Differentiating Prompt Pay Discounts from Self-Pay Discounts and Prompt Pay Laws

As patients grow increasingly savvy about researching healthcare prices, they’re more likely to ask #physicians and/or #medicalpractice administrators for discounts that apply to services received. As many practices are aware, some discounts are legal, while others are not under #promptpay discount regulations.

To stay compliant with the prompt pay discount regulations, take a close look at which types of discounts are permitted under the Office of Inspector General (OIG’s) rules in your state and which are not.

Differentiate Prompt Pay From Self-Pay Discounts

If your practice is considering implementing a prompt pay discount, it’s important to know that these types of discounts are completely different from self-pay discounts. Here’s why:

• Prompt pay discounts occur when the practice offers the patient a discounted rate if they pay within a certain time limit (such as the day of service or within 30 days after, for example).
• Self-pay discounts occur when the practice gives the patient a discounted rate by bypassing insurance completely and charging the patient a lower cash rate than they would charge the insurance company. These are also offered to patients who have no insurance at all.

General Features of Prompt Pay Discounts

The OIG has stated prompt pay discounts are permitted if:

• The amount of the discount relates to the cost the practice would incur to collect the amount.
• The discount is offered to all patients for all services and items, regardless of their diagnosis, length of stay/treatment, etc.
• The prompt pay discount is not advertised in advance.
• The costs are not shifted to Medicare, Medicaid or other government programs.
• Private payers are notified.

Although the OIG has noted its position on prompt pay discounting when it comes to patients under federal healthcare programs like Medicare and Medicaid, private payers may not follow the same guidance, so it’s important to check with your insurers to get their prompt pay discount regulations in writing.

Take These Key Steps Before Offering Discounts

Once your practice has made the decision to offer prompt pay discounts, follow these three steps to ensure that you don’t run afoul of the regulations:

1. Check with a healthcare attorney before offering any prompt pay discounts.
2. Get each insurer’s prompt pay discount policy in writing before moving forward.
3. Maintain documentation about what you’re spending to collect balances to justify the use of a prompt pay discount.

By taking these essential steps up front, you’ll avoid government scrutiny and the ensuing fines and penalties that come with violation accusations.

A Matter of Law: Prompt Pay Laws

Have you ever submitted your bills to a private insurance company and waited months to find out whether the insurer would pay your claim? If so, depending on your state’s laws, you may be entitled to interest from the insurer. The company also may risk being fined by the State’s Department of Insurance.

A typical prompt pay law applies to all “clean claims.” A clean claim means that the provider used the insurer’s paper claim form or followed the specified electronic billing format and has completed all the required fields with enough information to allow the insurer to process the claim.

In most states, insurers that fail to process claims within the state’s prompt pay time period are required to pay interest to the provider, sometimes as high as 18 percent annually. In addition, insurers may be subject to fines if they routinely fail to pay claims in a timely manner and/or fail to pay interest.

Steps to Take

First, check your state’s prompt pay law requirements. This information is available on the website for your state’s Department of Insurance.

Once you have confirmed that your insurer is outside the prompt pay deadlines, you should take the following steps:

• Complain to the insurer. Include with your complaint the state’s prompt pay time frame, the date you submitted your claim, and, if possible, proof of the date the claim was submitted or received (for example, certified mail receipt or electronic claim notification of receipt). In cases where the insurer asserts that it never received the claim, include a copy of the original claim.
• If your complaint to the insurer does not resolve the problem, then complain to your state’s Department of Insurance. Complaint forms typically can be found on the state insurance department website, along with the department’s address and phone number. Be sure that you have documented your contacts with the insurer on this issue, including the name of any person you spoke with, the date of the conversation, and what was discussed.

Exceptions to the Rule

An important exception to prompt payment laws is that they generally do not apply to plans that are “self-insured.” Because these plans use their own funds to pay claims, instead of paying premiums to insurers, they are not deemed to be in the business of insurance and cannot be regulated by state insurance departments.

PLEASE NOTE: The information in this article should not be used as a substitute for obtaining personal legal advice and consultation prior to making decisions regarding individual circumstances.

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