HBA-DMH H.B. 1862 77(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 1862
By: Eiland
Insurance
3/25/2001
Introduced



BACKGROUND AND PURPOSE 

Currently, when a physician sends a claim to a health maintenance
organization or a preferred provider organization (health care plan
provider) for payment the health care plan provider may assert that the
claim was not received.  The statutory limit of 45 days does not begin
until the health care plan provider receives the claim; therefore, the
health care plan provider may delay payment.  House Bill 1862 establishes a
standardized clean claim form for health care plan providers and sets forth
provisions for the receipt of a claim by a health care plan provider. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the commissioner of insurance in
SECTION 1 (Section 18B, Article 20A, Insurance Code) and SECTION 10
(Section 4A, Article 21.21, Insurance Code) of this bill. 

ANALYSIS

House Bill 1862 amends the Insurance Code to prescribe  a clean claim form
for physicians and institutional and noninstitutional providers.  The bill
provides that institutional providers use the current UB form 92 (UB form)
or a subsequent UB form as adopted by the commissioner of insurance
(commissioner) and that physicians and noninstitutional providers use the
current Health Care Financing Administration Form 1500 (form 1500) or a
subsequent Health Care Financing Administration Form as adopted by the
commissioner to be submitted for payment.  The bill prescribes the contents
of each form (Sec. 18B, Art. 20A and Sec. 3A, Art. 3.70-3C).   

The bill authorizes a health maintenance organization (HMO) or a preferred
provider organization (PPO), by contract with a physician or provider, to
require fewer or additional data fields on the form but not to exceed those
listed on form 1500.  The bill requires a HMO or PPO to notify in writing a
physician or provider within a specified time period of the need for any
attachments desired in good faith for clarification of a clean claim. The
bill requires the written notice requesting the attachment to describe the
information requested, provide a detailed description of the reason the
information is being requested, and pertain only to information that the
HMO or PPO is able demonstrate is within the scope of the claim.  Upon
receiving a valid request, the bill requires the physician or provider to
provide the attachment within a specified time period and establishes
payment requirements for a delay due to a clarification request.  The bill
authorizes an HMO or PPO to require any data element that is required in an
electronic transaction set needed to comply with federal law (Sec. 18B,
Art. 20A and Sec. 3A, Art. 3.70-3C). 

The bill requires an HMO or PPO that utilizes preauthorization of medical
or health care services to provide to each medical or health care provider
and each enrollee a complete listing of the  services requiring
precertification and the procedures required to precertify a medical or
health care service or procedure. Upon receipt of a request, the bill
requires the HMO or PPO to review and issue a determination of coverage
within the time frames required for a utilization review.  The bill
authorizes an HMO or PPO to deny precertification of the service or
procedure if the HMO or PPO certifies in writing within the specified time
frames that the enrollee was not a covered enrollee of the health benefit
plan and the HMO or PPO  was notified within 30 days of the disenrollment
(Sec. 3D, Art. 3.70-3C and Sec. 18E, Art. 20A). 

The bill prohibits an HMO or PPO from denying  payment of a medical or
health care claim, procedure, or service as not medically necessary or
appropriate care unless such medical or health care claim, procedure, or
service was precertified (Sec. 18E, Art. 3.70-3C and Sec. 18F, Art. 20A).
The bill authorizes an HMO or PPO to deny a medical or health care service
request for precertification or for payment of a medical or health care
claim under certain conditions (Sec. 18F, Art. 3.70-3C and Sec. 18G, Art.
20A). 

The bill sets forth provisions for a contract between an HMO or PPO and a
physician licensed by the Texas State Board of Medical Examiners and
establishes requirements for an HMO or PPO to provide continuos access for
verification of coverage and benefits (Sec. 3C, Art. 3.70-3C and Sec 18A,
Art. 20A). The bill prohibits an HMO or PPO from requiring the use of a
dispute resolution procedure with a preferred provider or physician or
provider, as appropriate, that violates certain prompt payment provisions
and prohibits this stipulation from being nullified or waived by contract
(Sec. 3A, Art. 3.70-3C and Sec. 18B, Art. 20A). 

The bill specifies that a person engages in an unfair method of competition
or unfair or deceptive act or practice in the business of insurance if the
person:  

_misrepresents to a health care provider a material fact or policy or
contract provision relating to the claim;  

_fails to make a payment or otherwise act in good faith with respect to
services for which coverage is reasonably clear under the health benefit
plan;  

_fails to provide promptly to a health care provider a reasonable
explanation of the basis in the policy or contract, in relation to the
facts or applicable law for denial of a claim under a health benefit plan; 

_fails within a reasonable time to affirm or deny coverage for a claim
under the health benefit plan; 

_refuses, fails to make, or unreasonably delays payment of a claim on the
basis that other coverage may be available or that third parties are
responsible for the payment; or  

_refuses to make payment under the health benefit plan without a reasonable
basis to do so.  

The bill authorizes the commissioner to adopt rules as necessary to
implement these provisions and prohibits these provisions from being
nullified or waived by contract (Sec. 4A, Art. 21.21). 

EFFECTIVE DATE

September 1, 2001.