U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

36–114 PDF 2007

SUBCOMMITTEE HEARING ON ENSURING

PROMPT PAYMENT FOR SMALL HEALTH

CARE PROVIDERS

SUBCOMMITTEE ON REGULATIONS, 

HEALTH CARE & TRADE 

COMMITTEE ON SMALL BUSINESS 

UNITED STATES HOUSE OF 

REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

AUGUST 1, 2007

Serial Number 110-39

Printed for the use of the Committee on Small Business

(

Available via the World Wide Web: http://www.access.gpo.gov/congress/house 

HOUSE COMMITTEE ON SMALL BUSINESS

NYDIA M. VELA ́ ZQUEZ, New York, Chairwoman

HEATH SHULER, North Carolina 

CHARLIE GONZA ́ LEZ, Texas 

RICK LARSEN, Washington 

RAUL GRIJALVA, Arizona 

MICHAEL MICHAUD, Maine 

MELISSA BEAN, Illinois 

HENRY CUELLAR, Texas 

DAN LIPINSKI, Illinois 

GWEN MOORE, Wisconsin 

JASON ALTMIRE, Pennsylvania 

BRUCE BRALEY, Iowa 

YVETTE CLARKE, New York 

BRAD ELLSWORTH, Indiana 

HANK JOHNSON, Georgia 

JOE SESTAK, Pennsylvania 

STEVE CHABOT, Ohio, Ranking Member 

ROSCOE BARTLETT, Maryland 

SAM GRAVES, Missouri 

TODD AKIN, Missouri 

BILL SHUSTER, Pennsylvania 

MARILYN MUSGRAVE, Colorado 

STEVE KING, Iowa 

JEFF FORTENBERRY, Nebraska 

LYNN WESTMORELAND, Georgia 

LOUIE GOHMERT, Texas 

DEAN HELLER, Nevada 

DAVID DAVIS, Tennessee 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida 

JIM JORDAN, Ohio

MICHAEL DAY, Majority Staff Director 

ADAM MINEHARDT, Deputy Staff Director 

TIM SLATTERY, Chief Counsel 

KEVIN FITZPATRICK, Minority Staff Director

SUBCOMMITTEE ON REGULATIONS, HEALTH CARE & TRADE

CHARLES GONZA ́ LEZ, Texas, Chairman

RICK LARSEN, Washington 

DAN LIPINSKI, Illinois 

MELISSA BEAN, Illinois 

GWEN MOORE, Wisconsin 

JASON ALTMIRE, Pennsylvania 

JOE SESTAK, Pennsylvania 

LYNN WESTMORELAND, Georgia, Ranking 

BILL SHUSTER, Pennsylvania 

STEVE KING, Iowa 

MARILYN MUSGRAVE, Colorado 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida 

JIM JORDAN, Ohio

(II) 

C O N T E N T S 

OPENING STATEMENTS 

Page

Gonza ́lez, Hon. Charles ........................................................................................... 1

Westmoreland, Hon. Lynn ...................................................................................... 3

WITNESSES

Wilson, Dr. Cecil B., American Medical Association ............................................ 4

Merrill, Dr. Robert, D.D.S., American Association of Orthodontists ................... 5

Henkes, Dr. David, Pathology Associates of San Antonio .................................... 8

Austin, Dr. Gordon T., D.M.D., Northwest District of the Georgia Dental 

Association ............................................................................................................ 10

Kelly, Dr. Frank B., American Academy of Orthopaedic Surgeons ..................... 11

APPENDIX 

Prepared Statements: 

Gonza ́lez, Hon. Charles ........................................................................................... 21

Westmoreland, Hon. Lynn ...................................................................................... 23

Wilson, Dr. Cecil B., American Medical Association ............................................ 24

Merrill, Dr. Robert, D.D.S., American Association of Orthodontists ................... 32

Henkes, Dr. David, Pathology Associates of San Antonio .................................... 36

Attachments to Dr. Henkes Testimony .................................................................. 48

Austin, Dr. Gordon T., D.M.D., Northwest District of the Georgia Dental 

Association ............................................................................................................ 65

Kelly, Dr. Frank B., American Academy of Orthopaedic Surgeons ..................... 67

(III) 

(1)

SUBCOMMITTEE HEARING ON ENSURING 

PROMPT PAYMENT FOR SMALL HEALTH 

CARE PROVIDERS 

Wednesday, August 1, 2007

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

SUBCOMMITTEE ON REGULATIONS, HEALTH CARE & TRADE

Washington, DC. 

The subcommittee met, pursuant to call, at 10:00 a.m., in Room 

2360 Rayburn House Office Building, Hon. Charles Gonza ́lez 

[Chairman of the Subcommittee] presiding. 

Present: Representatives Gonza ́lez, Larsen, Altmire, Shuler, and 

Westmoreland. 

OPENING STATEMENT OF CHAIRMAN GONZA ́ LEZ 

Chairman GONZA ́LEZ. The Subcommittee on Regulation, Health 

Care and Trade on Small Business will come to order. Today’s 

hearing is on ensuring prompt payment for small health care providers. 

I am going to begin with an opening statement, but I do want 

to preface my remarks as well as the remarks by the ranking member, thanking each and every one of the witnesses. Please understand this is probably the busiest time of the session for Members 

of Congress because we are supposed to go on the August recess 

and we are trying to do a few things before we leave either Saturday or Sunday or it could be Monday or Tuesday. We are not sure. 

But we are hoping certain Members will come through. 

Also understand you have submitted written testimony and that 

testimony is actually reference material for us. And the questions 

that we will be posing today will again inform us, enlighten us and 

guide us. And staff is here, of course, and we count on them to take 

a lot of notes but we do that ourselves. Again, thank you very 

much. And I am hoping we will have members—as a matter of fact, 

we have been joined by Congressman Shuler at this time. Members 

may come in and out, and that is just the nature of the beast 

around here because there are so many demands being made on 

Members. And the Chair will recognize himself for an opening 

statement. 

Small physician groups face many challenges today. Unfortunately, many of these have nothing to do with practicing medicine. 

Whether it be the increase in bureaucracy of managed care or the 

prospect of reduced Medicare reimbursements, it can be extremely 

difficult to make these businesses profitable. 

2

Today’s hearing will look at one of the biggest financial challenges facing the industry. Payments from insurance companies to 

health care providers have long been a concern of health care providers and their member organizations. Providers have shown that 

some insurers delay payments for a significant portion of the insurance claims. This often leads to cash-flow problems and increases 

the cost of care for the patients that they serve. 

Such conditions are particularly problematic for small health 

care providers. As small businesses, they just cannot afford to be 

exposed to the sort of instability that an unpredictable revenue 

stream creates. Payment delays are nothing more than an unfair 

business practice that let insurance companies earn interest on 

money owed. Cash flow is an important issue for the small practice 

and late payments hinder their ability to run and expand their 

businesses. 

The insurance community argues that the prompt payment of 

claims is not a problem, that the market in concert with State laws 

will address any lingering problems. This subcommittee is interested in our witnesses’ responses to that particular assertion. Small 

providers lack the financial resources to hold insurance companies 

accountable for their failure to make timely claim payments. If an 

insurer is unwilling to make a payment or wants to delay payment, 

what remedy do small practices have at hand to compel payment 

unless we provide them with one? Only prompt payment laws that 

are enforced make it possible for small providers to be paid in a 

timely and fair manner. 

