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You are here: Home . rules . 2003 . 0623-059
Archived File – for Reference Use.
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Subchapter X. Preferred Provider Plans

28 TAC §3.3703

The Texas Department of Insurance proposes amendments to Sec. 3.3703, concerning required contracting provisions for preferred provider plans. These proposed amendments are necessary to implement provisions of SB 418 (78 th Legislative Session) which relate to the coding guidelines and other information that an insurer must supply upon request of a preferred provider. SB 418, in pertinent part, required certain changes to the department´s existing rule requiring disclosure of fee schedules and coding information that affect the payment for services provided by physicians and other health care providers pursuant to a preferred provider contract subject to Texas Insurance Code Art. 3.70-3C. Other provisions of SB 418 are addressed in proposed rules published elsewhere in this issue of the Texas Register .

The proposed amendments to subsections (a)(20) and (a)(20)(F) delete outdated compliance date language contained in the original rule. The proposed amendments to subsection (a)(20)(A) state that disclosed bundling processes must be consistent with nationally recognized and generally accepted bundling edits and logic, and add to the list of information to be disclosed, the publisher, product name and version of any software used by the insurer to determine bundling and unbundling of claims. The proposed amendments to subsection (a)(20)(D) require the insurer to give 90, rather than 60, days written notice of any changes, and provide that an insurer may not make retroactive changes to any of the information required to be provided by paragraph (20). Proposed subsection (a)(20)(G) adds "other business operations" and "communications with a governmental agency involved in the regulation of healthcare or insurance" to the list of acceptable uses of disclosed information. The proposed amendments to that subparagraph also change the term "verification" to "representation" to avoid confusion with the verification provisions of SB 418.

Proposed subsection (a)(20)(H) allows a preferred provider that receives information under the disclosure requirements to terminate its contract with a preferred provider carrier on or before the 30 th day after the date the provider receives the information, without penalty or discrimination in participation in other products or plans so long as proper notice is given to insureds in compliance with existing law. Proposed subsection (a)(20)(I) provides that the provisions of this paragraph may not be waived, voided, or nullified by contract. Proposed paragraph (a)(21) provides that an insurer may require a preferred provider to retain in its records updated information concerning a patient´s other health benefit plan coverage.

The department will consider the adoption of the proposed amendments to §3.3703 in a public hearing under Docket No. 2553 on August 7, 2003 , at 9:30 a.m. in Room 100 of the William P. Hobby Jr. State Office Building , 333 Guadalupe, Austin , Texas .

Kimberly Stokes, Senior Associate Commissioner, Life, Health and Licensing Program , has determined that, for each year of the first five years the proposed amendments will be in effect, there will be no fiscal impact to state and local governments as a result of the enforcement or administration of the amendments. There will be no measurable effect on local employment or the local economy as a result of the proposal.

Ms. Stokes has also determined that, for each year of the first five years the amendments are in effect, the public benefits anticipated as a result of the proposed amendments will be the implementation of the provisions of SB 418, which will simplify and standardize current disclosure procedures between preferred providers and insurers. Any cost to persons required to comply with this section for each year of the first five years the proposed section will be in effect is the result of enactment of SB 418 and not the result of the adoption, enforcement, or administration of this section. In addition, the amendments in many respects only further refine or clarify the procedures contained in the current rule. Because any potential costs are mandated by the statute, it would be neither legal nor feasible to waive or modify the requirements for insurers that are small or micro businesses, because contracted physicians and providers should nevertheless be able to obtain information regarding claims processing information and procedures whether they are contracting with a small or large insurer.

To be considered, written comments on the proposal must be submitted no later than 5:00 p.m. on August 4, 2003 , to Gene C. Jarmon, General Counsel and Chief Clerk, Mail Code 113-2A, Texas Department of Insurance, P. O. Box 149104 , Austin , Texas 78714-9104 . An additional copy of the comment must be simultaneously submitted to Kimberly Stokes, Senior Associate Commissioner, Life, Health and Licensing Program, Mail Code 107-2A, Texas Department of Insurance, P.O. Box 149104 , Austin , Texas 78714-9104 .

