Six Major HMOs are Breaking State Prompt Pay Law

Medical Society of New Jersey Calls for a

State Audit Because Patient Care is Suffering



Apr 19, 2001, 01:00 ET from Medical Society of New Jersey

    ATLANTIC CITY, April 19 /PRNewswire/ -- A prospective study by the Medical
 Society of New Jersey (MSNJ) reports that more than $1 billion of this year's
 HMO claims will not be paid in accordance with the prompt payment law signed
 by Governor Christie Whitman in December 1999.*  The study -- which is the
 most comprehensive ever in the United States -- tracked medical claims from
 Aetna, Amerihealth, Cigna, Horizon, Physicians Health Services and Oxford.
 Overall, these HMOs -- which represent 90 percent of the managed care market
 -- violated the law more than 25 percent of the time.  As a result of the
 study, MSNJ is urging the Department of Banking and Insurance (DOBI) to audit
 these six HMOs.
     "Audit is the only language HMOs understand. Ohio audited their HMOs to
 bring them under control when they violated their state prompt pay law, and
 New Jersey must continue that trend," said Angelo S. Agro, MD, president,
 MSNJ.  "New Jersey's prompt pay law was passed more than a year ago, giving
 HMOs more than enough time to comply. The bottom line is when it comes to
 prompt pay, you either obey the law or you break it - there's no in-between."
     Last year, Ohio faced a similar situation when HMOs were violating the
 prompt pay law.  The Ohio Department of Insurance levied fines totaling
 $545,000 against seven HMOs after its medical society conducted a similar
 study of HMO prompt pay violators in Ohio.  According to MSNJ, violation of
 the current law should prompt DOBI to take similar action.
     "Each of these companies is breaking the law, and the end result is less
 interaction between the patient and the physician. It means a disruption in
 the continuity of care, increased patient confusion, and physicians and staff
 spending more time fighting with HMOs and less time treating patients," Agro
 added.  "When it comes to healthcare, patients rightfully demand that
 physicians comply with their healthcare needs 100 percent of the time.  The
 state law demands the same compliance from HMOs regarding payment, and it's
 time to hold their feet to the fire."
     A sample of 1,200 physicians (more than 6 percent of the physician
 population in New Jersey) serving 1.2 million patients participated in this
 study.  MSNJ then tracked approximately 17,500 of these physicians' claims
 during the week of January 15, 2001, and monitored the claims for 60 days.
 These results come one year after New Jersey passed its prompt payment law
 establishing mandatory timetables for HMOs to respond to electronic and paper
 claims.  Under the law, HMOs must process electronically submitted claims
 within 30 days, and paper (manually submitted) claims within 40 days.
     To compare this to federal law, Medicare requires 95% of clean claims to
 be paid within 30 days.  Using Medicare's aggregate requirement, none of the
 six major HMOs in this study are in compliance, and New Jersey law does not
 speak of aggregates, but of individual claims.
     "The AMA commends the Medical Society of New Jersey for conducting an
 extensive prospective study of physician claims submitted to health plans,
 tracking more than 17,000 claims submitted during a single week in January
 2001," said AMA Board Chair D. Ted Lewers, MD.  "This study's findings clearly
 demonstrate that health plans in New Jersey are not complying with the
 existing state prompt pay guidelines for both electronic and paper claims.
 These recorded delays in payment put an undue burden on physicians and their
 practices and jeopardize patient care and safety."
     The chart below lists the compliance rates of each examined HMO regarding
 electronic and manual claim submissions.  Also listed is the overall
 percentage of electronic claims received by that individual company during the
 weeklong survey.  For example, 38 percent of all claims submitted to Aetna
 during the study were electronic claims.  81 percent of those electronic
 claims were responded to within the 30 days required by state law.
 
     HMO       Percentage of      Percentage of    Percentage of    Percentage
              claims submitted  electronic claims     claims         of paper
               electronically     paid in full       submitted      claims paid
                                 within 30 days      manually    in full within
                                                                     40 days
 
     Aetna           38 %                81 %           62 %           48 %
     AmeriHealth     1 %                 NA             99 %           55 %
     Cigna           45 %                66 %           55 %           62 %
     Horizon         55 %                66 %           45 %           71 %
     Oxford          67 %                79 %           33 %           86 %
     PHS             54 %                68 %           46 %           67 %
 
     Some other interesting results from the study (individual charts available
 upon request):
 
     Electronic Claims:  20 percent of electronic claims submitted in the study
                         received no response from the HMO within the mandated
                         30-day period -- that violates the law.
 
     Manual Claims:      30 percent of manual claims submitted in the study
                         received no response from the HMO within the mandated
                         40 day period -- that violates the law.
 
     Aetna:              It is best at paying electronically submitted claims
                         on time (81 percent of the time -- still in violation
                         of the law), but is the worst at paying paper claims
                         (less than 50 percent), even though most of the claims
                         it received (62 percent) were paper claims.
 
     Oxford              Ranked higher than the others, perhaps because it
                         previously was fined for violating earlier prompt pay
                         requirements.
 
     Medical Society of New Jersey (MSNJ)
     Founded in 1766, the Medical Society of New Jersey is a voluntary
 association of 9,500 physicians statewide, whose mission is improving the
 health of New Jerseyans and acting on behalf of its members in legislative and
 regulatory matters.
     For more information, please visit the MSNJ web site at
 http://www.msnj.org.
 
     * Figure based on number of unpaid claims for electronic and paper claims
 during study period ($1.5 million) multiplied by 52 weeks in the year
 multiplied by 14 (the multiplier to get from the sample size of 1,200
 physicians surveyed to 16,800 physician in the state).  The law was passed in
 December of 1999.  Regulations were instituted in December of 2000.
 
