[co-author: Spencer Smith]
This is the first of three blogs in a series discussing the shift many states are beginning to make towards limiting “Surprise” or “Balance Billing.” This first blog will focus on Texas Senate Bill 1264, which looks to end surprise billing in the State of Texas in certain circumstances. The second blog in this series will look at the similar law California passed in 2017 to see what kind of effects that law has had. The final blog in this series will discuss other proposed state and federal laws that look to continue the trend towards ending surprise billing.
“Surprise” or “balance billing” is when a patient, who is covered by health insurance or a health plan, unintentionally receives services from a provider that is not contracted with the patient’s insurance company (“Out-of-Network Provider”). These surprise bills often arise from emergency services or services delivered to patients at In-Network Facilities (facilities contracted with their health plan) by out-of-network specialty physicians or other providers that patients typically have no role in choosing – most commonly, ancillary physicians (anesthesiologists, radiologists, pathologists, and assistant surgeons). Because that provider is not under contract with the patient’s health plan, the health plan pays the provider only the amount it deemed appropriate in its contract with the patient. The Out-of-Network Provider will then seek the difference between what the health plan paid and the provider’s charges, directly from the patient.
In the past, Texas attempted to curb surprise billing for unsuspecting patients through a formal, patient requested, mediation administered by the Texas Department of Insurance (“TDI”) between the health plans and providers. However, patients were still required to pay the Out-of-Network Provider the mediated amount. Furthermore, due to the large number of requests for mediation, TDI has a backlog of mediations and patients are faced with outstanding surprise medical bills.
In 2019, the Texas Legislature enacted Senate Bill (“S.B.”) 1264 (the “Act”), which amended several Texas statutes to limit surprise billing when the Act goes into effect on January 1, 2020. The goal of the legislation is to remove the patient—referred to as an “enrollee” by health plans—from the discussion of payment between the patient’s health plan and the Out-of-Network Provider. The Act applies only to certain health plans, and certain out-of-network providers, and only applies to healthcare services provided after January 1, 2020.[1]
The Act applies in the common surprise billing situations:
- Out-of-Network Providers (facilities, physicians, or other providers) provide emergency services to a patient;[2]
- Out-of-Network Physicians practicing at an In-Network Facility (like a hospital), [3] and;
- Out-of-Network diagnostic imaging provider or laboratory if the service is performed in connection with a health care service performed by an In-Network Provider.[4]
Under the Act, health plans are required to pay the Out-of-Network Provider’s “usual and customary rate” or another rate agreed to by the health plan and Out-of-Network Provider. The main change for patients is that Out-of-Network Providers seeking payment for services may no longer directly bill a patient when billing for services covered by the Act. The Act expressly provides that a patient “does not have any financial responsibility greater than an applicable copayment, coinsurance, and deductible under the patient’s health plan.”[5] A patient is also entitled to receive from their health insurance plan a written “Balance Billing Prohibition Notice” within the explanation of benefits (EOB) in connection with any health care service or supply (whether emergency or non-emergency) provided by an Out-of-Network Provider.[6]
S.B. 1264 revised the former mediation process for payment disputes between health plans and facilities. Out-of-Network Facilities are required to participate in the revised mediation process, which is still administered by TDI, if requested by a party to the transaction, which includes the Out-of-Network Facilities, a health benefit plan issuer, or the enrollee.[7] The Act also created a new mandatory binding arbitration applicable to Out-of-Network Providers that are not facilities. The statute charges TDI to create and administer the arbitration program wherein an arbitrator shall determine the reasonable amount for the health care or medical services provided to the enrollee by an Out-of-Network Provider.[8] On September 27, 2019, TDI published proposed rules implementing the Act and the new arbitration process. The earliest possible date of adoption for the proposed rules is October 27, 2019.[9]
The Act provides the authority for regulatory agencies, such as the Texas Medical Board, Texas Health and Human Services, Texas Department of Licensing and Regulation, or TDI, to take disciplinary action against a licensee for failure to comply with the Act’s requirements and prohibitions against balance billing. This provision provides leverage for patients, who could submit a complaint to the relevant licensing agency, against both providers and health plans to comply with the Act’s requirements.
