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You are here: Home . rules . 2003 . 0915A-059
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Subchapter X. Preferred Provider Plans

28 TAC §3.3703

The Commissioner of Insurance adopts amendments to §3.3703, concerning required contracting provisions for preferred provider plans. The amendments are adopted without changes to the proposed text as published in the July 4, 2003 issue of the Texas Register (28 TexReg 5087). The commissioner adopted emergency rules to take effect on August 16, 2003 in compliance with provisions of Senate Bill (SB) 418. These emergency rules were published in the August 29, 2003 issue of the Texas Register (28 TexReg 7019). The emergency rules will be withdrawn at the time these adopted rules become effective. Other provisions of SB 418 are addressed in adopted rules published elsewhere in this issue of the Texas Register .

These amendments are necessary to implement provisions of SB 418 (78 th Regular Legislative Session) which relate to the coding guidelines and other information that an insurer must supply upon request of a preferred provider.

In developing these rules, the department has had extensive discussions and consultations with the Clean Claims Working Group (CCWG), a group originally established by the department in 2001 and comprised of representatives of carriers, physicians, providers, and trade associations, and open in attendance to all other interested persons. As part of its continuing consultation with the CCWG, the department held three meetings with the group in May and June of 2003 to discuss implementation of the new statute. In addition, SB 418 required the commissioner to appoint a Technical Advisory Committee on Claims Processing (TACCP) to, among other things, advise the commissioner on technical aspects of coding of health care services and claims development, submission, processing, adjudication, and payment. The statute also requires the commissioner to consult with the TACCP prior to adopting any rules. The majority of the members of the CCWG have been appointed to the TACCP, which on June 18 and September 9, 2003 held meetings at which the rules were discussed.

The commissioner held a public hearing on the proposed sections on August 7, 2003 (Docket No. 2553).

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. These amendments add language to the existing disclosure rule to conform to new requirements of SB 418.

3. HOW THE SECTIONS WILL FUNCTION. The adopted amendments to subsections (a)(20) and (a)(20)(F) delete outdated compliance date language contained in the original rule. The adopted 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 adopted 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). Adopted subsection (a)(20)(G) adds "other business operations" and "communications with a governmental agency involved in the regulation of health care or insurance" to the list of acceptable uses of disclosed information. The adopted amendments to that subparagraph also change the term "verification" to "representation" to avoid confusion with the verification provisions of SB 418.

Adopted 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. Adopted subsection (a)(20)(I) provides that the provisions of this paragraph may not be waived, voided, or nullified by contract. Adopted subsection (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.

Where applicable, the department has indicated comments received on the comparable Chapter 11 rule, §11.901, published elsewhere in this issue of the Texas Register , by enclosing the reference in brackets.

General.

Comment: Two commenters state that proposed §3.3703 is not applicable to dental claims. Some commenters suggest that "stand-alone" dental plans be exempted from the requirements of SB 418 altogether, asserting that the bill´s provisions are based upon medical standards (rather than dental standards). One commenter expresses support for applying the requirements to dental claims.

Agency response : Some commenters correctly noted that Article 3.70-3 of the Texas Insurance Code does not apply to provisions for dental care benefits in any health insurance policy. Accordingly, §3.3703 does not apply to dental claims. SB 418 does, however, apply to HMOs, generally, and provides no basis for excluding dental HMOs from its provisions.

Comment: A commenter requests clarification that the rule would not apply to Medicare+Choice claims. Some commenters ask that the department clarify whether Employee Retirement Income Security Act (ERISA) claims are subject to the rule. Some urge application of these provisions to ERISA claims, while others reject such application.

Agency response: The rule does not apply to Medicare+Choice claims. The rule does not apply to benefits available under valid self-funded ERISA plans.

Comment: Several commenters recommend that the rule be made applicable to all existing contracts.

Agency response: The department disagrees. SB 418 provides that a contract entered into or renewed on or after August 16, 2003 would be subject to the statute. Therefore, the rule would also be applicable to contracts entered into or renewed on or after that date.

