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What can you do if your health insurance claim is delayed?

Most people who make a claim on their health insurance never worry about how and when the bill will be paid.

However, sometimes the insurer delays payment to the provider. This can cause anxiety for the patient if the doctor demands prompt reimbursement for services.

delayed-health-insurance-claim In fact, that situation is not unusual, says Amy Bach, executive director at the nonprofit consumer advocacy group United Policyholders.

"It is quite common, and I think it's going to become more common until health care reform shakes out," she says.

What causes a health insurance claim delay?

Sometimes, delays are the result of an insurer investigating a claim, and deciding that it doesn’t fall within the health plan's scope of coverage.

But in many other cases, delays are the result of miscommunication. Because every health care plan has its own internal billing guidelines and coding procedures, information doesn't always flow smoothly between providers and insurers.

Health reform may make the situation worse, at least temporarily. Many people now are turning to health insurance exchanges and buying insurance from new insurers, or getting new plans through their employer.

The flow of information may slow further as insurers form new relationships with new medical providers, she says.

"I'm expecting there to be more delays," Bach says. 

States set the rules

Many states have "prompt pay" laws that require insurance companies to pay a claim within a specified number of days -- usually 30 days -- or be subject to a penalty. However, the rules differ from state to state. For example:

  • In Illinois, insurers must pay claims within 30 days or face a penalty of 9 percent interest per year on the unpaid amount until the payment is made to the medical provider.
  • In Kansas, insurers must pay claims within 30 days or accrue interest penalties of 1 percent per month.
  • In Texas, insurers must pay claims within 30 days if they have been submitted electronically, or 45 days if they have been submitted by traditional mail. Insurers who pay late face various penalties, including a $1,000 daily penalty for insurers who are late paying at least 2 percent of all their claims to all providers.

"The fine is per claim per day, so it can add up really, really fast," says Deeia Beck, public counsel for the Texas Office of Public Insurance Counsel.

Generally, all "clean claims" are subject to such rules. For a claim to be "clean," insurers have all the information necessary to process the claim, including proper documentation of the medical visit or procedure.

Insurers who don't receive such information generally are required to notify providers and patients of the problem within a time frame specified by the state.

The power to set prompt-payment rules remains with the states. So even if you buy an insurance plan through the federal health insurance exchange that has been established as part of Obamacare, your state law will still determine how long insurers have to make payment, according to the U.S. Centers for Medicare and Medicaid Services (CMS). (CMS is the federal agency in charge of implementing many of the reforms associated with the Patient Protection and Affordable Care Act.)

Looking for an Obamacare health insurance plan? Use our subsidy calculator to see if you qualify for a subsidy on your premium.

Insurers typically settle clean claims within the parameters of a state's laws, says K. Edward Shanbacker, executive vice president of the Medical Society of the District of Columbia, an organization that is part of the federation of state, county and specialty medical societies that make up the American Medical Association.

Even when a claim payment is delayed for some reason, doctors typically don’t demand immediate payment from a patient but work to get it from the insurer, Shanbacker says.

Bach says most delayed claims are not the result of any malicious intent on the part of the insurer, but are more likely due to a coding mix-up or other similar administrative error.

"A lot of these disputes happen because of flat-out confusion," she says.

Whatever the reason for the delays, they can wreak havoc for both providers and patients.

Bach recently heard from a couple who were expecting a baby, and whose obstetrician sent them a "prebill" for delivery services. The doctor feared a possible delay in being reimbursed by the couple's insurance company, and wanted to be paid up front.  

Bach says such prebilling practices are the result of growing frustrating at having to wait for insurers to pay claims.

"Doctors just want to be paid, and people just want to be treated," she says.

How to resolve a delayed health insurance claim

If you’ve worked with your insurer to clear up confusion surrounding a claim, but still can’t reach a satisfactory resolution, you could end up responsible for paying the bill.

If you fail to do so, the provider could use collections to try to get payment for the bill. In addition, the provider could report your lack of payment to the credit bureaus, which could hurt your credit score.

Here are tips on how to resolve a delayed health insurance claim.

1. Contact local authorities, such as your state department of insurance.

Bach says state agencies have a long history of settling disputes, although the time it takes to address and settle a dispute varies.

"Typically, people get a written response from a state insurance department within three weeks after they file a written complaint," she says.

2. Document your claim thoroughly.

According to Bach, documenting your claim is extremely important to resolving a dispute successfully. You should keep a record that includes the name and contact information of all people whom you speak to and the dates and times of all conversations.

Patients who are informed about their claim and who can clearly explain the details usually have more success in when negotiating with doctors anxious for payment.

"Communicate orally and in writing to reassure them that you are diligently attempting to get them paid," she says.

Doctors who see you actively trying to resolve the process are more likely to cut you slack and to refrain from reporting you to a credit bureau for nonpayment, Bach says. 

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