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You are here: Home . rules . 2003 . 0915c-059
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Subchapter T. Submission of Clean Claims

§§21.2801­21.2809, 21.2811­21.2819, and 21.2821­21.2825

The Commissioner of Insurance adopts amendments to §§21.2801-21.2803, 21.2807-21.2809, and 21.2811-21.2817, and new §§21.2804-21.2806, 21.2818, 21.2819 and 21.2821­21.2825, concerning the submission of clean claims to insurers who issue preferred provider benefit plans and health maintenance organizations (hereinafter collectively referred to as carriers). Sections 21.2802-21.2804, 21.2806, 21.2809, 21.2811, 21.2815-21.2819, 21.2821, 21.2822, and 21.2824 are adopted with changes to the proposed text as published in the July 4, 2003 issue of the Texas Register (28 TexReg 5099). Sections 21.2801, 21.2805, 21.2807, 21.2808, 21.2812, 21.2813, 21.2814, 21.2823 and 21.2825 are adopted without changes and will not be republished.

The amended and new sections are the result of the enactment of Senate Bill (SB) 418 during the 78 th Regular Legislative Session. That legislation, among other things, amended Texas Insurance Code Art. 3.70-3C, concerning preferred provider benefit plans, and the Texas Health Maintenance Organization (HMO) Act, Texas Insurance Code Chapter 843, to provide comprehensive changes to the procedures and requirements governing the processing and payment of clean claims submitted by certain physicians and providers. While SB 418 and the rules apply to preferred providers of insurers that issue preferred provider benefit plans, physicians and providers contracted with HMOs, and certain other physicians and providers in certain circumstances, this order will use the terms "preferred provider," "physician" and "provider" to refer to the entities to whom these rules apply. Other provisions of SB 418 are addressed in adopted rules published elsewhere in this issue of the Texas Register.

Pursuant to SB 418, several provisions of the law became applicable to contracts between carriers and physicians and providers entered into or renewed, or certain services provided, on and after the 60 th day after the effective date of the statute, rendering those provisions effective on August 16, 2003 . The commissioner adopted rules on an emergency basis, effective August 16, 2003 , which were published in the August 29, 2003 issue of the Texas Register (28 TexReg 7030). The emergency rules will be withdrawn at the time these adopted rules become effective.

These sections are necessary to implement the provisions and intent of SB 418 by ensuring that the clean claims filing and payment processes are streamlined, standardized, and efficient.

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. 2556).

Changes have been made to several of the proposed sections as published; however, none of the changes introduce new subject matter or affect additional persons than those subject to the proposal as originally published. In addition, many issues associated with the changes were discussed by the CCWG and the TACCP. In response to comments, the following changes have been made: (1) The definition of "billed charges" in §21.2802(2) was amended to define the term as "the charges for medical or health care services included on a claim submitted by a physician or provider" rather than with reference to charges in excess of the general level of charges made by other physicians or providers who render or furnish the same or similar services, treatments, or supplies to persons in the same geographic area whose illness or injury is comparable in nature and severity. The scope and definition of billed charges, which become applicable to prompt payment of claims through the penalty provisions, were the subject of much debate in the CCWG and TACCP meetings. In addition, the department received a large number of comments concerning this definition. Many commenters believe that the current definition does not accurately reflect the language of SB 418; others believe that the current language is necessary in order to prevent overcharging by physicians and providers. After much consideration of all positions presented, the department has determined that the definition of billed charges should be changed to conform more precisely to the language in the statute. However, as noted in the response to comments, the department acknowledges the concerns of those commenters who believe that defining the term to mean the amount submitted on a claim by a physician or provider will result in increased, uncontained medical costs that, in turn, will result in higher insurance premiums. While the department does not regulate the amounts a physician or provider can submit on a claim, it will remain sensitive to allegati ons of abuse i n this area. In connection with these expressed concerns, the revised definition of billed charges states that, for purposes of the subchapter, billed charges must comply with all other applicable requirements of law, including Texas Health and Safety Code §311.0025, Texas Occupations Code §105.002, and Texas Insurance Code Art. 21.79F. In addition, physicians, providers, consumers, and carriers are encouraged to complain to the department regarding allegations of fraudulent or unreasonable charges. The TDI Fraud Unit, when necessary, refers such matters to the appropriate authority, including the Board of Medical Examiners, a district attorney´s office, the Office of the Attorney General and the federal government. Moreover, the department has launched an aggressive education campaign to inform all stakeholders of the various prompt pay provisions, and will record information to track concerns regarding timely payment of clean claims, billed charge penalties paid, medical inflation, and fraud referrals. The department will consult with the TACCP regarding aggregate information. The department also notes that where a claim is paid correctly and promptly, the carrier´s liability will be limited to the contracted amount, and the issue of billed charges does not arise. (2) The definition of "duplicate claim" in 21.2802(11) was amended to exclude claims submitted at the request of a carrier. (3) The definition of "procedure code" in §21.2802(23) was amended to add the words "representing a service or treatment." (4) The phrase "if shown on the patient´s ID card" was added to §21.2803(b)(1)(D) and (b)(2)(JJ). (5) The word "state" was added to the fields described in §21.2803(b)(1)(E) and (G). (6) The field location for identification of a duplicate or corrected claim was changed from field 22 to field 10b, and this requirement was moved from §21.2803(b)(1)(X) to §21.2803(b)(1)(N). (7) Fields for verific ation numbers were added at §21.2803(b)(1)(Y) and (b)(2)(L L). (8) The word "inpatient" was deleted from §21.2803(b)(2)(O)-(T). (9) §21.2803(g) was changed to clarify that additional information submitted on a claim can include attachments. (10) §21.2804(a) was clarified to state that the time period to request additional information may be extended due to a catastrophic event. (11) §21.2806(c) was changed to make the submission of claims by facsimile contingent upon the carrier´s acceptance of that method. (12) §21.2815(a)(3) and (c)(3) were amended to make clear that the 18% interest applies to the penalty amount. (13) §21.2815(b) was added, and the subsequent sections renumbered, to include examples of penalty calculations for underpayments. (14) §21.2815(g) was amended consistent with changes to the definition of billed charges. (15) §21.2817 was changed to make clear that contracts may not waive a physician´s or provider´s recovery of court costs. (16) Subsection (f) was added to §21.2818 to make clear that the provisions of this section does not affect a carrier´s ability to recover an overpayment in the case of fraud or material misrepresentation. (17) §21.2819(b)(1)(B) was amended to provide that the sworn affidavit may be from either a corporate officer or that person´s designee. (18) §21.2821(e)(1)(D) was amended to change a reference to waiting period, and an "other" category was added as subsection (e)(1)(F). (19) Language in §21.2821(e)(2) and (3) concerning reporting of declinations was deleted. (16) The rule´s effective date in §21.2824 was changed to October 5, 2003 , and a clarifying reference to services was included. In addition, several changes were made for clarity and consistency, and typographical errors were corrected, throughout.

Adopted §21.2801 provides that Subchapter T, in addition to applying to claims submitted by contracted physicians and providers, has limited applicability to noncontracted physicians and providers. Adopted §21.2802 contains revised definitions of certain terms including audit, billed charges, diagnosis code, procedure code, and statutory claims payment period. In addition, this section re-defines the term "clean claim" with regard to both non-electronic and electronic claims, and contains new definitions for terms such as catastrophic event, corrected claim, duplicate claim, preferred provider, and provider.

Adopted §21.2803 specifies 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 adopted section lists the required data elements with reference to the appropriate fields on the claim forms prescribed by the Centers for Medicare and Medicaid Services (CMS) for both institutional and non-institutional providers (UB-92 and CMS-1500, respectively). The section states 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 health care claims, including applicable implementation guides, companion guides, and trading partner agreements. The adopted section also provides 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.

Adopted §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 applicable 21- (for pharmacy claims), 30- (for electronic claims), or 45-day (for nonelectronic claims) statutory claims payment 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, and specifies that the time periods may be extended as allowed by §21.2819(c). 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.

Adopted §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-day (for non-electronic claims) 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, as 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 §21.2818.

Adopted §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 adopted section 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.

Adopted §21.2807 contains changes to ensure consistency with the requirements of SB 418, including provisions relating to the adjudication of pharmacy claims. Adopted §§21.2808, 21.2811-21.2812, 21.2814, and 21.2817 also contain changes for purposes of consistency. Adopted §21.2809 provides 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 periods allowed by adopted §21.2804 or §21.2819(c)--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 adopted §21.2815(c) automatically qualify 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 procedure 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 adopted §21.2818.

Adopted §21.2813 provides 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. Adopted §21.2815 sets out the new graduated penalty requirements applicable to carriers that do not pay a preferred provider´s clean claim within the applicable statutory claims payment period, including the method for calculating the penalty on the unpaid balance of a partially paid claim. This section also clarifies 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 provides an example of how the interest is to be calculated. The adopted section also provides 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 adopted section requires 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.

Adopted §21.2816 expands 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, this 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 electronically or by fax.

Adopted §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 recovery of refunds. 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 adopted 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.

Adopted §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 claims submission or processing activity, and provides that a valid certification tolls the applicable statutory deadlines for the number of days the entity certifies that activity was interrupted.

Adopted §21.2821 requires quarterly reporting by HMOs and preferred provider carriers of information and data regarding claims processing and payment and business interruptions due to catastrophic events, with the first report due on February 15, 2004, for the preceding months of September through December, 2003. This information, much of which is currently being collected by the department from carriers, 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 provisions of SB 418, the department will also need to obtain data concerning verifications and declinations in order to monitor how these provisions are working. The adopted section 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 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 by July 31 st to give the carriers enough time to develop meaningful data. Consistent with the quarterly reporting requirements regarding claims payment, adopted §21.2822, concerning administrative penalties, states that a carrier´s compliance percentage shall be determined on a quarterly basis, separately for institutional and noninstitutional preferred provider claims, and not including claims paid pursuant to audit.

