A new Health Policy Brief from Health Affairs and the Robert Wood Johnson Foundation examines the ninety-day grace period, a provision of the Affordable Care Act (ACA). Of the eight million people who enrolled in the insurance Marketplaces between October 2013 and March 2014, 85 percent received an advance premium tax credit. This provision allows a three-month grace period for nonpayment of insurance premiums for this group of consumers--and this group only--if they have previously paid at least one month's full premium in that benefit year. This grace period allows these new enrollees continuity of care, preventing them from shifting or "churning" in and out of coverage for nonpayment. Health care providers, however, have expressed concerns that this provision and the way the Centers for Medicare and Medicaid Services (CMS) has implemented it could expose them to considerable financial risk. This Health Policy Brief focuses on how this provision is being implemented and the concerns from the provider community.
Topics covered in this brief include:
- What's the law? Before the ACA, state laws on outstanding premium payments varied, with many states only offering a thirty-day grace period. This ninety-day provision for consumers receiving advance payment of the premium tax credit applies everywhere in the United States regardless of whether an insurance Marketplace is operated by the state or the federal government. The ACA statute states that if a subsidized enrollee does not pay a premium the insurance issuer must notify the Department of Health and Human Services of such nonpayment and allow a ninety-day grace period. CMS regulations have further stated that issuers must pay all appropriate claims for medical services rendered to the enrollee during the first month of the grace period and are allowed to put on hold claims for service during the second and third months, but there is no requirement that providers be notified. The brief also explains the termination and reenrollment process for people who fail to pay premiums once the ninety-day grace period has elapsed.
- What's the debate? Most criticism about the ninety-day grace period has come from provider organizations, such as hospitals and physician groups. One of those groups--the Medical Group Management Association--released a survey in May 2014 showing that 48 percent of providers who refused to accept Marketplace insurance from patients cited worries about assuming financial liability during the grace period as a reason for their decision. The brief also details the concerns of insurers, which prompted CMS to change the regulation from its initial version to allow the delay of payment for claims in the second and third months of the grace period. As the brief also explains, "prompt payment" laws on the books in many states will provide some protection to providers and, to some extent, to insurers.
- What's next? Since this is the first year of the Marketplaces, only preliminary data from a few states exist about the impact of the ninety-day grace period. In the interim, the American Medical Association has created resources for its members to deal with its potential consequences. Some providers have recommended providing assistance for patients so they can maintain coverage and avoid the grace period in the first place. This issue is likely to evolve in the future as more information about how likely patients who have signed up for subsidized coverage become delinquent on their payments.
Health Affairs is the leading journal at the intersection
of health, health care, and policy. Published by Project HOPE, the
peer-reviewed journal appears each month in print, with additional
Web First papers published periodically and health
policy briefs published twice monthly at www.healthaffairs.org.
Read daily perspectives on Health
Download weekly Narrative Matters podcasts on iTunes.