HBA-JEK H.B. 1347 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 1347 By: Bailey Insurance 2/19/2001 Introduced BACKGROUND AND PURPOSE The current reimbursement procedures of some preferred provider organizations (PPO) and health maintenance organizations (HMO) can cause difficulties for doctors and patients. PPOs and HMOs sometimes mistakenly verify that an insured is covered before a procedure, and then refuse to pay the doctor after the treatment is provided and the error is discovered. Also, some PPOs and HMOs require the use of dispute resolution and avoid the prompt payment requirements of current law. Some podiatrists practicing in Texas who routinely provide physical therapy are sometimes not receiving prompt payment because some PPOs and HMOs refuse to reimburse podiatrists for services. These PPOs and HMOs direct patients to another facility for physical therapy, which may inconvenience the patient and disrupt timely patient care. House Bill 1347 sets forth reimbursement requirements to address these problems. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS House Bill 1347 amends the Insurance Code to require preferred provider organizations (PPO) and health maintenance organizations (HMO) to inform a provider as to whether or not an insured is covered for a service or benefit if the provider requests the information before providing the service or benefit to the insured. If the PPO or HMO verifies that an insured is covered for a service or benefit, the bill prohibits the PPO or HMO from denying payment for that service or benefit unless a written notice of an error in the verification is received by the provider before the service or benefit is provided. The bill prohibits a PPO or HMO from requiring the use of a dispute resolution procedure with a provider if the use of such a procedure violates the provisions requiring full payment of a clean claim or 85 percent of the contracted rate on a claim the PPO or HMO intends to audit within 45 days of receiving the claim. H.B. 1347 provides that a contract between a PPO or HMO and a licensed podiatrist must provide that the podiatrist may furnish physical therapy within the scope of the law regulating podiatry. A PPO is an insurer that provides, through its health insurance policy, for the payment of a level of coverage which is different from the basic level of coverage provided by the health insurance policy if the insured uses a preferred provider. EFFECTIVE DATE September 1, 2001.