Adopted §21.2823 states that §19.1724 (relating to Verification) and §21.2807 apply to a physician or provider that provides emergency services or services not reasonably available in the carrier´s network. Adopted §21.2824 contains an effective date of October 5, 2003 for contracts entered into or renewed between carriers and physicians and providers as well as for certain services provided by physicians and providers that do not have a contract with an HMO or preferred provider carrier. Adopted §21.2825 contains a severability provision.

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 or HMOs. These provisions also were proposed for comment in the July 4, 2003 issue of the Texas Register (28 TexReg 5087, 28 TexReg 5089, and 28 TexReg 5091) and were adopted as emergency rules effective August 16, 2003 , and published in the August 29, 2003 issue of the Texas Register (28 TexReg 7019, 28 TexReg 7022, and 28 TexReg 7024). Those sections are adopted elsewhere in this issue of the Texas Register. In addition, contemporaneously with these amendments and new sections, the adoption of the repeal of §§21.2804-21.2806 and 21.2818-21.2820 is published elsewhere in this issue of the Texas Register.

SUMMARY OF COMMENTS AND AGENCY´S RESPONSE TO COMMENTS.

General Comment:

Several commenters thank the department for trying to implement fair rules, for considering the effects on physicians/providers, health plans, consumers and employers, and for compromising to assure that the system will work. The commenters urge the department to recognize that too strict regulation or too little time for processing will result in an unworkable system, which will harm consumers.

Agency Response: The department appreciates the supportive comments.

Comment: A commenter opines that patients, and not physicians and providers, should be given more responsibility for providing information on such things as claims and other insurance coverage.

Agency Response: The department agrees that patients should cooperate with requests for information in order to assure that claims related to their care are processed expeditiously. However, SB 418 only addresses claims processing activities between providers and carriers. Accordingly, these rules do not address patient responsibility.

Comment: A commenter recommended that the department adopt rules requiring employers to give notice prior to the employees´ changing health plans in order to ease the carriers´ burden to determine enrollee status.

Agency Response: The department agrees that a carrier´s lack of current information concerning its enrollees is detrimental to physicians and providers who in good faith provide services to such individuals. The department urges carriers to take appropriate action--whether by contract amendment or other agreement, or more frequent communication with employers--in order to maintain current information on enrollees. The department will continue to monitor this situation to determine whether additional rules are necessary.

Comment: A commenter urged the department to make sure the rules comply with the provisions of HIPAA.

Agency Response: The department has made a strong effort to be aware of and not contradict HIPAA requirements, and, with the assistance of the TACCP, will continue to do so.

Comment: Several commenters request that the rules clarify how dental claims should be handled. Some commenters note that insured dental plans are exempt from Texas Insurance Code Article 3.70-3C but are subject to Article 21.53. A commenter requests that the rule clarify that it does not apply to "stand-alone dental plans." Another commenter indicated that the rule´s provisions are inconsistent with the way dentistry is practiced; that dental services are generally not provided on weekends and legal holidays, so that the after-hours staffing requirements of SB 418 and the rules do not meet any specific need of dental providers. The commenter notes that the rules make compliance for dental plans overly burdensome and expensive while providing minimal protections/benefits to consumers and providers. The commenter also notes that because SB 418 does not apply to plans that administer only indemnity products, plans providing both managed care and indemnity dental benefits would be subject to two different standards, which would be costly and inefficient.

Agency Response: The department acknowledges that the provisions of SB 418 apply to HMO dental plans and not to indemnity dental benefits. The department also recognizes that the current rules do not reflect, among other things, dental-specific requirements for clean claims. The department plans to work with the interested parties to develop required data elements and other modifications necessary to accommodate dental claims that are subject to SB 418 and will consider this issue in future rulemaking. The department acknowledges that carriers that provide both HMO and indemnity dental benefits may be subject to different requirements as a result of the application of SB 418.

Applicability to Stand-Alone Vision Plans

Comment: A commenter requests an exemption from the rules for single service vision HMOs. Because indemnity vision products are not affected by these rules, carriers administering both indemnity and HMO products will be subject to two different standards, thereby increasing administrative costs.

Agency Response: The department acknowledges that carriers that administer both HMO and indemnity vision benefits may be subject to different requirements as a result of the application of SB 418. However, the statute does not provide for an exception for a single-service HMO. The department declines to add an exception to the rules.

Applicability to Pharmacy Claims : Some commenters maintain that, except for timely claim payment requirements, the provisions of SB 418 do not apply to electronically submitted pharmacy claims, largely due to the unique nature of such claims as point-of-sale transactions that are administered at the time the pharmacist fills the prescription. Many of the rules´ provisions, such as those concerning duplicate claims, clean claim requirements, and verification, do not apply to pharmacy claims. One commenter questions whether the rules´ proposed effective date applies to pharmacies, since the date is tied to provider contracts, especially preferred providers. Another commenter requests an exemption from the rules except for those provisions that expressly apply to pharmacy claims.

Agency Response: The department agrees with the commenters that many provisions of the statute and rules may not operationally apply to pharmacy claims. However, several other provisions clearly do apply, including deadline for claims payment, penalty provisions, overpayments, and electronic adjudication of pharmacy claims. Because the statute does not appear to specifically allow exceptions from certain provisions, the department declines to do so in this rule. The department also agrees that the rule does not appropriately reference the standard transaction format required under HIPAA for retail pharmacy transactions. As such, the department has added language to §21.2803(d) that identifies the NCPDP Telecommunication Standard Version 5.1 and NCPDP Batch Standard Version 1.1 as the acceptable formats for submitting electronic retail pharmacy claims. The rules´ effective date applies to all pharmacists who are providers or preferred providers, as defined in the rule, who contract or renew a contract with an HMO or preferred provider carrier on or after October 5, 2003 , as well as to providers and preferred providers who perform emergency or referral services on and after that date. Additionally, it is the department´s understanding that some drug claims, such as certain injectable medications, are submitted on CMS 1500 claim forms. For those claims, the clean claim elements would apply, as would the duplicate claim provisions. The verification requirements are applicable to the carrier and might be used by a physician who wants verification that the carrier will pay for an expensive drug that he or she is planning to administer in the office setting. Therefore, it would not be appropriate to exempt pharmacy claims generally from the requirements of the rules.

Comment: A commenter notes that SB 418 contains provisions concerning ID cards, and seeks clarification of the effective date of these provisions and the information necessary to indicate that a health plan is subject to regulation by the department.

Agency Response: The department did not address ID cards in the proposal. However, provisions governing ID cards are contained in §21.2820, which was part of the emergency rules adopted by the department on August 15, 2003 . In addition, the department expects to propose rules implementing the ID card requirements of SB 418 soon. The effective date for compliance with the provisions of those rules will not be tied to contracts between providers and carriers, but instead the issue or renewal date for health plans issued by carriers subject to SB 418.

Comment: A commenter asked for clarification that the rules do not apply to Medicare+Choice plans.

Agency Response: The department confirms that the rules do not apply to Medicare+Choice plans.

Comment: A commenter seeks clarification regarding whether the statute and rules are applicable to Employee Retirement Income Security Act (ERISA) plans and non-ERISA self-funded plans.

Agency Response: As with the prompt pay rules that have been in effect since 2000, the rules under SB 418 do not apply to self-funded ERISA plans, nor to certain non-ERISA plans (government, school and church plans). The department´s long-standing position on the issue of applicability of prompt pay to self-funded ERISA plans is consistent with testimony from the Office of Attorney General before the Senate Health and Human Services Committee when SB 418 was first laid out, stating that SB 418 does not apply to self-funded ERISA plans.

§21.2802(2) ­ Definition of Billed Charges

Comment: The department received numerous comments concerning the definition of billed charges. Numerous commenters expressed concern that the definition in the proposed rule describes the usual and customary charges defined by the health plans and does not follow the language or intent of the legislation, which refers to "billed charges as submitted on the claim." These commenters say this language is clear and does not support any other interpretation. In addition, they state that the definition contained in the proposed rule will create a loophole in the statute´s penalty provisions by allowing the plans to determine billed charges, thus setting their own penalties. A commenter notes that a carrier that does not meet its obligations to pay claims timely and accurately should lose the discount of usual and customary and pay billed charges. One commenter expresses concern that a provider who attempted to ascertain "the general level of charges in the same geographical area" could be determined to be guilty of price fixing, and questioned who defines "geographical area" and "general level of charges."

Other commenters support the proposal´s definition of "billed charges" as usual and customary. These commenters believe the definition should be the same as it is for the rules implementing HB 610, 76 th Legislature, the statutory predecessor to SB 418, because the statutory language "essentially did not change." Numerous commenters support maintaining the current definition of "billed charges" to prevent excessive billing by preferred providers, contending that there is nothing to prevent a provider raising its charge master several times a year or billing in excess of usual and customary rates in order to maximize penalties, causing uncontrolled expenses for health carriers. Some of these commenters point out that, in responding to similar comments in an earlier rule implementing HB 610, the department stated that it was necessary that billed charges be defined to prevent physicians and providers from billing in excess of their usual charges in order to maximize penalties. Other commenters note that the term "usual and customary" is often contained in a carrier´s contracts with providers. In response to concerns regarding potential billing abuses if the definition is changed, commenters who support changing the definition note that by using claim history, disclosure of fee schedules at the time of contract negotiation, and other means, a physician´s pattern of billed charges is easily ascertained. Further, if abuses exist, the Medical Practice Act provides for action against physicians. Others recommend that the rule require billed charges to satisfy all applicable provisions of Texas law, including Insurance Code Article 21.79F and Texas Health and Safety Code §311.0025. Conversely, a commenter notes that the department has regulatory authority over carriers and can penalize them if they use the usual and customary definition inappropriately, but has no similar authority over providers.

