News From the
Committee on Small Business
Subcommittee on Regulations, Health Care and Trade
Charlie Gonzalez, Chairman

For Immediate Release
August 1, 2007   

CONTACT: Shripal Shah (Gonzalez) – (202) 226-7524, Kate Gilman/Erin Donar,  (202) 225-4038

Committee Explores Barriers to Prompt Payments by Health Insurance Companies
Delayed Payments Harm Providers’ Ability to Provide Quality Care

WASHINGTON – Like all businesses, health care practices offer a service and expect to receive payment in a prompt fashion. However, one of the greatest challenges facing small health care providers is their inability to receive compensation in a timely manner from insurance companies. This growing problem has caused many small providers to scale back their operations and limit the kinds of insurance they will accept, leading to compromised access to care. At today’s hearing, the Subcommittee on Regulations, Health Care and Trade explored the issue of prompt payment, impediments to enforcing the requirements, and possible ways to improve the current system.

“When medical offices do not receive payment in a timely manner, it affects their ability to provide the best care to patients,” said Subcommittee on Regulations, Health Care and Trade Chairman Charlie Gonzalez (TX-20). “After frustrating experiences with insurance companies, these small businesses may be less willing to accept that insurance in the future, causing patients to be denied access to vital services.”

The issue of ensuring prompt payment for medical services affects a broad spectrum of the health care industry including physicians, dentists, and mental health providers. While every state has enacted laws known as “prompt payment laws” requiring insurance companies make payment in a specified time period, small health care providers continue to be burdened by delayed payments. Some insurance companies have either ignored the requirements or argued that the lack of federal requirement protects them from state laws. As a result, small providers face instability due to inconsistent revenue flows, and are forced to pass additional costs on to their patients, cut down on services provided or patients treated, or refuse to accept certain kinds of insurance.

“When health providers feel that their practices are threatened because of delays in payment, there is a problem with the system,” said Chairman Gonzalez. “We must ensure that these small businesses are able to continue to serve the communities that depend on them.”

At the hearing, health care providers requested that prompt pay laws be more broadly defined and have tougher enforcement provisions. They described how their daily operations are jeopardized by unpaid bills, forcing them to reconsider the care they provide. The committee discussed remedies to the current system, including implementing uniform national standards and strengthening current State statutes.

“The existing system is clearly inadequate and is putting an undue strain on our nation’s health care providers,” said Chairman Gonzalez. “We must work with insurance companies to ensure that these small providers receive the payments they are due. This is critical for the future of small medical offices and for the health of the people who depend on their services.”

###