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New Georgia Prompt Pay Law To Take Effect in 1/2013

The new Georgia Prompt-Pay law is set to take effect in January 2013.  The law will require insurers to promptly pay physicians for treating patients who are part of self-funded employer health plans. Specifically, the new law requires insurers to pay treating physicians within 30 calendar days for paper claims submissions and within 15 working days for electronically submitted claims. If the payment is not received on time, the insurer administering the self-funded plan is required to pay 12% interest on those unpaid claims.

The insurance trade group America’s Health Insurance Plans filed a lawsuit in late August challenging the statute claiming it violates ERISA, which exempts self-funded employer plans from state regulations governing health insurance.  In 2010, then governor Sonny Purdue vetoed a similar bill citing ERISA. However, current governor Nathan Deal signed the new legislation in 2011.

Last week, the American Medical Association and the Medical Association of Georgia filed a petition in federal court in Atlanta to intervene in the case as co-defendants in order to help support the law. The lawsuit currently names state Insurance Commissioner Ralph Hudgens as defendant.

“This case has national implications for resolving the regulatory void in which health insurers are unaccountable for chronically late payments when they serve as administrators for self-insured employers,” said the AMA’s president, Dr. Jeremy Lazarus, in a statement. “Georgia has effectively closed that regulatory loophole, which helps physicians maintain a sustainable practice environment.”

“Georgia’s prompt-payment law is one of the most effective in the country,’’ Lazarus said.

Glenn Allen, a spokesman for Hudgens, said Tuesday that the commissioner “believes that doctors should be paid promptly, and he will enforce the law until a federal court tells him to do otherwise.”

Dr. Sandra Reed, president of the Medical Association of Georgia, recently released a statement saying “The fundamental fairness mandated by Georgia’s statute allows physicians to redirect their limited resources from battling to get the payments they’ve earned to caring for patients.’’

“Holding health insurers accountable for on-time payment gives medical practices greater budget certainty and helps Georgia physicians keep their doors open and pay the salaries and benefits of more than 90,000 office employees,” Reed said.