Special E-Mail Bulletin #2 - February 2001 - California Gets Tough On Late Payment
Special E-Mail Bulletin
Hi, everyone.
In several previous e-mail bulletins I've brought you news about state regulators and insurance commissioners getting tough on healthplans that violate state prompt payment laws. Here's a story from Friday's Orange County Register (Southern California) with information on another state that's begun to crack-down.
California's new Department of Managed Care is issuing its first fine against a late-paying HMO. In this case it's Pacificare, the company that runs Secure Horizons, the nation's largest Medicare HMO program. Also noteworthy is the fact that the state is actually sending someone to go on-site at the tardy payor to oversee compliance.
Certainly this should be good news for California providers but, eventually, also for you in other states. Since California is considered a "bell-weather" state for managed care activities, this is a significant move and a powerful statement for regulators and payors in other states. Hopefully it will mean increased pressure on payors in other states and the enactment and implementation of solid, prompt payment laws in all states.
Until the next bulletin....
Gil Weber
State to fine HMO for late payments
HEALTH CARE: Regulators send an on-site examiner to monitor PacifiCare.
February 23, 2001
By BERNARD J. WOLFSON
The Orange County Register
State regulators will fine PacifiCare of California for delinquent payments to doctors and hospitals, and have sent an on-site examiner to make sure the Cypress-based HMO pays the late bills in full with interest.
Daniel Zingale, director of the Department of Managed Health Care, said Thursday he believes the citation is the first of its kind against a California health plan.
The amount of the fine will be set by the examiner, Zingale said. He did not disclose how much PacifiCare owes.
"It's a persistent problem, and PacifiCare is not the only health plan we are concerned about," he said.
Late payments are "a threat to quality of care," he said, because they distract doctors and "disrupt the financial stability of the health-care system."
The department said PacifiCare violated a state law requiring HMOs to pay medical claims within 45 working days. The past-due claims span most of last year. PacifiCare must pay all the overdue bills, plus interest, within 60 days.
PacifiCare said the late payments did not result from an inability to pay, but from logistical bottlenecks related to a change in its business model.
Over the past year, particularly in its contracts with hospitals, PacifiCare has moved rapidly away from making lump-sum monthly payments, paying instead for each service or procedure rendered. That change multiplied the number of claims it receives.
"In the tight labor market that exists in Orange County we weren't able to hire claims examiners fast enough to keep up with this temporary bubble," said Nancy Monk, a PacifiCare vice president.
But PacifiCare is addressing the problem, she said: It has hired 72 new claims processors, added extra night shifts, offered incentives for people willing to work overtime, and upgraded its ability to handle claims electronically.
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