The American Medical Association issued a statement to physicians on Wednesday cautioning doctors on how to navigate a 90-day grace period for government-subsidized health plans. A patient with subsidized insurance who is falling behind in payments is guaranteed coverage for medical bills for 30 days – but insurers can ultimately deny payment during the remaining 60 days. Some doctors and the AMA say insurance companies could delay and then retroactively deny claims made during the 60-day period – a bill then held stuck with physicians.
“This puts the physician and their patients in a very difficult situation,” said Dr. Ardis Dee Hoven, president of the American Medical Association (AMA).
“If a patient is being treated for a serious illness, that requires ongoing care,” she said. “The physician is having to assume the financial risk for this. That’s the bottom line.”
Current regulations on late and outstanding premium payments vary by states, with some states allowing insurers to drop consumers' policies without advance notice. Other states require insurers to offer a 30-day grace period before dropping customers' plans. If coverage is dropped for nonpayment, providers must work directly with patients to collect payments, according to Jennifer Kowalski, vice president of health reform practice at Avalere Health.
Under the CMS rule, which was released in March, consumers will get a 90-day grace period to pay their outstanding premiums before insurers are permitted to drop their coverage. The rule will apply to consumers in all states who purchase subsidized coverage through the Affordable Care Act's (ACA) insurance exchanges. According to Kowalski, the new rule would benefit about 80% of consumers in the exchanges.
The rule also requires insurers to reimburse providers during the first 30 days of the 90-day grace period. If a consumer still fails to make a payment after 90 days and his or her coverage is dropped, insurers will not be required to pay for claims incurred during the last 60 days of the grace period.
"The doctors get left holding the bag on pending claims," said Robert Laszewski, a former insurance executive and consultant.
The way things work now, insurers generally cancel a policy if a subscriber falls behind more than 30 days. The insurer is usually on the hook for bills incurred before that cancellation.
The AMA and dozens of other physician groups have urged the Obama administration to spell out how and when insurers must notify physicians when their patients fall behind on premiums. Doctors’ groups got a prompt notification law passed earlier this month by the Washington state legislature.
Some experts worry that doctors who know they may not get paid have a strong incentive to withhold treatment. They may also insist on being paid upfront in full, which could be a breach of their contracts with insurers.
If the insurer notifies the physician that a patient is behind on premiums and the insurer is holding up claims payments, “Nine times out of ten the doctor is not going to provide the services -- no matter what their network contract says.”
“The doctors aren’t bad guys -- they’re business people,” Haile added. “Any economically rational actor would do it.”
The AMA, meanwhile, encouraged doctors to broach financial concerns with their patients, and explain why it’s important to maintain insurance coverage.
The groups released materials Wednesday, including a sample “Dear Patient” letter explaining that while the doctor will continue to see them during the grace period, “you may be obligated to pay the full cost of services that we provide to you” if insurance is terminated. The letter also encourages patients to discuss changes in their financial circumstances with doctors.
Physicians are also reminded that even if insurers cover claims during the latter 60 days of the grace period, they may seek to recoup those funds if coverage is canceled.