On April 27, 2010, Governor Jay Nixon signed legislation altering prompt payment obligations under Missouri law. Effective January 1, 2011, this legislation is significant for several reasons:
(1) It revises the timeframe permitted for complying with the Missouri Prompt Pay Act (the “MPPA”).
Under the old MPPA, health carriers have 10 working days to acknowledge they have received a claim, to notify providers regarding a claim’s status, and/or to request additional information about a claim. Upon receiving additional information, health carriers have 15 days to pay all or part of the claim, to send another notice denying the claim in full or part, or to make a final request for additional information. Within 15 days of receiving additional information in response to a final request, the health carrier has the option of paying all or part of the claim, denying the claim, or suspending the claim.
The new legislation tightens the timeframe for acknowledging the receipt of a claim and following up on claims requiring additional information. It also eliminates the option of suspending claims at the end of the submission process, and prevents health carriers from delaying payment on claims received by their third party administrators or other agents. When this legislation takes effect, health carriers subject to the MPPA must:
- Within 48 hours of receiving an electronically-filed claim: Send an electronic acknowledgement of the date of receipt.
- Within 30 processing days of receiving a filed claim: Send an electronic or facsimile notice of the status of the claim that notifies the provider whether the claim is a clean claim, or requires additional information from the provider. If the claim is clean, it must be paid or denied. If it requires additional information, a request for such information must be included in the notice.
- Within 10 processing days of receiving additional information: Pay the claim or any undisputed part of the claim, or send an electronic facsimile notice of receipt and status of the claim that (1) denies all or part of the claim (and specifies why); or (2) makes a final request for additional information.
- Within 5 processing days of receiving a response to a final request for information: Pay the claim or any undisputed part of the claim, or deny the claim. Health carriers will no longer have the option of suspending claims.
“Processing days” are currently defined as the “number of days the health carrier has the claim in its possession.” Under the new legislation, this definition has expanded to ensure that receipt of a claim by a health carrier’s agent, subsidiary, contractor, subcontractor, or third-party contractor does not extend the timeframe for payment. Under both versions of the law, processing days do not include days in which the health carrier is waiting for a response to a request for additional information.
(2) It potentially increases the penalty for failure to timely pay a claim, and removes the requirement that providers formally notify health carriers that a penalty may be due.
Under the old MPPA, health carriers that do not pay providers on or before the 45th day from the date of a claim’s receipt are required to pay 1% interest per month on the claim based on the unpaid balance. In addition, failure to pay, deny, or suspend a claim (or statutory interest due on the claim) within 40 processing days results in a penalty in the amount of 50% of the claim per day up to $20.00. No penalty may be incurred unless, on or after the 40th day, the provider notifies the carrier that the claim had not been paid, denied or suspended. Penalties cannot accrue for more than 30 days unless providers send a second written or electronic notice on or after the 30 days that the claim remains unpaid and that penalties are due pursuant to the MPPA. Further, penalties cease to accrue if the health carrier pays, denies, or suspends the claim, or if a petition is filed in a court of competent jurisdiction to recover payment of the claim.
The new legislation lowers the penalty percentage from 50% to 1%, but removes the notification requirements and the $20.00 cap previously attendant to MPPA penalties. Under the new legislation, health carriers that do not pay on or before the 45th processing day from the date of receipt of the claim, must pay 1% interest per month and a penalty equal to 1% of the claim per day, based on the unpaid balance as of the 45th processing day. Interest and penalties will continue to accrue until the day after a petition is filed in a court of competent jurisdiction to recover payment of the outstanding claim. The new legislation does not provide that penalties or interest cease to accrue if the health carrier acts on the claim after the 45th processing day.
(3) It makes clear that third-party contractors and self-insured health plans must comply with the MPPA, or face interest and penalties.
Under the old MPPA, the MPPA provides that “health carriers” and “third-party contractors” must comply with the prompt pay deadlines outlined above. However, the law’s interest and penalty provisions only apply to health carriers that fail to comply.
The new legislation remedies this omission by including “third-party contractors” in the definition of “health carriers.” In addition, it defines self-insured health plans (to the extent permitted by federal law) as “health carriers.” Thus, both third-party administrators acting on behalf of self-funded plans, as well as the self-funded plans themselves, may be subject to interest and penalties for failure to comply with the MPPA.
Greensfelder Health Care Reimbursement Group: