A bipartisan group of lawmakers introduced legislation requiring Medicare Advantage plans to accelerate payment to healthcare providers and face monetary penalties for non-compliance, addressing provider concerns about delayed reimbursements.
U.S. Senators Catherine Cortez Masto (D-Nev.) and Marsha Blackburn (R-Tenn.) led the introduction of the Medicare Advantage Prompt Pay Act in both chambers of Congress. The bill requires Medicare Advantage plans to pay providers faster and establishes clear payment timelines with financial penalties for violations. Healthcare providers regularly report service and payment delays, inconsistent policies, and inappropriate denials by MA plans. Currently, no clear guidelines exist for how quickly an MA plan must reimburse providers for in-network claims, creating unnecessary delays that could lead to providers dropping contracts with plans and jeopardizing in-network access to care for Medicare Advantage beneficiaries.
The legislation establishes specific requirements for Medicare Advantage plans:
Rep. Linda Sanchez (D-Calif.) stated, "More than half of seniors eligible for Medicare are enrolled in Medicare Advantage. However, too many are hit with confusing medical bills due to delayed and inconsistent Medicare Advantage billing practices. Our bipartisan bill will bring much-needed clarity to the system, ensuring healthcare providers are paid promptly and patients aren't hit with unexpected bills long after they received care."
The American Hospital Association wrote in their support letter that "an AHA survey found that 50% of hospitals and health systems reported having more than $100 million in unpaid claims that were more than six months old. Among the over 700 hospitals surveyed, these delays amounted to more than $6.4 billion in delayed or denied claims that are more than six months old."
Medicare Advantage plans are private insurance alternatives to traditional Medicare that cover more than half of Medicare-eligible seniors. Unlike traditional Medicare, which has established payment standards, MA plans operate without clear federal guidelines for payment timelines to healthcare providers. Most states have prompt payment laws regulating fully insured and other state-regulated insurance types, but these laws do not apply to MA plans, creating a regulatory gap that allows for extended payment delays.
This legislation directly addresses a cash flow crisis affecting healthcare providers nationwide, particularly as Medicare Advantage enrollment continues growing. The $6.4 billion in delayed claims represents an operational strain on hospitals and health systems, potentially forcing them to drop MA contracts and reducing access to care for the 54% of Medicare beneficiaries who rely on these plans. The payment delays create a problem where providers receive lower reimbursement rates than traditional Medicare while waiting twice as long for payment, creating unsustainable financial pressures that could limit healthcare access for seniors who depend on Medicare Advantage coverage.
Healthcare providers face financial pressure from Medicare Advantage plans that pay less and slower than traditional Medicare, jeopardizing the sustainability of care for millions of seniors. This bipartisan legislation offers a solution by establishing enforceable payment timelines and financial penalties, potentially stabilizing provider participation in Medicare Advantage networks and ensuring continued access to care for beneficiaries.
Medicare Advantage generally pays providers slower and at lower rates than traditional Medicare.
The legislation only targets faster payments, not higher reimbursement rates.
No, state laws do not apply, which is why federal legislation is needed.
Regulators would have authority to impose fines up to $25,000 with interest.
Yes, some providers may drop contracts if payment issues persist.