By: Miller H.B. No. 2405
A BILL TO BE ENTITLED
AN ACT
relating to the prompt payment of claims to physicians and
providers by insurers and health maintenance organizations.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 3A, Article 3.70-3C, Insurance Code, as
added by Chapter 1024, Acts of the 75th Legislature, Regular
Session, 1997, is amended to read as follows:
Sec. 3A. PROMPT PAYMENT OF PREFERRED PROVIDERS. (a) In
this section, "clean claim" means a [completed] claim that complies
with section 3C of this article[, as determined under department
rules, submitted by a preferred provider for medical care or health
care services under a health insurance policy].
(b) A physician or [preferred] provider must submit a claim
to an insurer not later than the 95th day after the date the
physician or provider provides the medical care or health care
services for which the claim is made. If a physician or provider
fails to submit a claim in compliance with this subsection, the
physician or provider forfeits the right to payment unless the
failure to submit the claim in compliance with this subsection is a
result of a catastrophic event that substantially interferes with
the normal business operations of the physician or provider as
determined under guidelines established by the commissioner by
rule. The period for submitting a claim under this subsection may
be extended by contract. A physician or provider may not submit a
duplicate claim for payment before the 46th day after the date the
original claim was submitted. The commissioner may adopt rules
under which an insurer may determine whether a claim is a duplicate
claim [for medical care or health care services under a health
insurance policy may obtain acknowledgment of receipt of a claim
for medical care or health care services under a health care plan by
submitting the claim by United States mail, return receipt
requested. An insurer or the contracted clearinghouse of an
insurer that receives a claim electronically shall acknowledge
receipt of the claim by an electronic transmission to the preferred
provider and is not required to acknowledge receipt of the claim by
the insurer in writing].
(c) Except as provided by subsection (e) or (f) of this
section, not [Not] later than the 45th day after the date that the
insurer receives a clean claim submitted by [from] a preferred
provider, the insurer shall:
(1) pay the total amount of the claim in accordance
with the contract between the preferred provider and the insurer;
(2) pay the portion of the claim that is not in dispute
and notify the preferred provider in writing why the remaining
portion of the claim will not be paid; or
(3) notify the preferred provider in writing why the
claim will not be paid.
(d) If a prescription benefit claim is electronically
adjudicated and electronically paid, and the preferred provider or
its designated agent authorizes treatment, the claim must be paid
not later than 21st day after the treatment is authorized.
(e) Except as provided by subsection (f) of this section, if
[If] the insurer [acknowledges coverage of an insured under the
health insurance policy but] intends to audit the preferred
provider claim, the insurer shall pay the charges submitted at 100
[85] percent of the contracted rate on the claim not later than the
45th day after the date that the insurer receives the clean claim
from the preferred provider. If the insurer requests additional
information needed to complete the audit, the request must describe
with specificity the information requested and relate only to
information the insurer in good faith needs to adjudicate the
claim. The insurer may only request information from the preferred
provider that is contained in, or is in the process of being
incorporated into, the patient's medical or billing record
maintained by the preferred provider. If a preferred provider does
not supply information reasonably requested by the insurer in
connection with the audit, the insurer may:
(1) notify the provider in writing that the provider
must provide the information not later than the 45th day after the
date of the notice of forfeit the amount of the claim; and
(2) if the provider does not provide the information
as required by subsection (1), recover the amount of the claim and
reasonable attorney's fees and court costs in an action to recover
payment under this subsection [Following completion of the audit,
any additional payment due a preferred provider or any refund due
the insurer shall be made not later than the 30th day after the
later of the date that:
[(1) the preferred provider receives notice of the
audit results; or
[(2) any appeal rights of the insured are exhausted].
(f) If an insurer needs additional information from a
preferred provider to process a clean claim, the insurer shall
request in writing that the preferred provider provide any
additional information the insurer desires in good faith for
clarification of the claim. The insurer must request the
additional information not later than the 30th day after the date
the insurer receives the clean claim. The request must describe
with specificity the information requested and relate only to
information the insurer in good faith needs to adjudicate the
claim. The insurer may only request information from the preferred
provider that is contained in, or is in the process of being
incorporated into, the patient's medical or billing record
maintained by the preferred provider. An insurer that requests
additional information shall pay, deny, or audit the claim on or
before the 45th day after the date the initial clean claim is
received, excluding the day the insurer requests the additional
information and each day after the date the additional information
is requested and before the date the insurer receives the
additional information. [An insurer that violates Subsection (c) or
(e) of this section is liable to a preferred provider for the full
amount of billed charges submitted on the claim or the amount
payable under the contracted penalty rate, less any amount
previously paid or any charge for a service that is not covered by
the health insurance policy.]
(g) The commissioner shall adopt rules to identify a filing
by a physician or provider to an insurer that includes additional
information requested by the insurer.
(h) The insurer's clean claims payment processes shall be
consistent with, if available, nationally recognized, generally
accepted Current Procedural Terminology codes, notes, and
guidelines, including all relevant modifiers.
(i) A preferred provider may recover reasonable attorney's
fees and court costs in an action to recover payment under this
section.
