Apr 23, 2019

The AMA Gets Behind Federal Prompt Pay Legislation

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Brian S. King
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The American Medical Association has an informative story in its most recent newsletter about whether prompt payment laws are accomplishing their objectives. Prompt payment statutes take various forms. But their common purpose is to establish deadlines within which health insurers must pay properly documented medical claims. All 50 states have passed prompt pay laws. The AMA's main points are 1) state laws don't go far enough in providing remedies that induce payer compliance, 2) state laws are completely preempted by ERISA, at least when dealing with self-funded medical benefit plans, and 3) Congressional action is necessary to fill these gaps. The article has some very interesting information. For example, over 95% of the 313 metropolitan statistical areas in the country have a single insurer that controls at least 30% of the market. Over 20% of the MSAs have an insurer that controls 70% or more of the market! Insurers are getting better at paying valid claims promptly. The average days in accounts receivable for a claim decreased from 36.2 days in 2005 to 34.4 days in 2006. And finally, the 2007 Kaiser Family Foundation Employee Health Benefits Survery says that about 55% of workers get their health benefits through self-funded plans. This last fact is hard for me to believe. I would have guessed that self-funded plans still covered substantially fewer than half the employees in the country.

Category: General


1 Comments to "The AMA Gets Behind Federal Prompt Pay Legislation"

The 55% figure does sound startling, but I have seen figures like it many times over the years.
Larger employers tend to self-fund their benefits (those of 500 or more employees).
And, as I recall, they employ half or so of the American workforce.
If large employers realized the advantages of self insuring, what does that tell you of the value that health insurers bring?
You don't need pools of thousands of people to make the large numbers work in your favor.
Similar economics await small employers in the same line of business that form VEBAs.
Don Levit
Posted by Don Levit on November 17, 2008 at 01:47 PM

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