four times higher."

"To be clear, Blue Cross does not object to the overall concept of charitable third-party payments," spokesman Jim McManus said in a statement. "Our concerns with respect to certain third-party payment[s] are at this time, generally limited to circumstances where those payments may create conflicts of interest and adverse implications for the entire market."

In July, Minnetonka-based UnitedHealthcare sued a for-profit chain of dialysis clinics called American Renal Associates (ARA), alleging that the company was indirectly providing money through a charity to patients in Florida.

Those patients qualified for coverage in government programs, United alleged, but used third-party payments to buy coverage from the insurer. Where Medicaid and Medicare pay ARA a reimbursement rate of $300 or less for one session of dialysis services, the lawsuit states, the company believes it can bill United more than $4,000 per session.

"ARA has endeavored to cause those patients to drop their government insurance and enroll in United's commercial plans," the insurer alleged.

"ARA secured premium assistance from a third party, the American Kidney Fund (AKF), to cover the patients' commercial plan premiums," the lawsuit states. "Upon information and belief, AKF's financial assistance was funded by earmarked donations ARA made to the [nonprofit group] for this very purpose."

The lawsuit says the dialysis company counseled patients on enrollment in the commercial plans that were most favorable to ARA.

In a statement issued Friday, the dialysis company said the lawsuit contains baseless claims and multiple factual errors, including bills from another provider in the complaint. It appears to parallel the insurers lobbying on proposed regulations that would "force high-cost patients out of their insured pools, compelling them to rely solely on Medicaid," said Michael Costa, the vice president and general counsel for ARA, in a statement.

"The litigation is nothing more than a self-serving attempt by [United] to deny chronically ill dialysis patients — who are often some of the most vulnerable groups in our communities and disproportionately Americans of color — access to financial assistance that the federal and state governments have clearly approved as appropriate," Costa said.

The American Kidney Fund is a not a party to the lawsuit, but the nonprofit issued a statement disputing the allegations. The AKF takes money from dialysis clinics to fund its patient-assistance programs, but the contributions aren't conditioned on patients getting care from certain clinics or obtaining certain types of health insurance, said Tamara Ruggiero, vice president of public affairs for the nonprofit group.

The American Kidney Fund says it helped about 800 Minnesota dialysis patients last year maintain access to care.

Lebahn, the dialysis patient from Blaine, gets help from the nonprofit group to pay the premium on his Medicare supplemental insurance.

The scrutiny is troubling because it threatens access to care, Ruggiero said. She added that her group fears the Commerce Department's bulletin allows insurers too much latitude to block payments from nonprofits.

"We are hoping that the department will be open to hearing public comments on the bulletin and perhaps making some modifications," she said in an interview.

Christopher Snowbeck • 612-673-4744

Twitter: @chrissnowbeck