Sen.Chuck Grassley (R., Iowa) questions witnesses during a Senate Judiciary Committee hearing in Washington, D.C., on Feb. 4, 2014. (Andrew Harrer/Bloomberg)
Bloomberg News

Sen. Chuck Grassley (R., Iowa) sent a blistering letter to Health and Human Services Secretary Kathleen Sebelius accusing her agency of stonewalling about its guidance on a key question in the health law.

“Although your response took three months to compose, it utterly failed to address the questions and information requests in my letter,” the senator said in a letter dated Feb. 12.

The issue: As the Journal reported in December, some hospitals want to be able to pay premiums on behalf of some people so it can guarantee they have coverage if they turn up looking for treatment. Insurers say this move would be a conflict of interest for hospitals and could threaten the economic underpinnings of the law because it would likely lead to more sick people getting enrolled.

The question of whether third parties are allowed to pay premiums is a huge one, and has become more complicated because of a letter sent by Mrs. Sebelius to a congressman in October in which she stated that she didn’t consider plans sold through the insurance exchanges to be federal health-care programs, and so weren’t subject to rules that prevent health providers from giving subsidies or rebates to enrollees.

That appeared to open the door to third-party payments. But less than a week later, an HHS unit that is implementing the health law said it would “discourage” hospitals and other commercial entities from paying premiums and warned that it would take further action if necessary.

Mr. Grassley wrote to HHS in November asking several questions about how it reached its conclusion that the plans weren’t federal health programs.

Mrs. Sebelius replied earlier this month that HHS had examined “the definition of ‘federal health care program’” and had consulted with the Justice Department. She wrote that HHS concluded that the plans and related to the federal marketplaces aren’t “federal health care programs.”

Mr. Grassley complained that she had “avoided providing any substantive explanation of which aspects of each program support your decision and why.” He went on to add that he thought the plans could be described as federal programs because they receive “substantial federal subsidies —- funds provided by the American taxpayer” and asked why the department won’t do more to stop the payments.

He concluded with a request “to honor your commitment to make your staff available for a briefing and provide a written reply that is actually responsive to the questions in my original letter.”

Joanne Peters, an HHS spokeswoman, said in a statement that the agency had received the latest letter from Mr. Grassley and would respond directly to the committee. Her statement also shed some more light on the department’s thinking.

“The Health Insurance Marketplace offers consumers a choice of private health insurance plans offered by health insurance companies,” she said. “This is not a government-run insurance program, as we have always said. This was a determination that plans participating in the federal exchange are treated the same as private plans outside of the Marketplace. To be clear, though, insurers will continue to be subjected to the False Claims Act and other federal and state law prohibiting fraudulent conduct. It represents no change from current practices and enforcement.”

Follow @wsjwashington on Twitter.



For the latest Washington news,

For outside analysis,