Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Should Doctors Fear This Little-Known Obamacare Change?

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

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

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

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

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/07/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.