It’s buried deep, in small type, in a set of rules issued almost a year, and thousands of Federal Register pages ago. Here’s the setup. Jimmy has a chronic medical problem, and knows it, but he cannot afford insurance payments each month, even with the available subsidy. So he puts off buying insurance until he needs six months of care, costing a quarter million dollars. Then, he buys a subsidized QHP through www.healthcare.gov and pays his first monthly premium. The clinic and the hospital verify his coverage and begin treating Jimmy, who never pays another premium. Periodically, the clinic and the hospital verify Jimmy’s coverage. After three months, the insurer notifies them that Jimmy’s coverage has been terminated for non-payment of premiums.
Each insurer that sells a Qualified Health Plan (“QHP”) through an Exchange, such as www.healthcare.gov, must have consistent, non-discriminatory rules for terminating coverage due to non-payment. Those rules must give ACA subsidy recipients who have made the first month’s premium payment a “grace period” of three consecutive months before terminating coverage. During that grace period, the insurer must:
(1) Pay all appropriate claims for services rendered to the enrollee during the first month of the grace period and may pend claims for services rendered to the enrollee in the second and third months of the grace period;
(2) Notify HHS of such non-payment; and,
(3) Notify providers of the possibility for denied claims when an enrollee is in the second and third months of the grace period.
45 C.F.R. § 156.270(d), as amended July 15 and August 30, 2013. Subject to the insurer’s agreement to do better by its network providers, this rule leaves them on the hook for services rendered during the second and third months of the grace period, as long as the insurer notifies them some time before its end of that possibility.
Unless state law says otherwise. So, the American Medical Association Advocacy Resource Center has circulated among state legislators a model bill, titled, “Physician and Provider Notification of Patients in Health Insurance Exchange Grace Period.” (Awful, no? Presumably they did well in chemistry lab and calculus.) Boiling it down, the bill says that an insurer must disclose that an insured patient is in such a grace period each time a provider inquires about that patient, or the provider is entitled to be paid by the insurer as if the patient were not in such a grace period.
Unless and until legislators solve the problem, the AMA also suggests related collections policies and financial agreement terms to manage this exposure. The AMA encourages physicians to ask insurers these related questions:
What specific information will be provided?
How, in what format?
How and when will notice be provided if a patient has brought his payments current?
What claims that may be pended under the rule will instead be paid by the insurer?
And, perhaps most importantly:
Where are those assurances found in the provider agreement?
We have seen media reports that some physicians think that they can avoid this problem by refusing to accept insureds who obtained subsidized coverage through an Exchange. For reasons too detailed to explain in this short space, we caution against doing so without supporting legal advice from a lawyer with good malpractice insurance.