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You are here: Home . rules . 2003 . 0815-059
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SUBCHAPTER T. Submission of Clean Claims

§§21.2801 ­ 21.2809, 21.2811 - 21.2826

The Commissioner of Insurance adopts on an emergency basis, to take effect on August 16, 2003, amendments to §§21.2801-21.2803, 21.2807-21.2809, and 21.2811-21.2817, and new §§21.2804-21.2806 and 21.2818-21.2826 concerning the submission of clean claims to health maintenance organizations and insurers who issue preferred provider benefit plans (hereinafter collectively referred to as carriers). The emergency adoption is necessary to comply with and implement the provisions and the intent of SB 418 (78 th regular legislative session) by ensuring that the clean claims filing and payment processes are streamlined, standardized, and efficient.

SB 418 also contains provisions regarding preauthorization and verification procedures and the availability of coding guidelines and other information through contracts with preferred provider carriers and HMOs. These provisions are addressed in emergency rules published elsewhere in this issue of the Texas Register.

Pursuant to SB 418, several provisions became applicable to contracts entered into or renewed, or certain services provided, on or after the 60 th day after the effective date of the statute, June 17, 2003 , rendering those provisions effective on August 16, 2003 . SB 418 further provides that the Commissioner of Insurance may adopt emergency rules to implement this Act without making the finding in subsection (a), Section 2001.034, Government Code. An emergency adoption is warranted so that rules are in place on the effective date of certain provisions of the statute, to facilitate the uniform implementation of these amendments, and to guide affected parties´ compliance with the new statutory requirements. SB 418 requires the commissioner, not later than 90 days after the Act´s effective date, to adopt rules to implement the Act. It also requires that the commissioner appoint a "technical advisory committee on claims processing" (TACCP) and to consult with the TACCP with respect to, among other things, "claims development, submission, processing, adjudication, and payment" before adopting any rule related to such subjects. Following consultation with the TACCP, as well as with the Clean Claims Working Group, TDI on July 4, 2003 proposed for public comment rules to implement most of the requirements of SB 418, and held a public hearing on the rules on August 7, 2003 . More than 150 comments were received on the proposal. While the department intends to adopt final rules in the near future, the usual process of rule adoption and its associated notice and comment periods, as well as the need to respond to comments, would have required a timeframe that could not be completed prior to the date affected entities must begin complying with certain provisions of the new statute. Considering these facts, it is necessary to adopt these amendments on an emergency basis to ensure that physicians and providers are paid timely for their services and to promote regulatory compliance. New §&sect ;21.2820 and 21.2826 will be proposed for public comment in the near future.

The amendments to §21.2801 provide that Subchapter T, in addition to applying to claims submitted by contracted physicians and providers, has limited applicability to noncontracted physicians and providers. Amendments to §21.2802 revise definitions of certain terms including audit, diagnosis code, procedure code, and statutory claims payment period. They also define "billed charges" as "the charges for medical or health care services included on a claim submitted by a physician or provider," and state that billed charges must comply with all applicable provisions of law, including the requirement that providers may not submit a bill for treatment that is improper, unreasonable, or medically or clinically unnecessary. In addition, the amendments re-define the term "clean claim" with regard to both non-electronic and electronic claims, and add definitions for terms such as catastrophic event, corrected claim, duplicate claim, preferred provider, and provider.

Amendments to §21.2803 specify the elements of a clean claim for non-electronic claims and for electronic claims, which are those that comply with regulations of the U.S. Department of Health and Human Services which implement the Health Insurance Portability and Accountability Act (HIPAA), and adopt standard transactions and data elements for the electronic exchange of information. For non-electronic claims, the amendments list the required data elements with reference to the appropriate fields on the claim forms prescribed by the Centers for Medicare and Medicaid Services for both institutional and noninstitutional or physician providers (UB-92 and CMS-1500, respectively). The amendments state that a physician or provider submits an electronic clean claim by using the ASC X12N 837 format that complies with all applicable federal laws related to electronic healthcare claims, including applicable implementation guides, companion guides, and trading partner agreements. The amendments also provide that if a physician or provider submits an electronic clean claim that requires coordination of benefits, the carrier processing the claim as a secondary payor shall rely on the primary payor information submitted on the claim, and that primary payor information may be submitted electronically to the secondary payor in compliance with applicable federal law, including applicable implementation guides, companion guides, and trading partner agreements.

Section 21.2804 details the procedures by which a carrier, upon receipt of a clean claim, may request additional information from a treating preferred provider, including the timeframes for making a request, and paying, denying, or auditing a claim. It also provides that the period for determining whether a clean claim is payable is tolled, and does not resume, pending receipt of the additional information or a response indicating that the preferred provider does not possess the requested information. It states that the carrier shall require the preferred provider to either attach a copy of the request to its response, or provide certain identifying information, and says that if a request was submitted electronically in accordance with federal requirements, the response must also be submitted in accordance with those requirements.

Section 21.2805 contains the procedures by which a carrier may request additional information from a source other than the preferred provider who submitted the claim, and provides that the applicable 21 (for pharmacy claims), 30 (for electronic claims) or 45 (for non-electronic claims) day statutory claims payment period is not extended pending receipt of the information. It states that the carrier shall request that the responding entity attach a copy of the request to the response, and contains the same federal electronic request and response requirements of §21.2804, if applicable. It also provides that if, upon receipt of information, the carrier determines that there was an error in payment of a claim, the carrier may recover any overpayment pursuant to the provisions of this rule.

Section 21.2806 lists the methods by which a claim may be transmitted and requires a physician or provider to submit a claim no later than the 95 th day after the medical or health care services were rendered, or forfeit the right to payment unless the failure to timely submit was the result of a catastrophic event. However, the parties may agree by contract to extend the period for submitting a claim. For a claim for which coordination of benefits applies, the 95 day period does not begin for submission of the claim to the secondary payor until the physician or provider receives notice of the payment or denial from the primary payor. For a claim submitted by an institutional provider, the 95-day period begins on the date of discharge. A carrier shall accept as proof of timely filing a claim filed in compliance with this subsection or information from another carrier showing that the physician or provider submitted the claim to the carrier in compliance with this subsection. The adoption also says that a duplicate claim may not be submitted prior to the applicable 21 , 30 or 45 day claims payment period, and a carrier that receives a duplicate claim within that time is not subject to penalties on the duplicate claim.

Amendments to §21.2807 contain changes to ensure consistency with the requirements of SB 418, including provisions relating to the adjudication of pharmacy claims. Amendments to §§21.2808, 21.2811-21.2812, 21.2814, and 21.2817 are also made for consistency. Amendments to §21.2809 provide that a carrier that intends to audit a clean claim must, within the applicable claims payment period, notify the preferred provider clearly and prominently on the explanation of payment that the claim is being audited and pay 100% of the applicable contracted rate. A carrier that fails to notify and pay 100% within the claims payment period--or, if applicable, the extended period allowed by adopted §21.2804--may not use the audit procedures. A preferred provider that receives less than 100% of the applicable contracted rate has received an underpayment and must so notify the carrier within 180 days in accordance with §21.2815(c) to receive a penalty. If a physician or provider fails to timely provide additional information requested by the carrier during the audit, the carrier may recover the amount paid pursuant to the procedures contained in the statute. Prior to seeking a refund for an audit payment a carrier must give the physician or provider an opportunity to appeal pursuant to §21.2818 (relating to overpayments).

Amendments to §21.2813 provide that all statutory and regulatory requirements applicable to a carrier also apply to contracted entities that process or pay claims, obtain the services of physicians or providers, or issue verifications or preauthorizations. Amendments to §21.2815 set out the new graduated penalty requirements applicable to carriers that do not pay a preferred provider´s clean claim within the applicable 21, 30 or 45 day claims payment period, including the method for calculating the penalty on the unpaid balance of a partially paid claim. The amendments also clarify statutory language by stating that the penalty for a claim paid later than 90 days after the expiration of the statutory claims payment period includes 18% interest on the penalty amount, and they provide an example of how the interest is to be calculated. The amendments also provide that a carrier is not liable for a penalty if the failure to pay the claim timely was a result of a catastrophic event, or if the preferred provider notifies the carrier of an underpaid claim after the 180 th day after the underpayment was received and the carrier pays the balance on or before the 45 th day after the notice. The amendments require a carrier to clearly and prominently indicate on the explanation of payment the amount of the contracted rate paid and the amount paid as a penalty.

Amendments to §21.2816 expand the current provisions concerning date of receipt to include any written communication, including a claim, referenced under Subchapter T. In order to provide proof of submission and establish date of receipt, the section also allows any entity submitting a communication to choose to maintain a mail log that identifies each separate claim, request, or response in a batch and says that a copy of the mail log, if used, shall be transmitted to the receiving entity.

