Health care providers will be on the hook for some patients who don’t pay premiums

If you ran a business – and yes, a physician’s office is a business – would you join into a program that requires you provide services, but does not guaranty you’d get paid? That’s what physicians and other health care providers are learning when it comes to insureds who fall behind on their premium payments.

There is almost nothing in this law that can be described as “insurance.” From Michelle Malkin.

The Affordable Care Act created a 90-day grace period before insurers can drop patients who fall behind on premiums. So, delinquents who obtain tax-subsidized health insurance through an Obamacare health insurance exchange have three months to settle up their bills prior to their policy being canceled. As written, the law puts insurers on the hook for the grace period.

But the bureaucrats at the Centers for Medicare and Medicaid Services decided to issue a rule in March making insurers responsible only for paying claims during the first 30 days of the debtors’ grace period. Who’s on the hook for the other two months? Well, customers are entrusted to foot the bills for additional services. But if they blow off the payments, it’s up to physicians and hospitals to collect.

Let’s say an individual “who qualifies for advance payment of premium tax credits” starts falling behind on their monthly health care insurance premium payments. Remember, even though someone is getting a partial subsidy from the government, they still have to cover their own portion of the premium – as agreed – in a timely fashion.

Remember, they have this 90-day grace period before they really have to pay. So, since there is no penalty for paying late, people will pay late. On day 45 they go to the doctor because of a broken wrist. They “have” insurance even though they are about a month late on their premium payment. Of course, the broken wrist makes it hard to work  and since the injury was not related to employment, they fall further behind on premium payments and get canceled by the insurance company.

Even though this person had their insurance card at the time of the accident and the insurance company said they were insured, now the insurance company does not have to pay out to the health care providers who provided the service. The government doesn’t have to pay either. The federal rules allow insurance companies the ability to retroactively cancel insurance policies, leaving the health care provider to fend for themselves and try to get payment via collection.

The American Hospital Association, Federation of American Hospitals and the AAMC wrote – in part – the following to an administrator at the Centers for Medicare and Medicaid Services. I don’t have time to quote the sections in the federal register as referenced, but you can look them up.

Under section 1412(c)(B)(iv)(II) of the [Patient Protection and Affordable Care Act] ACA, if an insured individual who qualifies for advance payment of premium tax credits does not pay his/her portion of the premium, [qualified health plans] QHPs are required to “allow a 3-month grace period of nonpayment of premiums before discontinuing coverage.” (Emphasis added.) This grace period protects low-income individuals who wish to purchase health insurance, but who may experience temporary difficulty in paying premiums during a given time period, giving them an opportunity to catch up. Under this protective measure, an individual’s inability to pay insurance premiums must be sustained before the ACA will permit QHPs to terminate coverage.

In July 2011, [Centers for Medicare & Medicaid Services] CMS issued a proposed rule to implement this ACA provision. (76 Fed.Reg. 41,865 [Jul. 15, 2011].) CMS proposed that a QHP issuer must provide a grace period of at least three consecutive months before terminating coverage, provided an enrollee receiving advance payments of the premium tax credit previously has paid at least one month’s premium. Thus, CMS’s proposal went further than the required statutory minimum of a three-month grace period, presumably to afford QHPs and states the flexibility to provide additional consumer protections as desired.

In a recent final rule, however, CMS reversed course and promulgated a final policy that permits QHPs to terminate coverage after 30 days of non-payment of premiums for this category of enrollees. (See 77 Fed.Reg. at 18426-28.) Specifically, QHPs would be required only to pay all appropriate claims for services provided during the first month of the grace period, and could suspend claims for services furnished during the second and third months. If a consumer does not pay his/her outstanding premiums by the end of the three-month grace period, the QHP may deny all pending claims for services rendered during the second and third months.

The effect of this policy is to allow QHPs to retroactively terminate coverage for the second two months of the grace period. This shifts the burden related to patient protections during most of the grace period from QHPs to health care providers.