Earlier this week, we discussed the three-month grace period afforded to enrollees of qualified health plans (“QHPs”). To recap that article, the ACA requires that QHPs pay claims for the first thirty days of the grace period during which premium payment remains unpaid, but issuers may pend claims for the final sixty days of the grace period. If the balance remains unpaid, the issuer may deny any claims submitted within the final sixty days.

During the second and third months of payment delinquency, providers are entitled to notice of the potential that an enrollee’s claims may be denied, but the U.S. Department of Health and Human Services (“HHS”) has not fully explained the timing and substance of such notice.

State exchanges such as the one operated in Kentucky allow insurers to develop their own notification protocol. Kentucky establishes its notification procedure in 900 KAR 10:010E, Section 13(4)(a)(2)(c), simply stating that QHP issuers “shall notify providers of the possibility for denied claims for services provided to an enrollee in the second and third months of the grace period.”

When participating in federally-facilitated exchanges, “[i]ssuers should notify all potentially affected providers as soon as is practicable when an enrollee enters the grace period…”. The notice should include (1) purpose of the notice; (2) a notice-unique identification number; (3) the name of the particular plan and affiliated issuer; (4) names of all individuals affected by the policy and possibly under the care of this provider; (5) a grace period explanation with applicable dates, including whether the enrollee is in the second or third month of his or her grace period; consequences of grace period exhaustion for the enrollee and the provider; and further options for the provider; and (6) any customer service telephone number specifically designated for the providers’ use.

A recent survey conducted by a physician staffing agency found that approximately two-thirds of physicians were “not at all familiar” with either the contracted rates for exchange products or the coverage terms for exchange patients, including the grace period terms.^[1] This little-known loophole can lead to big financial problems. Further, little can be done to reduce the potential for debt incurred during the two month period to pend or deny claims.

Providers should understand how and to what extent they will receive notice of a patient’s grace period. Providers should also ensure that any personal guarantees of payment required of patients at the point-of-service are being properly issued, signed, and collected by staff. The grace period loophole has the potential to strain provider-patient relationships, significantly impact a provider’s bottom line, and even limit access to care if providers choose to withdraw from the exchanges.

HHS has acknowledged that nonpayment of premiums would “increase uncertainty for providers and increase the burden of uncompensated care.” The first step to closing the loophole is to make providers aware of it. In August, hospital trade groups  such as the American Hospital Association, the Federation of American Hospitals, and the Association of American Medical Colleges asked CMS to require that qualified health plans pay for all services rendered during the three-month grace period. Educate yourself on the loophole and take action to minimize the risks associated with it. 

_{[1] Dan Mangan, Even doctors are clueless on Obamacare, poll finds, CNBC News (July 22, 2013).}