The ACA's Ban on Rescissions of Coverage: When an Insurance Company Can (and Can't) Cancel a Policy (45 CFR § 147.128)

Rescission, canceling coverage retroactively, exposes patients and practices to sudden financial risk and claim denials. Under 45 CFR § 147.128, plans and issuers cannot rescind a policy except for fraud or intentional misrepresentation of material fact, and they must provide 30 days’ advance written notice before the rescission takes effect. Cancellations for nonpayment of premiums or timely contributions are not treated as rescissions under this rule. For small practices, operationalizing a 30-day alert, freezing billing and scheduling as needed, and documenting payer communications can prevent uncompensated care and support patients as they contest improper cancellations. This article turns § 147.128 into clear clinic workflows.

Small clinics often learn of a coverage problem only after a denial arrives, too late to manage financial exposure or help the patient. The rescission rule in 45 CFR § 147.128 shifts that dynamic by requiring advance notice when an issuer intends to cancel coverage retroactively for fraud or intentional misrepresentation. If your team can spot the notice immediately, pause affected transactions, and organize the right evidence, you can stabilize the visit plan, protect the patient from surprise costs, and reduce write-offs. The sections below define rescission precisely, outline who enforces the rule, and provide a lean playbook sized for front-desk, billing, and a single compliance lead.

Legal Framework & Scope Under 45 CFR § 147.128

What a rescission is (and isn’t). A rescission is a cancellation or discontinuance of coverage that is retroactive. The rule prohibits rescissions except where the individual (or someone acting for the individual) committed fraud or made an intentional misrepresentation of material fact prohibited by the plan. Importantly, retroactive terminations due to nonpayment of premiums or contributions are not rescissions under this regulation. That distinction matters for workflows: nonpayment follows normal termination timelines, while rescission triggers special notice and patient rights.

30-day advance written notice. Before rescinding, the plan must provide at least 30 days’ advance written notice to each participant/beneficiary/enrollee whose coverage would be rescinded. This window gives the patient time to contest the decision or secure alternative coverage. For clinics, the notice is a signal to adjust scheduling and to help the patient navigate options without losing continuity of care.

Fraud vs intentional misrepresentation. The terms are narrow. Fraud is deceit for gain; intentional misrepresentation requires deliberate false statements about material facts (e.g., knowingly listing an ineligible dependent, intentionally concealing other coverage). Ordinary mistakes, incomplete knowledge at the time of application, or changes in circumstance not willfully concealed generally do not meet this threshold.

Relationship to other ACA market reforms. While grievance/appeal rights, preventive coverage, or surprise billing have their own rules, rescission stands alone to police retroactive cancellations. Clinics should treat rescission notices as a special “risk event” under § 147.128 and avoid conflating them with routine denials or benefit disputes.

Value for operations. Understanding § 147.128 lets your team differentiate: (1) nonpayment terminations (no rescission), (2) retroactive cancellations for alleged fraud or intentional misrepresentation (rescission), and (3) eligibility changes without retroactivity (ordinary changes). That triage reduces administrative friction and anchors the right response within the 30-day window.

Primary oversight. For fully insured individual and small-group policies, state insurance departments are the first line of enforcement, with federal oversight (e.g., HHS/CCIIO) ensuring compliance with ACA market reforms. Self-funded ERISA group health plans fall under DOL/EBSA oversight for plan administration, while HHS ensures adherence to the market-reform standard embedded via the Public Health Service Act.

What triggers reviews.

• Patterns of retroactive cancellations absent documented fraud or intentional misrepresentation.

• Rescissions lacking 30-day advance notice to the affected person(s).

• Evidence that issuers used rescission to manage loss ratios (e.g., selective retro cancellations around high-cost claims).

• Consumer complaints alleging that a simple mistake or data mismatch was treated as intentional misrepresentation.

What regulators expect from practices. Although the obligation sits with plans, regulators recognize that providers hold critical evidence: eligibility screenshots, notice copies, contact logs, and clinical scheduling records showing the harm of retroactivity. Well-organized files strengthen patient complaints and investigations while protecting your revenue cycle.

Below are lean, non-redundant controls tailored to § 147.128. Each item includes implementation guidance, evidence to retain, a low-cost method, and the legal anchor.

