[Congressional Record Volume 150, Number 49 (Thursday, April 8, 2004)]
[Senate]
[Pages S4046-S4048]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. CORZINE (for himself, Mr. Reed, Mr. Bingaman, Mr. 
        Lautenberg, and Ms. Cantwell):
  S. 2308. A bill to provide for prompt payment and interest on late 
payments of health care claims; to the Committee on Health, Education, 
Labor, and Pensions.
  Mr. CORZINE. Mr. President, I rise today to introduce legislation to 
ensure that managed care plans and other private health insurers pay 
health care claims in a timely fashion. I thank my colleagues Senators 
Lautenberg, Reed, Bingaman and Cantwell for joining me in introducing 
this bill.
  This legislation seeks to address the very serious backlog of HMO 
payments that hospitals and physicians are facing in my State of New 
Jersey and across the country. Specifically, the legislation requires 
private health plans to pay manually filed claims within 30 days and 
electronically filed claims within 14 days. Insurers that fail to meet 
these time frames would be required to pay interest for every day the 
claims went unpaid. Insurers that knowingly violate these prompt 
payment requirements would be subject to monetary penalties.
  A Federal prompt pay law is critical to ensuring that our health care 
providers maintain adequate cash flows and are able to continue 
functioning. The need for such a law cannot be understated. In my State 
of New Jersey, almost half of all hospitals are operating in the red, 
and that number is growing. Physicians and hospitals are experiencing a 
severe medical malpractice crisis, which is further limiting their 
resources. Untimely payment of claims has only compounded this problem.
  According to a survey of 50 New Jersey hospitals, only 39 percent of 
manually-filed clean claims are paid within 40 days. These institutions 
cannot afford to wait indefinitely for reimbursement for services they 
have provided. Each year, hundreds of millions of dollars in HMO 
payments to hospitals are held up for months at a time, worsening 
provider fiscal woes.
  The problem of late payments has reached such a crisis that 47 
States, including New Jersey, have enacted ``prompt pay'' laws to 
require insurers to pay their bills within a specific time frame. 
Unfortunately, New Jersey's law, like most similar State laws, is 
largely ineffective because it lacks strong enforcement provisions and 
offers no incentives for private insurers to comply. Furthermore, State 
prompt-pay laws only apply to non-ERISA regulated plans, which only 
cover approximately 50 percent of New Jersey insureds.
  Shouldn't we hold private insurers to the same standards that regular 
citizens must adhere to? If you don't pay your health insurance premium 
when it's due, the company will simply cancel your policy. If you're 
late making your credit care payments, your credit care company charges 
you interest. Why shouldn't private health insurers also be penalized 
for making late payments?
  In my view, it only makes sense to hold insurance companies to the 
same type of standards to which we hold Medicare. Medicare must pay 
claims within thirty days of receiving them. Why should private 
insurers be immune from any such time limits?
  The bottom line is that patients, hospitals and other health care 
providers should not have to shoulder the burden of unpaid claims. My 
legislation will ensure that private insurers assume the financial 
responsibilities for the health coverage they are being paid to 
provide.
  I ask unanimous consent that the text of the legislation be printed 
in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2308

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Prompt Payment of Health 
     Benefits Claims Act of 2004''.

     SEC. 2. AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY 
                   ACT OF 1974.

       (a) In General.--Subpart B of part 7 of subtitle B of title 
     I of the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1185 et seq.) is amended by adding at the end the 
     following:

     ``SEC. 714. PROMPT PAYMENT OF HEALTH BENEFITS CLAIMS.

