HBA-ALS H.B. 2883 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2883 By: Bailey Insurance 3/28/1999 Introduced BACKGROUND AND PURPOSE Currently in Texas, health care is often provided to patients by practitioners who contract as "preferred providers" with insurers and health maintenance organizations. However, many preferred provider contracts do not include full and complete fee schedules, may be assigned without the practitioner's consent, permit the denial of a claim even after the practitioner has confirmed coverage, and prohibit the practitioner from providing a full range of customary services. H.B. 2883 establishes provisions that are mandatory in a preferred provider contract and a contract between a health maintenance organization and physician or provider, which relate to: fee schedules, contract assignments; submission, denial, and payment of claims; the provider's right to appeal denied claims; the provider's right to render customary medical services and equipment to patients; annual renewal of contracts; and dispute resolution through arbitration. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 3, Article 3.70-3C, Insurance Code, as added by Chapter 1024, Acts of the 75th Legislature, Regular Session, 1997, by adding Subsection (n), as follows: (n) Specifies that a preferred provider contract must: (1) include a complete fee schedule, all applicable treatment codes, and a complete explanation of the method for determining payment of a preferred provider; (2) prohibit the insurer from changing the fee schedule for a preferred provider without giving the preferred provider specified notice requirements and allow the preferred provider to terminate the contract before the implementation of the revised fee schedule without penalty; (3) prohibit unilateral amendments to the contract, except as authorized by Subdivision (2); (4) prohibit the insurer from assigning the contract to another entity and causing the provider to become a provider in another health care plan without the provider's prior consent; (5) give the preferred provider at least 90 days after the date of service to submit a claim for payment; (6) require the insurer to pay a properly submitted and complete claim for payment by a preferred provider no later than a specified date and, if the insurer fails to pay a claim as required under this subdivision, require the insurer to forfeit any applicable fee discount, and to, instead, pay the preferred provider's usual and customary fee for the service for which the claim was made; (7) clearly describe all information that must be included on a claim form submitted by a preferred provider to render the claim full and complete for payment purposes; (8) provide that the insurer may not deny a claim for payment on the ground that the insured is no longer eligible for coverage or that the benefits have changed once eligibility and benefits have been properly verified by the preferred provider; (9) define "medical necessity" as "the standard for health care services as determined by physicians and practitioners in accordance with the prevailing practices and standards of the medical profession and the community" and allow a preferred provider to appeal an adverse decision regarding medical necessity to a panel of preferred providers of the same specialty; (10) clearly explain the insurer's policy regarding global periods and payment methods for multiple surgical procedures that are performed during the same operation; (11) prohibit the insurer from denying or interfering with the preferred provider's right to render medical services and furnish durable medical equipment to patients in the office setting as is customary for providers of the same medical specialty; (12) provide for the automatic annual renewal of the contract unless a party to the contract gives 90 days' prior written notice of termination to the other party stating the reason for the termination; and (13) provide for all unresolved disputes between the insurer and a preferred provider to be resolved through binding arbitration on the request of either party. SECTION 2. Amends Section 18A, Texas Health Maintenance Organization Act (Article 20A.18A, Vernon's Texas Insurance Code), as added by Chapter 1026, Acts of the 75th Legislature, Regular Session, 1997, by adding Subsection (j), as follows: (j) Provides that a contract between a health maintenance organization and a physician or provider must: (1) include a complete fee schedule, all applicable treatment codes, and a complete explanation of the method for determining payment of a physician or provider; (2) prohibit the health maintenance organization from changing the fee schedule for a physician or provider without giving the physician or provider 90 days' prior written notice by certified mail and allowing the physician or provider to terminate the contract before the implementation of the revised fee schedule without penalty; (3) prohibit unilateral amendments to the contract, except as authorized by Subdivision (2) of this subsection; (4) prohibit the health maintenance organization from assigning the contract to another entity and causing the physician or provider to become a physician or provider in another health care plan without the physician's or provider's prior consent; (5) give the physician or provider at least 90 days after the date of service to submit a claim for payment; (6) require the health maintenance organization to pay a properly submitted and complete claim for payment by a physician or provider no later than a specified date, if the health maintenance organization fails to pay a claim as required under this subdivision, require the health maintenance organization to forfeit any applicable fee discount and to instead pay the physician's or provider's usual and customary fee for the service for which the claim was made; (7) clearly describe all information that must be included on a claim form submitted by a physician or provider to render the claim full and complete for payment purposes; (8) provide that once eligibility and benefits have been properly verified by the physician or provider, the health maintenance organization may not deny a claim for payment on the ground that the enrollee is no longer eligible for coverage or that the benefits have changed; (9) define "medical necessity" as "the standard for health care services as determined by physicians and providers in accordance with the prevailing practices and standards of the medical profession and the community" and allow a physician or provider to appeal an adverse decision regarding medical necessity to a panel of physicians or providers of the same specialty; (10) clearly explain the health maintenance organization's policy regarding global periods and payment methods for multiple surgical procedures that are performed during the same operation; (11) prohibit the health maintenance organization from denying or interfering with the physician's or provider's right to render medical services and furnish durable medical equipment to patients in the office setting as is customary for physicians or providers of the same medical specialty; (12) provide for the automatic annual renewal of the contract, unless a party to the contract gives 90 days' prior written notice of termination to the other party stating the reason for the termination; and (13) provide for all unresolved disputes between the health maintenance organization and a physician or provider to be resolved through binding arbitration on the request of either party. SECTION 3.Effective date: September 1, 1999. Makes application of this Act prospective. SECTION 4.Emergency clause.