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Jan 2017

Office of Inspector General Allows Charities to Assist with Patient Insurance Obligations

Even when an action is legal, it may project a bad impression that brings unwanted scrutiny. In the healthcare world, a hospital providing a patient a financial break on the health insurance co-pay may raise a few eyebrows. This particular action is often criticized because it gives the appearance the financial incentive provided will give Hospital XYZ a competitive advantage over Hospital ABC. From a health plan point of view, it may cause a patient to seek medically unnecessary services if there is no or very little patient financial liability.

It should also be noted any person who interferes with a patient’s obligations under his or her health insurance policy may be viewed as interfering with the patient’s policy plan. An advisory opinion by the Office of Inspector General (“OIG”) issued on December 28, 2015, states that in certain instances a non-profit, tax-exempt, charitable organization may provide financial assistance with an individual’s co-payment, health insurance premiums and insurance deductibles when a patient exhibits a financial hardship. [1](

OIG’s opinion came about when a party requested a ruling from the OIG. The party was a non-profit, tax-exempt, charitable organization that did not provide any healthcare services or serve any specified diseases. It should also be noted that 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 this particular 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 regarding where their donation is directed.

The non-profit, tax-exempt, charitable organization would bring awareness to its program that assists patients with co-payments, health insurance premiums and insurance deductibles through its website, Internet presence and pamphlets placed in the offices of healthcare providers. In addition, a patient’s healthcare provider could also suggest the program to his/her patient.

Before applying for financial hardship assistance, the patient must have already selected his/her health care provider, practitioner, or supplier and have a treatment plan 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 put under the microscope two (2) key components of the program:

(1) The donor’s contributions to the program.

  • The donor’s contributions to the program. The OIG reasoned that it has long-accepted that industry stakeholders may assist 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.

(2) The non-profit, tax-exempt, charitable organization’s assistance to patients.

  • With 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 order for as long as funding is available. Based on these facts, the OIG determined that this fact scenario presents very low risk of fraud and abuse. The OIG noted that program is not likely to influence any patient’s selection of a particular provider, practitioner or supplier for items or services.

This has long been a red-hot topic in healthcare for some time. It is a practice that is vulnerable to continued scrutiny. However, the OIG opinion may provide financially challenged patients with a ray of hope for continued treatment in the face of escalating medical bills. Before moving forward with such a plan, a provider should consult with their in-house legal counsel as well as an outside law firm since compliance is next to cleanliness.

[1] Please note that an OIG Advisory Opinion is only applicable to the specific factual situation presented and only as to the party requesting the opinion. It cannot serve as evidence of any other entity’s compliance with regulations or statutes. It is merely educational as on the approach which may be taken on an issue by the OIG.

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