P.O. Box 12068, State Capitol
Austin, Texas 78711
Tel. (512) 463-0112
Fax (512) 463-0923
PROMPT PAYMENT IS THE RIGHT THING TO DO
A customer brings the family car into the shop for new tires and an oil change. The auto shop buys the parts, performs the labor and rings up the bill ... but the customer refuses to pay the total amount.
In this scenario, the garage can simply lock up the vehicle and keep it until payment is received. But imagine if such a billing dispute occurred in a doctor's office.
It would be unthinkable for the health care provider to remove a cast from a broken arm, insert a swollen appendix back into a patient's abdomen or confiscate someone's heart medication.
So what happens when the responsible party -- HMOs and other health insurance providers -- refuse to pay the amount owed to the service provider?
This question has been under review for some time by the Texas Legislature, as fierce billing disputes have raged on between health care providers and HMOs. Our Health and Human Services Committee has listened to dozens of hours of testimony from hospitals, physicians and other health care providers, some with accounts receivable in excess of three years. We have listened to heart-wrenching stories of clinics and practices being forced to lay off staff or shut their doors altogether because they are not being paid for the services they are providing.
As a business owner and a free market conservative, it concerns me that our current system runs counter to basic principles of free enterprise. I can think of no other industry in which one party is allowed to pay their bills when they want, at the rates they want - no matter what is specified in their contracts.
What kind of business person would want to enter into an agreement in which the contract rates could be re-negotiated by one party after the goods or services are delivered?
I filed SB 418, the so-called "prompt pay" bill, to balance the needs of both parties. Insurance companies should be allowed to ensure that our health care providers are submitting legitimate claims that are covered by a patient's health plans. And when legitimate claims are submitted, they ought to be paid -- on time and in full.
Signed into law this month by Governor Rick perry, this new law will provide consistency and uniformity to a payment system that is not only broken -- it is draining vital resources from our health care system.
The new law will significantly reduce the administrative nightmare that is burdening both parties. It will put an end to the billing disputes that have prompted both sides to hire additional personnel and pay enormous legal fees. It will cut costs by moving from a paper system to an electronic filing system by 2006.
Most importantly, it will allow our health care providers to spend less time fighting payment battles and more times with their patients, who often get caught on the crossfire.
There is a reason this legislation has passed both chambers of the Legislature so overwhelmingly. It is good for patients. And it the right thing to do.
Senator Jane Nelson represents District 12, which includes the growing suburban communities of Denton and Tarrant counties and parts of the city of Fort Worth. She is Chairman of the Senate Committee on Health & Human Services and led the interim study into the prompt payment of health care providers.
(Note: Photos of the bill signing ceremony available on request)