Industry News

TDI Implements Laws Protecting Texans from Surprise Billing and Freestanding ERs

In 2019, the Texas legislature passed four bills intended to protect Texas patients from surprise billing from out-of-network providers and the abuses of freestanding emergency rooms. This article summarizes each starting with the most significant.

SB 1264 – Surprise Billing Ban and Arbitration Process

The 59 page bill is the most significant and comprehensive measure. Its protections, which began on Jan 1, 2020, apply only to state-regulated health plans (i.e.: fully insured plans) and are not applicable to self-funded plans including small group level funded plans.

SB 1264 prohibits surprise billing by out-of-network providers when patients have little to no choice over who provides their care. It removes patients from any payment dispute between the provider and insurer. The patient is only responsible for his applicable health plan cost sharing. It applies in three common surprise billing situations:

  1. Out-of-network providers—facilities, physicians, or other providers—that provide emergency services to a patient.
  2. Out-of-network physicians practicing at an in-network facility.
  3. Out-of-network diagnostic imaging providers or laboratories if the service is performed in connection with a health care service performed by an in-network provider.

Unless the provider and insurer agree to a different rate, the insurer is required to pay the out-of-network provider at a ‘usual and customary’ rate. SB 1264 defines ‘usual and customary’ as the 80th percentile of billed charges or the 50th percentile of health plans’ payments to in-network providers for the same or similar services in the 3-digit zip code as determined by the FAIR Health benchmarking database.

If the provider believes a payment is not ‘usual and customary’, the dispute begins with a mediation process. If not settled through mediation, the dispute enters binding, baseball-style arbitration. The arbitrator reviews the total bill and awards the payment amount to the party whose amount is closest to the reasonable amount determined by the arbitrator. The arbitrator must use 10 factors—including the usual and customary range—to determine the reasonable amount. Read the mediation and arbitration FAQs for complete details about the process.

The act’s prohibition against balance billing does not apply if a patient elects to receive non-emergency care from an out-of-network provider and signs a waiver at least 10 business days prior to receiving the out-of-network care. The waiver cannot be used in an emergency or when an out-of-network doctor was assigned to the case, such as when an anesthesiologist is assigned to a surgery, and patients can (and should) choose not to sign.

HB 1941 – Freestanding Emergency Room Cost Transparency and Control

Effective Sep 1, 2019. HB 1941 bans unconscionable prices at freestanding emergency rooms and protects all consumers in Texas. It is not tied to health insurance and is enforced by the Attorney General—not the insurance commissioner.

The act defines unconscionable prices as “200% of the average charge for the same or substantially similar care provided to other individuals by emergency rooms of hospitals located in the same county or nearest county.” The Department of State Health Services maintains a database of all charges, which it uses to determine if a price exceeds the 200% threshold.

HB 2041 – Freestanding Emergency Room Price Transparency

Effective Sep 1, 2019. HB 2041 is an act that provides consumer protection and is enforced by the Attorney General. It is not an insurance regulation.

HB 2041 requires freestanding emergency rooms to post notices listing the health plan networks in which it is an in-network provider online and throughout the facility. It requires freestanding ERs to provide a written disclosure requiring signature listing the health plan networks in which it is an in-network provider and the median prices the patient may be charged for a procedure.

HB 2041 also prohibits a freestanding ER from claiming to ‘take’ or ‘accept’ coverage if it is not an in-network provider for the health plan and bans the use of names or logos of out-of-network insurers or health plans.

SB 1037 – Protects Consumer Credit Scores from Surprise Billing Medical Debt

Effective May 31, 2019. SB 1037 prohibits a consumer reporting agency from furnishing a consumer report related to a surprise balance bill owed to an emergency care provider or a facility-based provider for an out-of-network benefit claim if the consumer was covered by a health benefit plan at the time of the claim. The act protects a consumer’s credit score.

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