Section 21.2818 establishes a procedure by which a carrier can recover a refund due to overpayment or completion of audit, including deadlines and notice requirements for refund requests and for recovery. It requires the carrier to give the physician or provider notice, not later than 180 days after receipt of the overpayment, or upon completion of audit, of the specific claims and amounts overpaid and reasons therefor. The notice must also include notification of appeal rights and describe the methods by which the carrier intends to recover. The section gives a physician or provider 45 days to appeal a request for refund, and says that upon receipt of such written appeal the carrier must begin the appeal process provided in the carrier´s contract with the provider. It provides that a carrier may not recover a refund until the later of the 45 th or 30 th day after notification (for overpayments and audits, respectively) or exhaustion of appeal rights, if the provider has not made arrangements for payment. It also provides that a secondary payor that pays a portion of a claim that should have been paid by the primary payor may only recover the overpayment from the carrier responsible for that amount, unless the overpaid portion was paid by both payors, in which case the secondary payor may recover from the physician or provider. Finally, it specifies that a carrier´s ability to recover amounts fraudulently billed is not affected.

Section 21.2819 requires physicians, providers and carriers to notify the department within five days if, due to a catastrophic event, they are unable to meet the statutory deadlines for claims filing or claims payment. The section also requires an entity, within ten days after returning to normal operations, to certify to the department, by sworn affidavit, the specific nature and dates of the catastrophic event and the length of time the event caused an interruption in activity, and provides that a valid certification tolls the applicable statutory deadlines for the number of days the entity certifies that activity was interrupted.

Section 21.2820 specifies certain requirements for identification cards or similar documents issued by HMOs or preferred provider carriers that allow enrollees and insureds to access services or coverage under an HMO evidence of coverage or a preferred provider benefit plan. This section will be proposed for public comment prior to its permanent adoption.

Section 21.2821 requires quarterly reporting by HMOs and preferred provider carriers of information and data regarding claims processing and payment and business interruption data due to catastrophic events, with the first report due on February 15, 2004 , for the preceding months of September through December. This information, much of which is currently being collected by the department upon request, is necessary to assist the TACCP in gathering information for the biennial report to the legislature required by SB 418. It is also necessary in order to provide data to determine compliance with SB 418´s additional penalty provisions for carriers that fail to comply with the claims payment requirements for more than two percent of clean claims. Because of the new verification provision of SB 418, the department will also need to obtain data concerning verifications and declinations in order to monitor how this provision is working. The adoption requires reporting of verification and declination data to be done annually, on or before July 31 st . Because the final disposition of claims associated with verifications and declinations may take several months (due to the 95-day claims filing deadline and the applicable statutory claims payment periods), the department has required the reporting of this information to be on an annual rather than quarterly basis. Consistent with the quarterly reporting requirements regarding claims payment, §21.2822, concerning administrative penalties, states that a carrier´s compliance percentage shall be determined on a quarterly basis, separately for noninstitutional preferred provider claims and institutional preferred provider claims, and not including claims paid pursuant to audit.

Section 21.2823 states that §§19.1724 (relating to Verification) and 21.2807 apply to a physician or provider that provides emergency services or specialty or referral services not reasonably available in the carrier´s network. Section 21.2824 contains an effective date of August 16, 2003 for contracts between carriers and physicians and providers as well as for certain physicians and providers that do not have a contract with an HMO or preferred provider carrier. Section 21.2825 contains a severability provision. Section 21.2826 waives application of the provisions of this subchapter and §§3.3703(20), 11.901(10), 19.1723, and 19.1724 to Medicaid and Children´s Health Insurance Program (CHIP) plans provided by an HMO or preferred provider carrier, as requested by the Texas Department of Health and Human Services pursuant to new Insurance Code Article 21.30. This section will also be proposed for public comment prior to its permanent adoption.

SB 418 also contains new provisions regarding verification and preauthorization of medical or health care services and availability of coding guidelines through contracts with preferred provider carriers and HMOs. These provisions are addressed in emergency rules published elsewhere in this issue of the Texas Register . In addition, contemporaneously with these amendments and new sections, the emergency adoption of the repeal of §§21.2804-21.2806 and 21.2819-21.2820 is also published elsewhere in this issue of the Texas Register.

The sections are adopted on an emergency basis under SB 418, Government Code §2001.034, and Insurance Code Articles 3.70-3C and 21.30 and §§843.209, 843.336-843.353, 843.3385, 843.3405, and 36.001. SB 418 provides that the commissioner shall adopt rules as necessary to implement that Act, including emergency adoption of rules pursuant to §2001.034 of the Government Code without a finding described in subsection (a) of that provision. Government Code §2001.034 provides for the adoption of administrative rules on an emergency basis without notice and comment. Article 3.70-3C provides a mechanism for the prompt and efficient resolution of claims by preferred provider carriers and provides that the commissioner may adopt rules to implement the article as it relates to the prompt payment of claims. Article 21.30 grants the commissioner the authority to waive application of certain sections of the Insurance Code to services and benefits provided under the state Medicaid and Children´s Health Insurance Program, as requested by the Texas Department of Health and Human Services. Article 3.70-3C §11 and section 843.209 imposes requirements on any identification card issued by a carrier. Sections 843.336-843.353, 843.3385, and 843.3405, collectively provide a mechanism for the prompt and efficient resolution of claims by HMOs and provides that the commissioner may adopt rules to implement the article as it relates to the prompt payment of claims. Section 36.001 provides that the Commissioner of Insurance may adopt any rules necessary and appropriate to implement the powers and duties of the Texas Department of Insurance under the Insurance Code and other laws of this state.

§21.2801. Scope. The purpose of this subchapter is to specify the definitions and procedures necessary to implement Article 3.70-3C (Preferred Provider Benefit Plans) and Chapter 843 of the Insurance Code relating to clean claims and prompt payment of physician and provider claims. This subchapter applies to all non-electronic and electronic claims submitted by contracted physicians or providers for services or benefits provided to insureds of preferred provider carriers and enrollees of health maintenance organizations. The subchapter also has limited applicability to noncontracted physicians and providers.

§21.2802. Definitions. The following words and terms when used in this subchapter shall have the following meanings:

(1) Audit -- A procedure authorized and described in §21.2809 of this title (relating to Audit Procedures) under which an HMO or preferred provider carrier may investigate a claim beyond the statutory claims payment period without incurring penalties under §21.2815 of this title (relating to Failure to Meet the Statutory Claims Payment Period).

(2) Billed charges -- The charges for medical care or health care services included on a claim submitted by a physician or provider. For purposes of this subchapter, billed charges must comply with all other applicable requirements of law, including Texas Health and Safety Code Sec. 311.0025, Texas Occupations Code Sec. 105.002, and Texas Insurance Code Art. 21.79F.

(3) CMS -- The Centers for Medicare and Medicaid Services of the U.S. Department of Health and Human Services.

(4) Catastrophic Event -- An event, including a acts of God, civil or military authority, acts of public enemy, war, accidents, fires, explosions, earthquake, windstorm, flood or organized labor stoppages, that cannot reasonably be controlled or avoided and that causes an interruption in the claims submission or processing activities of an entity for more than two consecutive business days.

(5) Clean claim --

(A) For non-electronic claims, a claim submitted by a physician or provider for medical care or health care services rendered to an enrollee under a health care plan or to an insured under a health insurance policy that includes:

(i) the required data elements set forth in §21.2803(b) of this title (relating to Elements of a Clean Claim); and

(ii) if applicable, the amount paid by the primary plan or other valid coverage pursuant to §21.2803(c) of this title (relating to Elements of a Clean Claim);

(B) For electronic claims, a claim submitted by a physician or provider for medical care or health care services rendered to an enrollee under a health care plan or to an insured under a health insurance policy using the ASC X12N 837 format and in compliance with all applicable federal laws related to electronic healthcare claims, including applicable implementation guides, companion guides and trading partner agreements.

(6) Condition code -- The code utilized by CMS to identify conditions that may affect processing of the claim.

(7) Contracted rate -- Fee or reimbursement amount for a preferred provider's services, treatments, or supplies as established by agreement between the preferred provider and the HMO or preferred provider carrier.

(8) Corrected claim -- A claim containing clarifying or additional information necessary to correct a previously submitted claim .

(9) Deficient claim -- A submitted claim that does not comply with the requirements of §21.2803(b) or (d) of this title.

(10) Diagnosis code -- Numeric or alphanumeric codes from the International Classification of Diseases (ICD-9-CM), Diagnostic and Statistical Manual (DSM-IV), or their successors, valid at the time of service.

