Can a health plan go out of business and not pay your healthcare receivables?
When a insolvent health plan fails to pay a provider for the monies owed, the provider may have a very limited recourse. There may be funds or pools of various funds to collect from, that are intended to protect the enrollee or patient. Some times the contracting with bad insurance companies can be avoided:
Due Diligence Before You Contract:
- Ask the insurance company for its financial statements,
- Check National Association of Insurance Commissioners (NAIC) for filings to see what information is available
- Check the State's department of insurance for filings that HMOs and Other Insurance companies are required to make
- Check for brokerage analyst ratings that are being given to the plan by the experts,
- Check for Reinsurance Policies
- Ask for Insolvency Insurance - especially HMOs are required to carry that in many states
In contracts you should ask for provisions regarding the right to audit, cash deposits if a claim is paid more than a specified number of days past due, late payment penalty, and late payment interest, and do not allow for setoff by the payer; all these provisions keep the insurance plans from avoiding payment.
Typically health plans do not go bankrupt over night, it takes a while.
Look for Warning Signs of Insolvency:
- Financial Losses
- Payment delays
- Blanket denials of categories of claims
- Sometimes they may deny every N(th) claim, meaning random denials without reason
- Other, there are other strategies that health plans use to deny claims.
If you are seeing inappropriate denials or delays in payment, then you should do the following:
- Review your termination provisions in the contract, and consider terminating the contract,
- Review the financial status of the health plan to see if you are detecting warning signs of a bankruptcy approaching,
- Be expedient in pursuing your claim and do not hesitate to go first, because you don't want to be the last one to collect from that payer,
- If the health plan files for bankruptcy, do pay attention to the bankruptcy notices and file your claim with the bankruptcy court.