|Note: This is TOA’s analysis of the final version of SB 1264. It has yet to be signed into law by Governor Abbott. In addition, it will require an extensive rule-making process by the Texas Department of Insurance.
The following is provided for informational purposes only. It does not provide legal guidance.
A 2009 Texas law created a mediation process in which a patient who receives a balance bill for a certain amount may trigger a mediation process to address the balance bill. In these scenarios, a patient must start the mediation process.
The 2019 Texas Legislature – led by Sen. Kelly Hancock (R-North Richland Hills), Sen. John Whitmire (D-Houston), Rep. Tom Oliverson, MD (R-Spring) and Rep. Trey Martinez Fischer (D-San Antonio) – created an overhaul of the state’s out-of-network law as it relates to “surprise billing” through SB 1264. In short, it bans the practice of sending a balance bill to a patient for out-of-network services (with certain exceptions).
It is important to note that this law does not extend to ERISA-based plans and certain types of services, such as emergency medical services (EMS). In addition, a provider may have sign-off from a patient for a balance bill (more below).
SB 1264 applies to health care provided beginning on January 1, 2020; an extensive rule-making process at the Texas Department of Insurance (TDI) will be necessary to define many of the standards.
SB 1264 applies to state-regulated HMOs, PPOs, EPOs, and the Employees Retirement System of Texas (ERS) and the Teacher Retirement System of Texas (TRS).
The bill exempts from these requirements a nonemergency health care or medical service:
This will require clarification in the TDI rule-making process.
A carrier, after determining coverage and receiving a clean claim, which is defined in statute as complete with an enumerated list of information, shall pay the physician, provider, or facility the usual and customary rate (UCR). For emergency care, the UCR is defined as the 50th percentile of the maximum allowable rate as provided in the carrier’s master benefit plan.
The payment shall be sent directly to the physician, provider, or facility within 30 days of an electronically submitted clean claim and 45 days for a paper-submitted clean claim.
The carrier must send an explanation of benefits to the patient and the provider that itemizes the copay, coinsurance, and deductible for which the patient is liable and for what they may be billed. In addition, the carrier must include a statement indicating that the insured may not be billed and is not liable beyond the enumerated amounts.
Physician & Midlevel Provider Arbitration
SB 1264’s new arbitration process applies to physicians and midlevel providers:
An arbitrator is required to consider the following items to determine a reasonable payment:
SB 1264 prohibits TDI from selecting an organization that is financially affiliated with a health benefit plan issuer. The organization is likely to be FAIR Health, and those rates may not be based on facility payments.
Mediation for Facility Services
Instead of being subject to arbitration, out-of-network facilities would be subject to mediation (with the patient taken out of the process). The legislation does indicate that facility mediation process does not apply to the professional or technical component of a physician service.
SB 1264 requires TDI to take the following actions:
Facility Mediation Process
The following process has been put in a place by SB 1264:
Diagnostic Imaging & Laboratory Services
Diagnostic imaging and laboratory services are listed in both the mediation and arbitration portions of the bill for emergency services. Whether the services are subject to the mediation or arbitration depends on whether the service is affiliated with a physician or a facility.
SB 1264 indicates that the balance billing prohibition does not apply to out-of-network diagnostic imaging for non-emergency services if the enrollee elects to receive in writing in advance of the service with respect to each out-of-network provider providing the service and that the enrollee receives a written disclosure with the following terms:
Diagnostic Imaging & Laboratory Service Definition
According to the SB 1264:
“Diagnostic imaging provider” means a health care provider who performs a diagnostic imaging service on a patient for a fee or interprets imaging produced by a diagnostic imaging service.
“Diagnostic imaging service” means magnetic resonance imaging, computed tomography, positron emission tomography, or any hybrid technology that combines any of those imaging modalities.
“Laboratory service provider” means an accredited facility in which a specimen taken from a human body is interpreted and pathological diagnoses are made or a person who makes an interpretation of or diagnosis based on a specimen or information provided by a laboratory based on a specimen.
“Smaller” disputes with the same carrier and the same provider may be bundled together if they do not exceed $5,000. In addition, no claim in the bundle may not exceed $1,500.
Balance Billing Prohibition Report
SB 1264 requires TDI to conduct a study each biennium on the effects of SB 1264. The study will include:
TDI will be required to collect data on a quarterly basis from the health plans.