Some say the provision might prompt doctors to avoid the exchanges altogether, while other experts say few health care providers are aware of the issue and likely won’t know about the loophole until it’s too late.
Provision Permits Care Without Coverage
Under the ACA, if families who obtain subsidized health plan coverage through the exchanges fail to pay their premiums, they have a three-month grace period before the policy is cancelled. However, insurers are responsible only for paying claims during the first month of that grace period.
During the other two months, families are asked to pay their doctor’s bill or their insurance premium if they seek health care services. However, if they do not pay either bill, physicians are left to cover the cost of the treatment.
Such families would face a tax penalty for missing payments, but they would not receive a fine, a premium rate increase or a repayment order. They also would not be barred from purchasing another subsidized plan during the next enrollment period.
A ‘Laudable’ Design With Flaws
“I believe this part of the law was designed for logical and laudable reasons,” Lisa Folberg — vice president of medical and regulatory policy at the California Medical Association — said.
She explained that the three-month grace period was meant to ensure continuity of care for low-income families who might be between jobs and cannot afford to pay their premiums for a few weeks.
However, she said, “It is not the job of a physician to manage risk. It’s the job of the health plan — that’s its entire reason for existing,” adding, “Here we have case where doctors have to manage risk. That’s where the ACA went wrong.”
Concerns With Loophole
Observers say that while some families might be unable to pay their premiums because of situations such as job loss or divorce, others might avoid paying to take advantage of the loophole.
Meanwhile, physician advocates worry that the provision might prompt many doctors to avoid participating in the exchanges.
“This could potentially be a huge factor for physicians who are deciding whether they want to contract with Covered California,” the Golden State’s health insurance exchange, Folberg said. “They’ll want answers from participating health plans before making their decision.”
If they know about the loophole at all.
According to Folberg, many physicians have “no idea” about the provision and its implications. She said, “When I tell them, they are shocked.”
However, those who do know about the provision might be unable to avoid treating exchange patients. Folberg said that some physicians hold contracts with large health insurers — such as Anthem Blue Cross — that include an “all-products” clause, which requires that doctors treat any patients covered under the health plan.
Even physicians who are not required to treat patients through such contracts likely would continue providing care for patients, even after health plans provide 15 days’ notice that payments will stop for the last two months of the grace period.
Folberg said, “Doctors have legal and ethical obligations not to abandon their patients during course of treatment. A physician isn’t going to stop a round of chemotherapy, and those drugs can cost tens of thousands of dollars or more.”
Paul Phinney — president of CMA — said the loophole “could be very problematic, even to the extent that it may cause some physicians to have to close their practice.”
Leah Newkirk of the California Academy of Family Physicians said the financial implications of the grace period are especially acute for small or struggling practices. Newkirk said, “I think in particular it will impact providers in rural areas and providers who are seeing disadvantaged populations, sort of precisely the people we want to encourage to (buy policies).”
In response to the criticisms by California physician groups, Diana Dooley — secretary of the state Health and Human Services Agency and Covered California trustee — said that state officials have discussed such concerns with the federal government but that federal law provides no flexibility on the issue.
Assessment or Action?
In a notice published in the Federal Register, HHS acknowledged that nonpayment of premiums for certain subsidized policies would “increase uncertainty for providers and increase the burden of uncompensated care.” HHS officials said that the agency will “monitor this issue moving forward and will continue to work on the development of policies to prevent misuse of the grace period.”
However, Folberg said action — on a large or small scale — is needed.
She said that exchange officials could do more to increase the administrative burdens on health plans. For example, health plans could be required to notify patients, along with physicians, of the impending loss of coverage. Health plans might start rebuking the ACA provision because of the extra work, she said.
However, Folberg observed, the surest way to solve the issue is with the help of Congress. If word of the loophole spreads, more physicians can lobby U.S. lawmakers for a change, she said. “This is a federal issue, and the only way to fix it is by changing federal law.”