(j) [(h)] In addition to any other penalty or remedy
authorized by this code or another insurance law of this state, an
insurer that violates subsection (c), [or] (d), or (e) of this
section is subject to an administrative penalty under Chapter 84
[Article 1.10E] of this code. For each day an [The] administrative
penalty is imposed under this subsection, the penalty [that
article] may not exceed $1,000 for each [day the] claim that remains
unpaid or violation of Subsection (c), [or] (d), or (e) of this
section. An insurer is not subject to an administrative penalty if
the commissioner finds that the insurer has paid, denied or audited
at least ninety-five (95) percent of all clean claims received from
preferred providers within the statutory time frames during a
calendar year. The commissioner may establish standards under
which the commissioner may impose sanctions on or assess penalties
against an insurer under Chapter 82 or 84 of this code if the
commissioner finds that an insurer has violated subsection (c),
(d), or (e) of this section in processing less than ninety-five (95)
percent of clean claims submitted to the insurer by preferred
providers within the statutory time frames.
(k) [(i)] Upon written request, [T] the insurer shall
provide a preferred provider with summaries [copies] of all
applicable utilization review policies and claim processing
policies or procedures[, including required data elements and claim
formats].
(l) [(j) An insurer may, by contact with a preferred
provider, add or change the data elements that must be submitted
with the preferred provider claim.
[(k) Not later than the 60th day before the date of an
addition or change in the data elements that must be submitted with
a claim or any other change in an insurer's claim processing and
payment procedures, the insurer shall provide written notice of the
addition or change to each preferred provider.
[(l) This section does not apply to a claim made by a
preferred provider who is a member of the legislature.
[(m)] This section applies to a person with whom an insurer
contracts to process claims or to obtain the services of preferred
providers to provide medical care or health care to insureds under a
health insurance policy.
(m) [(n)] The commissioner of insurance may adopt rules as
necessary to implement this section.
(n) Except as provided by subsections (b) and (h) of this
section, the provisions of this section 3A may not be waived,
voided, or nullified by contract.
SECTION 2. Article 3.70-3C, Insurance Code, as added by
Chapter 1024, Acts of the 7th Legislature, Regular Session, 1997,
is amended by adding sections 3C-3E, 3I, 3J, and 10 to read as
follows:
Sec. 3C. ELEMENTS OF CLEAN CLAIM. (a) A claim by a
preferred physician or preferred provider, other than an
institutional provider, is a "clean claim" if the claim is
submitted to an insurer for payment using Centers for Medicare and
Medicaid Services Form 1500 or a successor to that form developed by
the National Uniform Claim Committee or its successor and adopted
by the commissioner by rule for the purposes of this subsection and
contains the information required by the commissioner by rule for
the purposes of this subsection entered into the appropriate fields
on the form.
(b) A claim by a preferred institutional provider is a
"clean claim" if the claim is submitted to an insurer for payment
using Centers for Medicare and Medicaid Services Form UB-92 or a
successor to that form developed by the National Uniform Billing
Committee or its successor and adopted by the commissioner by rule
for the purposes of this subsection and contains the information
required by the commissioner by rule for the purposes of this
subsection entered into the appropriate fields on the form.
(c) For electronically filed claims, the commissioner shall
require any data element that is required in an electronic
transaction set needed to comply with federal law.
(d) A clean claim submitted by a physician or provider that
includes additional fields, data elements, attachments, or other
information not required under this section is considered to be a
clean claim for the purposes of this article.
(e) The provisions of this section may not be waived,
voided, or nullified by contract.
(f) A claim by a physician, provider or institutional
provider is not a clean claim if the insurer reasonably and in good
faith believes that it might have been submitted fraudulently. An
insurer may take appropriate measures to detect, investigate,
prevent payment of, and report as required by law, claims that an
insurer in good faith reasonably suspects may be fraudulent in
nature. Claims that in good faith of the insurer fall under
reasonable suspicion of having been submitted fraudulently are not
subject to the other provisions of this section 3C and must be
treated in accordance with the insurer's established anti-fraud
procedures and with state and/or federal laws and regulations
pertaining to the investigation and reporting of suspected
insurance fraud.
Sec. 3D. OVERPAYMENT. (a) Except as provided by subsection
(b), an insurer may deduct the amount of an overpayment from any
amount owed by the insurer to the physician or provider, or may
otherwise recover the amount of overpayment, if:
(1) not later than the 180th day after the date the
physician or provider receives the payment, the insurer provides
written notice of the overpayment to the physician or provider that
includes the basis and specific reasons for the request for
recovery of funds; and
(2) the physician or provider does not make
arrangements for repayment of the requested funds on or before the
45th day after the date the physician or provider receives the
notice.
(b) If a physician or provider exercises a right of appeal
available under the physician's or provider's contract with the
insurer, the insurer may not recover the amount overpaid until the
physician's or provider's right of appeal is exhausted.
(c) The insurer may modify the provisions of this section 3D
by contract if agreed by the physician or provider.
