As the sole owner of a thriving ophthalmology practice in a quiet Midwestern college town, Dr. Jones always felt he had an ideal situation, treating interesting patients in pleasant surroundings. He was a happy man . . . until his receivables began to grow at an alarming rate.

The problem: The managed care plan that insured everyone associated with the college fell far behind in its payments to Dr. Jones. And with more than half of his patients enrolled in this one plan, Dr. Jones soon found himself dipping deeply into his personal savings just to keep the practice going. Despite his protests, the late payments persisted.

Why has late payment become such a problem? In some communities, it's become so chronic and widespread that it's created serious financial problems for physicians whose practices rely heavily on the delinquent payers. It also creates a heavy administrative burden on providers and their staffs, who spend hours on the phone with payers pursuing payment of unpaid, overdue claims.

Lame excuses

Payers who have experienced major growth through mergers or other business strategies often attribute payment delays to problems associated with converting computer systems to accommodate growing beneficiary loads. How- ever, poor business planning doesn't justify payers enhancing their own cash flow at the provider's expense.

The other common justification for delayed payment is that the physician hasn't submitted a "clean" claim. While payers can certainly require providers to submit claims "clean" enough to make a payment decision, many payers manipulate the concept of clean claims to delay payment for months. Some payers will return claims as not "clean," but fail to indicate what's missing, putting the burden on the practice to navigate the payer bureaucracy. Payers will also make multiple requests for additional information over an extended time period. Some payers simply sit on unprocessed claims.

Remedying the problem

Fortunately, a number of states are recognizing and attacking this problem. Some states now levy substantial fines against managed care plans that violate state "prompt payment" laws. To date, Florida, Georgia, North Carolina, Maryland, New York and New Jersey have imposed fines, with many other states monitoring payer behavior and enforcing prompt payment laws. In some instances, physicians are now receiving interest payments for delayed claims associated with those fines.

In addition, the AMA has recommended that the following provisions should be in each of your managed care contracts: "Each payer shall remit to Medical Services Entity the Company Compensation within 14 days of receipt of an electronic claim and 30 days of receipt of a written claim by Medical Services Entity, or such shorter time as set forth by law, that contains sufficient detail that payer is able to reasonably determine the amount to be paid.

"In the event that a payer fails to make such payments in a timely fashion, payer shall be obligated for payment of such amounts plus interest accruing at the annualized rate of the Wall Street Journal prime rate of interest on the first day of the month on which amounts were due, plus 3%, or such greater rate of interest as provided for under state law, in the event of late payment.

"All payments to Medical Services Entity will be considered final unless adjustments are requested in writing by Medical Services Entity within 90 days after receipt by Medical Service Entity of payment explanation from payer."

Putting this provision in a contract puts the law on your side.

For its own well-being, the eyecare industry must continue to monitor new and potentially harmful trends in managed care and to aggressively contest abusive payer business practices.

Dr. Gable is chief executive officer of Dynamic Health Connections, Inc., in Lake Forest, Calif., which provides specialized consulting expertise for subspecialty physician groups, managed care organizations and other medical organizations. You can reach him at dhc38@aol.com.