Federal prompt-pay law: A path to timely reimbursement

Health insurers often flout the spirit and the letter of state legislation requiring them to pay physicians within a certain number of days. A tough national law is a way to ensure that such conduct ceases.

Editorial. Sept. 3, 2007.

Forty-nine states and the District of Columbia set deadlines for health plans to reimburse physicians for treating their members -- or face the threat of financial penalty.

Yet even after many of these states strengthened their laws to counter plans' abilities to find ways around them, state prompt-payment laws and regulations still aren't enough to make sure physicians get paid in a timely fashion for their services.

One problem was, and still is, health plans violating the spirit of the laws by finding ways to make a "clean claim," one supposedly free of errors, look unclean, often by saying the claim didn't carry enough documentation. (Most of the laws start the clock on payment only after a physician has submitted a clean claim -- the definition of which is left up to the insurer.) Another problem was, and still is, ERISA-covered plans either not being covered under the laws or presuming that they are not subject to the laws.

But one of the biggest problems blunting the effectiveness of prompt-pay laws was, and still is, now more than ever, market-dominant health plans figuring that any fines or restitution they might be forced to pay is merely the cost of doing business.

With the AMA's own studies finding just about every market dominated by one or two large insurers, doctors have little leverage in trying to negotiate or reject an insurer who is not paying promptly. And with these dominant insurers individually clearing hundreds of millions of dollars or even billions of dollars in profits every quarter, the $76 million in prompt-payment fines and penalties nationwide over the last decade is just a drop in the bucket.