Progressive Focus© Newsletter
|Volume 7, Number 2||Summer, 2006|
|Helping You Manage the Expectations of Managed Vision Care|
In This Issue:
Legislatures and the Judiciary at Work: The Good, Bad, and Ugly
(Second of two parts)
In the previous edition of Progressive Focus© I introduced you to some recent legislation on the distribution and sale of contact lenses, malpractice award caps, and Pay for Performance. In this issue we'll look at legislation that directly impacts on when doctors are to be reimbursed by third party payers.
1) The Notice Prejudice Rule
Most of your Provider Agreements will specify that claim submissions can be denied if not sent within "X" days of the date of service. Typically that's not a problem, and your staff easily complies.
But there can be legitimate reasons why the paperwork might not be filed in the allotted time frame. And if the delay is not the practice's fault then it seems unfair and unreasonable for a payer to deem the claim invalid and, thereby, deny reimbursement on an otherwise valid submission.
Most often staff misses a deadline when there is uncertainty or confusion about a patient's insurance coverage (e.g., is it Medicare or a Medicare HMO; or is it a workers' compensation claim or one to be filed with the patient's regular health insurance?). And sometimes the practice does not learn that there is any insurance coverage at all until well after the date of service. By the time payment responsibilities are resolved it may be past the 60 or 90 day filing window demanded by the payer who then, annoyingly, refuses to pay.
Outrageous, disingenuous, and not particularly unusual conduct
At one of my lectures a practice administrator described a dispute with a payer who was denying reimbursements for services provided by one of the doctors, claiming that he was not on the panel. In fact, he was.
But it took months to get things cleared up, and when it was finally straightened out the payer told the practice that the filing deadline on all of that doctor's claims had passed, and they were no longer payable even though the patients had been eligible on the dates of service! That's simply an outrageous position for any payer to take.
Protecting the doctor and the patient
But outrageous conduct by payers is not all that unusual. To protect both the practitioner and patient's financial interests a majority of states have legislation of some sort in place requiring payers to honor late but otherwise valid claims.
That protection is called the "notice prejudice rule," and it essentially says an insurer can only deny a late-filed claim if it can demonstrate that it would be prejudiced ("hurt" in legal terms) by the late filing. The insurer bears the burden of proof to show why it should be relieved of its financial obligation.
Surprisingly, many health plans and their attorneys are not aware of the notice prejudice rule, or the level of accountability it can put onto payers. So your first step should be to check with an attorney to determine if your state has a notice prejudice rule that can be used to leverage reluctant payers. You can also search Google using "notice prejudice rule" + (your state's name).
A few years ago a California practice administrator contacted me about problems she was having getting some late claims paid. I advised her to check into this notice prejudice rule.
The practice's attorney was not aware of the notice prejudice rule, but he checked California case law and found that it was for real. He drafted a letter that's used as a model for the sample letter included below. They then presented the letter to problematic payers -- in this case secondary to Medicare -- and it worked. The practice has received payment on several claims that previously had seemed destined for write-off.
Fighting back: A sample letter you can adapt
Give them great meals of beef and iron and steel,
they will eat like wolves and fight like devils.
Here's the sample letter you can adapt when dealing with payers who are denying claims as filed too late. Be sure to show this to your attorney first to get the language modified as necessary to protect your rights under, and comply with your state's laws.
<Insert claim number>
<Insert patient's name>
The above referenced claim was submitted to Medicare on or about <insert date>, via Medicare's electronic claims processing system. Medicare promptly paid its portion of the charges and forwarded the claim to <XYZ Plan> for further processing on <insert date>. Subsequently, on <insert date> we billed <XYZ Plan> directly. As of the date of this letter, the claim still has not been paid.
This is far from an isolated incident. We have had ongoing difficulties in collecting balances owed by <XYZ Plan> on its Medicare supplemental policies.
<ABC Eyecare>'s patients, many of whom are elderly, sometimes cause delays in the processing of the initial claim due to confusion over their insurance coverage. This can cause delays in the billing of secondary and supplemental insurers, and <XYZ Plan> has provided itself with a convenient means of denying claims, by stating that they are late-filed.
