or years, physicians and their patients have been plagued by contract, billing, and claims problems inflicted by health plans. With the recent implementation of California’s unfair payment practices regulations, the Department of Managed Health Care (DMHC) now has the power to take action against Knox-Keene licensed health plans (and their contracting medical groups/IPAs) that repeatedly engage in unfair payment practices.

This article will help physicians understand and benefit from the regulations. It is especially important
that physicians be able to identify and report unfair health plan payment practices to DMHC. Without physician complaints, the regulations will be useless and nothing will change. (Provider complaint forms are available in the Unfair Payment Practices Resource Center.)

Fee Schedule Disclosure
California’s unfair payment practices regulations require all Knox-Keene licensed health plans to fully and regularly disclose to contracting physicians their fee schedules and payment rules, including instructions for submitting claims and filing provider disputes. Under the regulations, health plans were required to provide that information to contracting physicians on or before January 1, and the plans must continue to do so each year by the contract anniversary date. Health plans must also provide their complete fee schedules and payment rules in a timely manner to newly contracted physicians and must comply with all written physician requests for such information. Health plans must also notify contracted physicians in writing 45 days before instituting any changes to fee schedules and payment rules.

Preauthorization
Health plans are prohibited from preauthorizing treatment of a plan enrollee and then rescinding or modifying that authorization after the physician provides the service. To demonstrate to DMHC that a violation has occurred, CMA recommends that physicians keep a record of all preauthorizations. If the plan issues a written preauthorization, keep a copy in the patient’s chart. For authorization provided by telephone, physicians should record details of the conversation in the patient’s chart, including the name and title of the person they spoke with, the procedure(s) authorized, and the date.

Claim Submission Deadlines
California law prohibits Knox-Keene licensed health plans from imposing claim submission deadlines that are less than 90 days from the date of service for contracted physicians and 180 days for noncontracted physicians. Should a claim be filed after these deadlines, plans are still required to pay the claim if the physician submits a provider dispute form showing "good cause" for the delay.

Although the regulations do not define “good cause,” DMHC has said it will review and evaluate the criteria plans use in adjudicating late claim submissions, indicating it will be “the determiner of good cause.” The regulations also authorize DMHC to penalize plans that impose unreasonable deadlines.

To minimize the risk of late claim denials, CMA encourages physicians to submit claims early and whenever possible to submit them electronically. Physicians should review any claims that are denied for late filing for compliance with these fair payment rules.

Overpayment Notices
California’s unfair payment practices law requires Knox-Keene licensed health plans to request refunds on overpaid claims to physicians in writing within one year of the original payment dates. Such notices must clearly identify the claim, including patient name, date of service, and amount the plan believes was overpaid, and state the plan’s case for overpayment.

To contest an overpayment notice, physicians must notify the plan in writing within 30 days of receipt and explain why they believe the claim was not overpaid. The plan must then process the contested notice of overpayment through its official provider dispute process. (The law also requires that health plans fully and regularly disclose to contracting physicians the rules for filing provider disputes. For more information, see “Fee Schedule Disclosure,” above.)

Claim Receipt Acknowledgement
State law requires Knox-Keene licensed health plans to acknowledge receipt of all claims, whether or not they are complete. If a plan—or its contracting medical groups or IPAs—repeatedly fails to do so, the state’s new unfair payment practices regulations authorize enforcement action by the Department of Managed Health Care (DMHC).

Health plans must acknowledge receipt of electronically submitted claims within two working days and paper claims within 15 working days. If an incomplete claim is received, health plans must acknowledge receipt of the claim so long as the claim identifies the provider. If the claim is missing necessary payment information, the plan may simultaneously acknowledge receipt of the claim and deny the claim as incomplete.

Physicians are encouraged to keep a record of all claim submission dates and to save claim-receipt acknowledgements they receive back from health plans. Physicians will then be able to provide DMHC with the evidence the department needs to take action against violators of the new regulations.

Explanation of Denial or Adjustment
When a Knox-Keene licensed health plan denies, adjusts, or contests a physician claim, the plan must provide the physician with a detailed written explanation of why the action was taken.

Health plans (and their contracting medical groups/IPAs) must provide that explanation no later than 30 days after receipt of a PPO claim or 45 days for an HMO claim. Under the State of California’s new unfair payment practices regulations, the Department of Managed Health Care (DMHC) is authorized to penalize plans that fail to do so.

Physicians are encouraged to carefully review their Explanation of Benefit forms (EOBs) to ensure that their claims have not been improperly denied, adjusted, or contested, and that the explanations are clear and accurate.

