Ask our attorney: Don’t take the money and run

Avoid offers to pay your claims faster but at a discount

By Legal and Regulatory Affairs staff

February 23, 2012—From time to time, we hear from members who have received a letter from a company offering to pay health insurance claims faster if the provider accepts lower reimbursement. For example, after you have submitted claims to Insurance Company X, you receive a letter from Company Y offering to reimburse you in just 10 days if you agree to accept only 70 percent of the total claim amount that you submitted. Company Y may be unfamiliar to you and may not even be an insurance company.

Consider our answers to the following questions about what you should do. (Note the disclaimer at the end of this article.)

Should I accept the offer?

We caution members against accepting such offers. They often entail giving up a significant percentage of your reimbursement without being paid much faster. Most states have prompt payment laws that require insurance companies to pay within a certain period of time. The laws often require insurers to pay “clean claims” – which provide all of the necessary information – within 30 or 45 business or calendar days. Some states have a shorter time frame for paying electronic (versus paper) claims.

If you have a provider contract with the insurance company, that contract also typically requires the company to pay claims within a certain time frame, which may be shorter than the period specified by your state’s prompt payment law.

Do I need to respond to such an offer?

Generally, no. We have not seen a “pay faster, but less” offer that requires an affirmative rejection of the offer from the psychologist in order for him or her to continue being paid directly in a regular and timely fashion by the insurance company with which the practitioner is associated. Even so, we are interested in hearing from any members who receive an offer that purports to require an affirmative rejection in order to receive direct payment from Insurance Company X.

Is this practice legal?

As long as the offer is clearly an offer, and it is not otherwise deceptive, it probably is legal. By analogy, a stranger could knock on your door and offer to buy your house on the spot for cash if you were willing to accept only a quarter of its current value. Or a friend could offer to buy your new car for $100. While seemingly outrageous, such propositions are not illegal.

However, please let us know if you receive an offer that sounds deceptive - for example, an offer that makes it seem as if there will be negative consequences if you do not accept the deal. An offer would also be deceptive if it stated or implied that if you reject the offer, Insurance Company X (to which you originally submitted your claim) would be under no obligation to pay you within a reasonable time – when in fact your provider contract with Insurance Company X or your state’s prompt payment law requires prompt payment.

  • This article is part of an occasional “Ask Our Attorney” series in which the APA Practice Organization shares guidance from staff attorneys in response to member inquiries about practice-related issues and concerns. 

  • Legal issues are complex and highly fact specific and require legal expertise that cannot be provided by any single article. In addition, laws change over time and vary by jurisdiction. The information in this article does not constitute legal advice and should not be used as a substitute for obtaining personal legal advice and consultation prior to making decisions regarding individual circumstances.

For more information, contact the Legal and Regulatory Affairs department by email or at (202) 336-5886.