By Eiland H.B. No. 1862
77R6939 T
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the regulation and prompt payment of health care
1-3 providers under certain health benefit plans.
1-4 BE IT ENACTED BY THE LEGISLATURE OF TEXAS:
1-5 SECTION 1. The Texas Health Maintenance Organization Act,
1-6 Chapter 20A, Insurance Code, Sec. 18B, is amended as follows:
1-7 Sec. 18B. PROMPT PAYMENT OF PHYSICIANS AND PROVIDERS.
1-8 (a) DEFINITIONS.
1-9 (1) "CLEAN CLAIM FOR PHYSICIANS OR NON INSTITUTIONAL
1-10 PROVIDERS" means a Health Care Financing Administration Form 1500
1-11 in effect on the effective date of this Act, or a subsequent Health
1-12 Care Financing Form as adopted by the Commissioner, submitted for
1-13 payment, with required information in the following fields on the
1-14 form:
1-15 (A) field 1a, subscriber/patient plan
1-16 identification number;
1-17 (B) field 2, patient's name;
1-18 (C) field 3, patient's date of birth and gender;
1-19 (D) field 4, subscriber's name;
1-20 (E) field 5, patient's address including street
1-21 or post office box, city, and zip code;
1-22 (F) field 6, patient's relationship to
1-23 subscriber;
1-24 (G) field 7, subscriber's address including
2-1 street or post office box, city, and zip code;
2-2 (H) field 10, whether patient's condition is
2-3 related to employment, auto accident, or other accident;
2-4 (I) field 11, subscriber's policy number;
2-5 (J) field 11a, subscriber's birth date and
2-6 gender;
2-7 (K) field 11c, health maintenance or preferred
2-8 provider carrier name; and
2-9 (L) field 11d, disclosure of any other health
2-10 benefit plans.
2-11 (i) If the information required in this
2-12 subsection is yes, and known to the provider, then the following
2-13 data fields should be completed:
2-14 (I) field 9;
2-15 (II) field 9a;
2-16 (III) field 9b;
2-17 (IV) field 9c; and
2-18 (V) field 9d.
2-19 (ii) The data fields specified in
2-20 Subdivision (i) of this subsection are required when submitting
2-21 claims to secondary payor health maintenance organizations or
2-22 preferred provider carriers.
2-23 (iii) If the information required in this
2-24 subsection is no, the data fields specified in Subdivision (i) of
2-25 this subsection are not required.
2-26 (F) field 12, patient's or authorized person's
2-27 signature or notation that the signature is on file with the
3-1 physician or provider;
3-2 (G) field 13, subscriber's or authorized
3-3 person's signature or notation that the signature is on file with
3-4 the physician or provider;
3-5 (H) field 14, date of current illness, injury,
3-6 or pregnancy;
3-7 (I) field 15, first date of previous same or
3-8 similar illness, if unknown, enter same date as field 14;
3-9 (J) field 21, diagnosis codes or nature of
3-10 illness or injury;
3-11 (K) field 24A, date(s) of service;
3-12 (L) field 24B, place of service codes;
3-13 (M) field 24C, type of service code;
3-14 (N) field 24D, procedure/modifier code using
3-15 national recognized medical data code sets as adopted;
3-16 (O) field 24E, diagnosis code by specific
3-17 service by the Commissioner by rule;
3-18 (P) field 24F, charge of each listed service;
3-19 (Q) field 24G, number of days or units;
3-20 (R) field 25, physician's or provider's federal
3-21 tax ID number;
3-22 (S) field 28, total charge;
3-23 (T) field 31, signature of physician or provider
3-24 or notation that the signature is on file with the HMO or preferred
3-25 provider carrier;
3-26 (U) field 32, name and address of facility where
3-27 services rendered (if other than home or office; and
4-1 (V) field 33, physician's or provider's billing
4-2 name and address.