Comment: A commenter requests that the effective date be deferred to permit carriers sufficient time to draft, file with the department, and distribute to physicians and providers new contractual provisions. Others also generally recommend deferring the effective date, e.g., to January 1, 2004 . Yet other commenters support an early effective date.

Agency response: SB 418 provided that certain provisions would be effective immediately upon enactment ( June 17, 2003 ) and other provisions would be applicable 60 days after the effective date of the statute ( August 16, 2003 ). The Legislature determined the effective date of these provisions. Prompt implementation of these statutory protections was reflected in the adoption of emergency rules with an effective date of August 16, 2003 . This adoption gives permanent effect to the implementation of certain SB 418 provisions.

The department also notes that PPO preferred provider carriers are not required to file their physician/provider contracts with the department. While HMO provider contracts must be filed, no department approval is required prior to use.

Limitations on Requests: A commenter recommends limiting the number of claims payment information requests physicians and providers may make of carriers annually. The commenter suggests that physicians and providers be permitted to request such information no more than twice a year.

Agency response: The department disagrees with the suggested limitation. SB 418 provides unrestricted access to claims payment information.

§3.3703(a)(20)(A)(i) [§11.901(10)(A)(i)]: A commenter suggests that the listing of codes be expanded to include the "Current Dental Terminology" (CDT) code set, as dental plans would find it impossible to comply with a requirement to use the CPT code set. The commenter further notes that the dental industry does not have a diagnostic code set comparable to the ICD-9-CM codes, nor are there industry-wide modifiers to code sets.

Agency response: Section 11.901(10)(A)(i) only requires fee schedule information to include applicable codes and modifiers. Note §3.3703 is not applicable to dental claims.

§3.3703(a)(20)(A)(iii) [§11.901(10)(A)(iii)]: Several commenters suggest that the department clarify the compliance standards regarding "nationally recognized and generally accepted bundling edits and logic." One commenter suggests the department specifically reference the kinds of software programs that would satisfy the rule requirement. One commenter recommends that the department establish criterion-by-criterion standards to identify legitimate practices on an interdisciplinary basis, and urges the department to not specify one single software as the standard. Another commenter urges the adoption of Correct Coding Initiative (CCI) edits as the standard, asserting that carriers should not be permitted to have their "own" systems. Another commenter urges that any such criteria have a clinical, rather than financial, basis. Another commenter questions, if carriers used commercially available software, whether the identification of the software and edits would satisfy the rule´s requirements. A commenter questions whether carriers would be able to use claim audit software edits to deny or reduce payments, according to multiple surgery guidelines and industry reimbursement standards.

Agency response: SB 418 requires that carriers´ claims payment processes be consistent with nationally recognized, generally accepted bundling edits and logic. It also requires carriers, upon request, to provide their contracted physicians and providers, with a description and copy of their coding guidelines, including any underlying bundling processes. This information must include the name, edition, and model version of the software the carrier uses to determine bundling and unbundling of claims. The adopted rule confirms the minimum requirement imposed by SB 418, i.e., that carriers must disclose their bundling edits and logic, and, pursuant to subparagraph (vii), if software is used, identify the publisher, product name and version of such product. At the same time, the rule puts carriers on notice that their bundling edits and logic must enjoy a general recognition and acceptance, nationally. SB 418 requires the department to consult with the TACCP regarding implementation of any standardized coding and bundling edits and logic. Therefore, the department declines to change the rule, as adopted, at this time. However, it may propose additional amendments to the rule, subsequent to further consultation with the TACCP.

§3.3703(a)(20)(F) [§11.901(10)(F)]: One commenter suggests permitting companies to satisfy requirements of disclosure of fee schedules, bundling guidelines, etc., via a website. Another commenter observes that some carriers´ sites are so extensive that finding the claims payment information is excessively difficult. That commenter requests that the rule clarify the carrier´s obligation to specify where a physician or provider should look on the web.

