Texas Passes Consumer Protection Law On Surprise Medical Bills



Governor Abbot recently signed Senate Bill 1264 which, effective September 1, 2019, provides consumer protections against certain medical and health care billing by certain out-of-network (“OON”) providers.

Surprise medical bills have become a familiar life event for residents of the state of Texas. Either in instances of medical emergencies where Texans are left with no other option but to receive OON medical attention from providers or when Texans unknowingly receive OON ancillary services (e.g. lab or imaging services) despite their good faith attempts to receive in-patient or out-patient services from in-network facilities, they are unnecessarily held financially responsible because of the everlasting reimbursement disputes between health insurers and health care providers. In recognition of the stress these surprise medical bills induce, the Texas Legislature passed a bipartisan bill that, when signed into law, will prohibit surprise medical bills from being sent to patients and force payers and providers to resolve these disputes, in good faith, on a claim-by-claim basis.

The Texas Department of Insurance (“TDI”) describes a surprise medical bill (i.e a balance bill) as a bill from a doctor, hospital, or other health care provider who is not a part of the insured’s network, and provides the following example:

A patient goes to an in-network hospital for emergency care and is treated by an out-of-network doctor. The doctor and the hospital each bill $1,000 for their services, and the health plan [insurer] pays them each $400. The in-network hospital can only bill the patient for copays, deductibles, and coinsurance amounts. The doctor, however, may bill [the patient] for the $600 that the health plan [insurer] didn’t pay, as well as any copays, deductibles, and coinsurance.

Unsuspecting patients had previously been saddled with this OON bill because either the insurer underpaid the provider, the provider’s billed amounts were too high, or a combination of both.

With the passage of Senate Bill 1264 earlier this year, the Texas legislature took it upon itself to ensure that Texans are no longer left feeling exploited by this practice. Once effective, Texans receiving health care services from OON providers in the above mentioned instances will no longer be responsible for any amounts greater than their cost-share obligations (i.e. copay, deductible, coinsurance). Upon the processing of a claim, the patient’s insurer must include in the explanations of benefits a statement on the prohibition of balance billing the patient and the total amount the provider may bill the patient with an itemized breakdown of the patent’s cost-share obligations.

Furthermore, in the event an amount on a OON claim, less the patient’s cost-share obligations, remains outstanding, either the OON provider or the insurer has the option to request a mandatory mediation or a mandatory arbitration of the claim through the TDI’s website. If mediation is requested, a mediator will have the discretion to adjust an amount to be paid to the provider if the mediator believes more should be paid on the patient’s OON claim.

However, if arbitration is requested, then each party will submit the amount it believes to be paid (i.e. billed amount for provider and allowed amount for insurer) and the arbitrator, after reviewing the supporting documents provided from each party, will determine one of the submitted amounts as the final award. The arbitrator will not have the discretion to make any adjustments on the amount to be paid. This style of arbitration is commonly referred to as “baseball” style arbitration.

By the passage of this law, Texas has positioned itself to become one of the more patient friendly states by shielding its residents from the practice of surprise billing, and has created a pathway for all other states to follow.

Of important note, this law only applies to insurance plans that are regulated by the State and TDI -- which represent less than a quarter of the health insurance sold in Texas. The law does not apply to other types of health insurance plans that are not regulated by the TDI including self-funded employee benefit plans.

Originally published in Houston Medical Times - August 2019.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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