Prompt Pay Insurance Law in Plain English

Click here to download the CDPAANYS’ Summary of Prompt Pay Insurance Law, §3224-a.

CDPAANYS’ Summary of Prompt Pay Insurance Law, §3224-a.

Prompt Payment of Submitted Claims Requirements:

  • Plans must pay clean claims within 30 days for online and electronic submissions, and 45 days for paper, fax or other submissions.
  • When a plan determines a claim is not “clean” or wishes to dispute a claim’s liability based on good faith, the insurer or plan must pay any undisputed portion of the claim within 30 or 45 days and must also notify the health care provider in writing within 30 days of receiving the disputed claim.  This notification must:
    • State specific reasons why the disputed claim is not liable, and;
    • Specify all information that is needed to determine payment liability of the claim.
  • Once the requested information is received, the insurer or plan must pay within 30 or 45 days.

Penalties for Late Payments:

  • Each claim or bill that is paid late constitutes a separate violation of this section.  A plan that fails to reimburse or notify of deficiencies for 100 claims is guilty of 100 violations.
  • Insurers and plans that violate prompt-pay law are obligated to pay full settlement of the late claim or bill, plus interest, unless the insurer or plan has been deemed by the superintendent to have promptly submitted at least 98% of claims in the past calendar year.
  • Interest on late payments is calculated, from the date the claim or payment was due, as the greater of:
    • 12% per annum, or;
    • The rate set by the commissioner of taxation and finance for underpayment of corporate taxes (currently 7.5%).
  • Plans are not required to pay interest on late claims that amounts to less than $2.00.

Prompt Claims Submission Requirements:

  • Claims must be submitted by health care providers within 120 days after the date of service.
  • Health care providers may make agreements with plans determining a timeframe or other terms that are more agreeable to the health care provider.   This timeframe may not, under any circumstances, be less than 90 days.
  • Health care providers must be allowed to request reconsideration of claims denied exclusively due to submission beyond 120 days (or the agreed timeframe not less than 90 days) after the date of service.
  • The insurer or plan must pay the claim in full if the health care provider can demonstrate that both:
    • The late claim submission was a result of an “unusual occurrence,” AND;
    • The health care provider “has a pattern or practice” of submitting claims in compliance with the agreed timeframe not less than 90 days.
  • In cases where the health care provider submits a claim in violation of the agreed timeframe, the plan may reduce reimbursement of the claim by up to but not in excess of 25% of the total amount that would have been paid had the claim been submitted within the agreed timeframe.
  • Health care providers may determine agreements with insurers or plans to lesser reductions for late claims submissions.

How to Report a Prompt Payment Violation:

Violations can be reported online through the New York State Department of Financial Services website.  Follow this link: http://dfs.ny.gov/insurance/provlhow.htm

Health Care Provider Rights:

For more information on insurance law for health care providers, follow this link to the Department of Financial Services’ website: http://dfs.ny.gov/insurance/hprovrght.htm