Agency response: The department disagrees that further clarification is needed. The rule permits carriers to disclose claims payment information by any reasonable method through which the provider can access the information. The rule also requires the carrier to disclose claims payment information such that a reasonable person with sufficient training, experience, and competence in claims processing could determine the payment to be made under the contract. That standard necessarily requires that the claims payment information be presented in a clear and accessible manner. Thus, while a carrier may provide the required information electronically via such means as a website, it is not sufficient to merely direct a physician or provider to a general website absent specific directions about how to access the information requested.

§3.3703(a)(20)(G) [§11.901(10)(G)]: One commenter requests that the department define what is meant by "other business operations."

Agency response: Although the department declines to amend this language, it will monitor any issues that arise relating to disclosure of information under these circumstances, to ascertain whether future rule amendments are warranted.

§3.3703(a)(20)(G) [§11.901(10)(G)]: One commenter suggests penalizing physicians and providers that share confidential/proprietary information inappropriately.

Agency response: While the department lacks enforcement authority over physicians and providers, carriers have remedies available for violations of copyrights, proprietary licensing agreements, etc.

§3.3703(a)(21) [§11.901(11)]: Several commenters, stating that physicians and providers should not be required to track patients´ health care coverage, recommend deletion of this paragraph. One commenter supports the proposal to require providers to maintain insurance information on patients. Another commenter suggests that the rule require physicians and providers to maintain additional insurance information, including a patient's automobile coverage.

Agency response: SB 418 specifically permits carriers to require a physician or provider to retain updated information concerning a patient´s other health benefit plan coverage. However, automobile insurance coverage, while potentially inclusive of health benefits, is not a health benefit plan. The department declines to change the language of the rule.

For: Community First Health Plans, Inc. and Community Medicine Associates.

For with changes: Aetna, Blue Cross and Blue Shield of Texas, Dallas County Medical Society, First Health Group Corp., Golden Rule Insurance Company, Gulf Quest, L.P., Harris County Medical Society, The Health Group, HealthCore Physicians Group, Humana, Inc., Infectious Care, Kelsey-Seybold Clinic, Medicine Associates of North Texas ­ Forest Location, Medicine Associates of North Texas ­ Mid Cities Office, Medicine Associates of North Texas ­ East Dallas Office, Medical Clinic of North Texas, P.A., National Association of Dental Plans, Patient Physician Network, South Texas Radiology Group, Southwest Pain Management, Texas Association of Business, Texas Association of Health Plans, Texas Eye Institute, Texas Medical Group Management Association, Texas Oncology, P.A., The Woman´s Group, and UnitedHealthcare of Texas, Inc.,

Against:None.

The amendments are adopted under the Insurance Code Art. 3.70-3C, Section 3A 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 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.

§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) A contract between a preferred provider and an insurer shall not restrict a physician or health care provider from contracting with other insurers, preferred provider plans, preferred provider organizations, or HMOs.

(2) Any term or condition limiting participation on the basis of quality, contained in a contract between a preferred provider and an insurer, shall be consistent with established standards of care for the profession.

(3) In the case of physicians or practitioners with hospital or institutional provider privileges who provide a significant portion of care in a hospital or institutional provider setting, a contract between a preferred provider and an insurer may contain terms and conditions which include the possession of practice privileges at preferred hospitals or institutions, except that if no preferred hospital or institution offers privileges to members of a class of physicians or practitioners, the contract may not provide that the lack of hospital or institutional provider privileges may be a basis for denial of participation as a preferred provider to such physicians or practitioners of that class.

(4) A contract between an insurer and a hospital or institutional provider shall not, as a condition of staff membership or privileges, require a physician or practitioner to enter into a preferred provider contract.

(5) A contract between a preferred provider and an insurer may provide that the preferred provider will not bill the insured for unnecessary care, if a physician or practitioner panel has determined the care was unnecessary, but the contract shall not require the preferred provider to pay hospital, institutional, laboratory, x-ray, or like charges resulting from the provision of services lawfully ordered by a physician or health care provider, even though such service may be determined to be unnecessary.

