Prompt Pay
MANAGED CARE: PAYMENT ISSUES - PROMPT PAYMENT
Because the medical community has had to fight healthcare insurers for timely payment and has been forced to seek legislation to address delay, most of the medical community identifies “prompt payment” as the specific statutory and regulatory provisions governing payment of claims and defenses to the prompt payment of claims.
MSNJ POSITION: MSNJ was one of the first medical societies to obtain state legislation requiring healthcare insures to pay in a timely manner or to pay interest on the overdue claims. MSNJ believes that insurers’ do not pay claims as quickly as they could and that they look for loopholes (e.g., the definition of a clean claim, requests for records) to avoid or delay payment.
MSNJ ACTION: MSNJ pursued this issue successfully in the national class-action lawsuits. (See the table below for the applicable timeframes). MSNJ also continued the fight with the state legislature to close the loop-holes and improve the implementation of the prompt pay law and regulations.
STATUS: The new managed care law increased the interest amount to 12%. It also attempted to close loop-holes such as: an insurer’s repeated requests for information and routine requests for coordination of benefits. There is a presumption that payment should be made within 30 (electronic) or 40 (paper) days if:
- Provider is eligible;
- Patient is covered;
- Service is covered;
-
All information (previously listed as necessary) has been provided; and
- There is no evidence of fraud.
Insurers must notify physicians and patients within 30 (electronic) and 40 (paper) days of the following defects:
- Lack of substantiating documents
- Coding or other necessary information is incorrect
- Payer disputes the amount; or
- Evidence of fraud
Insurers must notify physicians within 7 days of a determination that the claim cannot be processed because of incorrect coding or other data required to be submitted.
If insurers fail to abide by the above notice provisions then the claim is deemed to be overdue and subject to the 12% interest payment.
To complain about violations of the New Jersey prompt pay law, see the Q&A document and appeal procedure links below.
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AUTHORITY
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Time to Pay
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Interest
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Receipt
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NJ Law*
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30 days electronic/40 paper
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12%
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Payer must acknowledge receipt of electronic claim within 2 days
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Aetna**
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15 days electronic/30 days paper
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Lesser of prime or 8% per annum
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|
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Cigna**
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15 days electronic/30 days paper
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6% simple, per annum
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|
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HealthNet**
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15 days electronic/30 days paper
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6% per annum
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*The Health Claims Authorization, Processing, and Payment Act (HCAPPA) became effective on July 11, 2006.
**Violations of the time frames can be appealed through the class-action lawsuit
compliance dispute mechanism.