April 2002 Bulletin

In Brief


Prompt payment legislation advanced out of the State Senate during February. The bill adopts CMS-1500 as the uniform claim form in Colorado and requires carriers to accept electronic claims by October 1. The bill also raises the penalty (separate from interest) insurers must pay to providers from 3% to 10% of the amount of the late claim.


Two prompt payment bills were introduced. Under one bill, insurers must pay or deny claims within 30 days. If the insurer needs additional substantiation they must request it within 30 days and specifically describe what is needed. The insurer has 30 days to pay or deny the claim upon receipt of the additional information. Insurers must pay interest of 12% on late claims. The government may fine insurers up to $10,000 for repeated violations or revoke their license. Physicians would not be able to bill patients directly until the prompt payment period has expired. The other bill requires payment within 45 days of receipt of a claim. The bill requires providers to submit claims on the latest CMS-1500 form using the most recent CPT codes. The interest penalty is the same 12% but doesn’t have to be paid unless it is $5 or more. Under this bill, fines only go up to $5,000 and there are no provisions affecting the licensure status of insurers who repeatedly violate this law.


Governor Jane Swift (R) signed into a law a bill allowing chiropractors to call themselves "chiropractic physicians" and podiatrists to call themselves "podiatric physicians."


The prompt payment bill in Michigan passed the House and needs to go back to the Senate for concurrence. Under the bill, clean claims must be paid within 45 days or a penalty of 12% is assessed.


The avalanche of tort reform bills in Mississippi came to a halt in February. Only one bill dealing with restrictions on where (venue) malpractice cases can be filed made it out of committee in the Senate. Tort reform advocates were working on lining up support to amend the bill on the Senate floor to include broad tort reform objectives. The chair of the committee, a trial lawyer, declined to bring the bill to the Senate floor and it died. In addition, spurred by the impending bankruptcy of the Medicaid system, Mississippi legislators passed legislation reducing provider reimbursement by 5%.


A bill before the Missouri House Judiciary Committee would bar hospitals and other employers from using non-compete agreements to retain workers. Another bill would provide that a health carrier could not change a code submitted by a physician without the express written permission of the physician.


Nevada Governor Kenny Guinn (R) announced that he was appropriating $250,000 from an emergency account to fund a newly created Nevada Essential Insurance Association. The Association will not be run by the state. The move is in response to physicians who have called for a special session to enact tort reforms and others who recently crowded a hearing held by the Nevada State Insurance Commissioner that examined the state’s professional liability insurance situation. Fifteen carriers testified that they were either pulling out of Nevada or were writing very few new policies. The Governor indicated he thought the Association would be in existence for a year to a year and a half until doctors can finance their own insurance company.

New Jersey

A new bill introduced requires prompt decisions on authorizations and prohibits unjustified down coding of claims. The bill provides that a payer must respond to a provider’s authorization request for inpatient or emergency services within 24 hours and for outpatient services within 3 business days. Additionally, a payer cannot amend a claim by changing the diagnostic code assigned to the services by the health care provider without providing written justification. Before leaving office outgoing Governor DiFrancesco signed into law SB 1033 allowing physicians to jointly negotiate with managed care companies. The law does not force the insurers to participate in negotiations, which has been a problem in Texas and Washington, the only other states to have similar laws.


State Senator Harold F. Mowery, Jr. (R) introduced legislation to improve patient safety by reducing medical errors in health care facilities. The bill would create a Health Care Quality Assurance Authority to identify steps that reduce medical errors and improve health care quality, and establish a process for confidential peer review of health care practitioners. The bill also would require licensed health care facilities to implement a patient safety plan that allows for the anonymous reporting of medical errors or other threats to patient safety.

The Pennsylvania legislature came to a compromise on the medical professional liability reform bill. The bill requires that all malpractice suits be filed within seven years of the date of injury (except for children), allows evidence of collateral sources of recovery to be introduced and allows periodic payment of future medical damages over $100,000. The bill also appropriates $40 million from traffic fines to help reduce premiums in the state mandated Catastrophic Loss Fund which will slowly be privatized.

The final bill did not contain the caps on damages and venue restrictions that were part of the earlier House bill. It requires direct notification of patients when a medical error has occurred and creates a Patient Safety Authority to study the issue and make policy recommendations. The Governor is expected to sign the bill.


Rio Grande Valley physicians are expected to ask state legislators on April 8 to stem rising costs of malpractice lawsuits. The doctors are warning that patient care is compromised, as fewer specialists want to handle high-risk patients. The Neueces County Medical Society has decided to support a doctor walkout on April 8, protesting rising malpractice insurance costs and frivolous lawsuits. Doctors in the community are expected to close their doors for a few hours or a full day; emergency rooms are expected to be fully staffed.

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