States stiffening prompt-pay laws

After physicians complain that laws requiring timely payment of claims aren't working, legislators come up with laws friendlier to doctors.

By Leigh Page, AMNews staff. June 4, 2001.

Get ready for Prompt Pay II, the sequel to the mostly unsuccessful run of a show that many physicians rated thumbs down.

With physicians complaining that laws requiring prompt payment of claims didn't result in insurers actually paying claims promptly, at least nine states this year have revised their laws to tighten deadlines, stiffen fines or attempt to close other loopholes that physicians say let plans evade the state-mandated time limits.

Entering the 2001 legislative session, 40 states had prompt-payment laws, and 33 of those states were likely to look at changing their laws, according to a National Conference of State Legislatures survey of legislators.

The revisions, such as an Alabama law that passed in May that adds a definition to the term "clean claim" and mandates fines for insurers who don't pay up quickly enough, are "going to make a difference," said David C. Montiel, MD, a Montgomery radiologist. For one thing, "there is enforceability now."

Health plans' lobbying efforts kept prompt-payment bills from being tougher on managed care. The original bills often lacked strong provisions, such as penalties, because health plans adamantly opposed them and drafters could not predict problems that would crop up later.

But the industry is losing out in many states as medical societies fight back with member surveys showing widespread lack of compliance with the original laws.

In more than 30 such surveys nationwide, 38% of doctors report that it takes on average more than 45 days to receive payment on a clean claim, according to the AMA, which helped devise the surveys. [...]