Chapter 368, House Bill 361, enacted last year by the Maryland General Assembly to complement the implementation of the Affordable Care Act, gives health plans another way to delay, and possibly deny, payments to hospitals and other healthcare providers.
In effect since January 1, 2014, the Conformity with and Implementation of Federal Patient Protection and Affordable Care Act amends Maryland’s clean-claims law prompt-payment requirement § 15-1005(e) to permit health plans to “pend” claims for reimbursement under the ACA’s federal health insurance exchange regulations.
Previously, Insurance Code Section 15-1005(e) required payment for the undisputed portion of clean claims within 30 days of receipt of a claim without exception. The revised law adds a new section, § 15-1315(c), which provides an exception in keeping with ACA exchange rules.
Individuals who enroll in ACA exchange plans and qualify for a subsidy receive a 90-day grace period before termination of coverage due to non-payment. The amendment addresses the issue of non-paying exchange policyholders by permitting insurers during the final 60 days of the grace period to pend those claims and notify providers that they may ultimately be denied.
The rest of the Maryland prompt-pay statute remains unchanged. Under the statute, payers still must pay the undisputed portion of the claim within 30 days. And the law stipulates that health plans subject to the statute allow providers a minimum of 180 days from the date of service to submit claims. If a claim is denied, providers generally have 90 working days from the date of denial to appeal.
When negotiating payer contracts, the 180-day period in the prompt-pay statute provides a floor, but hospitals should seek to build on that time allotment. Some contracts extend the deadline for filing claims to as much as a year from the date of service, allowing the additional time needed in extenuating circumstances, for example, situations in which the provider cannot reasonably determine the patient’s member identification.
Similarly, managed care contracts often stipulate that claims denied for lack of timely notification will be overturned if providers can show that they tried to determine and immediately filed upon learning the patient was a customer, and that the delay in filing the claim did not lengthen or adversely impact the patient’s course of treatment.
In addition, as is common in other state statutes, the Maryland prompt-pay rule on interest owed to providers for failure to pay clean claims still applies to all payers covered by the statute, subject to a regulatory exception for those payers that have a working capital allowance. So if a health plan has deposited with a Maryland hospital an amount equal to the outstanding daily balance due, then interest generally does not apply. Unfortunately, that allowance removes the incentive for payers to reimburse providers in a timely manner, as hospitals rely on the threat of those high interest rates as a deterrent for payers’ arbitrary and capricious denials.
While helping protect health plans during the ACA transition period, the modifications to the Maryland prompt-pay statute present another potential reimbursement headache for hospitals. But with the rest of the law intact, providers need to protect themselves as best they can in contract negotiations. The statutory minimum of 180 days for submitting claims is not a contractual maximum: Providers should negotiate and seek up to a year. Hospitals also should pursue enforcement of the interest section of the prompt-pay law.
Anderson & Quinn, LLC is a renowned law firm based in Rockville, Maryland, providing individuals, businesses, corporations, and healthcare institutions with the legal and litigation support they need.
