BILL ANALYSIS
AB 684
Page 1
Date of Hearing: April 14, 2009
ASSEMBLY COMMITTEE ON HEALTH
Dave Jones, Chair
AB 684 (Ma) - As Introduced: February 26, 2009
SUBJECT: Claim reimbursement: late payments: dental
services.
SUMMARY : Increases the interest rate health plans and health
insurers covering dental services must pay for uncontested
claims that are not reimbursed within 60 working days (to 20%
per year) and 90 working days (to 25% per year). Specifically,
this bill :
1)Requires health care service plans covering dental services
(health plans), health insurers covering dental services
(health insurers) and specialized health plans and health
insurers covering dental services (dental plans) to pay
interest at the rate of 20% per year on an uncontested claim
that is not reimbursed within 60 working days after receipt.
Requires interest to begin with the first calendar day after
the 60 working day period.
2)Requires health plans, health insurers and dental plans to pay
interest at the rate of 25% per year on an uncontested claim
that is not reimbursed within 90 working days after receipt.
Requires interest to begin with the first calendar day after
the 90 working day period.
EXISTING LAW :
1)Requires the regulation of health plans by the Department of
Managed Health Care (DMHC) and the regulation of health
insurers by the California Department of Insurance (CDI).
2)Requires health plans and health insurers to reimburse
uncontested claims no later than 30 days for health insurers
and non-health maintenance organization (HMO) health plans and
45 working days for HMOs, after receipt of the claim.
3)Requires, if a claim is not reimbursed within the 30 or 45
working day time period, that interest accrue at the rate of
15% per year, for health care service plans, and 10% per year
for health insurers, beginning with the first calendar day
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after the 30-working day period.
FISCAL EFFECT : This bill has not been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE . This bill is sponsored by the California Dental
Association (CDA) to establish tiered increases in the
interest penalties for non-payment of claims beyond the
current time requirements, to 20% per year for claims not paid
within 60 days of receipt, and 25% per year for claims not
paid within 90 days of receipt. CDA believes that the current
penalty is too modest to induce payers to pay claims on time,
making the payment of penalties simply a cost of doing
business. CDA indicates it receives a significant number of
calls from its member dentists requesting assistance in
dealing with issues of late payment on non-disputed dental
claims. CDA states dental offices consistently reported that
while routine dental procedures (such as cleanings, exams,
restorations) are processed within the legally required period
of time, higher cost treatments (such as extensive crowns,
bridges, and removable prosthetics) take longer to be
processed and paid. Two dental offices in particular have
been struggling with $20,000 and $30,000 respectively in
outstanding claims, which is a significant financial burden to
any small business. CDA argues this bill is a reasonable
measure that will not impact those dental plans working within
the legally required timeframe and only penalize those
companies that do not.
2)BACKGROUND . Prompt pay statutes require health plans and
insurers to pay claims within specified timeframes. The
current interest penalty of 10% for CDI regulated plans and
15% for DMHC regulated plans would be increased by this bill
to 20% for claims paid between 61-90 days and to 25% for
claims paid after 90 days. On an average dental claim of
$150, the amount owed in an interest penalty for CDI insurers
would increase from 4.2 cents per day to 8.3 cents per day for
claims reimbursed between 61-90 days (the interest penalty
increase from 10% to 20%). For claims paid after 90 days, the
amount owed from the interest penalty would increase from 4.2
cents per day to 10.4 cents per day (the interest penalty
increase from 10% to 25%). For DMHC plans, the amount owed
from the interest penalty would increase from 6.2 cents per
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day to 8.3 cents per day (the interest penalty increase from
15% to 20%) for claims paid within 61-90 days, and from 6.2
cents per day to 10.4 cents per day for claims paid past 90
days (the interest penalty increase from 15% to 25%).
According to the DHMC web site, from 2002 through the present,
there have been 54 enforcement actions involving late claims
payment. Of the 54, five involved dental plans with a
combined penalty of $74,000. DMHC's Office of Provider
Oversight reports 7,064 complaints received from all providers
during 2008. Of the 7,064 complaints, 48 were from dental
providers. Of those 48 complaints, 16 dental provider
complaints involved an issue of untimely payment.
3)OPPOSITION . This bill is opposed by the California
Association of Dental Plans (CADP), which argues current law
provides substantial specific penalties for late penalties,
that the DMHC has mechanisms in place to review provider
complaints and intervene when appropriate, that a review of
some claims of slower payment reveals that almost 30% of
dental claims are handwritten and sent by mail not using
computer billing technology, that dentists and dental plans
should be able to manage their insurance contracting
relationships without state involvement, and if dentists are
unhappy with the interaction with the plan, they can choose
not to contract. CADP asks that dental plans and the dentists
settle their payment disputes amongst themselves. Delta
Dental of California (DDC) argues it pays 99.995% of clean
claims in compliance with prompt payment requirements. DDC
argues late dental claims are not a problem meriting a
legislation solution, there is no reason to legislate a
specific set of penalties for dental claims, and existing law
already sufficiently discourages late payment of claims.
REGISTERED SUPPORT / OPPOSITION :
Support
California Dental Association (sponsor)
American Federation of State, County and Municipal Employees,
AFL-CIO
California Medical Association
Opposition
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Association of California Life & Health Insurance Companies
California Association of Dental Plans
Delta Dental of California
Analysis Prepared by : Scott Bain / HEALTH / (916) 319-2097