Written by attorney Justin Brooks Demerath

Texas Prompt Pay Litigation Allows Healthcare Providers to Supplement Revenue Cycle

Over 20 years after the first prompt payment act was passed in the state of Texas, healthcare providers still struggle with delayed payments. But an emerging branch of litigation may change this frustrating trend. On June 17, 2003, Governor Rick Perry signed the SB 418 Prompt Pay Act into law, closing the loopholes in former prompt payment legislation that obstructed the timely payment of healthcare providers. The 2003 bill states that insurance companies must pay doctors, pharmacists, hospitals, and other healthcare providers within 30 days of an electronic claim or be subject to penalty fees, interest, and even attorney’s fees. However, despite the enactment of this law a decade ago, insurance companies still continue to delay and underpay claims. Healthcare providers dedicate an immense amount of time in all hours of the day and all days of the week to performing valuable service. So insurance companies know that the tedious process of sifting through thousands of past claims and entering a negotiation deters many busy healthcare providers from taking legal action. Additionally, many healthcare providers mistakenly assume that their collections departments are able to recover all the money due under the law. This oversight allows insurance companies to avoid paying significant amounts of penalties and interest that build over time but fly under the radar. So how can healthcare providers force insurance companies to pay their dues?

Recently, law firms in Texas have begun opening practices focusing on the enforcement of the Prompt Pay Act. O’Hanlon, McCollom, & Demerath, through litigation partners, utilizes a new four million dollar software that flags late payments over the last four years of a provider’s claim history and creates an aggregate report of all the penalties and interest due. The use of software and the legal system allows providers to spend a minimal amount of time worrying about disputing claims individually. In the case of O’Hanlon, McCollom, & Demerath, the only time required of the healthcare provider is the couple of hours needed to submit raw data to the firm’s analysts. After running the data through the software, the firm’s attorneys simply use these reports to represent the healthcare provider in arbitration against the insurance company and recover all fees owed. In the past, the amount of interest accrued over time has often been much higher than originally thought by the provider.

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