(11) Duplicate Claim -- Any claim submitted by a physician or provider for the same health care service provided to a particular individual on a particular date of service that was included in a previously submitted claim. The term does not include corrected claims.

(12) HMO -- A health maintenance organization as defined by Insurance Code Section 843.002(14).

(13) HMO delivery network -- As defined by Insurance Code Section 843.002(15).

(14) Institutional provider -- An institution providing health care services, including but not limited to hospitals, other licensed inpatient centers, ambulatory surgical centers, skilled nursing centers and residential treatment centers.

(15) Occurrence span code -- The code utilized by CMS to define a specific event relating to the billing period.

(16) Patient control number -- A unique alphanumeric identifier assigned by the institutional provider to facilitate retrieval of individual financial records and posting of payment.

(17) Patient-status-at-discharge code -- The code utilized by CMS to indicate the patient's status at time of discharge or billing.

(18) Physician -- Anyone licensed to practice medicine in this state.

(19) Place of service code -- The codes utilized by CMS that identify the place at which the service was rendered.

(20) Preferred provider --

(A) with regard to a preferred provider carrier, a preferred provider as defined by Insurance Code Article 3.70-3C, §1(10) (Preferred Provider Benefit Plans) or Article 3.70-3C, §1(1) (Use of Advanced Practice Nurses and Physician Assistants by Preferred Provider Plans).

(B) with regard to an HMO,

(i) a physician, as defined by Insurance Code Section 843.002(22), who is a member of that HMO's delivery network; or

(ii) a provider, as defined by Insurance Code Section 843.002(24), who is a member of that HMO's delivery network.

(21) Preferred provider carrier -- An insurer that issues a preferred provider benefit plan as provided by Insurance Code Article 3.70-3C, Section 2 (Preferred Provider Benefit Plans).

(22) Primary plan -- As defined in §3.3506 of this title (relating to Use of the Terms "Plan," "Primary Plan," "Secondary Plan," and "This Plan" in Policies, Certificates and Contracts).

(23) Procedure code -- Any alphanumeric code representing a service or treatment that is part of a medical code set that is adopted by CMS as required by federal statute and valid at the time of service. In the absence of an existing federal code, and for non-electronic claims only, this definition may also include local codes developed specifically by Medicaid, Medicare, an HMO, or a preferred provider carrier to describe a specific service or procedure.

(24) Provider -- A ny practitioner, institutional provider, or other person or organization that furnishes health care services and that is licensed or otherwise authorized to practice in this state, other than a physician.

(25) Revenue code -- The code assigned by CMS to each cost center for which a separate charge is billed.

(26) Secondary plan -- As defined in §3.3506 of this title.

(27) Source of admission code -- The code utilized by CMS to indicate the source of an inpatient admission.

(28) Statutory claims payment period --

(A) the 45-calendar-day period in which an HMO or preferred provider carrier shall make claim payment or denial, in whole or in part, after receipt of a non-electronic clean claim pursuant to Insurance Code Article 3.70-3C, §3A (Preferred Provider Benefit Plans) and Chapter 843;

(B) the 30-calendar-day period in which an HMO or preferred provider carrier shall make claim payment or denial, in whole or in part, after receipt of an electronically submitted clean claim pursuant to Insurance Code Article 3.70-3C, §3A (Preferred Provider Benefit Plans) and Chapter 843; or

(C) the 21-calendar-day period in which an HMO or preferred provider carrier shall make claim payment after affirmative adjudication of an electronically submitted clean claim for a prescription benefit pursuant to Insurance Code Article 3.70-3C, §3A(f) (Preferred Provider Benefit Plans) and Section 843.339, and §21.2814 of this title (relating to Electronic Adjudication of Prescription Benefits).

(29) Subscriber -- If individual coverage, the individual who is the contract holder and is responsible for payment of premiums to the HMO or preferred provider carrier; or if group coverage, the individual who is the certificate holder and whose employment or other membership status, except for family dependency, is the basis for eligibility for enrollment in a group health benefit plan issued by the HMO or the preferred provider carrier.

(30) Type of bill code -- The three-digit alphanumeric code utilized by CMS to identify the type of facility, the type of care, and the sequence of the bill in a particular episode of care.

§21.2803. Elements of a Clean Claim.

(a) Filing a Clean Claim. A physician or provider submits a clean claim by providing to an HMO, preferred provider carrier, or any other entity designated for receipt of claims pursuant to §21.2811 of this title (related to Disclosure of Processing Procedures):

(1) for non-electronic claims, the required data elements specified in subsection (b) of this section;

(2) for electronic claims, the required data elements specified in subsections (d) and (e) of this section; and

(3) if applicable, any coordination of benefits or non-duplication of benefits information pursuant to subsection (c) of this section.

(b) Required data elements. CMS has developed claim forms which provide much of the information needed to process claims. Two of these forms, HCFA 1500 and UB-82/HCFA, and their successor forms, have been identified by Insurance Code Article 21.52C as required for the submission of certain claims. The terms in paragraphs (1) and (2) of this subsection are based upon the terms used by CMS on successor forms CMS-1500 and UB-92 CMS-1450 claim forms. The parenthetical information following each term refers to the applicable CMS claim form, and the field number to which that term corresponds on the CMS claim form.

(1) Required data elements for physicians or noninstitutional providers. The data elements described in this paragraph are required as indicated and must be completed in accordance with the special instructions applicable to the data element for clean claims filed by physicians and noninstitutional providers.

(A) subscriber's/patient's plan ID number (CMS 1500, field 1a) is required;

(B) patient's name (CMS 1500, field 2) is required;

(C) patient's date of birth and gender (CMS 1500, field 3) is required;

(D) subscriber's name (CMS 1500, field 4) is required;

(E) patient's address (street or P.O. Box, city, state , zip) (CMS 1500, field 5) is required;

(F) patient's relationship to subscriber (CMS 1500, field 6) is required;

(G) subscriber's address (street or P.O. Box, city, state , zip) (CMS 1500, field 7) is required, but physician or provider may enter "same" if the subscriber´s address is the same as the patient´s address required by subparagraph (E) of this paragraph;

(H) other insured's or enrollee's name (CMS 1500, field 9), is required if patient is covered by more than one health benefit plan, generally in situations described in subsection (c) of this section. If the required data element specified in paragraph (1)(P) of this subsection, "disclosure of any other health benefit plans," is answered "yes," this element is required unless the physician or provider submits with the claim documented proof to the HMO or preferred provider carrier that the physician or provider has made a good faith but unsuccessful attempt to obtain from the enrollee or insured any of the information needed to complete this data element;

(I) other insured's or enrollee's policy/group number (CMS 1500, field 9a), is required if patient is covered by more than one health benefit plan, generally in situations described in subsection (c) of this section. If the required data element specified in paragraph (1)(P) of this subsection, "disclosure of any other health benefit plans," is answered "yes," this element is required unless the physician or provider submits with the claim documented proof to the HMO or preferred provider carrier that the physician or provider has made a good faith but unsuccessful attempt to obtain from the enrollee or insured any of the information needed to complete this data element;

(J) other insured's or enrollee's date of birth (CMS 1500, field 9b), is required if patient is covered by more than one health benefit plan, generally in situations described in subsection (c) of this section. If the required data element specified in paragraph (1)(P) of this subsection, "disclosure of any other health benefit plans," is answered "yes," this element is required unless the physician or provider submits with the claim documented proof to the HMO or preferred provider carrier that the physician or provider has made a good faith but unsuccessful attempt to obtain from the enrollee or insured any of the information needed to complete this data element;

(K) other insured's or enrollee's plan name (employer, school, etc.) (CMS 1500, field 9c), is required if patient is covered by more than one health benefit plan, generally in situations described in subsection (c) of this section. If the required data element specified in paragraph (1)(P) of this subsection, "disclosure of any other health benefit plans," is answered "yes," this element is required unless the physician or provider submits with the claim documented proof to the HMO or preferred provider carrier that the physician or provider has made a good faith but unsuccessful attempt to obtain from the enrollee or insured any of the information needed to complete this data element. If the field is required and the physician or provider is a facility based radiologist, pathologist or anesthesiologist with no direct patient contact, the physician or provider must either enter the information or enter NA (not available) if the information is unknown;

(L) other insured's or enrollee's HMO or insurer name (CMS 1500, field 9d), is required if patient is covered by more than one health benefit plan, generally in situations described in subsection (c) of this section. If the required data element specified in paragraph (1)(P) of this subsection, "disclosure of any other health benefit plans," is answered "yes," this element is required unless the physician or provider submits with the claim documented proof to the HMO or preferred provider carrier that the physician or provider has made a good faith but unsuccessful attempt to obtain from the enrollee or insured any of the information needed to complete this data element;

