Understanding Third-Party Payer Requirements for Prompt Payments
Are your ASC's third-party payers "stalling" when it comes to payments? Nationwide, surgery centers and other providers often encounter inconsistent cash flow due to payment delays from insurance companies. Most states provide recourse against delaying insurance payments by enacting prompt-payment legislation for private health plans that dictate reimbursement to providers must be within a specified amount of time.
While it is imperative that your ASC obtain reimbursement for services rendered within a reasonable amount of time, it is also necessary for third-party payers to have the opportunity to investigate their responsibility in the payment of the claim and determine if the services provided were medically necessary. Payment by government and private health plans for services that are not medically necessary has led to higher premiums and out-of-pocket expenses to the policyholders. For fair and timely reimbursement of healthcare claims, it is necessary to understand what constitutes a "clean claim" and the time period in which these claims are to be paid.
Most private payers define a clean claim as one that does not require the payer to investigate or request additional documentation to determine payer's responsibility on a prepayment basis. Clean claims must be filed in the timely filing period.
Medicare defines a clean claim as one which has no defect, impropriety or special circumstance, including incomplete documentation that delays timely payment.
Are you aware of state and federal prompt-payment laws and their requirements? How does your ASC monitor that reimbursement is received in accordance with those guidelines? In this Special Report, we review prompt-payment laws and provide guidance to help your ASC ensure timely receipt of payments.
Prompt payment statutes are different for each state. Are you aware of your state's prompt-payment regulations? How does your ASC monitor that reimbursement is received in accordance with those guidelines? There are several sources on the internet that will provide state-specific requirements, including this resource from the American Medical Billing Association.
With private payers, your best defense is your contract. Follow these seven tips to make sure the contract you agree to is in your ASC's interests.
1. Know your rights. Most health plan contracts do not contain clear claim payment guidelines, and most avoid language that would hold them responsible for paying a claim promptly or limiting their ability to request unnecessary information to delay payment of the claim. To avoid costly delays in payments, be sure to understand your rights when negotiating a contract and request interpretation of the insurance provider's payment schedule language.
2. Define payment period for clean claims. When reviewing a contract for your ASC to become a participating provider, ensure there is a clause that holds the health plan responsible for paying claims within a specified period of time. Reasonable guidelines for payment might be 21 days for clean claims submitted electronically and 30 days for clean claims submitted on paper (different periods of time may be defined by your state's prompt-payment statute). Without this clause, there is no obligation on the part of the health plan to pay the claim within a reasonable amount of time and you will limit your ability to dispute the length of time required for processing and paying a claim. Prior to contract negotiation, know your state's prompt-payment requirements as insurance companies may include provisions for a claim payment time period that is longer than the state guidelines. You should also request interpretation of what this particular payer deems a "clean claim" and what additional requests for information are considered reasonable.
3. Define payment period for unclean claims. You should require a definition of the timeframe in which a health plan can return a claim as "unclean." This prevents the health plan from holding unclean claims to delay payment. If the health plan finds that additional information is necessary to evaluate the claim for payment, a specified time limit for this request should be included in your contract. The contract should also specify how much additional time will be allowed to review this additional information prior to payment.
4. Address claims considered "not on file" (i.e., not received). Your software should have hard-coded claims submission data that specifically logs the date of claim submission as well as clearinghouse reports of claim submission and receipt by payer. Your contract should require the health plan to acknowledge receipt of an electronic claim within 24 hours. If no acknowledgement is received, the health plan should be contacted and, if necessary, the claim resubmitted. In the event the health plan states they did not receive an "acknowledged" claim, you will be able to provide documentation of the original filing date and require that they pay within the prompt-payment guidelines specified in the contract.
5. Identify penalties. Specify what penalties are to be assessed when the health plan does not pay according to prompt-payment guidelines. At the very least, the health plan should be obligated for payment of the claim plus a pre-set interest. In some states, if a claim is not paid following prompt-payment laws and contract content, participating provider discounts may be waived and the health plan may be liable for 100% of billed charges plus interest.
6. Protect your payment. Your contract should specify that all payments made by the health plan are considered final unless the provider receives a written request within a specified period of time after receipt of payment. This prevents health plans from auditing claims retrospectively and reducing payment several months after services were provided. Note: Time guidelines may vary according to state regulations.
7. Perform regular reviews. Be sure to review your contracts routinely as most contracts have an automatic annual renewal. As laws change on a regular basis, check with your state regarding prompt-payment laws and request appropriate addendums to your contract before renewing.
The Prompt Payment Act was finalized in 1999 to ensure the federal government makes timely payments. Bills are to be paid within 30 days after receipt and acceptance of material and/or services. When payments are not made timely, interest should be paid automatically.
Here are the required clean claim elements for government payers:
- Centers for Medicare & Medicaid Services (CMS) claim forms that record the information needed to process and generate provider reimbursement;
- provision of required data elements on the standard claims forms, along with any attachments and additional elements; and
- complete, legible and accurate information.
Know Your Rights
Even with prompt-payment laws in place, many health plans tend to ignore them because not all state insurance departments are aggressive in enforcing the laws, and the laws provide no recourse by the providers for enforcement. However, it is becoming more common for state regulators to enforce these laws and many health plans have been assessed large fines for violation of these laws. Carriers are subject to strict penalties for late payment of claims to contracted providers with penalties increasing based on the number of days the payment is late.
As health plan requirements for obtaining reimbursement have become more complex, providers have had to employ additional staff to obtain payment of claims. However, times are changing, and providers are becoming better educated in the reimbursement process and state legislation. Work with your private health plans to negotiate fair and equitable contracts. A good contract holds the health plan responsible for paying for services in a prompt, fair and reasonable manner as well as outlines your responsibility as a provider to submit clean claims. Working together, you and your health plan providers should strive to attain better healthcare coverage for your patients while holding down their premium costs.