[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.

     

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