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Prompt Pay Laws

Prompt Pay Laws

Prompt Pay Laws: Know Your Rights

By Lynette Byrnes, Senior VP, Practice Solutions at United Rheumatology

Every rheumatology practice is in the business of helping patients. Quality treatment that results in improved patient outcomes will always be the top priority. But, a business still has to manage its expenses, payroll, cash flow, and maintain general operational efficiencies. Payers can create challenges that make this management difficult, oftentimes in the form of delayed reimbursement payments. Prompt pay laws—the specifics of which vary state by state—protect healthcare providers by stipulating that they get paid within a certain timeframe after the submission of a claim, typically 30, 45, or 60 days, or the payer is subject to penalties. This protection of timely payment is a vital but sometimes misunderstood, part of practice management.  

Why does prompt payment matter?

Many of the services rheumatologists provide require purchasing materials like medications or equipment. When buying drugs for biologic therapy, for example, the practice is subject to a ticking clock for vendor payment once that medication is delivered. If payments from payers are delayed for months, it’s difficult for practices to keep up with invoices from their vendors. Cash flow problems can interrupt care and create payroll impediments, daunting occurrences for rheumatologists.

What about my payer contract?

While most states have had prompt payment laws in place for about the last 20 years, they differ in specifications and requirements. Additionally, every payer contract varies regarding reimbursement timing and requirements. So, if your contract with a payer states specifically that they have a right to request chart notes or initiate audits post-service under various circumstances, that contract may be enforceable over prompt pay laws. It’s very important that you understand the specific contracts with your payers regarding the timeliness of payment and their right to collect more information from you. When time is money, the timing becomes a very important part of the process. Delay in payment tactics has become an unfortunate reality even with prompt pay laws in place. Check your contracts and work to ensure they are reasonable and equitable.

What can I do about delayed payments?

Prompt pay laws can be difficult to enforce, although penalties and fines do remain a deterrent to payers. If you feel you are on the receiving end of repeated delayed payments, call the insurance company and try to reach someone on the phone directly. This is getting harder and harder; gone are the days when each rheumatology practice had a payer-provider relations representative. Inform the payer that you are going to report the behavior to the commissioner of insurance, and then do so via letter.
Still, the most effective way to reduce delayed payments is to submit clean claims. There are many simple steps and checks a practice can implement internally to ensure a claim isn’t kicked back. A robust billing department will ensure claims have been coded and specified correctly. So, you’re not always at the mercy of payer audits, audit your own practice proactively to ensure stronger claims compliance.

Do you know your practice?

Even with audit checks, payment laws, and contract provisions in place, the most effective way to manage an effective cash flow is to pulse-check your practice regularly. Run AR reports frequently so you can catch simple mistakes before they morph into larger problems. It’s also important to have a big picture understanding of reimbursements including the number of claims you typically send out daily and the timeframe for payment from your biggest payers. Know your payers’ behaviors so when they are misbehaving, you’ll know it. Prompt pay laws help with practice protection but are not a substitute for clean claims practices and productive agreements with payers that ensure each patient—and your practice—is adequately covered.  

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