[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]


 
                    SUBCOMMITTEE HEARING ON ENSURING 
                    PROMPT PAYMENT FOR SMALL HEALTH 
                             CARE PROVIDERS 

=======================================================================

            SUBCOMMITTEE ON REGULATIONS, HEALTH CARE & TRADE
                      COMMITTEE ON SMALL BUSINESS
                 UNITED STATES HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                             AUGUST 1, 2007

                               __________

                          Serial Number 110-39

                               __________

         Printed for the use of the Committee on Small Business


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 house

                     U.S. GOVERNMENT PRINTING OFFICE

36-114 PDF                 WASHINGTON DC:  2007
---------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing
Office  Internet: bookstore.gpo.gov Phone: toll free (866)512-1800
DC area (202)512-1800  Fax: (202) 512-2250 Mail Stop SSOP, 
Washington, DC 20402-0001

























                   HOUSE COMMITTEE ON SMALL BUSINESS

                NYDIA M. VELAZQUEZ, New York, Chairwoman


HEATH SHULER, North Carolina         STEVE CHABOT, Ohio, Ranking Member
CHARLIE GONZALEZ, Texas              ROSCOE BARTLETT, Maryland
RICK LARSEN, Washington              SAM GRAVES, Missouri
RAUL GRIJALVA, Arizona               TODD AKIN, Missouri
MICHAEL MICHAUD, Maine               BILL SHUSTER, Pennsylvania
MELISSA BEAN, Illinois               MARILYN MUSGRAVE, Colorado
HENRY CUELLAR, Texas                 STEVE KING, Iowa
DAN LIPINSKI, Illinois               JEFF FORTENBERRY, Nebraska
GWEN MOORE, Wisconsin                LYNN WESTMORELAND, Georgia
JASON ALTMIRE, Pennsylvania          LOUIE GOHMERT, Texas
BRUCE BRALEY, Iowa                   DEAN HELLER, Nevada
YVETTE CLARKE, New York              DAVID DAVIS, Tennessee
BRAD ELLSWORTH, Indiana              MARY FALLIN, Oklahoma
HANK JOHNSON, Georgia                VERN BUCHANAN, Florida
JOE SESTAK, Pennsylvania             JIM JORDAN, Ohio

                  Michael Day, Majority Staff Director

                 Adam Minehardt, Deputy Staff Director

                      Tim Slattery, Chief Counsel

               Kevin Fitzpatrick, Minority Staff Director

            SUBCOMMITTEE ON REGULATIONS, HEALTH CARE & TRADE

                   CHARLES GONZALEZ, Texas, Chairman


RICK LARSEN, Washington              LYNN WESTMORELAND, Georgia, 
DAN LIPINSKI, Illinois               Ranking
MELISSA BEAN, Illinois               BILL SHUSTER, Pennsylvania
GWEN MOORE, Wisconsin                STEVE KING, Iowa
JASON ALTMIRE, Pennsylvania          MARILYN MUSGRAVE, Colorado
JOE SESTAK, Pennsylvania             MARY FALLIN, Oklahoma
                                     VERN BUCHANAN, Florida
                                     JIM JORDAN, Ohio

        .........................................................


                                 ______


        .........................................................

                                  (ii)

  























                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page

Gonzalez, Hon. Charles...........................................     1
Westmoreland, Hon. Lynn..........................................     3

                               WITNESSES

Wilson, Dr. Cecil B., American Medical Association...............     4
Merrill, Dr. Robert, D.D.S., American Association of 
  Orthodontists..................................................     5
Henkes, Dr. David, Pathology Associates of San Antonio...........     8
Austin, Dr. Gordon T., D.M.D., Northwest District of the Georgia 
  Dental Association.............................................    10
Kelly, Dr. Frank B., American Academy of Orthopaedic Surgeons....    11

                                APPENDIX


Prepared Statements:
Gonzalez, Hon. Charles...........................................    21
Westmoreland, Hon. Lynn..........................................    23
Wilson, Dr. Cecil B., American Medical Association...............    24
Merrill, Dr. Robert, D.D.S., American Association of 
  Orthodontists..................................................    32
Henkes, Dr. David, Pathology Associates of San Antonio...........    36
Attachments to Dr. Henkes Testimony..............................    48
Austin, Dr. Gordon T., D.M.D., Northwest District of the Georgia 
  Dental Association.............................................    65
Kelly, Dr. Frank B., American Academy of Orthopaedic Surgeons....    67

                                 (iii)

  


                    SUBCOMMITTEE HEARING ON ENSURING
                    PROMPT PAYMENT FOR SMALL HEALTH
                             CARE PROVIDERS

                              ----------                              


                       Wednesday, August 1, 2007

                     U.S. House of Representatives,
                               Committee on Small Business,
           Subcommittee on Regulations, Health Care & Trade
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:00 a.m., in 
Room 2360 Rayburn House Office Building, Hon. Charles Gonzalez 
[Chairman of the Subcommittee] presiding.
    Present: Representatives Gonzalez, Larsen, Altmire, Shuler, 
and Westmoreland.

             OPENING STATEMENT OF CHAIRMAN GONZALEZ

    Chairman Gonzalez. The Subcommittee on Regulation, Health 
Care and Trade on Small Business will come to order. Today's 
hearing is on ensuring prompt payment for small health care 
providers.
    I am going to begin with an opening statement, but I do 
want to preface my remarks as well as the remarks by the 
ranking member, thanking each and every one of the witnesses. 
Please understand this is probably the busiest time of the 
session for Members of Congress because we are supposed to go 
on the August recess and we are trying to do a few things 
before we leave either Saturday or Sunday or it could be Monday 
or Tuesday. We are not sure. But we are hoping certain Members 
will come through.
    Also understand you have submitted written testimony and 
that testimony is actually reference material for us. And the 
questions that we will be posing today will again inform us, 
enlighten us and guide us. And staff is here, of course, and we 
count on them to take a lot of notes but we do that ourselves. 
Again, thank you very much. And I am hoping we will have 
members--as a matter of fact, we have been joined by 
Congressman Shuler at this time. Members may come in and out, 
and that is just the nature of the beast around here because 
there are so many demands being made on Members. And the Chair 
will recognize himself for an opening statement.
    Small physician groups face many challenges today. 
Unfortunately, many of these have nothing to do with practicing 
medicine. Whether it be the increase in bureaucracy of managed 
care or the prospect of reduced Medicare reimbursements, it can 
be extremely difficult to make these businesses profitable.
    Today's hearing will look at one of the biggest financial 
challenges facing the industry. Payments from insurance 
companies to health care providers have long been a concern of 
health care providers and their member organizations. Providers 
have shown that some insurers delay payments for a significant 
portion of the insurance claims. This often leads to cash-flow 
problems and increases the cost of care for the patients that 
they serve.
    Such conditions are particularly problematic for small 
health care providers. As small businesses, they just cannot 
afford to be exposed to the sort of instability that an 
unpredictable revenue stream creates. Payment delays are 
nothing more than an unfair business practice that let 
insurance companies earn interest on money owed. Cash flow is 
an important issue for the small practice and late payments 
hinder their ability to run and expand their businesses.
    The insurance community argues that the prompt payment of 
claims is not a problem, that the market in concert with State 
laws will address any lingering problems. This subcommittee is 
interested in our witnesses' responses to that particular 
assertion. Small providers lack the financial resources to hold 
insurance companies accountable for their failure to make 
timely claim payments. If an insurer is unwilling to make a 
payment or wants to delay payment, what remedy do small 
practices have at hand to compel payment unless we provide them 
with one? Only prompt payment laws that are enforced make it 
possible for small providers to be paid in a timely and fair 
manner.
    Efforts to enact prompt State payment laws have been 
successful. To date, all 50 States and the District of Columbia 
have prompt payment rules that apply to insurers. These laws 
were designed to help small providers who lack the ability to 
negotiate payment schedules with insurers or to compel payment. 
As such, small business health providers can rely on State 
efforts as opposed to hiring their own attorneys to enforce 
these requirements.
    But there is a problem. States do not seem to be 
effectively cracking down on insurers who are not complying 
with State prompt pay laws. In part, the focus of today's 
hearing is to understand why prompt pay laws fail to be as 
successful as providers once hoped. Ultimately, health care 
providers need prompt payment laws that are meaningful in 
practice, not just on paper. I believe this means promoting 
stricter enforcement of existing laws, strengthening prompt 
payment requirements and holding more health plans accountable.
    Though prompt payment laws can be found throughout the 
country, providers seem to uniformly agree that they are far 
from effective. This is a significant source of frustration for 
State insurance commissioners who have directed considerable 
resources to enforcing compliance and providers who are 
challenged by the problem daily. Without a solution, small 
practices will continue to struggle.
    I would like to thank again each witness. We look forward 
to your testimony. And at this time I am going to go and yield 
and recognize the ranking member, Congressman Westmoreland, for 
an opening statement.