Coverage Status Sentinel (central tracker)

• Implement: Create a single spreadsheet or EHR dashboard to log payer eligibility checks, key dates, and any rescission notices. Include fields for “notice date,” “effective rescission date,” “30-day deadline,” “freeze scope,” and “patient outreach done.”

• Evidence: Dated screenshots of eligibility queries, scanned notice letters, and call logs.

• Low-cost: Shared drive spreadsheet with conditional formatting for the 30-day countdown.

• CFR tie-in: Tracks compliance actions under 45 CFR § 147.128(a)(2) (advance notice).

30-Day Countdown & Freeze Protocol

• Implement: Upon receipt of a rescission notice, auto-calculate the 30-day mark; freeze elective services and hold claim submissions for dates of service within the look-back risk window unless medically urgent. For urgent care, proceed, but set the account to “payer dispute pending.”

• Evidence: Account “hold” flags, scheduling notes, and the countdown log.

• Low-cost: Two EHR flags: “Rescission-Watch” and “Medically Necessary, Proceed.”

• CFR tie-in: Operationalizes the advance notice right in § 147.128(a)(2).

Misrepresentation Triage Grid (intake vs claims)

• Implement: Use a one-page grid to classify the issue:

• Application data errors (e.g., knowingly adding an ineligible dependent) → potentially intentional misrepresentation if willful.

• Provider claim corrections (e.g., coding changes) → not grounds for rescission; unrelated to the patient’s application.

• Ordinary life changes (address, employment) disclosed timely → not fraudulent.

• Evidence: Patient intake questionnaires, date-stamped updates, and e-mail acknowledgments.

• Low-cost: Laminated decision tree at front desk and billing desks.

• CFR tie-in: Distinguishes the narrow rescission basis under § 147.128(a)(1).

Rescission Payer-Dialogue Script

• Implement: Standardize a script for calls: confirm whether the action is (a) nonpayment termination (not a rescission) or (b) rescission for fraud/intentional misrepresentation; request written notice, evidence summary, and the exact effective date. Ask for directions to submit patient evidence.

• Evidence: Call logs with names, dates, and summary; copies of the plan’s written notice.

• Low-cost: One-page script and a templated fax/e-mail request.

• CFR tie-in: Enforces the plan’s duty to provide advance written notice under § 147.128(a)(2).

Patient Evidence Pack

• Implement: Help the patient assemble documentation rebutting “intentional” elements (e.g., proof of dependent eligibility, prior disclosures, timely updates). Attach your eligibility screenshots and appointment logs to show reliance.

• Evidence: Consolidated PDF with index, including the plan’s notice and the patient’s statement.

• Low-cost: Use your scanner and a file-naming convention (YYYY-MM-DD_Patient_RescissionPack.pdf).

• CFR tie-in: Supports the patient’s defense against rescission except where fraud/intent exists (§ 147.128(a)(1)).

Alternative Coverage & Financial Bridge

• Implement: If rescission proceeds, offer a short self-pay policy with hardship accommodations and refer the patient to marketplace or Medicaid navigators. Set payment plans only after presenting a good-faith cost snapshot for upcoming medically necessary visits.

• Evidence: Signed financial assistance or payment plan agreements; navigator referral confirmation.

• Low-cost: Single-page self-pay and hardship templates.

• CFR tie-in: While not mandated by § 147.128, this protects patients during the 30-day window and documents reasonable clinic mitigation steps tied to the rescission event.

Post-Event Root Cause Check

• Implement: After any rescission case closes, conduct a 10-minute review: did intake questions elicit accurate application-relevant information? Did staff document updates? Do we need a new question to surface a common misunderstanding?

• Evidence: Brief memo with action items and template updates.

• Low-cost: Add a section in your monthly compliance huddle.

• CFR tie-in: Sustains ongoing compliance tied to the rescission boundary in § 147.128.

Case Study

A small primary-care clinic receives a letter stating that an established patient’s individual policy will be rescinded retroactively in 30 days due to alleged misrepresentation about dependent eligibility. The clinic’s Coverage Status Sentinel triggers the 30-day countdown and applies a freeze on nonurgent future services while the patient contests the notice. Using the Rescission Payer-Dialogue Script, the billing lead confirms it is a rescission (not nonpayment), requests the evidence summary, and secures the effective date.

