HBA-ATS, ALS, NLM, BTC H.B. 610 76(R)BILL ANALYSIS Office of House Bill AnalysisH.B. 610 By: Janek Insurance 6/2/1999 Enrolled BACKGROUND AND PURPOSE Prior to the 76th Legislature, neither health maintenance organizations nor preferred providers were required to compensate physicians or providers for services within a specified period of time. H.B. 610 requires prompt payment to physicians and providers for services performed. This bill sets further payment schedules for physicians and provides penalties for late payments. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the commissioner of insurance in SECTION 1 (Section 18B, Chapter 20A (The Texas Health Maintenance Organization Act), Insurance Code) and SECTION 2 (Article 3.70-3C, Insurance Code, as added by Chapter 1024, Acts of the 75th Legislature, Regular Session, 1997) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Chapter 20A (The Texas Health Maintenance Organization Act), Insurance Code, by adding Section 18B, as follows: Sec. 18B. PROMPT PAYMENT OF PHYSICIAN AND PROVIDERS. (a) Defines "clean claim." (b) Authorizes a physician or provider for medical or health care services to obtain acknowledgment of a receipt of claim for medical or health care services under a health care plan (plan) by submitting the claim by United States mail, return receipt requested. Requires a health maintenance organization (HMO) or its contracted clearinghouse that receives a claim electronically to acknowledge receipt of the claim by an electronic transmission to the physician or provider. Provides that the HMO or its contracted clearinghouse is not required to acknowledge receipt of the claim by the HMO in writing. (c) Requires the HMO, no later than the 45th day after it receives a clean claim from a physician or provider, to pay the total amount of the claim in accordance with the contract between the physician or the provider and the HMO, pay the portion of the claim that is not in dispute and notify the physician or provider in writing why the remaining portion was not paid, or notify the physician or provider in writing why the claim will not be paid. (d) Provides that a prescription benefit claim that is electronically adjudicated and electronically paid, and for which treatment has been authorized by the HMO or its designated agent, must be paid by the 21st day after the treatment is authorized. (e) Requires an HMO that acknowledges coverage of an enrollee under the plan but intends to audit the claim, to pay the charges submitted at 85 percent of the contracted rate, no later than the 45th day after the date the HMO receives the claim. Requires an additional payment due to a physican or provider or a refund due to the HMO to be made within a specified time period. (f) Provides that an HMO that violates Subsection (c) or (e) of this section is liable to a physician or provider for the full amount of billed charges submitted on the claim or the amount payable under the contracted penalty rate, less an amount paid or charge for a service that is not covered by the plan. (g) Authorizes a physician or provider to recover reasonable attorney's fees in an action to recover payment under this section. (h) Provides that in addition to any other penalty or remedy authorized by the Insurance Code or another insurance law of this state, an HMO that violates Subsection (c) or (e) of this section is subject to an administrative penalty under Article 1.10E (Administrative Penalties), Insurance Code. Prohibits the administrative penalty imposed under that article from exceeding $1,000 for each day the claim remains unpaid in violation of Subsection (c) or (e) of this section. (i) Requires the HMO to provide a participating physician or provider with copies of applicable utilization review policies and claim processing policies or procedures, including data elements or claim formats. (j) Authorizes an HMO to contract with a physician or provider to add or change the data elements that must be submitted with the claim. (k) Requires the HMO to provide written notice of an addition or change in the data elements that must be submitted with a claim or any other change in an HMO's claim processing and payment procedures, to each participating physician or provider, no later than the 60th day before the date of the addition or change. (l) Provides that this section does not apply to a claim made by a physician or provider who is a member of the legislature. (m) Provides that this section does not apply to a capitation payment required to be made to a physician or provider under an agreement to provide medical care or health care services under a plan. (n) Provides that this section applies to a person with whom an HMO contracts to process claims or to obtain the services of physicians and providers to provide health care services to health care plan enrollees. (o) Authorizes the commissioner of insurance (commissioner) to adopt rules as necessary to implement this section. SECTION 2. Amends Article 3.70-3C, Insurance Code, as added by Chapter 1024, Acts of the 75th Legislature, Regular Session, 1997, by adding Section 3A, as follows: Sec. 3A. PROMPT PAYMENT OF PREFERRED PROVIDERS. (a) Defines "clean claim." (b) Authorizes a preferred provider for medical or health care services under a health insurance policy (policy) to obtain acknowledgment of a receipt of claim for medical or health care services under a health care plan by submitting the claim by United States mail, return receipt requested. Requires an insurer or its contracted clearinghouse that receives a claim electronically to acknowledge receipt of the claim by an electronic transmission to the preferred provider. Provides that the insurer or its contracted clearinghouse is not required to acknowledge receipt of the claim by the insurer in writing. (c) Requires the insurer, not later than the 45th day after the date that the insurer receives an invoice from a preferred provider, to pay the total amount of the claim in accordance with the contract between the preferred provider and the insurer, pay the portion of the claim that is not in dispute and notify the preferred provider in writing why the remaining portion of the claim will not be paid, or notify the preferred provider in writing why the claim will not be paid. (d) Provides that a prescription benefit claim that is electronically adjudicated and electronically paid, and for which treatment has been authorized by the preferred provider or its designated agent, must be paid by the 21st day after the treatment is authorized. (e) Requires an insurer that acknowledges coverage of an insured under the policy but intends to audit the preferred provider claim, to pay the charges submitted at 85 percent of the contracted rate, no later than the 45th day after the date that the insurer receives the claim. Requires, after the completion of an audit, an additional payment due to a provider or a refund due to the insurer to be made no later than a specified time period. (f) Provides that an insurer who violates Subsection (c) or (e) of this section is liable to a preferred provider for the full amount of billed charges submitted on the claim or the amount payable under the contracted penalty rate, less an amount paid or charge for a service that is not covered by the policy. (g) Provides that a preferred provider may recover reasonable attorney's fees in an action to recover payment under this section. (h) Provides that, in addition to any other penalty or remedy authorized by this code or another insurance law of this state, an insurer that violates Subsection (c) or (e) of this section is subject to an administrative penalty under Article 1.10E of this code. Prohibits the administrative penalty imposed under that article from exceeding $1,000 for each day the claim remains unpaid in violation of Subsection (c) or (e) of this section. (i) Requires an insurer to provide a preferred provider with copies of applicable utilization review policies and claim processing policies or procedures, including data elements or claim formats. (j) Authorizes an insurer to contract with a preferred provider to add or change the data elements that must be submitted with the provider claim. (k) Requires the insurer to provide written notice of an addition or change in the data elements that must be submitted with a claim or any other change in an insurer's claim processing and payment procedures, to each provider, no later than the 60th day before the date of the addition or change. (l) Provides that this section does not apply to a claim made by a preferred provider who is a member of the legislature. (m) Provides that this section applies to a person with whom an insurer contracts to process claims or to obtain the services of preferred providers to provide medical or health care to insureds under a policy. (n) Authorizes the commissioner to adopt rules as necessary to implement this section. SECTION 3. Amends Section 5(c), Article 21.55, Insurance Code, by adding language that this article does not apply to a claim governed by Section 3A, Article 3.70-3C, of this code. SECTION 4. Effective date: September 1, 1999. SECTION 5. Emergency clause.