Federal prompt-pay law: A path to timely reimbursement

Forty-nine states and the District of Columbia set deadlines for health plans to reimburse physicians for treating their members -- or face the threat of financial penalty.

Yet even after many of these states strengthened their laws to counter plans' abilities to find ways around them, state prompt-payment laws and regulations still aren't enough to make sure physicians get paid in a timely fashion for their services.

One problem was, and still is, health plans violating the spirit of the laws by finding ways to make a "clean claim," one supposedly free of errors, look unclean, often by saying the claim didn't carry enough documentation. (Most of the laws start the clock on payment only after a physician has submitted a clean claim -- the definition of which is left up to the insurer.) Another problem was, and still is, ERISA-covered plans either not being covered under the laws or presuming that they are not subject to the laws.

But one of the biggest problems blunting the effectiveness of prompt-pay laws was, and still is, now more than ever, market-dominant health plans figuring that any fines or restitution they might be forced to pay is merely the cost of doing business.

With the AMA's own studies finding just about every market dominated by one or two large insurers, doctors have little leverage in trying to negotiate or reject an insurer who is not paying promptly. And with these dominant insurers individually clearing hundreds of millions of dollars or even billions of dollars in profits every quarter, the $76 million in prompt-payment fines and penalties nationwide over the last decade is just a drop in the bucket.

Many major plans have been held accountable for prompt payment by the settlements they entered to resolve class-action lawsuits by physicians regarding reimbursement practices. But those settlements will begin to expire later this year, removing that layer of protection.

The bottom line for physicians is that their bottom line is suffering as they provide what are in effect interest-free loans to insurers. The best way to combat this situation is for Congress to pass a federal prompt-pay law with the teeth to ensure that health plans reimburse doctors in a timely manner rather than play games with payments.

Cecil B. Wilson, MD, immediate past chair of the AMA Board of Trustees, laid out what such a law should look like as he spoke to the House Subcommittee on Regulations, Health Care and Trade, which on Aug. 1 held a hearing to explore prompt-payment issues. Any law should:

• Protect more robust prompt-pay laws so the federal standard is considered the minimum.
• Establish concurrent federal and state jurisdiction over prompt-pay enforcement.
• Clarify that state laws apply to ERISA-covered plans.
• Strengthen penalties against plans so they aren't considered the cost of doing business.
• Protect physicians from insurer retaliation if they pursue their remedies under the laws.
• Expand protections to address other tactics used by insurers to delay or decrease payments.

Health plans already have proven that state prompt-pay laws aren't enough for them to reimburse physicians in a timely manner.

A tough federal law would give teeth to the notion that it is only fair and right for plans to hold up their end of the deal with doctors.

Plans must pay physicians what is supposed to be coming to them, when it is supposed to be coming.