Efforts to enact prompt State payment laws have been successful. To date, all 50 States and the District of Columbia have 

prompt payment rules that apply to insurers. These laws were designed to help small providers who lack the ability to negotiate 

payment schedules with insurers or to compel payment. As such, 

small business health providers can rely on State efforts as opposed 

to hiring their own attorneys to enforce these requirements. 

But there is a problem. States do not seem to be effectively 

cracking down on insurers who are not complying with State 

prompt pay laws. In part, the focus of today’s hearing is to understand why prompt pay laws fail to be as successful as providers 

once hoped. Ultimately, health care providers need prompt payment laws that are meaningful in practice, not just on paper. I believe this means promoting stricter enforcement of existing laws, 

strengthening prompt payment requirements and holding more 

health plans accountable. 

Though prompt payment laws can be found throughout the country, providers seem to uniformly agree that they are far from effective. This is a significant source of frustration for State insurance 

commissioners who have directed considerable resources to enforcing compliance and providers who are challenged by the problem 

daily. Without a solution, small practices will continue to struggle. 

I would like to thank again each witness. We look forward to 

your testimony. And at this time I am going to go and yield and 

recognize the ranking member, Congressman Westmoreland, for an 

opening statement.

3

OPENING STATEMENT OF MR. WESTMORELAND 

Mr. WESTMORELAND. Thank you, Mr. Chairman , for holding this 

hearing today. This is a very important hearing, especially for the 

medical profession. I would also like to thank all the witnesses for 

your participation. And I am sure that today’s testimony will prove 

to be very helpful to this committee and to our Congress. 

Payment for service is the core of our economic system. No industry would survive if those who bought a product only paid a fraction of what it cost. But that is exactly what is happening to physicians in our health care industry. And not only are physicians often 

paid less than what their services cost, they are also being paid 

well after the bill comes due. So not only do you not get all your 

money, you don’t get it in a timely fashion. The ironically named 

prompt payment issue is one that is affecting physicians and patients all over the country. Surveys have shown that it is at the 

forefront of physicians’ concerns and I know that from listening to 

many physicians that come into our office every day to complain 

about the system. And their payment schedule is one of the things 

that they complain the most about. 

I don’t know about any of you, but when I visit my doctor, I want 

his full attention to be on what he is doing and not wondering if 

he is going to get paid for seeing me. Almost every State has enacted some form of prompt payment law in an effort to address this 

very real issue. Unfortunately, these laws usually have very little 

enforcement and therefore allow the problem to persist. 

I am proud that my home State of Georgia has one of the most 

comprehensive laws governing payment for medical services. Our 

law requires that insurers pay claims within 15 working days of receipt. While this law has helped, it has by no means eliminated the 

insurance companies’ desire to withhold payment. 

This Congress faces a great challenge as it tries to lower the 

overall cost of health care, while also providing access to those who 

need it. I hope that we can all agree that shortchanging our physicians is counterintuitive to having an effective health care system. 

I know that today’s hearings will be helpful in addressing this challenge. 

And again I want to thank the Chairman for having the hearing. 

And I welcome this distinguished panel, and thank all of you for 

your willingness to testify today. Thank you. 

Chairman GONZA ́LEZ. Thank you very much. Is there anyone else 

who wishes to make an opening statement? I want to welcome Dr. 

Rob Merrill. It says on our agenda that he is representing the orthodontists which are based in St. Louis, Missouri. But I want the 

record to be very clear that Rob is a citizen-resident of the great 

State of Washington with Nancy Washington. I have known him 

and his family for a long time, 10 to 15 years I guess it must be 

by now. So I really appreciate the hearing, but I wanted to especially welcome Dr. Merrill to the hearing. 

Thank you very much. We will proceed with the testimony. I 

would advise the witnesses that you have 5 minutes, and I know 

that may not be sufficient time, but we will try to hold you to the 

5 minutes. But also understand we will have follow-up questions. 

And since we don’t have as many members present, we are going 

to have a little bit more time and you will be able to again probably 

4

supplement some of the comments you wish you had covered during your testimony. 

The first witness will be the testimony of Dr. Cecil B. Wilson. He 

is the immediate past chair for the Board of Trustees for the American Medical Association and has been on the Board of Delegates 

since 1992. The AMA is the largest medical association in the 

United States. Dr. Wilson has been in private practice of internal 

medicine in central Florida for 30 years. Dr. Wilson. 

STATEMENT OF DR. CECIL B. WILSON, M.D., BOARD CERTIFIED 

INTERNIST, IMMEDIATE PAST CHAIR, BOARD OF TRUSTEES, 

AMERICAN MEDICAL ASSOCIATION 

Dr. WILSON. Thank you, Chairman Gonza ́lez, Ranking Member 

Westmoreland, and members of the subcommittee for the opportunity to testify today. My name is Cecil Wilson. I am the immediate past Chair of the Board of Trustees for the American Medical 

Association. I am also an internist from Winter Park, Florida. 

The focus of today’s hearing is of great importance to the medical 

community given that 52 percent of physician practices in this 

country have three or less physicians and account for 80 percent 

of outpatient visits. Small physician practices have limited leverage 

relative to large insurance companies since antitrust laws prevent 

physicians as a group from addressing payment and other contract 

terms on a level playing field. The ability of physicians to address 

unfair payment practices continues to diminish with the increasing 

consolidation of health insurers. 

In the majority of metropolitan statistical areas, a single health 

insurer dominates the market. The growing disparity in negotiating positions has created an environment where insurers are able 

to evade prompt payment laws with little, if any, adverse consequence. This has a financially debilitating effect on small physician practices and could limit patient access. When one side has all 

the market power, more efficient market mechanisms are hampered. 

A common problem confronted by many physicians is insurers 

paying claims late. Even if a claim includes all the appropriate information, insurance companies often find reasons to delay or deny 

payment. This is tantamount to small physician practices extending interest free loans to large insurance companies. 

In addition, this seemingly intentional behavior by the insurer 

creates an onerous administrative burden. Physicians and their 

staff must spend hours on the phone pursuing payment of unpaid 

claims. In fact, growing numbers of physician practices have been 

forced to hire office staff dedicated solely to collecting late payments. Because of this, some have had to eliminate services and 

clinical staff positions as well as forego equipment upgrades and 

the adoption of health information technology. 

Fundamental fairness warrants timely payment. As the Chair 

has stated, in 50 States and the District of Columbia, legislation 

and regulations have been passed tied to the prompt payment of 

claims. Despite this, physicians still experience problems with receiving payments from health plans in a timely manner. Evidence 

of the continuing problem is that State regulators have imposed 

more than $76 million, including fines, interest, restitution and 

5

statutory penalty fees against third-party payors for late payments 

to physicians and other health care providers. 

And it is not just State regulators who have understood the problem. In 2000, a number of individual and class action lawsuits were 

consolidated and eventually certified to cover more than 600,000 

physicians. The suits were brought to address violations of prompt 

pay laws as well as other payment violations by some of the Nation’s largest for-profit health plans. Settlements were reached with 

most of the insurers. 

