(a) HMOs shall be subject to the same requirements regarding prompt payment of claims, and the additional liability for bad faith failure to pay claims promptly, as are applicable to insurance companies under § 56-7-105.
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Terms Used In Tennessee Code 56-32-126

  • Attorney: means the person designated and authorized by subscribers as the attorney-in-fact having authority to obligate them on reciprocal insurance contracts. See Tennessee Code 56-16-102
  • Commissioner: means the commissioner of commerce and insurance. See Tennessee Code 56-32-102
  • Contract: A legal written agreement that becomes binding when signed.
  • Department: means the department of commerce and insurance. See Tennessee Code 56-1-102
  • Enrollee: means an individual who is enrolled in an HMO. See Tennessee Code 56-32-102
  • Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
  • Litigation: A case, controversy, or lawsuit. Participants (plaintiffs and defendants) in lawsuits are called litigants.
  • Month: means a calendar month. See Tennessee Code 1-3-105
  • person: includes an individual, insurer, company, association, organization, Lloyds, society, reciprocal insurer or interinsurance exchange, partnership, syndicate, business trust, corporation, agent, general agent, broker, solicitor, service representative, adjuster, and every legal entity. See Tennessee Code 56-32-102
  • Provider: means any physician, hospital or other person that is licensed or otherwise authorized in this state to furnish health care services. See Tennessee Code 56-32-102
  • Representative: when applied to those who represent a decedent, includes executors and administrators, unless the context implies heirs and distributees. See Tennessee Code 1-3-105
  • State: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
  • Statute: A law passed by a legislature.
  • United States: includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
  • Venue: The geographical location in which a case is tried.
  • written: includes printing, typewriting, engraving, lithography, and any other mode of representing words and letters. See Tennessee Code 1-3-105
  • Year: means a calendar year, unless otherwise expressed. See Tennessee Code 1-3-105
(b) This subsection (b) is intended to ensure the prompt and accurate payment of all provider claims for services delivered to an enrollee in the TennCare program that are submitted to an HMO involved in a TennCare line of business or a subcontractor of that HMO. Accordingly, each such HMO or subcontractor must establish and implement the following procedures for the processing of provider claims and the resolution of any disputes regarding the payment of claims:

(1) The HMO shall ensure that ninety percent (90%) of claims for payment for services delivered to a TennCare enrollee, for which no further written information or substantiation is required in order to make payment, are processed, and, if appropriate, paid within thirty (30) calendar days of the receipt of the claims. The HMO shall process, and if appropriate pay, within sixty (60) calendar days ninety-nine and one half percent (99.5%) of all provider claims for services delivered to an enrollee in the TennCare program. If a provider agreement requires the HMO to pay a provider a capitated payment each month, the payment shall be made by the time specified in the contract between the provider and the HMO. If the contract between the provider and HMO does not specify a payment schedule, payment shall be made by the tenth day of each calendar month. Disputed capitated provider payments are subject to independent review;

(A) “Pay” means that the HMO shall either send the provider cash or cash equivalent in full satisfaction of the allowed portion of the claim, or give the provider a credit against any outstanding balance owed by that provider to the HMO;
(B) “Process” means the HMO must send the provider a written or electronic remittance advice or other appropriate written or electronic notice evidencing either that the claim has been paid or informing the provider that a claim has been either partially or totally denied and specify all known reasons for denial. If a claim is partially or totally denied on the basis that the provider did not submit any required information or documentation with the claim, then the remittance advice or other appropriate written or electronic notice must specifically identify all the information and documentation;
(2)

(A) If a provider’s claim is partially or totally denied in a remittance advice or other appropriate written or electronic notice from an HMO, or a provider’s previously allowed claim is subsequently partially or totally denied by an HMO by an appropriate written or electronic notice, then the provider may file a written request to the commissioner to submit the claim denial to an independent reviewer as provided in subdivision (b)(3). In the event the provider receives no remittance advice or other appropriate written or electronic notice from an HMO either partially or totally denying a claim within sixty (60) calendar days of the HMO’s receipt of the claim, then the provider may file a written request to the commissioner to submit the claim to an independent reviewer as provided in subdivision (b)(3). However, prior to sending this request, the provider must send a written request for reconsideration to the HMO that identifies the claim or claims in dispute, the reasons for the dispute and any documentation supporting the provider’s position or request by the HMO. The HMO must respond to the reconsideration request within thirty (30) calendar days after receipt of the request. The response may be a letter acknowledging the receipt of the reconsideration request with an estimated time frame in which the HMO will complete its investigation and provide a complete response to the provider. If the HMO determines that it needs longer than thirty (30) calendar days to completely respond to the provider, the HMO’s reconsideration decision shall be issued within sixty (60) calendar days after receipt of the reconsideration request, unless a longer time to completely respond is agreed upon in writing by the provider and the HMO. If the HMO continues to deny the provider’s claims or the HMO does not respond to the reconsideration request within the time frames allowed in this subdivision (b)(2)(A), then the provider may file a written request with the commissioner to submit the claims to an independent reviewer as provided in subdivision (b)(3);
(B) The provider must include a copy of the written request for reconsideration with the request for an independent review. If the provider does not have a written contract with the HMO that denied the claim on the date the request is filed with the commissioner, then the provider must also send the commissioner payment satisfactory to the commissioner to cover the fees incurred by the independent reviewer. This payment shall be refunded to the provider if the provider is not ultimately required to pay the independent reviewer. Otherwise, the payment shall be used to reimburse any entity that paid the independent reviewer. The provider shall also furnish the commissioner any other information needed by the commissioner to process the provider’s request;
(C) The provider must file a request for independent review within three hundred sixty-five (365) calendar days after the HMO denies the claim for the first time or recoups the claims payment;
(D) Claims payment disputes involved in litigation, arbitration or not associated with a TennCare member are not eligible for independent review;
(3) Each HMO operating a TennCare line of business must contract with independent reviewers selected in accordance with subdivision (b)(4), and implement the following procedures to resolve disputed provider claims:

