Focus on health care reform: Advanced Premium Tax Credit grace period explained

As we’ve been telling you in our newsletters and through various informational sessions, health care reform will bring many changes to the industry and these changes will impact your daily business.

The Patient Protection and Affordable Care Act mandates a three-month grace period for Marketplace-purchased individual insurance policies that receive a premium subsidy from the government and are delinquent in paying their portion of premiums. The grace period applies as long as the individual has previously paid at least one month’s premium within the benefit year.

The health insurance plan is only obligated to pay claims for services rendered during the first month of the grace period. PPACA specifies that the health insurance plan may pend claims during the second and third months of the grace period.

If this happens, health care providers will notice this special message, during months two and three of the grace period, when they check eligibility on web-DENIS or on CAREN:

Contract is active but not current. Claims will be held until the member makes the appropriate payment to bring the contract to a current status, or until payment is no longer accepted and the coverage is terminated. There is no guarantee of payment for services rendered during this time period.

The Blues’ policy for the grace period is as follows:

• For claims with dates of service during the first month, Blue Cross Blue Shield of Michigan and Blue Care Network will process and pay otherwise covered claims as though the premium had been paid.
• For claims with dates of service during the next two months, BCBSM and BCN will pend claims for members who are receiving the Advanced Premium Tax Credit and are delinquent with premium payments.
• If the member pays the premium payment in full by the end of the grace period, BCBSM and BCN will process the pended claims in accordance with the member’s benefits.
• If the member fails to pay by the end of the grace period, their coverage will be terminated effective the end of the first month of the grace period. All claims that are pended during months two and three will be rejected as “member ineligible”.

Here are the direct impacts to health care providers:

• During the months two and three of the grace period, providers will see the special message noted above on the first web-DENIS eligibility screen. When this happens, providers may require these members to make payment in full at the time a covered service is rendered, up to BCBSM’s (or BCN’s) allowed amount.
• If the member pays the premium in full before the end of the third month of the grace period, the Blues will pay the pended claims to the provider. The provider will then need to refund the member any payments for covered services in excess of the liability communicated on the remittance advice (within 60 days, as per BCBSM and BCN policy).

Because this only applies to members who purchase health insurance through the Health Insurance Marketplace and receive a federal premium subsidy, you won’t see this until 2014. However, we wanted to be sure you were aware of the change in advance. We’ll continue to provide updates on issues related to reform.

The information in this article does not apply to pharmacy providers.

Continue to watch The Record and BCN Provider News for more reform information in the upcoming months.