West Virginia has become the 43rd state to enact a prompt-pay law, while three Midwest states are studying proposals to tighten penalties against tardy insurers.
On May 2, West Virginia Gov. Bob Wise signed a law establishing a 30-day deadline for paying or denying claims submitted electronically and a 40-day maximum for manual claims. The law, which takes effect Aug. 1, calls for 10% annual interest to accrue on late payments.
As Missouri's legislative session drew to a close last month, lawmakers adopted sweeping revisions to the state's managed care code to allow state regulators to fine health insurers up to $250,000 per year for being chronically late with
payments to physicians. Current provisions have no enforcement mechanism.
The measure also for the first time subjects third-party administrators to prompt-pay deadlines, makes it illegal for managed care contracts to mandate the use of hospitalists and encourages providers to file electronic claims.
Meanwhile, the Ohio Senate approved a bill to impose automatic interest charges at the rate of 18% per year for medical claims not paid within 30 days and to standardize and automate the claims process across the state. The House of Representatives heard testimony in late May.
"Our goal is to try to get this thing passed before June 30," says Ohio State Medical Association legislative director Tim Maglione, Lawmakers in Michigan are trying again after Gov. John Engler in January vetoed two widely supported bills. Engler disagreed with a provision to make the state's insurance commissioner the arbitrator of disputed medical claims (see Jan. 29, page 6). State Sen. Bill Schuette, chief sponsor of the previous legislation, introduced a revised plan May 3, though it could be months before senators consider the new proposal, his aides say.
The Missouri bill is on the desk of Gov. Bob Holden, who has until July 14 to sign or veto the legislation. Tom Holloway, director of government relations for the Missouri State Medical Association, says he expects Holden to approve the bill. Holden's office would not comment.
Under the new Missouri provisions, most of which would take effect Jan. 1, insurers would have 10 working days to acknowledge receipt of a claim and, if necessary, request additional information. Receipt of electronic claims must be acknowledged within one business day.
After receiving a clean claim or the requested additional information, the payer would have 15 calendar days to pay the bill, send a final request for information or give specific reasons for disputing or denying a claim. Another 15-day deadline to pay or deny applies once payers receive the final information from providers.
Claims not paid within 45 days of their original receipt would be subject to 1% monthly interest. After the payer has had the claim in its possession for 40 processing days and with proper notice from the healthcare provider, the insurer would have to pay an additional 50% of the claim--to a maximum of $20--per day and be liable for attorney's fees should the provider sue for collection.
"We think, on balance, that it has pretty significant teeth," says Holloway.
However, Katherine Edwards, director of the Missouri Association of Health Plans, says, "We're disappointed that anyone saw the need for this." Edwards says a survey of members last year showed that 93% of claims submitted are paid within 30 days and that 95% are settled in 45 days.
To promote the use of technology, the bill requires insurance companies to acknowledge receipt of electronic claims within one working day. Starting in 2003, all claims seeking prompt pay would have to be submitted in a format consistent with standards in the Health Insurance Portability and Accountability Act.