January 05, 2010

Report: new laws needed to ensure timely payments to health providers for patient care

A new report from the Missouri Department of Insurance shows health care providers across Missouri are dealing with significant payment delays in the claims filed with insurance companies for treatment of patients. The report on Missouri's "prompt pay" law, submitted to Gov. Jay Nixon after an executive order in September, shows more than 26 percent of claims at Missouri hospitals are past due by 90 days or more.

 "While many insurance companies in Missouri are meeting their financial obligations to health care providers and patients, others are not" said John M. Huff, director of the Missouri Department of Insurance, Financial Institutions and Professional Registration (DIFP). "When hospitals, doctors and other providers treat insured patients, the insurance claims must be paid on time. This report recommends state law be strengthened so that Missouri's health care system is not compromised by these payment delays."

The department analyzed data from 69 hospitals in compiling the 92-page report. The extent of payment delays differed greatly by region of the state. In some areas, 10 percent of claims were more than 90 days past due, but in others, that figure was 70 percent. Overall, in the second quarter of 2009, hospitals reported $153 million in claims unpaid after 90 days.

The report shows rural hospitals are seeing more payment delays: The average urban hospital reported 25.6 percent of claims over 90 days past due. For rural hospitals that figure is 37 percent.

"These slow processing times create an even more serious problem for smaller rural providers, who are more sensitive to interruptions to cash flow," Huff said.  "This is made worse by today's challenging economy, when smaller providers can be cash-strapped and less able to absorb these payment disruptions."

Percentage of claims unpaid after 90 days, by region:

Kansas City


St. Louis












The report concludes that Missouri's 2002 "prompt pay" law has had only a modest impact on speeding up health insurance claims payments to providers and needs to be strengthened to make the process more efficient. The report recommends the law be clarified to provide better direction to both insurers and health care providers on their roles and responsibilities. Also, where appropriate, Huff says he will order a number of regulatory actions by the department, including market conduct examinations of health insurance companies. These examinations investigate whether insurers are handling claims in compliance with Missouri law.

The report was produced in accordance with Executive Order 09-24, issued by Gov. Nixon on Sept. 11, 2009. The order created the "Prompt Pay for a Healthy Missouri Project" and assigned it to the DIFP, which invited Missouri hospitals and other health care providers to submit accounts receivable data for insurance claims. By revenue, the 69 hospitals responding represent more than 70 percent of the hospital market in Missouri. The report was submitted to Gov. Nixon on Dec. 31, as called for in the executive order.

The full prompt pay report is available on the department's Web site.