Medical Economics Feature -- September 2001
By Walt Borges
With the prompt pay provisions of House Bill 1862 lying in the
governor's trash pile, physicians may find that operating a
practice in Texas resembles a weird game of "Survivor," with
insurers using slow-pay, no-pay practices to "vote" physicians off
the island of sound finances.
Gov. Rick Perry promised a fix when he vetoed the bill and
ordered Texas Insurance Commissioner José Montemayor to "be more
aggressive in assisting physicians and health care providers in
claims disputes." The Texas Department of Insurance (TDI) responded
on July 24, issuing several proposed rules that would ease, but not
eliminate, the physician's burden to prove clean claims.
Among the proposed rules are changes that prohibit insurers from
circumventing state law by contract, limit information required by
insurers to data contained in a patient's medical file, and
penalize insurers who "lose" claim forms sent through the mail.
"We hope that the plans will seek to comply, although their
recalcitrance in the past makes us somewhat cautious," Texas
Medical Association President Tom B. Hancher, MD, said in a
statement about the proposed rules.
TDI is accepting comments on the rules until Sept. 4, and agency
officials say the rules could be adopted as early as the next
To be considered, written comments on the proposal must be
submitted to Lynda H. Nesenholtz, General Counsel and Chief Clerk,
Mail Code 113-2A, TDI, PO Box 149104, Austin, TX 78714-9104. An
additional copy of the comments must be submitted simultaneously to
Pat Brewer, HMO Project Director, Mail Code 103-6A, TDI, PO Box
149104, Austin, TX 78714-9104.
What can physicians do to survive in the claims-processing
wilderness? TMA physicians and the TMA Health Care Financing
Department assembled some tips and tools to aid doctors in the
prompt pay arena as part of its "Clean Claim Hall of Shame"
workshops in July and August.
"TMA put together the workshops to help physicians and their
staff understand the best way to ensure prompt payment from
insurers," said Robert Gunby, MD, chair of the TMA Council on
Socioeconomics. "TMA also offers forms, checklists, and other tools
that allow doctors and their staff to request information from
insurers, evaluate proposed contracts, file claims, and appeal
"It's important for physicians to know that TMA continues to go
to bat for them and fight for them in the meetings that we have
with the carriers," Dr. Gunby added.
The following pearls of wisdom are drawn from those
1. A clean claim is a readable claim.
Every time a physician files an inaccurate, incomplete, or
illegible claim form, prompt payment of the claim is doomed. At the
very best, processing the claim will be delayed. At worst, payment
will be denied.
Physicians and their insurance claims staff members must assume
the lead in making sure claims filed on paper will not be rejected
because of physical flaws. TMA Health Care Financing Director
Teresa B. Devine recommends using original claim forms printed with
red drop-out ink (ink that will not be picked up by
claims-processing scanners) to file paper claims.
In the wake of fines announced Aug. 1 by TDI against 17 insurers
for prompt pay violations, Ms. Devine recommends strongly that
physicians file claims that meet all requirements of the insurer.
If TDI is signaling that regulators will not tolerate clean claim
strategies adopted by insurers, the insurers are likely to be less
tolerant of errors made in filling out and filing the forms, Ms.
TMA distributes a sample of the Health Care Financing
Administration Form 1500 -- the standard form -- with highlighting
in the required and conditional fields. Instructions for and
explanations of each field are printed on the back of the sample
forms, which are available from TMA for use in dealing with group
health plans or Medicare.
Some other tips for a readable form: Ditch the paper clips,
post-it notes, and margin notes, and don't highlight portions of
the claim. If possible, don't file a handwritten claim; if you do,
make sure the print is legible. Although the claim form fields are
cramped, stay within the borders of each block, use capital
letters, and make sure the information prints darkly. You are
trying to counter the tendency of the insurance company scanners to
malfunction at the slightest irregularity.
If you have to mail the claim, use a flat envelope to avoid
folding it. Folds don't do well in scanners.
If you are thinking that filing by electronic means will reduce
the problems, you're right. But other steps must be taken to ensure
that the claim is processed correctly. Make sure your claims-filing
software transmits the HCFA Form 1500 correctly.
Don't assume that your software is consistent with the Texas
clean claim rules. Check it out with your software vendor. Most
importantly, keep a file of all transmission reports and
verifications -- just in case a claim gets lost. You also may need
to track claims that are processed through a clearinghouse.
2. File claims, and follow up on time.
The first commandment of prompt payment is to know the deadlines
and meet them. Each health insurer and each contract has a
different deadline, and the physician needs to know how long after
treatment the window remains open for filing a claim. Within 45
days of the insurer's receipt date, the insurer should send a
payment, a written denial, or a notice asking for additional
information. If the insurer hasn't responded, then it's time for
the practice's claims administrator to contact the insurer for an
3. Don't resubmit claims without trying to figure out
what went wrong.
Submitting duplicate claims is costly and can be considered
abusive. If your claim is lost, make a follow-up phone call to
check its status. If you filed electronically, make sure the
summary report doesn't indicate that the claim was rejected at the
time of transmission.
