90-day Premium Extension Rule Puts Too Much Risk on Physicians, Say AAFP, Others

March 26, 2014 01:37 pm News Staff

As millions of Americans obtain insurance through the state and federal marketplaces, the AAFP and other members of the physician community are asking insurance companies to assume greater risk for payment of medical services for newly insured patients who are behind on their premiums.

[Health Insurance Claim Form]

Many family physicians are concerned about who will be responsible for unpaid medical claims for patients whose insurance is terminated for nonpayment of insurance premiums. As part of the Patient Protection and Affordable Care Act, CMS requires that patients receive up to 90 days to pay their premiums before their coverage is dropped.

Although insurance companies are required to notify physicians about patients who have fallen behind on their payments and entered the 60- to 90-days overdue period, they are only responsible for paying claims for services performed during the first 30 days of the grace period. They are not required to pay claims during the final 60 days before coverage is terminated. Insurers can record such claims as "pending" or deny payment for care provided during that period.

The AAFP believes the notice requirement fails to protect physicians against the possibility of unpaid claims, so the Academy recently signed on to a letter from more than 80 medical organizations and state medical associations that asks CMS to revise its policy and require that insurance companies inform physicians as soon as a patient enters the first month of the grace period.

"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," says the letter to CMS Administrator Marilyn Tavenner, M.A., referring to the fact that when the rule was first introduced, insurers were responsible for paying for all care provided during the entire 90-day grace period.

"The regulations implementing the grace period require issuers to 'notify providers of the possibility for denied claims when an enrollee is in the second and third months of the grace period.' However, the timing and manner of such notice is left to the discretion of the issuers. We believe these current notice requirements are inadequate and will lead to administrative confusion for physicians and practices."

In addition, the letter asks CMS to hold insurers responsible for all medical claims for services provided in the final 60 days if the insurer provides inaccurate information to the medical practice about a patient's status.

The issue of unpaid insurance premiums is being widely discussed by medical organizations because newly insured patients who enrolled in late 2013 only began paying premiums in January 2014, so there is no record of unpaid claims yet. It is possible that insurance companies could create an online portal that physician practices could access without having to verify every patient's insurance individually by phone or email.

Many physician practices already verify a patient's insurance status before providing more expensive health care services. However, small practices that do not employ a practice administrator may not have the resources to verify every patient's insurance status on a daily basis.

More From AAFP
90-day Grace Period FAQ

Additional Resource
AMA Issues Grace Period Guide to Assist Physicians(www.ama-assn.org)