Sec. 3E. AVAILABILITY OF CODING GUIDELINES. (a) The
commissioner by rule shall require a contract between an insurer
and a preferred physician or preferred provider to provide that:
(1) the physician or provider may request a
description of the coding guidelines, including any underlying
bundling, recoding, or other payment process and fee schedules
applicable to specific procedures that the physician or provider
will provide under the contract;
(2) the insurer or the insurer's agent will provide the
coding guidelines and fee schedules not later than the 30th day
after the date the insurer receives the request;
(3) the insurer will provide notice of changes to the
coding guidelines and fee schedules that will result in a change of
payment to a physician or provider not later than the 60th day
before the date the changes take effect and will not make
retroactive revisions to the coding guidelines and fee schedules;
and
(4) after a physician or provider receives information
under this subsection, the contract may be terminated by the
physician or provider, without penalty or discrimination in
participation in contracts with the insurer, on or after the 60th
day after the date the physician or provider provides the insurer
written notice of intent to terminate the contract, unless modified
by contract.
(b) A physician or provider who receives information under
subsection (a) of this section may only:
(1) use or disclose the information for the purpose of
practice management or billing activities; and
(2) disclose the information to a government agency
involved in the regulation of health care or insurance.
(c) The insurer shall, on request of a physician or
provider, provide the name, edition, and model version of the
software that the insurer uses to determine bundling and unbundling
of claims.
(d) Nothing in this section may be construed to require an
insurer to provide specific information that would violate any
applicable copyright law or licensing agreement. However, the
insurer must supply, in lieu of any information withheld on the
basis of copyright law or a licensing agreement, a summary of
information that will allow a reasonable person with sufficient
training, experience, and competence in claims processing to
determine the payment to be made under the terms of the contract for
covered services provided to enrollees.
Sec. 3I. VIOLATION OF CERTAIN CLAIMS PAYMENT PROVISIONS;
PENALTY. (a) This section applies only to a clean claim.
(b) An insurer that fails to pay a clean claim in accordance
with sections 3A(c), (d), or (e) of this article shall pay to the
preferred physician or preferred provider the contracted rate owed
by the insurer for the claim, less amounts previously paid, plus a
penalty in the amount of fifty (50) percent of the difference
between the billed charge and the contracted rate. A penalty under
this subsection shall not exceed one hundred thousand dollars
($100,000). No penalty shall be paid on clean claims not covered by
the health insurance policy. This penalty shall apply to clean
claims paid forty-five (45) days or less after the statutory claims
payment deadline, subject to Sec. 3A(f).
(c) An insurer that fails to pay a clean claim in accordance
with sections 3A(c), (d) or (e) of this article shall pay to the
preferred physician or preferred provider the contracted rate owed
by the insurer for the claim, less amounts previously paid, plus a
penalty in the amount of one hundred (100) percent of the difference
between the billed charge and the contracted rate. A penalty under
this subsection shall not exceed two hundred thousand dollars
($200,000). No penalty shall be paid on clean claims not covered by
the health insurance policy. This penalty shall apply to clean
claims paid forty-six (46) days or more after the statutory claims
payment deadline, subject to Sec. 3A(f).
(d) An insurer that fails to pay the contracted rate owed by
the insurer for a clean claim in accordance with sections 3A(c), (d)
or (e) of this article shall pay to the preferred physician or
preferred provider a penalty in the amount of fifty (50) percent of
the underpaid amount. A penalty under this subsection may not
exceed one hundred thousand dollars ($100,000) or the difference
between the billed charges and the contracted rate whichever is
less. This penalty shall apply if the insurer pays the balance of
the contracted rate to the preferred physician or preferred
provider within forty-five (45) days of receipt of written notice
of the underpayment from the preferred physician or preferred
provider.
(e) An insurer that fails to pay the contracted rate owed by
the insurer for a clean claim in accordance with sections 3A(c), (d)
or (e) of this article shall pay to the preferred physician or
preferred provider a penalty in the amount of one hundred (100)
percent of the underpaid amount. A penalty under this subsection
may not exceed two hundred thousand dollars ($200,000) or the
difference between the billed charges and the contracted rate
whichever is less. This penalty shall apply if the insurer pays the
balance of the contracted rate to the preferred physician or
preferred provider forty-six (46) days or more after receipt of
written notice of the underpayment from the preferred physician or
preferred provider.
(f) An insurer is not liable for a penalty under subsection
(d) or (e) of this section if the insurer corrects the underpayment
within thirty (30) days of receipt of written notice from the
preferred physician or preferred provider. An insurer is not
liable for a penalty under subsection (d) or (e) of this section
unless the physician or provider notifies the insurer of the
underpayment not later than the 180th day after the date the
underpayment is received.
(g) An insurer that pays a penalty under this section shall
clearly indicate on the explanation of benefits or other statement
in the manner prescribed by the commissioner by rule the amount of
the contracted rate paid and the amount paid as a penalty.
(h) An insurer is not liable for any penalties under this
Section 3I or regulatory penalties under section 3A(j) if the
failure to comply is a result of a catastrophic event that
substantially interferes with the normal business operations of the
insurer as determined under guidelines established by the
commissioner by rule.
(i) The provisions of this section may not be waived,
voided, or nullified by contract.
