[Congressional Record Volume 144, Number 109 (Wednesday, August 5, 1998)]
[Extensions of Remarks]
[Pages E1563-E1565]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
INTRODUCTION OF LEGISLATION TO ENSURE PROMPT CLAIM PAYMENT BY HEALTH
PLANS
______
HON. JIM McDERMOTT
of washington
in the house of representatives
Wednesday, August 5, 1998
Mr. McDERMOTT. Mr. Speaker, today I am introducing legislation that
addresses the issue of prompt payment, that is, ensuring health plans
reimburse providers in a timely manner.
Although there have been numerous horror stories of health plans
withholding reimbursement from providers the issue of prompt claim
payment has not been addressed during the managed care reform debate.
My view is that the prolonged delay of claim payments by health plans
interferes with the doctor-patient relationship.
By delaying reimbursements to doctors, health plans are turning care-
givers into bill collectors--forcing them to hound both the insurance
company and the patient for reimbursements which, in most cases, should
already have been paid by the plan.
Unnecessary reimbursement delays by health plans create unnecessary
rifts between the patient and the provider--causing confusion with
patients about their health insurance plan at a time when they are most
vulnerable and possibly even distrust by the patient in the quality of
their provider.
The attached article from the August 2, 1998 Washington Post
elaborates with specific, real life examples of the above mentioned
issues.
Medicare, Medicare+Choice, & Medicaid already have statutory language
requiring prompt payment by its contractors. Yet, when President
Clinton extended managed care protections to federal employee health
plans, he did not include the prompt payment language in his executive
order.
Because of federal inaction, some states have taken the lead in this
area. Texas, Florida, Tennessee, New York, and New Jersey have stat
laws requiring prompt payment. Similar bills have been introduced in
Georgia, Massachusetts, New Jersey, Oklahoma, Pennsylvania, Rhode
Island, Vermont and Washington.
Most of the state laws appear stricter than the Medicare+Choice model
I propose. For example, in addition to establishing clean claim payment
guidelines, Texas requires strict time lines for plans when notifying a
provider that a claim is being investigated. The plan must explain in
writing why they reject a claim, and make payments in 5 business days
after notifying claimants that their claim will be paid.
New York, home of the infamous Oxford Health Plan, has by far the
strongest penalties for plans that fail to comply with their prompt
payment laws. New York plans can be subject
[[Page E1564]]
to fines of up to $500 per day for each claim not paid within 345 days.
Rather than draft comprehensive legislation this year that includes
stronger guidelines than are currently in place at the federal level, I
chose to introduce legislation that simply applies the existing
Medicare+Choice prompt payment regulations to all health plans--
regulations that Congress overwhelmingly supported last year.
If enacted, my legislation requires health plans to pay 95% of the
clean claims within 30 days of receipt. If health plans do not comply
with these guidelines, the bill requires plans to pay interest on clean
claims that are not paid within 30 days. The legislation also requires
that all other claims must be approved or denied within 60 calendar
days from the date of the request.
Congress can begin to address this important issue and alleviate much
of the stress health plans are causing both patients and providers by
passing prompt payment legislation. I urge my colleagues to join me in
taking action on this issue this year.
[From the Washington Post, August 2, 1998]
Health Care's Painful Claims--Problems With Insurers Plague Many
Patients
(By David S. Hilzenrath)
Olney resident Tammy L. Rhoades's health insurer, Blue
Cross and Blue Shield of the National Capital Area, left her
on the hook for $384 of anesthesiology charges because the
doctor who administered pain relief while she was in labor
wasn't a ``preferred provider.''
Baltimore resident William F. Cooke's insurer refused to
pay $1,404 for respiratory therapy he received after being
diagnosed with lung disease. Cooke said he checked with Blue
Cross and Blue Shield of Maryland before he started
treatment. But the company rejected the bills, saying his
policy's stated coverage of ``physical therapy'' didn't mean
``respiratory therapy.''
David Trebach of Alexandria received notice in June that a
doctor's office would obtain a court summons and ``an
immediate judgment against you and your property'' if he
didn't pay hundreds of dollars of bills dating back as far as
June 1997. Despite Trebach's persistent pleas, Kaiser
Permanente had failed to pay.
Eventually, each of the insurers gave in to protests and
paid the bulk of the charges, which erased the customers'
debts, but not their resentment.
For a growing number of consumers, it has become a familiar
test: exasperating rounds of letters, phone calls and time
spent on hold; empty corporate assurances, mysterious delays
and bewildering rebuffs--all in the course of getting a
health insurance company to pay what they contend it should
have paid in the first place.
``There is general misery in all dealings,'' Maryland
Insurance Commissioner Steven B. Larsen said.
Though some insurance companies, such as Kaiser Permanente,
acknowledged lapses in service, others, such as CareFirst
Inc., say they pay the vast majority of claims without a
hitch.
