October 30, 2026 · Muhammad Azam · 11 min read
California's prompt pay law requires health plans and insurers to pay a complete claim within 30 calendar days of receiving it. The rule comes from AB 3275 (Chapter 763, Statutes of 2024) and applies to claims received on or after January 1, 2026. It replaced the old deadlines of 30 working days for most plans and 45 working days for HMOs, and it covers HMOs, PPOs, Medi-Cal managed care plans and the IPAs and medical groups that pay claims on their behalf. Late payments owe 15% annual interest, plus a penalty if the plan doesn't pay that interest on its own.
For billing teams, this is the biggest change to California claims timing in two decades. It shortens the wait for payment, but only if you know which claims qualify, when the clock starts, and how to collect the interest payers often leave off.
AB 3275 at a glance
| Rule | What the law requires |
|---|---|
| Payment deadline | 30 calendar days after receipt of a complete claim |
| Contest or deny | Written notice within 30 calendar days of receipt |
| Reconsideration | 30 calendar days after the plan receives requested information |
| Interest | 15% per year, starting the first calendar day after the 30-day period |
| Penalty | Greater of $15 or 10% of accrued interest if the plan fails to pay interest automatically |
| Effective | Claims received on or after January 1, 2026 |
| Who it covers | HMOs, plan-issued PPOs, insurers, Medi-Cal managed care plans and their delegated entities |
| Who it doesn't cover | Self-funded employer plans, Original Medicare, Medicare Advantage, Medi-Cal fee-for-service and workers' compensation |
This guide is part of our California Medical Billing Laws guide.
What AB 3275 Changed
Before 2026, California's claims payment rules came mainly from AB 1455 and its regulations (28 CCR §1300.71). AB 3275 rewrote the timelines in the Health and Safety Code, the Insurance Code and the Welfare and Institutions Code.
| Before (claims received through Dec 31, 2025) | After (claims received on or after Jan 1, 2026) | |
|---|---|---|
| Payment deadline, most plans and insurers | 30 working days | 30 calendar days |
| Payment deadline, HMOs | 45 working days | 30 calendar days |
| Medi-Cal managed care plans | Followed the plan-type deadline | 30 calendar days, named expressly in the law |
| Contest or deny notice | Same working-day deadlines | 30 calendar days |
| Reconsideration after more information | 30 or 45 working days | 30 calendar days |
| Interest start | Day after the 30- or 45-working-day period | Day after the 30-calendar-day period |
| Penalty when interest isn't paid automatically | Smaller fixed amount | Greater of $15 or 10% of accrued interest |
| Enrollee complaints about delayed or denied claims | Not specifically addressed | Must be handled as grievances (new H&S Code §1371.34) |
Why "calendar days" matters
Working days skip weekends and holidays; calendar days don't. For an HMO, the old 45-working-day deadline often stretched past nine weeks. The new rule is a hard 30 days, about four weeks, for every plan type, so day 31 is now the same trigger for every commercial and Medi-Cal managed care claim.
Which rule applies to a claim
The date the plan receives the claim decides which rule applies, not the date of service. A December 2025 visit billed in January 2026 falls under AB 3275. Payers such as Alameda Alliance for Health state the split this way in their provider guidance.
Who AB 3275 Applies To
The 30-day rule follows the payer, not the provider. Before chasing a late claim, confirm the payer is covered.
Covered payers
Health care service plans regulated by the DMHC, including HMOs, POS plans and plan-issued PPOs, under Health and Safety Code §1371 and §1371.35.
Health insurers regulated by the California Department of Insurance (CDI), under Insurance Code §10123.13 and §10123.147.
Medi-Cal managed care plans, such as L.A. Care, Health Net, IEHP, CalOptima Health and Partnership HealthPlan.
Delegated entities. The DMHC's APL 25-007 guidance requires plans to make sure their risk-bearing organizations, capitated providers, claims processing organizations and management services organizations also comply. If an IPA pays your claim under a plan's DOFR, the 30-day rule applies to the IPA too.
Not covered
| Payer | Which rules apply instead |
|---|---|
| Self-funded (ERISA) employer plans | Plan terms and federal rules; AB 3275 doesn't apply (CMA) |
| Original Medicare | Federal prompt-payment rules for Medicare contractors |
| Medicare Advantage | Federal rules and the plan contract |
| Medi-Cal fee-for-service | DHCS claims processing rules |
| Workers' compensation | California Labor Code and Division of Workers' Compensation rules |
Tip: many large employers in California self-fund their plans even when a familiar insurer administers them. The patient's ID card or the payer's response usually shows whether a plan is fully insured or self-funded. Check before citing AB 3275 in a dispute.
