X. Federal Governmental Payments

Question 1: Clarify whether the surcharges apply to revenues designated providers of services receive from federal governmental agencies.

Question 2: Clarify which federal government programs are exempt from the surcharges.

Question 3: Are patient coinsurance and deductible payments under benefit plans covered by the FEHBA, and the other federal government programs mentioned in the response to the previous question, subject to the surcharge provisions?


Question 1: Clarify whether the surcharges apply to revenues designated providers of services receive from federal governmental agencies.

Answer 1: In general, payments made directly by federal governmental agencies are exempt from the surcharges. This exclusion does not automatically apply to payments made by federal governmental agencies in connection with employee health, worker's compensation and no-fault benefits (unless such payments are exempt pursuant to federal law as provided in the response to the following question) since, under the HCRA provisions, governmental agencies in this situation are acting in their role as employers rather than as governmental agencies. Consequently, payments to designated providers of services made by employee health benefits plans remain fully subject to surcharges at rates based upon the pool participation election decision of the organization providing such coverage (i.e., 8.18 percent or 32.18 percent and, where inpatient hospital coverage is provided, the GME regional per-unit of service surcharge or covered lives assessment, if where the entity is self-insured).

|top|

Question 2: Clarify which federal government programs are exempt from the surcharges.

Answer 2: Payments under the auspices of the following are exempt from the surcharges since they are considered to be payments made directly by federal governmental agencies:

CHAMPUS
Veterans Administration (VA) provider payments
Job Corps
Federal Correctional Facilities

The following are instances under which the federal government, in its role as employer, is exempt from the surcharges since the specific federal statute governing the following benefit plans preempts HCRA:

Uniformed Services Family Health Plan
Amtrack (pursuant to the Rail Passenger Service Act)
Benefit plans covered by the Federal Employees Health Benefits Act (FEHBA), including:

  • Governmental Employees Hospital Association (GEHA)
  • Mail Handlers' Health Benefits Plan
  • Postmasters Benefit Plan
  • Special Agents Mutual Benefit Association (SAMBA)
  • United States Air Force Group Health Plan

The above lists are not meant to serve as a comprehensive listing of federal governmental programs/plans that are exempt from the surcharges. The Health Department will continue to review any claims for exemption from the surcharges.

|top|

Question 3: Are patient coinsurance and deductible payments under benefit plans covered by the FEHBA, and the other federal government programs mentioned in the response to the previous question, subject to the surcharge provisions?

Answer 3: PHL Section 2807j(2)(f) provides that the total percentage allowance for patient deductibles and coinsurance amounts shall be the same percentage allowance applicable to payments by the primary payor covering the patient. Therefore, where a patient is making coinsurance and/or deductible payments to a designated provider for services covered under a benefit plan covered by one of the federal government programs mentioned in the response to the previous question, the surcharges do not apply. However, where an individual is making payments to a designated provider of service as a result of an exhaustion of benefits, or lack of benefits for a particular service, the individual shall be subject to an 8.18 percent surcharge.

|top|