(A) The commissioner shall use best efforts to refer an equal proportion of the total disputed claims to each independent reviewer. A provider may request, and the commissioner may allow, the claims of a provider involving the same HMO to be aggregated and submitted for simultaneous review by an independent reviewer when the specific reason for non-payment of the claims aggregated involve a dispute regarding a common substantive question of fact or law. The mere fact that a claim is not paid does not create a common substantive question of fact or law, unless the provider has received no remittance advice or other appropriate written or electronic notice from an HMO, either partially or totally denying a claim, within sixty (60) calendar days of the HMO’s receipt of the claim and the claims regard a common substantive question of fact or law. The reviewer shall, within fourteen (14) calendar days of receipt of the disputed claim or claims, request in writing that both the provider and the HMO provide the reviewer any and all information and documentation regarding the disputed claim or claims. The reviewer shall request the provider and HMO to identify all information and documentation that has been submitted by the provider to the HMO regarding the disputed claim or claims, and advise that the reviewer will not consider any information or documentation not received within thirty (30) calendar days of receipt of the reviewer’s request unless the HMO or provider requests the independent reviewer for additional time to complete the investigation of independent review requests when a provider elected to aggregate their claims. Thereupon, the reviewer may grant the HMO or provider an additional thirty (30) calendar days. The reviewer shall then examine all materials submitted and render a decision on the dispute within sixty (60) calendar days of the receipt of the disputed claim or claims, unless either the reviewer requests guidance on a medical issue from the TennCare appeals unit, or the reviewer requests and receives an extension of time from the commissioner to resolve the dispute. In reaching a decision, the reviewer shall not consider any information or documentation from the provider that the provider did not submit to the HMO during that organization’s review of the provider’s disputed claim or claims;
(B) Should the reviewer need assistance on a medical issue connected with the disputed claim or claims, then the reviewer shall refer this specific issue for review and response to the person in charge of the TennCare appeals unit within the TennCare bureau, unless the department in writing designates a different contact. Medical issues requiring referral may include whether a medical benefit is a covered service under the TennCare contract. The TennCare appeals unit may respond to the request, refer the request to an independent contractor, or refer the request to the TennCare bureau for review. A request to determine whether a service received was medically necessary must be responded to by a physician licensed by one (1) or more states in the United States. The appeals unit shall provide a concise response to the request within ninety (90) calendar days after receipt. If the appeals unit seeks the guidance of the TennCare bureau on whether a benefit is a covered service, then the bureau must respond to that request in writing in sufficient time to allow the appeals unit to timely respond to the reviewer. The reviewer shall make a final decision within thirty (30) calendar days of receipt of the appeals unit’s response;
(C) The reviewer shall send the HMO, the provider, and the TennCare division of the department of commerce and insurance a copy of the decision. Once the reviewer makes a decision requiring an HMO to pay any claims or portion of the claims, then the HMO must send the payment in full to the provider within twenty (20) calendar days of receipt of the reviewer’s decision;
(D) Within sixty (60) calendar days of a reviewer’s decision, either party to the dispute may file suit in any court having jurisdiction to review the reviewer’s decision and to recover any funds awarded by the reviewer to the other party. Any claim concerning a reviewer’s decision not brought within sixty (60) calendar days of the reviewer’s decision will be forever barred. Suits filed pursuant to this section will be conducted in accordance with the Tennessee Rules of Civil Procedure, and the review by the court will be de novo without regard to the reviewer’s decision. The reviewer, or any person assisting the reviewer in reaching a decision, shall be prohibited from testifying at the court proceeding considering the reviewer’s decision. Unless the contract between the parties specifies otherwise, venue and jurisdiction will be in accordance with Tennessee law. If the dispute between the parties is not fully resolved prior to the entry of a final decision by the court initially hearing the dispute, then the prevailing party shall be entitled to an award of reasonable attorney‘s fees and expenses from the nonprevailing party. “Reasonable attorney’s fees” means the number of hours reasonably expended on the dispute multiplied by a reasonable hourly rate, and shall not exceed ten percent (10%) of the total monetary amount in dispute or five hundred dollars ($500), whichever amount is greater;
(E) In lieu of requesting independent review, a provider may pursue any appropriate legal or contractual remedy available to the provider to contest the partial or total denial of the claim. For all claims filed on or after October 1, 1999, the state may not mandate that the provider and HMO resolve the claims payment dispute through arbitration;