Notice of Dispute Resolution Mechanism
California’s unfair payment practices regulations require that Knox-Keene licensed health plans and their contracting medical groups/IPAs maintain fair, fast, and cost-effective payment dispute mechanisms for contracting and noncontracting physicians. Every time a health plan contests, adjusts, or denies a physician claim, it must inform the physician of the availability of the plan’s dispute mechanism and explain the procedures for filing a dispute.

Physicians are encouraged to carefully review their explanation-of-benefit forms (EOBs) to ensure that any claim that is contested, adjusted, or denied contains the required dispute mechanism notice and clear instructions on how to file a dispute.

Dispute Filing Deadlines
Did you know that the State of California’s new unfair payment practices regulations prohibit Knox-Keene licensed health plans and their contracting medical groups/IPAs from imposing provider dispute filing deadlines that are less than 365 days from the date of the plan’s disputed action?

CMA recommends that physicians keep clear and dated records of every billing or contract dispute. It is important that payors who reject disputes because of improperly shortened submission deadlines or who engage in other unfair payment practices be reported to DMHC so that the department can identify and take action against them.

Dispute Resolution Deadlines
California’s new unfair payment practices regulations require Knox-Keene licensed health plans and their contracting medical groups/IPAs to resolve physician disputes in writing no more than 45 working days after receiving a physician dispute.

To ensure that disputes are resolved in a timely manner, CMA recommends that physicians document dispute submission dates and save dispute acknowledgements they receive from health plans. Proper documentation will enable DMHC to enforce the new regulations.

Requests for Medical Records
State law prohibits Knox-Keene licensed health plans from requiring a physician to submit medical records that are not “reasonably relevant” to the adjudication of a claim.

An “unreasonable” request, according to the Department of Managed Health Care (DMHC), is one that exceeds the minimum level of information required for a competent claims adjudicator to determine the plan’s payment responsibility. California’s new unfair payment practices regulations authorize DMHC to penalize plans (and their contracting medical groups/IPAs) that make such unreasonable demands for documentation.

Physicians should consider keeping a log to record all health plan requests for medical records. (A sample log is available on CMA’s unfair payment practices CD-ROM, “Payor Abuse Matters: React Now.”)

Interest and Penalties on Late Payments
Knox-Keene licensed health plans are required to automatically pay interest and penalties when an uncontested physician claim is not paid within the allowed time frame (30 business days for PPOs, 45 for HMOs). California’s unfair payment practices law authorizes the Department of Managed Health Care (DMHC) to penalize health plans that fail to comply with the new regulations.

When a claim is paid late, health plans (or their contracting medical groups/IPAs) must make interest payments—without the need for any reminder or request—to physicians no more than five working days after the claim is paid. Health plans that fail to make automatic interest payments (calculated at 15 percent a year) must pay an additional $10 penalty per claim.

If the interest due on an individual claim is less than $2, the plan can wait until the close of the calendar month and make a lump interest payment for all late claim payments during that time period. Lump interest payments must be made within 10 calendar days of the month’s end.

Forwarding Misdirected Claims
Knox-Keene licensed health plans and their contracting medical groups/IPAs are required by law to forward “misdirected” claims to the appropriate party for adjudication within 10 business days. A “misdirected” claim is one sent directly to a health plan for payment when in fact a contracting medical group/IPA is responsible for the claim, or vice versa.

The only exception occurs if a contracting physician mistakenly sends a claim for nonemergency services to a health plan, when it should have been sent to the capitated medical group/IPA. In that instance only, the plan may choose to issue a notice-of-denial with instructions to bill the capitated medical group/IPA. Whether the plan chooses to forward the claim or issue a denial, the plan has 10 days to comply. All claims for emergency services, whether physician is contracting or noncontracting, must be forwarded within 10 days.

When Claim Is Sent to a Health Plan Instead of Medical Group/IPA
• Contracted Physician: Plan has 10 days to either send the physician a notice-of-denial with instructions to bill the capitated medical group/IPA (nonemergency claims only) or forward the misdirected claim to the medical group/IPA.
• Noncontroacted Physician: Plan has 10 days to forward misdirected claims.
• Emergency Services: Plan must forward claims for emergency services within 10 days.

When Claim Is Sent to Medical Group/IPA Instead of Health Plan
• By Contracted or Noncontracted Physician: Whether the misdirected claim is from a contracted or noncontracted physician, the medical group/IPA must forward the misdirected claim to the health plan within 10 days of receipt of the claim.