4-3 (2) "CLEAN CLAIM FOR INSTITUTION PROVIDERS" means a UB
4-4 form 92 in effect on the effective date of this Act, or a
4-5 subsequent UB form as adopted by the Commissioner, submitted for
4-6 payment, with the required information in the following fields on
4-7 the form:
4-8 (A) field (1), provider's name, address and
4-9 telephone number;
4-10 (B) field (3), patient control number;
4-11 (C) field (4), type of bill code;
4-12 (D) field (5), provider's federal tax ID number;
4-13 (E) field (6), statement period (beginning and
4-14 ending date of claim period);
4-15 (F) field (12), patient's name (UB-92);
4-16 (G) field (13), patient's address;
4-17 (H) field (14), patient's date of birth;
4-18 (I) field (15), patient's gender;
4-19 (J) field (16), patient's marital status;
4-20 (K) field (17), date of admission;
4-21 (L) field (18), admission hour;
4-22 (M) field (19), type of admission (e.g.
4-23 emergency, urgent, elective, newborn);
4-24 (N) field (20), source of admission code;
4-25 (O) field (22), patient-status-at-discharge
4-26 code;
4-27 (P) field (39-41), value code and amounts;
5-1 (Q) field (42), revenue code;
5-2 (R) field (43), revenue description;
5-3 (S) field (46), units of service;
5-4 (T) field (47), total charge;
5-5 (U) field (50), HMO or preferred provider
5-6 carrier name;
5-7 (V) field (58), subscriber's name;
5-8 (W) field (59), patient's relationship to
5-9 subscriber;
5-10 (X) field (60), patient's/subscriber's
5-11 certificate number, health claim number, ID number;
5-12 (Y) field (67), principal diagnosis code;
5-13 (Z) field (82), attending physician ID;
5-14 (AA) field (85), signature of provider
5-15 representative or notation that the signature is on file with the
5-16 HMO or preferred provider carrier; and
5-17 (BB) field (86), date bill submitted.
5-18 [(a) In this Section, "clean claims" means a completed claim
5-19 as determined under Texas department of Insurance rules, submitted
5-20 by a physician or provider for medical care or health care services
5-21 under a health care plan.]
5-22 SECTION 2. The Texas Health Maintenance Organization Act,
5-23 Chapter 20A, Insurance Code, Section 18B, Subsection (j) is amended
5-24 as follows:
5-25 (j) (1) unless otherwise provided by this subsection,
5-26 a health maintenance organization may, by contract with a physician
5-27 or provider, require:
6-1 (a) fewer data fields than required in Subsection (a) of
6-2 this article; or
6-3 (b) additional data fields than those required in Subsection
6-4 (a) of this article but not to exceed those fields listed on the
6-5 Health Care Financing Administration form 1500 required by this
6-6 article.
6-7 (2) An health maintenance organization shall notify in
6-8 writing a physician or provider of the need for any attachments
6-9 desired in good faith for clarification of a clean claim. The
6-10 physician or provider must receive this notice not later than the
6-11 20th calendar day after the date of the health maintenance
6-12 organization receives the claim. To be valid, the written notice
6-13 requesting the attachment shall describe with specificity the
6-14 information requested, provided a detail description of the reason
6-15 why the health maintenance organization is requesting the
6-16 information, and pertain only to information that the health
6-17 maintenance organization can demonstrate is within the scope of the
6-18 claim in question. Upon receiving a valid request, the physician
6-19 or provider shall have 20 calendar days to provide the attachment
6-20 without tolling the 45-day payment period as defined in this
6-21 article. The 45-day payment period will be extended by the number
6-22 of days by which the requested attachment is received by the health
6-23 plan beyond the 20th day.
6-24 (3) A health maintenance organization may require any
6-25 data element that is required in an electronic transaction set
6-26 needed to comply with federal law.
6-27 [A health maintenance organization may, by contract with a
7-1 physician or provider, add or change the data elements that must be
7-2 submitted with the physician or provider claim.]
7-3 SECTION 3. Article, 3.70-3C, Section 3A, Subsections (a) and
7-4 (j), Insurance Code, is amended to read as follows:
7-5 (a) DEFINITIONS.
