The Debate Over the Affordable Care Act's 90 Day Grace Period

Posted by KUNAL JAIN on Apr 14 2015

Affordable Care ActThere has been widespread debate since the Affordable Care Act’s (ACA) 90 day grace period provision has been implemented. This allows members enrolled in a nonpayment period of three months before being dropped from their plan—but to qualify for the 90 day grace period, you must have an advance premium tax credit which is determined by the Marketplace and CMS. A figure according to healthaffairs.org explains “of the eight million people” enrolled through the Marketplace between the dates of October 2013 and March 2014, “85 percent received an advance premium tax credit.”

So, by now you may be asking: What’s the debate with this?

Before going too far into the existing debate, keep in mind that this act was established in order to prevent the cyclical “churning” lapses in and out of health coverage upon an enrollee’s failure to pay one month of their health insurance premium.

The Debate for Health Plan Insurers

Numerous factors and risks are in play with a nonpayment period, especially to hospitals and health plan insurers. There were many back-and-forth debates on how payments and claims would be processed during the 90 day grace period. One such was making insurers responsible for all “appropriate claims” for the 90 day period, to guarantee provider reimbursement for patient care performed for the 3 month duration.

However, this posed substantial reluctance for health insurers, which was centered on the fact that those who stopped paying could lapse for 3 months and then register for another plan during the next enrollment period. Organizations such as the AMA have argued that this loophole would “leave them on the hook for the cost of services” from day 31 to 90 (“them” being physicians and medical practices). Without accountability or penalty, what would stop people from stopping to pay and then re-enroll?

In reality, this would only work in limited situations, and if they stopped paying, the individual would be without coverage until the next re-enrollment period.

CMS’s Compromise

CMS’s compromise on regulation was that during the first month of the grace period, it would be mandatory for health insurers to pay for all claims, but during the next 60 days they could withhold and delay claim reimbursement. In the event that someone doesn’t pay within 90 days, those claims from the remaining 2 months would be terminated and therefore not have to be paid by the insurer.

Another Problem

Here comes the next problem: the communication between notifying physician practices when one of their patients is in the grace period. This includes: how far along in the grace period they are, how they will be notified (e-mail, paper?), and what the status of the patient’s payments are.

This lack of federal regulation has prompted states to enact “prompt payment” legislation, which establishes a required set of requirements the Marketplace must abide by in order to notify physicians of the status of their patients and what term of the grace period they are in. If these guidelines are not followed, then penalties such as interest on the patient’s bill can be added to what health insurers have to reimburse providers

The Future

It is uncertain what exactly the 90 day grace period is going to entail for health insurers or providers. This is true in terms of overall financial impacts, as well as the RCM of providers. The most important thing to learn out of the ACA is to stay informed and keep your medical billing model working optimally and your A/R at a minimum. By establishing communication goals and templates for patients and health insurers alike, you can become proactive in determining a patient’s grace period status and how that is going to affect your practice.

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