Texas Enacts Bill to Protect Consumers from Surprise Billing

June 18, 2019 - On June 14, Texas joined the ranks of a score of states with consumer protections against surprise billing (or balance billing) with the signing of Senate Bill 1264.

Effective this September, the bulk of the bill focuses on three areas: limitations on surprise billing information reported by consumer reporting agencies, elimination of surprise billing for specific health plans, and mandatory mediation requests. Of particular interest to providers and payers in the last item.

“We wanted to try to take the patients — get them out of the middle of it, because really it’s not their fight,” said the bill’s author Senator Kelly Hancock told NPR.

Under the new legislation, mediation no longer involves the patient and instead takes place between the health plan administrator or issuer and the provider and is overseen by an impartial mediator. Arbitration applies to amounts exceeding $500 and services rendered in emergency departments or medical care provided within a facility that is a preferred provider.

A facility-based provider, emergency care provider, health benefit plan issuer, or administrator can request mediation from the state, with the costs of the mediator split evenly among the parties. The state bears responsibility for notifying affected parties named in the mediation request.

“In an effort to settle the claim before mediation, all parties must participate in an informal settlement teleconference not later than the 30th day after the date on which a person submits a request for mediation," the bill adds. According to the law, formal mediation must take place within 180 days of the formal request.

As for the specifics of the mediation, participants will review the charges made by the provider and the amount paid by the health plan.

“The goal of the mediation is to reach an agreement among the facility-based provider or emergency care provider and the health benefit plan issuer or administrator, as applicable, as to the amount paid by the issuer or administrator to the facility-based provider or emergency care provider and the amount charged by the facility-based provider or emergency care provider,” the bill continues.

As for the amounts of bills, the newly enacted legislation calls on health plans to pay for emergency care furnished by out-of-network providers at a contracted rate or “an amount that the organization determines is reasonable." Under no circumstances is the provider to bill a patient for an amount higher than the patient's financial responsibility under a specific plan.

As reported by Austin’s NPR affiliate KUT, the Texas Department of Insurance — the program originally tasked with intervening on behalf of Texas residents — received 4,445 requests for mediation in 2018, up from 686 in 2014.

The legislative efforts at the state level are mirrored by those in DC. Last month, a House Ways and Means Committee hearing heard testimony from the American Medical Association (AMA), America’s Health Insurance Plans (AHIP), and the ERISA Industry Committee (ERIC) that laid bare the negative impact of surprise billing on industry-wide efforts to improve patient care and healthcare spending.

And earlier this year, leaders of the Senate Committee on Health, Education, Labor and Pensions (HELP) unveiled draft legislation that includes three proposals for eliminating surprise billing.

The first plan would mandate that all providers within an in-network hospital bill at the hospital’s rate regardless of the insurance networks that are a part of it. The second would set that price for out-of-network services at the median contracted rate in a given region. And the third would require an independent arbitrator to agree on a final offer for surprise bills exceeding $750 (those under $750 would apply the median rate referenced in the second plan).

The Senate HELP Committee is holding a hearing on June 18 to develop its legislation further.