Filed Under:Health Insurance, Individual Health

Insurers, doctors clash on prompt-pay law

Can Georgia control how quickly self-funded employer health plans pay doctors in the state?

Physicians say it can. Insurers say it can't.

America's Health Insurance Plans (AHIP) filed a suit in August in a U.S. District Court in Georgia in an effort to keep the Georgia insurance commissioner from enforcing the state Insurance Delivery Enhancement Act of 2011 (IDEA).

The American Medical Association (AMA) and the Medical Association of Georgia now have filed a motion seeking court commission to intervene in the case.

The state law requires all Georgia insurers to pay claims in a timely manner. 

Typical state "prompt pay laws" also require health plans to pay promptly, but they usually exempt the large, self-funded health plans governed by the Employee Retirement Income Security Act of 1974 (ERISA). Georgia does not provide an exemption for self-funded plans.

AMA President Jeremy Lazarus said in a statement that Georgia wants to keep health insurers that are administering self-funded plans from making payments chronically late.

"Georgia has effectively closed that regulatory loophole," Lazarus said.

AHIP said in its complaint that section 514 of ERISA preempts state laws that relate to self-funded health plans.

The drafters of ERISA wanted to lower the cost of offering employee benefits and encourage employers to offer health benefits by protecting multi-state employers from differences in state laws and procedures, AHIP said.

"State laws affecting administration of self-funded ERISA plans, like the Prompt Pay Amendment, are preempted by ERISA, because subjecting them to 'differing state regulations would complicate the administration of nationwide plans," AHIP said in its complaint, citing earlier U.S. Supreme Court cases.

The Georgia law also is preempted because it clashes with the ERISA civil enforcement mechanism and U.S. Department of Labor health claims processing regulations, AHIP said.

AHIP is seeking an injunction blocking enforcement of the Georgia prompt-pay law.

Ralph Hudgens, the Georgia insurance commissioner, has filed a response asking the court to deny AHIP's request for a preliminary injunction.

"AHIP's motion lawsuit does not have a substantial likelihood of success on the merits," Hudgens said in the response. "In addition, IDEA is not preempted by ERISA under any theory of preemption."

IDEA only regulates the "third-party administrators" (TPAs), or independent benefit plan administrators, that help employers run self-funded plans, Hudgens said.

"IDEA does not specifically 'target' or impose special burdens on self-funded plans, nor does it attempt to regulate the content, coverage or types of benefits offered by any plan," Hudgens said. "Therefore, IDEA does not 'relate to' ERISA plans, does not conflict with the core objectives or goals of ERISA, nor does it conflict with any ERISA remedies."

Most self-funded plans are run by TPAs that are owned by insurers, and those insurers are already subject to George prompt-pay requirements, Hudgens added.

Hudgens also has filed a motion asking the court to dismiss AHIP's claim.

AHIP lacks standing to bring the suit, the suit is barred by the 11th Amendment of the Constitution and the federal Tax Inunction Act, and IDEA is not preempted by ERISA, Hudgens said in the motion.

Hudgens has filed a notice asking the court to let the AMA and the Georgia medical association intervene in the case.

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