By Emillie J DiChristina, MBA for PracticeFirst
Whether you are a fan of the Affordable Care Act or take some other view, we at PracticeFirst want to make sure you are prepared for some of the potential financial risk arising from all of the newly insured patients your practice may encounter.
Most providers are worried about reimbursement rates being offered by insurers participating in the exchanges, as well as the greater number of people being covered by Medicaid and the potential for decreased Medicare rates.
With all this on your mind, it may have been easy to miss the potential financial risk caused by “the premium grace period” which is significantly different under the ACA for any person covered under a tax-subsidized health insurance.
For those people who are low-income, yet who do not qualify for Medicaid, they will be covered under tax-subsidized health insurance. In writing the ACA, there was an expectation that these lower income people may not have the money to pay their premiums without the tax subsidy, and even more likely that they will need to wait for the tax subsidy to be able to afford the premium at all.
So where is the risk?
Currently, when we confirm insurance on our patients prior to providing service we know the date when their insurance lapsed for any reason. Statutorily, private insurers offer a grace period of 10 days for premium payment to insure continued coverage so occasionally we will request the patient sign an agreement to pay, or more likely request a cash payment at the time of service – refunding if the patient offers proof of continued coverage.
Therefore currently, even if you did not request cash up-front, good front office technique reduces your risk of bad debt for services rendered to a potential 10-day grace period,
Unfortunately for healthcare providers, the ACA comes with s proverbial “rub” resulting in much greater bad debt risk when you care for anyone who receives a tax-subsidy for their health insurance. Actually, it comes with two “rubs” leaving you at greater risk.
The first issue placing you at risk is the fact that while you will be able to confirm your patient has insurance, even insurance purchased through the exchange, you are likely to not know if they receive a tax-subsidy to help pay for the insurance,
The second issue placing your practice at financial risk is the real kicker. As part of the ACA, people who qualify for tax-subsidies to purchase health insurance through online marketplaces, or exchanges, are allowed a three-month grace period if they don’t pay their premiums.
Furthermore, a federal rule allows health plans to suspend claims for services that delinquent enrollees receive during the second and third months of the grace period. That means that health-care providers will have to absorb the costs for services provided to people who didn’t pay their premiums and you will have no way of knowing if their premiums have been paid, or where there are in their grace period.
While both the American Hospital Association and the Association of American Medical Colleges have sent letters requesting the government to force health insurers to pay for delinquent enrollee’s claims during the entire three-month grace period there has been no movement toward enacting the proposed changes. This leaves providers in a potentially bad place as they have a high potential for accruing bad debt on services provided between 31 and 90 days of the allowed grace period.
The American Hospital Association was quoted as saying, “Whatever the cost of the grace period, it went from 100 percent liability for the health plans to only a third of the liability,” the association said in a statement. “For providers, it went from zero liability (other than deductibles and cost-sharing) to two-thirds of the liability for all the services.”
So what can you do to decrease this liability, short of refusing to participate in the insurances on the exchanges? The most significant action you can take is to strengthen your front end practices and agreements to pay.
You will have to assume that anyone participating in the exchanges may be tax-subsidized (consider it “universal precautions” for your bottom line) and amend your financial agreement forms to include language in which the patient agrees to pay for any services rendered to them should their insurance coverage lapse for any reason including non-payment of premiums.
You should also look at your fee schedule for self-pay patients (which may be what someone becomes if they have received services and have not paid their premiums). We all know that self-pay often translates into no-pay, so it may be worth considering setting your self-pay fees at the level which you would have received from your average payer potentially increasing your likelihood of receiving payment from patients whose insurance has lapse