             OPENING STATEMENT OF MR. WESTMORELAND

    Mr. Westmoreland. Thank you, Mr. Chairman , for holding 
this hearing today. This is a very important hearing, 
especially for the medical profession. I would also like to 
thank all the witnesses for your participation. And I am sure 
that today's testimony will prove to be very helpful to this 
committee and to our Congress.
    Payment for service is the core of our economic system. No 
industry would survive if those who bought a product only paid 
a fraction of what it cost. But that is exactly what is 
happening to physicians in our health care industry. And not 
only are physicians often paid less than what their services 
cost, they are also being paid well after the bill comes due. 
So not only do you not get all your money, you don't get it in 
a timely fashion. The ironically named prompt payment issue is 
one that is affecting physicians and patients all over the 
country. Surveys have shown that it is at the forefront of 
physicians' concerns and I know that from listening to many 
physicians that come into our office every day to complain 
about the system. And their payment schedule is one of the 
things that they complain the most about.
    I don't know about any of you, but when I visit my doctor, 
I want his full attention to be on what he is doing and not 
wondering if he is going to get paid for seeing me. Almost 
every State has enacted some form of prompt payment law in an 
effort to address this very real issue. Unfortunately, these 
laws usually have very little enforcement and therefore allow 
the problem to persist.
    I am proud that my home State of Georgia has one of the 
most comprehensive laws governing payment for medical services. 
Our law requires that insurers pay claims within 15 working 
days of receipt. While this law has helped, it has by no means 
eliminated the insurance companies' desire to withhold payment.
    This Congress faces a great challenge as it tries to lower 
the overall cost of health care, while also providing access to 
those who need it. I hope that we can all agree that 
shortchanging our physicians is counterintuitive to having an 
effective health care system. I know that today's hearings will 
be helpful in addressing this challenge.
    And again I want to thank the Chairman for having the 
hearing. And I welcome this distinguished panel, and thank all 
of you for your willingness to testify today. Thank you.
    Chairman Gonzalez. Thank you very much. Is there anyone 
else who wishes to make an opening statement? I want to welcome 
Dr. Rob Merrill. It says on our agenda that he is representing 
the orthodontists which are based in St. Louis, Missouri. But I 
want the record to be very clear that Rob is a citizen-resident 
of the great State of Washington with Nancy Washington. I have 
known him and his family for a long time, 10 to 15 years I 
guess it must be by now. So I really appreciate the hearing, 
but I wanted to especially welcome Dr. Merrill to the hearing.
    Thank you very much. We will proceed with the testimony. I 
would advise the witnesses that you have 5 minutes, and I know 
that may not be sufficient time, but we will try to hold you to 
the 5 minutes. But also understand we will have follow-up 
questions. And since we don't have as many members present, we 
are going to have a little bit more time and you will be able 
to again probably supplement some of the comments you wish you 
had covered during your testimony.
    The first witness will be the testimony of Dr. Cecil B. 
Wilson. He is the immediate past chair for the Board of 
Trustees for the American Medical Association and has been on 
the Board of Delegates since 1992. The AMA is the largest 
medical association in the United States. Dr. Wilson has been 
in private practice of internal medicine in central Florida for 
30 years. Dr. Wilson.

    STATEMENT OF DR. CECIL B. WILSON, M.D., BOARD CERTIFIED 
 INTERNIST, IMMEDIATE PAST CHAIR, BOARD OF TRUSTEES, AMERICAN 
                      MEDICAL ASSOCIATION

    Dr. Wilson. Thank you, Chairman Gonzalez, Ranking Member 
Westmoreland, and members of the subcommittee for the 
opportunity to testify today. My name is Cecil Wilson. I am the 
immediate past Chair of the Board of Trustees for the American 
Medical Association. I am also an internist from Winter Park, 
Florida.
    The focus of today's hearing is of great importance to the 
medical community given that 52 percent of physician practices 
in this country have three or less physicians and account for 
80 percent of outpatient visits. Small physician practices have 
limited leverage relative to large insurance companies since 
antitrust laws prevent physicians as a group from addressing 
payment and other contract terms on a level playing field. The 
ability of physicians to address unfair payment practices 
continues to diminish with the increasing consolidation of 
health insurers.
    In the majority of metropolitan statistical areas, a single 
health insurer dominates the market. The growing disparity in 
negotiating positions has created an environment where insurers 
are able to evade prompt payment laws with little, if any, 
adverse consequence. This has a financially debilitating effect 
on small physician practices and could limit patient access. 
When one side has all the market power, more efficient market 
mechanisms are hampered.
    A common problem confronted by many physicians is insurers 
paying claims late. Even if a claim includes all the 
appropriate information, insurance companies often find reasons 
to delay or deny payment. This is tantamount to small physician 
practices extending interest free loans to large insurance 
companies.
    In addition, this seemingly intentional behavior by the 
insurer creates an onerous administrative burden. Physicians 
and their staff must spend hours on the phone pursuing payment 
of unpaid claims. In fact, growing numbers of physician 
practices have been forced to hire office staff dedicated 
solely to collecting late payments. Because of this, some have 
had to eliminate services and clinical staff positions as well 
as forego equipment upgrades and the adoption of health 
information technology.
    Fundamental fairness warrants timely payment. As the Chair 
has stated, in 50 States and the District of Columbia, 
legislation and regulations have been passed tied to the prompt 
payment of claims. Despite this, physicians still experience 
problems with receiving payments from health plans in a timely 
manner. Evidence of the continuing problem is that State 
regulators have imposed more than $76 million, including fines, 
interest, restitution and statutory penalty fees against third-
party payors for late payments to physicians and other health 
care providers.
    And it is not just State regulators who have understood the 
problem. In 2000, a number of individual and class action 
lawsuits were consolidated and eventually certified to cover 
more than 600,000 physicians. The suits were brought to address 
violations of prompt pay laws as well as other payment 
violations by some of the Nation's largest for-profit health 
plans. Settlements were reached with most of the insurers.
    However, these short-term solutions will begin to sunset 
this year. The AMA urges Congress to pass legislation that will 
establish a strong Federal prompt pay standard, protect more 
robust prompt pay State laws by ensuring the Federal standard 
is the floor, establish concurrent jurisdiction over 
enforcement between the State and Federal Government, clarify 
that State prompt payment laws apply to all ERISA-covered 
health plans, strengthen penalties to prevent plans from 
considering fines and other associated financial sanctions as 
merely the cost of doing business, protect physicians from 
retaliation by insurers if they pursue their remedies under the 
prompt pay laws and expand protections to address other tactics 
utilized by health insurers to delay or decrease payments.
    The AMA looks forward to working with the committee to 
achieve our shared goals of strengthening and safeguarding the 
viability of small physician practices and providing quality 
care to patients.
    Thank you for the opportunity to be here today.
    [The prepared statement of Dr. Wilson may be found in the 
Appendix on page 24.]

