Three Month Grace Period Mandated for Delinquent Consumers Who Receive Obamacare Subsidies

    Though the Obama administration has been promoting the benefits of Obamacare for several years now, one perk of coverage through the exchanges that has gone largely unnoticed is a mandated three-month grace period for unpaid premiums.  The rule, however, only applies to those receiving subsidies via tax credits advanced to the insurers by the government (§155.430 and §156.270 of the Code of Federal Regulations.)

    Perhaps most notable about the rule is that, as long as a consumer has paid at least one full month's premium during the year, the insurer must continue to pay claims for services rendered during the first month of the grace period after a premium goes unpaid.  Further, even if coverage is eventually terminated, the effective date must be the last day of the first month of the grace period. The consumer thus receives a free month of coverage for which no direct premium was paid.  The insurer is compensated only to the extent of the advance payment of the tax credit for that month.  The tax credits for the second and third months of the grace period, which the insurer is mandated to continue to collect from the government, must be returned to the government if coverage is ultimately cut off.

    Other burdens relative to delinquencies are placed on the insurers as well.  The insurer must notify not only the consumer of past due status, but HHS as well.  Also, while any claims submitted during the second and third month of the aforementioned grace period may be held by the insurer pending payment from the consumer, the insurer is required to notify providers that claims may be ultimately denied if the grace period expires.

    The regulations do not specify a minimum subsidy required for this regulation to take effect, so even a consumer whose subsidy represents only a small portion of the monthly premium may benefit from the extended grace period.  Also not spelled out in the rules is whether the insurer has any legal recourse for the unpaid premium for the month during which coverage was extended.  Nor is it clear if HHS has recourse against the consumer for the tax credit paid to the insurer for that same month.

    The implementation of the advance payments of tax credits to insurers on behalf of consumers is one of the tasks of Obamacare's financial management system, which is still under development as Deputy Chief Information Officer Henry Chao for the Centers for Medicare and Medicaid Services (CMS) told Congress on Tuesday.  Chao testified the system was approximately 60% complete.  However, as we reported on Thursday, the contract for the financial management system was just awarded this past August on a no-bid, emergency basis.  At the time of the award, CMS admitted that its acquisition of "contractor financial services to assist CMS in developing and testing its Marketplace financial activity implementation solution is already minimally two months overdue[.]"  It is not clear if the 60% figure Chao used on Tuesday includes the testing of the system or simply the development phase.

    Less than six weeks remain before the system will need to go live and, among a multitude of other financial tasks, begin remitting funds to insurers on behalf of consumer who purchase coverage through the exchanges.  CMS does not appear to have an alternative if the system is not ready.  In CMS's own words from the August contract award notification, the consequences, "financial and other," of such a failure would be "severe."


Note: A version of this article first appeared at The Weekly Standard.

UPDATE:  After I wrote my article for The Weekly Standard, I found that Reason had already covered this topic earlier in November.

Maryland Obamacare Exchange: 'No Doctors Are Found'

    "If you've got a doctor that you like, you will be able to keep your doctor," President Obama assured the worried public as he worked to sell the Affordable Care Act in 2010.  However, in July 2013, visitors to Healthcare.gov received a less confident "you may be able to" in answer to the question, "Can I keep my own doctor?"  Beginning October 1, users of the Maryland Health Connection, that state's Obamacare insurance exchange, might have an even more basic question: Are there any doctors?
    A consumer information update dated the day the exchange opened informed users (at least those who took the time to read the updates) that the doctor search function was not yet operational and they would need to visit an external website to find out which doctors accept which plans.  The full update reads as follows [emphasis added]:

Search for your physician. If you are interested in understanding which health plans a particular doctor participates in, please visit https://providersearch.crisphealth.org  – a new service sponsored by Maryland Health Connection. For the time being, doctors and other providers are not yet available in Maryland Health Connection; therefore, if you choose to search for them on the website, you will receive a message that “no doctors are found” message.

