Bulletin 2009-02 South Carolina Health Care Financial Recovery and Protection Act

TO: FR0:\1: South Carolina Department of Insurance BULLETIN NU1\t1BER 2009-02 Scott H. Richardson, CPC ' Director !\lARK SANFORD Governor SCOTT H. RICHARDSON SUBJECT: South Carolina Health Care Financial Recovery and Protection Act (Prompt Pay) DATE: April 15, 2009 I. PURPOSE On June II, 2009 the South Carolina Health Care Financial Recovery and Protection Act (Act) \Viii go into effect. 1 Attached is a copy of the Act. The South Carolina Depat1ment of Insurance (Department) is charged with the responsibility of enforcing the provisions set forth in the Act The purpose of this Bulletin is to provide a brief overview of the Act and to outline the complaint and hearing request procedures. II. SUMMARY OF THE SOUTH CAROLINA HEALTH CARE FINANCIAL RECOVERY AND PROTECTION ACT Claim Payment Procedures Specifically, the Act insurers to clean claims received via paper within forty business days and clean electronic claims within twenty business days following the later of 1) date the claim is received; or the date on which the insurer all ofthe m the required for the claim to constitute a clean claim. Insurers must stamp paper claims with the date received or maintain an electronic system for determining when claims are submitted. For purposes of this bulletin, the claim is considered received when it comes into the actual or constructive possession of the person. The document must be received at the last known physical or E-mail address of the person before it is considered received. Simply mailing the document is not sufficient Insurers must also acknowledge electronic claims and identify the date claims are received by the insurer. If there is any defect, error, or impropriety in a claim that prevents it from adjudicated by the insurer, the insurer shall provide notice within twenty business days of receipt for claims and forty business days of receipt for paper claims cannot be to paper claims. Interest shall the twentieth and fortieth of and must Schedules physician may request the elect to receive and infonnation. in lieu of the to cover fee schedule. The insurer the hard copy. and only to the to perform the duty to maintain or member of infom1ation may constitute a breach of contract m the forfeiture of the physician's right to receive schedule III. QUESTIONS Any questions regarding this Bulletin should be submitted in writing to the attention of David Belton, Sr. Associate General Counsel, at Complaints a violation of the provisions of this Act may be submitted to the Office of Consumer Services via E-mail at or via telephone at 73 7-6180 (Columbia) or (800)768-3467 (South Carolina). Written complaints alleging violations of this Act may be mailed to the following address: Attn: Office of Consumer Services South Carolina Department of Insurance Post Office Box 100105 Columbia, South Carolina 29202-3105 1. \Ve assume iu addition to our Medical plans that the prompt pay requirements must also be met by our Vision aud Mental Health vendors. Correct'? to health insurance plans that Section l 2. Is there a dollar threshold for the interest payments? $.01, $1.00, etc.'? or must the payment be for any amount even it is just a few cents? RESPONSE: The statute does not limit the amount of interest payments. However, in lieu of cutting a check for $.01, the insurer may credit the insured's account by that amount. Notice of the credit must be provided. 3. \Ve assume the payment is for covered services for our members under a South Carolina issued policy. That is, the law is for South Carolina policies. In addition, the payment is for covered services received from South Carolina providers. RESPONSE: This law applies to South Carolina policies and providers. 4. \Ve assume the interest payments are paid to providers, not members. RESPONSE: If interest applies, it should be provided to the provider. Section 38-59- 340(B)( 4) excludes interest payment when to the plan member. 5. \Viii any interest rate changes be documented on the SCDOI website or do \H need to check the law periodically? RESPONSE: to 6. Is the definition of "electronic claim" considered as only an EDI 837 or is an electronic print image considered electronic'? lS EDI or equivalent as in the HIPAA 7. If a clearinghouse takes an EDI 837 and converts it to an electronic print image does that qualify as a conversion to hardcopy? RESPONSE: Section 38-59-230(D) prohibits a clearinghouse, billing or other vendor that contracts with a provider to deliver health care claims to an insurer on the provider's behalf from converting them from electronic to paper claims. 8. Are there exceptions to the '"no conversion from electronic to hardcopy" rule, for example if a payer is not able to accept electronic claims? RESPONSE: No. If they are a covered entity, insurers (payers) were required to comply with the administrative simplification requirements ofHJPAA in 2002. If they are exempt from compliance with the HIP AA requirement, the Act requires that the claim be submitted on the CMS 1500 or UB 04 claim form. 9. SC stated that this law is effective June 11, 2009- will there be any retroactive penalties for claims that ·were converted from electronic to hardcopy before June 11? RESPONSE: No. Exhibit South Carolina General Assembly 117th 2007-2008 A356, R374, H3674 STA TFS INFORl\IA TION Thompson, Toole, White, Young. Document Path: 11 uu'""''"u m the House on March 8, 2007 Introduced in the Senate on March 4, 2008 Last Amended on May 2008 Passed the General Assembly on June 4, 2008 Gmernor's Action: June 11. 