However, these short-term solutions will begin to sunset this 

year. The AMA urges Congress to pass legislation that will establish a strong Federal prompt pay standard, protect more robust 

prompt pay State laws by ensuring the Federal standard is the 

floor, establish concurrent jurisdiction over enforcement between 

the State and Federal Government, clarify that State prompt payment laws apply to all ERISA-covered health plans, strengthen 

penalties to prevent plans from considering fines and other associated financial sanctions as merely the cost of doing business, protect physicians from retaliation by insurers if they pursue their 

remedies under the prompt pay laws and expand protections to address other tactics utilized by health insurers to delay or decrease 

payments. 

The AMA looks forward to working with the committee to 

achieve our shared goals of strengthening and safeguarding the viability of small physician practices and providing quality care to 

patients. 

Thank you for the opportunity to be here today. 

[The prepared statement of Dr. Wilson may be found in the Appendix on page 24.]

Chairman GONZA ́LEZ. Dr. Wilson, thank you very much for your 

testimony. The next witness is Dr. Rob Merrill. Dr. Merrill is 

Chairman of the American Association Orthodontist Committee on 

Governmental Affairs. He is a board certified orthodontist and has 

been in practice since 1990. The AAO comprises 15,000 members 

in the United States, Canada and abroad. 

Dr. Merrill. 

STATEMENT OF DR. ROBERT MERRILL, D.D.S., M.S., BOARD 

CERTIFIED ORTHODONTIST, CHAIRMAN, COMMITTEE ON 

GOVERNMENT AFFAIRS, AMERICAN ASSOCIATION OF ORTHODONTISTS, ST. LOUIS, MISSOURI 

Dr. MERRILL. Chairman Gonza ́lez, Ranking Member Westmoreland, and distinguished members of the subcommittee, on behalf of 

the American Association of Orthodontists, I thank you for your 

leadership in holding this important hearing to address issues related to late payment and benefits by insurers. As the current 

Chairman of the Association’s Counsel on Government Affairs, it is 

my honor to have the opportunity to share the experiences and perspectives of its member orthodontists as the committee considers 

ways to alleviate the problems caused by the late payment of benefits. 

Orthodontists are uniquely qualified and educated dental specialists who correct improperly aligned teeth and jaws. There are curVerDate 0ct 09 2002 15:27 Jan 22, 2008 Jkt 033615 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 G:\CLERK SB\HEARINGS\TRANSCRIPTS\36114.TXT LEANN
6

rently 9,200 actively practicing U.S. members of the AAO. 

Orthodontics is one of America’s finest examples of a thriving small 

business community. The Nation’s orthodontists, over 75 percent of 

whom are solo practitioners that employ an average of seven dental 

service professionals, currently provide care to an estimated 4.4 

million adolescents and 1 million adults. Just over 60 percent of 

patients nationwide have insurance coverage that includes an orthodontic benefit to one degree or another. In my own office, approximately 55 percent of our patients have orthodontic insurance 

benefits. The best insurance companies pay claims within 30 days, 

not unlike the best patients who are also prompt in paying their 

bills, so we don’t have to send out multiple statements requesting 

payment. 

The average orthodontic practice is often hard hit by economic 

downturns as families often defer what may be perceived as elective orthodontic treatment. Often underscoring these financial difficulties is the practice of insurance companies that delay payments 

to orthodontic practices and thus cause additional hardship for the 

practice and its patients. 

As health care providers, orthodontists care about the quality of 

treatment of their patients and have a personal interest in the success of treatment. Since there are a relatively small number of orthodontists nationwide, we believe it is likely that insurance companies view the practices as lightweights that can be moved to the 

back of the line when it comes to payment of benefits. In short, this 

issue is about fairness as it involves large powerful insurance companies and their relationship to small community based health care 

providers and their patients. 

I would like to describe five ways in which late payment of benefits by insurers specifically harms the average orthodontic practice, 

a system used by one insurer that works well in my practice and 

outlines several areas where legislation could potentially help. 

One, cash flow problems. As small businesses, it is important to 

keep a steady and consistent cash flow in order to pay salaries of 

employers, the employees, vendors, and to upgrade equipment in 

order to provide the best, most technologically advanced care to patients. Late payments by insurers complicate cash flow, thus causing numerous accounting problems that require additional time, resources and staff to alleviate. 

Two, increased burden on patients. Many orthodontists in recent 

years have stopped processing insurance claims since the cost of 

hiring additional administrative staff to comply with insurance 

company red tape outweighs the benefit they receive in return. Regrettably, this causes additional strain for the patient, who is then 

burdened with the task of completing complicated reimbursement 

forms and communicating with the insurance companies. 

Three, administrative costs. Higher costs of insurance company 

compliance results in overall costs of patient care being increased. 

Many of the Nation’s orthodontists who have longstanding practices report that insurance company benefits for orthodontic treatment have remained unchanged for over 20 years. This means even 

patients who are covered by insurance often bear the entire burden 

of increased health care costs. 

7

Four, non-duplication of benefits. A related issue that affects orthodontists is what is termed non-duplication of benefits. This 

means that patients are covered by more than one insurance policy, 

yet the second policy will refuse to make any payment on behalf 

of the patient. It may be that both parents or a parent and a stepparent are employed and have paid the premiums for insurance 

that includes orthodontic coverage, yet will be unable to receive the 

benefit because of a non-duplication clause in the insurance policy. 

This means that the employee who happens to have insurance coverage through a spouse cannot access their benefits equally to an 

employee working for the same company who is not covered by the 

insurance plan even though both are paying the same premium. 

This situation is unfair to those who are paying for a benefit and 

not receiving it. This needs to be remedied. Therefore, the AAL believes that consumers who pay for insurance coverage should get 

the full extent of the coverage they are paying for instead of getting 

caught in a tangled maze of paperwork that ends with a denial of 

payment by the second insurer. Congress should require that 

where families have multiple dental benefit plans, each plan will 

pay a portion of the dental care claim according to their contracted 

scope of benefits, not to exceed 100 percent of the amount of the 

claim. 

Five, coordination of benefits. The treatment fee is such that 

both plans will usually end up paying their maximum, but the secondary insurer will refuse payment until a primary estimate of 

benefits is received, causing additional payment delays and increased paperwork and expense for the office and insurance company alike. An effective repayment system that works best for my 

office from an insurance company are the ones that pay automatically once the initial billing is received. This cuts down on expense 

and increased work hours for both the orthodontic office and the 

insurance company. Manual monthly insurance billing is very time 

consuming and adds to the administrative expense for both the 

practice and the insurance company and this ultimately costs the 

patients more. 

The AAL appreciates the opportunity to share the experiences 

and perspectives of our member orthodontists as the committee 

considers ways to alleviate the problems caused by late payments 

of benefits. I hope that the testimony I have offered has been valuable for that end, and I hope that if the AAL can be of further assistance to this committee, you will not hesitate to call upon us. 

[The prepared statement of Dr. Merrill may be found in the Appendix on page 32.]