     This update and several other consumer updates might help explain why as of noon on Monday, October 7, only 326 people in the state had successfully completed the application process. For example [emphasis added]:

REVIEW OUT-OF-POCKET COSTS CAREFULLY 

The application’s built in calculator may underestimate total out-of-pocket costs in some cases. Remember that if you are eligible for reductions in cost sharing, only silver plans will qualify. So a bronze plan might cost less in premium, but more in total out of pocket cost. We expect this to be fixed in the very near future, so if you would prefer, please check back in the next several weeks.

SHOP ONE PERSON AT A TIME 

In some cases, the application has trouble processing multiple applications at once. In case this happens to you, there is a solution: shop for each person separately. The price will be the same as if you are shopping together 

 SALARY CALCULATION 

Please calculate your salary using annual, weekly, quarterly or monthly calculations. Our application is currently miscalculating the bi-weekly salary. You will be able to see the calculated salary to ensure that the information you input is correct.

    The consumer update page does not yet indicate that any of these issues have been resolved.


Note: A version of this article first appeared at The Weekly Standard.

Obamacare Website Admits: You May Not Be Able to Keep Your Plan

    On the very day the Obamacare insurance marketplaces opened for business, a new topic appeared on the HealthCare.gov website:

    Although the topic was just added, it is already listed as "most popular":

    The write up on this new topic begins:

Starting 2014, most individual plans must offer new benefits and protections. Some plans will be changed or replaced with plans that offer these protections. 

If this happens, you can choose to buy a plan in the Health Insurance Marketplace instead. If you switch to a Marketplace plan, you may qualify for lower costs based on your income.

    Further down, the post states:

Your plan or choices may change
Given the changes required in 2014, insurance companies offering individual plans have two choices:

• They can make changes to your plan to provide these benefits. If they do, you’ll see these changes to your plan by the time you renew during 2014. For example, if your renewal date is in July 2014, you’ll see the changes no later than July.

• Your insurance company may decide to offer you other individual plans rather than renew the particular plan that you have today.

    While the post says that "insurance companies offering individual plans have two choices," this does not take into account that some insurance companies will simply choose to cancel the plan and not offer any alternatives, as some have already done.
    President Obama and his supporters have been insisting since before the Affordable Care Act was signed into law that if "you like your plan", you can keep it.  Now that the Marketplaces are open, the administration is finally acknowledging that that will not always be the case.
 

Note: A version of this article first appeared at The Weekly Standard under the headline "New Topic on HealthCare.gov: What If My Plan is Not Offered in 2014?" 

Obamacare Marketplaces Will Function as Payment Clearinghouses for Insurers

    As full implementation of the Affordable Care Act draws nearer, some aspects of its operation have received relatively little attention.  The October 1 launch of the marketplaces, or exchanges, is less than a week away, but outside of offering a Price Line-like shopping experience for health insurance, not much has been released about their function once a plan is chosen.  Although, the marketplaces have been primarily promoted as a place to shop for, compare, and choose coverage, they will actually function as payment clearinghouses as well.
    According to Betsy Charlow, the Communications Manager for the Maryland Health Connection, Maryland's marketplace, businesses that purchase coverage for employees through the Small Business Health Options Program (SHOP) will have an ongoing relationship with the marketplace, unlike individuals who will be passed on to private insurers soon after chosen policies are in place.
     "All employer bills get handled by Maryland Health Connection (federal requirement) regardless of whether it's employee choice or employer choice," said Ms. Charlow via email.  "Individuals who purchase can make their first premium payment on Maryland Health Connection or they can elect to pay the carrier directly. For all subsequent bills, the carriers would send these to individuals directly."
    One of the apparent reasons for the ongoing relationship of businesses with the Marketplace is the opportunity businesses will have to offer a variety of plans from different insurers to employees, yet have the convenience of a single bill. (This option will not be available on the federal government's Marketplace until 2015.) Again by email, Ms. Charlow said, "According to Tequila Terry, director of plan and partner management, the employer would not get multiple bills. The SHOP would aggregate all carrier bills so the employer can make one payment. The Maryland Health Benefit Exchange would then distribute payment to the appropriate carriers on behalf of the employer."
    Given that the security of the marketplaces and the data they will be collecting has been called into question in recent months, the revelation that not only will the exchanges be collecting personal and health information on individuals but financial information as well to facilitate payments could give rise to further concerns.  An email inquiry to Ms. Charlow regarding methods of payment to be available on the Maryland Health Connection (credit card, debit, check) has not yet been answered.
    Although the operation of the Maryland marketplace likely mirrors the operation of other state-run exchanges, not all states are operating their own marketplaces.  The federal government will be operating marketplaces for the non-participating states through the Healthcare.gov website.  Earlier in the month, THE WEEKLY STANDARD reported on a no-bid, emergency contract awarded in August to a Pennsylvania firm to provide a "financial management services system" for the Centers for Medicare & Medicaid's (CMS) operation of the marketplace.  The award noted:

