84R2120 SCL-D
By: Bonnen of Galveston H.B. No. 616
A BILL TO BE ENTITLED
AN ACT
relating to payment of and disclosures related to certain
out-of-network provider charges; authorizing a fee; providing a
penalty.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 1301, Insurance Code, is amended by
adding Subchapter C-2 to read as follows:
SUBCHAPTER C-2. PAYMENT OF OUT-OF-NETWORK PROVIDER CHARGES
Sec. 1301.141. DEFINITIONS. In this subchapter:
(1) "Clean claim" has the meaning assigned by Section
1301.101.
(2) "Database provider" means a database provider
certified by the department under Section 1301.1424.
(3) "Designated reimbursement information
organization" means an organization designated by the commissioner
under Section 1301.1426.
(4) "Geozip area" means an area that includes all zip
codes with the identical first three digits. For purposes of this
term, the geozip area is the closest geozip area to the location in
which the health care service was performed if the location does not
have a zip code.
(5) "Out-of-network provider," with respect to a
preferred provider benefit plan, means a physician or health care
provider that is not a preferred provider of the plan.
(6) "Purchaser" means an insured under a preferred
provider benefit plan, regardless of whether the insured pays any
part of the insured's premium, and a sponsor of the preferred
provider benefit plan, regardless of whether the sponsor pays any
part of an insured's premium.
(7) "Usual and customary charge" means a charge for a
service, classified by geozip area and Current Procedural
Terminology code, that is in the 90th percentile of the charges for
that service reported to a database provider.
Sec. 1301.1414. APPLICABILITY OF SUBCHAPTER. This
subchapter applies only to an insurer providing a preferred
provider benefit plan that provides benefits for services provided
by out-of-network providers.
Sec. 1301.1415. PAYMENT OF CERTAIN OUT-OF-NETWORK
PROVIDERS. (a) An insurer must use a charge-based methodology that
complies with this subchapter for computing a payment for a service
provided by an out-of-network provider if the provider submits a
clean claim for payment that includes:
(1) a certification of the usual and customary charge
for the service determined by a database provider selected by the
out-of-network provider; or
(2) a certification by a database provider selected by
the out-of-network provider that there are not sufficient reported
charges in the database provider's database to establish the usual
and customary charge for the service.
(b) If an out-of-network provider submits a clean claim for
payment of a charge that includes a certification from a database
provider selected by the out-of-network provider indicating that
the billed charge is not higher than the usual and customary charge,
the insurer shall pay the lesser of the billed charge or the usual
and customary charge minus any portion of the charge that is the
insured's responsibility under the preferred provider benefit
plan.
(c) If an out-of-network provider submits a clean claim for
payment of a charge that includes a certification from a database
provider selected by the out-of-network provider indicating that
the billed charge is higher than the usual and customary charge, the
insurer shall pay the billed charge minus any portion of the charge
that is the insured's responsibility under the preferred provider
benefit plan if the billed charge is justifiable considering
special circumstances under which the services are provided. If
the charge is not justifiable considering special circumstances
under which the services are provided, the insurer shall pay the
usual and customary charge minus any portion of the charge that is
the insured's responsibility under the preferred provider benefit
plan.
(d) If an out-of-network provider submits a clean claim for
payment of a charge that includes a certification described by
Subsection (a)(2) with respect to a billed charge, the insurer
shall pay 80 percent of the billed charge or an amount equal to the
90th percentile of the charges for the service reported by the
designated reimbursement information organization for physicians
or health care providers in the same geozip area, whichever is less,
minus any portion of the charge that is the insured's
responsibility under the preferred provider benefit plan.
(e) An insurer may not pay less than an applicable amount
required under this section because the insurer has not received a
portion of the charge that is the insured's responsibility.
Sec. 1301.1416. PROMPT PAYMENT OF CERTAIN CHARGES. If an
out-of-network provider submits to an insurer a clean claim for
payment of a charge that includes a statement from the provider
indicating that the provider is willing to accept a payment for the
service, classified by geozip area and Current Procedural
Terminology code, that is in the 85th percentile of the charges for
that service reported to a database provider selected by the
out-of-network provider and the claim for payment is otherwise made
in accordance with Subchapter C, the claim must be paid in
accordance with Subchapter C as if the physician or health care
provider was a preferred provider.
