19
COM Outlook . Spring 2015
A Brief Primer on the Concept
of Prompt Pay Laws
By Fred Segal, Esq.
While working on their medi-
cal education and beginning
training, medical students
and residents gradually begin
to realize that being involved
in the business of medicine
requires more knowledge
than the practice of medicine
itself. Among the lines of
business for which physi-
cians and medical profession-
als must familiarize them-
selves with is the business of
private health insurance.
The majority of medical professionals, in some man-
ner, have relationships with third party payers, who will
pay the physicians for medical services they perform on
a patient that are subscribed to the payer. Many patients
are subscribed to government payers—for example, the
Medicare and Medicaid program. Most patients, how-
ever, receive health care insurance coverage from private
payers (i.e., commercial health plans).
A physician’s relationship with private payers can
be complex; however, most have certain traits as illus-
trated below:
THE PAYER
contracts with the physician or entity
with whom he or she is affiliated to provide medical ser-
vices to certain patients—or beneficiaries—that are con-
tracted with a health insurance plan offered by the payer.
IF THE PHYSICIAN
provides services to a benefi-
ciary covered by the terms of the physician’s contract
with the plan, the physician will send a claim that must
satisfy certain requirements to the payer.
THE PAYER
will pay the physician an amount for the
services performed based on the contract’s fee schedule,
deny payment of the claim, or pay a lesser amount than
the physician believes he or she is entitled pursuant to
the fee schedule (i.e., an underpayment).
Without any recourse available for the physicians
for denials or underpayments, the above relationships
put physicians at a tremendous disadvantage. A payer
would have full discretion as to when and if it will pay
a physician’s claim. Payers can abuse this advantage by
denying or ignoring claims.
A few decades ago, after widespread complaints
kept filtering in from physicians regarding the frequen-
cy and manner in which they were paid claims, states
began to enact prompt pay laws, which essentially
require a payer to pay or deny a claim in a defined
period. Most also require that if the claim is denied,
the payer must be able to provide a valid reason upon
request. Currently, almost all 50 states have enacted
prompt pay laws.
Florida requires most private payers to adhere to the
following guidelines:
At no point after 20 days from receiving an electronic
claim or 40 days for a non-electronic claim, the private
payer will reimburse the physician that made the claim
the amount pursuant to the fee schedule contracted
between the parties. Other options include paying the
portion of the claim not in dispute, notifying the physi-
cian, in writing, why claim will not be paid, and allow-
ing the physician to request information as to why it
was not paid. A payer’s failure to pay or deny a claim
within 120 days for electronic claims and 140 days for
non-electronic claims creates an uncontestable obligation
for insurer to pay the claim to the provider, which means
the payer will have no defense if it is proven it did not
pay the claim within 120 or 140 days.
There are many other provisions of Florida’s prompt
pay laws that are not discussed above. It’s also impera-
tive to realize that prompt pay laws are more complex
than as described. The purpose of this article is to give
a brief overview of this type of statute so you can be
aware it exists, and from the beginning, keep track of
when you submit your claims and when they are due.
You never know when a prompt pay law may come
into play.
HEALTH CARE LEGAL EAGLE
Fred Segal is a health law
attorney in the Miami office of
the law firm Broad and Cassel
and a graduate of NSU’s Shepard
Broad Law Center.
