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Prompt Payment of Health Care Claims Final Rules

The Texas Department of Insurance on September 15, 2003, adopted final rules implementing major portions of SB 418, concerning prompt payment of physicians and providers by insurers issuing preferred provider benefit plans and health maintenance organizations. The rules finalize proposals which were published for comment on July 4, 2003. As of the new rules´ effective date, October 5, they will replace the bulk of the emergency rules that had gone into effect on August 16, 2003, the effective date of most of SB 418´s provisions. Emergency rule sections concerning ID cards issued by carriers and waiver of requirements under the Medicaid and Children´s Health Insurance (CHIP) programs will remain in effect until new rules are proposed and adopted.

Among other things, the adopted rules add or amend definitions of terms, including "billed charges," which is defined as the charges for medical or health care services included on a claim submitted by a physician or provider. The definition also provides that billed charges must comply with all applicable requirements of law, including the requirement that a provider may not submit a bill for treatment it knows was not provided or was improper, unreasonable, or medically or clinically unnecessary.

Because the Department received so many comments concerning the definition of billed charges, including concerns that the new language would allow overcharging by physicians and providers, the Department has launched an aggressive education campaign to inform all interested persons of the new provisions. It also encourages physicians, providers, consumers, and insurers to file complaints with the Department concerning allegations of fraudulent or unreasonable charges, which will be referred, where necessary, to the appropriate enforcement entity.

The new rules also contain provisions concerning preauthorization and verification of medical services, which shorten the time within which carriers must respond, and streamline the process for requesting verifications. Other key provisions which were changed or clarified in the adopted rules include methods for calculating penalties on late or underpaid claims; clarification of the time for responding to preauthorization and verification requests which are delivered after hours or on weekends; addition of a unique verification number as a claims element; and procedures governing the submission of a verification request for a service that must also be preauthorized.

The new rules will be effective October 5, 2003, and apply to contracts between providers and carriers that are written or renewed, and services provided pursuant to those contracts, and to certain non-contracted providers who provide services, on and after that date. The emergency rules remain in effect until October 5, and apply to contracts written or renewed on and after August 16, 2003; however, providers and their carriers may amend any contracts entered into between August 16 and October 5, to ensure that as many contracts as possible are subject to the same rules.

The adopted rules, as well as the emergency rules, can be accessed on TDI´s website here.

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Last updated: 9/6/2014