How does the Prompt Pay Law affect Contracted Providers?

The Texas Department of Insurance oversees and handles all complaints from physicians and providers about carriers who are failing to comply with the prompt payment requirements of Articles 3.70-3C, §3A and 20A.18B of the Texas Insurance Code and Department rules.  The Department is committed to achieving full company compliance with the prompt payment statutes and rules.

This article is to remind you of your responsibility to comply with the prompt payment laws for contracted physicians and providers and highlights some basic requirements that carriers must follow for making prompt payments to contracted physicians and providers.

For complete information on all of the required claims processing procedures to comply with Texas statutes and Department rules, refer to the appropriate provisions of the Texas Insurance Code and the Texas Administrative Code. Also, review the prompt payment statutes and rules to verify that your internal procedures comply with these requirements.

CONTRACTED PROVIDERS

Applicable Statutes and Rules. Article 3.70-3C, §3A specifies claims processing procedures and prompt payment requirements for preferred provider carriers when processing claims filed by contracted physicians and providers. Article 20A.18B specifies these same types of requirements for HMOs.

The rules implementing these statutes are found at Title 28 of the Texas Administrative Code (TAC), §§21.2801-21.2815. The rules apply to all claims filed for non-confinement services, treatments, or supplies rendered on or after August 1, 2000, and to claims filed for services, treatments, or supplies for in-patient confinements in a hospital or other institution that began on or after August 1, 2000.

Statutory Timelines. If a physician or provider submits a “clean claim” as defined in §§21.2802 and 21.2803, the carrier has 45 days after receipt of the claim to do one of the following:

  • pay the total amount of the claim in accordance with the contract;
  • deny the entire claim after a determination that the carrier is not liable and notify the physician or provider in writing why the carrier will not pay the claim;
  • pay the undisputed portion of a claim and deny the remainder after a determination that the carrier is not liable for the remainder of the claim and notify the physician or provider in writing why the carrier will not pay the denied portion of the claim;
  • pay the undisputed portion of the claim, notify the physician or provider in writing that the remainder of the claim will be audited and pay the physician or provider 85 percent of the contracted rate on the unpaid portion of the claim; or
  • notify the physician or provider in writing that the entire claim will be audited and pay the physician or provider 85 percent of the contracted rate on the claim.

When a carrier acknowledges coverage but decides to audit a claim, it must pay 85 percent of the contracted rate on the claim within 45 days. After the audit is completed, the carrier must make any additional payment within 30 days. Physicians and providers who owe refunds to a carrier must make them within 30 days after the physician or provider receives the audit results, or after the exhaustion of any covered person´s appeal rights if the appeal is filed within the 30-day refund period, whichever comes later. A carrier that fails to comply with the claims payment requirements is liable for payment of the full amount of billed charges submitted on the claim or the contracted penalty rate set forth in the contract between the physician or provider and the carrier. In addition, the Department may impose regulatory remedies and sanctions for non-compliance (as explained in the Enforcement section of this bulletin).

For prescription benefit claims, the carrier must pay electronically submitted prescription claims that are electronically adjudicated and electronically paid within 21 days after authorizing treatment.

If you pend taking action on a clean claim without complying with these requirements, you are not in compliance with the clean claims rules.

Claims Address. The carrier is required by rule to disclose to the physician or provider the following information:

  • an address where claims are to be sent for processing;
  • a telephone number for questions regarding claims;
  • the name, address, and telephone number of any entity to which claims payment functions have been delegated; and
  • the address and telephone number of any separate claims processing centers.

A carrier may not, after a change of claims payment address or a change in delegation of claims payment functions, deny a clean claim on the basis that a physician or provider failed to file the claim within any contracted time period, unless the carrier provided at least 60 calendar days prior written notice of the address or delegation change. A carrier may not fail to acknowledge receipt of a claim sent by certified or registered mail.

If you change the address to which the physician or provider must send the claim and do not give the required written notice and subsequently fail to act upon a clean claim within the statutory payment period or refuse to accept a clean claim because it was sent to the incorrect address, you are not in compliance with the clean claims rules.

Alteration by Contract. Statutory requirements, such as the prompt payment periods, may not be changed by contract (except that the 45-day payment period may be shortened by contract). Carriers may alter by contract some of the prompt payment requirements such as data elements and attachment requirements.

If you use contract provisions to lengthen the statutory prompt payment periods, you are not in compliance with the clean claims rules.

Attachments and Additional Elements. Carriers may revise their requirements for additional attachments and clean claims elements upon proper notification. The physician or provider must be notified at least 60 calendar days before the carrier may require the additional attachment or element.

If you are requiring physicians or providers to submit attachments for which you have not given proper notification in accordance with the rules, you are not in compliance with the clean claims rules.

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