If your practice bills IPAs heavily, see how claims move between plans and medical groups in our California Medical Billing guide.
What Counts as a "Complete Claim"
The 30-day clock only protects complete claims. A complete claim is a clean claim with all the reasonably relevant information the payer needs to decide it, such as the correct member ID, provider identifiers, codes, authorization number when one is required, and any attachments the payer's published billing rules require. AB 3275 directed the DMHC and CDI to define clean claim criteria by July 31, 2025, so check each payer's current provider manual for its exact list.
When the plan contests or denies a claim
If a claim isn't complete, the plan can't simply sit on it. Within 30 calendar days of receipt it must notify you in writing that the claim, or part of it, is contested or denied, and say what information it needs. Once you send that information, the plan has 30 calendar days to finish reconsidering the claim. Plans can set their own window for your response; Health Plan of San Joaquin, for example, gives providers 30 calendar days from its notice (HPSJ).
Partial claims
The law applies to a complete claim "or portion thereof." If a plan contests one line, it still has to pay the uncontested lines within 30 calendar days.
How to keep claims complete
Verify eligibility and plan or IPA assignment before the visit.
Get prior authorization when required, and put the number on the claim.
Scrub claims against payer edits before submission.
Attach records the payer's manual lists for that service type.
Send the claim to the right payer under the DOFR. Some plans forward misdirected claims to the delegated entity, but the clock may not run in your favor while it's in transit.
Interest and Penalties for Late Payment
When a complete claim isn't paid within 30 calendar days, the plan owes interest automatically. You shouldn't have to ask for it.
Interest: 15% per year, starting on the first calendar day after the 30-day period (H&S Code §1371.35).
Penalty: if the plan doesn't include the interest with the late payment, it owes an additional amount equal to the greater of $15 or 10% of the accrued interest.
Scope: interest and penalties apply to all late claims, including emergency services.
Worked example
A plan receives a complete $1,000 claim on February 2, 2026, and pays it on April 3, 2026, which is 60 days after receipt.
| Step | Calculation | Amount |
|---|---|---|
| Days late | 60 days − 30 days | 30 days |
| Daily interest | $1,000 × 15% ÷ 365 | $0.41 |
| Interest owed | $1,000 × 15% × 30 ÷ 365 | $12.33 |
| Penalty if interest wasn't paid automatically | Greater of $15 or 10% × $12.33 ($1.23) | $15.00 |
| Total owed beyond the claim | $12.33 + $15.00 | $27.33 |
On a single claim that's small. Across hundreds of late claims a month, unpaid interest and penalties add up to real money, and most practices never check for them.
How to spot missing interest
Compare each payment's paid date with the plan's receipt date, which appears in the 277CA acknowledgment or the plan portal. Any claim paid after day 30 should show an interest line on the remittance. If it doesn't, the penalty applies too. Our A/R follow-up team runs this check on every late payment.
How the 30-Day Rule Fits with Other California Deadlines
AB 3275 sets the payer's deadline. Other California rules set yours, and they work together across the life of a claim.
| Stage | Whose clock | Deadline | Source |
|---|---|---|---|
| Submit the claim | Provider | Plan can't require less than 90 days (contracted) or 180 days (non-contracted) from date of service | 28 CCR §1300.71 |
| Acknowledge receipt | Plan | 2 working days (electronic), 15 working days (paper) | 28 CCR §1300.71 |
| Pay, contest or deny | Plan | 30 calendar days from receipt | AB 3275 |
| Send requested information | Provider | Set by the plan's notice | Plan provider manual |
| Reconsider | Plan | 30 calendar days after receiving the information | AB 3275 |
| Dispute a payment decision | Provider | 365 days from the plan's action | 28 CCR §1300.71.38 |
| Decide the dispute | Plan | 45 working days | 28 CCR §1300.71.38 |
The acknowledgment matters most: it's the plan's proof of the receipt date, and the receipt date starts the 30-day clock. Save every 277CA or portal acknowledgment with the claim.
For the full list of California deadlines, see the rules table in our California Medical Billing Laws guide.
