The Insurance Marketplace Can Financially Impact Healthcare Providers

The Patient Protection and Affordable Care Act (PAACA) enables individuals — including those who qualify for Medicaid and the Children’s Health Insurance Program (CHIP) — to obtain affordable health insurance through the Health Insurance Marketplace (Marketplace). Some states (e.g., New York) developed their own Marketplace, while other states (e.g., New Jersey) utilize a Federally-Facilitated Marketplace (FFM).

Glitches in the FFM infrastructure have caused enrollment delays. For example, the transfer of eligibility information for new Medicaid enrollees from the Marketplace to the state agencies is not yet functioning properly. Providers will be impacted by this disconnect in that providers could be treating patients who are eligible for Medicaid or CHIP, but might not be able to determine the patients’ eligibility at time of service. There’s no special open enrollment period for Medicaid or CHIP. Individuals can apply in the Marketplace or directly with your state Medicaid/CHIP agency.

Another issue affecting enrolled individuals is the delay in receiving their insurance cards. This delay occurred, in part, because insurance companies were required to extend application deadlines due to the problems with the Marketplace website. This negatively impacts providers, as well. Per Healthcare.gov, if you enroll in a Marketplace plan by the 15th of the month, your coverage can start as soon as the first of the next month. But, if you enroll after the 15th, your coverage might not begin until the first of the month after the next month. For example, if you enroll by February 16, your coverage might not begin until April 1. As a result, providers may experience increased administrative or eligibility denials from insurance companies due to the lack of accurate information at registration.

An even more volatile situation for providers relates to missed or late premium payments. Under employer-based insurance, the premiums often are split between the employee and the employer. In those cases, the employer typically deducts the employee portion directly from payroll and pays the premium to the insurance company on a timely basis.

However, under the Marketplace scenario, individuals have a 90-day grace period before their coverage can be terminated by the insurer for non-payment. The rule applies to individuals in all states who obtain subsidized coverage through the new insurance exchanges. In the first 30 days, the insurer must pay for all incurred claims. However, at the end of the 90 days, if the patient has failed to pay the premiums, the insurer is not required to pay for claims incurred during the last 60 days of the 90-day period. Providers could see an increase in self-pay as a result.

Most non-clinical denials can be prevented by getting as much information as possible at the time of registration. It is more difficult to obtain that information afterwards, especially in the case of outpatient encounters. Providers should review their contracts and familiarize themselves with how these “suspended claims” situations will be handled by their contracted plans under PAACA.