Everybody struggles to recover money from insurance companies in a timely manner. Although some insurers consistently processed claims within 30 days, other insurers might take as long 120 days to pay claims. This unpredictability in the reimbursement process caused numerous healthcare providers to experience cash flow difficulties and other operational problems.
Medical insurance claims submitted by doctors, dentists and hospitals with proper documentation are required to be paid within set time limits or face penalties and other sanctions. These are called “prompt-pay statutes” and primarily applicable to the healthcare industry.
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Once the insurance company is contacted by a third party Collection Agency, on behalf of a healthcare provider, they are reminded of their duty to pay claims in a timely manner. Failure to resolve medical insurance claims in a timely manner may be in violation of the state law.
A debt Collection Agency will send five collection/reminder letters to these Insurance Companies, and they are legally required to respond due to the “Prompt-pay statute” law. Non-timely reimbursements is a leading cause of stress and burnout among medical professionals.
These laws and pay-out periods vary from state to state, in operation, complexity, and severity, but they share the goal of compelling insurers to promptly and fully pay all legitimate claims. Debt issues in the BSFI market are expected to grow significantly in the next 10 years.
Examples of “prompt-pay statutes” law in some states.
Texas Insurance prompt payment statute:
The Texas Prompt Pay Act (“TPPA”) is codified in the Texas Insurance Code as Subchapter J of Chapter 843 (governing health maintenance organizations (HMOs)) and Subchapters C and C-1 of Chapter 1301 (governing preferred provider organizations (PPOs)).
California prompt payment statute:
California Health & Safety Code 1371. A health care service plan, including a specialized health care service plan, shall reimburse claims or a portion of a claim, whether in state or out of state, as soon as practicable, but no later than 30 working days after receipt of the claim by the health care service plan, or if the health care service plan is a health maintenance organization, 45 working days after receipt of the claim by the health care service plan.
Florida Insurance prompt payment statute:
Florida statute 627.6131, otherwise known as the “Prompt Pay Statute,” requires insurance companies to make decisions and pay out on claims quickly. The timeframe created by this legislation depends on how the claim was received, either electronically or physically.
New York State prompt payment law health insurance:
Law § 3224-a (McKinney 2000) requires payment of health claims by health insurance companies within 45 days of receipt of such claim; N.Y. Ins. Law § 5106 (McKinney 2000) requires motor vehicle no-fault providers to pay health claims arising from vehicular accidents to be paid within 30 days of receipt of such claim.
North Carolina: 30 days for payment or denial.
North Dakota, Georgia: 15 days
Ohio, Oregon, Delaware, Idaho, Kansas, Kentucky, Maine, Maryland, Massachusetts, Minnesota, Montana, Nevada, Wisconsin: 30 days
Oklahoma, Colorado, Pennsylvania, Missouri, Nebraska, Vermont, Virginia, Wyoming: 45 days
Alabama, Arkansas: 30-45 days
Arizona: 30 days after the claim is approved
Louisiana: 25 to 45 days
Mississippi: 25-35 days
( days refer to “working” days)