AMA To Congress: Stop Unfair Business Practices Of Health Insurers

Main Category: Health Insurance / Medical Insurance
Article Date: 03 Aug 2007 - 1:00 PDT

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"The focus of today's hearing is of great importance to the medical community given that 52 percent of physician practices in this country have three or less physicians, and account for 80 percent of outpatient visits.

"Small physician practices have limited leverage relative to large insurance companies since antitrust laws prevent physicians as a group from addressing payment and other contract terms on a level playing field.

"The ability of physicians to address unfair payment practices continues to diminish with the increasing consolidation of health insurers. In the majority of Metropolitan Statistical Areas, a single health insurer dominates the market.

"The growing disparity in negotiating positions has created an environment where insurers are able to evade prompt payment laws with little, if any, adverse consequence. This has a financially debilitating effect on small physician practices and could limit patient access.

"When one side has all the market power, more efficient market mechanisms are hampered. A common problem confronted by many physicians is insurers paying claims late. Even if a claim includes all the appropriate information, insurance companies often find reasons to delay or deny payment. This is tantamount to small physician practices extending interest free loans to large insurance companies.

"In addition, this, seemingly intentional behavior by the insurer, creates an onerous administrative burden. Physicians and their staff must spend hours on the phone pursuing payment of unpaid claims. In fact, growing numbers of physician practices have been forced to hire office staff dedicated solely to collecting late payments.

"Because of this, some physicians have had to eliminate services and clinical staff positions as well as forego equipment upgrades and the adoption of health information technology. Fundamental fairness warrants timely payment.

"Forty-nine states and the District of Columbia have either passed legislation or promulgated regulations tied to the prompt payment of claims. Despite this, physicians still experience problems with receiving payments from health plans in a timely manner.

"Evidence of the continuing problem is that state regulators have imposed more than $76 million, including fines, interest, restitution, and statutory penalty fees, against third-party payers for late payments to physicians and other health care providers.

"And it's not just state regulators. In 2000 a number of individual and class action lawsuits were consolidated and eventually certified to cover more than 600,000 physicians. The suits were brought to address violations of prompt pay laws as well as other payment violations by some of the nation's largest for-profit health plans. Settlements were reached with most of the insurers; however these are short-term solutions and will begin to sunset this year.

"The AMA urges Congress to pass legislation that will:

-- Establish a strong federal prompt pay standard;
-- Protect more robust prompt pay state laws by ensuring the federal standard is the "floor;"
-- Establish concurrent jurisdiction over enforcement between the state and federal government;
-- Clarify that state prompt payment laws apply to all ERISA covered health plans;
-- Strengthen penalties to prevent plans from considering fines and other associated financial sanctions as merely the cost of doing business;
-- Protect physicians from retaliation by insurers if they pursue their remedies under the prompt pay laws; and,
--Expand protections to address other tactics utilized by health insurers to delay or decrease payments.

"The AMA looks forward to working with the Committee to achieve our shared goals of strengthening and safeguarding the viability of small physician practices and providing quality care to patients. Thank you for the opportunity to be here today."

http://www.ama-assn.org