Sec. 1301.142. REQUIRED CONTRACT TERMS. The language used
in the health insurance policy to describe the benefit provided
under the preferred provider benefit plan for services provided by
an out-of-network provider:
(1) must:
(A) provide that, if a certification described by
Section 1301.1415(a)(2) with respect to the charge is submitted
with the claim, payment to an out-of-network provider will be
computed based on 80 percent of the billed charge or an amount equal
to the 90th percentile of the charges for the service reported by
the designated reimbursement information organization for
physicians or health care providers in the same geozip area,
whichever is less;
(B) define "usual and customary charge" as that
term is defined by Section 1301.141; and
(C) incorporate into the definition of "usual and
customary charge" the definition of "database provider" assigned by
Section 1301.141; and
(2) may not add or subtract language from a definition
required by this section.
Sec. 1301.1424. CERTIFICATION AND QUALIFICATIONS OF
DATABASE PROVIDER AND DATABASE. (a) A database provider that is
used to determine usual and customary charges for the purposes of
this subchapter must be certified by the department. The
department may certify a database provider under this subchapter
only if the department determines that the database provider and
the database used by the provider for the purposes of this
subchapter comply with this section.
(b) A database provider must be a nonprofit organization
that:
(1) maintains a database with content that complies
with this section;
(2) maintains an active Internet website accessible to
all physicians or health care providers subscribing to the database
and to the public; and
(3) demonstrates an ability to:
(A) maintain a compilation of charge data that is
absent any data required to be excluded under Subsection (e)(1);
and
(B) distinguish charges that are not related to
one another and eliminate irrelevant or erroneous charges from
reported charge information.
(c) A database provider must compute usual and customary
charges for services provided by physicians or health care
providers in accordance with this subchapter.
(d) The data in the database must contain out-of-network
charges, classified by Current Procedural Terminology code, for
physician and health care providers in each geozip area in this
state.
(e) The data in the database may not:
(1) include:
(A) any data other than out-of-network billed
charges from physicians and health care providers in this state;
(B) physician and health care provider charges
that reflect payments discounted under governmental or
nongovernmental health benefit plans; or
(C) information that is more than seven years
old; or
(2) exclude charges accompanied by modifiers that
indicate procedures with complications.
(f) An entity may not be certified as a database provider
for the purposes of this subchapter if the entity owns or controls,
or is owned or controlled by, or is an affiliate of, any entity with
a pecuniary interest in the application of the database, including
an insurer, a holding company of an insurer, or a trade association
in the field of insurance or health benefits.
(g) The Internet website required by this section must allow
an individual to determine the usual and customary charge for a
particular service provided by a physician or health care provider.
(h) The department shall ensure that:
(1) the data in the database used to compute usual and
customary charges of out-of-network providers is updated regularly
to accurately reflect current physician and health care provider
retail charges;
(2) charge information that is more than seven years
old is removed from the database; and
(3) at least one entity is certified as a database
provider.
(i) The department may charge a fee for certification under
this section in an amount necessary to implement this section.
Sec. 1301.1425. PROVISION OF USUAL AND CUSTOMARY CHARGE BY
DATABASE PROVIDER. A database provider must compute the usual and
customary charge for each service for which a billed charge is
submitted to the insurer by a physician or health care provider that
subscribes to the database and provide the physician or health care
provider with a certification of the usual and customary charge or a
certification described by Section 1301.1415(a)(2), as applicable,
that is sufficient to enable an insurer to whom the physician or
health care provider submits a claim for payment to comply with this
subchapter.
Sec. 1301.1426. DESIGNATED REIMBURSEMENT INFORMATION
ORGANIZATION. (a) The commissioner by rule shall designate an
organization described by this section to report charges for
services provided by physicians and health care providers under
this subchapter.
(b) The organization designated under this section must be
an independent, not-for-profit organization created to:
(1) establish and maintain a database to help insurers
determine reimbursement rates for out-of-network charges; and
(2) provide insureds with a clear, unbiased
explanation of the reimbursement process.
