HCS HB 1498 -- PAYMENT OF HEALTH INSURANCE CLAIMS

SPONSOR:  Cooper (Jones, 89)

COMMITTEE ACTION:  Voted "do pass" by the Committee on Health
Care Policy by a vote of 10 to 0.

This substitute changes the laws regarding the requirements for
the payment of health insurance claims.  In its main provisions,
the substitute:

(1)  Requires health insurance carriers, including third-party
contractors, to send an electronic acknowledgment of the date of
receipt within 48 hours after an electronically filed health care
claim is received;

(2)  Increases the length of time, from within 10 working days to
within 30 processing days, that a health insurance carrier or a
third-party contractor has to send an electronic or facsimile
notice of the status of a health care claim that notifies the
claimant whether the filed claim has any reason which will
prevent timely payment or if more information is required.  If
the claim is properly filed, the carrier must pay or deny the
claim;

(3)  Requires a health carrier to notify the health care
provider, electronically or by fax, within 10 processing days,
instead of the current 15 days, upon receiving the requested
additional information from the health care provider to pay the
claim or make a final request for additional information.  If the
health care provider submits the additional information, the
health carrier must pay or deny the claim within five processing
days, instead of the current 15 days, of receiving the additional
information;

(4)  Adds a penalty equal to 1% of the total claim amount per day
on unpaid claims if a carrier has not paid a claimant within 45
processing days of receiving the claim;

(5)  Increases the amount at which a carrier can combine interest
and payments on unpaid claims from $5 to $100.  Claims that were
properly denied prior to the forty-fifth processing day will not
be subject to interest or penalties;

(6)  Repeals the current penalty imposed on carriers that do not
take required action within the 40 processing days;

(7)  Specifies that a claim for which a carrier has not
communicated a specific reason for the denial of payment cannot
be considered denied; and

(8)  Changes the requirements a carrier must follow when
requesting and acknowledging receipt of additional information
that is necessary to process all of a claim.

The substitute becomes effective January 1, 2011.

FISCAL NOTE:  Estimated Income on General Revenue Fund of Unknown
less than $30,579 in FY 2011, Unknown less than $36,710 in FY
2012, and Unknown less than $36,710 in FY 2013.  No impact on
Other State Funds in FY 2011, FY 2012, and FY 2013.

PROPONENTS:  Supporters say that the bill removes a loop hole
that allows health insurance claims to be suspended for a period
of time before a decision is made by the health carrier to pay or
deny the claim.  The bill requires a claim to be paid or denied
and removes the ability to suspend it.  Payment must be made
promptly to the health care provider or the provider is notified
why the claim cannot be paid.  Currently, the lack of prompt
payment is a problem which ultimately ends up costing consumers
more money.  Practitioners are spending too much money to ensure
payment, and those costs ultimately are passed on to the
consumer.  Providers' administrative costs have increased due to
the necessity to have staff follow up with insurers for payment.
These costs are passed on to consumers through insurance premium
rates.  Providers on average wait three times as long for payment
as compared to other businesses.  The bill has penalties to
encourage insurers to pay on time.  Medicare pays claims within
21 days on average; however, current law allows a carrier to
indefinitely suspend a claim unlike states that have a prompt pay
act.  Currently, only two-thirds of claims are processed by
carriers within 60 days.  The healthcare system works on a "serve
now, pay later" basis.  Government claims are paid faster than
claims from insurers.  Prompt pay laws need to be revised so that
patients are protected from rising costs.  Government
intervention is necessary to make changes that cannot be handled
through mediation between providers and insurers.  The
patient-responsible portion of a claim is the last to be billed
and the last to be paid.  It is also the least likely to be paid.
A patient needs to know his or her responsible portion in a
timely fashion.  By delaying the decision on a claim, the entire
billing process is delayed placing the provider at greater
financial risk.

Testifying for the bill were Representative Jones (89); Karen
Pickett; John Marshall; Andrew Schwartzkopf; Nancy Glass; Jeanne
Blumm; Leesa Apfelbaum; St. Luke Health System; Kaye Jarrell;
Missouri Ambulance Association; Missouri Academy of Family
Physicians; Missouri Association of Osteopathic Physicians and
Surgeons; Missouri State Medical Association; Missouri Nurses
Association; Missouri Ambulatory Surgery Center Association;
Washington University; Missouri Dental Association; Missouri ER
Physicians; BJC Health Care System; Missouri Hospital
Association; and Department of Insurance, Financial Institutions
and Professional Registration.

OPPONENTS:  Those who oppose the bill say that health carriers
are given incentives to pay bills for product pricing and medical
management through claims processing.  However, because there is
no definition of a clean claim, a claim will go to suspended
status.  Having a clean claim definition forgoes the need for a
suspended status.  The Department of Insurance, Financial
Institutions and Professional Registration made three
recommendations, and the bill addresses these recommendations.
However, the recommendations do not include a change to the
penalties.  Insurers are subject to market conduct standards.
Paying claims is extremely complex, and insurers have to be
stewards of the consumers premium rates.

Testifying against the bill were America's Health Insurance
Plans; Missouri Insurance Coalition; Coventry Health Care; Blue
Cross Blue Shield of Kansas City; and Anthem Blue Cross Blue
Shield of Missouri.

Missouri House of Representatives
95th General Assembly, 2nd Regular Session
Last Updated September 14, 2010 at 3:11 pm