The Department of Health and Human Services (HHS) recently announced that qualified health plans (QHPs) established by the Affordable Care Act (ACA)—which include federally-facilitated insurance exchanges and federal subsidies available for low-income consumers to purchase health insurance—are not “federal health care programs” under the Social Security Act. If this interpretation withstands or avoids judicial review, QHPs would not be subject to regulation under several government enforcement tools such as the federal health care program anti-kickback statute, the civil monetary penalties statute prohibiting, among other things, beneficiary inducements, and the exclusion of individuals and entities from participation in federal health care programs.

The HHS announcement came as a response from Secretary Kathleen Sebelius to an August 2013 letter from Congressman Jim McDermott, which raised questions frequently posed by health care providers and pharmaceutical and device manufacturers as implementation of the ACA drew near. Secretary Sebelius’s response surprised many because the Social Security Act’s broad definition of “federal health care programs” includes “any plan or program that provides health benefits, whether directly, through insurance, or otherwise, which is funded directly, in whole or in part, by the United States Government.”

Far from leaving the field unregulated, however, Secretary Sebelius indicated that HHS is taking steps to “ensure robust oversight of these critical Affordable Care Act” programs and will continue to work closely with the Office of Inspector General (OIG), which has authority to audit, investigate, and evaluate the HHS-administered ACA programs.

Perhaps most importantly, the Secretary’s letter notes that Congress expressly provided that the False Claims Act, which grants a cause of action to the United States and qui tam relators against any entity that makes a fraudulent claim for payment to the federal government, applies to payments made by, through, or in connection with an exchange if the payments include “federal funds.” This statement leaves an important question unanswered: Does False Claims Act liability attach to a health care provider who is reimbursed by a QHP for services provided to an individual with subsidized premiums? Ballard Spahr attorneys are available to assess this and other questions that will arise as a result of Secretary Sebelius’s statements and other HHS enforcement activities.

Ballard Spahr attorneys in the Health Care and White Collar Defense/Internal Investigations Groups have extensive experience with health care regulations, anti-kickback statutes, and state and federal false claims acts, as well as advising clients on appropriate compliance measures. For more information, please contact Health Care Practice Leader Jean C. Hemphill at 215.864.8539 or; White Collar Defense/Internal Investigations attorneys Beth Moskow-Schnoll at 302.252.4447 or, or Dee Spagnuolo at 215.864.8312 or; or the Ballard Spahr attorney with whom you work.