(M) whether patient's condition is related to employment, auto accident, or other accident (CMS 1500, field 10) is required, but facility based radiologists, pathologists, or anesthesiologists shall enter "N" if the answer is "No" or if the information is not available;

(N) if the claim is a duplicate claim, a "D" is required, if the claim is a corrected claim, a "C" is required (CMS 1500, field 10d);

(O) subscriber's policy number (CMS 1500, field 11) is required;

(P) HMO or insurance company name (CMS 1500, field 11c) is required;

(Q) disclosure of any other health benefit plans (CMS 1500, field 11d) is required;

(i) if respond "yes", then

(I) data elements specified in paragraph (1)(H)-(L) of this subsection are required unless the physician or provider submits with the claim documented proof to the HMO or preferred provider carrier that the physician or provider has made a good faith but unsuccessful attempt to obtain from the enrollee or insured any of the information needed to complete the data elements in paragraph (1)(H)-(L) of this subsection;

(II) the data element specified in paragraph (1)(II) of this subsection is required when submitting claims to secondary payor HMOs or preferred provider carriers;

(ii) if respond "no," the data elements specified in paragraph (1)(H)-(L) of this subsection are not required if the physician or provider has on file a document signed within the past 12 months by the patient or authorized person stating that there is no other health care coverage; although the submission of the signed document is not a required data element, a copy of the signed document shall be provided to the HMO or preferred provider carrier upon request.

(R) patient's or authorized person's signature or notation that the signature is on file with the physician or provider (CMS 1500, field 12) is required;

(S) subscriber's or authorized person's signature or notation that the signature is on file with the physician or provider (CMS 1500, field 13) is required;

(T) date of injury (HCFA 1500, field 14) is required, if due to an accident;

(U) name of referring physician or other source (CMS 1500, field 17) is required for primary care physicians, specialty physicians and hospitals; however, if there is no referral, the physician or provider shall enter "Self-referral" or"None";

(V) I.D. Number of referring physician (CMS 1500, field 17a) is required for primary care physicians, specialty physicians and hospitals; however, if there is no referral, the physician or provider shall enter "Self-referral" or "None";

(W) narrative description of procedure (CMS 1500, field 19) is required when a physician or provider uses an unlisted or not classified procedure code or an NDC code for unlisted drugs;

(X) for diagnosis codes or nature of illness or injury, (CMS 1500, field 21) up to four diagnosis codes may be entered, but at least one is required (primary diagnosis must be entered first);

(Y) verification number (CMS 1500, field 23) is required if services have been verified pursuant to §19.1724 of this title (relating to Verification). If no verification has been provided, a prior authorization number (CMS 1500, field 23), is required when prior authorization is required;

(Z) date(s) of service (CMS 1500, field 24A) is required;

(AA) place of service codes (CMS 1500, field 24B) is required;

(BB) procedure/modifier code (CMS 1500, field 24D) is required;

(CC) diagnosis code by specific service (CMS 1500, field 24E ) is required with the first code linked to the applicable diagnosis code for that service in field 21;

(DD) charge for each listed service (CMS 1500, field 24F) is required;

(EE) number of days or units (CMS 1500, field 24G) is required;

(FF) physician's or provider's federal tax ID number (CMS 1500, field 25) is required;

(GG) whether assignment was accepted (CMS 1500, field 27), is required if assignment under Medicare has been accepted;

(HH) total charge (CMS 1500, field 28) is required;

(II) amount paid (CMS 1500, field 29), is required if an amount has been paid to the physician or provider submitting the claim by the patient or subscriber, or on behalf of the patient or subscriber or by a primary plan in accordance with paragraph (1)(P) of this subsection and as required by subsection (c) of this section;

(JJ) signature of physician or provider or notation that the signature is on file with the HMO or preferred provider carrier (CMS 1500, field 31) is required;

(KK) name and address of facility where services rendered (if other than home or office) (CMS 1500, field 32) is required; and

(LL) physician's or provider's billing name, address and telephone number is required, and the provider number (CMS 1500, field 33) is required if the HMO or preferred provider carrier required provider numbers and gave notice of that requirement to physicians and providers prior to June 17, 2003.

(2) Required data elements for institutional providers. The data elements described in this paragraph are required as indicated and must be completed in accordance with the special instructions applicable to the data element for clean claims filed by institutional providers.

(A) provider's name, address and telephone number (UB-92, field 1) is required;

(B) patient control number (UB-92, field 3) is required;

(C) type of bill code (UB-92, field 4) is required and shall include a "7" in the third position if the claim is a duplicate;

(D) provider's federal tax ID number (UB-92, field 5) is required;

(E) statement period (beginning and ending date of claim period) (UB-92, field 6) is required;

(F) covered days (UB-92, field 7), is required if Medicare is a primary or secondary payor;

(G) noncovered days (UB-92, field 8), is required if Medicare is a primary or secondary payor;

(H) coinsurance days (UB-92, field 9), is required if Medicare is a primary or secondary payor;

(I) lifetime reserve days (UB-92, field 10), is required if Medicare is a primary or secondary payor, and the patient was an inpatient;

(J) patient's name (UB-92, field 12) is required;

(K) patient's address (UB-92, field 13) is required;

(L) patient's date of birth (UB-92, field 14) is required;

(M) patient's gender (UB-92, field 15) is required;

(N) patient's marital status (UB-92, field 16) is required;

(O) date of admission (UB-92, field 17) is required for inpatient admissions, observation stays, and emergency room care;

(P) admission hour (UB-92, field 18) is required for inpatient admissions, observation stays, and emergency room care;

(Q) type of admission (e.g., emergency, urgent, elective, newborn) (UB-92, field 19) is required for inpatient admissions;

(R) source of admission code (UB-92, field 20) is required for inpatient admissions;

(S) discharge hour (UB-92, field 21), is required for inpatient admissions, outpatient surgeries or observation stays;

(T) patient-status-at-discharge code (UB-92, field 22) is required for inpatient admissions, observation stays, and emergency room care;

(U) condition codes (UB-92, fields 24-30), are required if the CMS UB-92 manual contains a condition code appropriate to the patient's condition;

(V) occurrence codes and dates (UB-92, fields 32-35), are required if the CMS UB-92 manual contains an occurrence code appropriate to the patient's condition;

(W) occurrence span code, from and through dates (UB-92, field 36), are required if the CMS UB-92 manual contains an occurrence span code appropriate to the patient's condition;

(X) value code and amounts (UB-92, fields 39-41) are required for inpatient admissions. If no value codes are applicable to the inpatient admission, the provider may enter value code 01;

(Y) revenue code (UB-92, field 42) is required;

(Z) revenue description (UB-92, field 43) is required;

(AA) HCPCS/Rates (UB-92, field 44), are required if Medicare is a primary or secondary payor;

(BB) Service date (UB-92, field 45) is required if the claim is for outpatient services;

(CC) units of service (UB-92, field 46) are required;

(DD) total charge (UB-92, field 47) is required;

(EE) HMO or preferred provider carrier name (UB-92, field 50) is required;

(FF) provider number (UB-92, field 51), is required if the HMO or preferred provider carrier, prior to June 17, 2003, required provider numbers and gave notice of that requirement to physicians and providers.

(GG) prior payments - payor and patient (UB-92, field 54), are required if payments have been made to the physician or provider by the patient or another payor or subscriber, on behalf of the patient or subscriber, or by a primary plan as required by subsection (c) of this section;

(HH) subscriber's name (UB-92, field 58) is required, if shown on the patient´s ID card;

(II) patient's relationship to subscriber (UB-92, field 59) is required;

(JJ) patient's/subscriber's certificate number, health claim number, ID number (UB-92, field 60) is required;

(KK) insurance group number (UB-92, field 62) is required, if a group number is shown on the patient´s ID card;

(LL) verification codes (UB-92, field 63) are required if services have been verified pursuant to §19.1724 of this title (relating to Verification). If no verification has been provided, treatment authorization codes (UB-92, field 63) are required when authorization is required ;

(MM) principal diagnosis code (UB-92, field 67) is required;

(NN) diagnoses codes other than principal diagnosis code (UB-92, fields 68-75), are required if there are diagnoses other than the principal diagnosis;

(OO) admitting diagnosis code (UB-92, field 76) is required;

(PP) procedure coding methods used (UB-92, field 79), is required if the CMS UB-92 manual indicates a procedural coding method appropriate to the patient's condition;

(QQ) principal procedure code (UB-92, field 80), is required if the patient has undergone an inpatient or outpatient surgical procedure;

(RR) other procedure codes (UB-92, field 81), are required as an extension of subparagraph (QQ) of this paragraph if additional surgical procedures were performed;

(SS) attending physician ID (UB-92, field 82) is required;

(TT) signature of provider representative, electronic signature or notation that the signature is on file with the HMO or preferred provider carrier (UB-92, field 85) is required; and

(UU) date bill submitted (UB-92, field 86) is required.