The front desk assembles a Patient Evidence Pack: the patient’s intake forms showing the dependent’s full-time student status at enrollment, date-stamped e-mails updating the plan when the dependent graduated, and an eligibility screenshot from two months prior showing “active coverage.” The pack also includes upcoming appointment necessity notes.

Within two weeks, the issuer reviews the submission and withdraws the rescission, citing adequate proof that the original entry was not an intentional misrepresentation. Because the clinic froze elective care but continued medically necessary visits under a risk-flag, no financial harm occurred. The post-event review adds one intake question (“Has your dependent’s status changed since last visit?”) and a tick box in the eligibility screen for “rescission watch resolved.”

Risk Traps & Fixes Under 45 CFR § 147.128

Even experienced teams stumble when rescission notices blur with ordinary terminations. These targeted fixes keep your clinic aligned with the rule.

• Trap: Treating any retroactive cancellation as “nonpayment.”
  Fix: Verify whether the payer alleges fraud/intentional misrepresentation and whether a 30-day advance written notice was issued; only nonpayment is outside rescission. Reference: 45 CFR § 147.128(a)(1)–(b).

• Trap: Continuing elective services after a rescission notice without a plan.
  Fix: Trigger the 30-day countdown and freeze elective services; for necessary care, proceed under a risk flag and inform the patient of potential financial exposure. Reference: 45 CFR § 147.128(a)(2).

• Trap: Assuming coding discrepancies equal “misrepresentation.”
  Fix: Distinguish application misstatements (patient-level facts) from post-enrollment claims issues; coding errors are not grounds for rescission under § 147.128. Reference: 45 CFR § 147.128(a)(1).

• Trap: Missing documentation of eligibility checks and notices.
  Fix: Save screenshots and notice PDFs to the patient account; maintain a shared log for audits and patient complaints. Reference: 45 CFR § 147.128(a)(2).

• Trap: Not requesting the plan’s evidence summary.
  Fix: Use the payer-dialogue script to request the factual basis and effective date; diarize response deadlines. Reference: 45 CFR § 147.128(a)(2).

• Trap: Failing to update intake to catch recurring issues (e.g., dependent status).
  Fix: Add targeted questions and a quarterly review of rescission root causes. Reference: 45 CFR § 147.128 (ongoing compliance intent).

When these fixes are built into intake, eligibility, and billing routines, clinics can rapidly separate true fraud cases from errors, uphold patient rights under the 30-day notice rule, and avoid preventable write-offs.

Make rescission an incident type with a named owner. The Billing Lead (or Compliance Designee) should manage the Coverage Status Sentinel, run a monthly 10-minute rescission review, and report two metrics: (1) rescission notices handled with a full 30-day workflow, and (2) percentage resolved favorably for the patient (rescission withdrawn or changed to prospective termination). Add rescission to your new-hire training (five minutes on what a rescission is, where to file notices, how to tag the account). Finally, build a one-page playcard: “If a rescission letter arrives, do these five things today.”

Rescissions are rare but high-impact. The ACA limits them strictly to fraud or intentional misrepresentation of material fact, and mandates 30 days’ advance written notice. Clinics that detect notices instantly, freeze nonurgent activity, and assemble a credible Patient Evidence Pack can steady care, protect their revenue cycle, and help patients assert rights the rule guarantees.

Next steps for the coming week

• Publish your Coverage Status Sentinel and set conditional formatting for 30-day deadlines.

• Train front desk and billing on the rescission vs nonpayment distinction and the freeze protocol.

• Load the payer-dialogue script and Patient Evidence Pack template into your shared drive.

• Add two intake questions to catch common misstatements (e.g., dependent status, other coverage) and teach staff where to store updates.

• Schedule a five-minute “rescission huddle” in your monthly compliance review to keep the practice sharp.

• 45 CFR § 147.128 — Rescissions

• Patient Protection and Affordable Care Act; Interim Final Rules for Group Health Plans and Health Insurance Coverage Relating to Preexisting Condition Exclusions, Lifetime and Annual Limits, Rescissions, and Patient Protections

• Department of Labor (EBSA) — ACA Implementation FAQs (rescissions and market reforms)

• Center for Consumer Information & Insurance Oversight (CCIIO) — Market Reform Guidance