A legal fight about a Georgia health insurance law pits doctors against insurers in a case that could have reverberations nationwide.
At issue is a 2011 state law that requires insurers to pay doctors promptly for treating patients in self-funded employer health plans.
The new Georgia law states that physicians treating such patients must be paid within 30 calendar days for paper claims submissions and within 15 working days for electronically submitted claims. If the money does not arrive on time, the insurer that administers the self-funded plan must pay 12 percent interest on unpaid claims.
For years, Georgia has had this kind of prompt-pay law for regular insurance plans covering individuals and small businesses. But now that the requirement has been extended to self-funded employer plans – where the majority of Americans get their health coverage – opponents have taken their concerns to court.
America’s Health Insurance Plans, a trade group representing the industry, filed a lawsuit in late August challenging the new prompt-pay statute. AHIP says the Georgia requirement violates a federal law known as ERISA, which exempts self-funded employer plans from state regulations governing health insurance.
Last week, the American Medical Association and the Medical Association of Georgia stepped forward to support the law, filing a petition in federal court in Atlanta to intervene in the case as co-defendants. The lawsuit currently names state Insurance Commissioner Ralph Hudgens as defendant.
The Georgia prompt-pay law is set to take effect in January.
The previous governor, Sonny Perdue, vetoed a similar bill in 2010, citing ERISA. But the current governor, Nathan Deal, signed the new legislation last year.
“This case has national implications for resolving the regulatory void in which health insurers are unaccountable for chronically late payments when they serve as administrators for self-insured employers,” said the AMA’s president, Dr. Jeremy Lazarus, in a statement. “Georgia has effectively closed that regulatory loophole, which helps physicians maintain a sustainable practice environment.”
“Georgia’s prompt-payment law is one of the most effective in the country,’’ Lazarus said.
Glenn Allen, a spokesman for Hudgens, said Tuesday that the commissioner “believes that doctors should be paid promptly, and he will enforce the law until a federal court tells him to do otherwise.”
The AMA said Tuesday that three other states – Ohio, Rhode Island and Indiana – have payment laws similar to Georgia’s. An AHIP spokesman, Robert Zirkelbach, said he wasn’t familiar enough with the situation in those three states to comment.
But Zirkelbach told GHN on Tuesday that if Georgia’s law is upheld, it would set a precedent that could lead to such laws in other states.
Without ERISA protection, he said, employer plans would be subject to different health insurance laws in different states, which would raise administrative costs. “It will make it much harder for employers to offer insurance,’’ Zirkelbach said Tuesday.
Kathryn Wilber, senior counsel for health policy at the American Benefits Council, added that having to comply with different state insurance laws “would become very burdensome’’ for self-funded employers.
Graham Thompson, executive director of the Georgia Association of Health Plans, said Tuesday that his group is letting AHIP take the lead in the case.
The Georgia health plan organization took no official position during the debate over the prompt-pay bill in 2011, though some members opposed the legislation, Thompson said Tuesday.
Donald Palmisano, executive director of the Medical Association of Georgia, said Tuesday that health insurers in Georgia had accepted such prompt-pay requirements in past settlement agreements that have since expired.
The organization’s president, Dr. Sandra Reed, said in a statement, “The fundamental fairness mandated by Georgia’s statute allows physicians to redirect their limited resources from battling to get the payments they’ve earned to caring for patients.’’
“Holding health insurers accountable for on-time payment gives medical practices greater budget certainty and helps Georgia physicians keep their doors open and pay the salaries and benefits of more than 90,000 office employees,” Reed said.