Reform Update: Doctors urge CMS to issue rule on premium grace period

The Obama administration and the CMS recently issued a flood of new regulations implementing the Patient Protection and Affordable Care Act. But healthcare providers are saying at least one more rule is needed.

Physician organizations are calling for the CMS to codify its recommendations on notifying providers about patients who have not paid their premiums on time for subsidized insurance plans purchased on exchanges and are in the first month of a 90-day grace period.

Health plans will be liable for any claims these patients make during the first 30 days. Claims made in the second and third months of the grace period will be classified as pending and subject to denial if premiums are not paid. The patient is responsible for paying the entire amount and it will be up to providers to collect.

The CMS issued its rule on the 90-day grace period last August and released additional guidance (PDF) in October.

But, in a letter to CMS Administrator Marilyn Tavenner (PDF) earlier this month, the American Medical Association and 85 other physician groups urged the CMS to develop new requirements on when and how providers receive notification about the payment status of a patient's policy.

“By allowing issuers to 'pend' claims during months two and three of the grace period, rather than being responsible for claims incurred during the entire three-month grace period as CMS had originally proposed, CMS has unfairly shifted the burden and risk of potential loss for patient nonpayment of premiums to physicians,” the letter stated. “This financial burden will be untenable for many physicians. “

The CMS requires insurance companies to notify providers about the possibility of denied claims when the patient is in the second or third month of the grace period. But, according to the letter, “the timing and manner of such notice is left to the discretion of the insurers.”

“We believe these current notice requirements are inadequate and will lead to administrative confusion for physicians and practices,” the letter added.

Physician groups also are calling for the CMS to make insurers fully responsible for any claims if they provided inaccurate information about a patient's status during the final two-thirds of their grace period.

The rule “imposes significant risk” on providers to be left holding the bag for uncompensated care, attorney Michael Smith wrote in a post on the Health Law Firm Blog back in November. Smith added that the rule could be subject to manipulation by individuals who become “serial abusers” of the grace period by intentionally withholding full payment for their premiums.

The office of the trade association America's Health Insurance Plans was closed Monday due to inclement weather in Washington, so a representative was not available for comment.

With 15 days left for Congress to act, the American Medical Association is encouraging the U.S. Senate “to proceed in a timely and bipartisan manner” to repeal and replace Medicare's sustainable growth-rate reimbursement formula for physician pay. The plea comes after the House of Representatives tacked a politically contentious funding mechanism onto a bipartisan bill to reform the formula.

The House passed the SGR Repeal and Medicare Provider Payment Modernization Act 238-181 last week, but not before amending it to include a five-year delay on imposing penalties for individuals who fail to purchase a health insurance policy.

“While the House has not been able to bridge this partisan divide to date, it is time to move forward,” Dr. Ardis Dee Hoven, president of the AMA, said in news release.

An SGR-driven 24% physician Medicare payment cut is set to take effect April 1 if lawmakers don't overhaul the policy—or adopt another temporary patch, which the AMA has vigorously discouraged.

Before last week's vote, President Barack Obama issued a statement of administrative policy noting his opposition to using a delay in the enforcement of the individual insurance mandate as a financial offset to the estimated $138 billion cost of repealing the SGR.

The president said the delay would “increase health insurance premiums, decrease tax credits, increase the number of uninsured, and shift costs to businesses, workers and healthcare providers.”

The nonpartisan Congressional Budget Office calculated that delaying the penalty would increase the number of Americans without insurance by 13 million in 2018.

Follow Andis Robeznieks on Twitter: @MHARobeznieks