2008. Signed . Health Care Financial Recovery and Protection Act HISTORY OF LEGISLATIVE ACTIONS 3/8/2007 House Introduced and read first time HJ-1 0 3/8.'2007 2/27/2008 House House Refened to Committee on Labor, Commerce and Industry IIJ-11 Member(s) request name added as sponsor: Brady 2/2/,2008 2/28/2008 2/28/2008 2/28/2008 2 29 2008 House House House House House House Committee report: Favorable with amendment Labor, Commerce and Industry HJ-3 Member(s) request name added as sponsor: Talley, Clemmons. 0Yvens, Hiott, Skelton, Rice Amended HJ -14 Read second time HJ-21 Unanimous consent for third reading on next legislatiYe day HJ-21 Read third time and sent to Senate IIJ- I Scrivener's error corrected Senate Introduced and read Senate Banking and Insurance SJ-7 Banking and Insurance SJ-18 and to House with SJ-1 House amended HJ-188 House to Senate \'Vith HJ-196 6/412008 Senate Concuned in House amendment and enrolled SJ-308 R 374 LPITS YERSIO~S OF THIS BILL AN ACT TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING ARTICLE 2 TO CHAPTER 59, TITLE 38 SO AS TO ENACT THE ''SOUTH CAROLINA HEALTH CARE FINANCIAL RECOVERY AND PROTECTION ACT"; TO REQUIRE AN INSURER, UPON REQUEST, TO PROVIDE THE FEE SCHEDULE THAT IS CONTRACTED WITH THE REQUESTING PHYSICIAN AND TO PROVIDE THAT THE FEE SCHEDULE MUST BE KEPT CONFIDENTIAL; TO PROVIDE THAT CLEAN CLAil\IS SlrBMITTED BY PAPER l\IUST BE PAID WITHIN FORTY BVSINESS DAYS OF RECEIPT OR OF THE DATE ALL NECESSARY INFORMATION HAS BEEN RECEIVED AND T\VENTY BUSINESS DAYS FOR CLAIMS SUBMITTED ELECTRONICALLY; TO REQCIRE INSlJRERS TO l\IAINTAIN A SYSTEM FOR TRACKING RECEIPT AND DISPOSITION OF CLAIMS, TO PROVIDE ACKNOWLEDGEMENT OF CLAIMS RECEIVED AND NOTICE OF DEFECT OR ERRORS IN CLAIMS, AND TO ESTABLISH TIMEFRAMES FOR PROVIDING SUCH INFORMATION; TO PROVIDE THAT CLAIMS THAT ARE NOT TIMELY PAID IN ACCORDANCE WITH THIS ARTICLE ACCRUE INTEREST AT THE LEGAL RATE OF INTEREST, AS PROVIDED FOR IN LAW; TO SPECIFY CIRCF\ISTANCES lJNDER WHICH INTEREST PAYMENTS ARE NOT REQUIRED; TO ESTABLISH PROCEDlJRES AND TIME FRAMES FOR CONDUCTING OVERPAYMENT RECOVERY EFFORTS; TO PROVIDE THAT THIS ARTICLE DOES NOT APPLY TO CLAIMS PROCESSED UNDER ANY NATIONAL ACCOUNT DELIVERY PROGRAM; AND TO PROVIDE THAT THE DEPARTMENT OF lNSURANCE SHALL ENFORCE THE PROVISIONS OF THIS ARTICLE AND TO FCRTHER SPECIFY SANCTIONS THE DEPARTJ\IENT MAY IMPOSE FOR VIOLATIONS; AND TO Al\IEND SECTION 38-71-230, RELATING TO WRITTEN NOTICE OF HEALTH INSl:RANCE CLAll\IS POLICIES AND PROCEDCRES AND THE ADOPTION OF STANDARDIZED CLAIM FORl\IS, SO AS TO MAKE TECHNICAL CORRECTIONS. Be the State South South Carolina Health Care Financial Recovery and Protection Act SECTION 1. Title "Article 2 South Carolina Health Care Financial and Protection Act Section 38-59-200. atiiclc may be as the 'South Financial Protection Act'. Section 38-59-210. As ( 1) 'Insurer' means an company, a health 1'11'"''tt'n'" and any other entity providing health insurance coverage, as defined in Section 38-71-670(6), which is licensed to engage in the business of insurance in this State and which is subject to state insurance regulation. 'Health care services' means services included in furnishing an individual medical care or hospitalization, or services incident to the of medical care or hospitalization, and other services to prevent. alleviate, cure. or heal human illness, injury, or physical disability. (3) 'Health maintenance organization' means an organization as defined in Section 38-33-20(8). (4) ·Health msurance plan' means a health insurance policy or plan offered by a health insurer or a health maintenance orgamzation that provides health insurance coverage, as defined in Section 38-71-670(6). { 5) 'Physician' means a doctor of medicine or doctor of osteopathic medicine licensed by the South Carolina Board of Medical Examiners. ·Provider' means a physician, hospital, or other person properly certified, or permitted, where required, to furnish health care serVJCeS. (7) 'Participating provider' means a provider \vho provides covered health care services to an insured or a member pursuant to a contract an insurer or health insurance 'Clean claim· means an or paper claim for ,,.,,,'"'''"' that: 2 \Vhen submitted paper has all of the standardized CMS 1500 or UB 04 claim form, or the successor of each may be amended from time to or when submitted via an electronic transaction, uses only standard code sets and has all of the standard as required the Health Act of 1 and to an person under the health insurance (d) has any corresponding referral that may be required for the claim; (e) is a claim for which the insurer is the primary payor. or which the insurer's responsibility as a secondary payor has been clearly (!) has no material defect, enor, or impropriety that would affect the of the claim; mcludes all required substantiating documentation or coding; (h) is not subject to any particular circumstance that the insurer believes, subject to review by the Department of Insurance, would prevent accurate or timely payment from being made on the claim under the terms of the health insurance plan, the participating provider agreement or the insurer's published filing requirements; and (i) is under a health insurance plan for