Chairman GONZA ́LEZ. The next witness is from San Antonio, and 

he is Dr. David Henkes. I have known David—I know, Rick, you 

were saying you had known Dr. Merrill for a number of years. I 

hate to even tell you how long I have known David. He was starting his residency and I was already a seasoned 5-year lawyer, 

which is way, way back. And we share many things in common and 

that is a great passion for the University of Texas Longhorns. 

Dr. Henkes hails from San Antonio. He is a board certified pathologist and the immediate past President of the Bexar County 

Medical Society in San Antonio. He currently sits on the Board of 

8

Trustees for the San Antonio Medical Foundation and is on staff 

with Christus Santa Rosa Health Care, one of the top health care 

organizations in all of south Texas. Dr. Henkes is also a partner 

and practicing pathologist with Pathology Associates of San Antonio. 

Dr. Henkes. 

STATEMENT OF DR. DAVID HENKES, M.D., BOARD CERTIFIED 

PATHOLOGIST, PATHOLOGY ASSOCIATES OF SAN ANTONIO, 

PAST PRESIDENT, BEXAR COUNTY MEDICAL SOCIETY, SAN 

ANTONIO, TEXAS 

Dr. HENKES. Congressman Gonza ́lez and Ranking Member Westmoreland, and other members, I want to thank you very much. I 

would be nervous in giving this testimony except that I look at 

your friendly face. 

Overall in Texas the prompt pay laws we have passed have been 

helpful, but they haven’t really gone far enough. There are still 

some bad actors out there. In December of 1995, UnitedHealthcare 

was fined $4 million for violations. There is also the problem where 

the insurance companies tend to say they are ERISA and so therefore these are not regulated by States. Since most of their claims 

are ERISA, that has been an issue. 

As you mentioned practicing in Christus Santa Rosa, it is a 

very—I am very honored and very happy to do that, but it is a very 

high Medicaid and Medicare and indigent population. So you can 

imagine how slow pay and no pay has a real impact on our practice, especially when we have specialized pediatric cardiac surgery, 

pediatric oncology, and we have to attract talent for their special 

pathology needs. 

I want to tell you about an example in our practice that we had 

that extends beyond just the typical, you know, the slow pay for 

a claim submitted. In 2004, UnitedHealthcare had sent out a notice 

saying they would no longer pay for clinical pathology services. 

Clinical pathology services are services that pathologists provide to 

hospital laboratories for oversight and direction and usually comprise 25 to 35 percent of the time that a hospital pathologist 

spends doing those type of services. They said they were going to 

follow the Medicare model and to pay the hospital, which is indeed 

what Medicare does. But that is not the model of private insurance 

companies in Texas, and every other one pays us on a separate 

component basis. They said the services were covered and we 

should look to the hospital for that reimbursement. We did and the 

hospital said we are not being paid. They gave us signed statements of that and we asked them if they had any increase for the 

nonpayment to pay through to us and they said no. We went back 

to United and they said, oh, well, okay, we will change that, what 

we are going to do is—they changed their position and said we are 

going to go ahead and pay you a little bit more for your anatomic 

services to cover for these clinical services. Well, that brings in an 

ethical consideration because a number of patients who don’t have 

clinical services—they don’t—they have anatomic services and may 

not have clinical services. So they are paying for those other patients. And so we challenge that. And then finally, after having this 

within the Department of Insurance for Texas for almost 2 years, 

9

we got a letter back from them just giving us a letter from United 

saying that they no longer recognize this service. And so we are not 

sure exactly what that means, whether it is covered or uncovered 

or what we need to do with that. 

In essence, what I recommend is that this committee not only 

look at the existing rules and regulations from the States that are 

out there, but look at more detail at some of the other practices 

like what I have just mentioned and help us in terms of addressing 

those particular practices. I would suggest some of the following 

recommendations. 

One, that insurance companies must state whether disputed 

services are covered or not covered, recognized or unrecognized. If 

a service is covered, it should be paid; there should be a payment 

for that service. Insurance companies should not be allowed to increase payment for one service to cover no payment or lesser payment for another unless it is specifically agreed to by both parties 

in a written contract. Payment to someone other than the provider 

or person who is authorized by that provider for reassignment 

should be prohibited. 

The committee should consider a single set of rules on claims 

processing by all insurance companies as clinically based so there 

is transparency in the claims processing system. In cases of dispute 

requiring arbitration, the insurance company should pay the majority of the arbitration costs and contracts should not have provisions 

to deter class action arbitration or litigation. And just on that last 

particular item, we are currently in a class action arbitration and 

they are throwing up a number of hurdles about that basically so 

that it has made it very difficult but it will go forward and it 

should go forward. 

I would be happy to answer any other questions. I appreciate 

your time and consideration. 

[The prepared statement of Dr. Henkes may be found in the Appendix on page 36.]

Chairman GONZA ́LEZ. Thank you very much, Doctor. At this time 

the Chair is going to recognize the ranking member, Congressman 

Westmoreland, for the introduction of the next two witnesses. 

Mr. WESTMORELAND. Thank you, Mr. Chairman . I want to recognize Dr. Gordon Austin, a third generation dentist who graduated 

top of his class at the Medical College of Georgia. He completed his 

oral and maxillofacial surgery residency at the Naval Hospital in 

San Diego in 1993 and is board certified by the American Board 

of Oral and Maxillofacial Surgery and the National Dental Board, 

certified by anesthesiology. 

Dr. Austin served for 11 years on active duty in the U.S. Navy 

and continues to serve in the reserves with 30 years of continuous 

service. Captain Austin was mobilized to the National Naval Medical Center in Bethesda, Maryland for Operation Desert Storm in 

1991 and again in 2003 for Operation Iraqi Freedom. 

Dr. Austin has been in private practice since 1987. He lives in 

Carrollton, Georgia, with his wife Meredith and daughter 

Courtney. And Lindsay lives up here in Washington, his other 

daughter. But Captain Austin served from 2002 until 2005 as the 

Reserve Officers Association National Dental Surgeon. He is curVerDate 0ct 09 2002 15:27 Jan 22, 2008 Jkt 033615 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 G:\CLERK SB\HEARINGS\TRANSCRIPTS\36114.TXT LEANN
10

rently the President of Northwest District of Georgia Dental Association. He is a friend of mine and a constituent. And welcome, Dr. 

Austin. 

STATEMENT OF DR. GORDON T. AUSTIN, D.M.D., P.C., BOARD 

CERTIFIED ORAL AND MAXILLOFACIAL SURGEON, PRESIDENT, NORTHWEST DISTRICT OF THE GEORGIA DENTAL ASSOCIATION, CARROLLTON, GEORGIA 

Dr. AUSTIN. Thank you, Chairman Gonza ́lez. With the last name 

Austin, I certainly have a close kinship to the great State of Texas. 

Ranking Member Westmoreland, thank you for those comments, 

and members of the committee. I deeply appreciate this opportunity to testify before you on the issue of ensuring prompt payment for small health care providers. This is an issue of national 

interest and significant importance. 

There are currently at least 48 different State prompt pay laws, 

with to my calculation only South Carolina and Idaho not having 

such laws. In the complex environment of health care, any opportunity to decrease this complexity should be acted upon. 