       ``(a) Timeframe for Payment of Complete Claim.--A group 
     health plan, and a health insurance issuer offering group 
     health insurance coverage in connection with a group health 
     plan, shall pay all complete claims and uncontested claims--
       ``(1) in the case of a claim that is submitted 
     electronically, within 14 days of the date on which the claim 
     is submitted; or
       ``(2) in the case of a claim that is not submitted 
     electronically, within 30 days of the date on which the claim 
     is submitted.
       ``(b) Procedures Involving Submitted Claims.--
       ``(1) In general.--Not later than 10 days after the date on 
     which a complete claim is submitted, a group health plan, and 
     a health insurance issuer offering group health insurance 
     coverage in connection with a group health plan, shall 
     provide the claimant with a notice that acknowledges receipt 
     of the claim by the plan or issuer. Such notice shall be 
     considered to have been provided on the date on which the 
     notice is mailed or electronically transferred.
       ``(2) Claim deemed to be complete.--A claim is deemed to be 
     a complete claim under this section if the group health plan 
     or health insurance issuer involved does not provide notice 
     to the claimant of any deficiency in the claim within 10 days 
     of the date on which the claim is submitted.
       ``(3) Incomplete claims.--
       ``(A) In general.--If a group health plan or health 
     insurance issuer determines that a claim for health care 
     expenses is incomplete, the plan or issuer shall, not later 
     than the end of the period described in paragraph (2), notify 
     the claimant of such determination. Such notification shall 
     specify all deficiencies in the claim and shall list all 
     additional information or documents necessary for the proper 
     processing and payment of the claim.
       ``(B) Determination after submission of additional 
     information.--A claim is deemed to be a complete claim under 
     this paragraph if the group health plan or health insurance 
     issuer involved does not provide notice to the claimant of 
     any deficiency in the claim within 10 days of the date on 
     which additional information is received pursuant to 
     subparagraph (A).
       ``(C) Payment of uncontested portion of a claim.--A group 
     health plan or health insurance issuer shall pay any 
     uncontested portion of a claim in accordance with subsection 
     (a).
       ``(3) Obligation to pay.--A claim for health care expenses 
     that is not paid or contested by a group health plan or 
     health insurance issuer within the timeframes set forth in 
     this subsection shall be deemed to be a complete claim and 
     paid by the plan or issuer in accordance with subsection (a).
       ``(c) Date of payment of Claim.--Payment of a complete 
     claim under this section is considered to have been made on 
     the date on which full payment is received by the health care 
     provider.
       ``(d) Interest Schedule.--
       ``(1) In general.--With respect to a complete claim, a 
     group health plan or health insurance issuer that fails to 
     comply with subsection (a) shall pay the claimant interest on 
     the amount of such claim, from the date on which such payment 
     was due as provided in this section, at the following rates:
       ``(A) 1\1/2\ percent per month from the 1st day of 
     nonpayment after payment is due through the 15th day of such 
     nonpayment;
       ``(B) 2 percent per month from the 16th day of such 
     nonpayment through the 45th day of such nonpayment; and
       ``(C) 2\1/2\ percent per month after the 46th day of such 
     nonpayment.
       ``(2) Contested claims.--With respect to claims for health 
     care expenses that are contested by the plan or issuer, once 
     such claim is deemed complete under subsection (b), the 
     interest rate applicable for noncompliance under this 
     subsection shall apply consistent with paragraphs (1) and 
     (2).
       ``(e) Private Right of Action.--Nothing in this section 
     shall be construed to prohibit or limit a claim or action not 
     covered by the subject matter of this section that any 
     claimant has against a group health plan, or a health 
     insurance issuer.
       ``(f) Anti-Retaliation.--Consistent with applicable Federal 
     or State law, a group health plan or health insurance issuer 
     shall not retaliate against a claimant for exercising a right 
     of action under this section.
       ``(g) Fines and Penalties.--
       ``(1) Fines.--

[[Page S4047]]

