Another Challenge Lurks in the Affordable Care Act
What do you need to know about state insurance exchanges?
Time can fly, even when it comes to the law. Over three years have passed since President Obama signed the massive Patient Protection and Affordable Care Act, aka the health reform law.
The ACR has educated members about key changes, such as the higher equipment utilization rate and new payment models. But just when you thought that the act could not pose more challenges, an unheralded provision has surfaced that could further complicate your practice.
The act created health insurance exchanges, or competitive marketplaces, to remedy continued market barriers for individuals seeking coverage.1 Each state may establish an exchange to allow individuals and small employers to shop for insurance based on price, quality, and other factors.2 The government will offer tax credits to encourage individuals and families to obtain insurance through the exchanges. Open enrollment will occur in October 2013, and the exchanges will take effect January 1, 2014. However, a little-known part of the act may shift payment risk to radiology and radiation oncology practices if insured patients do not pay their premiums because of financial hardships or other reasons. Some officials in organized medicine question whether this loophole will affect physicians' ability to sustain their practices.3 In this column, we will outline the insurance provision and how practices should address yet another challenge in health reform.
What is the act's controversial provision about state insurance exchanges?
Under Section 1411 of the act, a qualified health plan that participates in the exchange and collects health insurance premiums from enrollees must allow a three-month grace period for paying premiums before the plan discontinues coverage.4 Patients who receive the subsidized coverage qualify for the grace period by paying at least one month's premium. However, the government decided in the exchange's final rule to require insurers to pay medical claims only during the first month of the grace period. In the other two months, the exchange requests that they pay their medical bills or their insurance premium if they receive health care services. If the patients do not pay either bill, however, physicians have to cover the cost of care.
Why do some health officials regard this provision as a loophole?
Nonpayment of premiums could leave a practice responsible for an undefined amount of health-care costs, accumulated over the course of up to sixty days. This gap especially could affect radiation oncologists, interventional radiologists, and breast imagers because they more frequently provide care to patients during a continuous period of time. Small or rural practices that treat underserved populations might experience difficulties if many patients do not pay on time.
Did the government recognize that its policy might affect patient care delivery?
Yes. HHS, which oversees the exchanges, acknowledged that pending claims "increase uncertainty for providers and increase the burden of uncompensated care." HHS originally proposed that insurers pay all claims during the grace period. However, it changed its position because of concerns that a statutory three-month grace period policy — which is longer than most commercial insurance grace periods — might cause different premiums between the exchange and non-exchange markets. Additionally, individuals could face a tax liability for any advance payments of the premium tax credit that the government pays on their behalf in a month in which they did not pay their premium share.5 The government has attempted to alleviate the burden by requiring insurers to inform physicians of any delinquencies within 15 days after insurers no longer have to pay claims.
State exchange representatives agree that physicians will bear some risk. Yet they assert that federal subsidies should allow families to buy affordable insurance that will reduce the prospect of a three-month delinquency. Nonetheless, practices that treat patients covered by the exchanges would have a two-week time frame (Between days 31 and 45 of the grace period) in which they could render care and not know that insurance reimbursement is uncertain.6
Can practices decide not to participate after signing an exchange contract with insurers?
Not necessarily. You may have agreed to contract with a large health insurer, such as Anthem Blue Cross, that typically imposes an "all products clause." That provision would obligate you to treat any patient that the health plan covers.7 The contract likely would impose a financial penalty if you terminated participation. You also must avoid inquiring about insurance status before providing care to a patient who presents to a hospital's emergency department and requests treatment, which the federal Emergency Medical Treatment and Active Labor Act prohibits.8
What will this mean for groups that consider joining the state insurance exchanges?
Groups will, again, have to weigh the Affordable Care Act's long reach. Plan early and prudently with your business administrator. Review exchange contracts thoroughly. Assess your potential patient mix and fiscal risk.
Visit the digital version of the Bulletin to view the endnotes for this article.
By Bill Shields, JD, LLM, CAE, and Tom Hoffman, JD, CAE