Again, my name is Gordon Austin, DMD. I practice oral and 

maxillofacial surgery in rural Georgia. And as an oral and maxillofacial surgeon, I practice in both the hospital and the office setting. 

As a surgical specialty, oral surgery bridges the gap between medicine and dentistry. I file both medical and dental insurance claims. 

I am a Medicare provider and I am a Medicaid provider. 

I have submitted written testimony and other information, so I 

will keep my remarks brief to allow as much time as possible for 

questions. 

Although I am a proud member of the Georgia Dental Association, I come before you today not representing any organization but 

as a small businessman with a business issue. There are a couple 

of points I would like to emphasize. 

As a congressional committee with expertise on small business, 

it is certainly no surprise to you that as a small business it is vital 

that I be paid promptly for my services. 

Secondly, I believe action on this issue is a reasonable responsibility of the Federal Government because of the interstate commerce issues involved. Although I practice in Georgia, I file claims 

with insurance companies across the United States. A reasonable 

time frame for payment should be a consistent and national standard. ERISA plans are exempt from prompt payment laws, so Federal legislation would be necessary to fully establish the national 

standard. 

Thirdly, will it work? Is it doable? Currently under Georgia Dental Medicaid with the ACS and Avesis insurance companies, I can 

examine a patient on Tuesday, do their surgery on Thursday, and 

have the money directly deposited in my account on Monday. If 

some of the Georgia Medicaid insurance companies can do this, any 

third party payor can if they are so motivated. Yet I have submitted to you documentation of a recent far too common case of 

services which I provided in March that still has not been paid in 

August, along with a lot of the phone calls and documentation provided to the company. This demonstrates the unreasonable time 

and unnecessary expense to my office spent resolving many claims. 

11

Again, I thank you for this opportunity. I look forward to answering your questions. 

[The prepared statement of Dr. Austin may be found in the Appendix on page 65.] 

Mr. WESTMORELAND. Thank you, Dr. Austin. Now it is my pleasure to introduce Dr. Frank Kelly, who serves as Chair of the Communications Cabinet of the American Academy of Orthopedic Surgeons. Dr. Kelly also practices at the Forsyth Street Orthopedic 

Surgery and Rehabilitation Center in Macon, Georgia. A notable 

member of Georgia’s medical community, Dr. Kelly has practiced in 

Macon for over 25 years. And he is a Phi Beta Kappa graduate of 

the University of North Carolina at Chapel Hill before completing 

his medical training at the Medical College of Georgia and his orthopedic residency at the University of Tennessee Campbell Clinic. 

Dr. Kelly is the past President of the Georgia Orthopedic Society 

and is currently serving as a member of the Board of Directors of 

the American Academy of Orthopedic Surgeons, representing over 

24,000 orthopedic specialists worldwide. 

I want to thank Dr. Kelly for his willingness to come share his 

thoughts, and I look forward to hearing his testimony. Dr. Kelly, 

welcome. 

STATEMENT OF DR. FRANK B. KELLY, M.D., BOARD CERTIFIED 

ORTHOPAEDIC SURGEON, CHAIR, COMMUNICATIONS CABINET, AMERICAN ACADEMY OF ORTHOPAEDIC SURGEONS, 

MACON, GEORGIA 

Dr. KELLY. Thank you very much, Lynn. When I get back home, 

I don’t know whether to tell my friends I went fifth or last. But 

perhaps fifth sounds better. Good morning once again, Chairman 

Gonza ́lez. And good morning again, Ranking Member Westmoreland. And good morning to other distinguished members of this 

subcommittee. 

As Lynn mentioned, my name is Frank Kelly. I am a practicing 

orthopedic surgeon in my hometown of Macon, Georgia. I also have 

the pleasure of serving as a member of the Board of Directors of 

the American Association of Orthopedic Surgeons. And I served as 

a Chair of our organization’s Communications Cabinet. 

On behalf of my organization and behalf of my colleagues across 

the country, I sincerely thank you for asking me to testify this 

morning on this very significant issue of prompt payment for 

health care services. 

As a practicing physician and as administrator of a seven-person 

practice, I am deeply concerned that the Federal Government has 

simply not done enough to ensure that physicians in practices like 

mine are paid promptly by insurers. Having now been in practice 

for almost 30 years, I have witnessed firsthand how this delay in 

reimbursement has not only made it more difficult for us to run 

our practices, but it has already had the very real potential of adversely affecting the quality of care we deliver to our patients. 

Though we have tried to cooperate with insurance companies, 

unfortunately the vast majority of so-called clean claims, those 

claims submitted in accordance with the insurer’s own guidelines, 

are not reimbursed in a timely manner. In fact, as has been mentioned several times this morning, these claims can average 3 to 6 

12

months before payment and they can constitute a very major burden for those of us who depend upon this income for the day-today operation of our practices. 

In response to concerns from physicians nationwide in an attempt also to address this significant problem, as has been mentioned already, almost all States have enacted prompt payment 

laws mandating that third-party payors reimburse claims in a reasonable time period. My home State of Georgia, as has been mentioned this morning, is fortunate to have one of the most comprehensive and effective laws governing prompt payment for medical services. Under our State law, insurers must process payment 

within 15 working days after receiving these clean claims, otherwise pay a penalty of up to 18 percent of the benefit due. 

Our insurance commissioner, John Oxendine, has been 

unyielding in his enforcement of this law and in his commitment 

to our State’s physicians, ensuring that big insurance companies 

don’t take advantage of our small medical practices. Unfortunately, 

Commissioner Oxendine’s reach extends only so far under the current Federal law. Approximately half of my patients and over 100 

million patients across our country are covered by self-funded insurance plans which fall under ERISA, the Federal Employee Retirement Income Security Act. And according to the Supreme 

Court’s decision in a 2004 case, these ERISA plans are exempt 

from State prompt payment regulations. As a result, thousands 

upon thousands of claims are slipping through the cracks in this 

system. 

While insurance companies may argue that the administrative 

burden of processing claims prohibits timely payment, I find this 

to be a hollow and very ineffective argument. Even Medicare, the 

Nation’s largest health plan, adheres to a higher standard than do 

these ERISA plans. In fact, the Social Security Act requires that 

accurate Medicare claims be processed in 30 days or be subject to 

a significant interest penalty. Prior to the enactment of our State’s 

prompt pay law, practices like mine relied heavily on Medicare for 

our monthly cash flow to meet the expenses of running our practices. Many of my colleagues and States with less aggressive 

prompt pay statutes still struggle with late payments from private 

insurance companies. They still depend upon Medicare reimbursements to cover their expenses. 

Though much work still needs to be done, I have seen the very 

positive impact of Georgia’s prompt payment regulations on our 

State’s health care system and on the many hard working physicians and small businesses within it. I am confident this problem 

of delayed reimbursements can be overcome throughout our country. This will require accommodation of at least three things. 

Number one, effective, extensive prompt payment legislation. 

Secondly, the accurate determination of what really constitutes a 

clean claim. 

And thirdly, and perhaps most importantly, appropriate enforcement mechanisms to ensure that insurance companies are adhering 

to these regulations. 

