In the Pandemic, Patients Need Health Insurance, Not a Hospital “Claims Reimbursement” Fund

By now it is axiomatic: In the United States, insurance is the single most important determinant of access to necessary health care.[1]  If this nation has learned nothing else from the decade-long struggle to enact and preserve the Affordable Care Act, it is the importance of health insurance to people’s lives and health.

Now this country faces a test of health and survival that few could have imagined—a lethal pandemic with no cure or vaccine. Most who endure COVID-19 will spend several miserably sick weeks at home, and the virus will pass. But a significant number—especially people with serious underlying health conditions—will need lengthy hospitalization and access to lifesaving, incredibly costly intensive care treatment. The at-risk population is disproportionately minority and low income, living in the most dangerous conditions for community spread and with the fewest resources to make it through the crisis. Millions have lost low-wage jobs that carried no health insurance. The lucky ones (if one can use that term under these circumstances) live in states that expanded Medicaid, but to date, 14 states still have not done so.[2] Workers and their families may be able to take advantage of subsidized Marketplace coverage and may be able to qualify their children for their state’s CHIP plan. [3] But outside the annual open enrollment period, the only special enrollment period is for workers who previously had job-based coverage, not those who simply lost their jobs.

Thus far, the Trump administration has done nothing in response to the urgent need for insurance help. Two separate studies find significant health insurance vulnerabilities among workers most likely to be laid off during the pandemic and therefore higher than normal uninsurance rates among workers laid off.[4][5] But, unlike past administrations during public health emergencies, the Administration has refused to actively encourage Medicaid nonexpansion states to rapidly expand, at least temporarily, using its fast-track Section 1115 demonstration authority.[6]  Nor has it used its broad powers to create a special enrollment period linked to the declared national emergency in order to provide access  to subsidized Marketplace coverage for all eligible people who are affected and otherwise without access to coverage. Congress has done little more. As part of the Families First Coronavirus Response Act, lawmakers expanded Medicaid to enable states to cover all uninsured people, but benefits are limited  to testing and testing-related services. The option does not include treatment. Nor have lawmakers directed the administration to establish a COVID-19 special enrollment period.

The administration has now unveiled its own idea to help the uninsured: withhold a portion of the direct funding that was intended to help hospitals and health care providers quickly ramp up their COVID-19 response effort, and instead, stand up an entirely new system to pay for treating uninsured patients. In other words, an old-style, limited funding uncompensated care pool.

Administered by the Health Resources and Services Administration (HRSA), this approach has so much wrong with it that it is difficult to know where to begin. First, of course, unlike public and private health insurance that is structured to finance all necessary care for eligible people, the Fund is subject to an appropriations cap. Congress has not set up a fund that will last for the duration of the pandemic.  Second, the uncompensated care model effectively withholds funding until allowable claims are received and processed. Establishing a billing system—even one that builds on the current Medicare claims payment system—takes time, as hospital billing departments must start generating an entirely new type of claim, subject to different procedural rules and allowing for payment only if the provider has “verified that the patient does not have” other coverage. HRSA gives no hint of what it will accept as verification; will self-attestation be sufficient? HRSA also notes that all paid claims will be subject to “post-reimbursement audit review,” and does not indicate the speed at which the new system will be able to operate.

Third, and most grievously, other than a prohibition against billing patients for care paid for out of the fund, the initiative lacks the most basic patient safeguards. There is no bar against discriminatory use of the fund—for example, withholding assistance from and billing some patients while offering the fund only to others. There is no requirement that hospitals prominently post information about the availability of the fund or how to seek help. There is no requirement that information about the fund be made available in the languages spoken in the community, as is the case with other forms of federal assistance. There is no discussion of giving patients the opportunity to apply and undergo an eligibility determination prior to being billed. There is no mention that hospitals or other health care providers paid through the fund must be in compliance with all federal civil rights laws (indeed, news reports indicate that the Administration is on the verge of issuing final rules that strip sexual orientation and gender identity from federal civil rights regulations issued by the Obama administration in 2016). In short, the fund lacks the types of basic protections that any first-year law student would identify. It offers no protections for the  people it is intended to help; in fact, the total absence of basic safeguards leads one to conclude that unlike health insurance, the policy underpinning of the fund is not to protect patients but simply to enable providers to selectively offset bad debt.

It is not as if there is no precedent upon which to draw. Policymakers have addressed patient protections under uncompensated care arrangements for decades. Most recently, federal regulations issued under the Obama administration that implemented amendments to federal tax laws governing nonprofit hospitals seeking tax-exempt status did a reasonably good job of identifying certain patient safeguards aimed at ensuring that hospitals’ financial assistance programs (a condition of federal tax exemption) would be fairly administered. There is no indication that the administration considered any relevant model.

Whether national policymakers will do something to stave off the looming health insurance catastrophe is not yet clear. What is clear is that a poorly thought out bad-debt pool, devoid of even the most elementary patient safeguards, is not the solution.

References

[1] Kaiser Commission on Medicaid and the Uninsured; Kaiser Family Foundation. The uninsured and the difference health insurance makes. https://www.kff.org/wp-content/uploads/2013/01/1420-14.pdf. Published September 2012. Accessed May 1, 2020.

[2] Kaiser Family Foundation. Status of state action on the Medicaid expansion decision: interactive map. https://www.kff.org/medicaid/issue-brief/status-of-state-medicaid-expansion-decisions-interactive-map/, Accessed Published April 27, 2020. April 29, 2020.

[3] Health coverage options if you’re unemployed. HealthCare.gov website. https://www.healthcare.gov/unemployed/coverage/. Accessed April 29, 2020.

[4] Blumberg LJ, Simpson M, Holahan J, Buettgens M, Pan C; Urban Institute.  Potential eligibility for Medicaid, CHIP, and Marketplace subsidies among workers losing jobs in industries vulnerable to high levels of COVID-19- related unemployment. https://www.urban.org/sites/default/files/publication/102115/potential-eligibility-for-medicaid-chip-and-marketplace-subsidies-among-workers-losing-jobs-in-industries-vulnerable-to-high-levels-of-covid-19-related-unemployment_0.pdf. Published April 2020. Accessed April 29, 2020.

[5] Collins, SR, Gunja MZ, Aboulafia GN, Czyzewicz E, Rapoport R. New survey finds Americans suffering health coverage insecurity along with job losses. Commonwealth Fund; To the Point. https://www.commonwealthfund.org/blog/2020/new-survey-finds-americans-suffering-health-coverage-insecurity-job-losses. Published April 21, 2020. Accessed April 29, 2020.

[6] Rosenbaum S. Medicaid and the Coronavirus: putting the nation’s largest health care first responder to work. Commonwealth Fund; To the Point. https://www.commonwealthfund.org/blog/2020/medicaid-and-coronavirus-putting-nations-largest-health-care-first-responder-work. Published March 9, 2020. Accessed April 29, 2020.

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