which the insurer has been timely paid all applicable premiums. (9) ·Force majeure' means any act of God, governmental act, act of terrorism, war, fire, flood, earthquake, hurricane, or other natural explosion or civil commotion. Section 38-59-220. (A) Within months of the effective date of this article. each insurer, upon written request from a physician who is also a participating provider will provide. by CD-ROM, or electronically at the insurer's option, the fee schedule that is contracted with that physician for up to 100 CPT(r) Codes customarily and used the Each physician t\VO fee schedule information provided disclose actual maximum allowable those stated in the Section 38-59-230. (A) An insurer shall direct the issuance of a or an electronic funds transfer in payment for a clean claim that is submitted via paper within forty business days following the later of the insurer's receipt of the claim or the date on which the insurer is in receipt of all information needed and in a format required for the claim to constitute a clean claim and is in receipt of all documentation which may be requested by an insurer which is reasonably needed by the msurer: ( 1) to determine that such claim does not contain any material defect, error, or impropriety; or (2) to make a payment determination. (B) An insurer shall direct the issuance of a check or an electronic funds transfer in payment for a clean claim that is submitted electronically within twenty business days follo\ving the later of the insurer's receipt of the claim or the date on which the insurer is in of all information needed and in a format required tor the claim to constitute a clean claim and is in receipt of all documentation which may be requested by an insurer which JS reasonably needed by the msurer: ( 1) to determine that such claim does not contain any material eiTor, or impropriety; or to make a determination. An insurer shall to or on paper for 4 rPC'•PH.'Pf1 by the insurer. If an insurer determines there is any defect, error. or impropriety in a claim that prevents claim from the insurer shall provide notice of the or the care transactions within if it was submitted section is intended or an insurer's to clinical the proper adjudication the or abusive billing (D) A billing or any that contracts vvith a provider to deliver health care claims to an insurer on the provider's behalf is prohibited converting electronic claims from the provider into paper claims fur submission to the msurer. A violation of this subsection constitutes an unfair trade practice under Chapter 5, Title 39. and individual providers and msurers injured by violations of this subsection have an action for as set forth in Section 39-5-140. Section 38-59-240. (A) For each clean claim with respect to which an insurer has directed the issuance of a check or the electronic funds later than the applicable period specified in Section 38-59-230, the insurer shall pay interest in the same manner and at the same rate set forth in Section 34-31-20(A) on the balance due on each claim computed from the twenty-first or the forty-first business day, as appropriate, based on the circumstances described in Section 38-59-230, up to the date on which the insurer directs the issuance of the check or the electronic funds transfer for payment of the clean claim. At the insurer's election, interest paid pursuant to this section must be included in the claim payment check or wire transfer or must remitted periodically, but at least quarterly, in a separate check or wm.:: transfer along with a report detailing the claims for which interest is being paid. (B) No insurer an obligation to make any interest payment to subsection (A): (I) wtth to any clean claun if within the submission of an 5 to any participating provider who balance bills a plan in violation of the participating with the a force member. or sequence received the insurer out of chronological order in \Vhich the services were performed. (2) The \YTitten notice required by this section shall include: (a) the patient's name; (b) the service date; (c) the payment amount received by the provider; and (d) a reasonably specific explanation of the change m payment. (B) An insurer may not initiate overpayment recovery efforts more than eighteen months after the initial payment was received by the provider; however, this time limit does not apply to the initiation of overpayment recovery efforts: ( 1) based upon a reasonable belief of fraud or other intentional misconduct; (2) required by a self-insured plan; or (3) required by a state or federal government program. Section 38-59-260. The requirements of this article do not apply to that are processed under any national account delivery program in which an insurer participates but is not solely responsible for the and payment of the claims, or claims tor services under a program offered or sponsored any state or federal governmental other than in its as an or both. 6 Standardized forms 7 is or its successor as it may be amended The 1500 or the or successor may to time may be with a customized which must appear in the top portion of one inch vertical the top." Severability clause subsection, paragraph, subparagraph, or word of act is for any reason held to be holding shall not affect the portions of this act, it would this act, paragraph, subparagraph, fact Time effective 4. act effect one year the Governor. 2008. the 11 of 2008.