Payment Delays Cause Concern Among Physicians

The growing problem of insurance companies delaying payments to physicians and hospitals is receiving attention from many state legislatures. Due to the declining reimbursement from all payers, physicians can no longer absorb the costs associated with payment delays. Many states are moving aggressively to ensure that payments are made within a reasonable timeframe. At the national level, Medicare requires clean claims to be paid within 30 days of receipt or interest (currently accrued at 6.25 percent per annum) must be paid. Medicaid has similar provisions for state plans.

Why are Payments Increasingly Delayed?

Many insurance companies blame payment delays on old computer systems or glitches resulting from new, recently installed systems. Insurance industry mergers, as well as the growth of patients in managed care plans have compounded the problem. Increased scrutiny, including more stringent reviews of services rendered, requires claims processors to slow down turnaround times. Many physicians believe payment delays are stalling tactics designed to increase profits by allowing insurance companies to accrue interest on unpaid claims.

Highlights from the States

New York

Last year, New York passed a law mandating the payment of clean claims within 45 days of receipt. Failure to pay the claim after 45 days results in annual interest payments of 12 percent (calculated on a per diem basis). The New York action followed reports in the New York Times that Oxford Health Plan had failed to make payments totaling over $200 million for at least three months. A subsequent investigation by the New York State Attorney General resulted in Oxford agreeing to pay the delinquent claims and a fine of $3 million. New York has established a toll-free hotline (1-800-358-9260) so physicians and other providers can report payment delays.

Texas

In 1991, Texas passed a prompt payment law, which was strengthened last year. The statute calls for acknowledging receipt of a claim and requesting further information within 15 days. Texas insurance commissioner, Elton Bomer, issued a bulletin in January warning insurers that they will be disciplined if they fail to comply with the 1997 law. This action was prompted after spot checks, in response to complaints from providers, disclosed many continued problems. The commissioner stated that “significant violations” were found and indicated that punitive actions could range from fines to loss of licensure.

New Jersey

Anger from the provider community in New Jersey resulted in an agreement between the state government and New Jersey’s ten largest HMOs last year. The agreement allowed the state to promulgate regulations whereby insurers are required to reimburse physicians and hospitals within 60 days of receipt of a clean claim. Late payments result in interest payments of 10 percent per annum.

Other States

Following is a chart indicating the prompt payment laws or regulations in each state. Neurosurgeons are encouraged to contact their state health insurance regulator if they are experiencing difficulties in getting claims paid. For more information on this issue, contact Lori Shoaf at (202) 628-2072 or via e-mail at [email protected].