    Chairman Gonzalez. Dr. Wilson, thank you very much for your 
testimony. The next witness is Dr. Rob Merrill. Dr. Merrill is 
Chairman of the American Association Orthodontist Committee on 
Governmental Affairs. He is a board certified orthodontist and 
has been in practice since 1990. The AAO comprises 15,000 
members in the United States, Canada and abroad.
    Dr. Merrill.

STATEMENT OF DR. ROBERT MERRILL, D.D.S., M.S., BOARD CERTIFIED 
   ORTHODONTIST, CHAIRMAN, COMMITTEE ON GOVERNMENT AFFAIRS, 
   AMERICAN ASSOCIATION OF ORTHODONTISTS, ST. LOUIS, MISSOURI

    Dr. Merrill. Chairman Gonzalez, Ranking Member 
Westmoreland, and distinguished members of the subcommittee, on 
behalf of the American Association of Orthodontists, I thank 
you for your leadership in holding this important hearing to 
address issues related to late payment and benefits by 
insurers. As the current Chairman of the Association's Counsel 
on Government Affairs, it is my honor to have the opportunity 
to share the experiences and perspectives of its member 
orthodontists as the committee considers ways to alleviate the 
problems caused by the late payment of benefits.
    Orthodontists are uniquely qualified and educated dental 
specialists who correct improperly aligned teeth and jaws. 
There are currently 9,200 actively practicing U.S. members of 
the AAO. Orthodontics is one of America's finest examples of a 
thriving small business community. The Nation's orthodontists, 
over 75 percent of whom are solo practitioners that employ an 
average of seven dental service professionals, currently 
provide care to an estimated 4.4 million adolescents and 1 
million adults. Just over 60 percent of patients nationwide 
have insurance coverage that includes an orthodontic benefit to 
one degree or another. In my own office, approximately 55 
percent of our patients have orthodontic insurance benefits. 
The best insurance companies pay claims within 30 days, not 
unlike the best patients who are also prompt in paying their 
bills, so we don't have to send out multiple statements 
requesting payment.
    The average orthodontic practice is often hard hit by 
economic downturns as families often defer what may be 
perceived as elective orthodontic treatment. Often underscoring 
these financial difficulties is the practice of insurance 
companies that delay payments to orthodontic practices and thus 
cause additional hardship for the practice and its patients.
    As health care providers, orthodontists care about the 
quality of treatment of their patients and have a personal 
interest in the success of treatment. Since there are a 
relatively small number of orthodontists nationwide, we believe 
it is likely that insurance companies view the practices as 
lightweights that can be moved to the back of the line when it 
comes to payment of benefits. In short, this issue is about 
fairness as it involves large powerful insurance companies and 
their relationship to small community based health care 
providers and their patients.
    I would like to describe five ways in which late payment of 
benefits by insurers specifically harms the average orthodontic 
practice, a system used by one insurer that works well in my 
practice and outlines several areas where legislation could 
potentially help.
    One, cash flow problems. As small businesses, it is 
important to keep a steady and consistent cash flow in order to 
pay salaries of employers, the employees, vendors, and to 
upgrade equipment in order to provide the best, most 
technologically advanced care to patients. Late payments by 
insurers complicate cash flow, thus causing numerous accounting 
problems that require additional time, resources and staff to 
alleviate.
    Two, increased burden on patients. Many orthodontists in 
recent years have stopped processing insurance claims since the 
cost of hiring additional administrative staff to comply with 
insurance company red tape outweighs the benefit they receive 
in return. Regrettably, this causes additional strain for the 
patient, who is then burdened with the task of completing 
complicated reimbursement forms and communicating with the 
insurance companies.
    Three, administrative costs. Higher costs of insurance 
company compliance results in overall costs of patient care 
being increased. Many of the Nation's orthodontists who have 
longstanding practices report that insurance company benefits 
for orthodontic treatment have remained unchanged for over 20 
years. This means even patients who are covered by insurance 
often bear the entire burden of increased health care costs.
    Four, non-duplication of benefits. A related issue that 
affects orthodontists is what is termed non-duplication of 
benefits. This means that patients are covered by more than one 
insurance policy, yet the second policy will refuse to make any 
payment on behalf of the patient. It may be that both parents 
or a parent and a step-parent are employed and have paid the 
premiums for insurance that includes orthodontic coverage, yet 
will be unable to receive the benefit because of a non-
duplication clause in the insurance policy. This means that the 
employee who happens to have insurance coverage through a 
spouse cannot access their benefits equally to an employee 
working for the same company who is not covered by the 
insurance plan even though both are paying the same premium. 
This situation is unfair to those who are paying for a benefit 
and not receiving it. This needs to be remedied. Therefore, the 
AAL believes that consumers who pay for insurance coverage 
should get the full extent of the coverage they are paying for 
instead of getting caught in a tangled maze of paperwork that 
ends with a denial of payment by the second insurer. Congress 
should require that where families have multiple dental benefit 
plans, each plan will pay a portion of the dental care claim 
according to their contracted scope of benefits, not to exceed 
100 percent of the amount of the claim.
    Five, coordination of benefits. The treatment fee is such 
that both plans will usually end up paying their maximum, but 
the secondary insurer will refuse payment until a primary 
estimate of benefits is received, causing additional payment 
delays and increased paperwork and expense for the office and 
insurance company alike. An effective repayment system that 
works best for my office from an insurance company are the ones 
that pay automatically once the initial billing is received. 
This cuts down on expense and increased work hours for both the 
orthodontic office and the insurance company. Manual monthly 
insurance billing is very time consuming and adds to the 
administrative expense for both the practice and the insurance 
company and this ultimately costs the patients more.
    The AAL appreciates the opportunity to share the 
experiences and perspectives of our member orthodontists as the 
committee considers ways to alleviate the problems caused by 
late payments of benefits. I hope that the testimony I have 
offered has been valuable for that end, and I hope that if the 
AAL can be of further assistance to this committee, you will 
not hesitate to call upon us.
    [The prepared statement of Dr. Merrill may be found in the 
Appendix on page 32.]

