Many practices already suffer losses from surprise payment retractions by health plans. These can occur when patients attempt to exploit system update lags after leaving their employer (and therefore the employer’s plan) or the grace period after failing to maintain payments on their own policy. (So, the patient knows he’s not paid his premium or that he’s left the employer plan, but also knows he’s still “covered” because of payment grace period or because of the 30-day window to elect COBRA coverage — even though the coverage will eventually be retroactively cancelled to the last paid day.)
Any retraction of payment for services already rendered is a blow for providers and their practices, but most state policies regarding timely payment of claims and premium grace periods help limit the exposure for retraction of reimbursement to 30-45 days.
However, the Affordable Care Act (ACA) contains a provision that mandates a much longer grace period — 90 days — for subsidized plan participants. The ACA authors intended that plan members who receive subsidies be allowed more leeway for missing payments because of lower incomes and possible hardship — but, the longer grace period also creates opportunity for abuse and financial exposure for practices.
Hospital and physician groups made note in the ACA comment period of the potential for the grace period to result in uncovered services being rendered. Extending the grace period increases the likelihood that significant services can be provided before a plan can be cancelled for unpaid premiums. Providers argued that plans should have to bear these costs — especially in the case of subsidized membership, since plans would presumably be receiving at least part of the premium cost from the government. However, in the final rule, the CMS allowed plans to deny claims in months two and three of the grace period. This means that payments already issued to providers could be retracted — leaving practices and hospitals on the hook for the cost of care already provided.
How can practices prepare for and protect themselves from these unexpected costs? A few things to evaluate:
- Has your state negotiated its own grace period? Here in California, the CMA prioritized working with the CMS to confirm its compromise version of the expanded grace period. The California version still allows for three months of missed payments before policy cancellation, but during months two and three the policy would be suspended. This would help prevent practices relying on false assurances of ‘active’ coverage. As of this writing, it appears that the CMS will allow California’s interpretation.If your state medical association or society has not addressed this issue, consider participating or working with the leadership to work towards are resolution that protects practices.
- Know your exchange plan contracts. Some carriers attempted to negotiate lower rates with physician practices in contracting for exchange plans. If your practice already participated in such negotiations, you know whether you’re in that exchange plan. (Just make sure you re-read the plan to understand if this grace period issue applies to you. Lower reimbursement plus a higher risk of unreimbursed care could be a double whammy.)
- Were you automatically added to an exchange plan? Some carriers in some states planned to automatically add providers to exchange plans that were similar to ones they were already contracted for. Check your amendments and any notices from your plans. If you were automatically added to an exchange plan, be sure to know your rights and responsibilities — and options.