7-6 (1) "CLEAN CLAIM FOR PHYSICIANS OR NON INSTITUTIONAL
7-7 PROVIDERS" means a Health Care Financing Administration Form 1500
7-8 in effect on the effective date of this Act, or a subsequent Health
7-9 Care Financing Form as adopted by the Commissioner, submitted for
7-10 payment, with required information in the following fields on the
7-11 form:
7-12 (A) field 1a, subscriber/patient plan
7-13 identification number;
7-14 (B) field 2, patient's name;
7-15 (C) field 3, patient's date of birth and gender;
7-16 (D) field 4, subscriber's name;
7-17 (E) field 5, patient's address including street
7-18 or post office box, city, and zip code;
7-19 (F) field 6, patient's relationship to
7-20 subscriber;
7-21 (G) field 7, subscriber's address including
7-22 street or post office box, city, and zip code;
7-23 (H) field 10, whether patient's condition is
7-24 related to employment, auto accident, or other accident;
7-25 (I) field 11, subscriber's policy number;
7-26 (J) field 11a, subscriber's birth date and
7-27 gender;
8-1 (K) field 11c, health maintenance or preferred
8-2 provider carrier name; and
8-3 (L) field 11d, disclosure of any other health
8-4 benefit plans.
8-5 (i) If the information required in this
8-6 Subsection is yes, and known to the provider, then the following
8-7 data fields should be completed:
8-8 (I) field 9;
8-9 (II) field 9a;
8-10 (III) field 9b;
8-11 (IV) field 9c; and
8-12 (V) field 9d.
8-13 (ii) The data fields specified in
8-14 Subdivision (i) of this subsection are required when submitting
8-15 claims to secondary payor health maintenance organizations or
8-16 preferred provider carriers.
8-17 (iii) If the information required in this
8-18 subsection is no, the data fields specified in Subdivision (i) of
8-19 this subsection are not required.
8-20 (F) field 12, patient's or authorized person's
8-21 signature or notation that the signature is on file with the
8-22 physician or provider;
8-23 (G) field 13, subscriber's or authorized
8-24 person's signature or notation that the signature is on file with
8-25 the physician or provider;
8-26 (H) field 14, date of current illness, injury,
8-27 or pregnancy;
9-1 (I) field 15, first date of previous same or
9-2 similar illness, if unknown, enter same date as field 14;
9-3 (J) field 21, diagnosis codes or nature of
9-4 illness or injury;
9-5 (K) field 24A, date(s) of service;
9-6 (L) field 24B, place of service codes;
9-7 (M) field 24C, type of service code;
9-8 (N) field 24D, procedure/modifier code;
9-9 (O) field 24E, diagnosis code by specific
9-10 service;
9-11 (P) field 24F, charge of each listed service;
9-12 (Q) field 24G, number of days or units;
9-13 (R) field 25, physician's or provider's federal
9-14 tax ID number;
9-15 (S) field 28, total charge;
9-16 (T) field 31, signature of physician or provider
9-17 or notation that the signature is on file with the HMO or preferred
9-18 provider carrier;
9-19 (U) field 32, name and address of facility where
9-20 services rendered (if other than home or office; and
9-21 (V) field 33, physician's or provider's billing
9-22 name and address.
9-23 (2) "CLEAN CLAIM FOR INSTITUTION PROVIDERS" means a UB
9-24 form 92 in effect on the effective date of this Act, or a
9-25 subsequent UB form as adopted by the Commissioner, submitted for
9-26 payment, with the required information in the following fields on
9-27 the form:
10-1 (A) field (1), provider's name, address and
10-2 telephone number;
10-3 (B) field (3), patient control number;
10-4 (C) field (4), type of bill code;
10-5 (D) field (5), provider's federal tax ID number
10-6 (E) field (6), statement period (beginning and
10-7 ending date of claim period);
10-8 (F) field (12), patient's name (UB-92);
10-9 (G) field (13), patient's address;
10-10 (H) field (14), patient's date of birth;
10-11 (I) field (15), patient's gender;
10-12 (J) field (16), patient's marital status;
10-13 (K) field (17), date of admission;
10-14 (L) field (18), admission hour;
10-15 (M) field (19), type of admission (e.g.
