Health Affairs has a nice analysis of the ACA’s 90-day grace period on cancellation of enrollment for subsidized patients who miss premium payments. But one piece of the puzzle that their article doesn’t touch on is the perverse incentive for health plans not to vigorously pursue those missed premiums.
Under the grace period, plans are required to reimburse providers for services rendered in the first month that the patient misses a premium payment, but not in the second and third months. However, the services a patient might need in months two and three could — perhaps even most-likely would* — greatly exceed the value of the premiums missed. This is why some hospitals, and now even some physicians, have started investigating whether they can pay these premiums on behalf of patients; they realize that they could be denied thousands in payments owed to them because of a patient’s failure to pay a much smaller amount. And this is why health plans would undoubtedly prefer that those patients not pay their premiums — and are unlikely to make any special efforts to collect them.
The idea of providers paying these premiums to protect their own position has analogs in other markets. For example, a bank might pay off a mortgagor’s tax lien to avoid losing the entire value of the property if the government forecloses. But in our world, it’s not clear if other regulations that touch upon payment relationships could hold against providers who try to pay off patient premium obligations. Health Affairs notes that CMS has already made a public statement discouraging such efforts.
While the AMA, MGMA and others continue to urge reform of the grace period provision, it’s reasonable to assume that payers will continue to argue that the related laws actually prevent providers from stepping in to pay premiums, and that the grace period rule should remain unchanged. (And, presumably, they’d argue against another solution, such as deducting the value of missed premiums from provider reimbursements.)
The bottom line is, the grace period seems unlikely to disappear any time soon. It remains very important that physicians, practice managers and billers understand how the grace period works, and what your rights and obligations are if you accept ACA plans. This is especially true now — during the last three months of the year — because a patient who begins a three-month grace period now can sign up again in open enrollment in January with no break in coverage.
Here are a few things you can do to be sure the grace period doesn’t create problems for your practice:
- Monitor your state government’s actions: as Health Affairs points out, some states now require health plans to provide real-time information about patients’ grace period status, and other states have related laws pending. Others have rules requiring payers to honor claims if a patient was verified as eligible when care was provided. Know what’s already been set to help you and what might be coming.
- Know your health plans’ policies: check with the ACA plans you participate in to understand their policies related to the grace period.
- Know which of your patients the grace period might apply to.
- Develop a strategy for explaining the grace period to patients: the AMA and state medical associations and societies have tools to help.
*I say this because the grace period only applies to plan members who are subsidized. Even a preventive exam costing a couple hundred dollars could exceed two months’ worth of the patient’s portion of a subsidized premium in many cases.