Insurers, docs face-off over Georgia’s Enhanced Prompt Pay Law

The American Medical Association and Medical Association of Georgia are fighting efforts in Georgia to undo the state’s law requiring insurers that provide third-party administrative services to pay claims in a timely manner.

The health insurance trade association America’s Health Insurance Plans is challenging the state’s Insurance Delivery Enhancement Act of 2011, which requires TPAs to pay paper claims within 30 days and electronic claims within 15 days, or pay 12% interest on unpaid claims. The act is effective Jan. 1, 2013.

The new law expands the regulatory scope of Georgia’s existing prompt payment law by adding TPAs to those payers that must comply. AHIP claims the new TPA provisions are preempted by ERISA, which sets basic standards for protection of pension and health plans in private companies. AHIP in August filed suit in the U.S. District Court in Atlanta seeking a ruling that permanently prohibits the state insurance commissioner from enforcing the TPA provision. In September, it filed a motion for a preliminary injunction that would prohibit enforcement during the litigation.

The medical associations now have filed a motion against AHIP’s motion, as they hope the law can be enforced in January as litigation on AHIP’s lawsuit continues. “If AMA and MAG are not allowed to intervene, the bargained-for interests and contractual rights of their membership pursuant to those provider agreements, along with the AMA and MAG’s own interest in protecting those rights, will be impaired,” according to the motion. “AMA and MAG’s memberships have a significant economic stake in the outcome of this litigation. Their membership often consists of small business owners who are adversely impacted financially when TPAs fail to pay for services rendered in a timely way.”

“This case has national implications for resolving the regulatory void in which health insurers are unaccountable for chronically late payments when they serve as administrators for self-insured employers,” says AMA President Jeremy Lazarus, M.D., in a statement. “Georgia has effectively closed that regulatory loophole, which helps physicians maintain a sustainable practice environment.”

Another statement to Health Data Management from AMA further explains the position of the medical associations: “The major goal of ERISA was to provide uniform minimum standards governing employee benefit plans, so that employers doing business in more than one state could design a plan that could operate nationwide, and would not face conflicting state requirements. … ERISA was conceived for an entirely different health care delivery system.  The transformation of health care delivery system has given rise to new types of arrangements and relationships for financing and delivering health care that were not contemplated by the framers of ERISA in 1974."

This story originally ran in Health Data Management.