The American Medical Association (AMA) announced new resources that will help physicians to overcome the financial risks associated with grace period rule in the Affordable Care Act (ACA). This rule was published by the Centers for Medicare & Medicaid Services (CMS) and it states that individuals who purchase subsidized coverage via state insurance exchanges will be given a 90-day grace period before the coverage gets cancelled for non-payment. The resources provide guidance to physicians on administrative policies, financial agreements and communication with patients and insurers by outlining the critical issues with the grace period and thereby help support their practices with efficient medical billing practices.
As per the CMS rule (the final regulations issued in March 2012), insurers in health exchanges need to pay the claims only if they are arising in the first 30 days of grace period and the corresponding enrollee fails to pay the required premium amount. There is no need for insurers to pay the claims arising during the last 60 days of the grace period for the enrollee whose coverage is terminated. The insurers are allowed to place all the claims incurred during the last two-thirds of the grace period in a pending status and deny them retroactively once the coverage is terminated after the grace period. According to the AMA, this rule poses the risk of uncompensated care for physicians. If the responsibility of managing such a risk is typically attributed to insurers, the grace period rule assigns two-thirds of that risk to physicians and healthcare providers from insurers. AMA attempts to embolden physicians to take proactive steps to minimize these risks with the new resources that have been announced.
The major issue for physicians is to collect accurate information from insurers about the grace period status of the patient. AMA suggests the following model collection policies for physicians to either amend their existing policies or implement new policies to address potential grace period concerns.
- Verification of Patient Eligibility – Conduct patient eligibility verification with insurer prior to the patient’s visit. Ask the health insurer representative whether the patient is in the grace period and which grace period month applies currently (if possible). Once the conversation ends, document all the key facts immediately and keep it safe for addressing later disputes.
- Encourage Discussions with Patients – If you find the patient is in the grace period during the appointment, discuss with the patient why it is important to catch up on premium payments before the grace period ends. A copy of model grace period notice can be given to the patients and they may be asked to be prepared to answer any question after reading the notice.
- Statement and Collection Letters – Statements and collection letters can be sent to the patients if necessary. Make sure that you provide the reason for the patient’s responsibility along with them. If you have received any documentation from the insurer, attach it along with the statement and collection letters.
- Calling the Patients Personally – Speak with patients personally regarding the overdue payments issues associated with the grace period. If you explain the grace period and its connection with balance due to the patients, it may encourage them to pay the due.
The other resources announced by AMA for physicians in its immediate press release are step-by-step guide to the ACA grace period, model financial agreement language for patients receiving advanced premium tax credits and sample letter – grace period notice to patients.
A professional medical billing company can help physicians take proactive steps for minimizing the risks associated with the grace period rule. Physicians finding it difficult to manage their time between their patients and revenue management can take advantage of dedicated and efficient revenue cycle management services. However, the AMA sent a letter to CMS urging to modify the grace period rule in such a way that it insists insurers to inform physicians when patients fail to pay their premiums. The current notification requirements allow insurers to decide when and how to notify physicians during the grace period.
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