What's in the Texas Legislature's Proposed Ban on Balance Billing?
SB 1264 by Sen. Kelly Hancock and HB 2967 by Rep. Tom Oliverson
The Texas Legislature has now witnessed two bills that would ban balance billing for emergency services, and each bill takes a completely different approach. It is critical to note that there are a number of unanswered questions about each bill at the moment, and this analysis is a rudimentary summary. We are likely to have a better feel for the direction of these bills in the near future, and TEMSA will continue providing updates to members.
Current Law
First, it is important to review the current law in Texas. SB 507 in the 2017 Texas Legislature, which created the state’s latest law on balance billing, exempted ambulance from the mediation process because lawmakers recognized that communities would have to raise taxes to cover EMS service if the agencies could not balance bill a patient for a service
The state's current law allows patients to trigger a mediation process for balance bills of $500 or more from any type of provider (except for EMS). If the patient and provider can't reach a conclusion, then the patient may take the bill to a formal mediation process at the Texas Department of Insurance (TDI). The current law does not affect ERISA plans, and those plans represent the majority of the plans sold in the commercial market.
Senate Proposal
Sen. Kelly Hancock (R-North Richland Hills) introduced SB 1264 on Thursday, and the bill would dramatically alter the out-of-network environment in Texas.
There are several key points to consider before digging into the analysis:
- Patients would still be responsible for co-pays and deductibles related to out-of-network services.
- Some providers choose to send an additional balance bill ("surprise bill") for out-of-network services if they believe that the out-of-network payment by the health plan is not adequate, and that is the primary focus of this issue. However, some provisions could have a greater impact on all providers, whether they balance bill or not.
It is unclear as to what types of providers would be affected by SB 1264.
Removing the Patient for Non-Emergency (Elective) Services
It appears that SB 1264 would remove the patient from the mediation process for non-emergency (elective) services. (The patient currently triggers the mediation process.) Instead, a health plan could force every balance bill of $500 or more into a mediation process between a provider and health plan. Both sides would be responsible for the costs. (If you don't send a balance bill to the patient, then this would not affect you.)
ERISA Opt-in
Congress regulates ERISA plans, which represent the majority of the health plans sold in Texas. However, SB 1264 is proposing to allow ERISA plans to opt in to the Texas mediation law.
Whether Texas law can incorporate ERISA plans is unclear. In addition, Congress has indicated that it plans to address balance billing in the near future.
Balance Billing Removed for Emergency Services
It appears that SB 1264 would remove balance billing for emergency services. Some providers balance bill for out-of-network services for care related to emergency services.
Under current Texas HMO law, health plans are required to pay a usual, customary, and reasonable (UCR) standard for certain emergency services and scenarios in which a certain specialist is not available in the network.
SB 1264 is proposing to eliminate the UCR provision in existing by replacing it with: "The issuer of the plan shall pay the nonpreferred provider in an amount that the issuer determines is reasonable for the emergency care services."
As a result, an out-of-network provider could be paid whatever the health plan wants for an out-of-network service: the provider would have no choice.
Bad Credit Reporting Prohibition
The bill would prohibit providers from sending payment balances to credit reporting agencies.
What's Next for SB 1264?
Rep. Trey Martinez Fischer (D-San Antonio) stood with Sen. Hancock at the press conference. Rep. Martinez Fischer indicated that he will introduce similar legislation in the House. However, it may be different.
Rep. Martinez Fischer chairs the House Business and Industry Committee, which could receive the bill referral due to the fact that the bill caption relates to bad credit reporting. However, a bill related to commercial health insurance is typically referred to the House Insurance Committee. The referral is determined by the House parliamentarian.
House Proposal
Rep. Tom Oliverson, MD (R-Spring) filed HB 2967 on Monday. Much like the Senate bill, it is critical to note that many questions need to be answered regarding this bill.
At first glance, it appears that HB 2967 would eliminate all balance billing in Texas - whether it is for emergency or scheduled services:
- A provider would submit a bill for out-of-network charges to the health plan.
- If the health plan chose to dispute the charge, a baseball-style arbitration process would be created to settle the dispute.
- HB 2967 would attempt to create a UCR for the arbitrator to use to settle the payment dispute, and the 80th percentile of the FAIR Health database could be used as the UCR. As to whether the 80th percentile of FAIR Health would be used as the floor or the ceiling is not known at the moment.
Again, both bills contain a number of unanswered questions. TEMSA will continue providing updates to TEMSA members.
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