Our association supports prompt payment within a 30-day timeframe. Such timely reimbursement will allow us to spend more 

13

time doing what we were trained to do, and that is taking care of 

our patients. 

On behalf of my orthopedic colleagues, on behalf our association, 

I thank you very much for your time and for your interest and for 

the opportunity to express to you my concerns about this most important matter. Thank you very much. 

[The prepared statement of Dr. Kelly may be found in the Appendix on page 67.]

Chairman GONZA ́LEZ. Thank you, Dr. Kelly. We have been advised we have got two procedural votes and I think we have the 

10-minute bell. Around the 5-minute bell we will head out back to 

the floor, vote. Two procedural votes, that could mean anything. 

Congressman Westmoreland could probably give me some insight 

as to what the Republicans have in store for us. I don’t think he 

will. As soon as we are through, we will come back. I will ask one 

question and get it started. Then we will probably have to excuse 

ourselves. Please stick around. Staff will tell you more or less the 

time frame once we get down there and start voting. But there are 

two votes and conceivably that could be 20 minutes or 30 minutes. 

But Dr. Wilson, there are certain things that kind of resonate. 

First of all, it appears everybody is in agreement that there is a 

role for the Federal Government and yet still leave room for State 

mechanisms to take effect, which I think is always the best thing 

we can do. But one thing that struck me in reading the testimony 

from all of you, but especially Dr. Wilson and I believe Dr. Kelly 

and some others, this thing about uniformity. It is surprising to me 

that at this point in time that there isn’t some sort of uniformity 

on what a clean claim looks like, the minimum amount of information that has to be reflected on there that would be sufficient, 

though, for the insurer to go ahead and act on it, because it appears that there is a game that goes on obviously. And I think I 

will get to Dr. Henkes and he can explain what happened in his 

particular episode in San Antonio. 

But have there—obviously there have been efforts to try to come 

together on what some sort of uniform information would be required? 

Dr. WILSON. Yes. Thank you, Mr. Chair. And certainly there 

have been and certainly the AMA has been involved in a lot of 

those efforts, in getting uniformity in terms of the claim form as 

well as the requirements for a clean claim. The challenge, of 

course, is that each of the insurance companies is an independent 

business. They sometimes would claim that there is some antitrust 

provisions that would prevent them from cooperating in some ways. 

I don’t think we buy that argument. But the reality is they have 

not been able to come up with something they all agree with that 

would mean a clean claim. 

The other thing that physicians face is what is called black box 

edits, and that is for any one insurance company they won’t tell the 

physician what their requirements are. So you might have 10 companies you deal with and at a minimum if they would just let you 

know, what are the 10 things that ought to go into a clean claim, 

that would help the physician. Frequently those are considered proprietary and not available and not provided. So the physician finds 

14

out what is missing from a claim when he gets the claim back and 

says, well, you missed this. And unfortunately, sometimes you will 

correct that and then you get the claim back again and say by the 

way, here is something else we want you to correct as well. And 

each of those, of course, retolls the hours in terms of prompt pay 

which make that a challenge. 

The point is well made. We need some uniformity there. And 

there are times when the Federal Government can provide that 

uniformity and this is one of those. 

Chairman GONZA ́LEZ. Sir, we always hear here in Congress that 

many times whatever Medicare—what the United States Government through Medicare establishes, what would be a reimbursement rate for any procedure, a protocol and so on that generally 

insurers will then adopt that particular baseline reimbursement 

rate. Is that accurate? 

Dr. WILSON. The reality is more and more of the insurance companies are pegging their rates. They won’t necessarily make that 

the same rate. But if as is anticipated—and we would hope Congress is going to block that. If we come January 1 and are faced 

with a 10 percent cut in Medicare payments, you can be sure that 

insurance companies will look at that and adjust their rates. Now, 

they won’t all come down to Medicare levels, but they will use that 

as a model which then will obviously impact everyone adversely. 

Chairman GONZA ́LEZ. The reason I ask that, it seems that they 

are pretty willing to go ahead and adopt that which the Federal 

Government may establish if it works to their advantage but not 

necessarily other practices by the Federal Government when it 

comes to, say, Medicare. So I think we can maybe give them a little 

bit of guidance. 

At this time, the committee will stand in recess and we will reconvene as soon as that second vote or the last vote. Thank you for 

your patience and see you in a few minutes. 

[Recess.] 

Chairman GONZA ́LEZ. The subcommittee will reconvene at this 

time. I will yield to the ranking member for any questions he might 

have since I had the privilege of getting a few minutes in earlier. 

Mr. WESTMORELAND. Thank you, Mr. Chairman . And I want to 

thank all of you for coming. And I know a lot of people don’t look 

at it as being—in the medical profession as being a small businessman. But coming from a small business background and knowing 

some of you personally, I know that it is a small business and that 

cash flow is critically important. And I am going to ask Dr. Austin 

this. Does a delay in provider reimbursement threaten to Dr. ve 

some of the small providers out of business? And if that happened 

because of this pay issue, what would the effect be on both the provider and the patients? 

Dr. AUSTIN. Thanks for the question. I just wanted to say to the 

Chairman I really appreciated his comment about the Medicare 

rules. I believe you get it, that the insurance companies use what 

is to their advantage and this card was not to their advantage. 

It is really pretty simple in terms of running a business. The 

more hassles you have in a business, the more difficult it is to 

make a profit, the lower incentive there is to go into the business. 

So if the bottom-line continues to deteriorate, it is harder and hardVerDate 0ct 09 2002 15:27 Jan 22, 2008 Jkt 033615 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 G:\CLERK SB\HEARINGS\TRANSCRIPTS\36114.TXT LEANN
15

er to attract the best and the brightest to the professions. It is particularly problematic for small specialties like my own. 

The orthodontist as previously—the issue of being an orthodontist. When I was on the Medicare Carrier Advisory Committee, 

I was talking to the medical director about some issues that we 

had. And he said, you know, Gordon, we get 6,000 complaints from 

the cardiologists and we get six complaints from the oral surgeons 

and we just don’t have time to get to your issues. And so that is 

really what happens to the small practitioners, is that we get 

pushed to the back of the line. And because we are small, it affects 

us more. If I do four surgeries in a day and one of those claims 

doesn’t get paid, that is 25 percent of my income that doesn’t happen. If you were in a large group, that is a smaller percentage and 

more easily absorbed. So it affects the smallest businesses, the 

smallest practitioners the most. 

Mr. WESTMORELAND. Just one follow-up if I could. And this 

would be to anybody because you may all have different circumstances. But what are some of the excuses or practices or dilatory things that these insurance companies do to prevent you from 

being paid promptly. 

Dr. AUSTIN. It is pretty easy in my case. I do the same type of 

procedures over and over and over again and we face the same 

issues. A large part of my practice would be taking out wisdom 

teeth on a young person. We know that they are going to ask for 

an X-ray. We know that if we take out a little cyst, they will ask 

for a path report. And we know if they are a student, they will ask 

for proof of student status. We routinely send these in with the 

claim and yet we routinely get the claim back saying send us an 

X-ray. We call them and say you have the X-ray. They say, oh, yes, 

we do have the X-ray. They say send us the student status. We 

sent you a student status. Oh, well, maybe we didn’t get it. So they 

know what stops the clock, and that is really what the issue is. The 

States have put a clock on them to pay the claim and they know 

if they can say it is not a clean claim, they are missing something, 

it stops the clock. So even when we send it, stamp on the claim 

that we sent it, they still when we call them or get the letter back, 

they ask for something we have already sent them. 