One commenter recommends amending and clarifying the definition to state that billed charges may not exceed the lower of the currently defined standard or the charges established by CMS and paid by it on behalf of Medicare beneficiaries for those same services, treatments or supplies. Another commenter requests that the department avoid a definition of "billed charges" that would allow the use of discounted fee schedules as billed charges.

Agency Response: After consideration of all positions presented, as well as discussions with the CCWG and TACCP, the department has determined that the definition of billed charges should be changed to conform more precisely to the language in the statute. However, the department continues to share the concerns of those commenters who believe that this definition may result in increased, uncontained medical costs that will, in turn, result in higher insurance premiums. While the department does not regulate the amount a physician or provider can charge for a particular service, it will remain alert to allegations of abuse in this area. In connection with these expressed concerns, the revised definition of billed charges states that, for purposes of the subchapter, billed charges must comply with all other applicable requirements of law, including Texas Health and Safety Code §311.0025, Texas Occupations Code §105.002, and Texas Insurance Code Art. 21.79F. In addition, physicians, providers, consumers, and carriers are encouraged to file complaints with the department regarding allegations of fraudulent or unreasonable charges. The TDI Fraud Unit, when it believes there has been a violation of a law, refers such matters, as appropriate, to the Board of Medical Examiners, a district attorney´s office, the Office of the Attorney General or the federal government. Moreover, the department has launched an aggressive education campaign to inform all stakeholders of the various prompt pay provisions, and will record information to track concerns regarding timely payment of clean claims, billed charge penalties paid, medical inflation, and fraud referrals. The department will consult with the TACCP regarding aggregate information. The department also notes that where a claim is paid correctly and promptly, the carrier´s liability will be limited to the contracted amount, and the issue of the definition of billed charges does not arise.

§21.2802(3) ­ Definition of CMS

Comment: A commenter suggests the letter "s" should be added to the word "Center" in the definition of "CMS."

Agency Response: The department agrees and the definition of "CMS" has been changed accordingly.

§21.2802 ­ Definition of Case Rate

Comment: One commenter notes that the definition of "case rate" was deleted in the proposed rule, although the term is contained in the definition of "billed charges."

Agency Response: The amended definition of "billed charges" discussed earlier deletes the term "case rate."

§21.2802(8) and (11): Definition of Corrected Claim and Duplicate Claim

Comment: A commenter expresses appreciation for the department´s efforts in differentiating corrected and duplicate claims so that corrected claims are not inappropriately identified as duplicates.

Agency Response: The department appreciates the supportive comment regarding the complex issue of corrected and duplicate claims. The department will continue to work with the TACCP regarding issues surrounding corrected and duplicate claims.

§21.2802(10) Definition of Diagnosis Code

Comment: Some commenters assert that, in order to make clear that the rules´ protections for physicians also apply to dentists and oral and maxillofacial surgeons who contract with HMOs and PPOs covered by the rules, "Current Dental Terminology" (CDT) should be added to the numeric or alphanumeric codes included in the definition of diagnosis code.

Agency Response: The department believes the commenter´s reference to "diagnosis code" is really a reference to "procedure codes." The department disagrees that CDT codes should be specifically added to the definition of "procedure code" as it believes the codes are already included in the definition as part of a medical code set that is adopted by CMS.

§21.2802(20) Definition of Preferred Provider

Comment: Some commenters suggest that the definition of preferred provider should include dentists.

Agency Response: Because preferred provider dental plans are not authorized by the Insurance Code, dental indemnity plans are not subject to Insurance Code article 3.70-3C. The definition of preferred provider references Insurance Code §843.002 for physicians and providers that contract with an HMO. The definition of provider in §843.002 includes dentists. Therefore, the definition of preferred provider in these rules does not need to specifically reference dentists.

§21.2802(23) ­ Definition of Procedure Code

Comment: A commenter requests that the phrase "representing a service or treatment" be inserted into the definition of procedure code after "alphanumeric code" in order to distinguish codes for services or treatments from codes for diagnoses. The commenter also requested that the department require carriers to use only the federally required code sets. Another commenter states that most, if not all, carriers are retiring their local codes in favor of the standard code sets even for non-electronic claims. The commenter also states that it would expect a carrier to adopt the federally required code sets for both electronic and non-electronic claims even though the proposed rules would allow local codes for non-electronic claims.

Agency Response: The requested language for the definition of "Procedure Code" has been added to the rule. SB 418 allows carriers to use nationally recognized and generally accepted Current Procedural Terminology codes, notes and guidelines including all relevant modifiers. To the extent that this allows any variance from federally required code sets, the statutory language supports such a variance. The department agrees that there is an apparent movement away from the use of local codes in favor of the federally required code sets for both electronic and non-electronic claims. Notably, the federal rules do not restrict code sets used in non-electronic claims. The rule references local codes for non-electronic claims only. The rule clearly limits the use of codes for electronic claims to include only those allowable under HIPAA and is, therefore, in compliance with federal electronic transaction requirements.

§21.2803 ­ Elements of Clean Claim

Comment: A commenter expresses appreciation to the department for developing a truly standard set of clean claim elements. Other commenters commend the department for its efforts to be consistent whenever possible with the HIPAA administrative simplification provisions as they relate to standard electronic transactions and code sets, since physicians are struggling to meet the October 16, 2003 HIPAA compliance date. Commenters also commend the department´s actions to limit contrary requirements for claim development and submission as much as is practicable.

Agency Response: The department appreciates the supportive comments and expresses gratitude to the carrier and provider community, especially those involved in the department´s CCWG and the TACCP, for their assistance in standardizing clean claim elements.

Comment: A commenter observes that several of the elements that are required data elements under HIPAA for the CMS 1500 and UB-92 have been deleted. However, a state does not have authority to amend a federally mandated form.

Agency Response: The department is not amending the claim forms themselves, but instead is adopting a set of elements from the claim form to create a standardized set of clean claim elements pursuant to SB 418. Additionally, these requirements apply only to non-electronic claims, which are not addressed under HIPAA.

§21.2803(b)(1)

Comment: A commenter complains that the rule deletes Fields 11a (subscriber´s birthdate and gender) and 11b (subscriber´s plan name) as required fields, which could be helpful for the purposes of identification.

Agency Response : The department declines to make a change. The department consulted with the TACCP regarding the clean claim elements, and believes there is adequate information on the claim form which will allow a carrier to identify a patient.

§21.2803(b)(1)(E)&(G)

Comment: A commenter notes that clean claim elements 21.2803(b)(1)(E) and (G) omit the requirement to include the state in the address requirements.

Agency Response: The department agrees and has changed the rule to require inclusion of the state in the address information.

§21.2803(b)(1)(H)-(L)

Comment: A commenter feels these subsections create circumstances under which additional documentation would be required, making it impossible to file such claims electronically. Providers have a strong incentive to file primary and secondary claims simultaneously based on the provisions of the statute. Therefore, it would be reasonable to assume that providers have made a good faith attempt to obtain secondary insurance information.

Agency Response: These subsections do not address the information required on a claim form required under the HIPAA Administrative Simplification provisions. The subsections apply only to non-electronic claims.

§21.2803(b)(1)(H)-(M)

Comment: While many commenters appreciate the department´s exemption for hospital-based radiologists, anesthesiologists, and pathologists, they assert the exemption should extend to all physicians who do not have direct patient contact. This would include, for example, cardiologists who read only EKGs, neurologists interpreting encephalograms, and pulmonologists interpreting pulmonary function tests. One commenter noted that some radiologists and pathologists might be office-based, not hospital-based, such as in rural communities. The commenters believe this exception also should be applied to Fields 9 and 9a through 9d (§21.2803(b)(1)(H)-(L)). Other commenters request that no physicians be exempted from the requirements of this element. One commenter believes that anesthesiologists, radiologists and pathologists should not be exempted from this requirement because they should have access to this data since the facility has it. Another commenter expresses concern that the rule will enable the billing personnel of facility-based radiologists, pathologists, and anesthesiologists to frequently enter "NA" within the required fields, which could potentially create additional administrative work and cost for carriers that would have to pend the claim in anticipation of receiving the related facility or attending provider's claims within the mandatory payment period, or begin an investigation. The commenter suggests that these providers be required to obtain any other insurance information directly from the facility or attending physician at the time they receive the order or request for services.

Agency Response: The department declines to make the suggested change concerning expansion of the exception to other providers. The information in these fields is important information for claims processing and is included as a required clean claim element for this reason. Exceptions to required clean claims elements must be limited, and in this case the department has limited the exemption to providers that were identified by the CCWG as those clearly not having sufficient patient contact to warrant collecting this information. This requires specifically identifying the types of providers that are subject to the exception. For the same reason, the department also declines to exempt hospital-based providers from the requirements of §21.2803(b)(1)(H)-(L). The information that hospital-based providers need to complete these fields is maintained by and available from the hospital and hospital-based providers routinely utilize this source for the demographic information used to complete their claims. After consultation with the CCWG and the TACCP, the subsections regarding good faith effort to obtain secondary payor information were included in order to prevent unnecessary requests for additional information.

§21.2803(b)(1)(S)

Comment: Some commenters commend the department for modifying the requirement for Field 14 and eliminating Field 15; they state this change is a tremendous improvement and recognizes the efficiencies that will be gained by carriers requesting this information by audit for claims with preexisting condition implications, rather than requiring this information to be submitted for all claims. Other commenters argue that carriers, especially carriers offering individual insurance products, need complete information from both fields to identify contractual benefits tied to a date of onset for an illness or pregnancy. An example is where physical therapy benefits are limited to 60 visits from date of onset without completion of the field, health plans cannot effectively track for this benefit limitation and would have to hand pull and screen claims. It could also force health plans to request additional information prior to paying claims where pre-existing conditions were a factor, such as with individual policies. One commenter states that the proposed rules delete the words "current illness or pregnancy," which it says are critical elements that should be furnished to insurers. It also says this change, along with deletion of field 15, may not be consistent with HIPAA.

