Hospitals' Survey Shows HMOs Paying Quicker, But Still Lagging Behind Acceptable Time Frames

Apr 05, 2001, 01:00 ET from New Jersey Hospital Association

    PRINCETON, N.J., April 5 /PRNewswire/ -- HMOs have made slight
 improvements paying hospitals in a timely manner, but they still have a long
 way to go to meet standards set by state law and regulation.
     That's the conclusion of a New Jersey Hospital Association survey of its
 members assessing not only how quickly HMOs pay claims but also how well they
 adhere to state requirements to do so. The survey also examined whether claims
 were paid properly and whether reasons for claims denials were fully
 explained.
     At the end of 1999, the state Legislature passed a law requiring that all
 HMOs pay uncontested paper claims within 40 days and electronic bills within
 30 days. The statute also holds HMOs accountable to contest claims within
 30 days, respond better to claims inquiries and pay interest to hospitals on
 late payment of claims. Soon after the law was passed, but before state
 regulations were put in place, an initial survey of hospitals drew some
 disturbing conclusions: only 16 percent of the health plans paid claims within
 40 days and hospitals were still waiting for more than $108 million in
 accounts receivable.
     The most recent NJHA follow-up survey showed improvement in some areas
 when performance was compared between March and October 2000. For example, in
 March only 27 percent of the HMOs contested claims within the required
 30 days. In October that number climbed to 41 percent. In addition, 37 percent
 of HMOs were paying hospitals interest on the late payment of claims as
 opposed to only 15 percent in March.
     However, in the critical area of timely payment, 84 percent were still
 taking longer than 40 days to pay manual claims. In fact, the 40 hospitals
 reporting showed more than $130 million in HMO accounts receivable beyond
 60 days.
     "There is still much room for progress when it comes to HMOs paying for
 the care hospitals have provided," said NJHA President Gary Carter. "First we
 needed to have a law passed to get their attention. Now we need to make sure
 that their performance gets even better. To still have $130 million in
 payments to hospitals outstanding after 60 days would be unacceptable in any
 other industry."
 
     Other key findings from the survey showed:
 
     -- There was a slight improvement in the timely payment of electronic
 claims from 21 percent in March 2000 to 28 percent in October.
 
     -- HMOs were slower to respond to claim inquiries within three days, from
 53 percent in March 2000 to 41 percent in October.
 
     -- Health plans demonstrated improvement in providing all of the reasons
 for which a claim was denied, from 49 percent in March to 58 percent in
 October.
 
     "With the recent implementation of regulations to tighten compliance with
 the law, we're hoping to see even more improvement on the part of HMOs," said
 NJHA Senior Vice President of Planning and Research Valerie Sellers.
 "However, at a time when more than half the state's hospitals are operating in
 the red, poor payment practices by health plans create an administrative and
 financial nightmare for our hospitals."
     Based in Princeton, NJHA provides its 107 members with advocacy, policy
 development, data analysis research and education.
 
 

SOURCE New Jersey Hospital Association
    PRINCETON, N.J., April 5 /PRNewswire/ -- HMOs have made slight
 improvements paying hospitals in a timely manner, but they still have a long
 way to go to meet standards set by state law and regulation.
     That's the conclusion of a New Jersey Hospital Association survey of its
 members assessing not only how quickly HMOs pay claims but also how well they
 adhere to state requirements to do so. The survey also examined whether claims
 were paid properly and whether reasons for claims denials were fully
 explained.
     At the end of 1999, the state Legislature passed a law requiring that all
 HMOs pay uncontested paper claims within 40 days and electronic bills within
 30 days. The statute also holds HMOs accountable to contest claims within
 30 days, respond better to claims inquiries and pay interest to hospitals on
 late payment of claims. Soon after the law was passed, but before state
 regulations were put in place, an initial survey of hospitals drew some
 disturbing conclusions: only 16 percent of the health plans paid claims within
 40 days and hospitals were still waiting for more than $108 million in
 accounts receivable.
     The most recent NJHA follow-up survey showed improvement in some areas
 when performance was compared between March and October 2000. For example, in
 March only 27 percent of the HMOs contested claims within the required
 30 days. In October that number climbed to 41 percent. In addition, 37 percent
 of HMOs were paying hospitals interest on the late payment of claims as
 opposed to only 15 percent in March.
     However, in the critical area of timely payment, 84 percent were still
 taking longer than 40 days to pay manual claims. In fact, the 40 hospitals
 reporting showed more than $130 million in HMO accounts receivable beyond
 60 days.
     "There is still much room for progress when it comes to HMOs paying for
 the care hospitals have provided," said NJHA President Gary Carter. "First we
 needed to have a law passed to get their attention. Now we need to make sure
 that their performance gets even better. To still have $130 million in
 payments to hospitals outstanding after 60 days would be unacceptable in any
 other industry."
 
     Other key findings from the survey showed:
 
     -- There was a slight improvement in the timely payment of electronic
 claims from 21 percent in March 2000 to 28 percent in October.
 
     -- HMOs were slower to respond to claim inquiries within three days, from
 53 percent in March 2000 to 41 percent in October.
 
     -- Health plans demonstrated improvement in providing all of the reasons
 for which a claim was denied, from 49 percent in March to 58 percent in
 October.
 
     "With the recent implementation of regulations to tighten compliance with
 the law, we're hoping to see even more improvement on the part of HMOs," said
 NJHA Senior Vice President of Planning and Research Valerie Sellers.
 "However, at a time when more than half the state's hospitals are operating in
 the red, poor payment practices by health plans create an administrative and
 financial nightmare for our hospitals."
     Based in Princeton, NJHA provides its 107 members with advocacy, policy
 development, data analysis research and education.
 
 SOURCE  New Jersey Hospital Association