Dr. KELLY. If I might, I would like to echo Gordon’s comments 

because I found the same situation in my orthopedic practice. One 

of the things I do, as you might imagine very commonly, is a knee 

injection. It is a very simple technique. It takes just a few moments. The same situation. We will submit the claim, they will 

send a letter back that always says—they send it back and they 

say we notified your patient 17 days ago. They always say 17 days 

ago that we received this bill and we need to have from you the 

patient’s history and physical, any pertinent lab tests, pertinent Xrays, progress notes, anything to game the system. 

I think the Chair had it right earlier. I think it is almost like 

a game they are playing just to delay payment. So we have the 

same situation with knee injections in our procedures that Gordon 

does in his practice and it has just escalated. 

Dr. MERRILL. Probably the most common thing with braces is 

when there is two insurance policies that cover—the average fee for 

braces is well in excess of what the lifetime maximum is. And secVerDate 0ct 09 2002 15:27 Jan 22, 2008 Jkt 033615 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 G:\CLERK SB\HEARINGS\TRANSCRIPTS\36114.TXT LEANN
16

ondary insurers will delay payment by saying, well, we are not 

going to issue our estimate of what we are going to pay until after 

the payment is received from the first insurer so we know what 

they’ll pay and then we’ll tell you what we are going to pay, even 

though both are going to pay that full amount. It is just a matter 

of being able to delay it an additional 3 to 4 months, which provides uncertainty to the patient. The patient is, like, do I have this 

or do I not, am I going to have to find another $1,000 or $1,500 

to pay towards this or will my insurance pay for it? And my office 

staff have to explain that to the patients and they don’t understand 

how the insurance companies work. And so it is very disconcerting 

to the patients when that happens, as well as being a problem for 

cash flow as you have alluded to. 

Dr. WILSON. One of the things that has happened along with the 

prompt pay laws in States is insurance companies now have a new 

category, which is called pending review. And so you get the report 

back—and I mentioned this in my written testimony—that pending 

review doesn’t tell you what it is they are looking at. It is like a 

concurrent audit and then that postpones the prompt payment and 

then ultimately they will say what it is that they want. 

Mr. WESTMORELAND. And just a little follow-up to that. Like Dr. 

Gordon and Dr. Austin and I am sure Dr. Merrill, you do the same 

thing over and over. So you know what they are going to ask for. 

Is there any type of checklist or something that you send in with 

a claim or is there requirements that they have given you that you 

routinely know? I mean, I understand how they are doing it, but 

I mean, it is really inexcusable if you do these things over and over 

and over and know what they are going to ask. Would one patient 

be different from another? 

Dr. KELLY. I will start that, Lynn. I think the incredible thing 

about this is we use the insurer’s own guidelines. They ask us what 

to submit. We use their own guidelines for our claims. And even 

though we have followed their guidelines to the letter, they still 

come back requesting other information. 

I would request that sometime when you are in the Macon area, 

please stop by my office for 30 or 45 minutes. You will be just absolutely amazed at the type of requests that we get from the insurance companies. 

So they have guidelines, we go by them. It doesn’t seem to matter. 

Dr. AUSTIN. The claim itself—we have codes and the codes very 

clearly define as to what the procedure is that we are doing. So in 

theory, when we have submitted that claim with the code, we have 

told them exactly what we are doing, how we are doing it. And as 

I said, with Medicaid I can send it in on Thursday and have the 

money in the bank on Monday. It is not a matter that they can’t 

do it. It is purely a matter of in their minds it is a business advantage to not pay in a timely manner. And they are much better at 

it than I am. 

And that is kind of where the issue comes in. The best people 

that are gaming the system are the insurance companies. The next 

people are the people that do regulations, Medicare, that set guidelines. But the person that is least able to really keep up with the 

changes is the small practitioner. So we are always a little behind 

17

the curve. The insurance company is always a little bit ahead of 

the curve and the regulations are somewhere in the middle. 

Dr. HENKES. Congressmen, as well, you have to realize too if you 

have four or five major players in one area, you are also playing 

with four or five different sets of rules. And that is why I believe 

that the more uniformity in the sets of rules would be better. Each 

one may have their own sets of rules, as Dr. Wilson had mentioned. 

Some of these are black box edits. They won’t even tell you what 

the rules are. 

Dr. WILSON. I guess the other observation about, well, can they 

do it if they want to—well, someone said how does it happen with 

Medicare. And clearly there are rules for Medicare. And while if 

you look at prompt payment for Medicare across the board, it is 

about somewhere in the middle. However, for example, in my own 

personal example, which is solo medicine—and I file electronically 

and I can tell you that the Medicare carrier meets the requirements, the 14-day requirement for a turnaround on electronic billing. And it seems to me that—and obviously those are the major 

health insurers who are contracted with Medicare. And that to me 

speaks to the issue that if the incentives are appropriate, if the 

cloud is there, in this case the Federal Government, then they will 

be able to meet some standards that are put in place. 

Chairman GONZA ́LEZ. The Chair is going to go and recognize 

Jason Altmire. And again, Congressman Altmire, thank you for 

joining us. 

Mr. ALTMIRE. Thank you, Mr. Chairman and Mr. Ranking Member. I would just say very briefly it looks like we will have some 

disruption here to this hearing but that should not indicate that 

this committee doesn’t understand the significance of health care 

as an issue to small businesses. And I just wanted to thank each 

and every one of you while we had you here together for your appearance here today and let you know we want to continue working 

with you as we move forward on this issue. There is no issue like 

this across the business world where small businesses are affected 

by health care every single day, every business in the country. And 

I really appreciate the fact, we appreciate the fact that you took 

the time out of your day to come help us with this hearing and 

walk us through your issues. And we look forward to continuing 

that discussion and just to apologize again for the disruptions that 

apparently we are going to be facing throughout the hearing. 

Thanks. 

Chairman GONZA ́LEZ. Thank you very much. Let me direct a 

question to Dr. Henkes. You pointed out an interesting case that 

you had with UnitedHealth and it is not for us to paint with a real 

broad brush. But nevertheless, the concern that we have, Republicans, Democrats, it doesn’t matter, is that we have a business 

model that has been institutionalized by the insurance industry. 

The insurance industry is a very essential component to the way 

we do business in this country and we need a healthy insurance 

industry. But nevertheless, our fear now is that they have basically 

built into their business model a manner in which to delay payment for what very well could be obviously the business considerations of holding on to that money, the investments and so on that 

18

it brings. So, Dr. Henkes, you have pointed out the experience with 

UnitedHealth and how you had to go and address that obviously. 

The other thing that you pointed out in your written testimony 

was the concern—and some of the other witnesses also pointed out 

and I wanted to touch on this quickly—and that is some Federal 

clarification legislatively on the application of ERISA and how that 

plays a part in maybe complicating what can be done with insurers 

and the question of prompt payment. What is the position on 

ERISA and how do you see it? 