(F) Providers who are owned by state or local governmental entities shall retain the statutory right of setoff if available. Judicial review of a reviewer’s decision regarding a state or local governmental provider shall be in the chancery court of Davidson County, and not in the Tennessee claims commission, unless the provider and HMO have agreed to another appropriate venue and jurisdiction by contract. The Prompt Pay Act, compiled in title 12, chapter 4, part 7, does not impact any claim of sovereign immunity that a state or local governmental provider may possess, although the provider will be responsible for paying any appropriate attorney’s fees and expenses awarded under subdivision (b)(3)(D);
(G) All costs associated with implementing these procedures shall be paid by the applicable HMO. However, the provider shall reimburse the HMO the independent reviewer’s fee within twenty (20) calendar days of receipt of the reviewer’s decision, if the reviewer finds that the HMO properly denied the claim being reviewed. If a provider fails to properly reimburse the HMO, the TennCare division of the department of commerce and insurance may prohibit that provider from future participation in the independent review process;
(H) The HMO shall compensate the independent reviewer pursuant to their written agreement within thirty (30) calendar days of the HMO’s receipt of the independent reviewer’s bill for services rendered. If the HMO fails to pay the bill for the independent reviewer’s services, then the independent reviewer may request payment directly from the state from any funds held by the state that are payable to the HMO; and
(I) The procedures in subdivisions (b)(3)(A)-(H) shall not apply to any claims filed with the HMO before October 1, 1999, even if that claim is refiled after that date;
(4) The commissioner shall appoint a panel of five (5) persons, known as the selection panel for TennCare reviewers. The panel shall consist of two (2) provider representatives, one (1) representative from each of the two (2) HMOs with the largest number of TennCare enrollees, and the commissioner or the commissioner’s duly designated representative. The panel shall select a chairperson, and all decisions of the panel shall be made by a majority vote of the members of the panel. The panel shall select and identify an appropriate number of independent reviewers to be retained by each HMO under subdivision (b)(3). The panel shall negotiate the rate of compensation for each reviewer, and the rate of compensation shall be the same for each reviewer. Each HMO engaged in a TennCare line of business, as a condition of participating in this contract or in the TennCare program, shall contract with each reviewer and agree to pay the rate of compensation negotiated by the panel. The members of the panel shall not be paid. The panel shall meet at least twice a year;
(5) By no later than May 1 of each year, the commissioner shall report to the department of health and to the fiscal review committee the number of requests for TennCare claims review filed for each HMO operating a TennCare line of business during the prior calendar year. The commissioner shall also generally report the outcome of these independent review requests for each HMO. In addition, the commissioner shall report the name of any provider whose claim denial is upheld in more than fifty percent (50%) of the independent review requests, as well as the number of claim reviews with the claims denial upheld;
(6) All claims for services furnished to a TennCare enrollee filed with an HMO must be processed by either the HMO or by a single subcontractor retained by the organization for the purpose of processing claims. However, another single entity can process claims related to each of the following: pharmacy, vision, dental or mental health benefits or durable medical equipment;
(7) The HMO shall ensure all its subcontractors processing TennCare claims follow the same claims processing and resolution procedures required by the Prompt Pay Act, compiled in title 12, chapter 4, part 7. TennCare claims processed by a subcontractor are subject to the prompt payment requirements of this statute. Claims denied by a subcontractor are subject to independent review. If a provider requests independent review of a claim denied by a subcontractor, the HMO contracted with that subcontractor must initially pay the independent reviewer’s fee. If the independent reviewer upholds the subcontractor’s denial, the provider must reimburse the HMO the reviewer’s fee. If the independent reviewer finds for the provider, the HMO contracted with the subcontractor must pay the provider within twenty (20) calendar days of the reviewer’s decision;
(8) An HMO that subcontracts with another entity to obtain services for TennCare enrollees shall guarantee and assure the payment of all contracted amounts agreed to be paid to the providers by that entity or that entity’s agent. This does not preclude the HMO from seeking reimbursement from the subcontractor for any amounts paid. Nor does this prevent the HMO from asserting any legal defenses to the payment of a provider’s claims that were available to the subcontractor. Claims filed with a subcontractor are subject to the prompt payment requirements of this statute. Claims denied by a subcontractor are subject to independent review. If a provider requests independent review of a claim denied by a subcontractor, the HMO contracted with that subcontractor must initially pay the independent reviewer’s fee. If the independent reviewer upholds the subcontractor’s denial, the provider must reimburse the HMO the reviewer’s fee. If the independent reviewer finds for the provider, the HMO contracted with the subcontractor must pay the provider within twenty (20) calendar days of the reviewer’s decision; and
(9) Any HMO found by the commissioner to be in violation of this subsection (b) shall be subject to revocation or suspension of its certificate of authority under § 56-32-116 or, in the alternative, the imposition of the penalties and other remedies set forth at § 56-32-120.
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