AMA Issues Grace Period Guide to Assist Physicians

The American Medical Association (AMA) announced new resources to guide physicians on navigating a little known rule in the Affordable Care Act (ACA) that could pose a significant financial risk for medical practices. The rule published by Centers for Medicare & Medicaid Services (CMS) provides individuals that purchase subsidized coverage through the state insurance exchanges a 90-day grace period before their coverage is cancelled for non-payment.

Under the CMS rule, insurers in health exchanges are required to pay any claims incurred during the first 30-days of the grace period, but insurers are not required to pay claims incurred during the last 60-days for any patient whose coverage is terminated. Patients are considered to be covered for care during the entire grace period, but insurers are allowed to place all the claims during the last two-thirds of the period in a pending status and retroactively deny them when coverage is terminated at the end of the grace period.

As such, the grace period rule imposes a great risk for uncompensated care on physicians and their medical practices.

https://download.ama-assn.org/resources/doc/washington/x-pub/grace-period-step-by-step.pdf

https://download.ama-assn.org/resources/doc/washington/x-pub/grace-period-collection-policies.pdf

https://download.ama-assn.org/resources/doc/washington/x-pub/grace-period-model-financial-agreement.pdf

https://download.ama-assn.org/resources/doc/washington/x-pub/grace-period-notice-to-patients.docx

About the Author

Reed Tinsley CPA

This article is written by Reed Tinsley, a Houston, TX-based CPA with over 30 years of experience advising physicians and medical practices across Texas and the United States. Reed holds certifications as a Certified Valuation Analyst (CVA), Certified Healthcare Business Consultant (CHBC), and Certified Financial Planner (CFP), specializing exclusively in the healthcare sector. He is a published author, nationally recognized speaker, and trusted advisor to physicians on accounting & tax, practice management, and financial planning. Schedule a Free Consultation.