The amendments are proposed under the Insurance Code Article 3.70-3C and §36.001. Article 3.70-3C, Section 3A(p) gives the Commissioner the authority to adopt rules as necessary to implement Article 3.70-3C, Section 3A. Article 3.70-3C, Section 3A(m) states that an insurer´s claims payment processes shall be consistent with nationally recognized, generally accepted bundling edits and logic . Article 3.70-3C, Section 3F provides in part that an insurer may require a physician or provider to retain in the physician´s or provider´s records updated information concerning other health benefit plan coverage. Article 3.70-3C, Section 3H contains requirements and procedures by which coding, bundling, or other payment processes and fee schedules may be requested, and must be provided, pursuant to a contract between an insurer and a physician or provider. Article 3.70-3C, Section 6(e)(2) provides that a preferred provider that voluntarily terminates the preferred provider´s relationship with the insurer shall provide notice to insureds of the termination, with the assistance of the insurer. Section 36.001 of the Insurance Code provides that the Commissioner of Insurance may adopt rules necessary and appropriate to implement the powers and duties of the Texas Department of Insurance.

The following article is affected by this proposal: Article 3.70-3C, Preferred Provider Benefit Plans

§3.3703 . Contracting Requirements.

(a) An insurer marketing a preferred provider benefit plan must contract with physicians and health care providers to assure that all medical and health care services and items contained in the package of benefits for which coverage is provided, including treatment of illnesses and injuries, will be provided under the plan in a manner that assures both availability and accessibility of adequate personnel, specialty care, and facilities. Each contract must meet the following requirements:

(1) ­ (19) (No change.)

(20) A contract between a preferred provider and an insurer must include provisions that will entitle the preferred provider upon request to all information necessary to determine that the preferred provider is being compensated in accordance with the contract. A preferred provider may make the request for information by any reasonable and verifiable means. The information must include a level of detail sufficient to enable a reasonable person with sufficient training, experience and competence in claims processing to determine the payment to be made according to the terms of the contract for covered services that are rendered to insureds. The insurer may provide the required information by any reasonable method through which the preferred provider can access the information, including e-mail, computer disks, paper or access to an electronic database. Amendments, revisions or substitutions of any information provided pursuant to this paragraph must be made in accordance with subparagraph (D) of this paragraph. The insurer shall provide the fee schedules and other required information by [the later of the 90th day after the effective date of this paragraph or] the 30th day after the date the insurer receives the preferred provider's request.

(A) This information must include a preferred provider specific summary and explanation of all payment and reimbursement methodologies that will be used to pay claims submitted by the preferred provider. At a minimum, the information must include:

(i) a fee schedule, including, if applicable, CPT, HCPCS, ICD-9-CM codes and modifiers:

(I) by which all claims for covered services submitted by or on behalf of the preferred provider will be calculated and paid; or

(II) that pertains to the range of health care services reasonably expected to be delivered under the contract by that preferred provider on a routine basis along with a toll-free number or electronic address through which the preferred provider may request the fee schedules applicable to any covered services that the preferred provider intends to provide to an insured and any other information required by this paragraph that pertains to the service for which the fee schedule is being requested if that information has not previously been provided to the preferred provider;

(ii) all applicable coding methodologies;

(iii) all applicable bundling processes , which must be consistent with nationally recognized and generally accepted bundling edits and logic;

(iv) all applicable downcoding policies;

(v) a description of any other applicable policy or procedure the insurer may use that affects the payment of specific claims submitted by or on behalf of the preferred provider, including recoupment; [and]

(vi) any addenda, schedules, exhibits or policies used by the insurer in carrying out the payment of claims submitted by or on behalf of the preferred provider that are necessary to provide a reasonable understanding of the information provided pursuant to this paragraph; and

(vii) the publisher, product name and version of any software the insurer uses to determine bundling and unbundling of claims .