       ``(A) In general.--If a group health plan or health 
     insurance issuer offering group health insurance coverage, 
     willfully and knowingly violates this section or has a 
     pattern of repeated violations of this section, the Secretary 
     shall impose a fine not to exceed $1,000 per claim for each 
     day a response is delinquent beyond the date on which such 
     response is required under this section.
       ``(B) Repeated violations.--If 3 separate fines under 
     subparagraph (A) are levied within a 5-year period, the 
     Secretary is authorized to impose a penalty in an amount not 
     to exceed $10,000 per claim.
       ``(2) Remedial Action Plan.--Where it is established that 
     the group health plan or health insurance issuer willfully 
     and knowingly violated this section or has a pattern of 
     repeated violations, the Secretary shall require the group 
     health plan or health insurance issuer to--
       ``(A) submit a remedial action plan to the Secretary; and
       ``(B) contact claimants regarding the delays in the 
     processing of claims and inform claimants of steps being 
     taken to improve such delays.
       ``(h) Definitions.--In this section:
       ``(1) Claimant.--The term `claimant' means a participant, 
     beneficiary or health care provider submitting a claim for 
     payment of health care expenses.
       ``(2) Complete claim.--The term `complete claim' is a claim 
     for payment of covered health care expenses that--
       ``(A) in the case of a claim involving a health care 
     provider that is an institution or other facility or agency 
     that provides health care services, is a properly completed 
     billing instrument that consists of--
       ``(i) the Health Care Financing Administration 1450 (UB-92) 
     paper form, or its successor, as adopted by the NUBC, with 
     data element usage consistent with the usage prescribed in 
     the UB-92 National Uniform Billing Data Elements 
     Specification Manual, and, for claims submitted before 
     October 1, 2002, any State-designated data requirements that 
     are determined and approved by the State uniform billing 
     committee of the State in which the health care service or 
     supply is furnished; or
       ``(ii) the electronic format for institutional claims (and 
     accompanying implementation guide) adopted as a standard by 
     the Secretary of Health and Human Services pursuant to 
     section 1173 of the Social Security Act (42 U.S.C. 1320d-2); 
     and
       ``(B) in the case of claim involving a health care provider 
     that is a physician or other individual who is licensed, 
     accredited, or certified under State law to provide specified 
     health care services, is a properly completed billing 
     instrument that--
       ``(i) the Health Care Financing Administration 1500 paper 
     form, or its successor, as adopted by the NUCC and further 
     defined by data element specifications contained in the NUCC 
     implementation guide or, if such specifications are not 
     issued by the NUCC, the data element specifications contained 
     in the Medicare Carriers Manual Part 4 (HCFA-Pub 14-4) 
     sections 2010.1 through 2010.4; or
       ``(ii) the electronic format for professional claims (and 
     accompanying implementation guide) adopted as a standard by 
     the Secretary of Health and Human Services pursuant to 
     section 1173 of the Social Security Act (42 U.S.C. 1320d-2).
       ``(3) Contested claim.--The term `contested claim' means a 
     claim for health care expenses that is denied by a group 
     health plan or health insurance issuer during or after the 
     benefit determination process.
       ``(4) Health care provider.--The term `health care 
     provider' includes a physician or other individual who is 
     licensed, accredited, or certified under State law to provide 
     specified health care services and who is operating with the 
     scope of such licensure, accreditation, or certification, as 
     well as an institution or other facility or agency that 
     provides health care services and is licensed, accredited, or 
     certified to provide health care items and services under 
     applicable State law.
       ``(5) Incomplete claim.--The term `incomplete claim' means 
     a claim for health care expenses that cannot be adjudicated 
     because it fails to include all of the required data elements 
     necessary for adjudication.
       ``(6) NUBC.--The term `NUBC' means the National Uniform 
     Billing Committee.
       ``(7) NUCC.--The term `NUCC' means the National Uniform 
     Claim Committee.''.

     SEC. 3. AMENDMENTS TO THE PUBLIC HEALTH SERVICE ACT.

       (a) Group Market.--Subpart 2 of part A of title XXVII of 
     the Public Health Service Act (42 U.S.C. 300gg-4 et seq.) is 
     amended by adding at the end the following:

     ``SEC. 2707. PROMPT PAYMENT OF HEALTH BENEFITS CLAIMS.