Agency Response: The department appreciates the supportive comment and recognizes that this information may be necessary in certain instances. However, the department, with the assistance of the CCWG and the TACCP, has been monitoring this issue for the last few years and understands that, for most claims, this information is not necessary and is often difficult, if not impossible, for some physicians and providers to obtain. The department believes that in those instances in which this information is necessary for claim processing, the carrier may request the information under the procedures set forth in §21.2804. While the change may not be consistent with HIPAA requirements for electronic claims, this requirement applies only to non-electronic claims.

§21.2803(b)(1)(T) and (U)

Comment: Some commenters have concerns about requiring "self-referral" or "none" on these fields when there is no referring physician. Because most health plans are moving away from requiring a referral from a primary care physician to a specialist, this would make all physicians follow a requirement that only a small number can implement.

One commenter said that health plans have never required this information, and that formatting would be required to include this for claims submissions.

Agency Response: This clean claim element, as proposed, was discussed with the CCWG and the TACCP. The department believes that the information in this field is necessary, and declines to make the change. The field must contain the required information because a carrier processing a claim will not know if a blank field indicates the lack of a referral or a failure to comply with the requirements of the clean claim rules.

§21.2803(b)(1)(V)

Comment: A commenter suggests revising this subsection to delete the word "unlisted" before "drug code."

Agency Response: The department agrees and has made the change so as not to unnecessarily limit the drug codes a provider may use.

§21.2803(b)(1)(X)

Comment: A commenter requested that designation of duplicate and corrected claims should be consistent with the HIPAA claim frequency type codes for electronic claims and should include a "7" for a duplicate claim and an "8" for a corrected claim. The use of these codes should be in field 10d of the CMS 1500 rather than field 22 as proposed.

Agency Response: The department had lengthy discussions with the CCWG and the TACCP, as well as physician representatives, carriers, hospital representatives and representatives of the National Uniform Claim Committee (NUCC) and National Uniform Billing Committee (NUBC) concerning the ability to identify corrected and duplicate claims on both the UB-92 and the CMS 1500. Based on those discussions, the department has determined that the number "7" in the "Type of Bill Code" as it appears in the UB-92, field 4, third position, represents a corrected claim and not a duplicate claim as was originally proposed, and the rule has been revised accordingly. This change is consistent with similar requirements for electronic claims for both professional and institutional claims filed using the 837P and the 837I.

No data element exists to identify a duplicate claim on the UB-92 or the CMS 1500, or in the 837P or 837I. As requested by members of the CCWG and the TACCP and other commenters, and in order to be consistent with requirements for electronic and non-electronic claims where possible, the rule has been revised to delete an identifier for duplicate claims for the UB-92, as the "Type of Bill Code" does not provide for such identification.

Because no similar "Type of Bill Code" exists for the CMS 1500, TDI worked with the CCWG and the TACCP to identify a field that can be used to identify duplicate and corrected claims. Though field 22 was initially identified as an acceptable field, the CCWG, and the TACCP members and the later agreed that field 10d was a better choice. TDI agrees to change the required field from 22 to field 10d for identifying duplicate and corrected claims filed on the CMS 1500. It should be noted that, although identification of duplicate claims is not a clean claim element for claims filed using the UB-92, nothing in this rule precludes a provider from identifying a duplicate claim in a manner that does not conflict with requirements for a clean claim. For example, a provider may stamp "duplicate" on such claims so long as the stamp does not make unreadable, or otherwise interfere with, any of the required clean claim elements.

Comment: A commenter queried whether it was appropriate to submit a corrected claim in accordance with the rules if a carrier has indicated that it has no record of a claim in response to a provider´s inquiry regarding receipt of a claim. The commenter expressed concern that the second claim would not properly be designated as a corrected claim and sought clarification as to the applicability of the statutory claims payment period and associated penalties to such a claim.

Agency Response: A clean claim must be processed as required by the rules. A carrier´s indication during the statutory claims payment period that it has not received a claim will not present a problem if the submitting physician or provider has made use of the mail log or a similarly reliable method for evidencing submission. If there is no proof of claims submission and the carrier indicates that the claim was not received, the second claim is not a duplicate and instead is a new claim requiring the beginning of a new statutory claims payment period. If the submitting physician or provider does have proof of submission, the carrier´s request for a duplicate claim does not require the physician or provider to indicate on the second claim that the second claim is a duplicate. The department has clarified in the definition of a duplicate claim that a requested copy of a claim is not a duplicate claim.

§21.2803(b)(1)(II)

Comment: Several commenters supported requiring this element, amount paid, if the physician received primary payment. The statute allows for both primary and secondary to be filed simultaneously, and allows for communication between those plans to coordinate payment. No element or definition should prevent the streamlining of the coordination of payment or extend the 45-day time limit in which the plans are required to coordinate and make payment to the physician.

Agency Response: The department appreciates the commenter's support for requiring the amount paid by other insurance as a data element if the other insurance has paid. However, the department disagrees that this element should only be required if the provider has already received the primary carrier's payment and also does not believe that this requirement impedes the simultaneous filing of primary and secondary carrier claims. The claims may be filed simultaneously to each carrier but the amount paid by the primary carrier is a clean claim data element for the claim filed to the secondary carrier. Consequently, the secondary carrier's statutory clean claim payment period will not begin until it is notified of the amount paid by the primary carrier. To do otherwise, would deprive a secondary carrier of all or part of its rightful statutory clean claim payment period. The amount paid by a primary carrier may be furnished by the billing provider as a correction to the deficient claim or obtained via communication with the primary carrier. The department declines to change the rule.

§21.2803(b)(1)(LL) and (b)(2)(FF)

Comment: A commenter says that it gave its participating providers notice, prior to June 17, 2003 , that it required the provider license number, although in field 31 rather than field 33 as required by this subsection. The commenter seeks clarification that this complies with the rule. Another commenter asked if this information could not be requested if it was not required by the plan prior to June 17.

Agency Response: Based on the information supplied in the first comment, it appears that the element complies with the requirements of the statute. If notice was not given prior to June 17, 2003 , the information may not be requested as a clean claim element.

§21.2803(b)(2)(O)-(T)

Comment: A commenter requests clarification regarding a potential ambiguity due to the provisions of these paragraphs applying only to inpatient and emergency room services. The rule should be clearer so as to also apply to outpatient services and ambulatory claims. Another commenter requests addition of "outpatient surgeries" to this subsection regarding admission hour. Because the level of provider compensation may change depending on the length of time the patient is in the facility, the commenter needs to know the hour the patient was admitted in order to pay the claim correctly. A commenter says that these fields are restricted to only inpatient admissions, and says that either "inpatient" should be deleted or that "outpatient" should be added.

Agency Response: The department agrees and has deleted the word "inpatient" from the relevant paragraphs. A provider may include the information if it knows a carrier wants it, and a carrier is not prohibited from asking for this information where needed.

§21.2803(b)(2)(AA)

Comment: A commenter requests that this language be expanded for clarification.

Agency Response: The department declines to make the change, as it believes the language as proposed is clear.

§21.2803(b)(2)(HH) (now (JJ))

Comment: A commenter requested that the information for this element be required only if the information is shown on the ID card issued by the carrier to the patient. This requirement should be consistent with the requirement in §21.2803(b)(2)(KK).

Agency Response: The department agrees and has made the requested change.

§21.2803(b)(2)(II)

Comment: A commenter requested that the information in this field, the patient´s relationship to the subscriber, be required only if included on the patient´s ID card.

Agency Response: The department declines to make this change. In order for an insurer to properly process claims, certain information may be required, such as information regarding the subscriber. While a group number, as referenced in §21.2803(b)(2)(KK), is not likely known to a patient, the patient´s relationship to the subscriber should be readily available to the patient.

Comment: Many commenters support adding a data element that would identify whether verification had been obtained for a service. Field 23, Prior Authorization Number, was suggested for the CMS 1500, field 63 for the UB 92, and the corresponding field on the HIPAA 837 transaction format. One commenter says that a verification number is critical to ensure that a verified claim is not wrongfully denied, and will make it easier to comply with the rules´ reporting requirements. Other commenters request that this element not be required as it involves costly additional programming and there are no analogous elements on the 837 form used in the HIPAA administrative simplification guidelines.

Agency Response: The department agrees with the first group of commenters and has added new §21.2803(b)(1)(Y), verification number (CMS 1500, field 23), and §21.2803(b)(2)(LL) (UB-92, field 63), which 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 or treatment authorization codes are required, respectively, when prior authorization is required and granted. Use of the verification number may reduce administrative costs by providing carriers with relevant information without the need for a manual review of files to determine which procedures have been verified. The department is aware of data elements on the 837P and 837I forms that may be used to convey this information for HIPAA electronic claims. Carriers and providers may use trading partner agreements to enable the use of verification numbers in electronic claims in a manner allowed by CMS regulations.

§21.2803(b)(2)(RR)

Comment: The reference to (II) should be (QQ).

Agency Response: The department agrees and has made this change.

§21.2803(c) and (e)

Comment: A commenter requests clarification that the coordination of benefits rules apply even when the provider files a claim with only one plan.

Agency Response: The department agrees that provisions in the rules relating to coordination of benefits apply even if the provider files a claim with only one plan. If a carrier is certain that it is the secondary carrier on a claim, it may give notice to the provider that the claim is deficient due to the lack of primary carrier payment information as required by §21.2808.

Comment: A commenter feels it would be helpful in meeting the 95-day claims filing deadline if claims subject to coordination of benefits could be filed with all carriers at once, or if the filing deadline were extended for the secondary claims.

