BILL ANALYSIS

C.S.H.B. 2359

By: Bonnen, Greg

Insurance

Committee Report (Substituted)

BACKGROUND AND PURPOSE

Interested parties note that is it rare for consumers to receive a disclosure stating payment and compensation terms for certain health care goods and services prior to treatment or purchase of such goods or services. These parties assert that as a consequence of this lack of transparency, market-driven corrections in pricing do not occur, leading to large discrepancies in pricing between different health care providers for the same service.

C.S.H.B. 2359 seeks to inject some practical equity into health care market pricing by requiring health insurance companies to disclose their contracted fee schedules, and by prescribing certain restrictions on pricing for the same service across all providers who contract with a single insurance company.

RULEMAKING AUTHORITY

It is the committee's opinion that rulemaking authority is expressly granted to the commissioner of insurance in SECTION 2 of this bill.

ANALYSIS

C.S.H.B. 2359 amends the Insurance Code to prohibit a managed care plan from using different contractual terms and conditions of administrative procedures or different claim adjudication methodologies or procedures for an optometrist, therapeutic optometrist, or ophthalmologist solely because the practitioner is an optometrist, therapeutic optometrist, or ophthalmologist and from using, within a geographic area, different contractual fee schedules or reimbursement amounts for those practitioners solely because the practitioner is an optometrist, therapeutic optometrist, or ophthalmologist.

C.S.H.B. 2359 requires each health care contract to include a disclosure form that states payment and compensation terms in plain language. The bill requires such a form to include information sufficient for a health care provider to determine the compensation or payment for the provider's services and to include the manner of payment; the effect of edits, if any, on payment or compensation; and a fee schedule that shows the compensation or payments to the health care provider and the range of compensation or payments to different providers performing the same service for procedure codes reasonably expected to be billed by the provider for services provided under all contracts used by the health care contractor, and shows, on request, the range of compensation or payments for other procedure codes used by, or that may be used by, the provider.

C.S.H.B. 2359 prohibits a health care contractor from paying an amount of compensation or payments to a health care provider that is less than 85 percent of the amount paid for the same service to another health care provider that holds the same license, certificate, or other authority, regardless of the location of the health care providers and of whether the health care providers are performing services under the same contract. The bill authorizes a health care contractor to satisfy the requirement for inclusion of the effect of edits in the disclosure form by providing a clearly understandable, readily available mechanism that allows a health care provider to determine the effect of an edit on the provider's payment or compensation before a service is provided or a claim is submitted. The bill requires the fee schedule to include, as applicable, service or procedure codes and the associated payment or compensation for each code and authorizes the fee schedule to be provided electronically. The bill requires a health care contractor to provide the fee schedule to an affected health care provider when a material change to a contract occurs that affects the health care provider's payment or compensation, authorizes a health care provider to request that a written fee schedule be provided up to twice annually, and requires the health care contractor to provide the written fee schedule promptly. The bill also requires a health care contractor, if applicable, to inform an affected health care provider in the required disclosure form of the prohibited payment and contracting practices specified in the bill regarding optometrists, therapeutic optometrists, and ophthalmologists.

C.S.H.B. 2359 prohibits a health care contract from precluding the use of the contract or disclosure of the contract to the Texas Department of Insurance to enforce the bill's provisions or other state law. The bill establishes that the information is confidential and privileged and is not subject to public information law, or to subpoena, except to the extent necessary to enable the commissioner of insurance to enforce the bill's provisions or other state law.

C.S.H.B. 2359 authorizes the commissioner to adopt reasonable rules as necessary to implement the bill's purposes and provisions and requires the commissioner to adopt rules as necessary to enforce such provisions. The bill makes a violation of its provisions regarding the required disclosure and permissible range of payment and compensation terms a deceptive act or practice in insurance under applicable statutory provisions.

C.S.H.B. 2359 defines, among other terms, a "health care contract" to mean a contract entered into or renewed between a health care contractor and a physician or health care provider for the delivery of health care services to others. The bill includes within the definition of "health care contractor" certain specified health benefit plan issuers, certain third-party administrators, and a pharmacy benefit manager that administers or manages prescription drug benefits. The bill exempts an employment contract or arrangement between health care providers from its provisions but expressly includes contracts for health care services between a medical group and other medical groups within the applicability of those provisions.

C.S.H.B. 2359 applies only to a health care contract that is entered into or renewed on or after January 1, 2014.

EFFECTIVE DATE

September 1, 2013.