Conflicts between health insurers and patients are hardly a
new phenomenon, but the upheaval in the nation's health care
system in recent years has raised the level of frustration.
The managed care revolution, which promised to simplify
billing for consumers, instead has spawned bureaucratic rules
and procedures so complex that they have confounded even the
latest computer systems--not to mention human beings.
Problems with ``billing or payment of claims or premiums''
tied as the top health insurance complaint of Californians
surveyed last fall by a state health policy task force.
Fourteen percent said those relatively pedestrian issues were
their biggest health insurance problem, eclipsing such hotly
debated issues as delays in obtaining needed care or
difficulty getting referrals to specialists.
Some rapidly growing health plans have overreached, adding
members much faster than they have added workers. Others have
thrown their customer service into chaos, at least
temporarily, by merging with companies that use different
systems, consolidating far-flung offices, laying off
experienced employees in one part of the country and hiring
novices to replace them somewhere else--all in the name of
efficiency.
``Most plans today are having serious servicing issues--
issues of turnaround time, accuracy, being able to respond to
consumers,'' said Richard Sinni of Watson Wyatt Worldwide,
which audits health plan performance for employers. ``I think
they've gotten worse across the board.''
Many doctors, hospitals and patients accuse insurers of
dragging out payments as part of a deliberate strategy to
wear them down or continue earning interest on their money as
long as possible.
Insurers deny that the delays are intentional. They
attribute them to a variety of factors, including their own
administrative errors, patients' ignorance about their
benefits and necessary enforcement of sometimes unpopular
standards.
This much is clear: The industry's heightened focus on the
bottom line means bills these days are subject to stricter
scrutiny and challenge.
``We do not apologize aggressive approach to . . .
utilization review on behalf of our members,'' William L.
Jews, chief executive of CareFirst, said in a news release
last week.
CareFirst, parent of the Blue Cross and Blue Shield
companies serving Maryland and the District, has a duty to
make sure customers' health dare dollars are spent
responsibly, executives said. The insurer is also caught
between conflicting expectations--those of the people who
receive the care and those of the employers who subsidize it,
officials said.
``The employers . . . ask Blue Cross to be stricter or
harder or harsher on payments,'' said John Moseman, a vice
president of the Maryland company.
Often, doctors and patients create their own headaches by
filling out forms incorrectly or ignoring the rules.
One woman had about $9,000 of maternity charges rejected
last year because she didn't get the required
``precertification'' for the birth of her child, said Dora
Crouse, whose job is to troubleshoot claims problems for
clients of JEMM Group Insurance Inc., a Silver Spring
insurance broker. When JEMM intervened, the woman's preferred
provider organization agreed to pay the bills.
In contrast, no one blames Bonnie Emmert of Grant Junction,
Colo., for her woes, but it took several months and the
involvement of state regulators to resolve them.
While undergoing chemotherapy and radiation this year for
breast cancer, Emmert said she spent much of her time
listening to the music on her insurer's customer service
line, faxing and mailing multiple copies of the same
paperwork, and fending off demands by her hospital and
doctors for payment of charges dating back as far as
December. A nurse by profession, Emmert said she has been
living off savings while sidelined by her illness.
Provident American Life and Health Insurance Co., based in
Norristown, Pa., was investigating Emmert's medical history
to determine if her cancer was a preexisting condition and
therefore excluded from coverage.
Emmert, 45, who bought her Provider policy last August and
had surgery in December, said she found the company's doubts
hard to understand. ``I had cancer in August and I waited
till December to do anything about it?'' she asked,
rhetorically. ``Yeah, right.''
The bills came due just in time to get caught in the
confusion when Provident moved its claims processing
operations from Minnesota and Pennsylvania to Florida in late
January. ``The data transfer did not go smoothly,'' said
Jimmy Potts, Provident's vice president for market conduct
and compliance. The move ``created a delay that is frankly
unacceptable to the company, but under the circumstances was
unavoidable.''
Following the move, Provident was so overwhelmed with
inquiries about delayed payments that callers were left on
hold for as much as an hour and a half at a time, Potts said.
The company agreed to pay thousands of dollars for Emmert's
care on July 8 after the Colorado Division of Insurance
showed that she had been insured before she bought coverage
from Provident. That made any question of a preexisting
condition moot, Potts said.
``We recognize it's a frustrating time for her,`` Potts
said. ``But it also has been an incredibly frustrating time
for those of us within the insurance company.''
William Cooke's sentiments in his dispute with Blue Cross
and Blue Shield of Maryland went beyond frustration. In a
complaint to the Maryland Insurance Administration (MIA), the
Baltimore retail manager accused the company of ``predatory''
behavior.
Blue Cross defended its decision not to pay for Cooke's
respiratory therapy in an August 1997 letter to the MIA,
noting that Cooke's policy explicitly excluded ``admissions
or any period of stay in a facility'' for various services.
