BILL ANALYSIS

C.S.H.B. 4343

By: Bonnen

Public Health

Committee Report (Substituted)

BACKGROUND AND PURPOSE

In 2021, the legislature passed H.B. 3459 to address the growing issue of overutilization of prior

authorizations for medical services by health insurers. This legislation created a process by which physicians could earn an exemption from prior authorization requirements by attaining a 90 percent or higher prior authorization approval rate for a given service. Under current law if an individual is injured due to the denial of a procedure requested in a prior authorization or the reviewing agent acts in an arbitrary manner or without a medical basis there is no recourse for the patient. Given the novelty of the concept and the complexity of the issue, the process of adopting rules to implement the legislation by the Texas Department of Insurance was lengthy and required input from a large group of market participants. Following the adoption of rules to implement the law, physicians seeking to earn exemptions under the law have reported that parts of the process are confusing and overly burdensome. Furthermore, some physicians report there are inconsistencies between insurers and a lack of transparency regarding compliance with the law. Consequently, many physicians have reported the time and effort required to obtain an exemption is not worth the benefit. Physicians employed by medical insurance companies as utilization review agents are authorized to make medical decisions without the same oversight offered to doctors practicing medicine. These decisions can result in injury or death of an individual who is the subject of the review. C.S.H.B. 4343 seeks to address these issues and improve the process by adding clarity to the process and aligning the implemented rules with the intent of the previously passed legislation.

CRIMINAL JUSTICE IMPACT

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

ANALYSIS

C.S.H.B. 4343 amends the Insurance Code to authorize the Texas Medical Board (TMB), if the TMB believes that a physician has directed a utilization review in an arbitrary manner or without a medical basis or receives a complaint with that allegation, to request the Texas Department of Insurance (TDI) to determine whether the health insurance policy or health benefit plan that is the subject of the utilization review covers the health care service being reviewed. The bill requires the TMB, if TDI determines the health care service is covered, to notify the physician of the allegation and authorizes the TMB, on that determination, to compel the production of documents or other information as necessary to determine whether the utilization review was directed in an arbitrary manner or without a medical basis. The bill limits an inquiry and determination to whether the utilization review was directed in an arbitrary manner or without a medical basis in accordance with the standards of medical practice. The bill requires the TMB to suspend the inquiry until the conclusion of the commissioner of insurance's proceeding if the commissioner initiates a proceeding in relation to the same utilization review for which the inquiry is being conducted. The bill authorizes the TMB to conduct an inquiry in the manner provided by statutory procedures for expert physician review. These provisions of the bill do not apply to chiropractic treatments.

C.S.H.B. 4343 prohibits a physician that directs a utilization review from holding a limited license to practice administrative medicine.

C.S.H.B. 4343 authorizes the TMB to initiate a proceeding under the bill's provisions relating to a utilization review inquiry by the TMB. The bill authorizes the TMB to restrict, suspend, or revoke the license of a physician the TMB determines has directed a utilization review in an arbitrary manner or without a medical basis at the conclusion of the proceeding. The bill authorizes the commissioner of insurance, if a utilization review results in the serious injury or death of an individual who is the subject of the review, to temporarily prohibit a physician who directed the utilization review from directing utilization review and authorizes the TMB to temporarily suspend the physician's license. The bill requires the commissioner or the TMB, as applicable, to conduct an applicable proceeding regarding the utilization review and establishes that the prohibition or suspension is effective until the conclusion of the proceeding.

C.S.H.B. 4343 requires a health maintenance organization (HMO) or an insurer, in conducting an evaluation for an exemption from preauthorization requirements for physicians and providers providing certain services, to include all preauthorization requests submitted by a physician or provider to the HMO or insurer, or its affiliate, considering all health insurance policies and health benefit plans issued or administered by the HMO or insurer, or its affiliate, regardless of whether the preauthorization request was made in connection with a health insurance policy or health benefit plan. The bill establishes by reference that a person is considered an affiliate of another if the person directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with the other person. The bill changes from a six-month evaluation period to a one-year evaluation period the period during which an HMO or insurer, including any affiliate, has approved or would have approved not less than 90 percent of preauthorization requests that prohibits the HMO or insurer from requiring a physician or provider to obtain a preauthorization for a particular health care service. The bill changes from once every six months to once every year the frequency with which an HMO or insurer must evaluate whether a physician or provider qualifies for an exemption from preauthorization requirements.

C.S.H.B. 4343, with respect to determinations made regarding the denial or rescission of a preauthorization exemption, prohibits a reviewing physician who makes such a determination from holding a limited license to practice administrative medicine. The bill requires an HMO or insurer, if there are fewer than five claims submitted by a physician or provider subject to a rescission during the most recent evaluation period for a particular health care service, to review all the claims submitted by the physician or provider during that period for the service.

