1-1     By:  Janek, et al. (Senate Sponsor - Carona)           H.B. No. 610
 1-2           (In the Senate - Received from the House May 6, 1999;
 1-3     May 7, 1999, read first time and referred to Committee on Economic
 1-4     Development; May 14, 1999, reported adversely, with favorable
 1-5     Committee Substitute by the following vote:  Yeas 7, Nays 0;
 1-6     May 14, 1999, sent to printer.)
 1-7     COMMITTEE SUBSTITUTE FOR H.B. No. 610                   By:  Carona
 1-8                            A BILL TO BE ENTITLED
 1-9                                   AN ACT
1-10     relating to health care providers under certain health benefit
1-11     plans.
1-12           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13           SECTION 1.  The Texas Health Maintenance Organization Act
1-14     (Chapter 20A, Vernon's Texas Insurance Code) is amended by adding
1-15     Section 18B to read as follows:
1-16           Sec. 18B.  PROMPT PAYMENT OF PHYSICIAN AND PROVIDERS.  (a)
1-17     In this section, "clean claim" means a completed claim, as
1-18     determined under Texas Department of Insurance rules, submitted by
1-19     a physician or provider for medical care or health care services
1-20     under a health care plan.
1-21           (b)  A physician or provider for medical care or health care
1-22     services under a health care plan may obtain acknowledgment of
1-23     receipt of a claim for medical care or health care services under a
1-24     health care plan by submitting the claim by United States mail,
1-25     return receipt requested.  A health maintenance organization or the
1-26     contracted clearinghouse of the health maintenance organization
1-27     that receives a claim electronically shall acknowledge receipt of
1-28     the claim by an electronic transmission to the physician or
1-29     provider and is not required to acknowledge receipt of the claim by
1-30     the health maintenance organization in writing.
1-31           (c)  Not later than the 45th day after the date that the
1-32     health maintenance organization receives a clean claim from a
1-33     physician or provider, the health maintenance organization shall:
1-34                 (1)  pay the total amount of the claim in accordance
1-35     with the contract between the physician or provider and the health
1-36     maintenance organization;
1-37                 (2)  pay the portion of the claim that is not in
1-38     dispute and notify the physician or provider in writing why the
1-39     remaining portion of the claim will not be paid; or
1-40                 (3)  notify the physician or provider in writing why
1-41     the claim will not be paid.
1-42           (d)  If the health maintenance organization acknowledges
1-43     coverage of an enrollee under the health care plan but intends to
1-44     audit the physician or provider claim, the health maintenance
1-45     organization shall pay the charges submitted at 85 percent of the
1-46     contracted rate on the claim not later than the 45th day after the
1-47     date that the health maintenance organization receives the claim
1-48     from the physician or provider.  Following completion of the audit,
1-49     any additional payment due a physician or provider or any refund
1-50     due the health maintenance organization shall be made not later
1-51     than the 30th day after the later of the date that:
1-52                 (1)  the physician or provider receives notice of the
1-53     audit results; or
1-54                 (2)  any appeal rights of the enrollee are exhausted.
1-55           (e)  A health maintenance organization that violates
1-56     Subsection (c) or (d) of this section is liable to a physician or
1-57     provider for the full amount of billed charges submitted on the
1-58     claim or the amount payable under the contracted penalty rate, less
1-59     any amount previously paid or any charge for a service that is not
1-60     covered by the health care plan.
1-61           (f)  A physician or provider may recover reasonable
1-62     attorney's fees in an action to recover payment under this section.
1-63           (g)  In addition to any other penalty or remedy authorized by
1-64     the Insurance Code or another insurance law of this state, a health
 2-1     maintenance organization that violates Subsection (c) or (d) of
 2-2     this section is subject to an administrative penalty under Article
 2-3     1.10E, Insurance Code.  The administrative penalty imposed under
 2-4     that article may not exceed $1,000 for each day the claim remains
 2-5     unpaid in violation of Subsection (c) or (d) of this section.
 2-6           (h)  The health maintenance organization shall provide a
 2-7     participating physician or provider with copies of all applicable
 2-8     utilization review policies and claim processing policies or
 2-9     procedures, including required data elements and claim formats.
2-10           (i)  A health maintenance organization may, by contract with
2-11     a physician or provider, add or change the data elements that must
2-12     be submitted with the physician or provider claim.
2-13           (j)  Not later than the 60th day before the date of an
2-14     addition or change in the data elements that must be submitted with
2-15     a claim or any other change in a health maintenance organization's
2-16     claim processing and payment procedures, the health maintenance
2-17     organization shall provide written notice of the addition or change
2-18     to each participating physician or provider.
2-19           (k)  This section does not apply to a claim made by a
2-20     physician or provider who is a member of the legislature.
2-21           (l)  This section does not apply to a capitation payment
2-22     required to be made to a physician or provider under an agreement
2-23     to provide medical care or health care services under a health care
2-24     plan.
2-25           (m)  This section applies to a person with whom a health
2-26     maintenance organization contracts to process claims or to obtain
2-27     the services of physicians and providers to provide health care
2-28     services to health care plan enrollees.
2-29           (n)  The commissioner may adopt rules as necessary to
2-30     implement this section.