(c) Coordination of benefits or non-duplication of benefits. If a claim is submitted for covered services or benefits in which coordination of benefits pursuant to §§3.3501 - 3.3511 of this title (relating to Group Coordination of Benefits) and §11.511(1) of this title (relating to Optional Provisions) is necessary, the amount paid as a covered claim by the primary plan is a required element of a clean claim for purposes of the secondary plan's processing of the claim and CMS 1500, field 29 or UB-92, field 54 must be completed pursuant to subsection (b)(1)(II) and (b)(2)(GG) of this section. If a claim is submitted for covered services or benefits in which non-duplication of benefits pursuant to §3.3053 of this title (relating to Non-duplication of Benefits Provision) is an issue, the amounts paid as a covered claim by all other valid coverage is a required element of a clean claim and CMS 1500, field 29 or UB-92, field 54 must be completed pursuant to subsection (b)(1)(II) and (b)(2)(GG) of this section. If a claim is submitted for covered services or benefits and the policy contains a variable deductible provision as set forth in §3.3074(a)(4) of this title (relating to Minimum Standards for Major Medical Expense Coverage) the amount paid as a covered claim by all other health insurance coverages, except for amounts paid by individually underwritten and issued hospital confinement indemnity, specified disease, or limited benefit plans of coverage, is a required element of a clean claim and CMS 1500, field 29 or UB-92, field 54 must be completed pursuant to subsection (b)(1)(II) and (b)(2)(GG) of this section. Notwithstanding these requirements, an HMO or preferred provider carrier may not require a physician or provider to investigate coordination of other health benefit plan coverage.

(d) A physician or provider submits an electronic clean claim by submitting a claim using the ASC X12N 837 format that complies with all applicable federal laws related to electronic healthcare claims, including applicable implementation guides, companion guides and trading partner agreements.

(e) If a physician or provider submits an electronic clean claim that requires coordination of benefits pursuant to §§3.3501-3.3511 of this title (relating to Group Coordination of Benefits) or §11.511(1) of this title (relating to Optional Provisions), the HMO or preferred provider carrier processing the claim as a secondary payor shall rely on the primary payor information submitted on the claim by the physician or provider. The primary payor may submit primary payor information electronically to the secondary payor using the ASC X12N 837 format and in compliance with federal laws related to electronic healthcare claims, including applicable implementation guides, companion guides and trading partner agreements.

(f) Format of elements. The elements of a clean claim set forth in subsections (b), (c), (d) and (e), if applicable, of this section must be complete, legible and accurate.

(g) Additional data elements or information. The submission of data elements or information on a claim form by a physician or provider in addition to those required for a clean claim under this section shall not render such claim deficient.

§21.2804 . Requests for Additional Information from Treating Preferred Provider.

(a) If necessary to determine whether a claim is payable, an HMO or preferred provider carrier may, within 30 days of receipt of a clean claim, request additional information from the treating preferred provider. An HMO or preferred provider carrier may make only one request to the submitting preferred provider for information under this section.

(b) A request for information under this section must:

(1) be in writing;

(2) be specific to the claim or the claim´s related episode of care;

(3) describe with specificity the clinical and other information to be included in the response;

(4) be relevant and necessary for the resolution of the claim; and

(5) be for information that is contained in or in the process of being incorporated into the patient´s medical or billing record maintained by the preferred provider.

(c) An HMO or preferred provider carrier that requests information under this section shall determine whether the claim is payable and pay or deny the claim, or audit the claim in accordance with §21.2809 of this title (relating to Audit Procedures), on or before the later of:

(1) the 15 th day after the date the HMO or preferred provider carrier receives the requested information as required under subsection (e) of this section;

(2) the 15 th day after the date the HMO or preferred provider carrier receives a response under subsection (d) of this section; or

(3) the latest date for determining whether the claim is payable under §21.2807 of this title (relating to Effect of Filing a Clean Claim).

(d) If a preferred provider does not possess the requested information, the preferred provider must submit a written response indicating that the preferred provider does not possess the requested information in order to resume the claims payment period as described in subsection (c).

(e) An HMO or preferred provider carrier shall require the preferred provider responding to a request made under this section to either attach a copy of the request to the response or include with the response, the name of the patient, the patient identification number, the claim number as provided by the HMO or preferred provider carrier, the date of service, and the name of the treating preferred provider. If the HMO or preferred provider carrier submitted the request for additional information electronically in accordance with federal requirements concerning electronic transactions, the preferred provider must submit the response in accordance with those requirements. To resume the claims payment period as described in subsection (c) of this section, the preferred provider must deliver the requested information in compliance with this subsection.

(f) Receipt of a request or a response to a request under this section is subject to the provisions of §21.2816 of this title (relating to Date of Receipt).

§21.2805. Requests for Additional Information from Other Sources.

(a) If an HMO or preferred provider carrier requests additional information from a person other than the preferred provider who submitted the claim, the HMO or preferred provider carrier shall provide, to the preferred provider who submitted the claim, a notice containing the name of the physician, provider or other entity from whom the HMO or preferred provider carrier is requesting information. The HMO or preferred provider carrier may not withhold payment beyond the applicable 21, 30 or 45 day statutory claims payment period pending receipt of information requested under subsection (b) of this section. If on receiving information requested under this subsection the HMO or preferred provider carrier determines that there was an error in payment of the claim, the HMO or preferred provider carrier may recover any overpayment under §21.2818 of this title (relating to Overpayment of Claims).

(b) An HMO or preferred provider carrier shall request the entity responding to a request made under this section to attach a copy of the request to the response. If the request for additional information was submitted electronically in accordance with applicable federal requirements concerning electronic transactions, the response shall be submitted in accordance with those requirements, if applicable.

(c) Receipt of a request or a response to a request under this section is subject to the provisions of §21.2816 of this title (relating to Date of Receipt).

§21.2806. Claims Filing Deadline.

(a) A physician or provider must submit a claim to an HMO or preferred provider carrier not later than the 95th day after the date the physician or provider provides the medical care or health care services for which the claim is made. An HMO or preferred provider carrier and a physician or provider may agree, by contract, to extend the period for submitting a claim. For a claim submitted by an institutional provider, the 95-day period does not begin until the date of discharge. For a claim for which coordination of benefits applies, the 95-day period does not begin for submission of the claim to the secondary payor until the physician or provider receives notice of the payment or denial from the primary payor.

(b) If a physician or provider fails to submit a claim in compliance with this section, the physician or provider forfeits the right to payment unless the physician or provider has certified that the failure to timely submit the claim is a result of a catastrophic event in accordance with §21.2819 of this title (relating to Catastrophic Event).

(c) A physician or provider may submit claims via United States mail, first class, overnight delivery service, electronic transmission, hand delivery, facsimile, if the HMO or preferred provider carrier accepts claims submitted by facsimile, or as otherwise agreed to by the physician or provider and the HMO or preferred provider carrier. An HMO or preferred provider carrier shall accept as proof of timely filing a claim filed in compliance with this subsection or information from another HMO or preferred provider carrier showing that the physician or provider submitted the claim to the HMO or preferred provider carrier in compliance with this subsection.

(d) §21.2816 of this title (relating to Date of Receipt) determines the date an HMO or preferred provider carrier receives a claim.

(e) A physician or provider may not submit a duplicate claim prior to the 46 th day, the 31 st day if filed electronically, or the 22 nd day if a claim for prescription benefits, after the date the original claim is presumed to be received according to the provisions of §21.2816 of this title. An HMO or preferred provider carrier that receives a duplicate claim prior to the 46 th day after receipt of the original claim, a duplicate electronic claim prior to the 31 st day after receipt of the original claim, or a duplicate claim for prescription benefits prior to the 22 nd day after receipt of the original claim is not subject to the provisions of §§21.2807 of this title (relating to Effect of Filing a Clean Claim) or 21.2815 of this title (relating to Failure to Meet the Statutory Claims Payment Period) with respect to the duplicate claim.

§21.2807. Effect of Filing a Clean Claim.

(a) The statutory claims payment period begins to run upon receipt of a clean claim, including a corrected claim that is a clean claim, from a preferred provider, pursuant to §21.2816 of this title (relating to Date of Receipt), at the address designated by the HMO or preferred provider carrier, in accordance with §21.2811 of this title (relating to Disclosure of Processing Procedures), whether it be the address of the HMO, preferred provider carrier, or any other entity, including a clearinghouse or a repricing company, designated by the HMO or preferred provider carrier to receive claims. The date of claim payment is as determined in §21.2810 of this title (relating to Date of Claim Payment).

