The federal healthcare exchange,, will serve as the marketplace for coverage for many Americans; it also provides specific information on plan options by state.


Published 12/1/2013
John Froelich, MD; Roshan Shah, MD, JD; the Washington Health Policy Fellows

Health Insurance Exchanges: What They Mean to You

To continue to fully serve their patients, orthopaedic surgeons must determine how to successfully implement the provisions of the Affordable Care Act (ACA) into their practices. A key component of the ACA is the establishment of a marketplace or “exchange” that will be available for all citizens to purchase individual, family, or small business health insurance policies. The open marketplace of the exchange is designed to provide cost transparency as well as access to several different health insurance plans in one centralized location.

Exchanges are managed either by the federal government or by the state; more than half the states have defaulted to federal management of their exchanges. The number of insurance carriers and policies available for each state may be significantly different, depending on the interest of insurance companies in entering that market. Some states have several participating providers that offer more than 100 different specific plan options to residents. Other states are struggling to offer residents more than 10 coverage options.

All of the plans presented in the exchange must offer 10 basic services, including basic screening and routine health maintenance exams.

The federal subsidy
One key difference separates policies available through the exchanges from those purchased directly in the marketplace: Only policies purchased in the exchange qualify for federal subsidies. Additionally, small businesses hoping to obtain a tax credit for providing insurance to their employees must purchase policies through the exchanges.

Individuals and small businesses must meet some very basic thresholds to qualify for a subsidy or tax credits. For family policies, the income threshold for a premium subsidy is no more than 400 percent of the federal poverty level, or approximately $94,000 for a family of four. Tax credits are available to small businesses that employ fewer than 25 full-time employees, with an average salary less than $50,000, excluding the owner(s).

More information on qualifying for either premium subsidies or tax credits is available directly from the exchange.

Open enrollment
Open enrollment started on Oct. 1, 2013, and runs through March 31, 2014. Beginning in 2014 and each year thereafter, the enrollment period will be Oct. 1 through Dec. 15.

For coverage to start on Jan. 1, 2014, individuals must enroll by Dec. 15, 2013. To avoid paying a fine for not having coverage, individuals must enroll by March 31, 2014.

Although plenty of information is available for individuals (patients), significantly less information is available for providers, particularly on how the exchanges will affect their practices. The lack of information is primarily due to the degree of uncertainty that still surrounds implementation of the ACA and to the variability among medical practices. However, two key issues—reimbursement and the grace period—will affect every practice, and physicians should be aware of them moving forward.

Whether physicians will be reimbursed differently under these new plans is often unclear. However, all claims for individuals who purchased insurance through the exchange will go directly through the appropriate insurance company and not through the government. In addition, many insurance companies are developing new, exchange-specific policies, which may have smaller, more closely controlled provider networks.

For example, an orthopaedic surgeon may accept insurance from company XYZ, but not be part of the XYZ network for the company’s policies sold through the exchanges. Some insurance companies have begun to rename or specify their exchange products to help decrease the confusion for patients and providers. Orthopaedic surgeons who have not spoken with their major carriers about exchange-specific policies should take this opportunity to reach out and discuss any changes in reimbursements and access for these plans.

Grace period
One of the biggest risks for physicians involved with the exchanges is the newly designated 90-day grace period for making premium payments. Under this provision, patients with subsidized exchange policies will have a 90-day grace period after their last missed payment to remit their premiums before the policy is cancelled.

As long as covered individuals remit their payment during the grace period, their coverage will be maintained and the provider will not be affected. However, an issue arises if individuals default on their payments.

During the first 30 days of the 90-day grace period, insurance companies must pay for all services rendered—even if the patient ultimately defaults on payments. For care rendered during days 31 through 90, the company will label any claims as “pending”; if the patient defaults at the end of the 90 days, the insurance company will not pay any pending claims to the provider.

This becomes problematic if a patient presents a “valid” insurance card, but is, in fact, outside the initial 30 days of the grace period. The Centers for Medicare & Medicaid Services (CMS) final rule requires insurance companies to notify providers of any patients who have exceeded the initial 30 days of the grace period, but does not outline how and when this information must be communicated.

Providers and hospitals are concerned that they may be informed too late in the process to avoid absorbing bad debt for services provided. For example, a physician sees the patient on day 25 of the grace period. The company approves a scheduled surgery, which is performed on day 40—10 days into the “pending” period. However, the physician is not notified that the pending period has begun until 2 weeks after the surgery was performed. If the patient eventually defaults, the surgeon will not be reimbursed by the company for the services provided.

In such a situation, the practice would be responsible for absorbing the cost and would likely need to bill the patient directly. Placing this risk on the provider may have unintended consequences on patient care. For example, practices may begin to require proof of premium payment from all patients prior to surgery or may limit the number of patients insured under an exchange policy. The American Medical Association is working with CMS to change this policy to deflect some of the risk from providers.

Time will tell
As implementation of the ACA moves forward, the health insurance exchanges will provide individuals with access to more insurance options in a central location. Providers should be aware that the insurance obtained through the exchanges may include smaller coverage networks. In addition, reimbursements may change, and providers who participate may face increased financial risk associated with the 90-day grace period.

Although the exchanges are still in their infancy, they are surrounded by questions; only time will tell their full impact on patient access to care.

John Froelich, MD, and Roshan Shah, MD, JD, are the 2011–2012 Washington Health Policy Fellows (WHPF). For a complete list of the WHPF, visit

Disclosure information: Dr. Froelich—no conflicts; Dr. Shah—Pfizer; Merck; GlaxoSmithKline; Alnylam; Intuitive Surgical.