Avalere Health
An Inovalon Company
Insights

Oct 31, 2013

HHS: Exchange Plans Not Federal Programs

Published

Oct 31, 2013

On Oct. 30, HHS sent a letter to Rep. McDermott, R-Wash., indicating that it does not consider qualified health plans (QHPs) purchased through insurance exchanges to be federal healthcare programs.

This includes plans purchased through state and federal exchanges, as well as plans for which consumers receive advance payments of premium tax credits and cost-sharing reductions. As a result, such plans are not subject to federal anti-kickback rules and manufacturers are permitted to offer direct copay support to exchange enrollees.

Importantly, legal authority for anti-kickback issues has historically resided with the Office of the Inspector General (OIG). It is unclear whether this letter from HHS constitutes sufficient legal guidance to enable healthcare stakeholders to act without an official OIG ruling.

Nonetheless, stakeholders across the industry were anxiously awaiting this decision from HHS. Given expected high cost-sharing levels in many exchange plans, manufacturers are looking to provide support to ensure affordability of their products. According to Avalere’s Planscape™, in a review of more than 600 exchange plan designs in a subset of states, coinsurance levels for tier 4 are expected to range from 0-50 percent in silver plans with 4-tier formularies (the most common structure). This decision allows manufacturers to provide support specific to a particular product rather than providing support through a broader disease foundation.

Manufacturers may begin offering such support on the first day of effective coverage for the exchanges, which is Jan. 1, 2014. Given the late release of the decision, life sciences companies will need to move rapidly to ensure such programs are ready as soon as possible, including strategic program changes and operational adjustments to reflect unique aspects of the exchange market.

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