C.S.H.B. 4343 expands a physician or provider's right to an independent review of an adverse determination regarding a preauthorization exemption to include an HMO's or insurer's determination to deny an exemption to the physician or provider. The bill replaces the provision prohibiting an HMO or insurer, with certain statutory exemptions, from conducting a retrospective review of a health care service subject to a preauthorization exemption with a provision prohibiting instead an HMO or insurer from conducting a utilization review or requiring another review similar to preauthorization of the service, regardless of whether an exemption is rescinded after the provision of a health care service subject to the exemption.

C.S.H.B. 4343 requires each HMO and insurer to submit to TDI an annual written report, in the form and manner prescribed by the commissioner, for each health care service subject to an exemption from preauthorization requirements on the following:

· exemptions granted by the HMO or insurer for the service; and

· determinations by the HMO or insurer to rescind or deny an exemption for the service.

The bill establishes that such a report is public information subject to disclosure under state public information law. The bill requires TDI to ensure that the report does not contain any identifying information before disclosing the report.

C.S.H.B. 4343 amends the Occupations Code to include the direction of utilization review conducted by a utilization review agent under the direction of a licensed physician as an act of practicing medicine under the Medical Practice Act.

C.S.H.B. 4343 applies only to utilization review conducted on or after the bill's effective date and prohibits a preauthorization exemption provided before the bill's effective date from being rescinded before the first anniversary of the last day of the most recent evaluation period for the exemption.

EFFECTIVE DATE

September 1, 2023.

COMPARISON OF INTRODUCED AND SUBSTITUTE

While C.S.H.B. 4343 may differ from the introduced in minor or nonsubstantive ways, the following summarizes the substantial differences between the introduced and committee substitute versions of the bill.

The introduced required the TMB, if the TMB believes that a physician has directed a utilization review in an arbitrary manner or without a medical basis or receives a complaint with that allegation, to notify the physician of the allegation and authorized the TMB, upon such belief or receipt of such a complaint, to compel the production of documents or other information as necessary to determine whether the utilization review was directed in an arbitrary manner or without a medical basis. However, the substitute instead authorizes the TMB, on that belief or receipt of such a complaint, to request TDI to determine whether the health insurance policy or health benefit plan that is the subject of the utilization review covers the health care service being reviewed. The substitute conditions the introduced version's requirement for the TMB to notify the physician, and the discretion of the TMB to compel such production of documentation or information, on TDI determining that the health care service is covered by the policy or benefit plan that is the subject of the review. The substitute includes the following provisions absent from the introduced:

· an authorization for the TMB to conduct an inquiry into a physician or provider directing a utilization in an arbitrary manner or without medical basis in the manner provided by procedures for expert physician evaluation; and

· a provision exempting chiropractic treatment from the bill's provisions relating to such an inquiry.

The substitute omits a provision from the introduced revising provisions specifying that, for purposes of qualifying for an exemption from preauthorization requirements for applicable services, a physician or provider is not required to request the exemption by specifying that the physician or provider is also not required to perform the health care service that is the subject of the exemption a minimum number of times.  

The substitute includes the following provisions absent from the introduced:

· a provision defining "affiliate" by reference;

· a requirement for an HMO or an insurer, in conducting an evaluation for an exemption from preauthorization requirements for physicians and providers providing certain services, to include all preauthorization requests submitted by a physician or provider to the HMO or insurer, or its affiliate, considering all health insurance policies and health benefit plans issued or administered by the HMO or insurer, or its affiliate, regardless of whether the preauthorization request was made in connection with a health insurance policy or health benefit plan, for the purpose of conducting an evaluation for an exemption;

· a provision changing from a six-month evaluation period to a one-year evaluation period the period during which an HMO or insurer, including any affiliate, has approved or would have approved not less than 90 percent of preauthorization requests and that prohibits the HMO or insurer from requiring a physician or provider to obtain a preauthorization for a particular health care service;

· a provision changing from once every six months to once every year the frequency with which an HMO or insurer must evaluate whether a physician or provider qualifies for an exemption from preauthorization requirements;

· a provision establishing that the report each HMO and insurer must submit to TDI regarding exemptions from preauthorization requirements is public information subject to disclosure under state public information law;

· a requirement for TDI to ensure that the report does not contain any identifying information before disclosing it; and

· a prohibition against a preauthorization exemption provided before the bill's effective date being rescinded before the first anniversary of the last day of the most recent exemption evaluation period.