 

SOURCE Medical Society of New Jersey
    ATLANTIC CITY, April 19 /PRNewswire/ -- A prospective study by the Medical
 Society of New Jersey (MSNJ) reports that more than $1 billion of this year's
 HMO claims will not be paid in accordance with the prompt payment law signed
 by Governor Christie Whitman in December 1999.*  The study -- which is the
 most comprehensive ever in the United States -- tracked medical claims from
 Aetna, Amerihealth, Cigna, Horizon, Physicians Health Services and Oxford.
 Overall, these HMOs -- which represent 90 percent of the managed care market
 -- violated the law more than 25 percent of the time.  As a result of the
 study, MSNJ is urging the Department of Banking and Insurance (DOBI) to audit
 these six HMOs.
     "Audit is the only language HMOs understand. Ohio audited their HMOs to
 bring them under control when they violated their state prompt pay law, and
 New Jersey must continue that trend," said Angelo S. Agro, MD, president,
 MSNJ.  "New Jersey's prompt pay law was passed more than a year ago, giving
 HMOs more than enough time to comply. The bottom line is when it comes to
 prompt pay, you either obey the law or you break it - there's no in-between."
     Last year, Ohio faced a similar situation when HMOs were violating the
 prompt pay law.  The Ohio Department of Insurance levied fines totaling
 $545,000 against seven HMOs after its medical society conducted a similar
 study of HMO prompt pay violators in Ohio.  According to MSNJ, violation of
 the current law should prompt DOBI to take similar action.
     "Each of these companies is breaking the law, and the end result is less
 interaction between the patient and the physician. It means a disruption in
 the continuity of care, increased patient confusion, and physicians and staff
 spending more time fighting with HMOs and less time treating patients," Agro
 added.  "When it comes to healthcare, patients rightfully demand that
 physicians comply with their healthcare needs 100 percent of the time.  The
 state law demands the same compliance from HMOs regarding payment, and it's
 time to hold their feet to the fire."
     A sample of 1,200 physicians (more than 6 percent of the physician
 population in New Jersey) serving 1.2 million patients participated in this
 study.  MSNJ then tracked approximately 17,500 of these physicians' claims
 during the week of January 15, 2001, and monitored the claims for 60 days.
 These results come one year after New Jersey passed its prompt payment law
 establishing mandatory timetables for HMOs to respond to electronic and paper
 claims.  Under the law, HMOs must process electronically submitted claims
 within 30 days, and paper (manually submitted) claims within 40 days.
     To compare this to federal law, Medicare requires 95% of clean claims to
 be paid within 30 days.  Using Medicare's aggregate requirement, none of the
 six major HMOs in this study are in compliance, and New Jersey law does not
 speak of aggregates, but of individual claims.
     "The AMA commends the Medical Society of New Jersey for conducting an
 extensive prospective study of physician claims submitted to health plans,
 tracking more than 17,000 claims submitted during a single week in January
 2001," said AMA Board Chair D. Ted Lewers, MD.  "This study's findings clearly
 demonstrate that health plans in New Jersey are not complying with the
 existing state prompt pay guidelines for both electronic and paper claims.
 These recorded delays in payment put an undue burden on physicians and their
 practices and jeopardize patient care and safety."
     The chart below lists the compliance rates of each examined HMO regarding
 electronic and manual claim submissions.  Also listed is the overall
 percentage of electronic claims received by that individual company during the
 weeklong survey.  For example, 38 percent of all claims submitted to Aetna
 during the study were electronic claims.  81 percent of those electronic
 claims were responded to within the 30 days required by state law.
 
     HMO       Percentage of      Percentage of    Percentage of    Percentage
              claims submitted  electronic claims     claims         of paper
               electronically     paid in full       submitted      claims paid
                                 within 30 days      manually    in full within
                                                                     40 days
 
     Aetna           38 %                81 %           62 %           48 %
     AmeriHealth     1 %                 NA             99 %           55 %
     Cigna           45 %                66 %           55 %           62 %
     Horizon         55 %                66 %           45 %           71 %
     Oxford          67 %                79 %           33 %           86 %
     PHS             54 %                68 %           46 %           67 %
 
     Some other interesting results from the study (individual charts available
 upon request):
 
     Electronic Claims:  20 percent of electronic claims submitted in the study
                         received no response from the HMO within the mandated
                         30-day period -- that violates the law.
 
     Manual Claims:      30 percent of manual claims submitted in the study
                         received no response from the HMO within the mandated
                         40 day period -- that violates the law.
 
     Aetna:              It is best at paying electronically submitted claims
                         on time (81 percent of the time -- still in violation
                         of the law), but is the worst at paying paper claims
                         (less than 50 percent), even though most of the claims
                         it received (62 percent) were paper claims.
 
     Oxford              Ranked higher than the others, perhaps because it
                         previously was fined for violating earlier prompt pay
                         requirements.
 
     Medical Society of New Jersey (MSNJ)
     Founded in 1766, the Medical Society of New Jersey is a voluntary
 association of 9,500 physicians statewide, whose mission is improving the
 health of New Jerseyans and acting on behalf of its members in legislative and
 regulatory matters.
     For more information, please visit the MSNJ web site at
 http://www.msnj.org.
 
     * Figure based on number of unpaid claims for electronic and paper claims
 during study period ($1.5 million) multiplied by 52 weeks in the year
 multiplied by 14 (the multiplier to get from the sample size of 1,200
 physicians surveyed to 16,800 physician in the state).  The law was passed in
 December of 1999.  Regulations were instituted in December of 2000.
 
 SOURCE  Medical Society of New Jersey

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