Medi-Cal and Other Payers: How Prompt Pay Differs
The same patient can be covered by a payer that follows AB 3275 one month and one that doesn't the next. Knowing which applies keeps your follow-up queues accurate.
Medi-Cal managed care plans: covered
AB 3275 names Medi-Cal managed care plans expressly. Plans such as Partnership HealthPlan and Health Plan of San Joaquin have published provider notices confirming the 30-calendar-day rule and the 15% interest for claims received on or after January 1, 2026. The rule also reaches IPAs and medical groups paying Medi-Cal claims under a plan's delegation.
Medi-Cal fee-for-service: not covered
Claims billed directly to DHCS follow Medi-Cal's own processing rules, and the bigger risk there is on your side: late claims lose 25% to 50% of their value after six months from the month of service. See our Medi-Cal Billing Guide for those deadlines.
Medicare and Medicare Advantage: federal rules
Original Medicare and Medicare Advantage plans follow federal prompt-payment rules, not AB 3275. For Medi-Medi patients, the Medicare portion follows federal timing, while a Medi-Cal managed care plan paying the secondary portion follows AB 3275.
Workers' compensation and personal injury: separate systems
Workers' compensation claims follow the Labor Code and the Division of Workers' Compensation's timelines, and personal injury cases usually depend on liens or settlement. See our pages on workers' compensation billing and personal injury billing.
How to Enforce the 30-Day Rule
The law only helps if you act on it. Escalate in this order:
Follow up on day 31. Check the claim status in the payer's portal or by phone. Confirm the receipt date and whether the plan sent a written contest or denial notice. No notice within 30 days means the plan missed its deadline.
Request payment with interest. Ask the plan, or the delegated IPA, to pay the claim with the 15% interest owed, and the penalty if the interest was left off. Note the call reference number.
File a provider dispute. If the plan doesn't pay correctly, file through its provider dispute resolution (PDR) process within 365 days of its action. Cite AB 3275, the receipt date and the interest calculation.
Escalate to the regulator. If a DMHC-regulated plan or its IPA ignores the rule or its own dispute process, file a provider complaint with the DMHC. For an insurer-issued policy, contact the California Department of Insurance.
What the patient can do
AB 3275 also added Health and Safety Code §1371.34: when a member complains about a delayed or denied claim payment, the plan must handle it as a grievance. If a plan's delay is creating balances or collection notices for your patients, they can use that process too.
Keep a clean evidence file
For each disputed claim, keep the original claim, the 277CA or portal acknowledgment, any contest notice, your response with its date, the remittance and your interest calculation. That file wins disputes.
A structured denial management process keeps these deadlines visible across every payer.
Workflow Changes for Billing Teams
Most practice management systems still age A/R by date of service and use 30-, 60- and 90-day buckets. AB 3275 rewards a different view: age commercial and Medi-Cal managed care claims by date of receipt.
| Workflow | Before AB 3275 | Now |
|---|---|---|
| A/R follow-up trigger | 45-60 days after submission for HMOs | Day 31 after the payer's receipt date, every plan type |
| Aging reports | By date of service | Add a "days since receipt" view for commercial and Medi-Cal managed care payers |
| Payment posting | Post the paid amount | Also check for an interest line on every claim paid after day 30 |
| Payer tagging | Plan name | Plan name plus whether it's fully insured, self-funded, Medicare or Medi-Cal FFS |
| Delegated claims | Followed the IPA's own timing | Hold IPAs to the same 30-day rule |
| Disputes | Ad hoc | Template dispute letter citing AB 3275, the receipt date and the interest owed |
Faster follow-up shortens days in A/R across your whole commercial book. Practices that track interest also recover money they'd otherwise write off. A full revenue cycle management review is the quickest way to see how much AB 3275 interest your payers have left unpaid since January.
AB 3275 Action Checklist
Sources
DMHC: APL 25-007, Assembly Bill 3275 Guidance (Claim Reimbursement)
California Medical Association: Payors required to shorten claim payment timeframes in 2026
This article is general information, not legal advice. Confirm requirements with the DMHC, the CDI, your payer contracts or a healthcare attorney.
Frequently asked questions about California's prompt pay law
California's prompt pay law requires health plans and insurers to pay complete claims within a set time and to pay interest when they're late. Since January 1, 2026, under AB 3275, the deadline is 30 calendar days after the plan receives a complete claim.
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