BILL ANALYSIS Senate Research Center S.B. 2805 89R19453 TYPED By: Hagenbuch Health & Human Services 4/25/2025 As Filed AUTHOR'S / SPONSOR'S STATEMENT OF INTENT S.B. 2805 addresses ongoing issues related to the resolution of payment disputes between health benefit plans and out-of-network providers, particularly for emergency care, diagnostic imaging, and laboratory services. Under current law, Texas utilizes a binding arbitration process to settle such disputes, with the cost of arbitration evenly split between both parties, regardless of the outcome. Additionally, the definition of an "out-of-network provider" lacks sufficient clarity regarding how groups of providers are identified. The primary problem targeted by S.B. 2805 is the perceived unfairness in the arbitration cost structure and the ambiguity in the identification of out-of-network provider groups. Under existing law, both parties to arbitrationregardless of which party's position prevailsare required to share the cost of arbitration. This can disproportionately burden the party that acted in good faith, especially smaller providers or insurers that win disputes but must still pay half the arbitration fee. Furthermore, the lack of a standardized identifier for provider groups can complicate tracking and accountability in out-of-network claims. S.B. 2805 proposes two key reforms: 1. It revises the definition of "out-of-network provider" in Section 1467.001(6-a) to include a clearer and more comprehensive list of identifiers for provider groups: National Provider Identification Number, group NPI, and Employer Identification Number. This will enhance transparency, streamline dispute tracking, and reduce administrative ambiguity. 2. It amends Section 1467.087(e) to require that the losing party pay the full cost of arbitration. This introduces a "loser pays" structure, which incentivizes fair and reasonable negotiations before entering arbitration and discourages frivolous or bad-faith disputes. By altering the financial responsibility in arbitration and clarifying provider identification, this legislation is designed to reduce costs, increase efficiency, and enhance accountability in the arbitration process for out-of-network claims. Overall, S.B. 2805 aims to create a more equitable, transparent, and efficient arbitration process for resolving out-of-network billing disputes in the Texas healthcare system. As proposed, S.B. 2805 amends current law relating to arbitration of certain out-of-network health benefit claims. RULEMAKING AUTHORITY This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 1467.001(6-a), Insurance Code to redefine "out-of-network provider." SECTION 2. Amends Section 1467.087(e), Insurance Code to require the losing party to pay, rather than the parties to evenly split and pay, the arbitrator's fees and expenses not later than the 30th day after the date the arbitrator provides the parties with the written decision. SECTION 3. Makes application of this Act prospective to January 1, 2026. SECTION 4. Effective date: September 1, 2025.
BILL ANALYSIS
Senate Research Center S.B. 2805
89R19453 TYPED By: Hagenbuch
Health & Human Services
4/25/2025
As Filed
Senate Research Center
S.B. 2805
89R19453 TYPED
By: Hagenbuch
Health & Human Services
4/25/2025
As Filed
AUTHOR'S / SPONSOR'S STATEMENT OF INTENT
S.B. 2805 addresses ongoing issues related to the resolution of payment disputes between health benefit plans and out-of-network providers, particularly for emergency care, diagnostic imaging, and laboratory services. Under current law, Texas utilizes a binding arbitration process to settle such disputes, with the cost of arbitration evenly split between both parties, regardless of the outcome. Additionally, the definition of an "out-of-network provider" lacks sufficient clarity regarding how groups of providers are identified.
The primary problem targeted by S.B. 2805 is the perceived unfairness in the arbitration cost structure and the ambiguity in the identification of out-of-network provider groups. Under existing law, both parties to arbitrationregardless of which party's position prevailsare required to share the cost of arbitration. This can disproportionately burden the party that acted in good faith, especially smaller providers or insurers that win disputes but must still pay half the arbitration fee. Furthermore, the lack of a standardized identifier for provider groups can complicate tracking and accountability in out-of-network claims.
S.B. 2805 proposes two key reforms:
1. It revises the definition of "out-of-network provider" in Section 1467.001(6-a) to include a clearer and more comprehensive list of identifiers for provider groups: National Provider Identification Number, group NPI, and Employer Identification Number. This will enhance transparency, streamline dispute tracking, and reduce administrative ambiguity.
2. It amends Section 1467.087(e) to require that the losing party pay the full cost of arbitration. This introduces a "loser pays" structure, which incentivizes fair and reasonable negotiations before entering arbitration and discourages frivolous or bad-faith disputes.
By altering the financial responsibility in arbitration and clarifying provider identification, this legislation is designed to reduce costs, increase efficiency, and enhance accountability in the arbitration process for out-of-network claims.
Overall, S.B. 2805 aims to create a more equitable, transparent, and efficient arbitration process for resolving out-of-network billing disputes in the Texas healthcare system.
As proposed, S.B. 2805 amends current law relating to arbitration of certain out-of-network health benefit claims.
RULEMAKING AUTHORITY
This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Section 1467.001(6-a), Insurance Code to redefine "out-of-network provider."
SECTION 2. Amends Section 1467.087(e), Insurance Code to require the losing party to pay, rather than the parties to evenly split and pay, the arbitrator's fees and expenses not later than the 30th day after the date the arbitrator provides the parties with the written decision.
SECTION 3. Makes application of this Act prospective to January 1, 2026.
SECTION 4. Effective date: September 1, 2025.