A Loophole That Could Leave You in the Lurch

By Sally Eggleston, MBA, RT(T)

With the Patient Protection and Affordable Care Act (PPACA) now in full swing, we’re seeing some oncology practices willing to risk being an in-network healthcare provider for plans purchased on federal health insurance exchanges. At the same time, we’re seeing others refusing to risk it. One possible reason: a loophole in the PPACA that leaves providers risking nonpayment for up to two months of patient care.

PPACA mandates that exchange plan enrollees who have paid at least one month’s premium and receive advance premium tax credits be permitted to have an unpaid premium balance for three months before they may be terminated for delinquency. 1

This grace period allows qualified enrollees to access continued quality care in the face of unforeseen employment circumstances or financial constraints.

Qualifying health plans on the exchanges must provide this three-month grace period to subsidized exchange patients who fail to pay their insurance premiums. During the first 30 days of the grace period, the insurer must continue paying claims to providers as if the patient had paid his premium.

If the patient does not pay his premium within his 90-day grace period, his coverage is terminated. However, payors are not required to process or pay for claims for services that they received during the last 60 days of the 90-day period. Claims submitted by providers for that 60-day period may be pended, but they may eventually be denied if the enrollee is terminated.

This means that a provider risks delivering services to patients who ultimately may not be responsible for the bill. The insurer won't process the claims for the insurance subscriber and the provider is left attempting to seek payment from an individual who wouldn’t pay his insurance premium and who most likely won't pay the provider. 

The potential liability is frightening: up to two months of claims that may or may not get paid. Chasing down payment can require additional staff, possibly incur expensive legal fees or end up as bad debt write-offs.

A loophole puts a provider at additional risk. If the patient cannot or does not pay his premium or claims, he may face a tax penalty—but he is still permitted to enroll in another exchange plan during the next open enrollment period. Enrollees are free to move from one exchange plan to another in the fourth month and are entitled to full health coverage again.

It's still early to predict what kind of effect these changes will have on your practice. Factors in play include your patient pool, cash flow, financial status and resources necessary to manage claims follow-up.

There are ways to reduce risks, however. Carefully consider the terms of your exchange participation, especially any related to the pending and denial of claims is vital.  Also important, is requiring patients to sign a document stating responsibility for full payment in the event their insurance premiums have not been paid.  Assess the impact of potential bad debt or slow payments.  Plan the staff and operations you’ll need to manage this new aspect of claims and reimbursements.

The Affordable Care Act is bringing changes to all facets of the health care industry. RC Billing can help you navigate them so that you can focus on delivering top-notch care while maintaining a healthy bottom line. Find out what we can do for you by calling 512-583-2000.

1 Brett Johnson, JD, MPH, MS, Center for Medical and Regulatory Policy, California Medical Association, Sacramento, CA; Health Benefit Exchange Contracting – Providers could be Left Holding the Bag for Two Months of Claims on Subsidized Exchange Patients.


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