Please take the time to read the note at the end of the post - abcdmd
Introduction
The Affordable Care Act contains a loophole that may (will?) destroy profit margins at elite academic hospitals. In light of dropping
reimbursements from insurance companies, many tertiary and referral
centers have looked overseas for revenue. Many of these institutions rely on international patients to provide a cushion to the bottom line. In fact, the member institutions of the Texas Medical Center sponsor a hospitality lounge in Terminal E of the IAH-Houston airport.
"The mean charges—or amount billed—for international patients in 2010 was $69,771 compared with $33,079 for all patients."
It is completely fair to charge international patients a premium for healthcare delivered in the United States. Foreign nationals coming to the USA for medical care have not contributed to the medical infrastructure through income and Medicare taxes, so they should pay more. In fact, when an US citizen or permanent resident sponsors a relative to visit or immigrate to the USA, they sign an "affidavit of support" stating that they will reimburse the government in case the immigrant becomes a "public charge."
Medical Tourism
It is no secret that international patients coming to the United States for medical care pay more than those of us who live and work in the United States. According to a modernhealthcare.com report in 2013:"The mean charges—or amount billed—for international patients in 2010 was $69,771 compared with $33,079 for all patients."
It is completely fair to charge international patients a premium for healthcare delivered in the United States. Foreign nationals coming to the USA for medical care have not contributed to the medical infrastructure through income and Medicare taxes, so they should pay more. In fact, when an US citizen or permanent resident sponsors a relative to visit or immigrate to the USA, they sign an "affidavit of support" stating that they will reimburse the government in case the immigrant becomes a "public charge."
The Loophole
In the past, before the Affordable Care Act, it was almost impossible for a foreign national coming to the USA for medical care to get US based medical insurance for here for pre-existing medical conditions. It would have been absurd for a private insurance company to sell a policy, and then cover long term cancer or cardiac care costing tens of thousands of dollars a month. However, as of January 1, 2014, the absurdity has become a reality.
2. Prior to her arrival in the USA, she is required to deposit US $100,000 cash with the cancer hospital against future care and treatment.
Before the ACA of 2010, and January 1, 2014
1. Wealthy foreign national is diagnosed with breast cancer in her home country and wants to come to a cancer hospital in the USA for treatment. She contacts international patient services at the cancer hospital and they agree to see her. She goes to the local US Embassy with her appointment letter and gets a Non-Immigrant Visitor B1 (Business) or B2 (Tourist) Visa good for 6 months. There is no such thing as a "medical visa."2. Prior to her arrival in the USA, she is required to deposit US $100,000 cash with the cancer hospital against future care and treatment.
3. She is seen, treatment initiated with surgery, chemotherapy and radiation therapy. If her account runs dry, it needs to be replenished. She goes home in four to six months, cured of cancer. She is billed for services against the deposit account and any excess is refunded to her.
3. Upon arrival in the USA, she logs onto healthcare.gov and purchases an insurance policy covering cancer care for several hundred dollars a month from the federal or state exchange. There is no way to verify income from overseas, the federal exchange has to give her a policy under the law at subsidized rates due to the fact that pre-existing conditions no longer exist.
4. She is seen, treatment initiated with surgery, chemotherapy and radiation therapy. Any copays are deducted from her $100,000 deposit.
5. Her copays amount to $20,000 over six months, the cancer hospital has to refund the $80,000 and gets the negotiated rate from the insurance company instead.
According to the National Immigration Law Center facts page about the ACA (emphasis mine):
"Under the Affordable Care Act of 2010, individuals who are “lawfully present” in the United States will be eligible for new affordable coverage options after January 1, 2014. These options include access to "Pre-Existing Condition Insurance Plans" (PCIPs), to state or federally-run insurance exchanges, and to premium tax credits to help make health insurance more affordable. In their final rules on eligibility to enroll in the exchanges and to apply for premium tax credits, the U.S. Depts. of Health and Human Services and of the Treasury adopted the definition of "lawfully present" adopted by HHS for purposes of the PCIPs."
One of my colleagues wryly remarked that China or Russia does not need to hack us or demand payment on our debt in order to bankrupt us, they just need to stop providing medical care there, and send all their people here for medical care and give them the means to sign up on healthcare.gov
Here's a thought! Create a new visa category called B3, Medical Visa, and exempt those that get it from getting subsidized coverage under the ACA. I doubt it is going to happen, it's way too logical....
After the ACA of 2010, and January 1, 2014
1. and 2. are the same as above3. Upon arrival in the USA, she logs onto healthcare.gov and purchases an insurance policy covering cancer care for several hundred dollars a month from the federal or state exchange. There is no way to verify income from overseas, the federal exchange has to give her a policy under the law at subsidized rates due to the fact that pre-existing conditions no longer exist.
4. She is seen, treatment initiated with surgery, chemotherapy and radiation therapy. Any copays are deducted from her $100,000 deposit.
5. Her copays amount to $20,000 over six months, the cancer hospital has to refund the $80,000 and gets the negotiated rate from the insurance company instead.