Agency Response: This issue is already addressed in §21.2806(a), which provides that the 95-day claims filing deadline does not begin until the provider has received the primary carrier´s claims payment determination.

Comment: A commenter states that there is no consequence for a provider´s failure to maintain updated information about other health benefit coverage. The commenter suggests amending the clean claim element requirements to state that a physician cannot be required to investigate coordination of benefits (COB), with the exception of obtaining and maintaining updated information concerning a patient´s other coverage. The commenter also states that the rule should require maintaining of information on automobile coverage for consistency with the Texas COB regulations.

Agency Response: The department acknowledges that there is no consequence in the statute or rule for a provider´s failure to maintain updated information about other coverage, although the duty to maintain this information is required by statute; however the department encourages physicians and providers to keep this information to expedite and streamline claims payment. The department declines to require the maintenance of information on automobile coverage as this information, if needed, may be ascertained by carriers through inquiries to enrollees who have claims involving automobile losses. 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.

§21.2803(c)

Comment: A commenter states that the proposed subsection requires the provider to submit the amount paid by the primary carrier to the secondary carrier only if an amount has been paid by the physician or provider. However, it is customary for many providers to submit claims to all known carriers simultaneously. Under that scenario, the provider has not yet received any payment from the primary carrier and, under the proposed rules, is therefore not obligated to provide that information to the secondary carrier as a clean claim element. This leaves the secondary carrier with little choice but to knowingly overpay a claim or risk late payment penalties. For that reason, the statutory claims payment period should start for the secondary carrier upon receipt of the amount paid by the primary.

Agency Response: The rule provides that the amount paid by the primary carrier is a required element for submitting a clean claim to a secondary carrier. Because the statutory claim payment period does not start for the secondary carrier until it receives a clean claim, this issue should not affect secondary carriers in the manner anticipated by the commenter. Also, a provider´s claim filing timeframe does not begin until the provider receives notice of the claims determination from the primary payor.

Comment: Several commenters express concern about what a secondary payor is allowed to do if a physician or provider fails to provide other insurance information but the secondary payor has information from other sources indicating that there is other insurance. One commenter states that the department is limiting a health plan´s ability to go to any source for information other than the primary carrier. Another commenter states that subsection (c) does not allow for verification of other health insurance when a physician or provider fails to indicate on the claim that the patient has other insurance but the plan´s records suggest there is other coverage. The commenter recommends that plans be allowed to provide this information to the provider or physician, who would then be responsible for submitting the claim to the other carrier. One commenter suggests that the rule require the secondary payor to provide notification to the physician or provider that it is seeking additional information regarding other insurance and that the payment period be tolled until the secondary payor receives the information. The secondary payor would then pay the claim within 15 days of its receipt of this information. Another commenter seeks clarification that, under these circumstances, it may deny the provider´s claim and direct the provider to the other carrier.

Agency Response: The department disagrees that the rule limits carriers in this regard. If the treating physician or provider does not have information about other coverage, the carrier may request that information from third parties in compliance with §21.2805. If the information is not received prior to the end of the statutory claim payment period, the carrier may comply with the payment and notice requirements under the audit provisions of §21.2809 and continue to investigate the claim. If the carrier subsequently determines that an overpayment was made, it may recover the overpayment pursuant to §21.2818. In the second situation, if a carrier is certain that it is a secondary carrier but the claim does not indicate an amount paid by the primary carrier, the secondary carrier may deem the claim to be deficient and send the notice required by §21.2808. The amount paid by a primary payor is a required data element for a non-electronic clean claim.

§21.2803(e)

Comment: A commenter says that the benefits are a condition of a contract between a health plan and a covered entity, typically an employer, while SB 418 governs the relationship between a physician and a health plan. Therefore, the rule should replace "coordination of benefits" with the more accurate "coordination of payment," as specifically stated in SB 418.

Agency Response: The department disagrees that this is necessary. While SB 418 does use the term "coordination of payment," other provisions of the Insurance Code, as well as rules of the department, commonly use the term "coordination of benefits." The department believes that using two different terms for the same concept would cause confusion.

Comment: A commenter opines that while the rules say that the primary payor "may" submit primary payor information, the statute says this process is to be mandatory. The commenter believes "may" should be changed to "shall."

Agency Response: Because the word "may" is statutory language, the department declines to change the rule.

Comment: A commenter recommends the addition of an indicator to the secondary carrier that the primary carrier received the claim but the claim was denied or not paid due to issues such as application of the plan deductible.

Agency Response: The department declines to make the requested change. The provider or physician may enter "0" (zero) into the appropriate field in the circumstance described.

§21.2804. Requests for Additional Information from Treating Preferred Provider

Comment: Commenters say the rule does not provide any guidance as to the carrier´s options if a provider fails to respond to a request for information. Commenters suggest that the carrier be able to deny the claim, the provider should forfeit the claim or, in the alternative, that the claim would pend indefinitely. Another commenter expresses concern about the absence of a timeframe for providers to respond to a request for additional information, saying that actuarial reserving requirements make it critical to maintain an accurate picture of outstanding claims. That commenter suggests that the rule say a carrier may deny a clean claim if no information is received within 60 days of the request.

Agency Response: Because the rule provides that the deadline for payment of the claim is suspended until the carrier receives either the requested information or a written response from the provider indicating that it does not possess the information, it provides an incentive for providers to comply with the carrier´s request. The department does not believe that any further provision is necessary at this time but will monitor this issue and consult with the TACCP.

Comment: One commenter said that some specialists prefer to send, for example, an operative report with a claim in anticipation that the payor would request it, and sought confirmation that this was not precluded by the rules, although routine requests for patient records for every claim should not be required.

Agency Response: The department clarifies that additional information, including additional attachments, do not render an otherwise clean claim deficient. The department has changed the language of the rule at §21.2803(g) to make this clear.

§21.2805(a)

Comment: A commenter believes that furnishing the names of other providers from whom a carrier is requesting additional information will require a carrier to violate HIPAA privacy laws.

Agency Response: The department appreciates the commenter's concern for privacy issues. It has determined, however, that this requirement does not present a conflict with federal privacy laws. In many instances, the physician filing the claim will have provided the name of the other physician to the carrier, so there will be no disclosure. Even where a disclosure might occur, the disclosure is a part of a carrier's health care operations, as well as an act necessary to receive payment, both of which are excepted from the authorization requirement.

§21.2806

Comment: A commenter wants to know whether the 95-day filing deadline supercedes the filing deadline in existing contracts.

Agency Response: If the contract is one which is subject to the provisions of SB 418 and rules adopted thereunder, it must not contain provisions that are contrary to the statutory or regulatory requirements. While the 95-day filing deadline may be extended by contract, the contract may not shorten the filing deadline.

§21.2806(a)

Comment: A commenter requested that the last sentence of this subsection be moved to directly after the first sentence to clarify that the sentence applies to all claims and not just those subject to coordination of benefits issues.

Agency Response: The department agrees and has moved the sentence for clarity.

Comment: A commenter states that because many physicians that provide services in an inpatient setting do not submit claims until the institutional provider has discharged the patient, the provision stating that the 95-day period does not begin until the date of discharge should be extended to those physicians. Another commenter contends that there is no reason why use of the date of discharge to start the 95-day period should extend to physicians who, the commenter says, get admissions downloads on a daily basis and have ample time to submit claims for services rendered on any particular day. Another commenter requests that all providers be given the option of the later of the date of service, the date of discharge, or the receipt of all information necessary to submit a claim.

Agency Response: All services that are included on a claim submitted by a facility are subject to discharge as the start of the 95-day claim filing period because they are part of a continuous single episode of care. Conversely, services provided by a physician or other health care providers during a patient´s hospital stay, e.g., hospital visits by a physician may be billed to the carrier at any point during that stay, and are discrete services. Therefore, only facilities are subject to the discharge provision. The department declines to give the option of starting the 95-day filing period on the date of service, discharge or receipt of all necessary information to submit a claim, as carriers would not know which standard is being used or when all necessary information was accumulated for determining if a claim was timely filed. The department will continue to monitor and consult with the TACCP regarding this issue.

§21.2806(b)

Comment: A commenter states that this section should address whether a non-contracted provider who submits a claim late and thus forfeits the right to payment under these rules is prohibited from billing the enrollee or insured for the services. The commenter also suggests clarifying that the hold-harmless provisions of Art. 3.70-3C, §843.361 and department rules continue to apply to contracted providers.

Agency Response: SB 418 says that if a physician or provider fails to submit a claim in compliance with the statutory provisions concerning claims submission deadlines, the physician or provider forfeits the right to payment, except where the failure is the result of a catastrophic event. This provision does not affect other provisions of the Insurance Code including §843.361 and Art. 3.70-3C. Accordingly, the department does not believe that the rule requires amendment.

§21.2806(c)

Comment: A commenter believes that this subsection appears to conflict with §21.2816, which allows a carrier to determine the use of facsimile.

Agency Response: The department agrees and has changed §21.2806(c) to make the submission of claims by facsimile contingent upon the carrier´s acceptance of claims submitted by facsimile.

Comment: A commenter seeks clarification of a carrier´s ability to require that providers submit claims electronically.

Agency Response: Pursuant to the changes in law made by SB 418, a carrier may require electronic submission of claims. However, SB 418 also requires that a carrier make available the opportunity for a provider to request a waiver of an electronic claims submission requirement. SB 418 requires the commissioner to establish circumstances under which a waiver is required. Rules implementing Section 2A of SB 418, relating to waivers, will be proposed in the future.

Comment: A commenter says that overnight delivery and hand delivery should include a claims log. Another commenter requests that the department add language clarifying that claims must be sent to a designated address or fax number. One commenter requested that the department clarify that a carrier´s requirement that a provider send claims to a repricer or clearinghouse must be met in order to subject a carrier to penalties.