Sec. 3J. AUTHORITY OF ATTORNEY GENERAL. (a) If the
attorney general has good cause to believe that a physician or
provider has failed in good faith to repay an insurer under section
3D of this article, the attorney general may:
(1) bring an action to compel the physician or
provider to repay the insurer;
(2) on the finding of a court that the physician or
provider has violated section 3D, recover a civil penalty of not
more than the greater of $1,000 or two times the amount in dispute
for each violation; and
(3) recover court costs and attorney's fees.
(b) If the attorney general has good cause to believe that a
physician or provider has improperly used or disclosed information
received by the physician or provider under section 3E of this
article, the attorney general may:
(1) bring an action seeking an injunction against the
physician or provider to restrain the improper use or disclosure of
information;
(2) on the finding of a court that the physician or
provider has violated section 3E, recover a civil penalty of not
more than $1,000 for each negligent violation or $10,000 for each
intentional violation; and
(3) recover court costs and attorneys' fees.
(c) If the attorney general has good cause to believe that a
physician or provider has failed to comply with section 3A of this
article, the attorney general may:
(1) bring an action seeking an injunction against the
physician or provider to enforce compliance;
(2) on the finding of a court that the physician or
provider has violated section 3A, recover a civil penalty of not
more than $1,000 for each negligent violation or $10,000 for each
intentional violation; and
(3) recover court costs and attorneys' fees.
Sec. 10. CONFLICT WITH OTHER LAW. To the extent of any
conflict between this article and Article 21.52C of this code, this
article controls.
SECTION 3. Section 843.336, Insurance Code, as effective
June 1, 2003, is amended to read as follows:
Sec. 843.336. CLEAN CLAIM [DEFINITION]. (a) In this
subchapter, "clean claim" means a [completed] claim that complies
with this section.
(b) A claim by a physician or provider, other than an
institutional provider, is a "clean claim" if the claim is
submitted using Centers for Medicare and Medicaid Services Form
1500 or a successor to that form developed by the National Uniform
Billing Committee or its successor and adopted by the commissioner
by rule for the purposes of this subsection that is submitted to a
health maintenance organization for payment and that contains the
information required by the commissioner by rule for the purposes
of this subsection entered into the appropriate fields on the form.
(c) A claim by an institutional provider is a "clean claim"
if the claim is submitted using Centers for Medicare and medicaid
Services Form UB-92 or a successor to that form developed by the
National Uniform Billing Committee or its successor and adopted by
the commissioner by rule for the purposes of this subsection that is
submitted to a health maintenance organization for payment and that
contains the information required by the commissioner by rule for
the purposes of this subsection entered into the appropriate fields
on the form.
(d) For electronically filed claims, the commissioner shall
require any data element that is required in an electronic
transaction set needed to comply with federal law.
(e) A clean claim submitted by a physician or provider that
includes additional fields, data elements, attachments, or other
information not required under this section is considered to be a
clean claim for the purposes of this article.
(f) The commissioner may require any data element that is
required in an electronic transaction set needed to comply with
federal law.
(g) A claim by a physician, provider or institutional
provider is not a clean claim if the insurer reasonably and in good
faith believes that it might have been submitted fraudulently. An
insurer may take appropriate measures to detect, investigate
prevent payment of, and report as required by law, claims that an
insurer in good faith reasonably suspects may be fraudulent in
nature. Claims that in good faith of the insurer fall under
reasonable suspicion of having been submitted fraudulently are not
subject to the other provisions of this chapter and must be treated
in accordance with the insurer's established anti-fraud procedures
and with state and/or federal laws and regulations pertaining to
the investigation and reporting of suspected insurance fraud.
SECTION 4. Section 843.337, Insurance Code, as effective
June 1, 2003, is amended to read as follows:
Sec. 843.337. TIME FOR SUBMISSION OF CLAIM; DUPLICATE
CLAIMS [ACKNOWLEDGMENT OF RECEIPT OF CLAIM]. (a) A physician or
provider must submit a claim to a health maintenance organization
not later than the 95th day after the date the physician or provider
provides the medical care or health care services for which the
claim is made [A physician or provider for health care services
under a health care plan may obtain acknowledgment of receipt of a
claim for health care services under a health care plan by
submitting the claim by United States mail, return receipt
requested]. If a physician or provider fails to submit a claim in
compliance with this subsection, the physician or provider forfeits
the right to payment unless the failure to submit the claim in
compliance with this subsection is a result of a catastrophic event
that substantially interferes with the normal business operations
of the physician or provider as determined under guidelines
established by the commissioner by rule.
(b) The period for submitting a claim under this subsection
may be extended by contract.
(c) A physician or provider may not submit a duplicate claim
for payment before the 46th day after the date the original claim
was submitted.
(d) The commissioner may adopt rules under which a health
maintenance organization may determine whether a claim is a
duplicate claim [A health maintenance organization or the
contracted clearinghouse of the health maintenance organization
that receives a claim electronically shall acknowledge receipt of
the claim by an electronic transmission to the physician or
provider and is not required to acknowledge receipt of the claim in
writing].