2-31           SECTION 2.  Article 3.70-3C, Insurance Code, as added by
2-32     Chapter 1024, Acts of the 75th Legislature, Regular Session, 1997,
2-33     is amended by adding Section 3A to read as follows:
2-34           Sec. 3A.  PROMPT PAYMENT OF PREFERRED PROVIDERS.  (a)  In
2-35     this section, "clean claim" means a completed claim, as determined
2-36     under department rules, submitted by a preferred provider for
2-37     medical care or health care services under a health insurance
2-38     policy.
2-39           (b)  A preferred provider for medical care or health care
2-40     services under a health insurance policy may obtain acknowledgment
2-41     of receipt of a claim for medical care or health care services
2-42     under a health care plan by submitting the claim by United States
2-43     mail, return receipt requested.  An insurer or the contracted
2-44     clearinghouse of an insurer that receives a claim electronically
2-45     shall acknowledge receipt of the claim by an electronic
2-46     transmission to the preferred provider and is not required to
2-47     acknowledge receipt of the claim by the insurer in writing.
2-48           (c)  Not later than the 45th day after the date that the
2-49     insurer receives a clean claim from a preferred provider, the
2-50     insurer shall:
2-51                 (1)  pay the total amount of the claim in accordance
2-52     with the contract between the preferred provider and the insurer;
2-53                 (2)  pay the portion of the claim that is not in
2-54     dispute and notify the preferred provider in writing why the
2-55     remaining portion of the claim will not be paid; or
2-56                 (3)  notify the preferred provider in writing why the
2-57     claim will not be paid.
2-58           (d)  If the insurer acknowledges coverage of an insured under
2-59     the health insurance policy but intends to audit the preferred
2-60     provider claim, the insurer shall pay the charges submitted at 85
2-61     percent of the contracted rate on the claim not later than the 45th
2-62     day after the date that the insurer receives the claim from the
2-63     preferred provider. Following completion of the audit, any
2-64     additional payment due a preferred provider or any refund due the
2-65     insurer shall be made not later than the 30th day after the later
2-66     of the date that:
2-67                 (1)  the preferred provider receives notice of the
2-68     audit results; or
2-69                 (2)  any appeal rights of the insured are exhausted.
 3-1           (e)  An insurer that violates Subsection (c) or (d) of this
 3-2     section is liable to a preferred provider for the full amount of
 3-3     billed charges submitted on the claim or the amount payable under
 3-4     the contracted penalty rate, less any amount previously paid or any
 3-5     charge for a service that is not covered by the health insurance
 3-6     policy.
 3-7           (f)  A preferred provider may recover reasonable attorney's
 3-8     fees in an action to recover payment under this section.
 3-9           (g)  In addition to any other penalty or remedy authorized by
3-10     this code or another insurance law of this state, an insurer that
3-11     violates Subsection (c) or (d) of this section is subject to an
3-12     administrative penalty under Article 1.10E of this code.  The
3-13     administrative penalty imposed under that article may not exceed
3-14     $1,000 for each day the claim remains unpaid in violation of
3-15     Subsection (c) or (d) of this section.
3-16           (h)  The insurer shall provide a preferred provider with
3-17     copies of all applicable utilization review policies and claim
3-18     processing policies or procedures, including required data elements
3-19     and claim formats.
3-20           (i)  An insurer may, by contract with a preferred provider,
3-21     add or change the data elements that must be submitted with the
3-22     preferred provider claim.
3-23           (j)  Not later than the 60th day before the date of an
3-24     addition or change in the data elements that must be submitted with
3-25     a claim or any other change in an insurer's claim processing and
3-26     payment procedures, the insurer shall provide written notice of the
3-27     addition or change to each preferred provider.
3-28           (k)  This section does not apply to a claim made by a
3-29     preferred provider who is a member of the legislature.
3-30           (l)  This section applies to a person with whom an insurer
3-31     contracts to process claims or to obtain the services of preferred
3-32     providers to provide medical care or health care to insureds under
3-33     a health insurance policy.
3-34           (m)  The commissioner of insurance may adopt rules as
3-35     necessary to implement this section.
3-36           SECTION 3.  Section 5(c), Article 21.55, Insurance Code, is
3-37     amended to read as follows:
3-38           (c)  This article does not apply to Chapter 20A of this code
3-39     except as provided in Section 9 of that chapter.  This article does
3-40     not apply to a claim governed by Section 3A, Article 3.70-3C, of
3-41     this code.
3-42           SECTION 4.  (a)  The lieutenant governor and the speaker of
3-43     the house of representatives shall appoint a joint committee of the
3-44     legislature to study, evaluate, and make recommendations concerning
3-45     the adequacy of:
3-46                 (1)  state laws governing the payment and settlement by
3-47     health maintenance organizations and insurers of health care
3-48     provider claims, including the processes and practices established
3-49     by the health maintenance organizations and insurers for the
3-50     payments and settlements; and
3-51                 (2)  the enforcement of the laws described by
3-52     Subdivision (1) of this subsection, including the processes and
3-53     practices established in connection with the enforcement of those
3-54     laws.
3-55           (b)  Not later than December 31, 2000, the interim committee
3-56     established under this section shall report the results of its
3-57     study and evaluation, together with any recommendations adopted by
3-58     the committee, to the lieutenant governor and speaker of the house
3-59     of representatives.
3-60           SECTION 5.  This Act takes effect September 1, 1999.
3-61           SECTION 6.  The importance of this legislation and the
3-62     crowded condition of the calendars in both houses create an
3-63     emergency and an imperative public necessity that the
3-64     constitutional rule requiring bills to be read on three several
3-65     days in each house be suspended, and this rule is hereby suspended.
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