Prompt Pay Statutes: Paper Tigers or Effective Weapons Against MCO-Provider Abuse?

Abstract

A headline of an American Medical Association brochure shouts Sick and tired of providing interest-free loans? That's exactly what you're doing when health plans don't your claims on time. Physicians maintain that their practices are being starved to death by managed care organizations' refusal to honor claims in a timely manner. On the flip side, health insurance companies claim that the delays are caused by the provider. They claim that physicians either file the requests for reimbursement incorrectly or multiply. Beyond that, health insurance companies argue that speeding claims processing permits more fraud which reduces the pool of funds that are available for rightful claims. Health insurance companies further argue that providers are given ample opportunity for redress of complaints through administrative hearings. In an attempt to help speed payment of physicians and provide the necessary information to the health insurance companies paying claims, legislatures have attempted to craft prompt pay statutes. These statutes penalize managed care organizations for unjust denial and delay of payment of claims. While these statutes have resulted in fines and penalties being levied upon insurance companies; it is still not clear whether they adequately solve the problem they were designed to address.