    Chairman Gonzalez. The next witness is from San Antonio, 
and he is Dr. David Henkes. I have known David--I know, Rick, 
you were saying you had known Dr. Merrill for a number of 
years. I hate to even tell you how long I have known David. He 
was starting his residency and I was already a seasoned 5-year 
lawyer, which is way, way back. And we share many things in 
common and that is a great passion for the University of Texas 
Longhorns.
    Dr. Henkes hails from San Antonio. He is a board certified 
pathologist and the immediate past President of the Bexar 
County Medical Society in San Antonio. He currently sits on the 
Board of Trustees for the San Antonio Medical Foundation and is 
on staff with Christus Santa Rosa Health Care, one of the top 
health care organizations in all of south Texas. Dr. Henkes is 
also a partner and practicing pathologist with Pathology 
Associates of San Antonio.
    Dr. Henkes.

     STATEMENT OF DR. DAVID HENKES, M.D., BOARD CERTIFIED 
    PATHOLOGIST, PATHOLOGY ASSOCIATES OF SAN ANTONIO, PAST 
  PRESIDENT, BEXAR COUNTY MEDICAL SOCIETY, SAN ANTONIO, TEXAS

    Dr. Henkes. Congressman Gonzalez and Ranking Member 
Westmoreland, and other members, I want to thank you very much. 
I would be nervous in giving this testimony except that I look 
at your friendly face.
    Overall in Texas the prompt pay laws we have passed have 
been helpful, but they haven't really gone far enough. There 
are still some bad actors out there. In December of 1995, 
UnitedHealthcare was fined $4 million for violations. There is 
also the problem where the insurance companies tend to say they 
are ERISA and so therefore these are not regulated by States. 
Since most of their claims are ERISA, that has been an issue.
    As you mentioned practicing in Christus Santa Rosa, it is a 
very--I am very honored and very happy to do that, but it is a 
very high Medicaid and Medicare and indigent population. So you 
can imagine how slow pay and no pay has a real impact on our 
practice, especially when we have specialized pediatric cardiac 
surgery, pediatric oncology, and we have to attract talent for 
their special pathology needs.
    I want to tell you about an example in our practice that we 
had that extends beyond just the typical, you know, the slow 
pay for a claim submitted. In 2004, UnitedHealthcare had sent 
out a notice saying they would no longer pay for clinical 
pathology services. Clinical pathology services are services 
that pathologists provide to hospital laboratories for 
oversight and direction and usually comprise 25 to 35 percent 
of the time that a hospital pathologist spends doing those type 
of services. They said they were going to follow the Medicare 
model and to pay the hospital, which is indeed what Medicare 
does. But that is not the model of private insurance companies 
in Texas, and every other one pays us on a separate component 
basis. They said the services were covered and we should look 
to the hospital for that reimbursement. We did and the hospital 
said we are not being paid. They gave us signed statements of 
that and we asked them if they had any increase for the 
nonpayment to pay through to us and they said no. We went back 
to United and they said, oh, well, okay, we will change that, 
what we are going to do is--they changed their position and 
said we are going to go ahead and pay you a little bit more for 
your anatomic services to cover for these clinical services. 
Well, that brings in an ethical consideration because a number 
of patients who don't have clinical services--they don't--they 
have anatomic services and may not have clinical services. So 
they are paying for those other patients. And so we challenge 
that. And then finally, after having this within the Department 
of Insurance for Texas for almost 2 years, we got a letter back 
from them just giving us a letter from United saying that they 
no longer recognize this service. And so we are not sure 
exactly what that means, whether it is covered or uncovered or 
what we need to do with that.
    In essence, what I recommend is that this committee not 
only look at the existing rules and regulations from the States 
that are out there, but look at more detail at some of the 
other practices like what I have just mentioned and help us in 
terms of addressing those particular practices. I would suggest 
some of the following recommendations.
    One, that insurance companies must state whether disputed 
services are covered or not covered, recognized or 
unrecognized. If a service is covered, it should be paid; there 
should be a payment for that service. Insurance companies 
should not be allowed to increase payment for one service to 
cover no payment or lesser payment for another unless it is 
specifically agreed to by both parties in a written contract. 
Payment to someone other than the provider or person who is 
authorized by that provider for reassignment should be 
prohibited.
    The committee should consider a single set of rules on 
claims processing by all insurance companies as clinically 
based so there is transparency in the claims processing system. 
In cases of dispute requiring arbitration, the insurance 
company should pay the majority of the arbitration costs and 
contracts should not have provisions to deter class action 
arbitration or litigation. And just on that last particular 
item, we are currently in a class action arbitration and they 
are throwing up a number of hurdles about that basically so 
that it has made it very difficult but it will go forward and 
it should go forward.
    I would be happy to answer any other questions. I 
appreciate your time and consideration.
    [The prepared statement of Dr. Henkes may be found in the 
Appendix on page 36.]

    Chairman Gonzalez. Thank you very much, Doctor. At this 
time the Chair is going to recognize the ranking member, 
Congressman Westmoreland, for the introduction of the next two 
witnesses.
    Mr. Westmoreland. Thank you, Mr. Chairman . I want to 
recognize Dr. Gordon Austin, a third generation dentist who 
graduated top of his class at the Medical College of Georgia. 
He completed his oral and maxillofacial surgery residency at 
the Naval Hospital in San Diego in 1993 and is board certified 
by the American Board of Oral and Maxillofacial Surgery and the 
National Dental Board, certified by anesthesiology.
    Dr. Austin served for 11 years on active duty in the U.S. 
Navy and continues to serve in the reserves with 30 years of 
continuous service. Captain Austin was mobilized to the 
National Naval Medical Center in Bethesda, Maryland for 
Operation Desert Storm in 1991 and again in 2003 for Operation 
Iraqi Freedom.
    Dr. Austin has been in private practice since 1987. He 
lives in Carrollton, Georgia, with his wife Meredith and 
daughter Courtney. And Lindsay lives up here in Washington, his 
other daughter. But Captain Austin served from 2002 until 2005 
as the Reserve Officers Association National Dental Surgeon. He 
is currently the President of Northwest District of Georgia 
Dental Association. He is a friend of mine and a constituent. 
And welcome, Dr. Austin.