Agency Response: Although use of a claims log, as provided by §21.2816, is voluntary, that provision makes clear that it can be used for all forms of transmission, including overnight and hand delivery. Section 21.2807 already clarifies that the statutory claim payment period begins upon receipt of a clean claim at the designated location noticed by the carrier pursuant to the requirements of §21.2811 (relating to Disclosure of Processing Procedures).

§21.2806(e)

Comment: A commenter appreciates the provisions of subsection (e) and seeks clarification that, although a duplicate claim would not be subject to the provisions of §§21.2807 and 21.2815, the original claim would be subject to those provisions.

Agency Response: The department agrees that the original claim is subject to §§21.2807 and 21.2815.

Comment: Some commenters say that the rule´s lack of a consequence for a provider who submits a duplicate claim renders the rule without meaning or effect, and suggest that a penalty be provided. One commenter suggests that filing of a duplicate claim should render the original claim null and void and not subject to SB 418, and that a carrier´s obligation under that Act would only be as to the last-filed claim when a duplicate is filed. One commenter recommends that carriers include penalty language in their contracts for providers who file duplicate claims. The carrier supports the existence of a cap on such penalties of 10% of the billed charge on the duplicate claim.

Agency Response: The department does not have authority to subject physicians or providers to penalties. The department agrees with the commenter that carriers and providers may choose to address, in the provider contracts, contractual remedies for filing duplicate claims within the statutory claims payment period. The department declines to change the rule so as to render an original claim void upon the filing of a duplicate claim.

§21.2807

Comment: A commenter requests that the department include a requirement that if a carrier denies a claim due to termination of the patient´s coverage, the carrier must furnish the provider with the date of termination.

Agency Response: SB 418 requires that the carrier provide the reason a claim will not be paid. It does not require that the carrier furnish the termination date of coverage. Therefore, the department declines to make the change. The department notes, however, that a provider may request this information from the carrier or may obtain the information in the appeal process.

§21.2807(c)

Comment: A commenter seeks clarification regarding when affirmative adjudication of a pharmacy claim occurs. The commenter notes that pharmacy claims are high volume, low dollar claims that have traditionally been combined in a single payment at the end of a processing cycle that is normally 14 days. While pharmacists submit claims throughout the cycle, the claims are accumulated and sent to the payor after the end of the 14 days. Because processing time takes approximately another 11 days, the claims that are already 10 to 14 days old at the end of the cycle would be paid more than 21 days later. The commenter seeks a definition of "affirmative adjudication" that would essentially provide that the 21 days would begin to run at the end of the two week cycle.

Agency Response: The department declines to make the requested change. Although many carriers and pharmacy benefits managers may use the process described by the commenter, there is nothing in the statute to suggest that affirmative adjudication takes place upon a carrier´s act of accumulating a set of claims and then processing the accumulated claims. The commenter´s described timeline would result in the 21-day period set forth in the statute becoming a 35-day period. Furthermore, there is no affirmative act that takes place upon the accumulation of claims for processing that meets the statutory language of "affirmative adjudication." Instead, the affirmative electronic reply that is sent to a pharmacy provider is clearly the act contemplated by the statutory language that marks the beginning of the statutory claims payment period.

§21.2809 Audits

Comment: A commenter requests limiting the audit period to 95 days.

Agency Response: The statutory language indicates that the audit period is 180 days. The department declines to change the rule.

§21.2809 ­ Audit Procedures and §21.2818 ­ Overpayment of Claims

Comment: Commenters note that there is no timeframe for physicians and providers to refund overpayments after appeal or notice and recommend a 30-day timeframe.

Agency Response: The department declines to include such a provision, as SB 418 does not indicate that such a timeframe should apply. The parties may, however, choose to contract to require a provider to refund an overpayment within a specified period and/or place a deadline on the carrier seeking to recover an overpayment. The department notes that it would be good business practice for both carriers and providers if refunds of overpayments were provided as quickly as possible.

§21.2809(a)

Comment: A commenter recommends striking "to determine whether the claim is payable," since there may be occasions where the carrier determines that the claim is payable but needs to conduct an audit to determine if the amount billed for the service was actually provided to the patient.

Agency Response: The language referenced in the comment encompasses all issues affecting payment of a claim, including billing issues and the amount of payment to be made on an individual claim. Therefore, the department declines to make the suggested change.

Comment: A commenter suggests that the reference in this subsection to 21.2815(c) should actually be 21.2815(d).

Agency Response: The department agrees and has made the necessary change; however, the reference is now to §21.2815(e).

§21.2809(b)

Comment: A commenter inquires whether the last sentence of the subsection may be construed to allow carriers to use means other than a remittance and status report to identify audited claims.

Agency Response: The rule provides that a carrier must "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." Thus, the rule does not require any specific format for the information that is communicated to a provider regarding the outcomes of claims. The department expects, however, that whatever method is used will result in a clear indication to providers that the claim is being audited.

§21.2809(f)

Comment: A commenter requests clarification regarding a potential conflict between the language in this section that indicates that an audit payment is not an admission or acknowledgement of liability on a claim and the guarantee of payment that a verification represents. The commenter suggests that the language in the audit provisions may make the verification guarantee meaningless.

Agency Response: Although an audit payment is not an admission of liability on a claim, any previous guarantee of payment given in the verification process may not be undone by making an audit payment. Claims for services that have been verified may be audited, but such a claim is still subject to the requirements of the verification rules at §19.1724 and may be denied or reduced only in accordance with the provisions of those rules.

§21.2811 ­ Disclosure of Processing Procedures

Comment: A commenter requests that language be included allowing the carrier to provide the processing procedure information electronically or via the Internet.

Agency Response: The rule allows carriers to provide the information in its contract with the preferred provider, in the physician or provider manual or other document that sets forth the procedure for filing claims, or by any other method agreed to by the parties. The department declines to change the rule.

§21.2815 ­ General

Comment: A commenter says it added contractual penalty language to many of its contracts when HB 610, the predecessor to SB 418, was adopted. The commenter asks whether these provisions eliminate these contractual penalties for late paid claims, or whether they must pay the penalty according to the new graduated penalty requirements.

Agency Response: SB 418 eliminated the ability of parties to contract for penalties. However, if the contracts with contractual penalties were entered into before August 16, 2003 , they remain in effect and subject to the prior law until they are renewed after that date.

Comment: A commenter believes that the patient´s copayments, deductibles, etc., should be deducted from billed charges for the purpose of calculating penalties in order to avoid a penalty windfall for physicians and providers.

Agency Response: The department disagrees. The language in the statute and in the rule refers to "billed charges as submitted on a claim." Copayments, deductibles, and coinsurance amounts are not reflected in billed charges as submitted on a claim and, therefore, should not be deducted in calculating the penalty.

§21.2815(a)(1)

Comment: A commenter requests that the department emphasize the new statutory claims payment period for electronic claims by specifically identifying that category of claims in this section.

Agency Response: The department believes the change is unnecessary as the statutory claims payment periods and the types of claims to which they apply have already been defined and clarified in other sections of the rule.

§§21.2815(a)(1)(A), 21.2815(a)(2)(A) and 21.2815(c)

Comment: A commenter requested that "as submitted on the claim" be inserted after "billed charges."

Agency Response: The change in the definition of "billed charges" accomplishes the purpose of the commenter´s request without making this change.

§21.2815(a)(3)

Comment: A commenter requested that the department include an example of the calculation of the penalties under this section. The commenter further requested that the example indicate that the 18% penalty should be applied to the base amount of the claim as well as the penalty amount in paragraph (2) of the subsection.

Agency Response: The department agrees that an example is helpful and has included an example in the rule. The example clarifies that the 18% applies only to the penalty amount in paragraph (2) of the subsection.

§21.2815(d)(2)

Comment: A commenter suggests that by giving a provider such a long time, 180 days, to notify the carrier of an underpayment, the provider has an incentive to gain increased penalties. If a provider fails to notify the carrier before the 45 th day, the increased penalty of 100% of the underpaid amount will automatically apply. A commenter suggests that the period during which the provider fails to advise of an underpayment be tolled for purposes of calculating a penalty.

Agency Response: The department declines to make a change as the language in the rule tracks the language of the statute.

§21.2815(f)

Comment: A commenter says the rule's language requiring an explanation for the amount of billed charges compared to the amount submitted conflicts with Art. 3.70-3C §3I(j), which requires an explanation and refers to the contracted rate and amount paid as a penalty with no comparison required.

Agency Response: The rule regarding explanation of payment has been changed to delete the phrase "compared to the amount."

Comment: A commenter states that adding fields concerning the contracted amount, the billed charge amount, and the penalty amount conflicts with federal standards for electronic transactions, and asks for clarification as to this subsection's applicability to electronic claims. Another commenter notes that including Texas-specific requirements on evidences of payment will be administratively expensive and burdensome.

Agency Response: The department disagrees that requiring this information conflicts with federal law. The rule does not require that an explanation of payment take any particular form or that any particular "fields" contain the required information. If the HIPAA format does not accommodate the provision of this information, it may be provided separately. The rule´s requirements related to the evidence of payment are specifically related to the statutory requirements in SB 418.

Comment: A commenter inquires regarding whether a provider that fails to notify a carrier of an underpayment within 180 days may still expect payment in full for the claim.

Agency Response: The department agrees that in such circumstances, the provider would be entitled to payment for services rendered. The provider would not be entitled to penalties if the carrier pays the contracted rate within 45 days of receipt of the notice of underpayment.

§21.2816

Comment: Commenters commend the department for making use of a mail log voluntary. Because the commenters believe that faxing or electronically transmitting a copy of the mail log to the carrier in addition to the copy included with the communication is redundant, they recommend deletion of this portion of subsection (h). Some commenters ask that the department and health plans recognize alternative documents that contain the same information contained in a log; for example, if a physician´s office has all the elements needed for the mail log on its practice management software, a printed copy of this information should be accepted as proof of submission and to establish date of receipt. A commenter expresses concern that the department will not enforce payment deadlines unless a labor-intensive log is maintained.

