How Does the ACA “Grace Period” Affect Anesthesia Practices?

Patients who receive an advance premium tax credit under the Affordable Care Act (ACA) may lose their insurance coverage if they fail to pay their premiums—and leave their providers holding the bag.  With more than 4.2 million individuals now signed up for policies through the ACA health insurance exchanges, every provider is at some risk of loss.  There are steps that anesthesia practices can take to avoid such losses.

A little-known ACA rule gives patients who purchase subsidized coverage through the exchanges a 90-day grace period before their coverage is canceled for nonpayment of premiums.  Although insurers are required to pay for claims for services provided during the first 30 days of the grace period, they are permitted to pend any claims submitted for services performed during the 31st through 90th days.  They may ultimately deny such second- and third-month claims if the patient never makes the missed payment.  The patient would then be solely responsible for paying the healthcare services received.

From the point of view of the physician who saw the patient during the second or third month of the grace period, the problem is that he or she may not know about the patient’s default on the premiums, or whether the patient is still in the grace period.  True, the health plan is required to notify the practice when one of its patients enters the grace period.  CMS does not specify in its Guidance how or when the health plan must provide the notice, however.

There are steps by which practices can protect their revenues:

1. Check with the issuer of the health insurance as to the means by which it will notify providers of the grace period.  The notice may come in various ways:  by regular mail, by e-mail, through a portal on the health plan’s website or via standard electronic transaction upon eligibility check or upon submission of a claim.  It may also appear on a response to a request for prior authorization.
2. Check with the issuer of the health insurance as to when it will provide the notice.  CMS encourages health plans to notify providers of patients who are in their first month of the grace period and throughout the second and third month—but practices should not count on receiving timely notice without more.  Find out whether you will hear as soon as a patient enters the first month of the grace period, or only during the second or third month.  Earlier notice gives the practice more time address financial issues with the patient.  Also ask the issuer or health plan how it will notify you if and when a patient pays the premium and is no longer in the grace period, i.e., has valid coverage.
3. Ask how to verify eligibility.  Ask the health plan how to verify eligibility, e.g, by telephone or by standard electronic transaction (ASC X12 270 Health Care Benefit Inquiry and ASC X12 271 Response).  Will the eligibility information cover whether the patient is in the first, second or third month of the grace period?
4. Track the notices and eligibility verification responses received.  Alert the health plan of irregularities.
5. Provide affected patients with information on their rights and responsibilities.  The American Medical Association (AMA) offers a sample patient letter explaining the grace period and the importance of staying caught up with premiums.  The AMA also suggests adding the following language to your patient financial agreement:  “I [patient name] understand and acknowledge that I am personally responsible to pay [Anesthesia Group] in full for services that my health plan will not cover due to non-payment of my health insurance premiums.”

It is also worth checking with your state medical society and/or your insurance commissioner’s office to determine if any state laws protect or limit your rights to collect payments from or for patients in an ACA-insurance grace period.  Prompt pay statutes, like California’s, may require health plans to process claims within 30-45 days of receipt and not allow issuers to pend claims for the full 60 days permitted by the ACA.  In other states, e.g. Virginia, the federal grace period trumps any prompt pay laws. 

If the health plans covering your ACA patients have indicated that they will pay and not pend claims for services provided during the second or third month of the grace period—some have—or if those health plans erroneously pay a claim, can they recover the payment from you?  Most payer contracts with providers allow recoupment—and many states limit the time period within which health insurers can obtain refunds or recoup overpayments, regardless of contract language.

The AMA and the majority of national and state medical associations, including the American Society of Anesthesiologists, sent a letter to CMS Administrator Marilyn Tavenner on March 5, 2014 to express concerns about the grace period.  The letter protested the shift of the risk of loss from insurers to physicians and urged CMS to require insurers to provide grace period information as soon as a patient enters the first month of the grace period, and, in particular, as part of the insurance eligibility verification process. 

Anesthesia practices that obtain patients’ insurance information from their hospitals or surgery centers should work with their institutions to minimize disruptions caused by potential loss of coverage for nonpayment of premiums.  Resources on the AMA website may be helpful.  We hope that the help proves unnecessary for our readers and their practices.