HBA-ALS, NLM, BTC C.S.H.B. 610 76(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 610 By: Janek Insurance 4/16/1999 Committee Report (Substituted) BACKGROUND AND PURPOSE Currently, Health Maintenance Organizations (HMO) are not required to compensate physicians for services within a specified period of time. C.S.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, Insurance Code (The Texas Health Maintenance Organization Act)) 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, Insurance Code, The Texas Health Maintenance Organization Act (), 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 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. Provides that a health maintenance organization (HMO) that receives a claim electronically and that confirms receipt electronically is not required to acknowledge receipt of the claim in writing. (c) Requires the HMO, no later than the 60th day after the date that the HMO 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 and 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) Requires an HMO that acknowledges coverage of an enrollee under the health care plan (plan) but intends to audit the claim, to pay at least 85 percent of the submitted charges at the contracted rate, no later than the 60th day after the date the HMO receives the clean 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. (e) Provides that an HMO that violates Subsection (c) or (d) of this section is liable to a physician or provider for the full amount of charges submitted on the claim at the contracted rate, plus any penalties provided in the contract, less an amount paid or charge for a service that is not covered. (f) Authorizes a physician or provider to recover reasonable attorney's fees in an action to recover payment under this section. (g) 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 (d) of this section is subject to an administrative penalty under Article 1.10E, Insurance Code. Prohibits the administrative penalty imposed under that article from exceeding $1,000 for each day the invoice remains unpaid in violation of Subsection (c) or (d) of this section. (h) 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. (i) Authorizes an HMO to contract with a physician or provider to add or change the data elements that must be submitted with the claim. (j) 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. (k) Provides that this section does to apply to a claim made by an anesthesiologist. (l) 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 health care plan. (m) Provides that this section applies to a person with whom an HMO contracts to obtain the services of physicians and providers to provide health care services to health care plan enrollees. (n) 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 to obtain acknowledgment of a receipt of claim for medical or health care services under a health care plan by submitting the claim United States mail, return receipt requested. Provides that a health maintenance organization (HMO) that receives a claim electronically and that confirms receipt electronically is not required to acknowledge receipt of the claim in writing. (c) Requires the insurer, not later than the 60th 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 invoice will not be paid, or notify the preferred provider in writing why the invoice will not be paid. (d) Requires an insurer that acknowledges coverage of an insured under the health care policy but intends to audit the preferred provider claim, to pay at least 85 percent of the submitted charges at the contracted rate, no later than the 60th day after the date that the insurer receives the clean claim. Requires, after the completion of an audit, an additional payment due to a physician or provider or a refund due to the HMO to be made no later than a specified time period. (e) Provides that an insurer who violates Subsection (c) or (d) of this section is liable to a preferred provider for the full amount of charges submitted on the claim at the contracted rate, plus any penalties provided in the contract, less an amount paid or any charge for a service that is not covered by the policy. (f) Provides that a preferred provider may recover reasonable attorney's fees in an action to recover payment under this section. (g) 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 (d) of this section is subject to an administrative penalty under Article 1.10E of this code. Provides that the administrative penalty imposed under that article may not exceed $1,000 for each day the invoice remains unpaid in violation of Subsection (c) or (d) of this section. (h) 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. (i) Authorizes an insurer to contract with a preferred provider to add or change the data elements that must be submitted with the provider claim. (j) 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 participating physician or provider, no later than the 60th day before the date of the addition or change. (k) Provides that this section does to apply to a claim made by an anesthesiologist. (l) Provides that this section applies to a person with whom an insurer contracts to obtain the services of preferred providers to provide medical or health care to insureds under a health insurance policy. (m) 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 an invoice governed by Section 3A, Article 3.70-3C. of this code. SECTION 4. Effective date: September 1, 1999. SECTION 5. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE The substitute modifies the original in SECTION 1 (proposed Section 18B, Chapter 20A, Insurance Code (The Texas Health Maintenance Organization Act), as follows: The substitute modifies the original in proposed Subsection (a) to define "clean claim." Deletes the entire text of this subsection from the original, which required the health maintenance organization (HMO) to acknowledge the receipt of an invoice in writing, no later than the second day after the date that a health maintenance organization receives an invoice from a physician or provider for medical care or health care services under a health care plan. The substitute modifies the original in proposed Subsection (b) to authorize a physician or provider for medical or health care 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. Provides that an (HMO) that receives a claim electronically and that confirms receipt electronically is not required to acknowledge receipt of the claim in writing. The substitute deletes the entire text from this subsection of the original requiring an HMO, no later than the 15th day after the date that the HMO requires an invoice from a physician or provider, to request from the physician or provider any information, statement, or form that the HMO reasonably believes will be required to permit payment of the invoice. The original also authorized the HMO to request additional information at a later time if necessary to process the invoice. The substitute amends proposed Subsection (c) by requiring the HMO, no later than the 60th day after the date that the HMO receives a clean claim from a physician or provider, to pay the total amount of the claim according to the contract between the physician and the provider and the HMO, pay the undisputed portion of the claim and notify the physician or provider in