Agency Response: Because the mail log provisions were originally included in the prompt pay rules in response to physicians´ complaints about carriers alleging that claims were lost in transit, the rule contemplated use of a separate mail log in order to confirm that the claims were sent. Because this adopted rule, as the commenter notes, makes the mail log strictly voluntary, parties are free to agree to alternative means by which to establish presumptive receipt of a nonelectronic claim, including the means suggested by the commenter. The department is not requiring a mail log, per se, as a condition precedent to enforcement of these rules. However, the department strongly encourages parties to make use of the mail log or agree to use a similarly reliable system for evidencing receipt of claims and other communications. Failure to do so may hinder the department´s enforcement efforts.

Comment: A commenter requests that overnight and hand delivery include a log of claims in the transmission so that proof of claims can be verified.

Agency Response: The department has changed §21.2816(h) to allow for a mail log to be used for overnight and hand-delivered claims.

§21.2817

Comment: A commenter suggests that "and court costs" should be added to the sentence to reflect a change in the statutory language. Another commenter suggests that "and contracts between physicians and preferred providers" be added to the first sentence. Another commenter requests that the department add the term "impermissibly" to qualify the type of contractual extensions of timeframes that is not allowed.

Agency Response: The department agrees with the first request and the change has been made. The department declines to make the second and third recommended changes as the language is clear.

§21.2818. Overpayment of Claims

Comment: A commenter contends the rules will have a negative impact on fraud prevention, as they do not relieve a carrier from paying 100% of a claim even when fraud is suspected and do not provide for recoupment past 180 days. The commenter recommends that the rule reference antifraud laws and reference carriers´ ability to obtain full refund of payment in the event the claim is illegal or fraudulent.

Agency Response: The department agrees and has added language in §21.2818(f) (relating to Overpayments), saying that this subsection does not affect a carrier´s ability to recover an overpayment in the case of fraud or material misrepresentation.

Comment: A commenter recommends that recoupment not be allowed at all or should be limited to 95 days after payment and for valid reasons only.

Agency Response: The overpayment provisions in the statute and the rule allow for recoupment and the department declines to make the change. With respect to valid reasons for recoupment, the department notes that providers are given the opportunity to appeal overpayment notices. Providers that are subjected to improper recoupment or other overpayment recoveries should contact the department through the complaint process.

Comment: Commenters state that the rule should place an affirmative duty on the physician or provider to refund overpayments or, alternatively, that the physician or provider be required to notify the health plan of an overpayment.

Agency Response: The department believes the rule is consistent with SB 418, which only addresses procedures by which an insurer may recover an overpayment. The parties could choose to agree by contract to requirements for the provision of a refund of an overpayment. However, because SB 418 does not require that providers notify carriers of overpayments, the department does not believe that the parties may contract to require notification of an overpayment. The department believes, however, that it would be good business practice and that it would help stabilize the costs of health care if the parties communicate and cooperate with each other in the refund process.

Comment: A commenter suggests that the rule require that physicians and providers refund overpayments 30 days after appeal or notice by the carrier.

Agency Response: The department declines to include such a provision, as SB 418 does not indicate that such a timeframe should apply. Of course, parties may choose to include in their contracts provisions relating to this issue.

§21.2818(a)(1)

Comment: A commenter recommended that the 180-day period for notice of intent to recover an overpayment begin on the date printed on the explanation of payment provided by the carrier so that the overpayment deadline is subject to a clear starting date.

Agency Response: The rule states that the 180-day notice period begins on the date the provider receives the overpayment. Section 21.1816 of the rule specifies the method for determining the date of receipt. Given that the date of receipt is a clearly ascertainable date, the department declines to make the change.

§21.2819

Comment: A commenter asks whether the filing of a certificate means that it is automatically approved. If it is not automatically approved, the commenter requests that the provider or carrier that filed the certificate be given a specified period of time to appeal. The commenter also asks what obligations the entity that experiences a catastrophic event has to notify the parties who will be affected by the event and/or how those parties will know that the event was approved and that the rule´s timeframes have been temporarily tolled.

Agency Response: Sworn affidavits establishing a catastrophic event must be filed with the department. The filing is not subject to department approval. The department encourages carriers and providers to use any reasonable method to inform each other about catastrophic events, including written notice, voice mail message systems, e-mails or faxes as well as information posted on a website. The department will post information it receives regarding catastrophic events at www.tdi.state.tx.us.

§21.2819(b)(1)(B)

Comment: A commenter suggests that the sworn affidavit be from a corporate officer or the officer´s designee.

Agency Response: The department agrees, and has made this change.

§21.2821. Reporting Requirements

Comment: Commenters recommend that information related to the verification process should be submitted quarterly, at least in the first year after the rules become effective, because annual reporting of this information will not allow the department or the TACCP to closely track and evaluate the initial implementation as timely as is required.

Agency Response: The department disagrees. Because the verification process under SB 418 is a new one for carriers, and one that will require systems, personnel and procedural changes, the department believes that it would be less onerous, at least initially, to require that the information be reported annually. The department believes that issues concerning implementation will be brought to its attention throughout the next year, both from inquiries and complaints and through discussions with the TACCP.

§21.2821(a)-(e)

Comment: Some commenters stated that the department has never required monthly reports to determine compliance with the clean claim rules. This requirement would create a burden on health plans and would increase the cost of doing business and thus the cost of insurance. Currently, health plans are still grappling with implementation of federal HIPAA requirements by October 16, 2003 . The commenters urge that the reporting requirements be eliminated or, in the alternative, that the date for collecting data be delayed at least until January 1, 2004 , and that the reporting of declinations and verifications be limited to numbers of each until the deferred effective date. They also suggest that the extent of the reporting be reduced to eliminate redundancy with traditional audit functions and that the frequency of reporting be reduced in order to keep costs lower.

Agency Response: The majority of the rule´s reporting requirements duplicate those that the department has required of approximately 50 carriers, on a quarterly basis, for approximately the past two and one-half years. Accordingly, although the first report covers the period from September-December of 2003, this is largely data those carriers have been collecting for some time. In addition, the first of the reports required by the rule is not due until February 15, 2004 . As noted above, the rule allows collection and reporting of data on the new verification process to be done annually, with the first report not due until July 31, 2004 . Therefore, the department declines to limit the reporting requirements. While, depending upon an entity´s own internal auditing procedures, the reporting requirements may result in some redundancy, the department´s intent was to gather the information as efficiently as possible to enable the department to report to the legislature as required by SB 418.

§21.2821(c)

Comment: A commenter recommends that, to avoid double reporting, the first report required under the rules not include September 2003 but be limited to the fourth quarter of 2003.

Agency Response: The department is very cognizant of the administrative costs of reporting and will endeavor not to require double reporting. However, because certain provisions of SB 418 became effective August 16, 2003 , it is essential that the department receive information as soon as possible.

Comment: A commenter requests that the rule contain the requirement to report the number of duplicate claims received. Because the rule prohibits the submission of duplicate claims during the initial filing period yet appears to impose no penalties for non-compliance, the commenter says this information will allow the department to monitor this practice for consideration of possible penalties for chronic duplicate filers.

Agency Response: The department declines to make the change. Carriers may gather this information without a regulatory requirement to do so and to submit the information for the department´s review. The department notes, however, that SB 418 did not give it authority to impose penalties upon providers for noncompliance with its requirements.

§21.2821(d)(2)

Comment: A commenter recommends adding "preferred" to the term "institutional provider" for clarification.

Agency Response: The department agrees and the change has been made.

§21.2821(e)

Comment: A commenter reports that carriers will be unable to track declinations that result in claims that are paid or denied in their system without indicators on the claim form.

Agency Response: The department agrees and has made the necessary change.

Comment: A commenter requests that the information described in the subsection be collected quarterly rather than annually. Another commenter noted that certain high-volume claim periods may result in a carrier´s non-compliance with the two percent penalty threshold.

Agency Response: Due to the timeframes involved in the process of verification, delivery of services and claims processing and payment, the department declines to change the timeframes.

§21.2821(e)(1)(A)

Comment: A commenter recommends not only tracking this reason for declination ("premium payment timeframes that prevent verifying eligibility for 30-day period"), but also limiting its use by carriers.

Agency Response: The department declines to make this change, but intends to monitor its use through the reporting requirements.

§21.2821(e)(1)(D)

Comment: A commenter requests expansion of this category of declination reporting to include all issues relating to eligibility.

Agency Response: The department declines to make the change because the listed categories cover the vast majority of potential reasons for declination. Carriers are free to categorize and maintain data on any declinations that occur for reasons other than those listed. An additional category, "other," has been added as §21.2821(e)(1)(F).

§21.2822

Comment: A commenter requested clarification regarding how the department intends to use the information collected pursuant to §21.2821 for calculation of a compliance percentage. Another commenter requests that the language read that a carrier "may" be subject to an administrative penalty rather than "is" subject to an administrative penalty.

Agency Response: As the statute indicates, the department intends to calculate the compliance percentage by evaluating the claims that were paid or denied within the statutory claims payment period in relation to the total number of clean claims received. Neither the claims paid or denied nor the clean claims received will include claims that were audited by the carrier. With regard to the requested change, the department notes that the word "is" should be read in context. The sentence makes clear that a carrier "is subject to" a penalty; it does not mean that a carrier will necessarily be penalized. Because the department does not believe that the word "may" clarifies the meaning of the sentence, the department declines to make the requested change.

