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TMA OKs suing insurers over late physician payments

Texas doctors, deciding they've exhausted all other avenues, vow to sue delinquent insurance companies to force them to pay claims promptly.

By Tanya Albert, amednews staff. Nov. 6, 2000.

After years of unsuccessful attempts to work with insurers in Texas to make sure physicians get reimbursed in a reasonable amount of time and get paid for necessary patient services, state medical association members have decided it is time to take the battle to the courtroom.

The Texas Medical Assn.'s policy-making body passed a resolution in September that allows the group to file or join in lawsuits where there seem to be abuses.

Texas' woes
Prompt payment

At press time, TMA had not yet joined in any lawsuits, but was considering some cases. It is one of a growing number of medical associations putting their weight behind lawsuits that accuse insurers of not paying physicians promptly.

Earlier this year, the AMA/State Medical Society Litigation Center and medical associations in Georgia and California filed lawsuits regarding prompt payment.

State laws govern how quickly an insurer must reimburse doctors for their services. But the laws, along with attempts to work with insurers to solve payment problems, have not been good enough to ensure prompt payment in Texas or elsewhere.

"It's led to a level of frustration with physicians that they're saying, 'We no longer want to take this,' " said TMA Trustee Bohn Dixon Allen, MD, a general and vascular surgeon. "They want something to make managed care behave the way they should."

As doctors are getting more vocal about payment becoming such a problem that they are having trouble keeping their practices running, the AMA has helped state and local medical societies survey nearly 18,000 physicians nationwide to see what they are experiencing.

Preliminary results: 38% of physician practices reported that it takes, on average, more than 45 days to receive payment on a clean claim; some markets found that certain health insurers are consistently more than an average of 120 days late in paying clean claims.

"Delayed payment to physicians for services rendered is a big problem," said AMA Trustee Donald Palmisano, MD. "If physicians can't get paid, they can't keep their practices open and provide patient care."

In Texas, physicians say they are feeling the pinch.

Nearly 60% of physicians reported cash flow problems because of slow payment or nonpayment by third-party payers, according to the 2000 Survey of Texas Physicians.

"Physicians are at a point now that they have discounted their rates so much that they can't afford to not get paid promptly," Dr. Allen said.

Trying to collect

About 40 states, including Texas, have tried to get tough with insurers by passing laws to ensure that physicians get paid promptly or by interpreting laws in ways that lead to harsher punishment.

For example, California recently passed a bill that would give state regulators the power to hold slow-paying companies to a higher standard than the average company. California law requires HMOs to pay or deny claims within 45 days, and it requires PPOs to pay or deny in 30 days.

But if a particular company shows a pattern of constantly paying physicians late, the new state law gives regulators the power to require that particular company to make payments more quickly than what the state law requires. For example, an HMO could be required to make a payment in 35 days rather than the usual 45 allowed under state law.

In addition to trying to strengthen laws, representatives of the TMA and other medical societies also have sat down with insurance company executives over the past several years to try to work out payment problems. In Texas, the efforts didn't solve the problem.

"We've tried everything else in trying to get prompt payment," said Rocky Wilcox, TMA general counsel. "Physicians feel we need to take the issue to the courtroom."

Texas physicians aren't the only ones going that route after watching other attempts fail.

In May the California Medical Assn. filed a lawsuit against the state's three largest for-profit national health plans for several things, including delaying payments.

In February, the AMA/State Medical Society Litigation Center, the Medical Assn. of Georgia and three Georgia physicians jointly filed a lawsuit against Aetna U.S. Healthcare and its Georgia subsidiary charging that they disregard the state's strict prompt-pay law.

The suit -- the first prompt-payment suit filed by a medical association -- seeks an undisclosed amount in late payments and interest for not adhering to the Georgia law that requires insurance companies to pay "clean" claims within 15 days or to notify the recipients of its reason for failing to do so.

"We amended our prompt-pay statute and still didn't see any relief," said David Cook, general counsel for the Medical Assn. of Georgia.

Since the lawsuit was filed and the state has continued to levy fines against insurance companies that were violating Georgia's prompt pay-ment laws, there has been some improvement in the turnaround time, Cook said. The HMO association also has said prompt payment is the No. 1 issue to solve.

Improving the system

Nationally, most insurers are paying physicians and hospitals promptly and they are working to improve the system so claims are easier and quicker to process, said Susan Pisano, American Assn. of Health Plans spokeswoman.

Often, she said, it takes longer to reimburse physicians because claim forms have incomplete or inaccurate information.

For example, she said, there was a recent case in Maryland where providers weren't getting reimbursed for emergency department service because the form they submitted didn't indicate that it was an emergency department visit.

"There is responsibility on both ends," Pisano said. "There is a responsibility for the provider to fill out the information completely and accurately, and there is also a responsibility on the plans to pay complete and accurate claims promptly."

To improve the process, insurers are increasingly looking at ways for claims to be filed electronically with the insurance company.

If there are questions on the information providers submit, it would let the two sides exchange information quicker. Also, insurers are looking at a way to directly deposit claims into a provider's account, Pisano said.

"We're not of the mind that lawsuits are a good way of solving problems," she said.

Dr. Palmisano said the problem doesn't stem from physicians filling out forms improperly, but from insurance companies deliberately holding back the money.

"Physicians know how to fill out forms," he said. "Why would state regulatory agencies fine insurance companies in states such as New York, New Jersey and Florida if there wasn't a problem?"

Dr. Palmisano said the AMA/State Medical Society Litigation Center wouldn't file frivolous lawsuits and would evaluate cases individually.

"But there will be more filed if the insurers continue to abdicate their responsibility," he said. "If people hold money due to someone else, they should be held responsible."

Texas' woes

Nearly 60% of physicians surveyed in Texas said they encountered cash-flow problems as a result of slow payment or nonpayment by third parties. About 19% said the problems were so bad that they used personal funds to keep the practice going; nearly 13% took out commercial loans.

Here are the percentage of physicians by city that reported cash flow problems.

   Dallas          63.5%
   San Antonio     58.0%
   Fort Worth      57.9%
   Houston         57.3%
   Austin          53.2%

Source: 2000 Survey of Texas Physicians

ADDITIONAL INFORMATION:

Prompt payment

As a growing number of physicians nationwide cite prompt payment as a problem they experience with managed care companies, more than 30 state and local medical societies recently started working with the American Medical Assn. to collect information on the issue. About 18,000 physicians who have contracts with more than 275 health plans and who have more than 5 million patients have been surveyed.

What physicians are saying:

In some markets, certain health insurers are consistently an average 120 days late in paying "clean" claims.
Some physicians reported that their average health insurance claim is more than 100 days overdue.
A few physician practices experience nearly one year for their average payment delays.
Some practices reported that they are owed more than $2 million in late payments.
In some instances, a single health insurance company owes the practice more than $1 million.
38% of physician practices reported that it takes, on average, more than 45 days to receive payment on a "clean" claim.

What's being done:

The AMA has worked with more than 30 state societies in the past several years to draft state legislation requiring health insurers to pay in a timely fashion.
About 40 states have prompt payment laws.
A number of state regulatory agencies -- including ones in New York, New Jersey, Florida, Maryland and Georgia -- have fined health insurers that were in violation of state prompt payment laws. Some fines have totaled more than $100,000.
State regulators have forced health insurers to pay long-outstanding claims.

Source: American Medical Association