10-16 emergency, urgent, elective, newborn);
10-17 (N) field (20), source of admission code;
10-18 (O) field (22), patient-status-at-discharge
10-19 code;
10-20 (P) field (39-41), value code and amounts;
10-21 (Q) field (42), revenue code;
10-22 (R) field (43), revenue description;
10-23 (S) field (46), units of service;
10-24 (T) field (47), total charge;
10-25 (U) field (50), HMO or preferred provider
10-26 carrier name;
10-27 (V) field (58), subscriber's name;
11-1 (W) field (59), patient's relationship to
11-2 subscriber;
11-3 (X) field (60), patient's/subscriber's
11-4 certificate number, health claim number, ID number;
11-5 (Y) field (67), principal diagnosis code;
11-6 (Z) field (82), attending physician ID;
11-7 (AA) field (85), signature of provider
11-8 representative or notation that the signature is on file with the
11-9 HMO or preferred provider carrier; and
11-10 (BB) field (86), date bill submitted.
11-11 [In this section, "clean claims" means a completed claim as
11-12 determined under department rules, submitted by a preferred
11-13 provider for medical care or health care services under a health
11-14 insurance policy.]
11-15 (j) (1) unless otherwise provided by this subsection, an
11-16 insurer may, by contract with a physician or provider, require:
11-17 (cc) fewer data fields than required in Subsection (a)
11-18 of this article; or
11-19 (dd) additional data fields than required in
11-20 Subsection (a) of this article but not to exceed those fields
11-21 listed on the Health Care Financing Administration form 1500
11-22 required by this article.
11-23 (2) An insurer shall notify in writing a physician or
11-24 provider of the need for any attachments desired in good faith for
11-25 clarification of a clean claim. The physician or provider must
11-26 receive this notice not later than the 20th day after the date of
11-27 the insurer receives the claim. To be valid, the written notice
12-1 requesting the attachment shall describe with specificity the
12-2 information requested, provide a detailed description of the
12-3 reasons why the insurer is requesting the information, and pertain
12-4 only to information that the insurer can demonstrate is within the
12-5 scope of the claim. Upon receiving a valid request, the physician
12-6 or provider shall have 20 days to provide the attachment without
12-7 tolling the 45-day payment period as defined in this article. The
12-8 45-day payment period will be tolled by the number of business days
12-9 by which the attachment is delinquent.
12-10 (3) An insurer may require any data element that is
12-11 required in an electronic transaction set needed to comply with
12-12 federal law.
12-13 [An insurer may, by contract with a preferred provider, add
12-14 or change the data elements that must be submitted with the
12-15 preferred provider claim.]
12-16 SECTION 4. Article 3.70-3C, Insurance Code is amended by
12-17 adding Sections 3D, 3E, and 3F to read as follows:
12-18 Sec. 3D. PRE-AUTHORIZATION OF MEDICAL AND HEALTH CARE
12-19 SERVICES. (a) an insurer that utilizes pre-authorization of
12-20 medical or health care services shall provide to each medical or
12-21 health care provider and each enrollee a complete listing of the
12-22 services requiring pre-certification and the procedures required to
12-23 precertify a medical or health care service or procedure.
12-24 (b) Upon receipt of a request for medical or health care
12-25 service or procedures that require pre-authorization, the insurer
12-26 shall review and issue a determination of coverage within the time
12-27 frames for utilization review required by Section 5, Article 21.58A
13-1 of this code.
13-2 (c) An insurer may deny pre certification of the service or
13-3 procedure if the insurer certifies in writing within the time
13-4 frames under this article that the enrollee was not a covered
13-5 enrollee of the health benefit plan and the insurer was notified
13-6 within 30 days of the disenrollment.
13-7 Sec. 18E. RETRO-RESPECTIVE REVIEW OF CLAIMS. An insurer may
13-8 not deny payment of a medical or health care claim, procedure or
13-9 service as not medically necessary or appropriate care unless such
13-10 medical or health care claim, procedure or service was
13-11 pre-certified under Section 18 D of this Chapter.
13-12 Sec. 18F. DENIAL OF PRE-CERTIFICATION OR PAYMENT OF CLAIM
13-13 BASED ON MEDICAL NECESSITY OR APPROPRIATENESS OF CARE. An insurer
13-14 may deny a medical or health care service request for
13-15 pre-certification or for payment of a medical or health care claim
13-16 if:
13-17 (1) the insurer proves by clear and convincing
13-18 evidence that the medical or health care service or procedure was
13-19 not medically necessary or appropriate;
13-20 (2) a physician licensed to practice medicine in Texas
13-21 and who practices in the same or similar specialty provides a
13-22 signed, written statement setting out the clinical reasons for such
13-23 a determination; and
13-24 (3) the insurer provides to the physician or health
13-25 care provider and to the enrollee the determinations and
13-26 documentation required by this section under the time frames for
13-27 utilization review required by Section 5, Article 21.58A of this
14-1 code or by Section 3A of Article 3.70-3C of this Code, as
14-2 appropriate.
