New Georgia prompt-pay rule sparks legal fight

Print Friendly and PDF By: Andy Miller Published: Oct 16, 2012

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.

Enjoy Georgia Health News? Sign up for free Email Alerts or follow us on Facebook or Twitter

Help support our nonprofit journalism -- your gift is tax deductible!

  • Pingback: State Roundup: Mass. Launches Information Exchange | Health Care

  • Mybigjones12

    Perdue was and is a dope–and his veto of prompt pay due to ERISA was: 1) based on his clever manipulation concerning the intent of ERISA, but more important 2) to appease his AHIP lobbyist cronies who represent…you got it FEDERAL GOVERNMENT EMPLOYEES! ERISA is the “FEDERAL EMPLOYEE RETIREMENT INCOME SECURITY ACT”. Read that as another “special interest group” composed of UNIONIZED GOVERNMENT employees–like Teamsters, UAW, USW, and IBEW–no difference in the ilk which is mainly a collection of organized thugs. And since it is thugdom that rules, thug tactics like late payment, downgraded payment, or no payment at all is the order of the day. So once again, laws to protect physicians from the ongoing and ubiquitous practice of stall tactics and roadblocks of the generally unscrupulous insurance industry and its ERISA minions is challenged by the preeminent industry “mafia” (AHIP) along with a collection of FEDERAL UNION thugs. And the loosely fabricated argument that….waaa?…..“It will make it much harder for employers to offer insurance,’’ is akin to selling ice to Eskimos.

    • get the facts

      No. you’re insane. ERISA’s for large companies nationwide, not federal government not unions. ERISA does not fit into your freaked out anti-government anti-union rant. Try again, but get the facts, freako.

  • Pingback: Roundup: Mass. launches information exchange; Ga. fight brews over new prompt-pay rule

Sponsorships



University of Georgia College of Public Health Logo





















(Click on the logo for more information about our sponsors.)





Foundation Support for GHN:

Healthcare Georgia Foundation
Kaiser Permanente
Reynolds Charitable Fund
Georgia Health Foundation