2004 Legislation
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HOUSE BILL NO. 833 – Insurance, prompt pymt of claims


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Bill Status

H0833......................................................by STATE AFFAIRS
HEALTH INSURANCE - Adds to existing law to provide for the prompt payment
of health insurance claims; to define terms; to provide for interest
payments; to provide that insurers are not required to accept an assignment
of payment; to provide exceptions; and to provide penalties.
03/10    House intro - 1st rdg - to printing
03/11    Rpt prt - to Bus

Bill Text

  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-seventh Legislature                 Second Regular Session - 2004
                              IN THE HOUSE OF REPRESENTATIVES
                                     HOUSE BILL NO. 833
                                 BY STATE AFFAIRS COMMITTEE
  1                                        AN ACT
  8    Be It Enacted by the Legislature of the State of Idaho:
  9        SECTION  1.  That Title 41, Idaho Code, be, and the same is hereby amended
 10    by the addition thereto of a NEW CHAPTER, to be known and designated as  Chap-
 11    ter 56, Title 41, Idaho Code, and to read as follows:
 12                                      CHAPTER 56
 13                               PROMPT PAYMENT OF CLAIMS
 14        41-5601.  DEFINITIONS. As used in this chapter:
 15        (1)  "Beneficiary"  means  a policyholder, subscriber, member, employer or
 16    other person who is eligible for benefits under a contract providing hospital,
 17    surgical, or medical expense coverage or a managed care organization policy or
 18    agreement under which a third party payer  agrees  to  reimburse  for  covered
 19    health care services rendered to beneficiaries in accordance with the benefits
 20    contract.
 21        (2)  "Date  of payment" means the date the payment is sent as indicated by
 22    the mail stamp on the envelope, by the insurer to the practitioner or facility
 23    or to the beneficiary in the event there is not a contract for direct  payment
 24    by  the insurer to the practitioner or facility, or, in the event of a wire or
 25    other electronic funds transfer, upon acceptance by the insurer's  bank  of  a
 26    payment order.
 27        (3)  "Department" means the department of insurance.
 28        (4)  "Director" means the director of the department of insurance.
 29        (5)  "Electronic  claim" means a claim that is transmitted through the use
 30    of electronic media, which includes  the  internet,  extranet,  leased  lines,
 31    dial-up  lines,  private networks, and those transmissions that are physically
 32    moved from one (1) location to another using magnetic tape,  disk  or  compact
 33    disk  media. The claim shall contain the proper format and code sets in accor-
 34    dance with the applicable implementation specifications under 45  CFR  160  et
 35    seq., and 45 CFR 162 et seq.
 36        (6)  "Insurer"  means  any insurer that sells hospital, medical, long-term
 37    care, or vision insurance policies or certificates and managed care  organiza-
 38    tions.  For  the purpose of this chapter only, "insurer" also includes a third
 39    party administrator who makes  payments  to  beneficiaries,  practitioners  or
 40    facilities on behalf of an insurer and a hospital or professional service cor-
 41    poration.
 42        (7)  "Practitioner  or  facility"  means  any physician, hospital or other
  1    person or facility licensed or otherwise authorized  to  furnish  health  care
  2    services.
  3        (8)  "Receipt  of  claim" means the date the claim is actually received by
  4    the insurer from the practitioner or facility or the beneficiary.
  5        (9)  "Submission of claim" means the date the claim is sent  as  indicated
  6    by  the mail stamp on the envelope, by the beneficiary, practitioner or facil-
  7    ity, to the insurer or the date an  electronic  claim  is  transmitted  to  an
  8    insurer.
  9        41-5602.  PROMPT  PAYMENT  OF CLAIMS. (1) Except as otherwise specifically
 10    provided in this chapter, an insurer shall process a  claim  for  payment  for
 11    health  care  services rendered by a practitioner or facility to a beneficiary
 12    in accordance with this section.
 13        (2)  If a beneficiary, practitioner  or  facility  submits  an  electronic
 14    claim  to  an insurer within thirty (30) days of the date on which service was
 15    delivered, an insurer shall pay or deny the claim not later than  thirty  (30)
 16    days after receipt of the claim.
 17        (3)  If  a beneficiary, practitioner or facility submits a paper claim for
 18    payment to an insurer within forty-five (45) days of the date on which service
 19    was delivered, an insurer shall pay or deny the claim not  later  than  forty-
 20    five (45) days after receipt of the claim.
 21        (4)  If  an  insurer  denies  the claim or needs additional information to
 22    process the claim, the insurer shall notify the practitioner or  facility  and
 23    the  beneficiary  in  writing within thirty (30) days of receipt of the claim.
 24    The notice shall state why the insurer denied the claim.
 25        (5)  If the claim was denied because  more  information  was  required  to
 26    process  the claim, the notice shall specifically describe all information and
 27    supporting documentation needed to evaluate the claim for processing.  If  the
 28    practitioner  or facility submits the information and documentation identified
 29    by the insurer within thirty (30) days of receipt of the written  notice,  the
 30    insurer  shall process and pay the claim within thirty (30) days of receipt of
 31    the additional information or, if appropriate, deny the claim.
 32        (6)  Any claim submitted pursuant to this chapter shall  use  the  current
 33    procedural terminology (CPT) code in effect, as published by the American med-
 34    ical  association,  the  international classification of disease (ICD) code in
 35    effect, as published by the United States department of health and human  ser-
