Prompt-payment laws: How to close the loopholes

A new survey asks physicians to track how quickly specific claims are paid. The information will be used to beef up regulation and enforcement of prompt-pay laws.

Editorial. Dec. 2, 2002.

Thanks in part to the 25,000 physicians nationwide who filled out surveys developed by the AMA's Private Sector Advocacy area to track the extent of delayed claims payment, 47 states now have prompt-payment laws. Those laws give insurers a deadline to reimburse physicians for submitted claims. The surveys, which have been distributed through local and state medical societies and analyzed by the AMA since 1998, also have been useful in efforts to close loopholes in existing prompt-payment laws.

The laws, and their revisions, have had some beneficial effect. Physicians report in the surveys that most health plans have reduced the average of 90 to 120 days they once took to pay a claim. For the most part, however, those plans still fall outside the 15- to 45-day deadline required under state prompt-payment laws.

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Even in states where insurance departments are aggressive in enforcing the law -- states such as Georgia, New Jersey, Ohio and Texas -- physicians often still find themselves begging to be paid for their work. In Oregon, the state medical association on July 1 delivered to insurance regulators 103 complaints alleging insurer violations of the law since it was passed last year.

A collective $33 million in fines and restitutions paid by insurers nationwide hasn't stopped them from using every loophole they can find -- such as hiding behind the "clean claim" provision of the law by saying that a claim is not filled out correctly or making partial payments on a claim.

This is where a survey recently developed by the AMA Private Sector Advocacy area could make a difference. Rather than gathering general data about how long it takes to pay a claim, the survey asks for information on specific claims.

The first part of the survey asks physicians to track claims at 15-day intervals to see which have been paid. While tracking claims may sound daunting, the survey is designed so a physician can fill out the initial form in 15 to 30 minutes and complete the follow-ups in five to 10 minutes. The surveys don't ask for specific patient information, so patient privacy is kept intact.

A few state and local medical associations have tried out the survey, with impressive results. The Missouri State Medical Assn. used it to follow up on insurer compliance with a prompt-pay law passed in 2001. Data from more than 2,300 physicians -- almost all of the physicians asked to participate -- showed that 9% of claims got only partial payment and that, even after 90 days, 3.8% of claims got no response, said Tom Holloway, the association's director of governmental relations. The law requires claims to be paid within 45 days, with a response in the first 10 days about whether the claim was approved. Even in the first 10 days, 13.3% of claims got no response.

In August, the medical society took this information to the state's insurance department, which is now investigating the insurance plans, forcing them to open their books to see who's violating the prompt-pay law and deciding what punishment should be levied as a result.

Other state medical associations are distributing these new surveys, and you may find one landing on your desk soon. Filling out the survey and sending it back to the association that sent it is the best weapon you have against insurers' attempts to hold onto your money.

Providing evidence that insurers are slow to pay already has proven persuasive with legislators and regulators, who are far more attuned to insurers' financial games than they were five years ago. Providing even more specific evidence should help convince those same legislators and regulators to do even more to keep your money from languishing in an insurance company's savings account.