14-3 SECTION 5. The Texas Health Maintenance Organization Act,
14-4 Chapter 20A, is amended by adding Sections 18E, 18F, and 18G to
14-5 read as follows:
14-6 Sec. 18E. PRE-AUTHORIZATION OF MEDICAL AND HEALTH CARE
14-7 SERVICES. (a) A health maintenance organization that utilizes
14-8 pre-authorization of medical or health care services shall provide
14-9 to each medical or health care provider and each enrollee a
14-10 complete listing of the services requiring pre-certification and
14-11 the procedures required to precertify a medical or health care
14-12 service or procedure.
14-13 (b) Upon receipt of a request for medical or health care
14-14 service or procedures that require pre-authorization, the health
14-15 maintenance organization shall review and issue a determination of
14-16 coverage within the time frames for utilization review required by
14-17 Section 5, Article 21.58A of this code.
14-18 (c) A health maintenance organization may deny
14-19 pre-certification of the service or procedure if the health
14-20 maintenance organization certifies in writing within the time
14-21 frames under this article that the enrollee was not a covered
14-22 enrollee of the health benefit plan and was notified within 30
14-23 days of the disenrollment.
14-24 Sec. 18F. RETRO-RESPECTIVE REVIEW OF CLAIMS. A health
14-25 maintenance organization may not deny payment of a medical or
14-26 health care claim, procedure or service as not medically necessary
14-27 or appropriate care unless such medical or health care claim,
15-1 procedure or service was pre-certified under Section 18E of this
15-2 Chapter.
15-3 Sec. 18G. DENIAL OF PRE-CERTIFICATION OR PAYMENT OF CLAIM
15-4 BASED ON MEDICAL NECESSITY OR APPROPRIATENESS OF CARE. A health
15-5 maintenance organization may deny a medical or health care service
15-6 request for pre-certification or for payment of a medical or health
15-7 care claim if:
15-8 (4) the health maintenance organization proves by
15-9 clear and convincing evidence that the medical or health care
15-10 service or procedure was not medically necessary or appropriate;
15-11 (5) a physician licensed to practice medicine in Texas
15-12 and who practices in the same or similar specialty provides a
15-13 signed, written statement setting out the clinical reasons for such
15-14 a determination; and
15-15 (6) the health maintenance organization provides to
15-16 the physician or health care provider and to the enrollee the
15-17 determinations and documentation required by this section under the
15-18 time frames for utilization review required by Section 5, Article
15-19 21.58A of this code or by Section 18B of Chapter 20A of this Code,
15-20 as appropriate.
15-21 SECTION 6. Section 3, Article 3.70-3C, Insurance Code, is
15-22 amended by adding Subsections (p) and (q) to read as follows:
15-23 (p) A preferred provider contract between an insurer and a
15-24 physician licensed by the Texas State Board of Medical Examiners
15-25 must provide that:
15-26 (1) the physician may request, and the insurer shall
15-27 provide not later than the 30th day after the date of request, a
16-1 copy of the coding guidelines, including any underlying bundling,
16-2 recoding or other payments logic, and payment schedules applicable
16-3 to the compensation that the physician will receive under the
16-4 contract for services; and
16-5 (2) the insurer may not unilaterally make material
16-6 revisions, including retroactive revisions, to the coding
16-7 guidelines and payment schedules.
16-8 (q) An insurer must maintain and provide access for
16-9 verification of coverage and benefits on a 24 hour, seven day a
16-10 week basis and must verify coverage and benefits for an insured to
16-11 a preferred provider who requests such information prior to
16-12 rendering covered services. An insurer cannot require a provider
16-13 to verify coverage and benefits. After the coverage and benefits
16-14 have been verified, the insurer may not deny payment for services
16-15 rendered unless either written notice of an error in verification
16-16 is received by the preferred provider before the treatment or
16-17 service is performed or is subject to the provisions of Section 3 D
16-18 (c) of this article.
