Medical providers justifiably expect to receive prompt payment from their patients’ health insurance providers. Sadly, this often not the case. Each year, the health insurance industry underpays medical providers across the State of Texas by tens of millions. Sadly, many health providers elect to accept underpayments without seeking legal recourse against the health insurers that often refuse to pay the amount owed. Indeed, many providers are surprised to learn that Texas providers a legal remedy against health insurance companies that have not paid what is owed to providers. This remedy includes interest, statutory penalties, costs, and attorney’s fees, in addition to the amounts owed for the services provided.
Texas Prompt Pay Act
In 2003, Texas sought to address the problem of health insurance companies failing to properly reimburse health providers by passing the Texas Prompt Pay Act (TPPA). One key element of the TPPA applies is that it applies to health insurers, preferred provider organizations (PPOs) and health maintenance organizations (HMOs).
Deadline to Pay Medical Provider Claim
The TPPA requires PPOs and HMOs to pay “clean claims” no later than 45 days after receiving a claim in non-electronic form. This timeframe is shortened to 30 days for claims submitted in electronic form. from the billing physician or hospital. While the insurer may notify the provider that it intends to withhold payment on all or part of the claim While In the meantime, this could leave you in a complicated situation where you may have to pay medical bills out of your own pocket.
Texas Prompt Pay Act Penalties
Texas law has created a multi-tiered approach to the penalties an insurance company may be forced to pay due to delayed or underpayment of a medical insurance claim. These penalties are in addition to the payment of any attorney’s fees and costs related to legal action taken to recover amounts owed to the provider.
- If the claim is paid within 45 days after the prompt pay deadline has expired, the penalty is the lesser of $100,000.00 or 50% of the amount still owed to the provider.
- If the claim is paid within 46-91 days after the deadline, the penalty is the lesser of $200,000.00 or 100% of the amount still owed to the provider.
- If the claim is paid within 91 to 270 days after the deadline, the penalty is the lesser of $200,000.00 or 100% of the amount still owed to the provider, PLUS 18% annual interest on that amount.
How to Make A Texas Prompt Payment Act Claim
Normally, a provider will first need to obtain a standard assignment from its patient to pursue payment under the health insurance claim. Any claim made by the provider will be subject to the terms and conditions of the underlying policy or health plan.
The TPPA requires the provider to make a “clean claim.” This generally requires the provider to provide sufficient information to the health insurer to allow it to make a determination on the claim. In limited circumstances, the 30 to 45 days period to pay a claim may be extended.
Once the claim is submitted, the deadline to pay the claim begins. Insurers will normally provide its initial determination of the claim through an Explanation of Benefits (EOB) in which it may accept or deny the claim. As medical billing professionals are aware, there are numerous reasons why a claim may not be accepted including being out-of-network or not being medically necessary. It is also common for health insurers to ultimately approve only a portion of the amount of the claim. For many providers that perform high volume procedures or services, the underpaid claims can be significant.
ERISA Does Not Preempt the TPPA
Medical billing professionals and departments are generally aware of the implication of ERISA on health insurance claims. While ERISA often preempts state insurance laws, the Fifth Circuit has held that the TPPA is not preempted by ERISA. Seeing that most health insurance policies are subject to ERISA, the Fifth Circuit’s position on the application of the TPPA greatly expands provider’s ability to recover money justly owed for services provided.
Still, it is important for providers to recognize that ERISA applies to employer-provided health insurance claims. When a claim is delayed, denied, or underpaid, the provider may need to comply with ERISA’s administrative appeal requirements to perfect its right to sue under the TPPA.
Conclusion
The TPPA permits medical providers in Texas to sue for the amounts not properly paid to them by health insurance companies. It also allows medical providers to recover statutory penalties, interest, cost, and attorney’s fees. Although the TPPA was enacted in 2003, many providers are unaware of its benefits.
At the Johns Law Firm, we work with providers to evaluate claims for TPPA violations. Some claims are resolved prior to litigation, while others require a lawsuit to be filed.
Our attorneys can advise you about your right to prompt payment in a variety of situations when the PPO or HMO you’re dealing with is delaying payment. We can also guide you with the all the proper documentation that is needed in these cases as well as provide counsel over any objections or requests for further information that the insurer might have sent.
