Health Insurers Wont Support Legislation For Timely Payment

June 5, 2002
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LANSING — As if doctors and health insurers don’t have enough to differ about these days.

Legislation reintroduced in Lansing would require health insurers to pay physicians within a set time or pay interest on the outstanding charge. Insurers that are found engaging in a pattern of intentionally delaying the payment of health claims to doctors could face penalties.

“This legislation is very straightforward. Pay your bills on time, or pay an interest penalty just like you would for your credit card or heating bill,” said Liz Sayre-King, president of the Michigan Medical Group Management Association.

The two bills, sponsored by Sen. Bill Schuette, R-Midland, are similar to laws enacted last year requiring timely payment to hospitals. They have the staunch support of medical groups and physicians, including the Michigan State Medical Society.

Health insurers adamantly oppose the legislation, saying state government shouldn’t get involved in what essentially are private business disputes.

“It’s something we don’t think is appropriate or necessary,” said Eugene Farnum, executive director of the Michigan Association of Health Plans, which represents about 20 HMOs in the state.

The bills, Farnum contends, would add to the regulatory burden health insurers already face and likely result in increased costs, which would translate into higher insurance premiums. While he concedes that all sides in the industry could do a better job in providing timely processing and payment of health claims, Farnum believes legislation is not the way to do it.

“What we have here is an intrusion on the contractual process between two private entities,” Farnum said. “It’s just more paperwork without any value being added to the system. They’re creating more problems than they solve.”

Schuette reintroduced the bills in the state Senate earlier this month. They’re pending in the Senate Health Policy Committee.

The bills are similar to measures that Gov. John Engler vetoed in February, questioning state government’s role in enforcing business contracts. While Engler said he is fully supportive of the notion of timely payments of health claims, he believes those kinds of disputes are up to a court to settle.

The bills, Engler wrote in a letter to lawmakers explaining his veto, were “a legislative attempt to micromanage existing contracts between two private parties.”

“The duties of bill collector for the health care industry are not an appropriate role of the executive branch of state government,” Engler wrote.

The head of the Michigan State Medical Society begs to differ.

Physicians, with the onset of managed care in the past decade, have found it increasingly harder to receive timely payment of health claims. The situation is affecting the financial stability of some medical practices and ultimately threatens public access to health care, Society President Dr. Kenneth Musson said.

Schuette’s legislation would do something about it by providing physicians leverage in securing timely payments, Musson said. Physicians’ only recourse now is to pursue costly and time-consuming litigation, he said.

“People that run medical practices run a business just like everybody else. If people don’t pay their bills, I don’t stay in business,” said Musson, a Traverse City ophthalmologist.

“They’ve got the advantages and the odds are on their side and we don’t have a lot of tools to deal with it. It would give us a leveling of the playing field that we don’t have right now,” he said.

Under Schuette’s legislation, health insurers would have 45 days to pay a “clean” health claim from the time it’s received. If the claim goes unpaid for more than 45 days, it’s subject to 12 percent annual interest. If an insurer disputes a part of the claim, it must pay the undisputed portion.

Insurers would also have to file reports with the state insurance commissioner detailing the number of claims not paid within the prescribed time limit. If the insurance commissioner determines an insurer has “engaged in a pattern” of violating the timely payment provision, the state can impose a penalty of $5,000 for each violation, with a maximum fine of $50,000 for multiple violations.

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