    STATEMENT OF DR. GORDON T. AUSTIN, D.M.D., P.C., BOARD 
CERTIFIED ORAL AND MAXILLOFACIAL SURGEON, PRESIDENT, NORTHWEST 
DISTRICT OF THE GEORGIA DENTAL ASSOCIATION, CARROLLTON, GEORGIA

    Dr. Austin. Thank you, Chairman Gonzalez. With the last 
name Austin, I certainly have a close kinship to the great 
State of Texas. Ranking Member Westmoreland, thank you for 
those comments, and members of the committee. I deeply 
appreciate this opportunity to testify before you on the issue 
of ensuring prompt payment for small health care providers. 
This is an issue of national interest and significant 
importance.
    There are currently at least 48 different State prompt pay 
laws, with to my calculation only South Carolina and Idaho not 
having such laws. In the complex environment of health care, 
any opportunity to decrease this complexity should be acted 
upon.
    Again, my name is Gordon Austin, DMD. I practice oral and 
maxillofacial surgery in rural Georgia. And as an oral and 
maxillofacial surgeon, I practice in both the hospital and the 
office setting. As a surgical specialty, oral surgery bridges 
the gap between medicine and dentistry. I file both medical and 
dental insurance claims. I am a Medicare provider and I am a 
Medicaid provider.
    I have submitted written testimony and other information, 
so I will keep my remarks brief to allow as much time as 
possible for questions.
    Although I am a proud member of the Georgia Dental 
Association, I come before you today not representing any 
organization but as a small businessman with a business issue. 
There are a couple of points I would like to emphasize.
    As a congressional committee with expertise on small 
business, it is certainly no surprise to you that as a small 
business it is vital that I be paid promptly for my services.
    Secondly, I believe action on this issue is a reasonable 
responsibility of the Federal Government because of the 
interstate commerce issues involved. Although I practice in 
Georgia, I file claims with insurance companies across the 
United States. A reasonable time frame for payment should be a 
consistent and national standard. ERISA plans are exempt from 
prompt payment laws, so Federal legislation would be necessary 
to fully establish the national standard.
    Thirdly, will it work? Is it doable? Currently under 
Georgia Dental Medicaid with the ACS and Avesis insurance 
companies, I can examine a patient on Tuesday, do their surgery 
on Thursday, and have the money directly deposited in my 
account on Monday. If some of the Georgia Medicaid insurance 
companies can do this, any third party payor can if they are so 
motivated. Yet I have submitted to you documentation of a 
recent far too common case of services which I provided in 
March that still has not been paid in August, along with a lot 
of the phone calls and documentation provided to the company. 
This demonstrates the unreasonable time and unnecessary expense 
to my office spent resolving many claims.
    Again, I thank you for this opportunity. I look forward to 
answering your questions.
    [The prepared statement of Dr. Austin may be found in the 
Appendix on page 65.]
    Mr. Westmoreland. Thank you, Dr. Austin. Now it is my 
pleasure to introduce Dr. Frank Kelly, who serves as Chair of 
the Communications Cabinet of the American Academy of 
Orthopedic Surgeons. Dr. Kelly also practices at the Forsyth 
Street Orthopedic Surgery and Rehabilitation Center in Macon, 
Georgia. A notable member of Georgia's medical community, Dr. 
Kelly has practiced in Macon for over 25 years. And he is a Phi 
Beta Kappa graduate of the University of North Carolina at 
Chapel Hill before completing his medical training at the 
Medical College of Georgia and his orthopedic residency at the 
University of Tennessee Campbell Clinic.
    Dr. Kelly is the past President of the Georgia Orthopedic 
Society and is currently serving as a member of the Board of 
Directors of the American Academy of Orthopedic Surgeons, 
representing over 24,000 orthopedic specialists worldwide.
    I want to thank Dr. Kelly for his willingness to come share 
his thoughts, and I look forward to hearing his testimony. Dr. 
Kelly, welcome.

    STATEMENT OF DR. FRANK B. KELLY, M.D., BOARD CERTIFIED 
 ORTHOPAEDIC SURGEON, CHAIR, COMMUNICATIONS CABINET, AMERICAN 
        ACADEMY OF ORTHOPAEDIC SURGEONS, MACON, GEORGIA

    Dr. Kelly. Thank you very much, Lynn. When I get back home, 
I don't know whether to tell my friends I went fifth or last. 
But perhaps fifth sounds better. Good morning once again, 
Chairman Gonzalez. And good morning again, Ranking Member 
Westmoreland. And good morning to other distinguished members 
of this subcommittee.
    As Lynn mentioned, my name is Frank Kelly. I am a 
practicing orthopedic surgeon in my hometown of Macon, Georgia. 
I also have the pleasure of serving as a member of the Board of 
Directors of the American Association of Orthopedic Surgeons. 
And I served as a Chair of our organization's Communications 
Cabinet.
    On behalf of my organization and behalf of my colleagues 
across the country, I sincerely thank you for asking me to 
testify this morning on this very significant issue of prompt 
payment for health care services.
    As a practicing physician and as administrator of a seven-
person practice, I am deeply concerned that the Federal 
Government has simply not done enough to ensure that physicians 
in practices like mine are paid promptly by insurers. Having 
now been in practice for almost 30 years, I have witnessed 
firsthand how this delay in reimbursement has not only made it 
more difficult for us to run our practices, but it has already 
had the very real potential of adversely affecting the quality 
of care we deliver to our patients.
    Though we have tried to cooperate with insurance companies, 
unfortunately the vast majority of so-called clean claims, 
those claims submitted in accordance with the insurer's own 
guidelines, are not reimbursed in a timely manner. In fact, as 
has been mentioned several times this morning, these claims can 
average 3 to 6 months before payment and they can constitute a 
very major burden for those of us who depend upon this income 
for the day-to-day operation of our practices.
    In response to concerns from physicians nationwide in an 
attempt also to address this significant problem, as has been 
mentioned already, almost all States have enacted prompt 
payment laws mandating that third-party payors reimburse claims 
in a reasonable time period. My home State of Georgia, as has 
been mentioned this morning, is fortunate to have one of the 
most comprehensive and effective laws governing prompt payment 
for medical services. Under our State law, insurers must 
process payment within 15 working days after receiving these 
clean claims, otherwise pay a penalty of up to 18 percent of 
the benefit due.
    Our insurance commissioner, John Oxendine, has been 
unyielding in his enforcement of this law and in his commitment 
to our State's physicians, ensuring that big insurance 
companies don't take advantage of our small medical practices. 
Unfortunately, Commissioner Oxendine's reach extends only so 
far under the current Federal law. Approximately half of my 
patients and over 100 million patients across our country are 
covered by self-funded insurance plans which fall under ERISA, 
the Federal Employee Retirement Income Security Act. And 
according to the Supreme Court's decision in a 2004 case, these 
ERISA plans are exempt from State prompt payment regulations. 
As a result, thousands upon thousands of claims are slipping 
through the cracks in this system.
    While insurance companies may argue that the administrative 
burden of processing claims prohibits timely payment, I find 
this to be a hollow and very ineffective argument. Even 
Medicare, the Nation's largest health plan, adheres to a higher 
standard than do these ERISA plans. In fact, the Social 
Security Act requires that accurate Medicare claims be 
processed in 30 days or be subject to a significant interest 
penalty. Prior to the enactment of our State's prompt pay law, 
practices like mine relied heavily on Medicare for our monthly 
cash flow to meet the expenses of running our practices. Many 
of my colleagues and States with less aggressive prompt pay 
statutes still struggle with late payments from private 
insurance companies. They still depend upon Medicare 
reimbursements to cover their expenses.
    Though much work still needs to be done, I have seen the 
very positive impact of Georgia's prompt payment regulations on 
our State's health care system and on the many hard working 
physicians and small businesses within it. I am confident this 
problem of delayed reimbursements can be overcome throughout 
our country. This will require accommodation of at least three 
things.
    Number one, effective, extensive prompt payment 
legislation.
    Secondly, the accurate determination of what really 
constitutes a clean claim.
    And thirdly, and perhaps most importantly, appropriate 
enforcement mechanisms to ensure that insurance companies are 
adhering to these regulations.
    Our association supports prompt payment within a 30-day 
timeframe. Such timely reimbursement will allow us to spend 
more time doing what we were trained to do, and that is taking 
care of our patients.
    On behalf of my orthopedic colleagues, on behalf our 
association, I thank you very much for your time and for your 
interest and for the opportunity to express to you my concerns 
about this most important matter. Thank you very much.
    [The prepared statement of Dr. Kelly may be found in the 
Appendix on page 67.]

