Healthcare News & Insights

Emerging trend: Hospitals are paying patients’ insurance premiums

Extending charity care to patients is nothing new for hospitals. But with the changes brought about by healthcare reform, some hospitals are going the extra mile and actually covering patients’ premiums for their insurance.

man handing out cashHospitals across the country are taking different approaches to this emerging practice, as discussed in an article from Kaiser Health News.

Some hospitals are donating money to charity groups to help low-income patients keep up with premiums for health plans they purchased under the insurance exchanges set up by the Affordable Care Act (ACA).

Others are directly paying the premium costs for sicker patients if a lapse in payment is discovered when they’re admitted.

Another approach is for hospitals to cover the costs for an entire year of coverage once a qualifying low-income patient gets a policy from the exchange, as opposed to only paying if it lapses.

Why offer this to patients?

Hospitals are taking a more hands-on role in this process because they now have a larger financial stake in making sure patients keep their insurance. A provision in the ACA allows insurers to cancel patients’ policies after 90 days of non-payment. Services will be covered for the first 30 days of this “grace period,” but payors won’t cover patients for the remaining 60 days.

So that means hospitals either have to eat the costs, or go after patients for the balance. And if they’re having trouble paying their subsidized insurance premiums, they likely won’t be able to cover those bills, either.

Drawbacks to hospitals

Although helping patients with premiums can ensure that hospitals get paid for treatment, they do still run risks with this practice, according to the Kaiser article. Some facilities choose to preemptively cover patients by purchasing their insurance before they need any hospital services. In that case, there’s a chance patients could never need to visit the hospital for care.

And if hospitals pay premiums for ill patients, many carriers balk at that approach. They claim it skews their risk pools, causing them to pay more for patients care – driving up healthcare costs overall. That could lead to hospitals being closely scrutinized by the government for these expenditures, or even being forbidden from taking this approach.

For now, lawmakers haven’t taken a clear stand about the legality of hospitals providing this service for patients. Although a recent advisory from the Centers for Medicare & Medicaid Services (CMS) has expressed concern over hospitals helping patients with premiums, it hasn’t banned the practice outright.

Considering this approach

Implementing a similar policy in your hospital (or working closely with a charity to help patients pay their premiums) could help you avoid financial losses from patients who receive treatment and are facing loss of insurance coverage.

However, it’s important to weigh the up front costs against any potential benefits and savings down the line – and to make sure any policy you create is in compliance with applicable state regs.

We’ll keep you posted on any legal developments on the federal side.

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