Menendez, Lautenberg Introduce Bill Requiring Prompt Health Care Payments

Menendez, Lautenberg Introduce Bill Requiring Prompt Health Care Payments

Lawmakers: Late payments hurt patients; force financial hardships on pharmacists, doctors and hospitals

Washington - U.S. Senator Robert Menendez (D-NJ), joined by Senator Frank R. Lautenberg (D-NJ),today introduced legislation requiring prescription drug managers, managed careplans and other private health insurers to promptly pay health care claims submittedby pharmacists, physicians and hospitals.

Health care providers oftentimes face financial strife because prescription drug plans and health plans either do not pay them within a reasonable time frame, or do not pay them at all. The Menendez-Lautenberg bill would require payment within 14 days for claims filed electronically, and 30 days for manually-filed claims. Interest would be assessed and fines imposed upon companies in violation of this bill.

"A federal prompt pay law is critical to ensuring that our pharmacies and health care providers maintain adequate cash flows and are able to continue functioning," Menendez said. "They are the providers that know their patients best and ensure that they receive the important care they need and deserve. With the implementation of the new Medicare Prescription Drug benefit, local pharmacies have been particularly hard hit, which has grave consequences for American communities and the patients who depend most on Medicaid and Medicare."

"Hospitals, doctors and pharmacists that serve Medicare and Medicaid patients must be paid in a timely manner," said Lautenberg. "Without this legislation, senior citizens, the disabled and the poorest Americans could lose access to life-saving health care services."

The Prompt Payment of Health Benefits Claims Act would help ensure access to preferred pharmacies, physicians and hospitals by: requiring that group health insurers, Medicaid and Medicare managed care plans, and the new Medicare prescription drug mangers, pay claims to the beneficiary, hospital, physician or other provider who filed the claim within 14 days of the filing date for electronically filed claims and 30 days for manually filed claims.

The bill will also impose rising interest rates on claims that are paid late; impose monetary penalties for violations of the Act; ensure for a private right of action to recover unpaid claims and interest; and, not preempt state laws that impose requirements or standards that are equal to or more stringent than those established in this Act.

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The Prompt Payment of Health Benefits Claims Act of 2006


This bill will help ensure that our seniors and all patients have access to their preferred local pharmacy and health care provider. Since local pharmacies, doctors and hospitals are the health care frontline in our communities and often find themselves squeezed by insurance copies on the one hand and their obligation to take care of patients on the other, this bill aims to relieve the burden on providers by requiring prescription drug managers, managed care plans and other private health insurers to pay health care claims in a timely fashion. Under federal law and most state laws, there are no consequences for Health Maintenance Organizations (HMOs) and Prescription Drug Managers (PDMs) that fail to pay their bills. Even in states that do enforce prompt payment of claims standards, these rules do not apply to federally regulated (ERISA) health plans. Too many pharmacies, physicians and hospitals admit facing financial strife because prescription drug plans and health plans either do not pay them within a reasonable time frame, or do not pay them at all. Medicare is required to pay claims within 30 days of filing. Private prescription drug managers and health plans should also be required to pay their bills on time.


Specifically, the Prompt Payment of Health Benefits Claims Act would help ensure access to preferred pharmacies, physicians and hospitals by:

Requiring that group health insurers, Medicaid and Medicare managed care plans, and the new Medicare prescription drug mangers, pay claims to the beneficiary, hospital, physician or other provider who filed the claim within 14 days of the filing date for electronically filed claims and 30 days for manually filed claims.
Imposing rising interest rates on claims that are paid late.
Imposing monetary penalties for violations of the Act.
Ensuring a private right of action to recover unpaid claims and interest.
Not preempting state laws that impose requirements or standards that are equal to or more stringent than those established in this Act.

Statement of Senator Robert Menendez
Introduction of the Prompt Payment of Health Benefits Claims Act of 2006


April 5, 2006

Mr. President, I rise today to introduce legislation, along with my colleague, Senator Lautenberg, to preserve seniors' and all patients' access to local pharmacies, doctors and hospitals. Since these providers are on the front lines of our communities' health care systems and often find themselves squeezed by insurance copies on the one hand and their obligation to take care of patients on the other, this bill aims to relieve their burden by requiring prescription drug managers, managed care plans and other private health insurers to pay health care claims in a timely fashion.


The Prompt Payment of Health Benefits Claims Act bill seeks to address the financial strains being faced by hospitals and physicians my state of New Jersey and across the country. In addition, this legislation would address the new financial crisis pharmacies are facing in light of the new Medicare Prescription Drug benefit. Specifically, the legislation requires prescription drug managers, private health plans and other private health insurers to pay manually filed claims within 30 days and electronically filed claims within 14 days. Insurers that fail to meet these timeframes would be required to pay interest for everyday the claims goes unpaid. Insurers that knowingly violate these prompt payment requirements would be subject to monetary penalties.


Mr. President, a federal prompt pay law is critical to ensuring that our pharmacies and health care providers maintain adequate cash flows and are able to continue functioning. Seniors and all patients depend on their local pharmacists and preferred physicians. They are the providers that know their patients best and ensure that they receive the important care they need and deserve. The threat of local pharmacies, physicians and hospitals going out of business has serious consequences with regards to the kind of care the community will receive.


The need for this legislation cannot be understated. In my state of New Jersey, local pharmacies have never had a more challenging financial situation. They are encountering lower reimbursement rates from the prescription drug managers and a 60-90 day lag time in reimbursements, which are putting many on the brink of going out of business. Almost half of all hospitals are operating in the red, and that number is growing. Physicians and hospitals are experiencing rising health care operating costs and tight federal and state budgets. Untimely payment of claims has only compounded these problems.


The problem of late payments has reached such a crisis that the majority of states, including New Jersey, have enacted "prompt pay" laws to require insurers to pay their bills within a specific time-frame. Unfortunately, New Jersey's law, like most similar state laws, is largely ineffective because it lacks strong enforcement provisions and offers no incentives for private insurers to comply. Furthermore, state prompt-pay laws apply only to state-regulated plans, which only cover approximately half of New Jerseyans that are insured.


The bottom line is that pharmacies, physicians, hospitals and other health care providers should not have to shoulder the burden of unpaid claims. These local providers have fulfilled their commitment to care for patients, and my legislation will ensure that private insurers assume the financial responsibilities for the health coverage they are being paid to provide.


M. President, I ask unanimous consent that a copy of the legislation be printed in the Record at this point.

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