05 Jan How 90 Day Grace Period can Hurt Reimbursement
The Affordable Care Act created a 90-day grace period before insurance companies can drop enrollees who do not make premium payments on time. Those who receive tax-subsidized health insurance through Obamacare health-insurance exchange now have three months to pay the bill before the policy is cancelled. The Centers for Medicare and Medicaid Services (CMS) made a ruling in March of 2014 making insurers responsible for only the first 30 days of claims. So what does this mean about the other 60 days and the provider who rendered the services?
According to the American Medical Association (AMA), physicians spend between 10 and 15 percent of their gross revenue on collections and claims processing. It’s always best to collect payments from patients at the time of the service, instead of waiting and sending a bill later. There are ways to reduce costs, be more efficient, and collect payments faster. The CMS has proposed a 90-day grace period for patients who fail to pay their insurance premiums. This 90-day grace period can significantly impact practice reimbursement.
The Impact on the Provider
For many providers, the CMS rule regarding the 90-day grace period means that there is a chance they won’t get reimbursed for their services. The new rule only benefits the patient who does not pay the premium on time, according to California Healthline.
The insurance company cannot drop coverage without notice, but this doesn’t guarantee payment for the doctor. At present, the rules on premium payments vary from state to state. In certain states, insurance companies have to offer consumers a 30-day grace period, but in other states, insurers can drop the coverage without giving any type of notice to the patient.
According to the 90-day rule, the insurance company must offer provider reimbursement during the first 30 days of the grace period, but if the consumer does not pay after a 90-day span, the coverage is dropped. Insurance companies then are not required to reimburse the provider for any of the services that were given after the last 60 days of that grace period. So, to be adequately compensated for those services, the provider will have to bill the patient and attempt collections.
Less Choices, Higher Prices
Many healthcare companies and organizations are not pleased with this new rule. One analyst for the CRT Capital Group, Sheryl Skolnick, reports that the goal of this health law was for hospitals not to rely on the insurance company, but these organizations will be greatly impacted when reimbursement is not there.
CMS has been weighted down with complaints regarding this new rule. Many physicians, healthcare facilities, and organizations voice concerns that they will have no way to know or predict if the patient’s premiums are paid, so therefore, they will lose money.
The CMS has made no strides to repeal the 90-day cost-shifting rule, and it does not plan to do anything to address the providers’ concerns. One hospital representative voiced that this could be “potentially catastrophic.”
Small, private practices are already being affected by the electronic medical records mandate, slashed reimbursements, ICD-10 code changes, and federal issues with reimbursement. Now, they have another issue to face: the 90-day rule. Basically, this leaves providers forced to offer less choices and higher prices to patients.