(B) In the case of a reference to source information as the basis for fee computation that is outside the control of the insurer, such as state Medicaid or federal Medicare fee schedules, the information provided by the insurer shall clearly identify the source and explain the procedure by which the preferred provider may readily access the source electronically, telephonically, or as otherwise agreed to by the parties.

(C) Nothing in this paragraph shall be construed to require an insurer to provide specific information that would violate any applicable copyright law or licensing agreement. However, the insurer must supply, in lieu of any information withheld on the basis of copyright law or licensing agreement, a summary of the information that will allow a reasonable person with sufficient training, experience and competence in claims processing to determine the payment to be made according to the terms of the contract for covered services that are rendered to insureds as required by subparagraph (A) of this paragraph.

(D) No amendment, revision, or substitution of claims payment procedures or any of the information required to be provided by this paragraph shall be effective as to the preferred provider, unless the insurer provides at least 90 [ 60 ] calendar days written notice to the preferred provider identifying with specificity the amendment, revision or substitution. An insurer may not make retroactive changes to claims payment procedures or any of the information required to be provided by this paragraph. Where a contract specifies mutual agreement of the parties as the sole mechanism for requiring amendment, revision or substitution of the information required by this paragraph, the written notice specified in this section does not supersede the requirement for mutual agreement.

(E) Failure to comply with this paragraph constitutes a violation as set forth in subsection (b) of this section.

(F) This paragraph applies to all contracts entered into or renewed on or after the effective date of this paragraph. Upon receipt of a request, the insurer must provide the information required by subparagraphs (A) - (D) of this paragraph[ : ]

[ (i) for contracts entered into or renewed on or after the effective date of this paragraph, to the physician or provider by the later of the 90th day after the effective date of this paragraph or contemporaneously with other contractual materials; or ]

[ (ii) for an existing contract that does not contain the terms set forth in this paragraph, ] to the preferred [ contracting physician or ] provider by [ the later of the 90th day after the effective date of this paragraph or ] the 30th day after the date the insurer receives the preferred [ contracting physician's or ] provider's request.

(G) A preferred [ physician or ] provider that receives information under this paragraph:

(i) may not use or disclose the information for any purpose other than :

(I) the preferred [ physician's or ] provider's practice management ,

(II) [ and ] billing activities ,

(III) other business operations, or

(IV) communications with a governmental agency involved in the regulation of healthcare or insurance; and

(ii) may not use this information to knowingly submit a claim for payment that does not accurately represent the level, type or amount of services that were actually provided to an insured or to misrepresent any aspect of the services; and

(iii) may not rely upon information provided pursuant to this paragraph about a service as a representation [ verification ] that an insured is covered for that service under the terms of the insured's policy or certificate.

(H) A preferred provider that receives information under this paragraph may terminate the contract on or before the 30 th day after the date the preferred provider receives information requested under this paragraph without penalty or discrimination in participation in other health care products or plans. If a preferred provider chooses to terminate the contract, the insurer shall assist the preferred provider in providing the notice required by paragraph (18) of this subsection.

(I) The provisions of this paragraph may not be waived, voided, or nullified by contract.

(21) An insurer may require a preferred provider to retain in the preferred provider's records updated information concerning a patient´s other health benefit plan coverage.

(b) In addition to all other contract rights, violations of these rules shall be treated for purposes of complaint and action in accordance with Insurance Code Article 21.21-2, and the provisions of that article shall be utilized insofar as practicable, as it relates to the power of the department, hearings, orders, enforcement, and penalties.

(c) An insurer may enter into an agreement with a preferred provider organization for the purpose of offering a network of preferred providers, provided that it remains the insurer's responsibility to:

(1) meet the requirements of Insurance Code Article 3.70-3C (Preferred Provider Benefit Plans) and this subchapter; or

(2) ensure that the requirements of Insurance Code Article 3.70-3C (Preferred Provider Benefit Plans) and this subchapter are met.



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