    Chairman Gonzalez. Thank you, Dr. Kelly. We have been 
advised we have got two procedural votes and I think we have 
the 10-minute bell. Around the 5-minute bell we will head out 
back to the floor, vote. Two procedural votes, that could mean 
anything. Congressman Westmoreland could probably give me some 
insight as to what the Republicans have in store for us. I 
don't think he will. As soon as we are through, we will come 
back. I will ask one question and get it started. Then we will 
probably have to excuse ourselves. Please stick around. Staff 
will tell you more or less the time frame once we get down 
there and start voting. But there are two votes and conceivably 
that could be 20 minutes or 30 minutes.
    But Dr. Wilson, there are certain things that kind of 
resonate. First of all, it appears everybody is in agreement 
that there is a role for the Federal Government and yet still 
leave room for State mechanisms to take effect, which I think 
is always the best thing we can do. But one thing that struck 
me in reading the testimony from all of you, but especially Dr. 
Wilson and I believe Dr. Kelly and some others, this thing 
about uniformity. It is surprising to me that at this point in 
time that there isn't some sort of uniformity on what a clean 
claim looks like, the minimum amount of information that has to 
be reflected on there that would be sufficient, though, for the 
insurer to go ahead and act on it, because it appears that 
there is a game that goes on obviously. And I think I will get 
to Dr. Henkes and he can explain what happened in his 
particular episode in San Antonio.
    But have there--obviously there have been efforts to try to 
come together on what some sort of uniform information would be 
required?
    Dr. Wilson. Yes. Thank you, Mr. Chair. And certainly there 
have been and certainly the AMA has been involved in a lot of 
those efforts, in getting uniformity in terms of the claim form 
as well as the requirements for a clean claim. The challenge, 
of course, is that each of the insurance companies is an 
independent business. They sometimes would claim that there is 
some antitrust provisions that would prevent them from 
cooperating in some ways. I don't think we buy that argument. 
But the reality is they have not been able to come up with 
something they all agree with that would mean a clean claim.
    The other thing that physicians face is what is called 
black box edits, and that is for any one insurance company they 
won't tell the physician what their requirements are. So you 
might have 10 companies you deal with and at a minimum if they 
would just let you know, what are the 10 things that ought to 
go into a clean claim, that would help the physician. 
Frequently those are considered proprietary and not available 
and not provided. So the physician finds out what is missing 
from a claim when he gets the claim back and says, well, you 
missed this. And unfortunately, sometimes you will correct that 
and then you get the claim back again and say by the way, here 
is something else we want you to correct as well. And each of 
those, of course, retolls the hours in terms of prompt pay 
which make that a challenge.
    The point is well made. We need some uniformity there. And 
there are times when the Federal Government can provide that 
uniformity and this is one of those.
    Chairman Gonzalez. Sir, we always hear here in Congress 
that many times whatever Medicare--what the United States 
Government through Medicare establishes, what would be a 
reimbursement rate for any procedure, a protocol and so on that 
generally insurers will then adopt that particular baseline 
reimbursement rate. Is that accurate?
    Dr. Wilson. The reality is more and more of the insurance 
companies are pegging their rates. They won't necessarily make 
that the same rate. But if as is anticipated--and we would hope 
Congress is going to block that. If we come January 1 and are 
faced with a 10 percent cut in Medicare payments, you can be 
sure that insurance companies will look at that and adjust 
their rates. Now, they won't all come down to Medicare levels, 
but they will use that as a model which then will obviously 
impact everyone adversely.
    Chairman Gonzalez. The reason I ask that, it seems that 
they are pretty willing to go ahead and adopt that which the 
Federal Government may establish if it works to their advantage 
but not necessarily other practices by the Federal Government 
when it comes to, say, Medicare. So I think we can maybe give 
them a little bit of guidance.
    At this time, the committee will stand in recess and we 
will reconvene as soon as that second vote or the last vote. 
Thank you for your patience and see you in a few minutes.
    [Recess.]
    Chairman Gonzalez. The subcommittee will reconvene at this 
time. I will yield to the ranking member for any questions he 
might have since I had the privilege of getting a few minutes 
in earlier.
    Mr. Westmoreland. Thank you, Mr. Chairman . And I want to 
thank all of you for coming. And I know a lot of people don't 
look at it as being--in the medical profession as being a small 
businessman. But coming from a small business background and 
knowing some of you personally, I know that it is a small 
business and that cash flow is critically important. And I am 
going to ask Dr. Austin this. Does a delay in provider 
reimbursement threaten to Dr. ve some of the small providers 
out of business? And if that happened because of this pay 
issue, what would the effect be on both the provider and the 
patients?
    Dr. Austin. Thanks for the question. I just wanted to say 
to the Chairman I really appreciated his comment about the 
Medicare rules. I believe you get it, that the insurance 
companies use what is to their advantage and this card was not 
to their advantage.
    It is really pretty simple in terms of running a business. 
The more hassles you have in a business, the more difficult it 
is to make a profit, the lower incentive there is to go into 
the business. So if the bottom-line continues to deteriorate, 
it is harder and harder to attract the best and the brightest 
to the professions. It is particularly problematic for small 
specialties like my own.
    The orthodontist as previously--the issue of being an 
orthodontist. When I was on the Medicare Carrier Advisory 
Committee, I was talking to the medical director about some 
issues that we had. And he said, you know, Gordon, we get 6,000 
complaints from the cardiologists and we get six complaints 
from the oral surgeons and we just don't have time to get to 
your issues. And so that is really what happens to the small 
practitioners, is that we get pushed to the back of the line. 
And because we are small, it affects us more. If I do four 
surgeries in a day and one of those claims doesn't get paid, 
that is 25 percent of my income that doesn't happen. If you 
were in a large group, that is a smaller percentage and more 
easily absorbed. So it affects the smallest businesses, the 
smallest practitioners the most.
    Mr. Westmoreland. Just one follow-up if I could. And this 
would be to anybody because you may all have different 
circumstances. But what are some of the excuses or practices or 
dilatory things that these insurance companies do to prevent 
you from being paid promptly.
    Dr. Austin. It is pretty easy in my case. I do the same 
type of procedures over and over and over again and we face the 
same issues. A large part of my practice would be taking out 
wisdom teeth on a young person. We know that they are going to 
ask for an X-ray. We know that if we take out a little cyst, 
they will ask for a path report. And we know if they are a 
student, they will ask for proof of student status. We 
routinely send these in with the claim and yet we routinely get 
the claim back saying send us an X-ray. We call them and say 
you have the X-ray. They say, oh, yes, we do have the X-ray. 
They say send us the student status. We sent you a student 