Please be advised that under state law, a denial based on late filing of a claim will only be upheld where the insurer can show actual prejudice from the late filing.
In the present matter, Medicare forwarded the claim to <XYZ Plan> almost a year and a half ago, and <XYZ Plan> has failed to pay the claim. A denial based on late filing at this point would be disingenuous and entirely unjustified. <XYZ Plan> has failed to show that it has been prejudiced in any way. On the contrary, <XYZ Plan> has been aware of this claim since <insert date>, and has enjoyed continuous use of the money that it owes its insured as a policy benefit.
<XYZ Plan>'s stubborn refusal to promptly pay this and other claims puts <ABC Eyecare> in a very uncomfortable position vis-à-vis our patients. The patients expect insurers to pay their appropriate share of claims. When insurers do not, and the physician approaches the patients directly for payment, this results in a disruption of the trust that must exist between doctor and patient.
Please respond in writing directly to me. We hereby request that you pay the claim in full within <insert number> days of the date of this letter. If you do not, then we may have no choice but to take further action to protect our interests.
Thank you for your attention to this matter.
It works, but it's not a slam-dunk
Understand that each state interprets insurance law differently, and some notice prejudice rules will be more provider-friendly than others. So this legislation can be used successfully in some states but not in others, and in some circumstances but not necessarily in all.
Note also that on occasion a state's well-intentioned, provider-friendly laws designed to level the playing field might be in conflict with each other. For example, Texas has a notice prejudice rule that works to the benefit of practitioners who are late filing claims. However, Texas also has a prompt payment law that allows payers to deny a claim filed more than 95 days after of the date of service.
Depending on timing, these two pieces of legislation could work at opposites. And when such conflicts exist, until they're tested in court it's unclear how the dust will settle.
2) Prompt Payment Laws
In recent years it's become crystal clear that the claims submission and payment playing fields were anything but level. In an attempt to assure a fairer deal for providers of patient care services, 48 states and the District of Columbia now have some sort of prompt payment law or claims settlement act on their books. All of them mandate that "clean claims" must be paid or denied within a certain number of days. The amount due on a payable claim may also be subject to the addition of late payment penalties.
I'd gladly pay you Tuesday for a hamburger today.
Popeye, We Aim to Please (1934)
Most prompt payment laws stipulate that if a claim isn't "clean" (i.e., if information necessary to adjudicate the claim is missing), then payers have a specific number of additional days within which they must request such information. Once the practice has submitted the requested additional data, payers have another "X" days to pay the claim.
Sounds simple, but it may not be
Sounds simple, right? Well unfortunately most state legislatures failed to incorporate an unambiguous definition of "clean claim" into their prompt payment laws. It's left to each plan to self-define "clean." This makes it harder, sometimes impossible, for a practice to know from one plan to the next what data elements are required for any claim to be paid promptly, and as originally submitted.
The ambiguity makes it easier for payers to delay payment by deeming a claim not to be clean, and then requesting additional data. However, it should be noted that on average most payers are sending payments a bit more quickly now than they were a year or two ago. This is directly attributable to closer scrutiny being applied by many states' Departments of Insurance
Still, practices must be vigilant when negotiating provider agreements to insure that there are no conditions or ambiguities in the document that would allow a payer to use weaknesses in the legislation to bend the rules.
One state's law
Here, for example, are the requirements of Iowa's prompt payment law. This is pretty much typical of what you'll find across the country.
1) Claims must be paid or denied within 30 days after the insurer's receipt of a "clean" claim.
2) Clean claim is defined as a properly completed paper or electronic billing instrument containing all reasonably necessary information that does not involve coordination of benefits for third-party liability, preexisting conditions, investigations, or subrogation, and that does not involve the existence of particular circumstances requiring special treatment that prevents a prompt payment from being made.
3) A "properly completed billing instrument" is the HCFA 1450 (UB-92) or the HCFA 1500 or whatever form may be required by HIPAA.