It should be clearly noted that the Act’s prohibition against balance billing does not apply if a patient elects to receive non-emergency health care or medical service care from an Out-of-Network Provider and has signed a disclosure agreeing to be responsible for the Provider’s billed charges.[10]
[1] Act of June 14, 2019, 86th Leg., R.S., ch. 1342 § 5.01, 2019 Tex. Sess. Law Serv. 3977 (hereinafter referencing the applicable Texas Insurance Code provision). (The Act applies to health plans regulated by TDI as well as the Texas Employees Group Benefits plan (ERS) Tex. Ins. Code § 1551.015; Teacher Retirement System (TRS-Care) § 1575.009; and TRS-ActiveCare § 1579.009). See also Texas Passes A Law to Protect Patients From Surprise Medical Bills, NPR (June 18, 2019), https://www.npr.org/sections/health-shots/2019/06/18/733369370/texas-is-latest-state-to-attack-surprise-medical-bills (Until the U.S. Congress passes a federal law prohibiting surprise bills, patients covered by federally-regulated plans (which make up at least 40 percent of the Texas health insurance market) may still receive a balance bill from providers.)
[2] Tex. Ins. Code § 1271.155 (HMO); 1301.0053 (Exclusive Provider Benefit Plan); 1551.228 (Texas Employee Group Plan); 1575.171 (Texas Public School Employees Group Benefits); 1575.009 (Texas Public School Employees Group Benefits); 1579.109 (Texas School Employees Uniform Group Health Plan).
[3] Id. § 1271.157 (HMO); 1301.164 (Preferred Provider Benefit Plans); 1551.229 (Texas Employee Group Benefits); 1575.172 (Texas Public School Employees Group Benefits); 1579.110 (Texas School Employees Uniform Group Health Plan).
[4] Id. § 1271.158 (HMO); 1551.230 (Texas Employee Group Benefits); 1575.173 (Texas Public School Employees Group Benefits); 1579.111 (Texas School Employees Uniform Group Health Plan).
[5] See, id. § 1271.155.
[6] Id. § 1261.008; 1301.010 (Exclusive Provider Benefit Plan); 1301.165 (Preferred Provider Plan); 1551.015 (Texas Employee Group Benefits); 1575.009 (Texas Public School Employees Group Benefits); 1579.009 (Texas School Employees Uniform Group Health Plan), (The notice informs the enrollee of the billing prohibition under the Texas Insurance Code; provides an itemization of copayments, coinsurance, deductibles, and other amounts included in that total; and information required by TDI’s rules advising the physician or provider of the availability of mediation or arbitration, as applicable, under the Texas Insurance Code.).
[7] See Tex. Ins. Code §§ 1467.050, 1467.0505, and 1467.054 (Out-of-network facilities include hospitals, ambulatory surgical centers, or free-standing emergency rooms).
[8] Id. § 1467.083.
[9] See 44 Tex. Reg. 5551 (2019).
[10] Id. §§ 1271.157, 1271.158, 1301.164(d) (Preferred Provider Organization); §§ 1301.165, 1511.229(d) (Texas Employee Group Benefits); § 1551.230(d) (Texas Employee Group Benefits, Diagnostic Lab); § 1575.172 (Texas Public School Employees Group Benefits); § 1575.173(d) (Texas Public School Employees Group Benefits, Diagnostic Imaging Provider); § 1579.110(d) (Texas School Employees Uniform Group Health Plan); § 1579.111 (Texas School Employees Uniform Group Health Plan). (The disclosure explains that the physician or provider does not have a contract with the enrollee’s health benefit plan; discloses projected amounts for which the enrollee may be responsible; and discloses the circumstances under which the enrollee would be responsible for those amounts.)
