Providers protest rule putting them at financial risk if patients don’t pay premiums
By Jonathan Block Modern Healthcare.com
The CMS rule (PDF) gives consumers a 90-day grace period if they don’t pay their premiums before their insurer can drop their coverage. The rule applies to people in all states who obtain subsidized coverage through the new insurance exchanges. That likely will constitute 80% of insurance subscribers on the exchanges, said Jennifer Kowalski, vice president of the health reform practice at consulting firm Avalere Health.
Under the rule, insurers offering plans on the exchanges must provide a three-month grace period to individuals who have enrolled and who have stopped paying their premiums. In the first 30 days, the insurer must continue to pay incurred claims. But for subscribers who ultimately fail to pay premiums within the 90 days and whose coverage is terminated, payers are not required to pay for claims incurred during the last 60 days of the 90-day period.
“This process unduly burdens physicians, hospitals and other healthcare providers who must then collect payment from the patient, and puts them at an unfair and significant risk for providing uncompensated care to patients,” MHA CEO Herb Kuhn and Missouri State Medical Association Executive Vice President Thomas Holloway wrote in an Aug. 12 letter to CMS Administrator Marilyn Tavenner.
“Physicians, hospitals and other healthcare providers cannot reasonably be expected to know or predict if an enrollee’s premiums are paid or will be paid before the end of the grace period,” the letter continues. “If the current rules cannot be amended or interpreted in a more equitable manner, we fear there will be a widespread reluctance among physicians and other providers to participate in exchange plans.”
Currently, depending on the state, consumers who do not pay their premiums can be dropped by their insurer, though some states allow a 30-day grace period. If the subscriber is dropped for nonpayment, providers must collect directly from patients, according to Kowalski.
But up until now, consumers in the individual insurance market have had a strong incentive to stay up to date on their premiums, because if they let their coverage lapse they might not be able to obtain new coverage, particularly if they have pre-existing medical conditions. Under the Patient Protection and Affordable Care Act, however, insurers have to accept all applicants regardless of pre-existing conditions. So people know they can sign up again without penalty during the next open enrollment period.
The ACA did not address whether health plans or providers should foot the bill for claims received during the 90-day period for which a carrier received no premiums. The CMS addressed this in a rule published in March of last year.
The MGMA-ACMPE also has weighed in. In a July 3 letter to Tavenner, MGMA-ACMPE CEO Susan Turney objected to a part of the provision regarding insurer notification to providers of the 90-day grace period. As the regulation is currently written, health plans in exchanges “should notify all potentially affected providers as soon as practicable when an enrollee enters the grace period, since the risk and burden are greatest on the provider.”
Turney argued that providers should be notified as soon as the 90-day grace period begins or else “it will be too late for physicians to engage patients and make informed decisions prior to furnishing potentially uncovered services.” She recommends that issuers be required to notify providers within the first 15 days of the grace period, or else be held financially responsible for any services incurred in the last 60 days of the period.
Kowalski said that during those last 60 days of the unpaid period, insurers simply won’t process any claims for the insurance subscriber. If the subscriber fails to pay within the 90 days, the insurer will deny the claim. That will leave the provider with the unpaid bill, requiring the provider to seek payment directly from the patient.
American Hospital Association spokeswoman Elizabeth Lietz said the AHA is aware of the issue and is working on ways to address it.
An earlier version of the CMS rule mandated that insurers pay all claims during the 90-day grace period. But in a victory for payers, the final rule changed that to requiring insurers to pay claims only during the first 30 days. In a 2011 letter to the CMS, America’s Health Insurance Plans, the lobbying group for insurers, wrote that “requiring health plans to pay claims for enrollees who do not pay premiums increases premiums for all enrollees, effectively requiring premium-paying enrollees to subsidize coverage of individuals who failed to pay their premiums.”
“We recommend that CMS take steps to minimize the risks and costs to enrollees, health insurers, and the federal government during the grace period by allowing (plans) to withhold payment on claims received when premium payments are delinquent for more than 30 days. This practice is consistent with applicable state laws. Exchanges should also have the flexibility to permit (plans) to terminate coverage on a basis that reflects the period for which premiums have been paid.”
The Missouri providers’ letter warned that unscrupulous consumers could use the 90-day grace period to take advantage of providers and get free healthcare.
“We also are very concerned that some disreputable individuals will learn they can manipulate the system and win a full year’s insurance coverage on only nine months of premiums,” the MHA and Missouri State Medical Association say in their letter. “Knowing they are entitled to three months of grace period coverage, dishonest persons could stop paying premiums on the ninth month, enjoy free coverage during the 90-day grace period, have their coverage terminated, and then re-enter the exchange market where the Affordable Care Act’s guaranteed issue mandate would prohibit another plan from denying them coverage.”
The CMS did not return a request for comment on the letters by deadline.