The proposed late payment law will cause social insurance to suffer unjustified hardships.

The European Commission's (EC) proposed regulation to combat late payment in business transactions of 12 September 2023, aims to improve liquidity and access to finance, especially with regard to SMEs (Small and Medium-sized Enterprises) and it should also reduce their insolvency risks. A new regulation will replace the current Late Payment Directive 2011/7/EU from 2011. According to the EC, this is now inadequate, and it does not correct the asymmetry that often exists in the negotiating power used by large customers against smaller suppliers.

Strict deadlines, strict fines

Even though the planned new regulations will benefit companies of all sizes, SMEs should benefit more because late payments affect them badly with regard to their liquidity and insolvency risk. The draft regulation focuses on limiting the payment period to a maximum of 30 days for all business transactions. Nor should acceptance or verification procedures exceed 30 calendar days. Exemptions that still exist in the current Late Payment Directive will also be abolished. The option that member states now have to grant public organisations providing healthcare services a maximum extension of 60 days is in danger of becoming a thing of the past. Violations of the above-mentioned deadlines will be penalised; through significantly higher, mandatory default interest that is automatically due and flat-rate compensation for debt recovery costs of 50 euros per invoice.

These regulations do not suit the social security contract business

The issue that the EC is pursuing through its legislative initiative is understandable. It is unacceptable when large companies abuse their market power to impose financing costs on smaller suppliers, tradespeople or service providers. However, these regulations do not suit social insurances. But it does apply to the sector in which the social insurance organisations fulfil their statutory mandate.

Invoices are subject to statutory regulation

Social insurance generally manages to pay its invoices on time. Often meeting deadlines well under 30 days. However, the downstream procedures that have been established for invoicing doctors, hospitals and pharmacies take significantly longer than the EC's proposal envisages. This is because the legislative authority has severely regulated these procedures so that they can fulfil political objectives. The masses of data generated by day-to-day care are broken down into separate items - be it the insured person, the doctor or the hospital - using various verification routines and the care provided is checked for appropriateness, cost-effectiveness or manipulation based on the services to be invoiced. This process involves the data not only being checked for one invoicing quarter, but also for longer periods, as certain services can only be provided to a patient once a year or even less frequently. Applying a 30-day deadline for acceptance and verification procedures cannot succeed here. The argument that the aim is to reduce the risk of insolvency for SMEs is invalid here, as advance payments are made and the liquidity of the service providers is secured.

There is no real deadline for social insurance

It is clear that the EC was focussing on completely different business transactions and presumably did not mean to target social insurance. It would be helpful if this point is clarified in forthcoming legislative processes and that a deadline for such downstream verification and invoice correction processes is waived. DSV has made this clear in our position paper. Because there is no real deadline. With regard to the invoicing of fees for outpatient medical care, the documents justifying payment can even be checked by the Association of Statutory Health Insurance Physicians up to three years after submitting the mass data set. A three-year deadline would amount to no deadline at all.