(b) After receipt of a clean claim, prior to the expiration of the applicable statutory claims payment period specified in §21.2802(28) of this title (relating to Definitions), an HMO or preferred provider carrier shall:

(1) pay the total amount of the clean claim in accordance with the contract between the preferred provider and the HMO or preferred provider carrier;

(2) deny the clean claim in its entirety after a determination that the HMO or preferred provider carrier is not liable for the clean claim and notify the preferred provider in writing why the clean claim will not be paid;

(3) notify the preferred provider in writing that the entire clean claim will be audited and pay 100% of the contracted rate on the claim to the preferred provider; or

(4) pay the portion of the clean claim for which the HMO or preferred provider carrier acknowledges liability in accordance with the contract between the preferred provider and the HMO or preferred provider carrier, and:

(A) deny the remainder of the clean claim after a determination that the HMO or preferred provider carrier is not liable for the remainder of the clean claim and notify the preferred provider in writing why the remainder of the clean claim will not be paid; or

(B) notify the preferred provider in writing that the remainder of the clean claim will be audited and pay 100% of the contracted rate on the unpaid portion of the clean claim to the preferred provider.

(c) With regard to a clean claim for a prescription benefit subject to the statutory claims payment period specified in §21.2802(25)(C) of this title (relating to Definitions), an HMO or preferred provider carrier shall, after receipt of an electronically submitted clean claim for a prescription benefit that is affirmatively adjudicated pursuant to Insurance Code Article 3.70-3C, §3A(f) (Preferred Provider Benefit Plans) and Insurance Code §843.339, pay the prescription benefit claim within 21 calendar days after the clean claim is adjudicated.

§21.2808. Effect of Filing Deficient Claim. If an HMO or preferred provider carrier determines a submitted claim to be deficient, the HMO or preferred provider carrier shall notify the preferred provider submitting the claim that the claim is deficient within 45 calendar days of the HMO's or preferred provider carrier's receipt of the claim, or within 30 days of receipt of an electronic claim. If an HMO or preferred provider carrier determines an electronically submitted claim for a prescription benefit to be deficient, the HMO or preferred provider carrier shall notify the provider within 21 calendar days of the HMO's or preferred provider carrier's receipt of the claim.

§21.2809. Audit Procedures.

(a) If an HMO or preferred provider carrier is unable to pay or deny a clean claim, in whole or in part, within the applicable statutory claims payment period specified in §21.2802(25)(B) of this title (relating to Definitions) and intends to audit the claim to determine whether the claim is payable, the HMO or preferred provider carrier shall notify the preferred provider that the claim is being audited and pay 100% of the contracted rate within the applicable statutory claims payment period. An HMO or preferred provider carrier that fails to provide notification of the decision to audit the claim and pay 100% of the applicable contracted rate subject to copayments and deductibles within the applicable statutory claims payment period, or, if applicable, the extended period allowed for by §21.2804(c) of this title (relating to Requests for Additional Information), may not make use of the audit procedures set forth in this section. A preferred provider that receives less than 100% of the contracted rate in conjunction with a notice of intent to audit has received an underpayment and must notify the HMO or preferred provider carrier within 180 days in accordance with the provisions of §21.2815(c) of this title (relating to Failure to Meet the Statutory Claims Payment Period) to qualify to receive a penalty for the underpaid amount.

(b) The HMO or preferred provider carrier shall clearly indicate on the explanation of payment that the claim is being audited and the preferred provider is being paid 100% of the contracted rate, subject to completion of the audit. A paper explanation of payment complies with this requirement if the notice of the audit is clearly and prominently identified.

(c) The HMO or preferred provider carrier shall complete the audit within 180 calendar days from receipt of the clean claim. The HMO or preferred provider carrier shall provide written notification of the results of the audit. The notice shall include a listing of the specific claims paid and not paid pursuant to the audit, as well as a listing of specific claims and amounts for which a refund is due and for each claim, the basis and specific reasons for requesting a refund. An HMO or preferred provider carrier seeking recovery of any refund under this section shall comply with the procedures set forth in §21.2818 of this title (relating to Overpayment of Claims).

(d) An HMO or preferred provider carrier may recover the total amount paid on the claim under subsection (a) of this section if a physician or provider fails to timely provide additional information requested pursuant to the requirements of Insurance Code Article 3.70-3C §3A(g) or Section 843.340(c). Section 21.2816 of this title (relating to Date of Receipt) applies to the submission and receipt of a request for information under this subsection.

(e) Prior to seeking a refund for a payment made under this section, an HMO or preferred provider carrier must provide a preferred provider with the opportunity to appeal the request for a refund in accordance with §21.2818 of this title. An HMO or preferred provider carrier may not seek to recover the refund until all of the preferred provider´s internal appeal rights under §21.2818 of this title have been exhausted.

(f) Payments made pursuant to this section on a clean claim are not an admission that the HMO or preferred provider carrier acknowledges liability on that claim.

§21.2811. Disclosure of Processing Procedures.

(a) In contracts with preferred providers, or in the physician or provider manual or other document that sets forth the procedure for filing claims, or by any other method mutually agreed upon by the contracting parties, an HMO or preferred provider carrier must disclose to its preferred providers:

(1) the address, including a physical address, where claims are to be sent for processing;

(2) the telephone number at which preferred providers' questions and concerns regarding claims may be directed;

(3) any entity along with its address, including physical address and telephone number, to which the HMO or preferred provider carrier has delegated claim payment functions, if applicable;

(4) the address and physical address and telephone number of any separate claims processing centers for specific types of services, if applicable.

(b) An HMO or preferred provider carrier shall provide no less than 60 calendar days prior written notice of any changes of address for submission of claims, and of any changes of delegation of claims payment functions, to all affected preferred providers with whom the HMO or preferred provider carrier has contracts.

§21.2812. Denial of Clean Claim Prohibited for Change of Address. After a change of claims payment address or a change in delegation of claims payment functions, an HMO or preferred provider carrier may not premise the denial of a clean claim upon a preferred provider's failure to file a clean claim within the claims filing deadline set forth in §21.2806 of this title (relating to Claims Filing Deadline), unless timely written notice as required by §21.2811(b) of this title (relating to Disclosure of Processing Procedures) has been given.

§21.2813. Requirements Applicable to Other Contracting Entities. Any contract or delegation agreement between an HMO or preferred provider carrier and an entity that processes or pays claims, obtains the services of physicians and providers to provide health care services, or issues verifications or preauthorizations may not be construed to limit the HMO's or preferred provider carrier's authority or responsibility to comply with all applicable statutory and regulatory requirements.

§21.2814. Electronic Adjudication of Prescription Benefits. If a prescription benefit does not require authorization by an HMO or preferred provider carrier, the statutory claims payment period shall begin on the date of affirmative adjudication of a claim for a prescription benefit that is electronically transmitted.

§21.2815. Failure to Meet the Statutory Claims Payment Period.

(a) An HMO or preferred provider carrier that determines under §21.2807 of this title (relating to Effect of Filing a Clean Claim) that a claim is payable shall:

(1) if the claim is paid on or before the 45 th day after the end of the applicable 21, 30 or 45 day statutory claims payment period, pay to the preferred provider, in addition to the contracted rate owed on the claim, a penalty in the amount of the lesser of:

(A) 50% of the difference between the billed charges and the contracted rate; or

(B) $100,000.

(2) If the claim is paid on or after the 46th day and before the 91st day after the end of the applicable 21, 30 or 45 day statutory claims payment period, pay to the preferred provider, in addition to the contracted rate owed on the claim, a penalty in the amount of the lesser of:

(A) 100% of the difference between the billed charges and the contracted rate; or

(B) $200,000.

(3) If the claim is paid on or after the 91st day after the end of the applicable 21, 30 or 45 day statutory claims payment period, pay to the preferred provider, in addition to the contracted rate owed on the claim, a penalty computed under paragraph (2) of this subsection plus 18% annual interest on the penalty amount. Interest under this subsection accrues beginning on the date the HMO or preferred provider carrier was required to pay the claim and ending on the date the claim and the penalty are paid in full.

( b) The following examples demonstrate how to calculate penalty amounts under subsection (a) of this section:

(1) If the contracted rate owed by the HMO or preferred provider carrier is $10,000 and the billed charges are $15,000, and the claim is paid on or before the 45 th day after the end of the applicable statutory claims payment period, the HMO or preferred provider carrier shall pay, in addition to the contracted rate owed on the claim, 50% of the difference between the billed charges ($15,000) and the contracted rate ($10,000) or $2,500;

(2) if the claim is paid on or after the 46th day and before the 91st day after the end of the applicable statutory claims payment period, the HMO or preferred provider carrier shall pay, in addition to the contracted rate owed on the claim, 100% of the difference between the billed charges and the contracted rate or $5,000; and

(3) if the claim is paid on or after the 91st day after the end of the applicable statutory claims payment period, the HMO or preferred provider carrier shall pay, in addition to the contracted rate owed on the claim, $5,000, plus 18% annual interest on the $5,000 penalty amount accruing from the statutory claim payment deadline.