writing as to why the remaining portion was not paid, or notify the physician or provider in writing as to why the claim will not be paid, modifying the original by substituting "clean claim" in place of "invoice." The substitute modifies the original in proposed Subsection (d) to require an HMO that acknowledges coverage of an enrollee under the health care plan (plan) but intends to audit the claim to pay at least 85 percent of the submitted charges at the contracted rate, no later than the 60th day after the date the HMO receives the clean claim. Requires an additional payment due to a physician or provider or a refund due to the HMO to be within a specified time period. The substitute redesignates proposed Subsection (d) of the original to proposed Subsection (e) of the substitute. The substitute redesignates proposed Subsection (e) of the original to Subsection (f), and amends the subsection to authorize a physician or provider to recover reasonable attorney's fees in an action to recover payment under this section, rather than recover reasonable attorney's fees in an action to recover payment of an invoice subject to this section or to recover interest under Subsection (d) of this section. The substitute redesignates proposed Subsection (f) of the original to proposed Subsection (g) and makes conforming changes. The substitute adds Subsection (h) to require an 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. The substitute adds Subsection (i) to authorize an HMO to contract with a physician or provider to add or change the data elements that must be submitted with the claim. The substitute adds Subsection (j) to require an 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 a 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. The substitute adds Subsection (k) to provide that this section does to apply to a claim made by an anesthesiologist. The substitute redesignates proposed Subsection (g) to proposed Subsection (l). The substitute adds proposed Subsection (m) to provide that this section applies to a person with whom an HMO contracts to obtain the services of physicians and providers to provide health care services to health care plan enrollees. The substitute adds proposed Subsection (n) to authorize the commissioner of insurance (commissioner) to adopt rules as necessary to implement this section. The substitute modifies the original in SECTION 2 (Article 3.70-3C, Insurance Code, as added by Chapter 1024, Acts of the 75th Legislature, Regular Session, 1997), as follows: The substitute modifies the original in proposed Subsection (a) to define "clean claim," and to deletes the entire text of Subsection (a) from the original which required an insurer, not later than the second day after the date that an insurer receives an invoice from a preferred provider for medical care or health care provided to an insured covered by a health insurance policy, to acknowledge receipt of the invoice in writing. The substitute modifies the original in proposed Subsection (b) to authorize a preferred 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 by submitting the claim by United States mail, return receipt requested. Provides that a health maintenance organization (HMO) that receives a claim electronically and that confirms receipt electronically is not required to acknowledge receipt of the claim in writing. The substitute entire text of Subsection (b) from the original which required an insurer, not later than the 15th day after the date that the insurer receives an invoice from a preferred provider, to request from the preferred provider any information, statement, or form that the insurer reasonably believes will be required to permit payment of the invoice and authorizing the insurer to request additional information at a later time if necessary to process the invoice. The substitute amends proposed Subsection (c) to require the insurer, not later than the 60th 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 invoice will not be paid, or notify the preferred provider in writing why the invoice will not be paid, modifying the original by substituting the word 'invoice" with "clean claim. The substitute modifies the original in proposed Subsection (d) to require an insurer that acknowledges coverage of an insured under the health care policy but intends to audit the preferred provider claim, to pay at least 85 percent of the submitted charges at the contracted rate, no later than the 60th day after the date that the insurer receives the clean claim. Requires, after the completion of an audit, an additional payment due to a physician or provider or a refund due to the HMO to be made within a specified time period. The substitute redesignates proposed Subsection (d) of the original to proposed Subsection (e). The substitute modifies the original to provide that an insurer who violates Subsection (c) or (d) of this section is liable to a preferred provider for the full amount of charges submitted on the claim at the contracted rate, plus any penalties provided in the contract, less an amount paid or any charge for a service that is not covered by the policy, rather than an insurer who violates Subsection (c) of this section is liable to a preferred provider, in addition to the amount owed by the insurer for the care provided, for interest on that amount which accrues at the rate of 10 percent a year beginning on the date the insurer receives an invoice from a preferred provider and ending on the date the invoice is paid. The substitute redesignates proposed Subsection (e) to proposed Subsection (f). The substitute modifies the original to provide that a preferred provider may recover reasonable attorney's fees in an action to recover payment under this section, rather than reasonable attorney's fees in an action to recover payment of an invoice subject to this section or to recover interest under Subsection (d) of this section. The substitute redesignates proposed Subsection (f) to proposed Subsection (g) and makes conforming changes. The substitute modifies the original by adding proposed Subsection (h) to require an insurer to provide a preferred provider with copes of applicable utilization review policies and claim processing policies or procedures, including data elements or claim formats. The substitute modifies the original by adding proposed Subsection (i) to authorize an insurer to contract with a preferred provider to add or change the data elements that must be submitted with the provider claim. The substitute modifies the original by adding proposed Subsection (j) to require 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 participating physician or provider, no later than the 60th day before the date of the addition or change. The substitute modifies the original by adding proposed Subsection (k) to provide that this section does to apply to a claim made by an anesthesiologist. The substitute modifies the original by adding proposed Subsection (l) to provide that this section applies to a person with whom an insurer contracts to obtain the services of preferred providers to provide medical or health care to insureds under a health insurance policy. The substitute modifies the original by adding proposed Subsection (m) to authorize the commissioner of insurance to adopt rules as necessary to implement this section.