SECTION 5. Section 843.338, Insurance Code, as effective
June 1, 2003, is amended to read as follows:
Sec. 843.338. DEADLINE FOR ACTION ON CLEAN CLAIMS. Except
as provided by sections 843.3385 and 843.340, not [Not] later than
the 45th day after the date on which a health maintenance
organization receives a clean claim submitted by a physician or
provider, the health maintenance organization shall:
(1) pay the total amount of the claim in accordance
with the contract between the physician or provider and the health
maintenance organization;
(2) pay the portion of the claim that is not in dispute
and notify the physician or provider in writing why the remaining
portion of the claim will not be paid; or
(3) notify the physician or provider in writing why
the claim will not be paid.
SECTION 6. Subchapter J, Chapter 843, Insurance Code, as
effective June 1, 2003, is amended by adding section 843.3385 to
read as follows:
Sec. 843.3385. ADDITIONAL INFORMATION. (a) If a health
maintenance organization needs additional information from a
physician or provider to process claim, the health maintenance
organization shall request in writing that the physician or
provider provide any additional information the health maintenance
organization desires in good faith for clarification of the claim.
The health maintenance organization must request the additional
information not later than the 30th day after the date the health
maintenance organization receives the clean claim. The health
maintenance organization may only request information that is
contained in, or is in the process of being incorporated into, the
patient's medical or billing record maintained by the physician or
provider.
(b) The request must describe with specificity the
information requested and relate only to information the health
maintenance organization in good faith needs to adjudicate the
claim.
(c) A health maintenance organization that requests
additional information under this section shall pay, deny, or audit
the claim on or before the 45th day after the date the initial clean
claim is received, excluding the day the health maintenance
organization requests the additional information or each day after
the date the additional information is requested and before the
date that the health maintenance organization receives the
additional information.
(d) The commissioner shall adopt rules under which a health
maintenance organization can easily identify a filing by a
physician or provider that includes additional information
requested by the health maintenance organization.
SECTION 7. Section 843.339, Insurance Code, as effective
June 1, 2003, is amended to read as follows:
Sec. 843.339. DEADLINE FOR ACTION ON CERTAIN PRESCRIPTION
BENEFIT CLAIMS. If a health maintenance organization or its
designated agent authorizes treatment, a prescription benefit
claim that is electronically adjudicated and electronically paid
shall be paid not later than the 21st day after the date on which the
treatment is authorized.
SECTION 8. Section 843.340, Insurance Code, as effective
June 1, 2003, is amended to read as follows:
Sec. 843.340. AUDITED CLAIMS. Except as provided by
section 843.3385, if a [A] health maintenance organization [that
acknowledges coverage of an enrollee under a health care plan but]
intends to audit a claim submitted by a physician or provider, the
health maintenance organization shall pay the charges submitted at
100 [85] percent of the contracted rate on the claim not later than
the 45th day after the date on which the health maintenance
organization receives the clean claim from a physician or provider.
If the health maintenance organization requests additional
information needed to complete the audit, the request must describe
with specificity the information requested and relate only to
information the health maintenance organization in good faith needs
to adjudicate the claim. The health maintenance organization may
only request information from the preferred provider that is
contained in, or is in the process of being incorporated into, the
patient's medical or billing record maintained by the physician or
provider. If a physician or provider does not supply information
reasonably requested by the health maintenance organization in
connection with the audit, the health maintenance organization may:
(1) notify the physician or provider in writing that
the physician or provider must provide the information not later
than the 45th day after the date of the notice; or forfeit the
amount of the claim; and
(2) if the physician or provider does not provide the
information as required by Subdivision (1), recover the amount of
the claim and reasonable attorney's fees and court costs in an
action to recover payment under this subsection. [Following
completion of the audit, any additional payment due a physician or
provider or any refund due the health maintenance organization
shall be made not later than the 30th day after the later of the date
that:
[(1) the physician or provider receives notice of the
audit results; or
[(2) any appeal rights of the enrollee are exhausted].
SECTION 9. Subchapter J, Chapter 843, Insurance code, as
effective June 1, 2003, is amended by adding section 843.3401 to
read as follows:
Sec. 843.3401. OVERPAYMENT. (a) Except as provided by
subsection (b), a health maintenance organization may deduct the
amount of an overpayment from any amount owed by the health
maintenance organization to the physician or provider, or may
otherwise recover the amount of overpayment if:
(1) not later than the 180th day after the date the
physician or provider receives the payment, the health maintenance
organization provides written notice of the overpayment to the
physician or provider that includes the basis and specific reasons
for the request for recovery of funds; and
(2) the physician or provider does not make
arrangements for repayment of the requested funds on or before the
45th day after the date the physician or provider receives the
notice;
(b) if a physician or provider exercises a right of
appeal available under the physician's or providers' contract with
the health maintenance organization, the health maintenance
organization may not recover the amount overpaid until the
physician's or provider's right of appeal is exhausted;
(4) The health maintenance organization may modify the
provisions of Sec. 843.3401 by contract if agreed by the physician
or provider.