COMPARISON OF ORIGINAL AND SUBSTITUTE

While C.S.H.B. 2359 may differ from the original in minor or nonsubstantive ways, the following comparison is organized and highlighted in a manner that indicates the substantial differences between the introduced and committee substitute versions of the bill.

INTRODUCED

HOUSE COMMITTEE SUBSTITUTE

No equivalent provision.

SECTION 1. Section 1451.153(a), Insurance Code, is amended to read as follows:

(a) A managed care plan may not:

(1) discriminate against a health care practitioner because the practitioner is an optometrist, therapeutic optometrist, or ophthalmologist;

(2) restrict or discourage a plan participant from obtaining covered vision or medical eye care services or procedures from a participating optometrist, therapeutic optometrist, or ophthalmologist solely because the practitioner is an optometrist, therapeutic optometrist, or ophthalmologist;

(3) exclude an optometrist, therapeutic optometrist, or ophthalmologist as a participating practitioner in the plan because the optometrist, therapeutic optometrist, or ophthalmologist does not have medical staff privileges at a hospital or at a particular hospital;

(4) exclude an optometrist, therapeutic optometrist, or ophthalmologist as a participating practitioner in the plan because the services or procedures provided by the optometrist, therapeutic optometrist, or ophthalmologist may be provided by another type of health care practitioner; [or]

(5) as a condition for a therapeutic optometrist or ophthalmologist to be included in one or more of the plan's medical panels, require the therapeutic optometrist or ophthalmologist to be included in, or to accept the terms of payment under or for, a particular vision panel in which the therapeutic optometrist or ophthalmologist does not otherwise wish to be included;

(6) use different contractual terms and conditions or administrative procedures for an optometrist, therapeutic optometrist, or ophthalmologist solely because the practitioner is an optometrist, therapeutic optometrist, or ophthalmologist;

(7) use, within a geographic area, different contractual fee schedules or reimbursement amounts for an optometrist, therapeutic optometrist, or ophthalmologist solely because the practitioner is an optometrist, therapeutic optometrist, or ophthalmologist; or

(8) use different claim adjudication methodologies or procedures for an optometrist, therapeutic optometrist, or ophthalmologist solely because the practitioner is an optometrist, therapeutic optometrist, or ophthalmologist.

SECTION 1. Subtitle F, Title 8, Insurance Code, is amended by adding Chapter 1470 to read as follows:

CHAPTER 1470. DISCLOSURE OF PAYMENT AND COMPENSATION METHODOLOGY

Sec. 1470.001. DEFINITIONS. In this chapter, unless the context otherwise requires:

(1) "Edit" means a practice or procedure under which an adjustment is made regarding procedure codes that results in:

(A) payment for some, but not all, of the health care procedures performed under a procedure code;

(B) payment made under a different procedure code;

(C) a reduced payment as a result of services provided to a patient that are claimed under more than one procedure code on the same service date;

(D) a reduced payment related to a modifier used with a procedure code; or

(E) a reduced payment based on multiple units of the same procedure code billed for a single date of service.

(2) "Health benefit plan issuer" means:

(A) an insurance company, association, organization, group hospital service corporation, health maintenance organization, or pharmacy benefit manager that delivers or issues for delivery an individual, group, blanket, or franchise insurance policy or insurance agreement, a group hospital service contract, or an evidence of coverage that provides health insurance or health care benefits and includes:

(i) a life, health, or accident insurance company operating under Chapter 841 or 982;

(ii) a general casualty insurance company operating under Chapter 861;

(iii) a fraternal benefit society operating under Chapter 885;

(iv) a mutual life insurance company operating under Chapter 882;

(v) a local mutual aid association operating under Chapter 886;

(vi) a statewide mutual assessment company operating under Chapter 881;

(vii) a mutual assessment company or mutual assessment life, health, and accident association operating under Chapter 887;

(viii) a mutual insurance company operating under Chapter 883 that writes coverage other than life insurance;

(ix) a Lloyd's plan operating under Chapter 941;

(x) a reciprocal exchange operating under Chapter 942;

(xi) a stipulated premium insurance company operating under Chapter 884;

(xii) an exchange operating under Chapter 942;

(xiii) a Medicare supplemental policy as defined by Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss(g)(1);

(xiv) a Medicaid managed care program operated under Chapter 533, Government Code;

(xv) a health maintenance organization operating under Chapter 843;

(xvi) a multiple employer welfare arrangement that holds a certificate of authority under Chapter 846; and