Unintended consequences
Why is a foreign national who is here for medical care on a Non-Immigrant Visitor B1 (Business) or B2 (Tourist) Visa allowed to buy subsidized insurance through a federal/state insurance exchange? At my hospital, I have noticed that a handful of patients from overseas have figured out that the loophole exists, and have gotten subsidized health insurance through the federal exchange.
According to the National Immigration Law Center facts page about the ACA (emphasis mine):
"Under the Affordable Care Act of 2010, individuals who are “lawfully present” in the United States will be eligible for new affordable coverage options after January 1, 2014. These options include access to "Pre-Existing Condition Insurance Plans" (PCIPs), to state or federally-run insurance exchanges, and to premium tax credits to help make health insurance more affordable. In their final rules on eligibility to enroll in the exchanges and to apply for premium tax credits, the U.S. Depts. of Health and Human Services and of the Treasury adopted the definition of "lawfully present" adopted by HHS for purposes of the PCIPs."
Who is "lawfully present?"
It's a big category and includes legal immigrants, asylum seekers, etc. The complete list is here at healthcare.gov. The bullet of interest is half way down, an "Individual with Non-Immigrant Status":
Again, from the NILC FAQ PDF on this subject (emphasis mine):
"Nonimmigrant visa holders include tourists, students, and visitors on business, as well as individuals who are permitted to live and work in the U.S. indefinitely. Nonimmigrants may have a status granted under 8 U.S.C. section 1101(a)(15)(A) through (V) or by a treaty such as the one described below. Some categories of nonimmigrant statuses allow the status holder to work and eventually to adjust to lawful permanent residence. Nonimmigrants who violate the terms of their status — for example, by overstaying a tourist visa or working without permission — may lose their nonimmigrant status and be considered undocumented. Nonimmigrants who have not violated the terms of their status are considered “lawfully present.”"
The key point is that a visitor here for medical care is "lawfully present" under the law as a "non-immigrant visa holder", and may purchase health insurance through the exchanges, even if they have a pre-existing condition (such as cancer). I agree that students coming to the USA to study should be allowed to purchase health insurance while they are studying (think of it as an investment in keeping the smartest ones here). I have mixed feelings about those here on business.
Again, from the NILC FAQ PDF on this subject (emphasis mine):
"Nonimmigrant visa holders include tourists, students, and visitors on business, as well as individuals who are permitted to live and work in the U.S. indefinitely. Nonimmigrants may have a status granted under 8 U.S.C. section 1101(a)(15)(A) through (V) or by a treaty such as the one described below. Some categories of nonimmigrant statuses allow the status holder to work and eventually to adjust to lawful permanent residence. Nonimmigrants who violate the terms of their status — for example, by overstaying a tourist visa or working without permission — may lose their nonimmigrant status and be considered undocumented. Nonimmigrants who have not violated the terms of their status are considered “lawfully present.”"
The key point is that a visitor here for medical care is "lawfully present" under the law as a "non-immigrant visa holder", and may purchase health insurance through the exchanges, even if they have a pre-existing condition (such as cancer). I agree that students coming to the USA to study should be allowed to purchase health insurance while they are studying (think of it as an investment in keeping the smartest ones here). I have mixed feelings about those here on business.
Will this get fixed?
Short answer is no. The Republicans will have a field day tearing apart the ACA, and demanding another useless vote for repeal. The Democrats don't have the votes to make a change in "lawfully present." In this country, reasoned and civil debate ceased to exist years ago. I doubt HHS and CMS even have this on the radar, even though it may probably be fixed by a future rule change in the federal register.One of my colleagues wryly remarked that China or Russia does not need to hack us or demand payment on our debt in order to bankrupt us, they just need to stop providing medical care there, and send all their people here for medical care and give them the means to sign up on healthcare.gov
What will happen?
People in suits who run elite academic health centers will notice the declining revenue and make the clinician (who is nothing more than a commodity) see more patients. They will congratulate themselves for increasing the volume of overseas patients, and then give themselves bonuses and raises, while the physician's reimbursement drops because the insurance company is losing money. These were the same people that had representation through the American Hospital Association and supported passage of the ACA. I find it perplexing that the AHA missed this loophole while the legislation was being drafted, as they had a seat at the table.Here's a thought! Create a new visa category called B3, Medical Visa, and exempt those that get it from getting subsidized coverage under the ACA. I doubt it is going to happen, it's way too logical....
Note:
I tried to do an extensive amount of research and attempted to find any documentation that would refute my logic above, but have been unable to do so. I welcome any evidence to the contrary. I used the information from the National Immigration Law Center's website because it was easy to find and reference. I did review the Federal Register and items in question, and think my reasoning is sound.
I am in favor of the aims of the Affordable Care Act, but not necessarily in the means that have been used to implement it. I seek only to point out one unintended consequence of the ACA, not to damm the entire legislation.
I am a believer in social justice and fair play, and I think the presence of the loophole described below violates the intended balance that was envisioned. As a child of immigrants, and a proponent of immigration, I do not want this blog post to be considered in any way, shape or form to be anti-immigrant. I am a believer in medical tourism to the United States, as I do believe we have some of the best physicians in the world. Some of my most rewarding professional experiences have been with my overseas patients. It is a privilege to take care of them.
I welcome your comments - abcdmd