       ``(a) Timeframe for Payment of Complete Claim.--A group 
     health plan, and a health insurance issuer offering group 
     health insurance coverage in connection with a group health 
     plan, shall pay all complete claims and uncontested claims--
       ``(1) in the case of a claim that is submitted 
     electronically, within 14 days of the date on which the claim 
     is submitted; or
       ``(2) in the case of a claim that is not submitted 
     electronically, within 30 days of the date on which the claim 
     is submitted.
       ``(b) Procedures Involving Submitted Claims.--
       ``(1) In general.--Not later than 10 days after the date on 
     which a complete claim is submitted, a group health plan, and 
     a health insurance issuer offering group health insurance 
     coverage in connection with a group health plan, shall 
     provide the claimant with a notice that acknowledges receipt 
     of the claim by the plan or issuer. Such notice shall be 
     considered to have been provided on the date on which the 
     notice is mailed or electronically transferred.
       ``(2) Claim deemed to be complete.--A claim is deemed to be 
     a complete claim under this section if the group health plan 
     or health insurance issuer involved does not provide notice 
     to the claimant of any deficiency in the claim within 10 days 
     of the date on which the claim is submitted.
       ``(3) Incomplete claims.--
       ``(A) In general.--If a group health plan or health 
     insurance issuer determines that a claim for health care 
     expenses is incomplete, the plan or issuer shall, not later 
     than the end of the period described in paragraph (2), notify 
     the claimant of such determination. Such notification shall 
     specify all deficiencies in the claim and shall list all 
     additional information or documents necessary for the proper 
     processing and payment of the claim.
       ``(B) Determination after submission of additional 
     information.--A claim is deemed to be a complete claim under 
     this paragraph if the group health plan or health insurance 
     issuer involved does not provide notice to the claimant of 
     any deficiency in the claim within 10 days of the date on 
     which the additional information is received pursuant to 
     subparagraph (A).
       ``(C) Payment of uncontested portion of a claim.--A group 
     health plan or health insurance issuer shall pay any 
     uncontested portion of a claim in accordance with subsection 
     (a).
       ``(3) Obligation to pay.--A claim for health care expenses 
     that is not paid or contested by a group health plan or 
     health insurance issuer within the timeframes set forth in 
     this subsection shall be deemed to be a complete claim and 
     paid by the plan or issuer in accordance with subsection (a).
       ``(c) Date of payment of Claim.--Payment of a complete 
     claim under this section is considered to have been made on 
     the date on which full payment is received by the health care 
     provider.
       ``(d) Interest Schedule.--
       ``(1) In general.--With respect to a complete claim, a 
     group health plan or health insurance issuer that fails to 
     comply with subsection (a) shall pay the claimant interest on 
     the amount of such claim, from the date on which such payment 
     was due as provided in this section, at the following rates:
       ``(A) 1\1/2\ percent per month from the 1st day of 
     nonpayment after payment is due through the 15th day of such 
     nonpayment;
       ``(B) 2 percent per month from the 16th day of such 
     nonpayment through the 45th day of such nonpayment; and
       ``(C) 2\1/2\ percent per month after the 46th day of such 
     nonpayment.
       ``(2) Contested claims.--With respect to claims for health 
     care expenses that are contested by the plan or issuer, once 
     such claim is deemed complete under subsection (b), the 
     interest rate applicable for noncompliance under this 
     subsection shall apply consistent with paragraphs (1) and 
     (2).
       ``(e) Private Right of Action.--Nothing in this section 
     shall be construed to prohibit or limit a claim or action not 
     covered by the subject matter of this section that any 
     claimant has against a group health plan, or a health 
     insurance issuer.
       ``(f) Anti-Retaliation.--Consistent with applicable Federal 
     or State law, a group health plan or health insurance issuer 
     shall not retaliate against a claimant for exercising a right 
     of action under this section.
       ``(g) Fines and Penalties.--
       ``(1) Fines.--
       ``(A) In general.--If a group health plan or health 
     insurance issuer offering group health insurance coverage 
     willfully and knowingly violates this section or has a 
     pattern of repeated violations of this section, the Secretary 
     shall impose a fine not to exceed $1,000 per claim for each 
     day a response is delinquent beyond the date on which such 
     response is required under this section.
       ``(B) Repeated violations.--If 3 separate fines under 
     subparagraph (A) are levied within a 5-year period, the 
     Secretary is authorized to impose a penalty in an amount not 
     to exceed $10,000 per claim.
       ``(2) Remedial Action Plan.--Where it is established that 
     the group health plan or health insurance issuer willfully 
     and knowingly violated this section or has a pattern of 
     repeated violations, the Secretary shall require the health 
     plan or health insurance issuer to--
       ``(A) submit a remedial action plan to the Secretary; and
       ``(B) contact claimants regarding the delays in the 
     processing of claims and inform claimants of steps being 
     taken to improve such delays.
       ``(h) Definitions.--In this section:
       ``(1) Claimant.--The term `claimant' means an enrollee or 
     health care provider submitting a claim for payment of health 
     care expenses.
       ``(2) Complete claim.--The term `complete claim' is a claim 
     for payment of covered health care expenses that--
       ``(A) in the case of a claim involving a health care 
     provider that is an institution or other facility or agency 
     that provides health care services, is a properly completed 
     billing instrument that consists of--
       ``(i) the Health Care Financing Administration 1450 (UB-92) 
     paper form, or its successor, as adopted by the NUBC, with 
     data element usage consistent with the usage prescribed in

