HB 574

84(R) - 2015
House Insurance
House Insurance

Vote Recommendation

  • Neutral
  • Neutral
  • Neutral
  • Neutral
  • Neutral


Greg Bonnen

Bill Caption

Relating to the operation of certain managed care plans with respect to health care providers; amending provisions subject to a criminal penalty.

Fiscal Notes

No significant fiscal implication to the State is anticipated.

Based on information provided by the Texas Department of Insurance, Employees Retirement System, Teacher Retirement System, Texas A&M University System Administration, and University of Texas System Administration, it is assumed that all duties and responsibilities necessary to implement the provisions of the bill could be accomplished within existing staff and resources.

No fiscal implication to units of local government is anticipated.

Bill Analysis

5/18/15 Update:
This bill is substantively the same as when we reported on it in its original chamber. We continue to remain neutral. The second chamber sponsor is Senator Campbell.

Original chamber analysis below:

The bill would amend Chapters 843 and 1301 of the Insurance Code by prohibiting a health maintenance organization (HMO) from terminating participation of a physician or provider solely because the physician or provider informs an enrollee of the full range of physicians and providers available to the enrollee, including out-of-network-providers. This added provision would not apply to coverage under the child health plan program or health benefit plan for children under Chapters 62 and 63 of the Health and Safety Code.

The bill would establish provisions protecting a preferred provider’s contract from termination by insurers solely because they communicate to an enrollee the availability of out-of-network providers.

An insurer’s contract with a preferred provider would be authorized to require, except for cases of a medical emergency as determined by the preferred provider, before the provider could make an out-of-network referral for an insured, the preferred provider inform the insured:

  1. That the insured may choose a preferred provider or an out-of-network provider; and if the insured chooses the out-of-network provider the insured may incur higher out-of-pocket expense; and
  2. whether the preferred provider has a financial interest in the out-of-network provider.

On request, an insurer would be required to provide to a practitioner whose participation in a preferred provider benefit plan is being terminated: all information on which the insurer wholly or partly based the termination, including the economic profile of the preferred provider, the standards by which the provider is measured, and the statistics underlying the profile and standards.

Vote Recommendation Notes

The objective of the legislation is to discourage the practice of de-listing. De-listing occurs when physicians who refer patients to specific out-of-network providers receive a letter from the insurer canceling their contract for not utilizing in-network providers. In many cases, a de-listed physician would have to seek reinstatement through legal action. Oftentimes, this creates a David versus Goliath scenario where an individual physician or small practice is left with few negotiating tools and resources against an HMO's legal staff. 

While we appreciate that this bill attempts to protect physicians and safeguard patient choices, we also believe "a contract is a contract." If a health care provider entered into a contract with an HMO not to refer patients out of contract, then that contract must be honored and the law should not interfere -- even if the current, heavily regulated health care marketplace restricts choices. It is for that reason we stand neutral on HB 574.