Complexity of the 90 day grace period for paying exchange plan premiums

Health Affairs
Health Policy Briefs
October 16, 2014
The Ninety-Day Grace Period

To help enrollees new to the system keep their insurance, the ACA
provides a ninety-day grace period before an insurer can discontinue
someone's coverage for failure to pay a monthly premium. This applies
only to those who have received an advance premium tax credit to
purchase health insurance through the Marketplaces and have previously
paid at least one month's full premium in that benefit year.

The grace period allows for continuity of care for patients by
preventing people from shifting or "churning" in and out of coverage
when they fail to make a monthly premium payment.

In final regulations, CMS said issuers must pay all appropriate claims
for medical services rendered to the enrollee during the first month of
the grace period, and the insurer may put on hold claims for services
rendered to the enrollee in the second and third months. Issuers must
also notify HHS of such nonpayment and notify providers of the
possibility for denied claims when an enrollee is in the second and
third months of the grace period.

During these second and third months of the grace period, because the
patient is still insured, he or she cannot be billed by the provider for
any remainder that is owed for medical services that the enrollee
received. But if an enrollee fails to pay his or her premiums and the
entire grace period elapses, providers are allowed to seek payment for
the medical services they gave to that patient and for which the
insurance company did not reimburse claims.

Patient assistance programs: Some providers have expressed interest in
providing premium and cost-sharing assistance for their patients
enrolled in coverage through the Marketplaces. By helping their patients
maintain coverage and avoid the grace period in the first place,
providers hope to reduce the risk that medical claims for care they
provide will go unpaid.

However, questions continue to swirl about the legality of such an
approach. Although federal anti-kickback regulations might seem to
prohibit this type of practice, HHS has stated that such regulations do
not apply to the Marketplaces, their plans, and premium tax credits
because they are not considered "federal health care programs."

The ACA's uniform grace period could prove to play an important role in
keeping people enrolled in their plans. But big questions remain
unanswered about the financial risks to which physician practices or
hospitals could be exposed, as well as how much risk insurers face for
claims in the grace period and how that might affect premium growth for
all enrollees over time.

http://www.healthaffairs.org/healthpolicybriefs/brief.php?brief_id=128

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Comment by Don McCanne

The Affordable Care Act provides a 90 day grace period during which
health care coverage through exchange plans is continued before insurers
can cancel the plans for non-payment of premiums. However, the insurers
must pay claims for only the first 30 days, whereas providers are not
allow to collect from the patient during the remaining 60 days. After 90
days of nonpayment of premiums, the patient can be retroactively billed,
though collection can be difficult since most of these patients do not
have enough funds to pay their premiums, much less their health care bills.

If you read the full Health Policy Brief, you will see that the issues
are even more complex. The 90 day rule is yet one more unnecessary
administrative burden that ACA added to our already highly complex
system of financing health care. Under a single payer system there would
be no such thing as a 90 day grace period. Financing of the health care
system would be as automatic as it is now with Medicare.