Should Doctors Fear This Little-Known Obamacare Change?

Could this obscure rule make a big dent in hospital and physician profits?

Mar 22, 2014 at 8:41AM

The Affordable Care Act, better known as Obamacare, is well known by now for a variety of changes it is making in the U.S. health care system -- changes such as the Medicaid expansion, the individual mandate requiring people to purchase insurance, and the introduction of the public insurance exchanges for people to shop for said insurance. Scrutiny of the law has increased in the last few weeks as the March 31st enrollment deadline nears.

One of the more obscure rule changes involves a government-mandated 90-day grace period between when people purchase subsidized insurance on the exchanges and when they must pay their first premium to ensure that their coverage continues. At issue is this problem: If the person does not pay their premium, who is on the hook for their medical bills -- health care providers (such as doctors and hospitals) or insurers? The Centers for Medicare & Medicaid Services (CMS) has split responsibility between providers and insurers, with the insurer required to pay for the first 30 days and the provider left with the remaining 60 days' worth. This rule change, which has been in place since 2013, has become more contentious lately due to pushback from physician groups such as the American Medical Association.

In this video, health care analysts Michael Douglass and David Williamson analyze this and other potential risks to hospital stocks like HCA (NYSE:HCA)Tenet Healthcare (NYSE:THC), and LifePoint Hospitals (NASDAQ:LPNT).

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David Williamson has no position in any stocks mentioned. Michael Douglass has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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