SECTION 10. Subchapter J, Chapter 843, Insurance Code, as
effective June 1, 2003, is amended by adding section 843.3402 to
read as follows:
AVAILABILITY OF CODING GUIDELINES. (a) The commissioner by
rule shall require a contract between a health maintenance
organization and a physician or provider to provide that:
(1) the physician or provider may request a
description of the coding guidelines, including any underlying
bundling, recoding, or other payment process and fee schedules
applicable to specific procedures that the physician or provider
will provide under the contract;
(2) the health maintenance organization or the health
maintenance organization's agent will provide the coding
guidelines and fee schedules not later than the 30th day after the
date the health maintenance organization receives the request;
(3) the health maintenance organization will provide
notice of changes to the coding guidelines and fee schedules that
will result in a change of payment to a physician or provider not
later than the 60th day before the date the changes take effect and
will not make retroactive revisions to the coding guidelines and
fee schedules; and
(4) after a physician or provider receives information
under this subsection, the contract may be terminated by the
physician or provider, without penalty or discrimination in
participation in other contracts with the health maintenance
organization, on or after the 60th day after the date the physician
or provider provides the insurer written notice of intent to
terminate the contract, unless modified by contract.
(b) A physician or provider who receives information under
subsection (a) of this section may only:
(1) use or disclose the information for the purpose of
practice management or billing activities; and
(2) disclose the information to a government agency
involved in the regulation of health care or insurance.
(c) The health maintenance organization shall, on request
of a physician or provider, provide the name, edition, and model
version of the software that the insurer uses to determine bundling
and unbundling of claims.
(d) Nothing in this section may be construed to require an
insurer to provide specific information that would violate any
applicable copyright law or licensing agreement. However, the
insurer must supply, in lieu of any information withheld on the
basis of copyright law or a licensing agreement, a summary of
information that will allow a reasonable person with sufficient
training, experience, and competence in claims processing to
determine the payment to be made under the terms of the contract for
covered services provided to enrollees.
(e) Except for (a)(4), the provisions of this section may
not be waived, voided, or nullified by contract.
SECTION 11. Section 843.341, Insurance Code, as effective
June 1, 2003, is amended to read as follows:
Sec. 843.341. CLAIMS PROCESSING PROCEDURES. (a) Upon
written request, a health maintenance organization shall provide a
participating physician or provider with [copies] summaries of all
applicable utilization review policies and claim processing
policies or procedures[, including required data elements and claim
formats].
(b) A health maintenance organization's claims payment
processes shall be consistent with, if available, nationally
recognized, generally accepted Current Procedural Terminology
codes, notes, and guidelines, including all relevant modifiers. [A
health maintenance organization may, by contract with a
participating physician or provider, add or change the data
elements that must be submitted with a claim from the physician or
provider.]
[(c) Not later than the 60th day before the date of an
addition or change in the data elements that must be submitted with
a claim or any other change in a health maintenance organization's
claim processing and payment procedures, the health maintenance
organization shall provide written notice of the addition or change
to each participating physician or provider.]
SECTION 12. Section 843.342, Insurance Code, as effective
June 1, 2003, is amended to read as follows:
Sec. 843.342. VIOLATION OF CERTAIN CLAIMS PAYMENT
PROVISIONS; PENALTIES [ADMINISTRATIVE PENALTY].
(a) This section applies only to a clean claim.
(b) A health maintenance organization that fails to pay a
clean claim in accordance with sections 843.338, 843.339 or 843.340
of this article shall pay to the physician or provider the
contracted rate owed by the health maintenance organization for the
claim, less amounts previously paid, plus a penalty in the amount of
the fifty (50) percent of the difference between the billed charge
and the contracted rate. A penalty under this subsection shall not
exceed one hundred thousand dollars ($100,000). No penalty shall
be paid on clean claims not covered by the health insurance policy.
This penalty shall apply to clean claims paid forty-five (45) days
or less after the statutory claims payment deadline, subject to
Sec. 843.342.
(c) A health maintenance organization that fails to pay a
clean claim in accordance with sections 843.338, 843.339 or 843.340
of this article shall pay to the physician or provider the
contracted rate owed by the health maintenance organization for the
claim, less amounts previously paid, plus a penalty in the amount of
one hundred (100) percent of the difference between the billed
charge and the contracted rate. A penalty under this subsection
shall not exceed two hundred thousand dollars ($200,000). No
penalty shall be paid on clean claims not covered by the health
insurance policy. This penalty shall apply to clean claims paid
forty-six (46) days or more after the statutory claims payment
deadline, subject to Sec. 843.342.
(d) A health maintenance organization that fails to pay the
contracted rate owed by the health maintenance organization for a
clean claim in accordance with sections 843.338, 843.339 or 843.340
of this article shall pay to the physician or provider a penalty in
the amount of fifty (50) percent of the underpaid amount. A penalty
under this subsection may not exceed one hundred thousand dollars
($100,000) or the difference between the billed charges and the
contracted rate, whichever is less. This penalty shall apply if the
health maintenance organization pays the balance of the contracted
rate to the physician or provider within forty-five (45) days of
receipt of written notice of the underpayment from the physician or
provider.
(e) A health maintenance organization that fails to pay the
contracted rate owed by the health maintenance organization for a
clean claim in accordance with sections 843.338, 843.339 or 843.340
of this article shall pay to the physician or provider a penalty in
the amount of one hundred (100) percent of the underpaid amount. A
penalty under this subsection may not exceed two hundred thousand
dollars ($200,000) or the difference between the billed charges and
the contracted rate whichever is less. This penalty shall apply if
the health maintenance organization pays the balance of the
contracted rate to the physician or provider forty-six (46) days or
more after receipt of written notice of the underpayment from the
physician or provider.