§21.2824

Comment: Some commenters sought clear direction regarding the effective date of the new statute and rules, specifically with regard to a carrier that contracts with a network and not directly with providers. Commenters also suggest a uniform effective date for dates of service on or after the uniform date, such as January 1, 2004 . Some commenters request that the department force carriers to renew provider contracts, thereby requiring universal applicability of the statute and the rules. A commenter expresses disappointment that the rules do not apply to all contracts. Other commenters request an implementation period during which the rules would not be applicable. One commenter stated that the proposed September 4 th applicability date for the rules did not allow sufficient time for drafting and filing revised contracts with the department or for the contracting process. Another commenter said it would be operationally difficult to keep up with which agreements fell under SB 418 and which did not. One commenter urged an early, rather than later, effective date.

Agency Response: SB 418 applies to contracts between a carrier and a physician or provider that were entered into or renewed on and after the 60 th day after the effective date of the law, or August 16, 2003 . It also applies to certain medical and health care services, not provided under contract, rendered on and after that date. The proposed rule contained an estimated applicability date of September 4, 2003 . However, the department adopted emergency rules to implement SB 418, which became effective August 16, 2003 . The emergency rules will continue in force until the rules that are the subject of this order are finally adopted and effective. The date the carrier contracts with a network or other intermediary is the key date for purposes of determining applicability of SB 418 and rules adopted thereunder. Entities that find it operationally difficult to keep up with which requirements apply to which contracts may opt to renew, entirely or on a limited basis, contracts under these adopted rules.

Comment: A commenter expresses concern that carriers will delay the effective date by refusing to renew provider contracts. The commenter also requests clarification whether the rules apply to all provisions in a contract.

Agency Response: SB 418 establishes what contracts are subject to the Act and when. Once a contract is entered into or renewed on or after the effective date of the statute and rules, the contract must conform to the provisions of SB 418 and these rules.

Comment : A commenter notes that the rules contain an applicability date for provider contracts but not for the benefit plans. The commenter suggests that the rule provide an effective date that applies to contracts entered into or renewed between an HMO and preferred provider carrier and an employer or individual subscriber on or after January 1, 2004 .

Agency Response: As noted in a previous comment, SB 418 establishes what contracts are subject to the Act and when. It does not reference insurance or HMO contracts with employers or individuals as determinants of effective dates.

Comment: A commenter asks the department to clarify that upon renewal or issuance of a new contract, the provisions of the rule apply to services provided on or after the renewal date or inpatient services beginning on or after the renewal date.

Agency Response: The department agrees and clarifies that upon renewal or issuance of a new contract after the effective date of these rules, the provisions of these rules apply to claims for dates of service or inpatient services beginning on or after the date the contract was renewed or issued.

Comment: A commenter requests that the rule clearly reflects that the requirements only apply to claims under preferred provider benefit plans regulated under Texas Insurance Code Art. 3.70-3C or an HMO regulated under Texas Insurance Code chapter 843 and Art. 20A. The commenter also requests that the rule delineate that the provisions do not apply to noncontracted physicians or providers not subject to the mentioned provisions of the code except in those limited circumstances set forth in SB 418.

Agency Response: The department does not believe that any clarification is necessary as the rule and its provisions clearly identify the entities to which they apply and do not apply. SB 418 amended Art. 3.70-3C and Chapter 843, Insurance Code, and clarifies that the requirements apply only to claims filed under preferred provider benefit plans or HMO plans.

For, with changes: Advance PCS, Advanced Reproductive Care Center of Irving, Aetna, American National Insurance Company, Andrews & Kurth, Arlington Family Practice, P.A., Austin Anesthesiology Group, Austin Cardiovascular Associates, Austin Gastroenterology, Baylor College of Medicine & Neurosurgical Group of Texas, Baylor Family Health Center at Richardson, Baylor Family Practice Residency at Garland, Beach Clinic, Bent Tree Family Physicians, Blue Cross and Blue Shield of Texas, Cardiothoracic and Vascular Surgeons, Carter, Bakos, Hays, Martin, Center for Orthopaedic Specialties, CIGNA Healthcare of Texas, Inc., Clinics of North Texas, L.L.P., Coastal Surgical Group, L.C., Colon and Rectal Clinic, P.A., Columbus Medical Clinic, Community First Health Plans, Community Medicine Associates, Dallas County Medical Society, Dallas Family Doctors, Dallas Kidney Specialists, P.A., Dallas Radiologists, Dallas Urology Associates, L.L.P., Dallas-Fort Worth Sarcoma Group, P.A., Endocrinology Associates of Houston, P.A., Family Medical Center at Garland, Family Medicine Associates of Texas, Fortis Insurance Company, Frostwood Medical Group, Golden Rule, Gulf Quest L.P., Harris County Hospital District, Harris County Medical Society, Hospital Corporation of America, Health Care Professionals for Fair Business Practices, Health Central Women´s Care, Health Group Management, Health Insurance Association of America, HealthCore Physicians Group, HealthSouth Corporation, Highland Village Primary Care, P.A., Houston Eye Associates, Humana, Infectious Care, Institute for Women´s Health, Jefferson Physician Group, Jenkins Medical Associates, Kelsey-Seybold Clinic, KSF Orthopaedic Center, P.A., Magellan Behavioral Health, Medco Health, Medical Clinic of North Texas, P.A., Medicine Associates of North Texas ­ Forest Location, Medicine Associates of North Texas ­ Mid Cities Office, Medicine Associates of North Texas-East Dallas Office, Memorial Hermann Hospital, National Association of Dental Plans, N eurosurgical Group of Texas, North Texas Heart Center, Northwest Diagnostic Clinic, Oncology Consultants, P.A., Pacific Life, Pathology Reference Laboratory, Patient Physician Network Holding Company, Pinnacle Pain Management, San Antonio Orthopaedic Group, Skinner Clinic, Sleep Medicine Associates of Texas, South Texas Radiology Group, Southwest Pain Management, Southwest Physician Associates, Texas Association of Business, Texas Association of Health Plans, Texas Association of Life and Health Insurers, Texas Dental Association, Texas Digestive Disease Consultants, Inc., Texas Ear, Nose & Throat Specialists, L.L.P., Texas Eye Institute, Texas Fertility, P.A., Texas Health Resources, Texas Hospital Association, Texas Medical Association, Texas Medical Group Management Association, Texas Oncology, P.A., Texas Primary Care Coalition, Texas Society of Anesthesiologists, Texoma Independent Physicians, The Diaz Clinic, The Health Group, The Institute for Rehabilitation and Research Systems (TIRR Systems), The University of Texas Medical Branch, The Woman´s Group, Triad Hospitals, UICI, Unicare, United Concordia, United Healthcare, University Care Plus, University of Texas Southwestern Medical Center at Dallas, UT Houston, UT Houston ­ Pediatrics, West Plano Family Medicine, Wichita Falls Family Practice Residency Program, Women Partners in OB/GYN, 39 individual physicians, seven members of the Texas House of Representatives, and two other individuals in the medical field.

The sections are adopted under the Texas Insurance Code Article 3.70-3C and §§36.001, 843.336, 843.337, 843.338, 843.3385, 843.339, 843.340, 843.3405, and 843.341-843.353. Article 3.70-3C, and the referenced sections in Chapter 843, provide a mechanism for the prompt and efficient resolution of claims by preferred provider carriers and HMOs, respectively, and provide that the commissioner may adopt rules to implement these provisions as they relate to the prompt payment of claims. Section 36.001 of the Insurance Code provides that the Commissioner of Insurance may adopt any rules as 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.

7. TEXT.

§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 §311.0025, Texas Occupations Code §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 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 health care 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, or claims submitted by a physician or provider at the request of the HMO or preferred provider carrier.

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

(13) HMO delivery network--As defined by Insurance Code §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 §843.002(22), who is a member of that HMO's delivery network; or

(ii) a provider, as defined by Insurance Code §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--any 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 §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, if shown on the patient´s ID card;

(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)(Q) 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)(Q) 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)(Q) 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)(Q) 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)(Q) 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 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 and granted;

(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 elements 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 corrected claim;

(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 admissions, observation stays, and emergency room care;

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

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

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

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

(T) patient-status-at-discharge code (UB-92, field 22) is required for 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 if shown on the patient´s ID card;

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

(LL) verification number (UB-92, field 63), is 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 and granted;

(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 applicable format that complies with all applicable federal laws related to electronic health care 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 health care 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 or with 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. The time period to request additional information may be extended as allowed by §21.2819(c) of this title (relating to Catastrophic Event). 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) of this section.

(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 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(28)(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(28) 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 periods allowed for by §21.2804(c) of this title (relating to Requests for Additional Information) or §21.2819(c) of this title (relating to Catastrophic Event), 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(e)(2) 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 §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 mailing 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 §21.2819 of this title (relating to Catastrophic Event); 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 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´s fees and court costs pursuant to Insurance Code Article 3.70-3C §3A(n) and §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 §§21.2804 of this title (relating to Request for Additional Information from Treating Provider), 21.2806 (relating to Claims Filing Deadline), 21.2807 (relating to Effect of Filing a Clean Claim), 21.2808 (relating to Effect of Filing a Deficient Claim), 21.2809 (relating to Audit Procedures), and 21.2815 of this title (relating to Failure to Meet the Statutory Claims Payment Period), 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, 21.2807, 21.2808, 21.2809, and 21.2815 of this title for the number of days identified in subsection (b)(3) of this section as of the date of the catastrophic event.

§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, at a minimum, 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;

(E) pre-existing condition limitations; and

(F) other;

(2) 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, Reporting Requirements, Administrative Penalties, Applicability to Certain Non-Contracting Physicians and Providers, Applicability, and Severability) apply to services provided, or inpatient services beginning, pursuant to contracts entered into or renewed between an HMO or preferred provider carrier and a preferred provider on or after October 5, 2003 and to services provided or hospital confinements beginning on or after October 5, 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.



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