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Insurance Rule in the Affordable Care Act Worries Doctors

A Centers for Medicare and Medicaid Services (CMS) rule implemented in October of 2012, as the result of the Affordable Care Act, has some doctors very nervous. The rule, commonly dubbed the “grace period rule”, provides that individuals who purchased a government subsidized health insurance plan from the marketplace will have their medical bills covered for 30 days by their insurer if the patient falls behind on their payments for premiums. However, the rule provides that for the following 60 days, insurers may place a “stay” or even ultimately deny payments to the treating physician if the patient does not pay his or her premium. Under the rule, even if insurers cover claims during the last 60 days of the grace period, they may seek to recoup those funds if the insurance coverage is ultimately canceled. Prior to the rule’s implementation, insurers generally cancel a policy if a member falls behind more than 30 days and the insurer is usually on the hook for bills incurred before that cancellation.

The rule makes it so that physicians would have to seek payment for services rendered directly from the patient, which can be a long and uncertain process. The rule could impact solo physicians and small physicians groups, in addition to specialists, on a much greater scale due to their inability to absorb the costs of lost payments. For specialists, the high costs of their services could have an extremely negative impact on their bottom lines if they end up having to absorb the costs of lost payments for services rendered.

The American Medical Association (AMA) has publicly expressed concerns about the rule, fearing that it “could pose a significant financial risk for medical practices” and would leave doctors on the hook for unpaid patient bills after the insurer cancels the patient’s policy. The AMA has also urged the Obama administration to provide further guidance on how and when insurers must notify physicians on when their patients fall behind on premiums. The state of Washington, for example, passed a “prompt notification” law earlier in May. The Washington law would require insurance companies to provide information about whether a member is in the 90 day grace period, if a doctor or hospital requests such information. Other states are debating whether to pass legislation substantially similar to Washington’s “prompt notification” law.

However, there are some who worry that this push for “prompt notification” laws will lead to doctors refusing to treat patients when they know there is a chance that they would not be reimbursed. The AMA notes that physicians are contractually and ethically bound to continue caring for their patients.

Wachler & Associates will continue to keep you updated on the Affordable Care Act and other important health care news. For more information on health care reform, or how this rule could potentially impact your practice, please contact an experienced health care attorney at 248-544-0888 or via email at

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