As Affordable Care Act (“ACA”) marketplace subsidies expire and enhanced tax credits phase out, millions of Americans who rely on exchange-based health plans are facing steep premium increases heading into 2025. In some markets, premiums for middle- to lower-income individuals are projected to rise by as much as eight-fold. This shift is already producing significant concern among Federally Qualified Health Centers (FQHCs), Ryan White/Part C and Part F programs, STD clinics, and other 340B covered entities, all of whom rely on consistent patient access to affordable insurance coverage to ensure continuity of care.
Against this backdrop, many covered entities – and even some 340B contract pharmacies – are evaluating whether they may provide financial support to help patients afford the rising cost of ACA marketplace premiums. For some, the goal is to prevent currently insured patients from losing coverage. For others, the goal is more expansive: assisting uninsured but exchange-eligible patients in obtaining ACA plans and covering all or part of their monthly premiums.
These ideas raise complex legal, regulatory, compliance, contractual, and operational considerations. While the 340B program gives covered entities flexibility in how they use their program savings, premium assistance touches multiple regulatory regimes simultaneously and must be approached with careful planning.
This article explores the economic forces driving this trend, the compliance questions arising from patient premium support, and why 340B covered entities and contract pharmacies should seek legal guidance before implementing any premium-assistance initiative.
The Economic Drivers: Why Covered Entities Are Considering Premium Assistance
With the sunset of enhanced ACA subsidies enacted under the American Rescue Plan Act (ARPA) and extended under the Inflation Reduction Act (IRA), individuals who previously received substantial premium tax credits are now experiencing significant cost increases. Many households – especially those with modest incomes just above the subsidy threshold – will see premiums become financially untenable.
Covered entities are already seeing signs that patients are delaying enrollment during open enrollment, shifting to bare-bones coverage, or dropping coverage entirely. Likewise, for contract pharmacies, loss of insurance coverage has had a big impact on pharmacies serving HIV/PrEP patients and specialty populations, who are experiencing a drop in prescription volume and dispensing fees.
The Concept: Using 340B Savings to Offset Patient Premiums
With this backdrop, many covered entities have begun exploring whether a portion of their 340B savings may be reinvested to help cover a portion of premiums for patients losing subsidies, or even pay premiums entirely for otherwise uninsured individuals who qualify for exchange enrollment. While this type of reinvestment may align with HRSA’s long-standing position that covered entities may use 340B savings to “stretch scarce federal resources” and expand services for vulnerable patient populations, there are many legal, regulatory and contractual considerations at play, and how such assistance is structured is crucial to ensure compliance.
Key Legal, Regulatory, and Contractual Issues to Consider
Premium assistance – whether partial or full – involves analyzing the intersection of 340B rules, insurance marketplace regulations, federal benefit program requirements, anti-kickback laws, and payer contract obligations. Even when permissible, programs must be carefully tailored to avoid enforcement risk.
Below are some of the high-level issues entities must evaluate before moving forward.
- Federal and State Anti-Kickback Statute (AKS) and Beneficiary Incentive Risks
Providing financial assistance to a federally insured patient (e.g., those with Medicare or Medicaid) may raise concerns under:
- The Anti-Kickback Statute
- The Beneficiary Inducement Civil Monetary Penalties (CMP)
While ACA marketplace plans are not federal health care programs, many state law analogs exist which apply to commercial or exchange-based insurance. Thus, premium support must still be analyzed to ensure that there is no intent to influence referral or utilization of specific pharmacies, no improper steering to particular plans, and no remuneration that could be construed as indirectly linked to federally reimbursable services. Contract pharmacies, in particular, must be especially cautious: their involvement in premium assistance may be scrutinized as an inducement to generate federally reimbursable prescriptions.
- 340B Regulatory Considerations
While HRSA has not issued specific guidance on premium assistance, covered entities must avoid structuring arrangements that create conflicts with contract pharmacy agreements, third-party administrators (TPAs), or 340B operating policies. Entities also must consider how premium support impacts contract pharmacy carve-ins/out dynamics as well as duplicate discount risks (Medicaid/Marketplace coverage transitions).
- Marketplace Regulations, Exchange Rules, and Potential Insurer Pushback
Premium sponsorship also intersects with state-based marketplace regulations, CMS guidance on third-party premium payments, and payer rules requiring disclosure of third-party premium support. Notably, some exchanges or insurers require carriers to accept third-party payments only from certain types of nonprofit organizations or government programs, while others restrict or prohibit premium payments made by healthcare providers or affiliates.
Entities must also assess whether premium assistance triggers reporting obligations, and must ensure that any assistance provided – including with respect to completion of application documentation – is truthful and accurate. In fact, we have seen numerous investigations commenced by payers, focusing on the information supplied during the patient’s application process, suggesting an improper involvement or material misrepresentation by the covered entity.
- HIPAA, Privacy, and Data-Sharing Implications
Because premium-assistance programs may also involve coordinating with enrollment brokers and/or managing health plan interactions, it is likely that covered entities will be gaining access to additional layers of patient data, financial information and PHI. Thus, covered entities must ensure all workflows comply with applicable privacy laws, including HIPAA, state privacy laws and consumer protection requirements. It is also possible that by assisting patients in this way, covered entities could trigger health insurance broker requirements in various states, which may impose additional compliance obligations.
- Contractual Concerns for Contract Pharmacies
Finally, both covered entities and contract pharmacies must evaluate the implication these practices will have on PBM and health-plan network agreements. For example, many PBM and health-plan network agreements restrict providing financial support to plan members, and PBMs/insurers could view the premium assistance as an improper inducement to use the provider or pharmacy. This becomes especially true when considering what happens to the financial assistance if the patient is no longer a patient of the covered entity or pharmacy. We have seen pharmacies involved in these arrangements become subject to PBM audits, recoupments and terminations. Thus, these arrangements must be carefully structured so that they can be fully defended when scrutinized.
Carefully Structured Premium Assistance May Be Possible – But It Requires Compliance Planning
Given the dramatic premium increases and the mission-driven goals of safety-net providers, many covered entities view premium support as a necessary step to maintain access to care. However, premium assistance programs must be thoughtfully structured to avoid triggering violations of:
- 340B program rules
- Federal and state fraud and abuse laws
- Exchange and insurer rules
- PBM/pharmacy network agreements
- Grant conditions (e.g., HRSA Ryan White requirements)
A compliant program typically requires:
- A well-defined, written policy
- Objective, transparent patient eligibility criteria
- Clear separation between assistance decisions and pharmacy dispensing operations
- Documentation of patient assessments
- Avoidance of any link between premium assistance and the volume/value of federally reimbursable prescriptions
- Careful coordination between the covered entity and (if involved) contract pharmacy partners
Conclusion
As 2025 approaches, premium assistance is becoming a pressing issue for 340B covered entities and their contract pharmacy partners. Rising ACA marketplace premiums threaten patient access, clinical outcomes, and the financial sustainability of safety-net providers.
While premium-support programs may be structured in compliant ways, the regulatory and contractual landscape is complex. Every arrangement must be carefully tailored to avoid enforcement risk and unintended consequences.
Frier Levitt regularly advises FQHCs, Ryan White clinics, specialty clinics, and 340B contract pharmacies on premium assistance, patient support programs, 340B compliance, payor contracting, and related risk mitigation strategies. Our team helps providers design legally compliant, mission-aligned programs that support vulnerable patients while navigating federal and state regulatory requirements. If your organization is considering premium assistance or evaluating how to support patient insurance coverage in 2025, contact Frier Levitt’s 340B and Pharmacy Practice Groups for guidance before taking action.