Sec. 1301.143. DISCLOSURES REGARDING PAYMENT OF
OUT-OF-NETWORK PROVIDER. (a) An insurer that provides benefits
under a preferred provider benefit plan for services provided by
out-of-network providers must disclose in the summary plan
description, on an Internet website maintained by the insurer, and
to a prospective purchaser of the plan:
(1) the definition of "usual and customary charge"
assigned by Section 1301.141 and a description of how payment to an
out-of-network provider will, if applicable, be based on the lesser
of:
(A) the usual and customary charge for the
specific procedure that a physician or health care provider bills
the insurer; or
(B) 80 percent of the billed charge or an amount
equal to the 90th percentile of the charges for the service reported
by the designated reimbursement information organization for
physicians and health care providers in the same geozip area;
(2) examples of the anticipated portion of the charge
that will be the insured's responsibility for frequently billed
health care services by out-of-network providers;
(3) a methodology for determining the anticipated
portion of the charge that will be the insured's responsibility for
a specific health care service that is based on the amount, not an
approximation, that the insurer pays;
(4) the Internet website addresses of each database
provider certified under this subchapter at which a purchaser or
prospective purchaser may access the database or a single website
address at which an updated set of links to the website addresses of
those database providers may be accessed; and
(5) a statement that if the insurer's payment due under
the plan's out-of-network benefit provisions is not sufficient to
cover the total billed charge, the physician or health care
provider agrees to accept as payment in full the amount paid by the
plan in accordance with those provisions plus any portion of the
charge that is the insured's responsibility under the plan.
(b) Disclosures under this section must:
(1) be made in language easily understood by
purchasers and prospective purchasers of preferred provider
benefit plans;
(2) be made in a uniform, clearly organized manner;
(3) be of sufficient detail and comprehensiveness as
to provide for full and fair disclosure; and
(4) be updated as necessary to ensure that the
disclosures are accurate.
Sec. 1301.1434. ANNUAL ACTUARIAL CERTIFICATION. (a) An
insurer that offers a preferred provider benefit plan that provides
coverage for services provided by out-of-network providers must
annually submit to the department a written certification stating:
(1) the difference in value for a purchaser between:
(A) the coverage without the out-of-network
provider benefits; and
(B) the coverage with the out-of-network
provider benefits; and
(2) that the difference between the amount a purchaser
would be charged for the coverage without the out-of-network
provider benefits and the amount that a purchaser would be charged
for the coverage with the out-of-network provider benefits reflects
the difference in value certified under Subdivision (1).
(b) The certification must be made in easily understood
language, in a uniform, clearly organized manner, and be of
sufficient detail and comprehensiveness as to provide for full and
fair disclosure to an average consumer. The difference between the
value of the coverage without the out-of-network provider benefits
and the coverage with the out-of-network provider benefits must be
expressed in terms of a percentage, although use of a percentage
alone is not sufficient to satisfy the requirements of this
section.
(c) The certification must be made by an actuary who is
certified by a nationally recognized actuarial certification
organization recognized by the commissioner and who is not
affiliated with the insurer or any of the insurer's affiliates.
(d) An insurer must make the certification required by this
section readily available to the public.
Sec. 1301.1435. PAYMENT IN FULL. If the insurer's payment
due under a preferred provider benefit plan's out-of-network
benefit provisions is not sufficient to cover the total billed
charge, a physician or health care provider agrees to accept as
payment in full the amount paid by the plan in accordance with those
provisions plus any portion of the charge that is the insured's
responsibility under the plan.
Sec. 1301.1436. REMEDIES. (a) An insurer that violates
Section 1301.1416 is subject to the penalties imposed under Section
1301.137 as if the out-of-network provider was a preferred
provider.
(b) The remedies provided by this section are in addition to
remedies available under any other provision of this code.
SECTION 2. Subchapter C-2, Chapter 1301, Insurance Code, as
added by this Act, applies only to charges for services provided to
an insured under a health insurance policy delivered, issued for
delivery, or renewed on or after January 1, 2016. Charges for
services provided to an insured under a policy delivered, issued
for delivery, or renewed before January 1, 2016, are governed by the
law in effect immediately before the effective date of this Act, and
that law is continued in effect for that purpose.
SECTION 3. This Act takes effect September 1, 2015.