16-19 SECTION 7. Section 3A, Article 3.70-3C, Insurance Code, is
16-20 amended by adding Subsections (o) and (p) to read as follows:
16-21 (o) An insurer may not require the use of a dispute
16-22 resolution procedure with a preferred provider that violates
16-23 Subsection (c) or (e) of this section.
16-24 (p) The provisions of this section may not be nullified or
16-25 waived by contract.
16-26 SECTION 8. Section 18A, Article 20A, Insurance Code, is
16-27 amended by adding Subsections (l) and (m) to read as follows:
17-1 (l) A contract between a health maintenance organization and
17-2 a physician licensed by the Texas State Board of Medical Examiners
17-3 must provide that:
17-4 (1) the physician may request, and the health
17-5 maintenance organization shall provide not later than the 30th day
17-6 after the date of request, a copy of the coding guidelines,
17-7 including any underlying bundling, recoding or other payment logic,
17-8 and payment schedules applicable to the compensation that the
17-9 physician will receive under the contract for services; and
17-10 (2) the health maintenance organization may not
17-11 unilaterally make material revisions, including retroactive
17-12 revisions, to the coding guidelines and payment schedules;
17-13 (m) A health maintenance organization must maintain and
17-14 provide access for verification of coverage and benefits on a 24
17-15 hour, seven day a week basis and verify coverage and benefits for
17-16 an insured to a physician who requests such information prior to
17-17 rendering covered services. A health maintenance organization
17-18 cannot require a provider to verify coverage and benefits. After
17-19 the coverage and benefits have been verified, the health
17-20 maintenance organization may not deny payment for services rendered
17-21 unless either written notice of an error in verification is
17-22 received by the physician before the treatment or service is
17-23 performed or is subject to the provisions of Section 18E of this
17-24 chapter.
17-25 SECTION 9. Section 18B, Article 20A, Insurance Code, is
17-26 amended by adding Subsections (p) and (q) to read as follows:
17-27 (p) A health maintenance organization may not require the
18-1 use of a dispute resolution procedure with a physician or provider
18-2 that violates Subsections (c) or (e) of this section.
18-3 (q) The provisions of this Article may not be nullified or
18-4 waived by contract.
18-5 SECTION 10. Article 21.21, Insurance Code, is amended by
18-6 adding Section 4A to read as follows:
18-7 Sec. 4A. CLAIMS BY HEALTH CARE PROVIDERS. (a) In this
18-8 section:
18-9 (1) "Claim" means a demand for payment:
18-10 (A) under a contract under which the health care
18-11 provider provides health care services to insureds or enrollees in
18-12 a health benefit plan;
18-13 (C) under an assignment of benefits or other
18-14 similar agreement; or
18-15 (D) when health care services are provided to an
18-16 insured or enrollee by the health care provider for a covered
18-17 service, including a service provided in an emergent situation.
18-18 (2) "Health care provider" means a person who
18-19 furnishes health care services under a license, certificate,
18-20 registration, or other similar evidence of regulation issued by his
18-21 state or another state of the United States. The term includes a
18-22 physician.
18-23 (3) "Person" includes a health maintenance
18-24 organization.
18-25 (b) A person engages in an unfair method of competition or
18-26 unfair or deceptive act or practice in the business of insurance if
18-27 the person:
19-1 (1) misrepresents to a health care provider a material
19-2 fact or policy or contract provision relating to the claim;
19-3 (2) fails to make a payment or otherwise act in good
19-4 faith with respect to services for which coverage is reasonably
19-5 clear under the health benefit plan;
19-6 (3) fails to provide promptly to a health care
19-7 provider a reasonable explanation of the basis in the policy or
19-8 contract, in relation to the facts or applicable law for denial of
19-9 a claim under a health benefit plan;
19-10 (4) fails within a reasonable time to affirm or deny
19-11 coverage for a claim under the health benefit plan;
19-12 (5) refuses, fails to make, or unreasonably delays
19-13 payment of a claim on the basis that other coverage may be
19-14 available or that third parties are responsible for the payment; or
19-15 refuses to make payment under the health benefit plan without a
19-16 reasonable basis to do so.