status. Oh, well, maybe we didn't get it. So they know what 
stops the clock, and that is really what the issue is. The 
States have put a clock on them to pay the claim and they know 
if they can say it is not a clean claim, they are missing 
something, it stops the clock. So even when we send it, stamp 
on the claim that we sent it, they still when we call them or 
get the letter back, they ask for something we have already 
sent them.
    Dr. Kelly. If I might, I would like to echo Gordon's 
comments because I found the same situation in my orthopedic 
practice. One of the things I do, as you might imagine very 
commonly, is a knee injection. It is a very simple technique. 
It takes just a few moments. The same situation. We will submit 
the claim, they will send a letter back that always says--they 
send it back and they say we notified your patient 17 days ago. 
They always say 17 days ago that we received this bill and we 
need to have from you the patient's history and physical, any 
pertinent lab tests, pertinent X-rays, progress notes, anything 
to game the system.
    I think the Chair had it right earlier. I think it is 
almost like a game they are playing just to delay payment. So 
we have the same situation with knee injections in our 
procedures that Gordon does in his practice and it has just 
escalated.
    Dr. Merrill. Probably the most common thing with braces is 
when there is two insurance policies that cover--the average 
fee for braces is well in excess of what the lifetime maximum 
is. And secondary insurers will delay payment by saying, well, 
we are not going to issue our estimate of what we are going to 
pay until after the payment is received from the first insurer 
so we know what they'll pay and then we'll tell you what we are 
going to pay, even though both are going to pay that full 
amount. It is just a matter of being able to delay it an 
additional 3 to 4 months, which provides uncertainty to the 
patient. The patient is, like, do I have this or do I not, am I 
going to have to find another $1,000 or $1,500 to pay towards 
this or will my insurance pay for it? And my office staff have 
to explain that to the patients and they don't understand how 
the insurance companies work. And so it is very disconcerting 
to the patients when that happens, as well as being a problem 
for cash flow as you have alluded to.
    Dr. Wilson. One of the things that has happened along with 
the prompt pay laws in States is insurance companies now have a 
new category, which is called pending review. And so you get 
the report back--and I mentioned this in my written testimony--
that pending review doesn't tell you what it is they are 
looking at. It is like a concurrent audit and then that 
postpones the prompt payment and then ultimately they will say 
what it is that they want.
    Mr. Westmoreland. And just a little follow-up to that. Like 
Dr. Gordon and Dr. Austin and I am sure Dr. Merrill, you do the 
same thing over and over. So you know what they are going to 
ask for. Is there any type of checklist or something that you 
send in with a claim or is there requirements that they have 
given you that you routinely know? I mean, I understand how 
they are doing it, but I mean, it is really inexcusable if you 
do these things over and over and over and know what they are 
going to ask. Would one patient be different from another?
    Dr. Kelly. I will start that, Lynn. I think the incredible 
thing about this is we use the insurer's own guidelines. They 
ask us what to submit. We use their own guidelines for our 
claims. And even though we have followed their guidelines to 
the letter, they still come back requesting other information.
    I would request that sometime when you are in the Macon 
area, please stop by my office for 30 or 45 minutes. You will 
be just absolutely amazed at the type of requests that we get 
from the insurance companies.
    So they have guidelines, we go by them. It doesn't seem to 
matter.
    Dr. Austin. The claim itself--we have codes and the codes 
very clearly define as to what the procedure is that we are 
doing. So in theory, when we have submitted that claim with the 
code, we have told them exactly what we are doing, how we are 
doing it. And as I said, with Medicaid I can send it in on 
Thursday and have the money in the bank on Monday. It is not a 
matter that they can't do it. It is purely a matter of in their 
minds it is a business advantage to not pay in a timely manner. 
And they are much better at it than I am.
    And that is kind of where the issue comes in. The best 
people that are gaming the system are the insurance companies. 
The next people are the people that do regulations, Medicare, 
that set guidelines. But the person that is least able to 
really keep up with the changes is the small practitioner. So 
we are always a little behind the curve. The insurance company 
is always a little bit ahead of the curve and the regulations 
are somewhere in the middle.
    Dr. Henkes. Congressmen, as well, you have to realize too 
if you have four or five major players in one area, you are 
also playing with four or five different sets of rules. And 
that is why I believe that the more uniformity in the sets of 
rules would be better. Each one may have their own sets of 
rules, as Dr. Wilson had mentioned. Some of these are black box 
edits. They won't even tell you what the rules are.
    Dr. Wilson. I guess the other observation about, well, can 
they do it if they want to--well, someone said how does it 
happen with Medicare. And clearly there are rules for Medicare. 
And while if you look at prompt payment for Medicare across the 
board, it is about somewhere in the middle. However, for 
example, in my own personal example, which is solo medicine--
and I file electronically and I can tell you that the Medicare 
carrier meets the requirements, the 14-day requirement for a 
turnaround on electronic billing. And it seems to me that--and 
obviously those are the major health insurers who are 
contracted with Medicare. And that to me speaks to the issue 
that if the incentives are appropriate, if the cloud is there, 
in this case the Federal Government, then they will be able to 
meet some standards that are put in place.
    Chairman Gonzalez. The Chair is going to go and recognize 
Jason Altmire. And again, Congressman Altmire, thank you for 
joining us.
    Mr. Altmire. Thank you, Mr. Chairman and Mr. Ranking 
Member. I would just say very briefly it looks like we will 
have some disruption here to this hearing but that should not 
indicate that this committee doesn't understand the 
significance of health care as an issue to small businesses. 
And I just wanted to thank each and every one of you while we 
had you here together for your appearance here today and let 
you know we want to continue working with you as we move 
forward on this issue. There is no issue like this across the 
business world where small businesses are affected by health 
care every single day, every business in the country. And I 
really appreciate the fact, we appreciate the fact that you 
took the time out of your day to come help us with this hearing 
and walk us through your issues. And we look forward to 
continuing that discussion and just to apologize again for the 
disruptions that apparently we are going to be facing 
throughout the hearing. Thanks.
    Chairman Gonzalez. Thank you very much. Let me direct a 
question to Dr. Henkes. You pointed out an interesting case 
that you had with UnitedHealth and it is not for us to paint 
with a real broad brush. But nevertheless, the concern that we 
have, Republicans, Democrats, it doesn't matter, is that we 
have a business model that has been institutionalized by the 
insurance industry. The insurance industry is a very essential 
component to the way we do business in this country and we need 
a healthy insurance industry. But nevertheless, our fear now is 
that they have basically built into their business model a 
manner in which to delay payment for what very well could be 
