The lag time health-care providers often wait to be reimbursed by insurers has long been a sore spot for practitioners. After vociferous complaints from psychologists and other health-care providers, state legislatures across the country are making the issue a priority.
At least 33 states have considered and eight have passed new or strengthened "prompt-pay" bills--legislation that requires insurance companies to pay health-care providers in a more timely way for their services. Psychologists and others claim that insurers gain billions of dollars in interest each year during the delay between insurers' receipt of claims and their reimbursement.
It's certainly not inconsequential for behavioral health-care professionals who have been disproportionately affected by managed care, says psychologist Suzanne LeSure, PhD, the legislative chair of the Ohio Psychological Association (OPA). For small providers with profit margins that are "slim to nonexistent," it can spell serious financial problems.
Speaking to a state senate committee this year, LeSure testified that when large behavioral health-care insurers delay payment beyond 30 days, "it seriously impacts my business. I am not alone. Many behavioral health providers have gone out of business."
More than 40 states already have some kind of law in place that requires insurers to pay claims within a specified time frame. But, providers say, the penalties and the states' enforcement have not been enough to deter insurers' lateness. In fact, it appears that insurers continue to delay payment because the imposed late fees are less than the interest they can generate by holding onto providers' reimbursements.
Faced with these issues, OPA gathered the data to document the severity of the problem to policy-makers. The resulting study served as "a major contribution" in pushing the state legislature to pass a new law that puts teeth into enforcing a prompt-pay law that Ohio already had on the books, says OPA President Kevin Arnold, PhD.
Proof for policy-makers
Knowing that insurers said they weren't paying late or that stories of late payments were anecdotal, OPA was determined from the start to make its study's findings unassailable. The OPA study clocked the amount of time it took for 243 insurers to pay or deny 5,043 claims from 44 behavioral health professionals.
"It is the most comprehensive and carefully done documentation we know of by any group fighting for timely reimbursement across the country," says Michael Sullivan, PhD, assistant executive director for state advocacy in the APA Practice Directorate.
With a grant from APA Practice Organization's Committee on the Advancement of Professional Practice, the state association arranged for five behavioral health offices in five different Ohio cities to track claims over six months ending early this year. Each practice photocopied its claims before it sent them to the insurers. Attached to those copies were affidavits indicating the time and date of mailing. The affidavits were signed by postal employees or, when the claims were put in a post office drop box, by the practice's employees.
Then, when a payment, a denial or any other response--even a request for information--came back from the insurer, the psychology practice photocopied that correspondence and attached the postmarked envelope to the photocopies. A practice employee signed an affidavit saying the copies were of the documents that arrived in that envelope.
The results indicated that 41 percent of the insurers did not meet the 27-day cut off for prompt pay set for the study. That period included the 24 days the state laws give insurers to pay bills, plus three days for time in the mail.
OPA was able to give legislators a table showing the failure rates of the top 13 insurers in the sample for which there was return correspondence. Those companies together had received 73 percent of those claims and their failure to pay promptly ranged from 21 to 68 percent.
The results were even more impressive because OPA did not even include 3,234 claims--39 percent of the total--because there had been no return correspondence on those at all and the insurers could say those claims were lost in the mail.
APA Executive Director for Practice Russ Newman, PhD, JD, observed that the Ohio study helps shine a bright light on the severity of problems with prompt payment. "There's something really amiss when it takes a new law to stop the insurance industry from ignoring the existing law," he says.
Taking it to the capitol
OPA's presentation to the state legislature impressed policy-makers, says Michael Ranney, the association's executive director, and dovetailed nicely with a study conducted by the Ohio State Medical Association that had similar results. OPA partnered with groups representing physicians, hospitals, psychiatrists, optometrists, dentists and others to push for stronger legislation.
Under the new law, insurers would pay 18 percent interest on claims not paid or denied in 30 days, and the state insurance commission could levy fines of up to $300,000 for patterns of late payment. If insurers need additional information on a claim, they must request it within 30 days. Then the countdown to the deadlines stops until all information is provided. And in those cases insurers have a total of 45 days to pay or deny.
The legislation also offers incentives for providers to submit claims electronically. Six months after the federal requirements for insurers to accept electronic claims go into effect (April 2004), the prompt-pay time lines will apply only to electronic claims.