Rapid rise in COBRA enrollment creates billing hassles

Physicians can go months without pay while waiting for laid-off patients' coverage to kick in.

By Emily Berry — Posted Sept. 14, 2009

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The federal subsidization of COBRA -- the program that allows laid-off employees to remain insured through their company's health plan temporarily -- has produced two changes for doctors.

One is the fact that more of their patients are staying insured. The other is a rise in physicians' claim-filing and payment hassles.

The rules around COBRA enrollment "definitely create a problem for physicians' offices," said Mike Ertel, president of Ertel & Company, a benefit and insurance firm based in Fishers, Ind.

Getting a laid-off employee onto COBRA isn't always a smooth transition. There often is a gap in coverage that leaves physicians taking a cash flow hit until the COBRA coverage kicks in, or asking patients to pay cash. Experts advise informing patients about your COBRA procedures by telling them individually and by posting signs at your practice.

When patients are laid off, the Consolidated Omnibus Budget Reconciliation Act of 1986 allows them to keep their former employer's group coverage temporarily. The same applies for workers who leave a job voluntarily, get a divorce, or have work hours cut so they are no longer eligible for health benefits.

Under the federal stimulus package passed in February, the federal government is subsidizing COBRA premiums for workers laid off between Sept. 1, 2008, and Dec. 31, 2009, paying 65% of the cost for up to nine months. That made insurance easier for many to afford, and the resulting spike in enrollment has taken even some insurers' actuaries by surprise.

According to a report from Hewitt Associates released in August, the percentage of eligible workers who elected COBRA coverage doubled in the three months after the subsidy passed compared with the previous six months, from 19% to 38%.

Theoretically, the physician's office wouldn't have to do anything differently to get paid for caring for a patient enrolled in health insurance through COBRA. But the enrollment rules create complications, experts said.

For example, say a bank teller is laid off on Jan. 1. She and her family had been enrolled in the bank's health insurance plan. The bank has 30 days to tell the health plan that the employee was laid off. Then the plan has 14 days to send a letter to the employee notifying her she has the option to keep her coverage under COBRA. It's Valentine's Day.

The teller then has at least 60 days to decide whether to opt in. Then it can be another 45 days before she pays the first monthly premium. By now it's June.

If, in the meantime, her doctor has been trying to bill her insurer for care the family received after the layoff, but five months pass before the office can confirm eligibility.

And it gets even trickier: If that laid-off bank employee sends in a form agreeing to opt for COBRA coverage, but then cannot pay the premium, her coverage will be canceled.

Also, if she initially signs a waiver declining coverage and within 60 days changes her mind, she still can sign up, but coverage is not retroactive to her layoff date, but instead begins when she filled out the COBRA election form.

So it's not surprising that it can seem impossible to know when or whom to bill for care. Thomas Simpkins, billing supervisor for Capstone Physician Services, a billing and consulting firm in Tampa, Fla., said it's common for a health plan's records to show that a patient's coverage was terminated, while at the same time the patient says he or she has a letter guaranteeing coverage.

Simpkins said sometimes it helps to fax a copy of the patient's letter of coverage to the insurer, along with the claim. But other times, he said, the best solution is to give the patient the benefit of the doubt, set aside the bill, and wait for the system to catch up.

Ertel agreed that sometimes it's best to wait until eligibility is more or less finalized: "If [staff] calls on Friday [the health plan] could say one thing, and Monday it could say something different, and it could be retroactive."

But Susan Gliatis, a practice management consultant and owner of Central Ohio Practice Management, based in Columbus, said she tells her clients not to wait to find out if a patient is going to elect to continue coverage and will be able to pay the premium.

"A lot of people say they're signing up for COBRA, but it's so incredibly expensive, you're waiting around with a patient telling you, 'We're signing up,' " she said. "A proactive practice will bill the patient directly, or say, 'We can't see you until we confirm current and continued eligibility.' "

She advises her physician clients to treat the patient as a self-pay account -- "and don't let them in the door unless they pay something."

However, the AMA Code of Medical Ethics notes that any physician must give existing patients ample notice of this policy, as well as the opportunity to make alternative arrangements.

Gliatis recommends posting your practice's policy on COBRA where patients can see it -- before it's relevant to them.

"I would just say until eligibility and continued eligibility are verified, you're treated as a self-pay account," she said, although noting that's easier said than done. Gliatis said many of her physician clients specialize in behavioral health, and losing a job is part of the patient's crisis. So the last thing the doctor wants to do is hassle them about their bill.

"Sometimes it's just not practical."

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