19-17 (c) The commissioner may adopt rules as necessary to
19-18 implement this section.
19-19 (d) For purposes of enforcement, a person who engages in an
19-20 unfair method of competition or an unfair or deceptive act or
19-21 practice under Subsection (b) of this section is considered to be
19-22 engaging in an unfair method of competition or an unfair or
19-23 deceptive act or practice defined in Section 4 of this article.
19-24 (e) The provisions of this Section may not be nullified or
19-25 waived by contract.
19-26 SECTION 11. Subsection 10, Section 4, Article 21.21,
19-27 Insurance Code, is amended to read as follows:
20-1 (10) Unfair Settlement Practices. (a) engaging in
20-2 any of the following unfair settlement practices with respect to a
20-3 claim by an insured, [or] beneficiary, or health care provider.
20-4 (i) misrepresenting to a claimant a
20-5 material fact or policy provision relating to coverage at issue;
20-6 (ii) failing to attempt in good faith to
20-7 effectuate a prompt, fair, and equitable settlement of a claim with
20-8 respect to which the insurer's liability has become reasonably
20-9 clear;
20-10 (iii) failing to attempt, in good faith,
20-11 to effectuate a prompt, fair, and equitable settlement under one
20-12 portion of a policy of a claim with respect to which the insurer's
20-13 liability has become reasonably clear in order to influence the
20-14 claimant to settle an additional claim under another portion of the
20-15 coverage, provided that this prohibition does not apply if payment
20-16 under one portion of the coverage, provided that this prohibition
20-17 does not apply if payment under one portion of the coverage
20-18 constitutes evidence of liability under another portion of the
20-19 policy;
20-20 (iv) failing to provide promptly to a
20-21 policyholder a reasonable explanation of the basis in the policy,
20-22 in relation to the facts or applicable law, for the insurer's
20-23 denial of a claim or for the offer of a compromise settlement of a
20-24 claim;
20-25 (v) failing within a reasonable time to:
20-26 (A) affirm or deny coverage of a claim to a
20-27 policyholder; or
21-1 (B) submit a reservation of rights to a
21-2 policyholder;
21-3 (vi) refusing, failing or unreasonably
21-4 delaying an offer of settlement under applicable first-party
21-5 coverage on the basis that other coverage may be available or that
21-6 third parties are responsible for the damages suffered, except as
21-7 may be specifically provided in the policy;
21-8 (vii) undertaking to enforce a full and
21-9 final release of a claim from a policyholder when only a partial
21-10 payment has been made, provided that this prohibition does not
21-11 apply to a compromise settlement of a doubtful or disputed claim;
21-12 (viii) refusing to pay a claim without
21-13 conducting a reasonable investigation with respect to the claim;
21-14 (ix) with respect to a Texas personal auto
21-15 policy, delaying or refusing settlement of a claim solely because
21-16 there is other insurance of a different type available to satisfy
21-17 all or any part of the loss forming the basis of that claim; or
21-18 (x) requiring a claimant, as a condition
21-19 of settling a claim, to produce the claimant's federal income tax
21-20 returns for examination or investigation by the person unless:
21-21 (A) the claimant is ordered to produce those tax
21-22 returns by a court;
21-23 (B) the claim involves a fire loss; or
21-24 (C) the claim involves lost profits or income.
21-25 (b) Paragraph (a) of this clause does not provide a cause of
21-26 action to a third party asserting one or more claims against an
21-27 insured covered under a liability insurance policy.
22-1 (11) Misrepresentation of Insurance Policy.
22-2 Misrepresenting an insurance policy by:
22-3 (a) making an untrue statement of material fact;
22-4 (b) failing to state a material fact that is necessary to
22-5 make other statements made not misleading considering the
22-6 circumstances under which the statements were made;
22-7 (c) making a statement in such manner as to mislead a
22-8 reasonably prudent person to a false conclusion of a material fact;
22-9 (d) making a material misstatement of law; or
22-10 (e) failing to disclose any matter required by law to be
22-11 disclosed, including a failure to make disclosure in accordance
22-12 with another provision of this code.
