In an October 30, 2013, letter to Representative Jim McDermott (D-WA), U.S. Department of Health and Human Services (HHS) Secretary Kathleen Sebelius, stated that HHS “does not consider [Qualified Health Plans (QHPs)], other programs related to the Federally-facilitated Marketplace, and other programs under Title I of the Affordable Care Act to be federal health care programs.” This determination has significant implications for arrangements under various health care fraud statutes, including the federal health care program anti-kickback statute (42 U.S.C.§ 1320a-7b(b)), the civil monetary penalties statute prohibiting, among other things, beneficiary inducements (42 U.S.C. § 1320a-7a), and the exclusion of individuals and entities from participation in federal health care programs (42 U.S.C. § 1320a-7). Such statutes require, among other things, a trigger that the alleged fraud involve a “federal health care program” (as such term is defined under 42 U.S.C. § 1320a-7b(f)). Notably, in her letter, Secretary Sebelius indicates that the HHS determination was made “in consultation with the Department of Justice.” The HHS Letter was in response to an August 6 2013, letter from Representative McDermott to the Secretary.
In general, pharmaceutical manufacturers and other health care industry participants are advised to be particularly cautious in structuring programs that potentially have an impact on “federal health care programs”, such as certain discount and coupon arrangements. Were QHPs to be deemed “federal health care programs”, there would likely have been implications for various arrangements, such as co-pay assistance programs. Because of the numerous financial subsidies and federal payments under the Affordable Care Act health insurance exchanges, and plans offered under them, many industry participants had raised questions about the extent to which laws regulating “federal health care programs” might be triggered by QHP relationships. In her response, Secretary Sebelius appears to have considered these various financial federal payments, stating that the HHS determination: “includes the State-based and Federally-facilitated Marketplaces; the cost-sharing reductions and advance payments of the premium tax credit; Navigators for the Federally-facilitated Marketplaces and other federally funded consumer assistance programs; consumer-oriented and operated health insurance plans; and the risk adjustment, reinsurance, and risk corridors programs.”
It is important to understand that while the “federal health care program” determination lowers the risk of some potential routes of health care fraud enforcement, the federal and state governments have other tools available for combating improper relationships and conduct with QHPs and their members. Among other laws, various state kickback and consumer protection laws do not require a “federal health care program” trigger for liability. Also, in her letter, the Secretary expressly noted that the HHS Office of Inspector General (OIG) has jurisdiction: “to audit, investigate, and evaluate the HHS-administered programs in Title I of the Affordable Care Act. Further, section 1313 of the Affordable Care Act authorizes HHS and the OIG to investigate the ‘affairs of an Exchange.’ Congress also expressly provided that the False Claim Act applies to any ‘payments made by through, or in connection with an Exchange if the payments include Federal funds.’ Finally, depending on the specific conduct in question, there may be additional federal and state criminal or civil authorities that apply.”