This act establishes stricter, mandated timelines and penalties for Medicare Advantage organizations to promptly pay clean claims submitted by healthcare providers starting January 1, 2027.
Catherine Cortez Masto
Senator
NV
The Medicare Advantage Prompt Pay Act establishes stricter deadlines for Medicare Advantage organizations to pay providers for clean claims starting in 2027. These rules mandate payment within 14 days for electronically submitted claims from directly contracted providers and within 30 days for all other clean claims. The bill also introduces interest penalties for late payments and allows for civil monetary penalties for non-compliance, requiring MA plans to report detailed payment timeliness data.
Medicare Advantage Prompt Pay Act Mandates 14-Day Payment Deadline for Doctors Starting 2027
This bill, the Medicare Advantage Prompt Pay Act, is essentially dropping the hammer on how fast Medicare Advantage (MA) insurance companies have to pay doctors and hospitals. Starting January 1, 2027, MA organizations will face strict, mandatory deadlines for processing and paying what are called “clean claims”—meaning claims that have all the necessary paperwork and data. The biggest change? If a doctor has a direct contract with the MA plan and submits the claim electronically, the plan must pay at least 95% of that claim within 14 calendar days. For all other clean claims, like those submitted on paper or from non-contracted providers, the deadline is 30 calendar days.
The Cash Flow Lifeline for Providers
This is a huge deal for healthcare providers, from the large hospital systems down to the independent physical therapist or family doctor. Right now, payment delays from insurers are one of the biggest headaches for running a medical practice. When a provider has to wait 60, 90, or even 120 days to get paid for a service already rendered, it creates a massive cash flow problem. This bill directly addresses that, mandating a much shorter turnaround (SEC. 2). For a small rural clinic, getting paid within two weeks instead of two months could mean the difference between making payroll on time or having to take out a high-interest loan. The bill also clarifies how to determine when a claim was received, setting clear rules: electronic claims are received on the confirmation date, and paper claims are presumed received five business days after the postmark. This removes ambiguity that insurers sometimes use to stretch out the clock.
The Stick: Interest and $25K Fines
To ensure MA plans actually stick to these deadlines, the bill introduces two serious financial penalties. First, if an MA organization misses the 14- or 30-day deadline on a clean claim, they must pay the provider interest, starting the day after the payment was due (SEC. 2). This turns delayed payments from a cost-free float for the insurer into an actual expense. Second, if the Secretary of Health and Human Services finds that an MA organization is routinely violating these new prompt payment rules, they can hit the plan with civil money penalties of up to $25,000 for every single violation (SEC. 2). These penalties are a clear signal that the government is serious about enforcement, using the threat of significant fines to ensure compliance.
New Transparency Requirements
Beyond just setting deadlines and penalties, this legislation requires MA plans to report detailed data on their payment performance. As part of their regular reporting, they will have to disclose the total number and percentage of claims paid, broken down by whether the provider was contracted or non-contracted (SEC. 2). Crucially, they must also report the number and percentage of claims that missed the 14- or 30-day deadlines and, perhaps most telling, the total dollar amount of interest they had to pay out due to late payments. This level of transparency means that the government—and the public—will have a clear, quantifiable way to measure which MA plans are performing well and which ones are dragging their feet. For policy watchers, this new data will be invaluable for holding these large insurers accountable.
What Could Still Go Wrong?
While the intent is excellent, the main administrative hurdle remains the definition of a “clean claim.” A clean claim is one that includes every mandatory piece of data required on the standard billing forms. If an MA plan decides that a claim has a minor error—say, a missing code or a misplaced comma—they can argue it’s not “clean,” which allows them to reject or delay payment outside the 14/30-day window. Providers will need to be meticulous in their billing, and MA plans might be incentivized to become hyper-vigilant about minor errors to avoid the steep penalties. However, the requirement to report interest paid and the threat of large civil money penalties should discourage MA plans from using minor technicalities to game the system.