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Here are the key provisions of SB4 (from a summary prepared by OSMA):

• The bill requires the superintendent of insurance to develop a standard claim form to be used by all third-party payers. The form will be the HCFA-1500 for providers and the UB-92 for hospitals.
• In most cases, when a third-party payer receives¹ a claim on the standard claim form, the third-party payer shall pay or deny the claim not later than 30 days after receipt of the claim.
• If the third-party payer determines that “reasonable supporting documentation”² is needed to process a claim, the third-party payer shall:
       o Notify the provider, beneficiary, another third-party payer and all relevant external sources within the first 30 days of receipt of the claim that supporting documentation is needed. The notice shall state, with specificity, what supporting documentation is needed.
       o The provider can request that the third-party payer provide the notice of the request for supporting documentation be made in writing.
       o Pay or deny the claim not later than 45 days³ after receipt of the claim.
       o Establish a description of any supporting documentation that is routinely necessary for particular health care services and make the description available to providers in a readily accessible format.
• SB 4 places requirements on providers and third-party payers to use the most current CPT code and ICD-9 code in effect on the date of service.
• The “Don’t Play Games” Amendment: The bill prohibits a third-party payer from “engaging in any business practice that unfairly or unnecessarily delays the processing of a claim or the payment of any amount due for health care services rendered by a provider to a beneficiary.” Violations of this section can result in significant penalties from the Ohio Department of Insurance (ODI), which has broad authority under this section.
• Under a capitation arrangement with a provider, third-party payers shall begin paying the capitated amounts not later than 60 days after the date the beneficiary selects or is assigned a provider.
• The bill provides that a payment is considered final two years after it is made and any improper payment can only be recovered if initiated before that date. Notices of improper payments must include certain information⁴ and providers must be given an opportunity to appeal the take back request. If the take back request is proper, providers will have the option of making one or more direct re-payments or having the amount deducted from future reimbursements.
• SB 4 will give providers whose claims are denied, under certain circumstances⁵, the ability to re-file those claims with the appropriate third-party payer if:
       o The claim was initially submitted to a different third-party payer or state or federal program and that payer has determined that it is not responsible for the cost of the health-care services⁶. Providers will be required to submit the notice of denial from the third-party payer when re-filing.
       o The claim was submitted within 45 days after receiving notice from the different third-party payer that is not responsible for the cost of the health-care services.
• When a provider or beneficiary submits a duplicate claim to a third-party payer before the time frames specified in SB 4 have elapsed, the third-party payer may deny the duplicate claim. These denials shall not be counted by ODI against a third-party payer for the purposes of compliance with SB 4.
• Insurers will be required to establish a system whereby a provider or beneficiary may obtain information on the status of a claim. This system, which was a much-debated provision in the House discussion, can be either Internet based or established through other means.
• Any third-party payer that fails to comply with the time frames outlined in the bill will be required to pay interest on late claims at a rate of 18% per annum. Interest due shall be paid directly to the provider at the time the late payment is made and may not be used to reduce benefits or payments otherwise payable under the benefits contract.
• The Ohio Department of Insurance may levy monetary penalties for violations of ORC 3901.381 (time frames and payment) that constitute a consistent pattern or practice in the following amounts:
       o For the first offense, the ODI may levy a fine of not more than $100,000.
       o For a second offense that occurs on or earlier than four years from the first offense, the ODI may levy a fine of not more than $150,000.
       o For a third or additional offense that occurs on or earlier than seven years after the first offense, the ODI may levy a fine of not more than $300,000.
• The ODI may pursue other enforcement remedies for violations of the provisions contained in SB 4 such as those available under the “Unfair and Deceptive Trade Practices” act. This law was used recently by the ODI when it fined seven Ohio health insurers more than $500,000 for violations of the current prompt pay law.
• The bill will apply to state licensed HMOs and indemnity health plans. Unfortunately, federal law preempts the state’s ability to impose prompt pay guidelines to employer self-insurance plans (ERISA plans) and to Medicare+Choice plans. Additionally, both Medicaid and BWC guidelines currently have prompt pay requirements and therefore do not fall under the provisions of Senate Bill 4.
• Under existing law, a third-party payer and a provider may, “in negotiating a reimbursement contract, agree to any time period by which the third-party payer shall . . . make payment of any amount due on a completed claim.” Under Senate Bill 4, insurers can only contract for time periods shorter than those otherwise required under the bill.
• Additionally, any contract provision between an insurer and provider that is inconsistent with the “take back” provision is unenforceable.
• The Ohio Department of Insurance is permitted under the bill to require third-party payers to submit periodic reports of their compliance with the bill. Information from these reports can be used by ODI to initiate a market conduct examination of the third-party payer. These reports would be a public record.
• The federal Health Insurance Portability and Accountability Act of 1996 (HIPAA) requires all third-party payers to be capable of accepting claims submitted electronically by providers. Beginning six months after HIPAA requirements become effective⁷ for all health plans, Senate Bill 4 provides that the time periods for processing claims only apply to claims submitted electronically, with certain exceptions⁸.
• SB 4 will officially become law 12 months after Governor Taft signs the legislation. Governor Taft is expected to sign SB 4 sometime in early July, 2001.

¹ A presumption exists that a claim is received by the third-party payer on the fifth business day after the claim was mailed or one business day after the claim was submitted electronically.

² Supporting documentation includes the verification of employer and beneficiary coverage under a benefits contract, confirmation of premium payment, medical information regarding the beneficiary and the services provided, information on the responsibility of another third-party payer to make payment, information that is needed to correct material deficiencies in the claim related to diagnosis, treatment, or provider, or whether pre-existing conditions exist.

³ The number of days that elapse between the third-party payer’s request for supporting documentation and receipt of the requested documentation shall not be counted for purposes of determining compliance with the 45 day time frame.

⁴ Beneficiary name, date or dates the services were provided, the amount of the improper payment, the claim number, a detailed explanation of the basis for the third-party payer’s determination of improper payment, and the method in which payment was made, including the date of the payment and if applicable, the check number.

⁵ When a claim is submitted later than one year after the last date of service for which reimbursement is sought under the claim, the third-party payer shall pay or deny the claim according to the time frames in SB 4 or not later than 90 days after receipt of the claim.

⁶ A determination that a third-party payer or state or federal program is not responsible for the cost of health care services includes a determination regarding coordination of benefits, preexisting health conditions, ineligibility for coverage at the time services were provided, subrogation provisions and similar findings.

⁷ There are varying implementations dates for HIPAA. For the purposes of this section, the October, 2003 deadline for smaller health plans is used, which means providers will be required to comply with this section in April, 2004.

⁸ “A provider and third-party payer may enter into a contractual arrangement under which the third-party payer agrees to process claims that are not submitted electronically because of the financial hardship that electronic submission of claims would create for the provider or any other extenuating circumstance.”

This is landmark legislation that goes along way toward resolving issues that OPA members have been raising for years about slow or no payment practices that have been very harmful to practices around the state. Thanks again to all of you who helped us get this bill passed.

Please send questions or comments relating to SB4 to Michael Ranney.

Other Project FAIR links

• Project FAIR
• Project FAIR History
• Project FAIR Update
• Project FAIR Issue Report Form