Aug 20, 2017

Prompt Payment Legislation


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11/17/2008
Brian S. King
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One of the most infuriating and abusive practices of health insurers and self funded medical plans is their regular practice of delaying payment of valid claims submitted by health care providers. Many states have passed "prompt pay" statutes that require insurers to pay covered claims within short time frames, usually 30 days, after receiving all the information needed to process those claims. These statutes put in place penalties or interest obligations against insurers if payment is not made within the required time frames. However, these statutes are often toothless because they do not provide any private cause of action to individual consumers or health care providers; the penalties may be assessed and imposed only by a state’s insurance commissioner or other enforcement authority.

Sen. Robert Menendez of New Jersey proposes to amend ERISA to give claimants the right to collect interest from payors who improperly deny valid claims. You can read the bill here. Where the payor shows a pattern of wrongfully denying claims, the bill also allows the Secretary of Labor to impose fines and penalties.

The need to provide a meaningful negative consequences to payors who jerk around insureds and their health care providers is long overdue. I am amazed by payors’ brazen disregard of contractual and statutory time limits for paying valid claims. Whether Sen. Menendez’s bill has any chance of passage in today’s political climate is another thing. But it is a step in right direction.



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