HIPAA May Undermine State "Prompt Pay" Laws: Clean Claim' Redefined

By Frieden, Joyce | Clinical Psychiatry News, November 2003 | Go to article overview

HIPAA May Undermine State "Prompt Pay" Laws: Clean Claim' Redefined


Frieden, Joyce, Clinical Psychiatry News


WASHINGTON -- State "prompt pay" laws could be affected by the "transaction and code set" provisions of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) that went into effect last month, Ann Leopold Kaplan said at a forum sponsored by the American Health Lawyers Association.

Prompt pay laws require insurers to promptly pay providers who have submitted "clean claims," said Ms. Kaplan, a lawyer who specializes in health care policy. The question is, "Does a [HIPAA] compliant transaction equal a clean claim?"

HIPAA sets out specific instructions about how a claim must be formatted and what fields it must contain in order to be accepted by an insurance company, Ms. Kaplan explained. The transaction and code set rule still allows for optional fields and for decisions about what optional fields and attachments are needed. But if meeting a state's clean claim requirement would result in a violation of HIPAA, then that state law is going to be preempted.

Idaho is the only state that has not enacted any prompt pay laws, said Keith Halleland, a Minneapolis health care lawyer. "As a result of these laws, there are some pretty strict restrictions on how long an insurer has [to pay] a claim."

Generally speaking, all the laws require insurers to pay providers within a specified period of time--usually from 15 to 45 days--for any clean claim. If insurers don't pay within the time period, they must then add interest to the amount they owe; annual interest rates usually range from 9% to 18%, said Mr. Halleland, whose law firm has conducted research on state prompt pay laws. Claims payment can be delayed in some states if there is a "legitimate" dispute over the payment.

Some aspects of prompt pay laws vary widely, he continued. For instance, some states allow authorities to levy civil penalties on insurers that violate prompt pay laws, and the penalties can range from $500 to $5,000 per violation and from $10,000 to $200,000 in the aggregate, plus costs and attorneys' fees. …

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HIPAA May Undermine State "Prompt Pay" Laws: Clean Claim' Redefined
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