California Medical Billing Audit & Knox-Keene Prompt Pay Enforcement
California healthcare providers lose millions annually to slow-paying health plans and illegal retroactive recoupments. Here is how our forensic audit enforces DMHC Knox-Keene mandates, captures 15% statutory penalty interest, and ensures AB 72 compliance.
Healthcare practices in California operate under one of the strictest managed care regulatory environments in the nation, governed primarily by the Department of Managed Health Care (DMHC) under the Knox-Keene Health Care Service Plan Act of 1975. Knox-Keene mandates that commercial health plans pay or contest complete clean claims within 45 working days (or 30 working days for HMOs). If a plan fails to meet this deadline, it must automatically pay statutory interest at the rate of 15% per annum. Furthermore, California Insurance Code § 10126.65 strictly limits retroactive claim recoupments to 365 days. Our California audit team enforces these protections to capture overdue interest and defend practice revenues.
Audit red flags
- California commercial health plans holding clean electronic claims past 45 working days without issuing statutory 15% penalty interest checks.
- Payers attempting retroactive overpayment clawbacks on claims older than 365 days, violating California Insurance Code § 10126.65.
- Medi-Cal Managed Care plans denying claims for missing Treatment Authorization Requests (TARs) where emergency care was provided.
- Health plans reducing payments on out-of-network facility-based services below AB 72 statutory benchmarks.
Audit action plan
- 1. Knox-Keene 45-Day Statutory Interest Demand Filing — Calculate exact elapsed working days from clearinghouse 277 acknowledgement to remit date and file formal demands for 15% penalty interest on all delayed claims.
- 2. 365-Day Recoupment Defense Injunction — Issue formal legal dispute letters invalidating any payer overpayment demand letter dated more than 365 days after the original reimbursement date.
- 3. DMHC Independent Dispute Resolution Escalation — Escalate unresolved systematic claim delays or pattern downcoding directly to the DMHC Provider Dispute Resolution (PDR) mechanism.
Codes reviewed
- Knox-Keene 45-Day Mandate — Statutory Clean Claim Adjudication Deadline
- CIC § 10126.65 Recoupment — 365-Day Limitation on Post-Payment Audits
- AB 72 Out-of-Network Parity — Non-contracted services at in-network facilities
- Medi-Cal Fee-for-Service / MC — California Medicaid Managed Care Adjudication
Frequently asked questions
What is the penalty if a California health plan pays a claim late?
Under the Knox-Keene Act (California Health and Safety Code § 1371), if a health care service plan fails to pay or contest a clean claim within 45 working days, it must automatically pay interest of 15% per annum beginning on the first day after the deadline.
Can California health plans claw back payments made more than a year ago?
No. Under California Insurance Code § 10126.65 and Health & Safety Code § 1371.1, health plans cannot demand reimbursement for an overpayment or offset funds unless the written notice is sent within 365 calendar days of the date of payment (except in cases of fraud).