Payment delays: a sign of hard times for health plans?
By Edward Martin
- New solutions to an old problem: health plans that pay too slowly Talk to insurance industry officials about slow payments, and you'll hear the same explanation: incomplete information. While there's no denying that some claims are incomplete, physicians and analysts see a darker side to payment delays.
Laura Diamond, spokesperson for the American Association of Health Plans, which represents the nation's managed care industry, said her members are unfairly criticized. "Plans get inaccurate, incomplete information from doctors, and that adds to processing delays and costs," she said.
Some analysts, however, worry that funding crises may lie behind some of the delaying games. After years of undercutting each other to gain market share, many managed care plans deeply discounted their premiums, reducing the capital they need to pay claims.
Now, some analysts say, insurers are attempting to make up lost ground and gain investor confidence by boosting profits on every conceivable front. One way to achieve this is to earn interest on the "float" of funds owed to doctors.
What's at stake can be sensed from data compiled last year by PricewaterhouseCoopers. The accounting firm concluded that the insurance industry can pocket $280 million a year simply by returning one physician claim in a hundred and collecting interest on the held-up payment while the claim is resubmitted, ultimately paying the claim much later.
Doctors in California, New York and other states describe a seasonal pattern to those delays. Harvey V. Langford, FACP, a Virginia endocrinologist, for several years has been forced to take out short-term loans of up to $20,000 each January and February to pay salaries and overhead at his Richmond practice. The problem? Managed care plans sit on claims from November and December, leaving him without operating capital. "It seems they're padding profits to look good to investors at the end of the year," said Dr. Langford.
Industry consolidation may cause further financial strain. "Some companies have an almost total monopoly in their areas, so the impact of delayed payments on the individual physician is becoming exponentially greater," said Yank D. Coble, MACP, a Jacksonville, Fla., endocrinologist and AMA trustee. "In areas such as Massachusetts, where three of the four largest managed care companies are in serious difficulty, delay means you might never be paid at all," he said.
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