Physicians in some states are getting welcome support for their demands that managed-care insurers pay them on time.
At least two states, Texas and New York, passed legislation this year mandating that HMOs reimburse physicians within 45 days of submitting what insurers call a clean claim-a claim form that contains all required information. HMOs in New York must pay a 12% annualized interest penalty on late payments; Texas has no such penalty, but its aggressive Department of Insurance is leaning on HMOs.
Florida next year is expected to consider so-called prompt-payment legislation.
Meanwhile, in New Jersey, managed-care insurers are facing prompt-payment regulation. An agreement with New Jersey's departments of banking and insurance and health would commit the state's 10 largest HMOs to reimbursing physicians within 60 days of a filed clean claim or paying up to $1,000 per violation.
Regulations are expected to be in place within six months, says Molly Stouffer of the National Council of State Legislatures' health tracking service.
Prompt-payment regulations have existed for indemnity insurers in most states since the 1960s and 1970s, but HMOs are not covered by those laws.
Legislators pushing HMO prompt-payment bills have been motivated by mostly anecdotal tales of physicians waiting as long as 18 months to be reimbursed for claims, even though most contracts between HMOs and doctors specify a turnaround time for reimbursing claims of between 30 and 90 days.
Because most HMO contracts inhibit doctors' ability to ask their patients to cover unpaid bills, physicians often experience cash flow problems until the HMOs pay up.
In New York, prompt-payment legislation passed unanimously in August after foundering for two years. Passage was sparked by Norwalk, Conn.-based Oxford Health Plan's agreement to-without admitting guilt-pay a $1 million fine for allegations of delaying reimbursement of $238 million in claims to the state's physicians. Oxford in August signed prompt-payment agreements with New York, New Jersey and Connecticut providing for a 30-day turnaround and a 9% annualized interest penalty.
Manhasset, N.Y.-based North Shore Health System, which operates 10 hospitals and has about 4,500 affiliated physicians, reported that Oxford at one point owed it as much as $10 million in claims repayment.
"You and I, we don't pay our phone bill on time, we pay a penalty," says Peter Newell, an aide to New York Assemblyman Peter Grannis, D-Manhattan, who sponsored the state's prompt-payment bill. "Here are the insurers not meeting their obligations and getting off scot-free."
The State Medical Society of New York says it saw a marked increase in the number of physicians complaining about HMO reimbursement this year, which is why the group turned its focus to managed-care legislation.
Reimbursement "was a little throwaway item on our legislative agenda, but it ended up being a big item in the end," says Denise Murphy, the society's associate director of legislative affairs.
In New York, the concern was that managed-care insurers held back on paying claims to improve their already considerable cash flow. In Texas, the issue was the opposite--that the state's rapidly expanding number of HMOs, up to 44 this year from 17 in 1993, were holding back on paying claims to keep themselves afloat.
Legislation was proposed after the Texas Department of Insurance for the previous two years leaned harder on HMOs to reimburse doctors. The department acted in response to physician complaints submitted on forms developed by the Texas Medical Association. The department in 1997 has received 1,200 complaints, five times more than expected, Commissioner Elton Bomer says.
"I expect to get paid like the light company and the water company," says Howard Weiner, M.D., a gastroenterologist and a board member of Genesis Physician Group, a Dallas-based independent practice association. Weiner is complimentary of the Texas insurance department's effectiveness in getting HMOs to reimburse physicians.
Maryland, in 1991, was the first state to pass prompt-payment legislation aimed at HMOs. Its bill requires a 30-day turnaround with a 1.5% interest penalty, compounded monthly.
One Maryland HMO, Rockville-based Mid-Atlantic Medical Services, says the bill has had little effect on its operations because it always has promptly reimbursed physicians.
"For most HMOs that have been around for a while, 30 days is the standard for a clean claim," says Beth Sammis, the company's senior director of government relations.
Donald Dembo, M.D., a cardiologist and assistant physician-in-chief at Sinai Hospital of Baltimore, also says the Maryland law hasn't had much effect on HMOs, but not for the same reasons as Sammis.
Dembo says there are two major problems with Maryland's law. First, the onus is on physicians to collect interest, and most of the billing managers or outside contractors they hire don't do it because they aren't aware of the law. Second, the question of what constitutes a clean claim always is up to the HMO.
"For the most part, insurance companies, HMOs and other third-party payers have found ways to circumvent (the law) no matter what you do legislatively," Dembo says.
Weiner in Dallas echoes Dembo's statements, saying many of the disputes he's had with HMOs involve their assertions that claims were not filled out correctly or never received.
Jeff Wurzel, director of the Texas HMO Association, says the problems are particularly difficult for those adding new computer systems. (Oxford in New York blamed implementation of a new computer system for it's falling behind in payments.)
"The volume of claims is enormous even for relatively small health plans," Wurzel says. "Most plans don't yet have the perfect system in place to take claims in, adjudicate them and send payments out."