(c) Except as provided by this section, an HMO or preferred provider carrier that determines under §21.2807 of this title that a claim is payable, pays only a portion of the amount of the claim on or before the end of the applicable 21, 30 or 45 day statutory claims payment period, and pays the balance of the contracted rate owed for the claim after that date shall:

(1) If the balance of the claim is paid on or before the 45 th day after the applicable 21, 30 or 45 day statutory claims payment period, pay to the preferred provider, in addition to the contracted amount owed, a penalty on the amount not timely paid in the amount of the lesser of:

(A) 50% of the underpaid amount; or

(B) $100,000.

(2) If the balance of the claim is paid on or after the 46th day and before the 91st day after the end of the applicable 21, 30 or 45 day statutory claims payment period, pay to the preferred provider, in addition to the contracted amount owed, a penalty in the amount of the lesser of:

(A) 100% of the underpaid amount; or

(B) $200,000.

(3) If the balance of the claim is paid on or after the 91st day after the end of the applicable 21, 30 or 45 day statutory claims payment period, pay to the preferred provider, in addition to the contracted amount owed, a penalty computed under paragraph (2) of this subsection plus 18% annual interest on the penalty amount. Interest under this subsection accrues beginning on the date the HMO or preferred provider carrier was required to pay the claim and ending on the date the claim and the penalty are paid in full.

(d) For the purposes of subsection (c) of this section, the underpaid amount is calculated on the ratio of the amount underpaid on the contracted rate to the contracted rate as applied to the billed charges. For example, a claim for a contracted rate of $1,000.00 and billed charges of $1,500.00 is initially underpaid at $800.00 and the $200.00 balance is paid on the 30 th day after the end of the applicable statutory claims payment period. The amount underpaid, $200.00, is 20% of the contracted rate. In order to determine the penalty, the HMO or preferred provider carrier must calculate 20% of the billed charges, which is $300.00. This amount represents the underpaid amount for subsection (c)(1) of this section. Therefore, the HMO or preferred provider carrier must pay, as a penalty, 50% of $300.00, or $150.00.

(e) An HMO or preferred provider carrier is not liable for a penalty under this section:

(1) if the failure to pay the claim in accordance with the applicable statutory claims payment period is a result of a catastrophic event that the HMO or preferred provider carrier certified according to the provisions of §21.2831 of this title (relating to Catastrophic Events); or

(2) if the claim was paid in accordance with §21.2807 of this title, but for less than the contracted rate, and:

(A) the preferred provider notifies the HMO or preferred provider carrier of the underpayment after the 180th day after the date the underpayment was received; and

(B) the HMO or preferred provider carrier pays the balance of the claim on or before the 45th day after the date the insurer receives the notice of underpayment.

(f) Subsection (e) of this section does not relieve the HMO or preferred provider carrier of the obligation to pay the remaining unpaid contracted rate owed the preferred provider.

(g) An HMO or preferred provider carrier that pays a penalty under this section shall clearly indicate on the explanation of payment the amount of the contracted rate paid, the amount of the billed charges as compared to the amount submitted by the physician or provider and the amount paid as a penalty. A non-electronic explanation of payment complies with this requirement if it clearly and prominently identifies the notice of the penalty amount.

§21.2816. Date of Receipt.

(a) A written communication, including a claim, referenced under this subchapter is subject to and shall comply with this section unless otherwise stated in this subchapter.

(b) An entity subject to these rules may deliver written communications as follows:

(1) submit the communication by United States mail, first class, by United States mail return receipt requested or by overnight delivery;

(2) submit the communication electronically and maintain proof of the electronically submitted communication;

(3) if the entity accepts facsimile transmissions for the type of communication being sent, fax the communication and maintain proof of facsimile transmission; or

(4) hand deliver the communication and maintain a copy of the signed receipt acknowledging the hand delivery.

(c) If a communication is submitted by United States mail, first class, the communication is presumed to have been received on the fifth day after the date the communication is submitted, or, if the communication is submitted using overnight delivery service or United States mail return receipt requested, on the date the delivery receipt is signed.

(d) If a communication other than a claim is submitted electronically, the communication is presumed received on the date of submission. Communications electronically submitted after the receiving entity´s normal business hours are presumed received the following business day.

(e) If a claim is submitted electronically, the claim is presumed received on the date of the electronic verification of receipt by the HMO or preferred provider carrier or the HMO's or preferred provider carrier's clearinghouse. If the HMO's or the preferred provider carrier's clearinghouse does not provide a confirmation of receipt of the claim or a rejection of the claim within 24 hours of submission by the physician or provider or the physician's or provider's clearinghouse, the physician's or provider's clearinghouse shall provide the confirmation. The physician's or provider's clearinghouse must be able to verify that the claim contained the correct payor identification of the entity to receive the claim.

(f) If a communication is faxed, the communication is presumed to have been received on the date of the transmission acknowledgment. Communications faxed after the receiving entity´s normal business hours are presumed received the following business day.

(g) If a communication is hand delivered, the communication is presumed to have been received on the date the delivery receipt is signed.

(h) Any entity submitting a communication under subsection (b)(1)-(4) of this section may choose to maintain a mail log to provide proof of submission and establish date of receipt. The entity shall fax or electronically transmit a copy of the mail log, if used, to the receiving entity at the time of the submission of a communication and include another copy with the relevant communication. The log shall identify each separate claim, request for information or response included in a batch communication. The mail log shall include the following information: name of claimant; address of claimant; telephone number of claimant; claimant's federal tax identification number; name of addressee; name of HMO or preferred provider carrier; designated address, date of mailing or hand delivery; subscriber name; subscriber ID number; patient name; date(s) of service/occurrence, delivery method, and claim number, if applicable.

§21.2817. Terms of Contracts. Unless otherwise provided in this subchapter, contracts between HMOs or preferred provider carriers and preferred providers shall not include terms which:

(1) extend the statutory or regulatory time frames;

(2) waive the preferred provider's right to recover reasonable attorney fees and court costs pursuant to Insurance Code Article 3.70-3C §3A(n) and Section 843.343.

§21.2818. Overpayment of Claims.

(a) An HMO or preferred provider carrier may recover a refund due to overpayment or completion of audit if:

(1) the HMO or preferred provider carrier notifies the physician or provider of the overpayment not later than the 180 th day after the date of receipt of the overpayment; or

(2) the HMO or preferred provider carrier notifies the physician or provider of the completion of an audit under §21.2809 of the subchapter (relating to Audits).

(b) Notification under subsection (a) of this section shall:

(1) be in written form and include the specific claims and amounts for which a refund is due and for each claim, the basis and specific reasons for the request for refund;

(2) include notice of the physician´s or provider´s right to appeal; and

(3) describe the methods by which the HMO or preferred provider carrier intends to recover the refund.

(c) A physician or provider may appeal a request for refund by providing written notice of disagreement with the refund request not later than 45 days after receipt of notice described in subsection (a) of this section. Upon receipt of written notice under this subsection, the HMO or preferred provider carrier shall begin the appeal process provided for in the HMO or preferred provider carrier´s contract with the provider.

(d) An HMO or preferred provider carrier may not recover a refund under this section until:

(1) for overpayments, the later of the 45 th day after notification under subsection (a)(1) of this section or the exhaustion of any physician or provider appeal rights under subsection (c) of this section, where the physician or provider has not made arrangements for payment with an HMO or preferred provider carrier; or

(2) for audits, the later of the 30 th day after notification under subsection (a)(2) of this section or the exhaustion of any physician or provider appeal rights under subsection (c) of this section, where the physician or provider has not made arrangements for payment with an HMO or preferred provider carrier.

(e) If an HMO or preferred provider carrier is a secondary payor and pays a portion of a claim that should have been paid by the HMO or preferred provider carrier that is the primary payor, the secondary payor may only recover overpayment from the HMO or preferred provider carrier that is primarily responsible for that amount. If the portion of the claim overpaid by the secondary payor was also paid by the primary payor, the secondary payor may recover the amount of overpayment from the physician or provider that received the payment under the procedures set forth in this section.

(f) Subsections (a) through (e) of this section do not affect a carrier's ability to recover an overpayment in the case of fraud or a material misrepresentation by a physician or provider.

§21.2819. Catastrophic Event.