(xvii) an approved nonprofit health corporation that holds a certificate of authority under Chapter 844;

(B) the state Medicaid program operated under Chapter 32, Human Resources Code, or the state child health plan or health benefits plan for children under Chapter 62 or 63, Health and Safety Code;

(C) the Employees Retirement System of Texas or another entity issuing or administering a basic coverage plan under Chapter 1551;

(D) the Teacher Retirement System of Texas or another entity issuing or administering a basic plan under Chapter 1575 or a primary care coverage plan under Chapter 1579;

(E) The Texas A&M University System or The University of Texas System or another entity issuing or administering basic coverage under Chapter 1601; and

(F) an entity issuing or administering medical benefits provided under a workers' compensation insurance policy or otherwise under Title 5, Labor Code.

(3) "Health care contract" means a contract entered into or renewed between a health care contractor and a physician or health care provider for the delivery of health care services to others.

(4) "Health care contractor" means an individual or entity that has as a business purpose contracting with physicians or health care providers for the delivery of health care services. The term includes a health benefit plan issuer, an administrator regulated under Chapter 4151, and a pharmacy benefit manager that administers or manages prescription drug benefits.

(5) "Health care provider" means an individual or entity that furnishes goods or services under a license, certificate, registration, or other authority issued by this state to diagnose, prevent, alleviate, or cure a human illness or injury. The term includes a physician or a hospital or other health care facility.

(6) "Physician" means:

(A) an individual licensed to engage in the practice of medicine in this state; or

(B) an entity organized under Subchapter B, Chapter 162, Occupations Code.

(7) "Procedure code" means an alphanumeric code used to identify a specific health procedure performed by a health care provider. The term includes:

(A) the American Medical Association's Current Procedural Terminology code, also known as the "CPT code";

(B) the Centers for Medicare and Medicaid Services Healthcare Common Procedure Coding System; and

(8) "Same service" means health care procedures performed or billed under the same procedure code.

Sec. 1470.002. DEFINITION OF MATERIAL CHANGE.

Sec. 1470.003. APPLICABILITY OF CHAPTER.

Sec. 1470.004. RULEMAKING AUTHORITY.

Sec. 1470.005. DISCLOSURE TO THIRD PARTY. A health care contract may not preclude the use of the contract or disclosure of the contract to a third party to enforce this chapter or other state or federal law. The third party is bound by any applicable confidentiality requirements, including those stated in the contract.

Sec. 1470.006. REQUIRED DISCLOSURE AND PERMISSIBLE RANGE OF PAYMENT AND COMPENSATION. (a) Each health care contract must include a disclosure form that states, in plain language, payment and compensation terms. The form must include information sufficient for a health care provider to determine the compensation or payment for the provider's services.

(b) The disclosure form under Subsection (a) must include:

(1) the manner of payment, such as fee-for-service, capitation, or risk sharing;

(2) the effect of edits, if any, on payment or compensation; and

(3) a fee schedule that shows:

(A) the compensation or payments to the health care provider for procedure codes reasonably expected to be billed by the health care provider for services provided under all contracts used by the health care contractor; and

(B) the range of compensation or payments to different health care providers performing the same service for procedure codes reasonably expected to be billed by the health care provider for services provided under all contracts used by the health care contractor and, on request, the range of compensation or payments for other procedure codes used by, or which may be used by, the health care provider.

(c) A health care contractor may not pay an amount of compensation or payments to a health care provider that is less than 75 percent of the amount paid for the same service to another health care provider that holds the same license, certificate, or other authority, regardless of the location of the health care providers and of whether the health care providers are performing services under the same contract.

(d) A health care contractor may satisfy the requirement under Subsection (b)(2) regarding the effect of edits by providing a clearly understandable, readily available mechanism that allows a health care provider to determine the effect of an edit on payment or compensation before a service is provided or a claim is submitted.

(e) The fee schedule described by Subsection (b)(3) must include, as applicable, service or procedure codes and the associated payment or compensation for each code. The fee schedule may be provided electronically.

(f) A health care contractor shall provide the fee schedule described by Subsection (b)(3) to an affected health care provider when a material change related to payment or compensation occurs. Additionally, a health care provider may request that a written fee schedule be provided up to twice annually, and the health care contractor must provide the written fee schedule promptly.

Sec. 1470.007. ENFORCEMENT.

Sec. 1470.008. WAIVER OF FEDERAL LAW.

SECTION 2. Subtitle F, Title 8, Insurance Code, is amended by adding Chapter 1470 to read as follows: