April 2, 1999

Pennsylvania recently joined 32 other states with laws requiring insurers and managed care plans to pay medical claims on time.

Insurers and managed care plans in Pennsylvania have been required since January to pay fully documented claims within 45 days of receipt or pay an annual interest rate of 10 percent compounded daily on the amount owed until the claim is paid, according to the bill.

Most of these state laws also mandate financial penalties for late payments.

Don McCoy, director of policy and regulatory affairs for the Pennsylvania Medical Society, which spearheaded the lobbying effort, told Psychiatric News, "Our members drove the point home to legislators that they operate a small business that's no different from the corner grocer and they can't afford to have cash-flow problems."

Draft regulations on the bill's provisions are expected to be distributed for comment this spring, and final regulations will be published sometime this fall, said McCoy.

Gwen Lehman, executive director of the Pennsylvania Psychiatric Society, which supported the timely payment provisions, told Psychiatric News that she was aware of many complaints from members about long payment delays or not being paid at all for claims submitted to local managed care plans.

Ruiza Yee, M.D., a private practitioner in Reading, Pa., told Psychiatric News that she finally was paid this year for a claim filed more than three years ago. "I think that the only reason I finally got paid was that the patient filed suit against the managed care company for nonpayment."

Yee said the managed care company provided no explanation for the three-year delay. Perhaps more puzzling to Yee, a provider in the managed care plan's network, is that the claim was denied in 1997 on the grounds that the hospitalization was not medically necessary, despite the plan's initial authorization in 1995 and subsequent authorizations for each additional day the patient was hospitalized.

Yee appealed the denial in 1997 and won, but "the company still did not pay me." Yee continues to have reimbursement problems with the same managed care company. "Inpatient hospitalization seems the most problematic. I am out about $10,000 in unpaid claims," she said.

Yee also has experienced payment delays for outpatient services. "I have to fill out authorization forms every three or four months; meanwhile, I am still waiting to be paid for the previous visits."

The problem of delayed payments appears widespread among psychiatrists dealing with managed care companies. Rebecca Kilmer, coordinator of APA's Managed Care Help Line, told Psychiatric News that members have complained about delayed payments. "When psychiatrists contact the managed care company for answers, they get the administrative runaround," Kilmer observed. Some of the typical responses the help line receives are that the claim is being returned because it was not properly filled out, though it's on a standard form, and the claim was lost, said Kilmer.

Similar problems have been reported by other medical specialties. The Colorado Medical Society (CMS), which started collecting complaints related to managed care last September, estimated that 600 out of the 900 complaints received as of last month dealt with delayed payments. CMS is lobbying for a timely payment bill, which at press time had passed the House of Delegates and was pending a vote in the Senate.

However, more than legislation may be needed to solve the problem. New York's timely payment law enacted in 1997 is not working well, according to Seth Stein, J.D., executive director of the New York State Psychiatric Association.

"It appears that the insurers and HMOs are ignoring the bill's mandate to pay claims within 45 days or pay 12 percent annual interest on the amount owed. Our members who are mainly in solo practice may not have the staff or time to pursue collecting the interest owed them, which is a relatively small amount. What we need is a simple enforcement mechanism of the law's requirements so they have some teeth to them," said Stein.