JEFFERSON CITY — Gov. Jay Nixon signed legislation Tuesday that will impose new financial penalties on insurance companies that wait too long to pay claims and will give health care providers new guidance on the information they must provide insurers.
In a signing ceremony in his Capitol office, Nixon called the legislation "good, solid reform," that would help health care providers and insurers cut costs and be more efficient.
The legislation "will mean people will receive what they pay for; there will be more predictability in the system," the governor said.
Nixon, a Democrat, passed out copies of the signed measure to the several Republican lawmakers, doctors and nurses that stood behind him during the signing ceremony. Nixon said the legislation would help consumers by relieving angst over their medical bills.
The so-called "prompt pay" legislation gives insurers about 45 days to pay insurance claims. Those that take too long would pay a penalty of 1 percent of the claim per day. The law will also prevent insurers from suspending claims that they neither deny nor approve.
For health care providers, the law sets up a definition modeled after the one used for the federal Medicare program that lays out the information to be submitted to insurance companies.
The legislation takes effect next year.
Lawmakers have debated the issue previously, and the supporters of this year's attempt say it picked up steam after state insurance officials reported in January that there was more than $500 million in outstanding claims at 69 hospitals.
More than a quarter of those claims had been unpaid for at least 90 days, according to the report by the state Department of Insurance, Financial Institutions & Professional Registration. There also were significant differences in unpaid claims across the state, with just 11 percent of claims remaining unpaid after 90 days in northwest Missouri but 70 percent still unpaid after 90 days in the northeastern part of the state.
Hospitals in rural parts of the state also faced longer delays. More than one-third of claims had not been paid within 90 days in rural areas compared with about one-quarter in urban counties.
Rep. Tim Jones, who sponsored the prompt pay legislation in the House, praised insurance companies and health care providers for working together on the legislation.
"This is truly genuine and actionable health care cost reform," said Jones, R-Eureka.
Calvin Call, the executive director for the Missouri Insurance Coalition, said the changes would help make processing the claims more efficient. Call said the new state definition for claims containing all the required information is important because many of the current delays arise from errors or missing data in the information submitted by doctors and hospitals.
"We feel the new law is fair," he said.