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Should Doctors Fear This Little-Known Obamacare Change?

By Michael Douglass and Dave Williamson - Mar 22, 2014 at 8:41AM

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

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 ( HCA 2.07% )Tenet Healthcare ( THC 3.76% ), and LifePoint Hospitals ( LPNT ).

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Tenet Healthcare Corp. Stock Quote
Tenet Healthcare Corp.
THC
$75.36 (3.76%) $2.73
HCA Healthcare, Inc. Stock Quote
HCA Healthcare, Inc.
HCA
$238.60 (2.07%) $4.83
Community Health Systems, Inc. Stock Quote
Community Health Systems, Inc.
CYH
$12.01 (1.26%) $0.15
LifePoint Health, Inc. Stock Quote
LifePoint Health, Inc.
LPNT
Envision Healthcare Corporation Stock Quote
Envision Healthcare Corporation
AMSG.DL

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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