(a) An HMO, preferred provider carrier, physician or provider must notify the department if, due to a catastrophic event, it is unable to meet the deadlines in §§21.2815 of this title (relating to Failure to Meet the Statutory Claims Payment Period) or 21.2829 (relating to Filing of Claims), as applicable. The entity must send the notification required under this subsection to the department within five days of the catastrophic event.

(b) Within ten days after the entity returns to normal business operations, the entity must send a certification of the catastrophic event to the department, to the Life/Health/HMO Filings Intake Division, Texas Department of Insurance, P.O. Box 149104 , Mail Code 106-1E. The certification must:

(1) be in the form of a sworn affidavit from:

(A) for a physician or provider, the physician, provider, office manager, administrators or their designees; or

(B) for an HMO or preferred provider carrier, a corporate officer or the corporate officer´s designee.

(2) identify the specific nature and date of the catastrophic event; and

(3) identify the length of time the catastrophic event caused an interruption in the claims submission or processing activities of the physician, provider, HMO or preferred provider carrier.

(c) A valid certification to the occurrence of a catastrophic event under this section tolls the applicable deadlines in §§21.2804, 21.2806, 21.2809 and 21.2815 of this title for the number of days identified in subparagraph (b)(3) of this section as of the date of the catastrophic event.

§21.2820. Identification Cards.

(a) An identification card, or other similar document that includes information necessary to allow enrollees and insureds to access services or coverage under an HMO evidence of coverage or a preferred provider benefit plan, that is issued by an HMO or preferred provider carrier subject to this subchapter pursuant to §21.2801 of this title (relating to Scope) shall comply with the requirements of this section.

(b) An identification card or other similar document issued to enrollees or insureds shall include the following information:

(1) the name of the enrollee or insured;

(2) the first date on which the enrollee or insured became eligible for benefits under the plan or a notification of a toll-free number that a preferred provider may use to obtain that information; and

(3) the symbol identified in subsection (c) of this section.

(c) The symbol required by subsection (b)(3) of this section shall be displayed prominently on the front of the identification card as follows:

Figure 28 TAC 21.2820(c)

TDI Star

(d) The requirements of this section apply

to an HMO evidence of coverage or a preferred provider benefit plan issued or renewed on or after January 1, 2004 .

§21.2821. Reporting Requirements.

(a) An HMO or preferred provider carrier shall submit to the department quarterly claims payment information in accordance with the requirements of this section.

(b) The HMO or preferred provider carrier shall submit the report required by subsection (a) of this section to the department on or before:

(1) May 15 th for the months of January, February and March of each year;

(2) August 15 th for the months of April, May and June of each year ;

(3) November 15 th for the months of July, August and September of each year; and

(4) February 15 th for the months of October, November and December of each preceding calendar year.

(c) The HMO or preferred provider carrier shall submit the first report required by this section to the department on or before February 15, 2004 and shall include information for the months of September, October, November and December of the prior calendar year.

(d) The report required by subsection (a) of this section shall include, at a minimum, the following information:

(1) number of claims received from non-institutional preferred providers;

(2) number of claims received from institutional preferred providers;

(3) number of clean claims received from non-institutional preferred providers;

(4) number of clean claims received from institutional preferred providers;

(5) number of clean claims from non-institutional preferred providers paid within the applicable statutory claims payment period;

(6) number of clean claims from non-institutional preferred providers paid on or before the 45 th day after the end of the applicable statutory claims payment period;

(7) number of clean claims from institutional preferred providers paid on or before the 45 th day after the end of the applicable statutory claims payment period;

(8) number of clean claims from non-institutional preferred providers paid on or after the 46 th day and before the 91 st day after the end of the applicable statutory claims payment period;

(9) number of clean claims from institutional preferred providers paid on or after the 46 th day and before the 91 st day after the end of the applicable statutory claims payment period;

(10) number of clean claims from non-institutional preferred providers paid on or after the 91 st day after the end of the applicable statutory claims payment period;

(11) number of clean claims from institutional preferred providers paid on or after the 91 st day after the end of the applicable statutory claims payment period;

(12) number of clean claims from institutional preferred providers paid within the applicable statutory claims payment period;

(13) number of claims paid pursuant to the provisions of §21.2809 of this title (relating to Audit Procedures);

(14) number of requests for verification received pursuant to §19.1724 of this title (relating to Verification);

(15) number of verifications issued pursuant to §19.1724 of this title;

(16) number of declinations, pursuant to §19.1724 of this title.

(17) number of certifications of catastrophic events sent to the department; and

(18) number of days business was interrupted for each corresponding catastrophic event.

(e) An HMO or preferred provider carrier shall annually submit to the department, on or before July 31, information related to the number of declinations in the following categories:

(1) policy or contract limitations:

(A) premium payment timeframes that prevent verifying eligibility for 30-day period,

(B) policy deductible, specific benefit limitations or annual benefit maximum,

(C) benefit exclusions,

(D) no coverage or change in membership eligibility, including individuals not eligible, not yet effective or membership cancelled, and

(E) pre-existing condition limitations;

(2) declinations in which the claim was subsequently paid when submitted;

(3) declinations in which claim was subsequently denied when submitted;

(4) declinations due to inability to obtain necessary information in order to verify requested services from the following persons:

(A) the requesting physician or provider,

(B) any other physician or provider,

(C) any other person.

§21.2822. Administrative Penalties.

(a) An HMO or preferred provider carrier that fails to comply with §21.2807 of this title (relating to Effect of Filing a Clean Claim) for more than two percent of clean claims submitted to the HMO or preferred provider carrier is subject to an administrative penalty pursuant to the Insurance Code, §843.342(k) or Article 3.70-3C section 3I(k), as applicable.

(b) The percentage of the HMO or preferred provider carrier´s compliance with §21.2807 of this title shall be determined on a quarterly basis and shall be separated into a compliance percentage for noninstitutional preferred provider claims and institutional preferred provider claims. Claims paid in compliance with §21.2809 of this title (relating to Audit Procedures) are not included in calculating the compliance percentage under this section.

§21.2823. Applicability to Certain Non-Contracting Physicians and Providers. The provisions of §§19.1724 and 21.2807 of this title (relating to Verification and Effect of Filing a Clean Claim) apply to a physician or provider that provides to an enrollee or insured of an HMO or preferred provider carrier:

(1) care related to an emergency or its attendant episode of care as required by state or federal law; or

(2) specialty or other medical care or health care services at the request of the HMO, preferred provider carrier, physician, or provider because the services are not reasonably available from a physician or provider who is included in the HMO´s or preferred provider carrier´s network.

§21.2824. Applicability. The amendments to §§21.2801 - 21.2803, 21.2807 - 21.2809 and 21.2811 ­ 21.2817 of this title (relating to Scope, Definitions, Elements of a Clean Claim, Effect of Filing a Clean Claim, Effect of Filing Deficient Claim, Audit Procedures, Disclosure of Processing Procedures, Denial of Clean Claim Prohibited for Change of Address, Requirements Applicable to Other Contracting Entities, Electronic Adjudication of Prescription Benefits. Failure to Meet the Statutory Claims Payment Period, Date of Receipt, and Terms of Contracts), and new §§21.2804 - 21.2806, §§21.2818, 21.2819 and 21.2821 - 21.2825 of this title (relating to Requests for Additional Information from Treating Preferred Provider, Requests for Additional Information from Other Sources, Claims Filing Deadline, Overpayment of Claims, Catastrophic Event, Identification Cards, Reporting Requirements, Administrative Penalties, Applicability to Certain Non-Contracting Physicians and Providers, Applicability, and Severability) apply to contracts entered into or renewed between an HMO or preferred provider carrier and a preferred provider on or after August 16, 2003 and to services provided or hospital confinements beginning on or after August 16, 2003 by physicians and providers that do not have a contract with an HMO or preferred provider carrier.

§21.2825. Severability. If a court of competent jurisdiction holds that any provision of this subchapter is inconsistent with any statutes of this state, is unconstitutional, or is invalid for any reason, the remaining provisions of this subchapter shall remain in full effect.

§21.2826. Waiver. The provisions of Texas Insurance Code Articles 3.70-3C Sections 3A, 3C-3J, and 10-12; 21.52Z; Chapter 843, Subchapter J and Sections 843.209 and 843.319; as well as this subchapter and §§3.3703(20), 11.901(10), 19.1723, and 19.1724 of this title (relating to Contracting Requirements, Required Provisions, Preauthorization and Verification, respectively) are not applicable to Medicaid and Children's Health Insurance Program (CHIP) plans provided by an HMO or preferred provider carrier to persons enrolled in the medical assistance program established under Chapter 32, Human Resources Code, or the child health plan established under Chapter 62, Health and Safety Code.



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