With the impending and mandated October 1, 2013, Marketplace enrollment and January 1, 2014 go-live deadlines nearing, CMS' need for contractor-provided financial management services has reached an unusual and compelling level of urgency. The prospect of a delay in implementing the Marketplace by the operational date of January 1, 2014, even for a few days, would result in severe consequences, financial and other. 

    The contract description of the services required included accounting, printing and mailing, tracking of accounts receivable and accounts payable, documenting funds collected by CMS, data validation, debt management functions, and referral of debt to the Department of the Treasury, among others.  When inquiry was made to CMS about how these services related to the function of the federal Marketplace, particularly relative to transactions between consumers and the Marketplace, Richard Olague of the Media Relations Group for CMS replied via email on Tuesday, September 24, "We’re working on getting you more information."  No additional reply has been received as of this time.
    A single-payer national health system has been discussed for decades, but has never gained much popular support.  The structure of the state-run marketplaces, and possibly the federal marketplace, would go a long way in smoothing the path to such a system.  Businesses who use the exchanges will soon be remitting payments to the government for health insurance coverage, and even individuals will apparently have that option for the initial payment on their new policies.  The government already runs huge health insurance programs (Medicare and Medicaid), and the number of persons insured by Medicaid is expected to expand dramatically under the Affordable Care Act.  With more and more persons insured through the government and a growing number remitting payment for insurance through the government, the United States will certainly find itself closer than ever to national healthcare than at any time in its history.


Note: A version of this article first appeared at The Weekly Standard.

Part of Obamacare's Health Insurance Marketplace Taken Offline

    With the launch of the Obamacare Health Insurance Marketplace less than three weeks ago, one of the only functions consumers were already able to access, creating an account, has been taken "offline" for "upgrading."
    In 2010, after Obamacare was signed into law, the Department of Health and Human Services (HHS) created Healthcare.gov, a website designated to answer questions about the new law and eventually serve as the portal for the new health insurance "marketplace" or "exchange" that are a fundamental part of Obamacare.  This summer, the website was relaunched in anticipation of the October 1 opening of the marketplace.  One of the feature added was the ability to create an account to prepare for the open enrollment period that begins at that date:

    However, the link provided now merely takes users back to the main page for individuals.  The reason for this is that on Wednesday, September 11, HHS took the "create an account" feature offline, as the website explains:

Creating an account and logging in: Temporarily off-line 

To get everything ready for Open Enrollment, we’re upgrading the Marketplace account service. You won’t be able to create an account or log in to one you’ve created until Tuesday, October 1.
If you’ve already created a Marketplace account, great! You’ll be able to log in again starting October 1 and start your application for coverage.
If you haven’t created a Marketplace account yet, that’s okay. You’ll be able to do that starting October 1 and get going on your application too.

     There have been reports of technical glitches, delays, and security concerns with the new Marketplaces.  It is unclear of this latest move by HHS is a reflection of those issues.


Note: A version of this article first appeared at The Weekly Standard.

New Website to Answer Obamacare Questions for Businesses Crashes on First Day [TWS]

    Thursday morning, the White House announced a new website to answer questions from businesses about ObamaCare.  Valerie Jarrett announced the launch in a blog post entitled "A One-Stop-Shop on the Health Care Law for Businesses Big and Small."  However, within two hours, the website had crashed, giving users the following error screen:

    With the launch of the exchanges coming up October 1st, the Obama administration has less than two months to show the public it is ready to handle the transition.  This latest snafu will not do much to instill confidence.

Update: The website was operational again after about 1/2 hour.

Note: A version of this article first appeared at The Weekly Standard.