This bill establishes stricter, mandatory prompt payment deadlines and penalties for Medicare Advantage organizations when paying clean claims submitted by healthcare providers.
Jodey Arrington
Representative
TX-19
The Medicare Advantage Prompt Pay Act establishes stricter deadlines for Medicare Advantage organizations to pay clean claims submitted by doctors and suppliers. This legislation mandates that MA plans must pay at least 95% of electronic claims within 14 days and other clean claims within 30 days, starting January 1, 2027. Failure to meet these new prompt payment requirements will result in mandatory interest payments to providers and potential civil monetary penalties of up to $25,000 per violation for the MA organization. The Act also requires MA plans to begin reporting detailed data on their payment timeliness to the Secretary.
Medicare Advantage Plans Must Pay Doctors Within 14 Days Starting 2027, Or Face $25,000 Fines
The new Medicare Advantage Prompt Pay Act is straightforward: it forces Medicare Advantage (MA) organizations to drastically speed up how quickly they pay doctors and suppliers for services provided to MA enrollees. This isn't just a suggestion; it sets hard deadlines, backed by financial penalties, starting January 1, 2027.
The Clock Starts Now: New Payment Deadlines
If you’ve ever dealt with healthcare billing, you know how long it can take for a provider to get paid—often months. This bill aims to cut that wait time significantly, helping providers keep the lights on and focus on care. The key is the "clean claim," meaning the bill has all the required information. If a contracted provider submits that claim electronically, the MA plan must pay at least 95% of it within 14 calendar days. For any other clean claim—like paper submissions or claims from out-of-network providers—the deadline is 30 calendar days.
To make sure plans can’t stall, the law even defines when the clock starts ticking. If a claim is submitted electronically, the plan is presumed to have received it the moment the electronic system confirms it. For paper claims, it’s presumed received five business days after the postmark. This clarity is crucial because it eliminates the gray area that often allows payment delays.
The Cost of Playing the Waiting Game
What happens if an MA plan misses the deadline? They have to pay interest on the late amount, calculated using a specific federal rate. More importantly, the bill gives the Secretary of Health and Human Services serious enforcement power. If an MA organization repeatedly fails to meet these prompt payment rules, the Secretary can impose civil money penalties up to $25,000 for each instance of non-compliance.
Think of a small physical therapy practice that relies heavily on MA payments. If those payments are consistently delayed, it creates a cash flow crisis that can lead to layoffs or even closure. By mandating swift payment and imposing stiff fines for delays, the bill provides a much-needed financial safeguard for healthcare providers, which in turn helps ensure patients can continue seeing their preferred doctors.
Required Transparency: Who Pays On Time?
One of the most powerful provisions of this Act is the mandatory reporting requirement. Starting in 2027, MA plans must publicly report detailed data on their payment timeliness. They have to tell the government (and therefore the public) the percentage of claims paid, how many were paid on time (for both in-network and out-of-network providers), and the total dollar amount of interest they paid out due to lateness.
This mandatory transparency pulls back the curtain on MA plan operations. It allows regulators and the public to see exactly which plans are efficient and which are consistently dragging their feet. For busy people choosing an MA plan for themselves or their parents, this data could become a key factor, providing insight into which plans treat their doctors fairly—a good proxy for overall administrative quality.