Dr. HENKES. Well, I don’t think that the picture is entirely clear. 

From my understanding on this, there has been some discussions 

with the Department of Trade and that they have seen some ambiguity into whether this really has any kind of—they have jurisdiction over the prompt pay on this. We know at the Texas Department of Insurance there has been ambiguity by the researchers 

there as to whether the current laws apply, being State laws on 

to—for ERISA plans. I actually am on an advisory committee for 

an insurance company in Texas and they have taken the position 

that they do not. Of course I don’t think this one has been actually 

totally played out. I think there may have been one court case in 

another State that may have given some credibility that maybe 

payment issues are not necessarily preempted by ERISA. But there 

still is a lot of ambiguity. 

So I guess at this point, I think the State agencies, as well as 

the Federal, are in ambiguity in how this affects on the ERISA 

plans. And I think that is why it is so critical to have you and this 

committee look at that to give that clarity and give that clarity 

that if it requires passing another law or if the compliance—that 

this is a part of State law. 

Chairman GONZA ́LEZ. I will advise you all—and I would need to 

do more research on this. I didn’t have time to do it and check the 

status. H.R. 979 is the Bipartisan Consensus Managed Care Improvement Act of 2007, and it would amend ERISA. Among some 

of the provisions would be to impose prompt payment requirements 

on all employer-sponsored health plans. The act requires such 

plans to pay all clean claims consistent with existing requirements 

under the Medicare program. 

So obviously there are other committees that share jurisdiction. 

Much to our credit, the chairwoman of this committee, Chairwoman Vela ́zquez, was able to expand the jurisdiction of this committee to share some of the jurisdiction with other committees. So 

we still have to work in unison. So it is obviously being addressed. 

We just need to see where we can try to coordinate this. 

Dr. Kelly, I think you were pointing out again, if we can come 

up with the proper role for the Federal Government and, of course, 

Dr. Wilson was also very specific as to what extent we could do 

that. Dr. Austin also touched on that and I think that is going to 

be our focus. What can we do to come in with a Federal standard? 

Again, that is establishing basically the floor, working with the 

States, which would be really more of the enforcement mechanism, 

and of course if they have higher standards, not to interfere and 

meddle with that. At least that is my perspective, and I think Congressman Westmoreland may have a different take on it. 

19

Also, I think we need to start looking at uniformity out there so 

that we don’t have companies that basically say we don’t have the 

information, you add on to it. If they choose to do that, there 

should be an additional burden placed on them with some consequences. And that is the only way you ever get accountability, is 

where there is consequences, which I don’t think we have that at 

the present time. 

So there is much to be worked on. By the same token, I also wish 

to address many of the other items that you may have brought up 

in your written testimony addressing other trouble spots, not just 

the prompt payment. But I think that right now for the purpose 

of this hearing—and we will share the other recommendations and 

observations you made as to other, what I would say, difficult areas 

in practicing medicine. 

I also want to make another observation, and that is simply that 

this is the Small Business Committee. Most physician practices are 

small businesses, as has been pointed out. We recognize that you 

all are in a very unique position as physicians. You have to conduct 

yourselves as a business so you can open your doors in the morning 

and make sure that they are open every day. And that is a business. Nevertheless, I still consider you the last standing profession 

in the United States of America, and somehow you have to maintain that even in a business environment, and we are here to help 

you do that. 

We have another vote. We are going to be leaving in a few minutes, and I don’t know how long it is going to take. So what we 

are going to be doing is basically adjourning and letting you all 

catch your flights and such. And I know some of you said you wanted to take some pictures. So I want to give them that opportunity. 

So at this time, I would yield to the ranking member for any 

comments he may have or any follow-up questions. 

Mr. WESTMORELAND. Thank you, Mr. Chairman . 

Mr. WESTMORELAND. Let me just thank you for having this hearing because I think this is a very important issue. I do agree the 

Federal Government does need to have a part in it. 

One quick question. How many private insurers handle Medicare 

in your States, do you know a number? 

Dr. WILSON. For Florida, it is just one. 

Mr. WESTMORELAND. For Florida it is only 1. 

Mr. WILSON. It is Blue Cross/Blue Shield. 

Dr. HENKES. In Texas we have the standard program, a Medicare 

program, but there are some replacement programs, HMO replacement programs. 

Mr. WESTMORELAND. Medicare Advantage type thing? 

Dr. HENKES. There are probably 5 or 6 of those, maybe 6 or 7. 

Mr. WESTMORELAND. In Florida it says there are 289 different 

plans for the Medicare Advantage; is that true? 

Dr. WILSON. The answer is I do not know that, and I responded 

to the wrong question. When you said Medicare, I tend to think of 

the Medicare carrier and not the Medicare Advantage plans, but 

there are a lot of them. 

Mr. WESTMORELAND. Okay. 

Dr. HENKES. We can get that information for Texas. 

20

Mr. WESTMORELAND. I was wondering, I know the Medicare Advantage is a little bit different program than Medicare itself, with 

a little different payment. I was noticing we happened to be talking 

about the Medicare Advantage program and I was just looking at 

the different providers, 289 of them in Florida. Do they all have to 

agree to the prompt pay or to the payment that Medicare prescribed to be able to offer that? 

Dr. WILSON. One would assume. 

Mr. WESTMORELAND. I would assume that, too. 

Thank you, Mr. Chairman , for having this, and again we are 

going through some procedural stuff right now, a little disagreement, but I thank all of you for coming. 

Chairman GONZA ́LEZ. I will tell you this right now; that we are 

conducting ourselves like insurers on prompt payment. 

Well, I think we’re still going to make this vote, but I would like 

the opportunity to go out there and thank you personally. And 

Lynn, if you have a chance to also join me. 

I will do something a little different and instruct staff to get together. I want them to summarize some of the testimony regarding 

identifying everything that everyone agreed on, and what would be 

the remedy in order for us to share that with other members of this 

subcommittee as well as the full committee. 

And I ask unanimous consent at this time, the members have 5 

days to enter statements into the record. And this hearing is now 

adjourned. 

[Whereupon, at 12:00 p.m. The subcommittee was adjourned.]

21


36114.001
22


36114.002
23


36114.003
24


36114.004
25


36114.005
26


36114.006
27


36114.007
28


36114.008
29


36114.009
30


36114.010
31


36114.011
32


36114.012
33


36114.013
34


36114.014
35


36114.015
36


36114.016
37


36114.017
38


36114.018
39


36114.019
40


36114.020
41


36114.021
42


36114.022
43


36114.023
44


36114.024
45


36114.025
46


36114.026
47


36114.027
48


36114.028
49


36114.029
50


36114.030
51


36114.031
52


36114.032
53


36114.033
54


36114.034
55


36114.035
56


36114.036
57


36114.037
58


36114.038
59


36114.039
60


36114.040
61


36114.041
62


36114.042
63


36114.043
64


36114.044
65


36114.045
66


36114.046
67


36114.047
68


36114.048
69


36114.049
70


36114.050
71


36114.051
72


36114.052
73

Æ


36114.053