Special E-Mail Bulletin
October 2000
More on Prompt Payment Legislation
Special E-Mail Bulletin
Hi, everyone. State legislatures continue to flex their muscles in the battle to insure prompt payment of provider claims. Here's the latest from the October 9 issue of American Medical News. Note the interesting approach California is taking to enforcement and penalties.
Gil Weber
Health plans under payment pressure as states get tough
California may be the strictest, but other states also are stiffening prompt-pay laws to make sure that HMOs pay when laws are violated.
By Cheryl Jackson, AMNews staff. Oct. 9, 2000.
Doctors, hospitals and other providers in California might find that health plans that have been the slowest and most inadequate in paying claims suddenly are among the first to put checks in the mail.
Lawmakers recently passed a bill that would allow the state to make plans with a pattern of slow payment pay future claims within a shorter time span than mandated for other plans. Under California's current prompt-pay law, HMOs have to pay or deny claims within 45 days, while PPOs have 30 days to pay or deny.
California's law seems to be the nation's toughest, but the state is by no means the only one that has decided its prompt-pay law needs more teeth.
Minnesota, New Mexico and New Jersey are among the states that tweaked legislation to make it tougher on health plans.
Florida recently retooled its law, establishing a system in which physicians can submit their complaints against HMOs to a mediator, who would make a recommendation to a state agency. That agency would then decide how much, if anything, an HMO owes to physicians, and have the authority to enforce that order. In addition, HMOs also can bring complaints against physicians to the agency if insurers believe they've overpaid the doctors.
In other states, such as New York and Georgia, insurance departments are interpreting laws in ways to bring harsher punishments to health plans that don't follow prompt-pay laws.
Checking for patterns California's law is unique in that it will monitor plans much like a corrections system watches parolees.
California's Dept. of Managed Health Care will track plans and their payment histories and enforce current prompt-pay laws. It will also determine whether a plan has a sub-par record of payment after an investigation brought about by complaints from physicians or other providers.
The state would be able to make a plan speed up payments if it has a pattern of slow payment, unfair denial of payment, downcoding or other irregularities, including failure to include interest penalties when paying claims late. If the managed care plan later determines it paid a claim it shouldn't have, the onus is on the plan to prove there was a mistake. The managed care department can require the special fast-track payment for up to three years.
Also, the penalty for late payments would increase to 15% from 10%.
The new law, which would take effect in July 2001, is crucial to the survival of hospitals in California, where health plans owe hospitals about $1 billion in overdue claims payments for services already rendered under contract and with preauthorization, said Jan Emerson, spokeswoman for the California Healthcare Assn., the hospital group that led the charge for the legislation.
Late payment from HMOs has contributed to about 64% of California hospitals losing money from patient care operations, Emerson said. Managed care accounts for about 85% of the commercial market in the state.
"With the penetration of managed care in California, many physician practices are on the margin, and slow payment or downcoding makes the difference as to whether many practices and medical groups will sink or swim," said Norm Plotkin, associate director of government relations at the California Medical Assn.
Doctors and hospitals appear to have no qualms about forcing some plans to pay more quickly than others, even if it means plans sometimes will pay for overblown bills from providers. But to appease the HMO industry, the bill also calls for a state study of the billing practices of physicians and other providers.
"We're happy because the way it was first introduced, it was a very punitive bill," said Bobby Pena, spokesman for the California Assn. of Health Plans. "I think what we were able to get across to people is that all parties have a role to play in the payment and billing process, both good and bad."
"For the first time, this bill really puts into state law an acknowledgement and a review process should providers, hospitals and physicians be bad actors in the billing process, and it continues to allow health plans to review bills to make sure it was fair and accurate," Pena said.
He said it is often health providers that contribute to problems in billing and claims payment, sometimes through overbilling.
"Over the last year when we were talking about problems in billing and payment, the majority of the problems you were going to read in the media were brought on by providers and hospitals," Pena said. "If a health plan is acting inappropriately, then they should be reviewed and ultimately punished if they need to be. But providers and hospitals with overbilling and unnecessary and inappropriate care need to be looked at."
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