Health insurance companies may have penalties for late payments

On Behalf of | Apr 4, 2022 | Health Care Law

Healthcare providers in Texas provide very important services and care for their patients, but the care can be expensive. As such healthcare providers rely on patients’ health insurance to pay for the medical bills. While there may be some negotiations on the amount the insurance company will pay, healthcare providers expect that the bills will be paid by insurance companies. There is also an expectation that these payments will be made promptly.

There is also a law in place to ensure payments are made in a timely manner. This is known as the Texas Prompt Payment Act. It states that payments for bills submitted electronically must be paid within 30 days of receipt of the medical bill. If it is a paper submission, the then insurance company needs to pay within 45 days of the date of the bill. If insurance companies fail to pay the bill or follow the procedures for disputing it, then they must pay penalties.

Penalties for late payments of medical bills

The penalties depend on how late the insurance company pays the healthcare provider. The potential penalties are:

  • 31 – 75 days after electronic submission or 46 – 90 days after a paper submission – 50% of the contract discount given to the insurance company with a cap at $100,000.
  • 76 – 120 days after electronic submission or 90 – 135 days for paper submissions – 100% of the contract discount given to the insurance company with a cap at $200,000.
  • Later than 120 days for electronic submissions and 135 days for paper submissions – 100 % of the contract discount for the insurance company with a cap of $200,000, but there is an 18% annual interest added to the penalty.

Healthcare providers in Texas rely on payments from insurance companies. They take time to negotiate contracts to ensure that the payments will continue as well usually giving insurance companies a discount. In exchange it is not only an expectation, but a law that insurance companies must pay the bills they receive promptly. Experienced attorneys understand the potential penalties for late payments and may be able to help ensure healthcare providers receive what they deserve.