(6) A contract between a preferred provider and an insurer shall not:

(A) contain restrictions on the classes of physicians and practitioners who may refer an insured to another physician or practitioner; or

(B) require a referring physician or practitioner to bear the expenses of a referral for specialty care in or out of the preferred provider panel. Savings from cost-effective utilization of health services by contracting physicians or health care providers may be shared with physicians or health care providers in the aggregate.

(7) A contract between a preferred provider and an insurer shall not contain any financial incentives to a physician or a health care provider which act directly or indirectly as an inducement to limit medically necessary services. This subsection does not prohibit the savings from cost-effective utilization of health services by contracting physicians or health care providers from being shared with physicians or health care providers in the aggregate.

(8) A contract between a physician, physicians' group, or practitioner and an insurer shall have a mechanism for the resolution of complaints initiated by an insured, a physician, physicians' group, or practitioner which provides for reasonable due process including, in an advisory role only, a review panel selected by the manner set forth in subsection (b)(2) of §3.3706 of this title (relating to Designation as a Preferred Provider, Decision to Withhold Designation, Termination of a Preferred Provider, Review of Process).

(9) A contract between a preferred provider and an insurer shall not require any health care provider, physician, or physicians' group to execute hold harmless clauses that shift an insurer's tort liability resulting from acts or omissions of the insurer to the preferred provider.

(10) A contract between a preferred provider and an insurer shall require a preferred provider who is compensated by the insurer on a discounted fee basis to agree to bill the insured only on the discounted fee and not the full charge.

(11) A contract between a preferred provider and an insurer shall require the insurer to comply with all applicable statutes and rules pertaining to prompt payment of clean claims, including Insurance Code Article 3.70-3C §3A (Prompt Payment of Preferred Providers) and §§21.2801-21.2820 of this title (relating to Submission of Clean Claims) with respect to payment to the provider for covered services that are rendered to insureds.

(12) A contract between a preferred provider and an insurer shall require the provider to comply with Insurance Code Article 3.70-3C §4 (Preferred Provider Benefit Plans), which relates to Continuity of Care.

(13) A contract between a preferred provider and an insurer shall not prohibit, penalize, permit retaliation against, or terminate the provider for communicating with any individual listed in Insurance Code Article 3.70-3C §7(c) (Preferred Provider Benefit Plans) about any of the matters set forth therein.

(14) A contract between a preferred provider and an insurer conducting, using, or relying upon economic profiling to terminate physicians or health care providers from a plan shall require the insurer to inform the provider of the insurer's obligation to comply with Insurance Code Article 3.70-3C §3(h) (Preferred Provider Benefit Plans).

(15) A contract between a preferred provider and an insurer that engages in quality assessment shall disclose in the contract all requirements of Insurance Code Article 3.70-3C §3(i) (Preferred Provider Benefit Plans).

(16) A contract between a preferred provider and an insurer shall not require a physician to issue an immunization or vaccination protocol for an immunization or vaccination to be administered to an insured by a pharmacist.

(17) A contract between a preferred provider and an insurer shall not prohibit a pharmacist from administering immunizations or vaccinations if such immunizations or vaccinations are administered in accordance with the Texas Pharmacy Act, Article 4542a-1, Texas Civil Statutes and rules promulgated thereunder.

(18) A contract between a preferred provider and an insurer shall require a provider that voluntarily terminates the contract to provide reasonable notice to the insured, and shall require the insurer to provide assistance to the provider as set forth in Insurance Code Article 3.70-3C §6(e)(2) (Preferred Provider Benefit Plans).

(19) A contract between a preferred provider and an insurer shall require written notice to the provider upon termination by the insurer, and in the case of termination of a physician or practitioner, the notice shall include the provider's right to request a review, as set forth in §3.3706(c) of this title (relating to Designation as a Preferred Provider, Decision to Withhold Designation, Termination of a Preferred Provider, Review of Process).

(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 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;

(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 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 to the preferred provider by the 30th day after the date the insurer receives the preferred provider's request.

(G) A preferred provider that receives information under this paragraph:

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

(I) the preferred provider's practice management,

(II) billing activities,

(III) other business operations, or

(IV) communications with a governmental agency involved in the regulation of health care 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 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 30th 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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