The failed promise of prompt pay

Lawsuits and legislation fail to ensure prompt payment from insurers. The AMA supports a federal prompt-pay law as the answer.

By Dave Hansen, AMNews staff. Nov. 5, 2007.

Like all physicians, orthopedic surgeon Frank B. Kelly, MD, depends on steady cash flow to keep his office running. But Dr. Kelly, who directs the seven-doctor Forsyth Street Ambulatory Surgery Center in Macon, Ga., finds himself constantly battling private insurance companies to get payment for patient claims.

Even though Georgia law requires reimbursement within 15 days, Dr. Kelly says payment can take as long as six months. His financial situation gets so bad that he sometimes delays purchasing new equipment and sweats the months liability premiums come due. "You don't make plans for capital expenditures unless you have the money in hand," he says. "You cannot depend on being paid by an insurance company."

By 2007, all 50 states had some form of law penalizing health insurers for late payments. Yet the problem persists, physicians say.

Insurers have found loopholes to get around the deadlines and are using federal law to slip out of state laws, doctors say.

Rep. Charles B. Gonzalez (D, Texas) was so upset by reports of delayed payment from physicians in his San Antonio district that he held an August hearing on the issue.

"Would they accept the same timeline for payment of premiums as they would of claims?" asked Gonzalez, who chairs the House Small Business Committee's panel on regulation, health care and trade. "They don't carry you for three, four, six months. You'd probably get canceled."

What is needed, says the American Medical Association, is a tough federal law penalizing insurance companies that delay payment.