4) Failure to pay requires the payment of interest at the rate of 10% per annum commencing on the 31st day after the insurer's receipt of all information necessary to establish a clean claim.
Prompt payment laws by state (listed)
You can find a list of current prompt payment laws at this URL:
(click on "prompt pay laws by state").
Understanding your state's prompt payment law or claims settlement act
To learn specific information about prompt payment requirements in your state visit the National Association of Insurance Commissioners' website at:
From there you can link directly to any state's Department of Insurance. Your DOI can also provide information on how to file a complaint against slow payers.
Enforcement of prompt payment laws: What's to keep payers in line?
You can get more with a kind word and a gun than you can with a kind word alone.
Alphonse (Al) Capone
The states with prompt payment laws or claims settlement acts can hold payers accountable for failure to comply. Unfortunately, some states are not particularly vigilant in looking out for practitioners' interests. Others, such as Texas, have track records of cracking down hard on non-compliant payers. For a state by state list of fines and their reasons see this URL:
So what can you do if your prompt payment law doesn't seem to be working?
If despite a prompt payment law one or more payers fail to comply then you'll need to get active with the state Department of Insurance. Document and report to the DOI any instances of repeated or egregious payment delay. You should also send copies of such reports to your state society, to other professional societies such as AOA, ASCRS, and AAO, and to your elected state officials. You might also copy the human resources departments at any important local employers of your patients whose claims are not being promptly paid.
However, be careful to keep things in perspective. On occasion every payer will fail to pay a claim on time. There is nothing unseemly or problematic in an occasional slip-up.
What you'll want to monitor, and what regulators want to know about, is any repeating pattern of non-compliance.
What can you do proactively?
Here are two important steps you can take to reduce or eliminate excuses a payer might try to use to avoid paying a claim promptly. The "looser" your prompt payment law is written and enforced, the more important these become.
1) Insist that "clean claim" is unambiguously defined in each of your Provider Agreements or in any other documents that are incorporated by reference (i.e., where language from another document(s) in included into the Provider Agreement by reference, rather than by repeating it). If incorporated by reference, insist that you're provided with copies of those other documents.
If "clean" isn't clearly and unambiguously defined, then it's essential that Provider Agreements be amended as soon as possible, certainly no later than the next anniversary date. An experienced managed care attorney can provide the necessary verbiage.
2) Create a claims-submission matrix for the staff. The matrix should contain the specific information (fields) required by each plan to meet the "clean" standard. A matrix will allow those who file claims to verify that all required information is included or attached.
Note that many software packages will allow you to flag empty or incomplete fields so as to increase the likelihood of submitting a "clean" claim.
The buck stops here
Prompt payment laws can and do help, but as with so many other things in managed care it's your responsibility to take the initiative so that those laws can work as they were intended. You must plug the loopholes left by elected officials, and utilized to the nth degree by some third party payers.
Play hard. It's your money after all.
1) The Notice Prejudice Rule:
- requires that all properly completed claims submissions be paid even if filed late,
- applies in all 50 states and the District of Columbia,
- puts the onus on a payer to demonstrate why it should not be compelled to pay a late-filed claim,
- both a and b,
- both b and c.
2) The Notice Prejudice Rule:
- is sometimes unknown to third party payers,
- applies uniformly across the country,
- may be in conflict with certain other state laws dealing with reimbursement,
- both a and c,
- all of the above.
3) Prompt Payment Laws:
- are in place in all states and the District of Columbia,
- stipulate that payers must pay all claims within "X" days,
- typically contain a clear definition of "clean" claim,
- have caused most payers to meet their obligations more quickly than in the past,
- all of the above.
Education is what you get when you read the fine print.
Experience is what you get when you don't.
Copyright © 2003-2007, Gil Weber, MBA. No part of this newsletter may be reproduced or distributed in any form whatsoever without the author’s prior written authorization.
These materials are intended to provide useful information about the subject matter covered. The author believes that the information is as authoritative and accurate as is reasonably possible and that the sources of information used in preparation of the materials are reliable, but no assurance or warranty of completeness or accuracy is intended or given, and all warranties of any type are disclaimed.
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