PROMPT PAYMENT: New Law Tightens Monitoring of Health Plans

      Under "prompt pay" legislation recently passed by California lawmakers, the Department of Managed Health Care will monitor the payment patterns of health plans "like a corrections system watches parolees," American Medical News reports. The department will track plans' payment histories, and if a plan displays "a pattern of slow payment, unfair denial of payment, downcoding or other irregularities," it could be required to fast-track payments for up to three years. Under current law, HMOs have 45 days to act on claims while PPOs have 30 days. The new prompt-pay law, scheduled to take effect next July, also increases the interest on late payments from 10% to 15%. In addition, if an HMO determines that it paid an erroneous claim, it is up to the plan to prove the billing mistake. Jan Emerson, spokesperson for the California Healthcare Association, which "led the charge" for the measure, said it was necessary because health plans already owe hospitals roughly $1 billion in "overdue claims payments." She added that late payments from HMOs contribute to about 64% of California hospitals' financial losses. California Medical Association Associate Director of Government Relations Norm Plotkin said, "With the penetration of managed care in California, many physician practices are on the margin, and slow payment or downcoding makes the difference as to whether many practices and medical groups will sink or swim." To "appease the HMO industry," the new law also calls for a state study of provider billing practices. Bobby Pena, spokesperson for the California Association of Health Plans, said overbilling from providers adds to billing and claims problems. Pena said, "If a health plan is acting inappropriately, then they should be reviewed and ultimately punished if they need to be. But providers and hospitals with overbilling and unnecessary and inappropriate care need to be looked at." California joins Minnesota, New Mexico, New Jersey, Florida, New York and Georgia as states that have given "more teeth" to their prompt-pay laws (Jackson, American Medical News, 10/9 issue).