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Get Your Claim Paid: Regulatory Corrections

In January 1999, the New York State Insurance Department levied fines totaling $72,200 against 12 health insurance companies and HMOs for violations of New York's prompt-pay law, the first such action taken under the year-old statute.

The law requires insurance companies to pay undisputed claims within 45 days or face fines as high as $500 per claim per day, capped at $5,000 per claim. In this first round of violations, insurance companies that had 10 or more confirmed violations between April and September 1998 were only penalized $100 per claim paid late.

The fines effectively put payers on notice that the state will not tolerate tardy payment, said Allison Klimerman, director of public affairs for the Insurance Department.

The hardest-hit company was Connecticut-based Oxford Health Plans, which was fined $40,900. Among payers, Capital District Physicians' Health Plan (CDPHP) was fined $4,200; Community Health Plan, part of Kaiser Permanente Northeast Division, was fined $2,700; HUM Healthcare Systems (parent of Partners Health Plans) was fined $2,000; and WellCare of New York Inc. was fined $2,600. Dan Colacino, vice president of marketing for CDPHP, said the Latham-based HMO was slow to pay a certain type of claim between April and September. The claims were related to a medical code that requires a review before payment, and the reviews were taking too long -- a situation CDPHP has corrected, he said.

The HMO checked into the complaints against it and found that its records supported five of the 42, Colacino said. When the Department declined to rescind the remaining fines, CDPHP agreed to pay the full amount.

Even if the larger number of payments were made late, they would represent a tiny portion of the claims CDPHP processed and paid during the six months the Department considered, Colacino said. The HMO handles about 2.2 million claims annually for the 210,000 people it covers. In Texas, health plans were being told to pay on time or face penalties, as a result of an investigation by the Deptartment of Insurance in January 1998.

According to Texas Insurance Commissioner Elton Bomer, the investigation concluded that major managed care plans in Texas, including Aetna/U.S. Healthcare, Cigna, Humana, PacifiCare, Prudential and Blue Cross Blue Shield, are not consistently complying with a new law requiring them to pay doctors, hospitals and other health providers within 45 days of receiving a clean claim. The law also requires HMOs to pay primary care physicians within 60 days after a patient selects his or her doctor.

The Department has received hundreds of complaints from doctors about slow payments from health plans, said Texas Insurance Department representative Mark Hanna.

Phil Berry, an orthopedic surgeon in Dallas and president of the Texas Medical Association, estimates it takes from four to six months to receive payments on some claims. Often, he said, his office sends in a claim to a health insurance company with all the questions answered and the appropriate documentation attached, only to get the claim back without the attached documents, along with a letter stating that the claim is missing information. "You can still see the staple marks where we attached the documentation," said Berry.

Robert Gunby, an obstetrician-gynecologist and president of the Dallas County Medical Society, estimates that his practice has at any given time about $80,000 to $90,000 in unpaid claims. Frequently, three months elapse between the time a patient is treated and the claim is paid, Gunby estimates.

Most delays in processing claims are caused by errors by the group submitting the claim, such as sending in claims with incomplete or inaccurate information. Claims often are missing code numbers or are filled out in such a way that the computer cannot scan the form.

Physicians suspect other reasons. Many believe insurance companies deliberately stall on paying claims to earn more interest on their money. Insurance companies that don't pay on time will face penalties ranging from fines to revocation of their licenses.

Some state regulators suspect some companies were deliberately stalling because of financial problems.

In 1998, Empire Blue Cross and Blue Shield was accused in a class-action lawsuit of deliberately delaying and refusing to pay valid claims by policyholders.

The suit was filed by a former Nynex employee who lives in Massachusetts. In the suit, the man claims he was forced into bankruptcy by Empire's alleged tardiness. Empire denies the charges.

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