H.R. 5454: Medicare Advantage Prompt Pay Act

The Medicare Advantage Prompt Pay Act aims to enhance the payment processes within the Medicare Advantage program by instituting more rigorous timeliness standards for payments made to healthcare providers. The key components of the bill include:

Prompt Payment Requirements

The bill amends existing regulations to mandate that Medicare Advantage organizations must pay at least 95% of clean claims within a specified timeframe. A clean claim is defined as one that contains all necessary information required for processing. The deadlines are set as follows:

• 14 days for electronic claims submitted by providers under a contract with the organization.
• 30 days for non-electronic claims, and claims submitted for items or services not under contract.

Interest on Late Payments

If payment is not made within the specified timeframes, the Medicare Advantage organization must pay interest on the overdue amount. This interest is calculated based on existing federal guidelines for late payments.

Claims Receipt Assumptions

The legislation establishes a rebuttable presumption regarding when a claim is considered received by the organization:

• For electronic claims, it is deemed received on the date verified in health care claim status requests and responses.
• For other submissions, it is considered received five business days after the postmark date.

Civil Penalties for Non-Compliance

In instances where a Medicare Advantage organization fails to comply with these prompt pay requirements, the Secretary of Health and Human Services can impose civil money penalties of up to $25,000 for each violation.

Reporting Requirements

The bill also requires Medicare Advantage plans to report compliance with prompt payment requirements, detailing:

• The number and percentage of claims paid.
• The breakdown of claims for which payments were timely and those for which interest was paid due to late payment.
• The total amount of interest paid by the plan.

Effective Date

The changes stipulated by this bill would take effect for items and services provided on or after January 1, 2027, along with the relevant contract years.

Relevant Companies

• CNC - Centene Corporation: A large managed care organization that provides Medicaid and Medicare services could see impacts on their billing processes and cash flows due to new prompt payment requirements.
• MU - Molina Healthcare: This health insurance company is likely to be affected as they will need to adjust their claims processing systems to ensure timely payments according to the new regulations.
• HUM - Humana Inc.: As a major player in Medicare Advantage services, Humana will need to comply with tighter payment timelines and may incur fines for non-compliance, affecting their financial operations.