(f) A health maintenance organization is not liable for a
penalty under subsections (d) or (e) of this section if the health
maintenance organization corrects the underpayment within thirty
(30) days of receipt of written notice from the physician or
provider. A health maintenance organization is not liable for a
penalty under subsection (d) or (e) unless the physician or
provider notifies the health maintenance organization of the
underpayment not later than the 180th day after the date the
underpayment is received.
(g) A health maintenance organization that pays a penalty
under this section shall clearly indicate on the explanation of
benefits or other statement, in the manner prescribed by the
commissioner by rule, the amount of the contracted rate paid and the
amount paid as a penalty.
(h) [A health maintenance organization that violates
Section 843.338 or 843.340 is liable to a physician or provider for
the full amount of billed charges submitted on the claim or the
amount payable under the contracted penalty rate, less any amount
previously paid or any charge for a service that is not covered by
the health care plan.
[(b)] In addition to any other penalty or remedy authorized
by this code or another insurance law of this state, a health
maintenance organization that violates subsections 843.338,
843.339 or 843.340 of this article is subject to an administrative
penalty under Chapter 84 [Article 1.10E] of this code. For each day
an [The] administrative penalty is imposed under this subsection,
the penalty [that article] may not exceed $1,000 for each [day the]
claim that remains unpaid or violation of subsections [(c), [or]
(d)] 843.338, 843.339 or 843.340 of this section. A health
maintenance organization is not subject to such administrative
penalty if the commissioner finds that the health maintenance
organization has paid, denied or audited at least ninety-five (95)
percent of all clean claims received from providers and at least
ninety-five (95) percent of all clean claims received from
providers within the statutory time frames during a calendar year.
The commissioner may establish standards under which the
commissioner may impose sanctions on or assess penalties against a
health maintenance organization under Chapter 82 or 84 of this code
if the commissioner finds that a health maintenance organization
has violated subsections 843.338, 843.339 or 843.340 of this
section in processing less than ninety-five (95) percent of clean
claims submitted to the health maintenance organization by
providers within the statutory time frames.
(i) A health maintenance organization is not liable for
penalties under this section 843.342 if the failure to comply is a
result of a catastrophic event that substantially interferes with
the normal business operations of the health maintenance
organization as determined under guidelines established by the
commissioner by rule.
SECTION 13. Section 843.343, Insurance Code, as effective
June 1, 2003, is amended to read as follows:
Sec. 843.343. ATTORNEY'S FEES. A physician or provider may
recover reasonable attorney's fees and court costs in an action to
recover payment under this subsection [Section 843.342].
SECTION 14. Section 843.345, Insurance Code, as effective
June 1, 2003, is amended to read as follows:
Sec. 843.345. EXCEPTIONS. Sections 843.336-843.344 do not
apply to[:
[(1)] a capitated payment required to be made to a
physician or provider under an agreement to provide health care
services, including medical care, under a health care plan[; or
[(2) a claim submitted by a physician or provider who
is a member of the legislature].
SECTION 15. Subchapter J, Chapter 832, Insurance Code, as
effective June 1, 2003, is amended by adding sections 843.347 and
843.348 to read as follows:
Sec. 843.347. CONFLICT WITH OTHER LAW. To the extent of any
conflict between this subchapter and Article 21.52C, this
subchapter controls.
SECTION 16. Subchapter N, Chapter 843, Insurance Code, as
effective June 1, 2003, is amended by adding section 843.465 to read
as follows:
(a) If the attorney general has good cause to believe that a
physician or provider has failed in good faith to repay a health
maintenance organization under section 843.3401, the attorney
general may:
(1) bring an action to compel the physician or
provider to repay the health maintenance organization;
(2) on the finding of a court that the physician or
provider has violated section 843.3401, recover a civil penalty of
not more than the greater of $1,000 or two times the amount in
dispute for each violation; and
(3) recover court costs and attorney's fees.
(b) If the attorney general has good cause to believe that a
physician or provider is or has improperly used or disclosed
information received by the physician or provider under section
843.319, the attorney general may:
(1) bring an action seeking an injunction against the
physician or provider to restrain the improper use or disclosure of
information;
(2) on the finding of a court that the physician or
provider has violated section 843.319, recover a civil penalty of
not more than $1,000 for each negligent violation or $10,000 for
each intention violation; and
(3) recover court costs and attorney's fees.
(c) If the attorney general has good cause to believe that a
physician or provider has failed to comply with section 843.337 of
this article, the attorney general may:
(1) bring an action seeking an injunction against the
physician or provider to enforce compliance;
(2) on the finding of a court that the physician or
provider has violated section 843.337, recover a civil penalty of
not more than $1,000 for each negligent violation or $10,000 for
each intentional violation; and
(3) recover court costs and attorneys' fees.
