Senate Bill 1264, which recently passed during the 86th Texas legislative session, places restrictions on certain out-of-network providers regarding the practice known as “balance billing” and establishes a process through which health plans and providers may resolve payment disputes. The bill is effective September 1, 2019 and applies to services and supplies provided on or after January 1, 2020.
I. Balance Billing and SB 1264
The term “balance billing” refers to when a healthcare provider bills a patient for the difference between the reimbursement provided by the patient’s health insurance and the amount charged by the provider. SB 1264 places restrictions on balance billing by out-of-network (OON) providers of emergency services, facility-based services provided at an in-network healthcare facility, and lab and diagnostic imaging services that are related to an in-network service. The law disallows these providers from billing a patient for an amount greater than the applicable copayment, coinsurance, and deductible under the health plan based on the initial amount determined to be payable by the plan, or if applicable, a modified amount determined under the plan’s appeal process.
Significantly, the restriction on balance billing does not apply to a nonemergency medical service where the patient receives advance written notice of the service with respect to each OON provider that (a) explains that the provider does not have a contract with the patient’s health plan, (b) discloses the projected amount of the patient’s financial responsibility, and (c) discloses the circumstances under which the patient would be financially responsible.
II. Requirements for Health Plans
SB 1264 applies to claims covered by commercial Health Maintenance Organization (HMO), Exclusive Provider Organization (EPO), and Preferred Provider Organization (PPO) plans and administrators of health benefit plans (non-HMO) provided under the Employees Retirement System (ERS) and Teacher Retirement System (TRS). These health plans must process claims at the “usual and customary rate” for OON emergency services, facility based services provided at an in-network healthcare facility, and lab and diagnostic imaging services that are related to an in-network service. The law requires health plans to pay these claims directly to the OON provider no later than 30 days from receipt of an electronic clean claim and 45 days from receipt of a non-electronic clean claim, including all the information necessary to pay the claim.
The health plans must provide written notice to the patient and the OON provider in an explanation of benefits (EOB) which includes: (1) a statement that balance billing is prohibited under these circumstances, (2) the total amount that the OON provider may bill the patient under the health plan and an itemization of copayments, coinsurance, deductibles, and other amounts included in the total, and (3) information advising the OON provider of the availability of mediation or arbitration, as applicable. The health plan must provide the EOBs with notice to the OON provider no later than the date that the health plan makes a related payment.
III. Dispute Resolution
SB 1264 establishes a dispute resolution process to determine a reasonable payment amount for OON claims when health plans and OON providers disagree on the original payment. The dispute must be resolved between the OON provider and the health plan as the patient is not required to participate.
OON providers and health plans must participate in an informal settlement teleconference within 30 days of the dispute resolution request unless extended by agreement. If no resolution occurs, SB 1264 provides for mediation or arbitration alternatively depending on provider type. Claims from OON facilities may go through the mediation process, while OON non-facility providers such as physicians may go through the arbitration process.
The Texas Department of Insurance (TDI) must establish the mediation and arbitration programs to resolve disputes over OON facility claims. TDI is tasked with adopting rules, forms, and procedures necessary for the implementation of the programs, including the establishment of a portal on TDI’s website through which a request for mediation/arbitration may be submitted and lists of qualified mediators/arbitrators.
IV. Moving Forward
It will be interesting to see how the mediation and dispute resolution procedures will operate once TDI develops the process. But this law does give providers (and patients) some clarity on what should be billed to patients.