Charging Payers Interest on Unpaid Claims

As a healthcare provider, you probably deal with unpaid claims or delays in reimbursement commonly. This could be from the payer or insurance company delaying reimbursement, the patient exhausting benefits or perhaps certain services are limited or excluded from coverage.

Claims follow up a standard process in practices. One way to ensure more prompt payment from insurance or payers is to charge interest on claims that are beyond timely payment, as defined by each state’s regulations. This may not generate a lot of additional revenue, but it will encourage payers to be timely with payments.

Health Care Prompt Pay laws came about from 1999 to 2001, when all 50 states enacted their own version of the Prompt Pay Act to protect providers and hospitals from payer companies who do not pay on time. Each state has its own statute on time frames and the amount of interest that can be charged. According to the Health Care Prompt Pay website, each state requires that once a health provider sends claims to the payer and acknowledgment of receipt of the claim is received, the time clock starts.

For example, in Kentucky – if a claim is sent electronically to a payer and receipt is confirmed, if the claim is not paid within 30 days, the interest will depend on when the payer pays the claim. For those that are paid between 31-60 days from the receipt date, a 12% rate per annum can be billed to the payer. That interest increases at 61-90 days to 18% and then again at 91 days to 21%.

Here are some other state time frame examples in which payers must settle or penalty interest begins:

  • Florida requires payment in 45 days, then 10% annually.
  • Texas requires payment in 30 days when claims are filed electronically with an 18% penalty.
  • Tennessee requires payment in 21 days or 1% per month interest commences.
  • You can review each state’s specific requirements here.

Charging interest is allowed in most states, but there are limitations. It’s important to know your state’s specifications because there can be punitive consequences for going above the legal interest limit. Charging more interest than the legal limit is considered an “unfair act or practice in the conduct of commerce” and is deemed a violation of the Consumer Protection Act. A violation of the Consumer Protection Act can lead to the assessment of treble damages (three times the amount) plus costs and attorney fees against the losing party.

If payer relations is one of the areas you would like support or alleviation with, we’d love to talk. Schedule a consultation with one of our practice management experts today.

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