Prompt-pay law extension vetoed in Georgia

The governor says ERISA would not allow insurers handling self-funded plans to comply with the measure's requirements. The state's doctors disagree.

By Bob Cook — Posted July 1, 2010

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Georgia Gov. Sonny Perdue vetoed a bill that would have extended the state's prompt-pay law to cover insurers administering self-funded health plans, despite overwhelming legislative support for the measure.

"I would have liked the opportunity to sign" the bill, Perdue said in his June 8 veto message. However, he said the Medical Assn. of Georgia "insisted (over the objections of many) on including language that likely violates the Employee Retirement Income Security Act."

ERISA is a federal statute that covers, among others, companies and organizations that fund their own health insurance risk pools. The MAG says 75% of the state's privately insured are in ERISA plans. That means the current prompt-pay statute, requiring insurers to pay physicians within 15 business days or face fines, applies to only 25% of the state's privately insured residents, according to Perdue.

Donald J. Palmisano Jr., MAG general counsel and director of government relations, said Perdue's assertion is incorrect. He said the bill, passed 47-1 in the Georgia Senate and 128-25 in the House, does not violate ERISA because it does not affect coverage and benefit decisions made by self-funded plans.

Instead, the bill only regulates the financial relationship between third-party administrators and physicians, which is outside ERISA's purview, he said. Legislatures and courts have made similar assertions -- in cases looking at prompt payment and plans' use of rental networks -- in states such as Indiana, Ohio, Rhode Island and Texas, he said.

Palmisano called "outdated" the argument that ERISA would trump extending the state's prompt-payment law to third-party administrators.

Supporters of extending the prompt-payment statute in Georgia have two options when the state's Legislature returns in 2011. One is to attempt to overturn the veto, where a two-thirds vote in each chamber is required. The other is to reintroduce the bill. Palmisano said MAG will wait until the Legislature reconvenes before determining which option it would support.

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