Texas Prompt Pay | Senate Bill 418 (SB 418) Daniel Lynch 2017-11-17T23:11:52+00:00
Texas Prompt Pay – Senate Bill 418 (SB 418):
A majority of all practicing medical professionals in the state of Texas are unaware of the millions of dollars in revenue leakage, and recoverable contract underpayments that insurance companies are knowingly withholding, failing to comply with Senate Bill 418 Prompt Pay Legislation.
Looking at the reimbursement practices in the healthcare industry, Medical Bill Gurus has helped helped physicians combat a policy insurance companies have adopted of slowly processing and underpaying medical providers, resulting in short-payments to medical providers, costing them millions of dollars in lost revenue and contractual underpayments.
As medical providers are at a significant disadvantage in contractual negotiations with insurance companies, medical providers are often left to clasp any revenue they can recover, as insurance companies deploy a “take it or leave it” approach with non-compliant managed care discounts and contract compliance.
On the physician advocacy platform, our medical billing experts leverage prompt pay legislation, such as Texas State Senate Bill 418 (SB 418), also referred to the Texas Prompt Pay Act, which levels the playing field between medical providers and insurance companies, regulating claims processing and payment timeframes once a clean claim has been submitted.
As defined in Texas Senate Bill 418 (SB 418), a “Clean Claim” is a medical claim that contains no errors or defects that would result in delays of timely payment due to incorrect or incomplete documentation.
A clean claim from an institutional provider shall consist of the UB-92 data set or its successor submitted on the designated paper or electronic format as adopted by the National Uniform Billing Committee (NUBC).
While a majority of medical claims are considered “clean claims”, treatments or services that are processed using the ANSI 837/835 formats are systematically approved, and insurance companies are required submit reimbursement or contest timely payment violations.
What is Texas Senate Bill 418 (SB 418)?
In the State of Texas, all Insurance Companies are obligated by Texas State Senate Bill 418 (SB 418) to provide Prompt Payment to medical providers within a defined time limit to make a decision and pay a medical claim, or request additional information.
Texas State Senate Bill 418 (SB 418) also known as the “Texas Prompt Pay Act” was signed into law by former Texas Governor Ricky Perry in June 2003 with the goal of preventing contractual underpayments and protecting reimbursements owed to hospitals, pharmacies, and physicians.
Per the Texas Prompt Pay Act, insurance companies are subject to late fees under prompt pay if they fail to pay or deny a claim in whole or part within 30 days of the claim being submitted electronically, or 45 days if the claims was submitted in a non-electronic form.
Even if the insurance company desires an audit of the claim in question, the insurance company must pay the claim full during the audit, and then recover the difference if the audit finds inconsistencies or errors.
If a payment decision or request for additional information is not done within thirty days, then Texas State Senate Bill 418 (SB 418) mandates that the Insurance Company must pay in full all short-payments plus a penalty (timely payment violation) and interest to the medical provider.
From 2003 through the years, the health insurance companies attempted thru several court battles to dilute timely payment violations or cancel the effect of the Prompt Pay Laws with several different points of protracted litigation.
However, as shown below, recent court rules have come down in the doctors and medical providers’ favor to combat contractual underpayments and facilitate retrospective review for contract underpayment recovery:
What are the timely payment penalties for Texas Senate Bill 418 (SB 418)?
According to the Texas Medical Association, per Texas State Senate Bill 418 (SB 418), insurance carriers are obligated to pay medical providers a timely payment violation in addition to short-payments of the full contracted rate for services rendered if the insurance carrier does not promptly pay or respond within 45 days of receipt of a clean claim submitted non-electronically and within 30 days of receipt of a claim submitted electronically.
Due to the opportunity cost for the time value of money, even if the insurance company pays the medical provider the full contractual payment after the defined prompt pay deadline, the medical provider has lost money, even if the claim was eventually paid in full.
If the insurance company provide prompt payments for treatment, but underpays the medical provider leaving a short-payment, the insurance company must pay the medical provider a penalty based on the number of days the payment is late and the underpaid amount of the claim.
In addition to the difference between the contractual underpayment and allowable charges, as submitted on the claim, and the contracted rate, penalties are graduated based on the timeframe prompt payment was postponed:
1-45 days – Half to the difference between the billed charges and the applicable contracted rate OR $100,000, whichever is less
46-90 days – All of the difference between the billed charges and the applicable contracted rate OR $200,000, whichever is less
91 or more days – All of the difference between the billed charges and the applicable contracted rate OR $200,000, whichever is less. In addition, the insurance carrier must pay the medical provider 18 percent annual interest on the penalty amount, accruing from the date payment was originally due and through the date of actual payment.
If your practice or organization is looking to increase revenue and recoup lost profits, make sure to check out the Physician Advocacy platform that Medical Bill Gurus offers. Our insurance experts offer free auditing of closed accounts, and we only take a service fee based on the penalty we collect.