obviously the business considerations of holding on to that 
money, the investments and so on that it brings. So, Dr. 
Henkes, you have pointed out the experience with UnitedHealth 
and how you had to go and address that obviously.
    The other thing that you pointed out in your written 
testimony was the concern--and some of the other witnesses also 
pointed out and I wanted to touch on this quickly--and that is 
some Federal clarification legislatively on the application of 
ERISA and how that plays a part in maybe complicating what can 
be done with insurers and the question of prompt payment. What 
is the position on ERISA and how do you see it?
    Dr. Henkes. Well, I don't think that the picture is 
entirely clear. From my understanding on this, there has been 
some discussions with the Department of Trade and that they 
have seen some ambiguity into whether this really has any kind 
of--they have jurisdiction over the prompt pay on this. We know 
at the Texas Department of Insurance there has been ambiguity 
by the researchers there as to whether the current laws apply, 
being State laws on to--for ERISA plans. I actually am on an 
advisory committee for an insurance company in Texas and they 
have taken the position that they do not. Of course I don't 
think this one has been actually totally played out. I think 
there may have been one court case in another State that may 
have given some credibility that maybe payment issues are not 
necessarily preempted by ERISA. But there still is a lot of 
ambiguity.
    So I guess at this point, I think the State agencies, as 
well as the Federal, are in ambiguity in how this affects on 
the ERISA plans. And I think that is why it is so critical to 
have you and this committee look at that to give that clarity 
and give that clarity that if it requires passing another law 
or if the compliance--that this is a part of State law.
    Chairman Gonzalez. I will advise you all--and I would need 
to do more research on this. I didn't have time to do it and 
check the status. H.R. 979 is the Bipartisan Consensus Managed 
Care Improvement Act of 2007, and it would amend ERISA. Among 
some of the provisions would be to impose prompt payment 
requirements on all employer-sponsored health plans. The act 
requires such plans to pay all clean claims consistent with 
existing requirements under the Medicare program.
    So obviously there are other committees that share 
jurisdiction. Much to our credit, the chairwoman of this 
committee, Chairwoman Velazquez, was able to expand the 
jurisdiction of this committee to share some of the 
jurisdiction with other committees. So we still have to work in 
unison. So it is obviously being addressed. We just need to see 
where we can try to coordinate this.
    Dr. Kelly, I think you were pointing out again, if we can 
come up with the proper role for the Federal Government and, of 
course, Dr. Wilson was also very specific as to what extent we 
could do that. Dr. Austin also touched on that and I think that 
is going to be our focus. What can we do to come in with a 
Federal standard? Again, that is establishing basically the 
floor, working with the States, which would be really more of 
the enforcement mechanism, and of course if they have higher 
standards, not to interfere and meddle with that. At least that 
is my perspective, and I think Congressman Westmoreland may 
have a different take on it.
    Also, I think we need to start looking at uniformity out 
there so that we don't have companies that basically say we 
don't have the information, you add on to it. If they choose to 
do that, there should be an additional burden placed on them 
with some consequences. And that is the only way you ever get 
accountability, is where there is consequences, which I don't 
think we have that at the present time.
    So there is much to be worked on. By the same token, I also 
wish to address many of the other items that you may have 
brought up in your written testimony addressing other trouble 
spots, not just the prompt payment. But I think that right now 
for the purpose of this hearing--and we will share the other 
recommendations and observations you made as to other, what I 
would say, difficult areas in practicing medicine.
    I also want to make another observation, and that is simply 
that this is the Small Business Committee. Most physician 
practices are small businesses, as has been pointed out. We 
recognize that you all are in a very unique position as 
physicians. You have to conduct yourselves as a business so you 
can open your doors in the morning and make sure that they are 
open every day. And that is a business. Nevertheless, I still 
consider you the last standing profession in the United States 
of America, and somehow you have to maintain that even in a 
business environment, and we are here to help you do that.
    We have another vote. We are going to be leaving in a few 
minutes, and I don't know how long it is going to take. So what 
we are going to be doing is basically adjourning and letting 
you all catch your flights and such. And I know some of you 
said you wanted to take some pictures. So I want to give them 
that opportunity.
    So at this time, I would yield to the ranking member for 
any comments he may have or any follow-up questions.
    Mr. Westmoreland. Thank you, Mr. Chairman .
    Mr. Westmoreland. Let me just thank you for having this 
hearing because I think this is a very important issue. I do 
agree the Federal Government does need to have a part in it.
    One quick question. How many private insurers handle 
Medicare in your States, do you know a number?
    Dr. Wilson. For Florida, it is just one.
    Mr. Westmoreland. For Florida it is only 1.
    Mr. Wilson. It is Blue Cross/Blue Shield.
    Dr. Henkes. In Texas we have the standard program, a 
Medicare program, but there are some replacement programs, HMO 
replacement programs.
    Mr. Westmoreland. Medicare Advantage type thing?
    Dr. Henkes. There are probably 5 or 6 of those, maybe 6 or 
7.
    Mr. Westmoreland. In Florida it says there are 289 
different plans for the Medicare Advantage; is that true?
    Dr. Wilson. The answer is I do not know that, and I 
responded to the wrong question. When you said Medicare, I tend 
to think of the Medicare carrier and not the Medicare Advantage 
plans, but there are a lot of them.
    Mr. Westmoreland. Okay.
    Dr. Henkes. We can get that information for Texas.
    Mr. Westmoreland. I was wondering, I know the Medicare 
Advantage is a little bit different program than Medicare 
itself, with a little different payment. I was noticing we 
happened to be talking about the Medicare Advantage program and 
I was just looking at the different providers, 289 of them in 
Florida. Do they all have to agree to the prompt pay or to the 
payment that Medicare prescribed to be able to offer that?
    Dr. Wilson. One would assume.
    Mr. Westmoreland. I would assume that, too.
    Thank you, Mr. Chairman , for having this, and again we are 
going through some procedural stuff right now, a little 
disagreement, but I thank all of you for coming.
    Chairman Gonzalez. I will tell you this right now; that we 
are conducting ourselves like insurers on prompt payment.
    Well, I think we're still going to make this vote, but I 
would like the opportunity to go out there and thank you 
personally. And Lynn, if you have a chance to also join me.
    I will do something a little different and instruct staff 
to get together. I want them to summarize some of the testimony 
regarding identifying everything that everyone agreed on, and 
what would be the remedy in order for us to share that with 
other members of this subcommittee as well as the full 
committee.
    And I ask unanimous consent at this time, the members have 
5 days to enter statements into the record. And this hearing is 
now adjourned.
    [Whereupon, at 12:00 p.m. The subcommittee was adjourned.]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