Ms. Devine strongly recommends that all claims be filed
electronically and that all claims reported lost be resubmitted
Some practices submit and resubmit claims by certified mail. In
addition to the downside of the cost of each mailing, there is a
major loophole as well. Sending certified mail certifies the
mailing of a package, but it indicates nothing about the contents
of the packet. Electronic filing, on the other hand, confirms the
receipt or rejection of each individual claim within a submission,
Ms. Devine points out.
Sometimes an insurer may inform a doctor that a claim has been
lost after the filing deadline. A number of legal decisions support
the concept that claims that can be proved to have been mailed must
be assumed to have been delivered, but Ms. Devine says some
physicians who have argued this approach have failed to persuade
4. Use template letters for your appeals.
TMA has developed a series of template letters to help
physicians appeal denials or delays of claims payment. The letters
state the legal basis for the appeal and the consequences of and
penalties for failure to pay. The form letters are designed to help
save your staff the time and effort necessary to draft individual
letters for each appeal.
5. Use TMA tools.
TMA offers a number of tools to help physicians with claims
problems. In addition to the color-coded HCFA Form 1500 and the
templates for appeal letters, TMA has developed a managed care
contract review checklist, letter templates for requesting insurer
utilization review and claims-processing policies, and an
evaluation and management coding tool. These electronic tools are
online at www.texmed.org. Click on the doctor's bag at the bottom
of the TMA home page.
6. Know the law.
Changes in prompt pay laws directly affect your practice, so you
should keep up with the changes. TMA's lobbying efforts resulted in
the passage of House Bill 610 in 1999, which established the
initial framework of the state's prompt pay laws. But HB 610 and
subsequent rules contained glaring loopholes that allowed insurers
to change the definition of a clean claim by contract. The
ill-fated HB 1862 addressed that problem; now it's up to TDI.
Physicians also should be aware of judicial decisions that alter
the interpretation of prompt pay laws and rules regarding claims
Doctors also should know that HB 610's payment provisions don't
cover claims submitted to Medicare, Medicaid, workers' compensation
insurers, TriCare, school health plans, or self-funded employer
health plans set up under the Employee Retirement Income Security
Act (ERISA). Indemnity policies are covered but are subject to
other state laws governing payments.
7. Review your contracts with health insurers.
When a physician signs a bad contract, trouble lurks ahead. But
what do you look for?
First, don't accept contracts that include policies and
procedures that may be "incorporated by reference," unless you
first obtain those policies and procedures in writing from the
insurer. When disputes arise, both you and the insurer will at
least be talking about the same contract and policy language.
Second, Ms. Devine recommends that physicians get a copy of the
fee schedule for at least the top 25 current procedural terminology
(CPT) codes for which they bill. Many physicians never see the fee
schedule before signing a contract. Insurers resist providing the
constantly changing schedules or even specifying which of many
variations is in effect.
Third, request copies of utilization review and
claims-processing policies and procedures from each insurer. TMA
has template letters that you can use. TMA leaders and lobbyists
continue to urge TDI and insurers to recognize that fee schedules
and utilization review edits must be disclosed and updated to give
physicians full knowledge about the contracts they are signing.
Such disclosures will make auditing insurer payments possible. At
present, TDI continues to resist that interpretation of the
Insurance Code and does not require specific information to be made
Fourth, compare your contract with the American Medical
Association's model managed care contract for alternative contract
8. Don't agree to arbitration that limits your
Arbitration agreements in contracts can limit your right to go
to court or contact regulatory agencies, your own attorney, or
professional associations. Ask for details of the arbitration
structure, and don't sign contracts that limit discovery of
evidence or limit damages that the managed care organization may
owe. (See "
In a Bind
9. Evaluate whether the insurer is necessary for your
Physicians should evaluate insurers critically to make sure that
continued participation in a plan is not going to be a fatal
economic drag on the practice. Monitoring factors such as average
claims turnaround time, percentage of denied claims, percentage of
appeals required, fees paid versus fees billed, and the aging of
accounts receivable will provide valuable clues as to how well the
insurer is performing.
Dropping an insurer may not be an option if that insurer
accounts for more than 20 percent of a practice's revenues. Ms.
Devine says the "20 percent rule" should trigger consideration of
whether the practice can afford to lose or terminate the contract.
If the revenue share is large because the physician or practice is
the major contractor for an insurer in a community, then the
physician may actually gain some leverage in negotiating contract
10. Complain effectively.
TDI has a complaints process and a recently established
ombudsman to handle the burgeoning load of physician complaints.
Complaints about health maintenance organizations, preferred
provider organizations, and traditional indemnity plans fall under
its jurisdiction. An online complaint form can be found at
. The complaint can be filed online; however, supporting documents
must be faxed or mailed to TDI.
The TDI ombudsman is Audrey Selden, who can be reached at (512)
463-6169 or toll-free at (800) 578-4677.
Complaints regarding self-funded ERISA-type policies should be
sent to the U.S. Department of Labor, Division of Technical
Assistance and Inquiries, 200 Constitution Ave. N.W., Room N-5619,
Washington, D.C. 20210. The telephone number is (202) 219-8776.
TMA keeps a
hassle factor log
to identify trends and generate topics for discussion when
TMA leaders and staff meet with insurance carriers, insurance
regulators, and legislators.
TMA Advantage: Major TMA Tools
and Resources on Prompt Payment