[[Page S4048]]

     the UB-92 National Uniform Billing Data Elements 
     Specification Manual, and, for claims submitted before 
     October 1, 2002, any State-designated data requirements that 
     are determined and approved by the State uniform billing 
     committee of the State in which the health care service or 
     supply is furnished; or
       ``(ii) the electronic format for institutional claims (and 
     accompanying implementation guide) adopted as a standard by 
     the Secretary of Health and Human Services pursuant to 
     section 1173 of the Social Security Act (42 U.S.C. 1320d-2); 
     and
       ``(B) in the case of claim involving a health care provider 
     that is a physician or other individual who is licensed, 
     accredited, or certified under State law to provide specified 
     health care services, is a properly completed billing 
     instrument that--
       ``(i) the Health Care Financing Administration 1500 paper 
     form, or its successor, as adopted by the NUCC and further 
     defined by data element specifications contained in the NUCC 
     implementation guide or, if such specifications are not 
     issued by the NUCC, the data element specifications contained 
     in the Medicare Carriers Manual Part 4 (HCFA-Pub 14-4) 
     sections 2010.1 through 2010.4; or
       ``(ii) the electronic format for professional claims (and 
     accompanying implementation guide) adopted as a standard by 
     the Secretary of Health and Human Services pursuant to 
     section 1173 of the Social Security Act (42 U.S.C. 1320d-2).
       ``(3) Contested claim.--The term `contested claim' means a 
     claim for health care expenses that is denied by a group 
     health plan or health insurance issuer during or after the 
     benefit determination process.
       ``(4) Health care provider.--The term `health care 
     provider' includes a physician or other individual who is 
     licensed, accredited, or certified under State law to provide 
     specified health care services and who is operating with the 
     scope of such licensure, accreditation, or certification, as 
     well as an institution or other facility or agency that 
     provides health care services and is licensed, accredited, or 
     certified to provide health care items and services under 
     applicable State law.
       ``(5) Incomplete claim.--The term `incomplete claim' means 
     a claim for health care expenses that cannot be adjudicated 
     because it fails to include all of the required data elements 
     necessary for adjudication.
       ``(6) NUBC.--The term `NUBC' means the National Uniform 
     Billing Committee.
       ``(7) NUCC.--The term `NUCC' means the National Uniform 
     Claim Committee.''.
       (b) Individual Market.--Part B of title XXVII of the Public 
     Health Service Act (42 U.S.C. 300gg-41 et seq.) is amended--
       (1) by redesignating the first subpart 3 (relating to other 
     requirements) as subpart 2; and
       (2) by adding at the end of subpart 2 the following:

     ``SEC. 2753. STANDARDS RELATING TO PROMPT PAYMENT OF HEALTH 
                   BENEFITS CLAIMS.

