The Texas Prompt Payment Act

The Texas Prompt Payment Act

The Texas Prompt Payment Act was enacted to assist doctors, physician groups, hospitals and clinics recover overdue, underpaid, or unpaid insurance payments. The law requires payment to a healthcare provider for services rendered within 30 days of receipt of the claim and provides a steep penalty if an insurance company fails to make payment in accordance with the statute. The statute entitles a healthcare provider the right to recover not only the amount of the initial claim, but also stiff penalties, interest and attorney's fees if the payment of their claim is unreasonably delayed.

Penalties for Late Payment

When an insurance company fails to pay a healthcare claim within 30 days, the provider can seek payment of interest on top of the amount owed. Additionally, there are statutory penalties that can be imposed when payment is late or underpaid. Failing to comply can expose insurance companies to serious financial risks in the form of penalties interest, costs, and attorney’s fees in the event of a lawsuit. All of these penalties are in addition to the initial amount owed. The penalties for late payment begin on day 31 and include the following schedule for healthcare providers:

  • Overdue 31-75 days: 50% of the difference between the contracted rate and the billed charges, or $100,000, whichever is less
  • Overdue 76-120 days: 100% of the difference between the contracted rate and the billed charges, or $200,000, whichever is less
  • Overdue 121+ days: 100% of the difference between the contracted rate and the billed charges plus an additional 18% annual interest on the penalty amount

There is also a schedule that is applied exclusively to the pharmaceutical industry. The penalties for late payment begin on day 19 and the statute includes the following schedule for pharmaceutical providers:

  • Overdue 19-63 days: 50% of the difference between the contracted rate and the billed charges, or $100,000, whichever is less
  • Overdue 64-108 days: 100% of the difference between the contracted rate and the billed charges, or $200,000, whichever is less
  • Overdue 109+ days: 100% of the difference between the contracted rate and the billed charges plus an additional 18% annual interest on the penalty amount

Contact Zinda Law Group Today

It is important for health care providers to become familiar with the provisions of this law – it can directly affect your bottom line and it actually has some teeth in it. When health care providers are unaware of their rights under the Prompt Pay Act, they risk being taken advantage of by insurance companies who are always trying to game the system.  If you have questions about the Texas Prompt Payment Act, or would like to pursue a claim for late payment of a healthcare claim, the attorneys at Zinda Law Group can assist you. Contact us today via phone, email, or live chat on our website.

Where Zinda Law Group Practices:

We were founded in Texas and have a team of Austin personal injury lawyers as well as attorneys in Dallas and Fort Worth.

 As we’ve grown we expanded out west to El Paso, Texas subsequently into Arizona adding Tucson Personal Injury Lawyers to the firm, as well as adding offices in Colorado including Denver Personal Injury Lawyers and the surrounding cities such as Colorado Springs.

Types of Cases We Handle:

We also have a team of attorneys that have experience serious injury cases such as car accidents, wrongful death and truck accidents.   We also have experience handling more complex cases such as gas explosions and drug injury cases, such as the Taxotere® Lawsuits.