 36    vices,  or  the  healthcare  common  procedural  coding system (HCPCS) code in
 37    effect, as published by the United States centers for  medicaid  and  medicare
 38    services (CMS).
 39        (7)  This  chapter  shall  not apply to claims submitted under policies or
 40    certificates of insurance for specific disease,  hospital  confinement  indem-
 41    nity, accident-only, credit, medicare supplement, disability income insurance,
 42    student  health  benefits  only  coverage  issued as a supplement to liability
 43    insurance, worker's compensation or similar insurance, automobile medical pay-
 44    ment insurance or nonrenewable short-term coverage  issued  for  a  period  of
 45    twelve (12) months or less.
 46        41-5603.  INTEREST  PAYMENTS.  An insurer that fails to pay, request addi-
 47    tional information or documentation or deny a claim from a beneficiary,  prac-
 48    titioner or facility within the time periods established in this chapter shall
 49    pay  interest  at  the  contract statutory rate pursuant to section 28-22-104,
 50    Idaho Code, on the unpaid amount of a claim that is determined to be  due  and
 51    owing.  The  interest  shall accrue from the date payment was due, pursuant to
 52    the provisions of this chapter, until the claim is paid. Payment of any inter-
 53    est amount of less than four dollars ($4.00) shall not be  required.  Insurers
  1    may  add any interest due to a future payment to the beneficiary, practitioner
  2    or facility.
  3        41-5604.  ASSIGNMENT. Nothing in  this  chapter  requires  an  insurer  to
  4    accept  an  assignment  of  payment  by the beneficiary to the practitioner or
  5    facility.
  6        41-5605.  EXCEPTIONS. (1) The time periods set forth in  section  41-5602,
  7    Idaho  Code,  shall  not  apply to claims that the insurer reasonably believes
  8    involve fraud or misrepresentation by the practitioner or facility or the ben-
  9    eficiary or to instances where the insurer has not been provided the  informa-
 10    tion  necessary  to  evaluate the claim after notice has been given requesting
 11    additional information by the insurer as required by section 41-5602(5), Idaho
 12    Code.
 13        (2)  The time periods set forth in section 41-5602, Idaho Code, shall  not
 14    apply  to claims that the insurer reasonably believes require medical records,
 15    including accident reports, for the purpose of investigating whether  a  claim
 16    is  valid  for  subrogation,  or  the  coordination of benefits payable by the
 17    insurer with benefits payable by another insurer or payable under  federal  or
 18    state law.
 19        (3)  An  insurer is not required to comply with the time periods set forth
 20    in section 41-5602, Idaho Code, if the insurer is in compliance  with  a  con-
 21    tract  with  the  practitioner  or  facility which specifies different payment
 22    requirements. Payments made within the  time  periods  set  forth  in  section
 23    41-5602,  Idaho  Code,  for the purpose of this chapter, shall be deemed to be
 24    made in a reasonable and timely manner.
 25        (4)  An insurer is not required to comply with the periods  set  forth  in
 26    section  41-5602, Idaho Code, if the fee or premium entitling a beneficiary to
 27    insurance benefits has not been paid in full.
 28        (5)  An insurer is not required to comply with the time periods set  forth
 29    in  section 41-5602, Idaho Code, if failure to comply is due to an act of God,
 30    bankruptcy, an act of a governmental authority responding to an act of God  or
 31    emergency or the result of a strike, walkout or other labor dispute, or act of
 32    terrorism.
 33        41-5606.  PENALTIES. (1) The director shall enforce the provisions of this
 34    chapter  and shall review and, if appropriate, investigate complaints received
 35    by the department related to noncompliance with the provisions of  this  chap-
 36    ter.
 37        (2)  If  the director determines an insurer has violated the provisions of
 38    this chapter, the director may impose an administrative  fine  not  to  exceed
 39    five thousand dollars ($5,000) based upon an enforcement action.
 40        (3)  The  director shall not suspend or revoke an insurer's certificate of
 41    authority for violation of this chapter.
 42        (4)  No administrative penalty shall be imposed against an  insurer  under
 43    this  chapter  or  any  other provision of law for failure to comply with this
 44    chapter if, in the calendar year it has paid ninety-five percent (95%) or more
 45    of all claims subject to this chapter to or on behalf of beneficiaries  within
 46    the time periods set forth in section 41-5602, Idaho Code.
 47        (5)  This  section  shall  not  create  a private cause of action by or on
 48    behalf of a beneficiary or practitioner or facility against an insurer.
 49        SECTION 2.  This act shall be in full force and effect on and after  Janu-
 50    ary  1,  2005,  and  shall apply to those claims with a date of service on and
 51    after January 1, 2005.

Statement of Purpose / Fiscal Impact

                       STATEMENT OF PURPOSE
                             RS 14264

This bill requires insurance companies that provide health
insurance to pay a claim for covered services within thirty days
following receipt of a bill if the claim is sent electronically
or within forty five days if sent by paper.  If an insurance
company has a contract with a provider which contains different
payment requirements, the contractual provisions supercede the
requirements of this statute.  This statute will apply only when
an insurer is not complying with its contract or where there is
no contract.  This statute will only apply if a provider submits
a claim promptly for payment

                          FISCAL IMPACT

This bill will have no impact on the General Fund.  There will be
some costs of enforcement from the Department of Insurance's
dedicated accounts which will vary based on the degree of

Name: Idaho Medical Association:   Ken McClure 388-1200
Idaho Assn. of Health Plans:       Steve Tobiason 342-4545
Blue Cross of Idaho:               Julie Taylor  331-7357