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You are here: Home . bulletins . 2003 . b-0041-3
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COMMISSIONER'S BULLETIN # B-0041-03

October 21, 2003


To: CARRIERS


Re: CARRIERS' REFUSAL TO VERIFY

Effective October 5, 2003, the Texas Department of Insurance (TDI or the department) adopted rules, available on TDI's website at http://www.tdi.texas.gov/consumer/doctors.html, which implement several prompt payment provisions of SB 418, 78th Regular Legislative Session. These rules, which replace emergency rules adopted by TDI on August 16, 2003, apply to health maintenance organizations and insurers that issue preferred provider benefit plans (hereinafter collectively referred to as carriers). Among other things, the rules provide procedures by which carriers must respond to requests for verification of proposed services by physicians and providers.

It has recently come to TDI's attention that some carriers are making a corporate decision that they will not provide verifications under any circumstances. One carrier has cited as its justification the following language from the department's rule adoption order: "SB 418 does not require that a carrier issue a verification. A carrier may issue a declination if it lists the specific reasons for declining." The purpose of this bulletin is to explain the significance of this language and to reiterate to carriers the requirements of SB 418 and the department's rules.

The quoted language was contained in a response to a comment on the proposed rule that expressed concern that a carrier would decline to provide a verification, and that, without a verification, physicians would not provide medically necessary treatment. The department correctly pointed out that a carrier may decline to verify so long as it lists the specific reasons for declining. The department also responded that it anticipated that physicians would continue to do what was best for their patients with or without a guarantee of payment from the carrier. Accordingly, the department disagrees with any interpretation that this statement stands for the proposition that a carrier may decline to provide verifications entirely. Rather, consistent with SB 418, carriers, upon request "for verification of a particular medical care or health care service" proposed to be provided "to a particular patient," must inform the requestor without delay "whether the service, if provided to that patient, will be paid…" In order to do this, the carrier "shall have appropriate personnel reasonably available at a toll-free telephone number to provide a verification" during stated business hours, as well as a system to receive and respond to after-hours requests. The statute also says that a carrier may decline to provide a verification if it notifies the requestor "of the specific reason the determination was not made." Art. 3.70-3C, Sec. 3E(b), (c), and (d); see also Sec. 843.347(b), (c), and (d).

The department believes that the above statutory language makes clear that all carriers subject to SB 418 must make a good faith effort to consider requests for verification rather than adopting a corporate policy of no verifications. If the carrier is unable to verify, it may decline so long as it states the specific reason for the declination. Such reason, according to the statutory scheme, must be specific to the request for the proposed service rather than a blanket refusal. Carriers should review their verification procedures to ensure that they are compliant with this requirement.

If you have any questions concerning this bulletin, please contact Margaret Lazaretti, Deputy Commissioner, HMO Division, at (512) 322-4266 or Margaret.Lazaretti@tdi.state.tx.us.


_________________________
Jose Montemayor
Commissioner of Insurance



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