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Home Health & Hospice Week

Managed Care:

Overcome Delinquent Payor Headaches By Knowing Your State's Prompt Pay Laws

Published on Fri Jan 14, 2011

Remember: Medicare requires contractors to pay your clean claims within 30 days, but private payers differ by state.

Providers with managed care patients may find this scenario all too familiar: You've submitted a claim that you know is clean, you've waited three months, and you still haven't collected. Do you have any recourse? Yes, thanks to the prompt pay laws that each state must follow when paying your medical claims.

Determine Which Prompt Pay Laws Apply to You

Each state requires private insurers to pay all clean claims within a certain time frame. If the insurer does not pay the claim in a timely manner, then the payer is subject to paying interest on the charges owed to the provider (or directly to the beneficiary). Although each state publishes its own individual law, most range from 15 to 45 working days, with 30 days about the average.

How to find yours: "If you are a little adventurous, you could search for your state law on the Internet, although you should be warned that reading through state laws and their multiple exceptions, references to other sections of state law, and 'legalese' can make this a very frustrating exercise," says Joseph Lamm, a medical office manager in Massillon, Ohio.

Better option: Take advantage of your state trade organization to see if your state has a prompt pay law, and to which insurance companies it applies, Lamm suggests.

Caveat: State prompt pay laws do not apply to federal insurers, because the federal government dictates that clean claims must be paid in 30 days for paper claims, according to the Medicare Claims Processing Manual.

"If a state wants a prompt pay rule that's longer or shorter, they certainly can do that with reference to other payer services, but Medicare rules are federal and span across the country," says attorney Connie Raffa with Arent Fox in New York City.

"Because Medicare is a federal program, the 30-day threshold applies to all Medicare claims," Raffa says. "But if the state of New York wants a 45- day prompt pay rule with reference to private insurance, which they have jurisdiction over, they can do that separately," she advises.

Take Rules Seriously -- Ensure Payers Do, Too

If you thought the prompt pay rules were simply fluid "guidelines," think again. Last August, the New York State Insurance Department fined 20 health insurers more than $700,000 for violating that state's law.

"The Prompt Pay Law has been extremely effective in ensuring that consumers and health care providers are paid in a timely fashion and it remains an excellent deterrent against entities slow to pay undisputed claims," said New York State Insurance Department Superintendent James Wrynn in a release.

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