Subscribe to receive our Floor Reports covering all the action on the Texas House and Senate floor!
Relating to consumer protections against certain medical and health care billing by certain out-of-network providers.
Estimated Two-year Net Impact to General Revenue Related Funds for SB1264, Committee Report 2nd House, Substituted: a negative impact of ($10,493,160) through the biennium ending August 31, 2021.
The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill. The Texas Department of Insurance, Employees Retirement System, Teacher Retirement System, and any other state agency subject to this Act are required to implement a provision of this Act only if the legislature appropriates money specifically for that purpose. If the legislature does not appropriate money specifically for that purpose, the agencies may, but are not required to, implement a provision of this Act using other appropriations available for that purpose.
SB 1264, as substituted by the House committee, would amend the Insurance Code in several significant ways.
The bill would require certain health benefit plans that provide coverage for a service performed by an out-of-network provider who is a facility-based provider or who is a diagnostic imaging provider or lab service provider, as applicable, to provide the coverage at the usual and customary rate. However, this bill exempts from these requirement a nonemergency health care or medical service: (1) that an enrollee elects to receive in writing in advance of the service with respect to each out-of-network provider; and (2) for which an out-of-network provider, before providing the service, provides a complete written disclosure to the enrollee with certain prescribed disclosures.
This bill would also require a health benefit plan that provides coverage for emergency care performed by an out-of-network provider to provide coverage at the usual and customary rate or at an agreed rate.
This bill would require a health benefit plan issuer or administrator to provide written notice in an explanation of benefits provided to the enrollee and the out-of-network provider in connection with a health care service that is subject to the required coverages under the bill's provisions. An out-of-network provider would be prohibited from billing an enrollee an amount greater than an applicable copayment, coinsurance, or deductible under the enrollee's health benefit plan that: (1) is based on the amount initially determined payable by the health benefit plan issuer, and (2) is not based on any additional amount determined to be owed to the provider under provisions relating to out-of-network claim dispute resolution. This bill would expressly hold harmless an enrollee for financial responsibility for that amount.
The attorney general would be authorized to bring a civil action in the name of the state to enjoin an entity from a violation if the attorney general receives a referral from the appropriate regulatory agency indicating that the entity has exhibited a pattern of intentionally violating the bill's provisions relating to balance billing prohibitions and to recover reasonable attorney's fees, costs, and expenses incurred if the attorney general prevails. Appropriate regulatory agencies would be required to take disciplinary action against certain entities for violations under this bill's provisions.
This bill would apply provisions relating to out-of-network claim dispute resolution to a health benefit plan offered by an HMO and an exclusive provider benefit plan offered by an insurer. It would also set out provisions relating to mandatory mediation with respect to a health benefit claim submitted by an out-of-network provider that is a licensed ambulatory surgical center, a licensed birthing center, a licensed hospital, or a certain freestanding emergency medical care facility. This bill includes several other provisions relating to mediation and binding arbitration.
Note that this is a high level summary of major provisions of a 30-page bill. We encourage readers to review the bill itself for more information on the detailed procedures and requirements related to the arbitration required by SB 1294.
SB 1264 is one of a series of bills which attempt to address the issue of "balance billing" or "surprise billing" in which an individual receives services at an in-network facility covered by their insurance plan only to find out later that their treatment was provided by a health care professional who is out-of-network, leading to the unpleasant surprise of receiving a bill with a balance due for the difference between the total bill and the portion the insurance company paid for. These bills can be in amounts as high as several thousand dollars. (All for care which the person reasonably believed to be covered by insurance.)
The practice of balance billing only exists because health insurance and health care do not operate in a free market environment. These industries are laden with mandates and regulations which have resulted in higher prices, lower quality services, and reduced consumer choice.
If these industries operated in a free market environment, balance billing would not be an issue because it would not be tolerated by consumers. In the currently overregulated market, consumers have no real choice in the matter.
Worse still, this system has artificially given insurers a marketplace advantage over consumers. To the extent that insurers abuse this government-created artificial marketplace advantage to take advantage of consumers, the government has a legitimate interest in at intervening to at least somewhat blunt the negative effect of the problems it has created.
We do not support the concept of fighting the effects of overregulation with still more regulation. However, as a policy matter on this particular issue, this is probably preferable to the status quo as a short term solution so long as we continue to work toward getting the health care and health insurance industries moved into a more free market environment in the long term. One thing of which we are confident, this attempt to curb unintended consequences of overregulation will produce unintended consequences of its own.
Because consumers do not have the normal range of options they would expect to have under free market conditions, and because they are at the mercy of artificially advantaged insurers, we remain neutral on SB 1264.
In the long term, rather than attempt to fight the unintended consequences of overregulation with more regulation, the state should seek to enact wholesale deregulation of the health care and health insurance industries to the extent possible and lobby the federal government to do the same. In the meantime, consumers should consider medishare programs and direct primary care as alternatives to traditional insurance. In the absence of deregulation, consumers abandoning traditional insurance for less expensive and more market-based alternatives will stand the best chance at forcing insurers to change their practices.