SECTION 17. Subchapter E, Chapter 21, Insurance Code, is
amended by adding Article 21.52Z to read as follows:
Art. 21.52Z. ELECTRONIC HEALTH CARE TRANSACTIONS
Sec. 1. HEALTH BENEFIT PLAN DEFINED. (a) In this article,
"health benefit plan" means a plan that provides benefits for
medical, surgical, or other treatment expenses incurred as a result
of a health condition, a mental health condition, an accident,
sickness, or substance abuse, including an individual, group,
blanket, or franchise insurance policy or insurance agreement, a
group hospital service contract, or an individual or group evidence
of coverage or similar coverage document that is offered by:
(1) an insurance company;
(2) a group hospital service corporation operating
under Chapter 842 of this code;
(3) a fraternal benefit society operating under
Chapter 885 of this code;
(4) a stipulated premium insurance company operating
under Chapter 884 of this code;
(5) a reciprocal exchange operating under Chapter 942
of this code;
(6) a health maintenance organization operating under
Chapter 843 of this code;
(7) a multiple employer welfare arrangement that holds
a certificate of authority under Chapter 846 of this code; or
(8) an approved nonprofit health corporation that
holds a certificate of authority under Chapter 844 of this code.
(b) The term includes:
(1) a small employer health benefit plan written under
Chapter 26 of this code; and
(2) a health benefit plan offered under Chapter 1551,
1575, or 1601 of this code.
(c) The term does not include:
(1) a hospital indemnity policy
(2) a limited benefit policy;
(3) a specified disease policy;
(4) an indemnity policy issued by an insurer that does
not contract, directly or indirectly, with physicians or providers;
(5) workers' compensation insurance coverage;
(6) medical payment insurance issued as part of a
motor vehicle policy;
(7) a long-term care policy, including a nursing home
fixed indemnity policy, unless the commissioner determines that the
policy provides benefit coverage so comprehensive that the policy
is a health benefit plan as described in subsection (a) of this
section; or
(8) a plan that provides coverage:
a. only for accidental death or dismemberment;
b. for wages or payments in lieu of wages for a
period during which an employee is absent from work because of
sickness or injury; or
c. a supplement to liability insurance.
Sec. 2. ELECTRONIC SUBMISSION OF CLAIMS. A health care
professional licensed under the Occupations Code or a health care
facility licensed under the Health and Safety Code shall submit a
health care claim or equivalent encounter information to the issuer
of a health benefit plan. The health benefit plan issuer shall
comply with the standards for electronic transactions required by
this section and established by the commissioner by rule.
Sec. 2A. TEMPORARY PROVISION: ELECTRONIC SUBMISSION OR
CLAIMS. (a) An issuer of a health benefit plan is not required to
require a health care professional or facility to comply with the
provision required by section 2 of this article before September 1,
2006.
(b) An issuer of a health benefit plan by contract may
require that a health care professional licensed under the
Occupations Code or a health care facility licensed under the
Health and Safety Code submit a health care claim or equivalent
encounter information before September 1, 2006. The health benefit
plan issuer shall comply with the standards for electronic
transactions required by this section and established by the
commissioner by rule.
(c) Health care professionals or health care facilities
must submit health care claims or equivalent encounter information
electronically to the issuer of a health benefit plan by September
1, 2006. If a health care professional or health care facility
cannot comply with the provisions of this Article, the health care
professional or health care facility must apply for a waiver of any
requirement for electronic submission established under subsection
(b) of this section to the commissioner.
(d) The commissioner shall establish circumstances under
which a waiver is required including:
(1) undue hardship;
(2) health care professionals in rural areas; or
(3) any other special circumstance that would justify
a waiver.
(e) Any health professional or health care facility that is
denied a waiver for a health benefit plan may appeal the denial to
the commissioner. The commissioner shall determine whether a
waiver must be granted.
(f) This section expires September 1, 2007.
Sec. 3. RULES. The commissioner may adopt rules as
necessary to implement this article.
SECTION 18. Article 3.70-2. Form of Policy. Is amended by
adding a new subsection (N) to read as follows:
(a) (N) An individual or group policy of accident and
sickness insurance that is delivered, issued for delivery, or
renewed in this state, including a policy issued by a company
subject to Chapter 20, Texas Insurance Code, evidence of coverage
issued by a health maintenance organization subject to the Texas
HMO Act (Chapter 20A, Vernon's Tex. Ins. Code) may contain a
coordination of benefits provision to coordinate benefits when a
member is covered by more than one policy or evidence of coverage in
accordance with regulation promulgated by the Texas Department of
Insurance.
(b) This section does not apply to:
(1) a hospital indemnity policy
(2) a limited benefit policy, or
(3) a specified disease policy.
SECTION 18. As soon as practicable, but not later than the
30th day after the effective date of this Act, the commissioner of
insurance shall adopt rules as necessary to implement this Act. The
commissioner may use the procedures under section 2001.034,
Government Code, for adopting emergency rules with abbreviated
notice and hearing to adopt rules under this section. The
commissioner is not required to make the finding described by
section 2001.034(a), Government Code, to use the emergency rules
procedures.
SECTION 19. This Act takes effect immediately if it
receives a vote of two-thirds of all the members elected to each
house, as provided by Section 39, Article III, Texas Constitution.
If this Act does not receive the vote necessary for immediate
effect, this Act takes effect September 1, 2003.