       ``The provisions of section 2707 shall apply to health 
     insurance coverage offered by a health insurance issuer in 
     the individual market in the same manner as they apply to 
     health insurance coverage offered by a health insurance 
     issuer in connection with a group health plan in the small or 
     large group market.''.

     SEC. 4. AMENDMENTS TO THE SOCIAL SECURITY ACT.

       (a) Medicare.--
       (1) Medicare advantage plans.--Section 1857(f) of the 
     Social Security Act (42 U.S.C. 1395w-27(f)) is amended--
       (A) in paragraph (1), by striking ``consistent with the 
     provisions of sections 1816(c)(2) and 1842(c)(2)'' and 
     inserting ``consistent with the provisions of section 2707 of 
     the Public Health Service Act''; and
       (B) in paragraph (2)--
       (i) in the second sentence, by inserting ``and to reflect 
     the amount of any fines or penalties imposed pursuant to the 
     provisions of section 2707(g) of the Public Health Service 
     Act'' before the period at the end; and
       (ii) by inserting before the second sentence the following 
     new sentence: ``Payment of such amounts shall include any 
     interest due pursuant to the provisions of section 2707(d) of 
     the Public Health Service Act.''.
       (2) Prescription drug plans.--Section 1860D-12(b)(3) of the 
     Social Security Act (42 U.S.C.1395w-112(b)(3)) is amended--
       (A) by redesignating subparagraphs (E) and (F) as 
     subparagraphs (F) and (G), respectively; and
       (B) by inserting after subparagraph (D) the following new 
     subparagraph:
       ``(E) Prompt payment by medicare advantage organization.--
     Section 1857(f).''.
       (b) Medicaid.--Section 1932(f) of the Social Security Act 
     (42 U.S.C. 1396u-2(f)) is amended by striking ``the claims 
     payment procedures described in section 1902(a)(37)(A), 
     unless the health care provider and the organization agree to 
     an alternate payment schedule'' and inserting ``section 2707 
     of the Public Health Service Act''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2004.

     SEC. 5. PREEMPTION.

       The provisions of this Act shall not supersede any contrary 
     provision of State law if the provision of State law imposes 
     requirements, standards, or implementation specifications 
     that are equal to or more stringent than the requirements, 
     standards, or implementation specifications imposed under 
     this Act, and any such requirements, standards, or 
     implementation specifications under State law that are equal 
     to or more stringent than the requirements, standards, or 
     implementation specifications under this Act shall apply to 
     group health plans and health insurance issuers as provided 
     for under State law.

     SEC. 7. EFFECTIVE DATE.

       (a) In General.--Except as provided in this section, the 
     amendments made by this Act shall apply with respect to group 
     health plans and health insurance issuers for plan years 
     beginning after December 31, 2004.
       (b) Special Rule for Collective Bargaining Agreements.--In 
     the case of a group health plan maintained pursuant to one or 
     more collective bargaining agreements between employee 
     representatives and one or more employers ratified before the 
     date of the enactment of this Act, the amendments made by 
     this Act shall not apply to plan years beginning before the 
     later of--
       (1) the date on which the last of the collective bargaining 
     agreements relating to the plan terminates (determined 
     without regard to any extension thereof agreed to after the 
     date of the enactment of this Act), or
       (2) January 1, 2005.
     For purposes of paragraph (1), any plan amendment made 
     pursuant to a collective bargaining agreement relating to the 
     plan which amends the plan solely to conform to any 
     requirement of the amendments made by this section shall not 
     be treated as a termination of such collective bargaining 
     agreement.

     SEC. 7. SEVERABILITY.

       If any provision of this Act, or an amendment made by this 
     Act, is held by a court to be invalid, such invalidity shall 
     not affect the remaining provisions of this Act, or 
     amendments made by this Act.
                                 ______