In a single day in March, more than $500,000 in fines were levied against the nation's largest insurers for not paying provider claims promptly.
While the punishments were handed out, the question of whether prompt pay laws are having the intended effect--getting providers payment--remains unanswered. As of April, 36 states had laws requiring insurers to pay within a prescribed time frame or face penalties.
"If you look at the (fines) the states have levied, it doesn't appear (insurers) are paying as promptly as they should," says George Moore, senior vice president of Dallas-based ACS Healthcare Consulting, formerly the PACE Group. "I'd have to say the end result right now is the law hasn't done what it was meant to do in
The action came in a flurry, but the timing of two state crackdowns was coincidental.
New Jersey fined Oxford Health Plans of New Jersey $275,500 and UnitedHealthcare of New Jersey $127,400 on March 31. The fines were for a range of violations, including failure to pay claims promptly. New Jersey law requires insurers to pay claims within 30 to 40 days. Neither United nor Oxford officials returned calls seeking comment.
Also on March 31, Georgia Insurance Commissioner John Oxendine fined AetnaUSHealthcare of Georgia, UnitedHealthcare of Georgia, Humana Employers Health Care of Georgia, Blue Cross and Blue Shield of Georgia and HMO Georgia--the HMO for the Blues--a total of $133,226.
Georgia law, which was updated about two years ago, requires clean claims to be paid within 15 working days.
While Aetna officials were disappointed, they believe they are in "substantial compliance" with Georgia law, says spokesman Robert Kremer. Aetna was fined $61,305.
Humana is committed to following the law, and less than 3% of the company's claims were late, says spokesman Jose Marques, whose company was fined $15,039.
Blues officials say the relatively small fine--$1,789 for HMO Georgia and $2,355 for the Blues--reflects the company's payment of 99.8% of claims on time, says Charlie Harman, vice president for public affairs.
United representatives didn't comment on the fines.
It's too early to determine whether New Jersey's prompt pay law has actually had its intended impact, says Walter Kahn, M.D., president-elect of the New Jersey Medical Society. The law took effect Jan. 1. Physicians say prior to the law they sometimes waited as long as a year to be paid, Kahn says.
However, Kahn believes the law and subsequent fines will have a ripple effect on the managed care industry. "I'm sure they do not enjoy being fined," he says.
"It's just like the speeding law. If nobody gets a ticket, everyone will keep speeding. Hopefully the regulators will make the HMOs toe the line."
Georgia's prompt pay law is the strictest in the nation. That stringent requirement has caused an administrative burden for health plans and cost them hundreds of thousands of dollars to hire claims processing staff and adopt computer programs, says Gay Ann Williams, executive director of the Georgia Association of HMOs.
Williams says her organization will lobby the Legislature next year to change the law to require payment in 30 days.
For the most part, she says, insurers pay the claims within 15 days, but "those plans that have regional or national claims paying systems (must have) special adjustments to pay claims appropriately and in compliance."
Moore, of ACS, says health plans must make changes to comply with the law. "I don't think the plans can continue to absorb large fines," he says.
Often complying with the law requires more than the cooperation of the insurer, says Roger Cruzan, spokesman for UnitedHealthcare. The claims need to be in proper form when they're submitted, he says.
"It's an industry issue everyone is wrestling with," he says. "It's not immediately solved by a piece of legislation or regulation."