Prompt-payment laws: Spotty performance on clean claims

Prompt-pay laws haven't lived up to their potential. Better laws and enforcement are needed, as well as a change in attitude by health plans.

Editorial. Dec. 18, 2000.

Prompt-payment laws make sense and, fortunately, the idea is popular with lawmakers -- 40 states already have them. However, all too often their performance falls far short of their promise.

Some of the laws are toothless, not packing enough penalty bite to make health plans act to the laws' intent of seeing physician claims paid in a timely manner. Others are hollow, built around loopholes that give health plans essentially unlimited discretion as to whether a claim is clean enough for them to pay (not surprisingly, very often the answer is a firm but barely explained "nope"). Sometimes, the problem is not the law but the regulator, insurance commissioners who won't enforce prompt-payment penalties.

The AMA and medical societies have amply documented the result: Physicians in large numbers, and in many parts of the country, who honestly believe that they have submitted clean claims but nevertheless don't get paid on time. Such evidence may be exasperating, but it has been and will likely continue to be one of the best ways out of this mess.

Since 1998, the AMA has worked with more than 30 state, county and city medical societies to conduct physician surveys on the prompt-payment practices of health plans. This survey approach takes slow payment out of the realm that health plans would like to keep it in -- of anecdotal complaints that can be easily dismissed as so much physician carping -- and provides statistics that medical societies can slap on the desks of lawmakers as well as insurance commissioners.

More than a third of the 18,000 physicians surveyed say that, on average, it takes more than 45 days -- state limits typically range between 30 and 45 days -- to get paid on a clean claim. Some physicians are facing 100-day or longer average waits to be paid. One state survey, from Texas, found that almost 60% of doctors had cash flow problems from slow payments or nonpayments from health plans, including doctors who had to pay practice expenses out-of-pocket or take out loans.

Such surveys helped enact the prompt-pay laws, most of which have come into existence only in the past few years, and can help in making sure that doctors in all states have them. They can be used to improve existing laws -- such is the effort now going on in Texas and other states -- to include stringent penalties for slow-paying plans and interest payments for doctors made to wait (both are on the advocacy agenda).

Other laws may not have to be fixed as much as used. Surveys can help make the case with insurance commissioners that they should act. Some states are setting a good example on getting tough with slow-paying health plans, including California, Georgia and New Jersey. In October, New York's insurance superintendent assessed more than a half-million dollars in fines to 21 health plans, the second time this year New York has sanctioned slow-paying plans. Such actions both help physicians get paid and underscore the validity of doctor complaints.

For their own part, health plans point the finger of blame at physicians and their office staffs. As we reported recently, health plan sources cite figures claiming 25% to 50% of claims are not prepared properly. Even supposing that such numbers are anywhere near correct, a notion many physicians would reject based on firsthand experience, it bespeaks a system so utterly confusing that it's a wonder the average medical practice can ever expect to be paid on time. The wide variation of documentation requirements, from plan to plan, is a particular problem.

It's a system that health plans created and one that they can do a lot to fix by better communicating claim requirements. In addition, health plans should have designated individuals available to help resolve problem claims.

Some plans lately have shown they are receptive to working with physicians, and it raises questions about those that don't. What's their real agenda -- to pay or to delay?