States move to strengthen prompt-payment laws
Newer laws give providers more clout
Responding to physician complaints, a growing number of states have enacted new laws requiring health plans to pay providers promptly for their services. If West Virginia, Alaska, Rhode Island, and Oregon pass their first prompt-payment laws this year as expected, it will bring to 45 the number of states with prompt-pay statutes.
"You learn from what’s happened elsewhere," says Michael E. Migliori, MD, past president of the Rhode Island Medical Society. Rhode Island’s proposed legislation, for example, would require that health plans report the status of any claim, an innovation not included in the first round of prompt-pay laws.
What makes a claim clean’?
One of the biggest hurdles facing lawmakers is devising an effective definition of clean claims that will stop health plans from holding up payments unnecessarily or from asking for several resubmissions of the same bill.
Most clean claim definitions "tend to leave far too much latitude for health plans," complains Steve Keene, director of governmental affairs at the North Carolina Medical Society in Raleigh. Instead, he favors the approach taken by the North Carolina legislature, which tries to reduce resubmissions by giving plans only one chance to identify all their problems with a claim.
New Mexico and Alabama, on the other hand, require a plan accept a claim as clean if it is "substantially" free of errors and can be processed without the missing data. This means "if the middle initial is missing but the Social Security number is there and you can identify who it is, it is a clean claim," says Richard Whitaker, director of government affairs for the Medical Association of Alabama in Montgomery.
Despite these efforts, surveys show that 38% of doctors still report that it takes more than 45 days on average to receive payment on a clean claim, according to the American Medical Association (AMA) in Chicago.
"It’s like sending [claims] into a black hole," said Angelo Agro, MD, president of the Medical Society of New Jersey in Lawrenceville.
A new wave of corrective actions are coming from state lawmakers to toughen up their existing laws. For instance, many recent proposals require plans to acknowledge that they have received a claim, explain all their concerns with a contested bill, and immediately pay uncontested parts of the bill.
Timeliness defined by postmark
In addition, the new laws tighten definitions of a "clean" or error-free claim, bar plans from overriding prompt-pay time limits in their contracts, and try to define exactly when a claim is deemed paid. For example, Hawaii specifically states it is the postmarked date on the payment.
Almost every rewrite stiffens enforcement, such as interest rates, fines, or more state monitoring. Interest rates can be as high as 18% per year in Georgia, but most are the 10% range, says the National Conference of State Legislatures in Washington, DC. Here is a list of states that have recently revamped their provider prompt-pay laws:
• New Jersey. Before: Pay clean claims within 60 days. Now: Pay clean electronic claims within 30 days, clean paper claims within 40 days. Before: Plan does not have to acknowledge receipt of the claim. Now: Plan must acknowledge receipt of the claim and cannot add new stipulations when it is resubmitted.
• Alabama. Before: No definition of clean claim. Now: A claim is clean if it is "substantially" error-free and can be processed without more information. Before: No penalty for late payments. Now: Plan must pay 1.5% interest per month; state fines against plans with a pattern of late payments.
• Utah. Before: Only addressed patients’ complaints. Now: The law includes complaints from doctors, and the state will conduct random compliance audits. Before: Focused on plans’ duties. Now: Doctors have up to 60 days to respond to plan’s request for more information or pay late fees of 0.1% a day.