The relevance of that was hard to fathom, because Cooke
said he received the therapy on an outpatient basis.
Months later, Blue Cross continued to argue that, while
Cooke's policy covered ``physical therapy,'' the treatment he
received didn't fit the definition.
The MIA disagreed. In March, it wrote that the company's
posture ``may violate general quality of care standards.''
Even then Blue Cross held its ground, so in April the MIA
issued an ultimatum: Failure to pay would result in a formal
order against the company ``and administrative penalties.''
Finally, in late June--more than a year and half after the
disputed treatment ended--Blue Cross paid $1,303.25.
In the case of Rhoades and her out-of-network
anesthesiologist, the insurer reversed itself without
argument.
``We would agree with Mrs. Rhoades's position that she
could not at the time of the delivery as the question . . .
`Are you [a preferred provider] or are you not?'' Moseman
said.
Though the nation's angst over medical claims is hard to
measure, signs of it abound:
Fast-growing Oxford Health Plans Inc. of Norwalk, Conn.,
developed what it envisioned as a state-of-the-art computer
system--and then watched it malfunction on a grand scale.
Doctors, hospitals and regulators complained about a mountain
of unpaid medical bills. To make amends, the company had
advanced $203 million to health care providers as of Dec. 31
as it attempted to plow through the backlog.
After Aetna Inc. merged with U.S. Healthcare, the amount of
time it took to
[[Page E1565]]
company to process medical claims doubled last year,
according to one analyst. The company says performance has
since rebounded.
What had been 44 claims-processing centers across the
country were consolidated at about 25 locations, and the
number of employees handling claims was reduced by more than
one-fifth. Employees with 15 years of experience were
replaced by people with less than a year's experience, said
R. Max Gould, Aetna U.S. Healthcare's head of customer
service.
In a series of audits of Colorado health insurers, the
state Division of Insurance has cited widespread problems
related to payment of claims, among other shortcomings. The
regulatory agency this year assessed fines against PacifiCare
of Colorado Inc., HMO Colorado Inc., Blue Cross Blue Shield
of Colorado and Gem Insurance Co.
Gem, which tripled enrollment in three years and
accumulated a backlog of 106,000 unpaid claims, said in June
that its low prices ``led to . . . poor customer service.''
When Prudential moved processing of many Washington area
claims to Jacksonville, Fla., in the spring of 1997
``initially there was some conversion disruption,''
Prudential spokeswoman Peggy Frank Lyle said. The company was
compressing 40 claims-processing sites and 28 member-services
sites nationwide into four.
It's ``very difficult when you have that many new people to
train,'' Lyle said.
In April, Maryland's hospitals filed a coordinated
complaint with the state insurance commissioner alleging
health plans were systematically denying payment for
medically necessary care after the care had been delivered.
United Healthcare, though not singled out for criticism,
showed the highest level of denied claims, according to
Maryland Hospital Association data. The percentage of
hospital days for which it initially refused payment rose to
14.6 percent in 1997--more than one in seven--from 4.4
percent in 1996, the association reported.
``When we find the care is not appropriate, we deny
[payment for] the hospital day,'' United Healthcare Vice
President Sharon Pavlos said.
Kaiser Foundation Health Plan of the Mid-Atlantic States
Inc., also know as Kaiser Permanente, in June paid $117,000
to settle an array of potential violations cited by the
Virginia Bureau of Insurance.
For example, more than one-fifth of the time, a review
found, Kaiser failed to add interest to late claim payments
as required by law.
Kaiser said its problems got much worse last year, after
the period covered by the review. The February 1997 takeover
of Humana Group Health Inc., ``crashed our little system''
said Bernard J. Tyson, president of Kaiser's Central East
Division. ``We don't have . . . the right infrastructure and
information systems to manage now a big piece of our
business.''
The company plans to complete a major upgrade next spring.
In the meantime, it fired the outside contractor that had
been handling its claims and switched to a better internal
system, officials said. ``Clean'' claims, which are claims
that don't raise questions, were being processed in an
average of 26.7 days during June, compared with about 50 days
at one point last year.
Trebach's most severely delayed bills ``fell in some black
hole,'' spokeswoman Darlene Frank said.
For Trebach, a social worker in the Fairfax County public
schools, a final indignity was the doctors' warning that a
``warrant in debt'' might be ``delivered to your home by a
Sheriff.''
``This would be so frightening for my children,'' said
Trebach's wife, Loretta DiGennaro.
Consumers ignore payment demands at their peril, as a clerk
in a Washington electrical supply business recently
discovered. Long after his insurer had rejected a series of
1995 and 1996 hospitals bills--so much later that the insurer
can't document the reason--the hospital turned them over to a
collection agency, according to Crouse at the JEMM insurance
brokerage.
Now, under a court order, the clerk's wages are being
garnisheed to pay the debt.
____________________