22-13 SECTION 12. The Texas Health Maintenance Organization Act,
22-14 Chapter 20A, Insurance Code, Section 18B, Subsection (e) is
22-15 removed:
22-16 [(e) If the health maintenance organization acknowledges
22-17 coverage of an enrollee under the health care plan but intends to
22-18 audit the physician or provider claim, the health maintenance
22-19 organization shall pay the charges submitted at 85 percent of the
22-20 contracted rate on the claim not later than the 45th day after the
22-21 date that the health maintenance organization receives the claim
22-22 from the physician or provider. Following completion of the audit,
22-23 any additional payment due a physician or provider or any refund
22-24 due the health maintenance organization shall be made not later
22-25 than the 30th day after the later of the date that:]
22-26 [(1) the physician or provider receives notice of the
22-27 audit results; or]
23-1 [(2) any appeal rights of the enrollee are exhausted.]
23-2 SECTION 13. The Texas Health Maintenance Organization Act,
23-3 Chapter 20A, Insurance Code, Section 18B, Subsection (f) is amended
23-4 as follows:
23-5 (f) A health maintenance organization that violates
23-6 Subsection (c) [or (e)] of this section is liable to a physician or
23-7 provider for the full amount of billed charges submitted on the
23-8 claim, plus 18% interest per annum. [or the amount payable under
23-9 the contracted penalty rate, less any amount previously paid or any
23-10 charge for a service that is not covered by the health care plan]
23-11 SECTION 14. The Texas Health Maintenance Organization Act,
23-12 Chapter 20A, Insurance Code, Section 18B, Subsection (g) is amended
23-13 as follows:
23-14 (g) A physician or provider may recover reasonable
23-15 attorney's fees plus court costs in an action to recover payment
23-16 under this section.
23-17 SECTION 15. The Texas Health Maintenance Organization Act,
23-18 Chapter 20A, Insurance Code, Section 18B, Subsection (k) is
23-19 removed:
23-20 [(k) Not later than the 60th day before the date of an
23-21 addition or change in the data elements that must be submitted with
23-22 a claim or any other change in a health maintenance organization's
23-23 claim processing and payment procedures, the health maintenance
23-24 organization shall provide written notice of the addition or change
23-25 to each participating physician or provider.]
23-26 SECTION 16. Article, 3.70-3C, Section 3A, Subsection (e),
23-27 Insurance Code, is removed:
24-1 [(e) If the insurer acknowledges coverage of an insured
24-2 under the health insurance policy but intends to audit the
24-3 preferred provider claim, the insurer shall pay the charges
24-4 submitted at 85 percent of the contracted rate on the claim not
24-5 later than the 45th day after the date that the insurer receives
24-6 the claim from the preferred provider. Following completion of the
24-7 audit, any additional payment due a preferred provider or any
24-8 refund due the insurer shall be made not later than the 30th day
24-9 after the later of the date that:]
24-10 [(1) the preferred provider receives notice of the
24-11 audit results; or]
24-12 [(2) any appeal rights of the insured are exhausted.]
24-13 SECTION 17. Article, 3.70-3C, Section 3A, Subsection (f),
24-14 Insurance Code, is amended as follows:
24-15 (f) An insurer that violates Subsection (c) [or (e)] of this
24-16 section is liable to a preferred provider for the full amount of
24-17 billed charges submitted on the claim, plus 18% interest per annum.
24-18 [or the amount payable under the contracted penalty rate, less any
24-19 amount previously paid or any charge for a service that is not
24-20 covered by the health insurance policy]
24-21 SECTION 18. Article, 3.70-3C, Section 3A, Subsection (g),
24-22 Insurance Code, is amended as follows:
24-23 (g) A preferred provider may recover reasonable attorney's
24-24 fees plus court costs in an action to recover payment under this
24-25 section.
24-26 SECTION 19. Article, 3.70-3C, Section 3A, Subsection (k),
24-27 Insurance Code, is removed:
25-1 [(k) Not later than the 60th day before the date of an
25-2 addition or change in the data elements that must be submitted with
25-3 a claim or any other change in an insurer's claim processing and
25-4 payment procedures, the insurer shall provide written notice of the
25-5 addition or change to each preferred provider.]
25-6 SECTION 20. This Act takes effect September 1, 2001, for any
25-7 contract entered into or renewed on or after September 1, 2001.