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You are here: Home . rules . 2005 . 1229G-059

SUBCHAPTER J. Physician and Provider Contracts and Arrangements

28 TAC §11.901

1. INTRODUCTION. The Commissioner of Insurance adopts an amendment to §11.901, concerning health maintenance organization (HMO) contracting arrangements with participating physicians and providers. The amendment is adopted without changes to the proposed text published in the August 5, 2005, issue of the Texas Register (30 TexReg 4438).

2. REASONED JUSTIFICATION. This amendment is necessary to implement Senate Bill (SB) 50 enacted by the 79th Legislature, Regular Session. Consistent with SB 50, the amendment to §11.901 requires that, upon request from a participating physician or provider, an HMO shall include a provision in the physician's or provider's contract providing that the HMO or the HMO's clearinghouse may not deny or refuse to process an electronic clean claim because the claim is submitted together with or in a batch submission of claims that contains claims that are deficient.

3. HOW THE SECTION WILL FUNCTION. The amendment includes the contracting requirement enacted in SB 50 and adds further language to define the term "batch submission." The definition clarifies that the reference to a batch submission is a reference to existing federally standardized transactions and provides that a batch submission is a group of electronic claims which are submitted for processing at the same time within a HIPAA standard ASC X12N 837 Transaction Set and identified by a batch control number. It is important that HMOs avoid erroneously interpreting the language of SB 50 and the adopted amendment. The language of the statute and the adopted amendment apply to clean claims submitted in a batch submission with a claim that is deficient but also to clean claims submitted "together with" claims that are deficient, regardless of whether those claims are in a batch submission. The contract requirement in SB 50 and the adopted amendment applies to more than just those claims submitted in a batch submission and includes groups of claims that may or may not be properly classified as a batch submission for federally standardized transactions. Therefore, in applying the contract requirement, it is incorrect for HMOs simply to focus on whether claims that are submitted together are in a batch submission that meets the federal regulatory definition.

4. SUMMARY OF COMMENTS AND AGENCY'S RESPONSE TO COMMENTS.

Comment: Commenters agreed with the proposed language that describes the meaning of the term "batch submission."

Agency Response: The department appreciates the supportive comment.

Comment: Though the commenters supported the rule as proposed, one commenter requested that the rule be made applicable to contracts "amended" on or after January 1, 2006. The commenter based the request on language in the statute that states that the provider may request language in the contract providing that the insurer may not refuse to process or pay an electronically submitted clean claim because the claim is submitted together with or in a batch submission with a claim that is not a clean claim.

Agency Response: The department appreciates the supportive comments. Although the department understands the commenter's desire to affect the greatest number of contracts in the quickest time possible, SB 50 specifically provides that the changes in the law apply only to contracts "entered into or renewed" on or after January 1, 2006. The rule is consistent with SB 50, and it is the department's position that extending the rule to apply to contract amendments made prior to January 1, 2006 is not within the department's authority. To the extent that a contract amended after January 1, 2006 either includes the language contemplated in SB 50 or otherwise constitutes a renewal of the contract, SB 50 will apply to the contract.

5. NAMES OF THOSE COMMENTING FOR AND AGAINST THE SECTION.

For: Texas Medical Association.

For with changes: Texas Hospital Association.

Against: None.

6. STATUTORY AUTHORITY. The amendment is adopted under the Insurance Code §§843.151, 843.323 and 36.001. Section 843.151 authorizes the commissioner to adopt reasonable rules as necessary and proper to implement Insurance Code Title 6 Chapter 843. Section 843.323 provides that, if requested by a participating physician or provider, an HMO shall include a provision in the physician's or provider's contract providing that the HMO or the HMO's clearinghouse may not refuse to process or pay an electronically submitted clean claim because the claim is submitted together with or in a batch submission with a claim that is deficient. Section 36.001 provides that the Commissioner of Insurance may adopt any rules necessary and appropriate to implement the powers and duties of the Texas Department of Insurance under the Insurance Code and other laws of this state.

7. TEXT.

§11.901. Required Provisions.

(a) Physician and provider contracts and arrangements shall include provisions:

(1) regarding a hold harmless clause as described in Insurance Code §843.361:

(A) A hold harmless clause is a provision, as required by Insurance Code §843.361, in a physician or health care provider agreement that obligates the physician or provider to look only to the HMO and not its enrollees for payment for covered services (except as described in the evidence of coverage issued to the enrollee).

(B) In accordance with Insurance Code §843.002 relating to an "uncovered expense," if a physician or health care provider agreement contains a hold harmless clause, then the costs of the services will not be considered uncovered health care expenses in determining amounts of deposits necessary for insolvency protection under Insurance Code §843.405.

(C) The following language is an example of an approvable hold-harmless clause: (Physician/Provider) hereby agrees that in no event, including, but not limited to non-payment by the HMO, HMO insolvency, or breach of this agreement, shall (physician/provider) bill, charge, collect a deposit from, seek compensation, remuneration, or reimbursement from, or have any recourse against subscriber, enrollee, or persons other than HMO acting on their behalf for services provided pursuant to this agreement. This provision shall not prohibit collection of supplemental charges or copayments made in accordance with the terms of (applicable agreement) between HMO and subscriber/enrollee. (Physician/Provider) further agrees that:

(i) this provision shall survive the termination of this agreement regardless of the cause giving rise to termination and shall be construed to be for the benefit of the HMO subscriber/enrollee; and

(ii) this provision supersedes any oral or written contrary agreement now existing or hereafter entered into between (physician/provider) and subscriber, enrollee, or persons acting on their behalf. Any modification, addition, or deletion to the provisions of this clause shall be effective on a date no earlier than 15 days after the commissioner has received written notice of such proposed changes;

(2) regarding retaliation as described in Insurance Code §843.281;

(3) regarding continuity of treatment, if applicable, as described in Insurance Code §843.309 and §843.362;

(4) regarding written notification to enrollees receiving care from a physician or provider of the HMO's termination of that physician or provider in accordance with Insurance Code §843.308 and §843.309;

(5) regarding written notification of termination to a physician or provider in accordance with Insurance Code §843.306 and §843.307:

(A) the HMO must provide notice of termination by the HMO to the physician or provider at least 90 days prior to the effective date of the termination;

(B) not later than 30 days following receipt of the written notification of termination, a physician or provider may request a review by the HMO's advisory review panel;

(C) within 60 days following receipt of the provider's request for review, the advisory review panel must make its formal recommendation and the HMO must communicate its decision to the physician or provider;

(6) regarding posting of complaints notice in physician/provider offices as described in Insurance Code §843.283. A representative notice that complies with this requirement may be obtained from the HMO Division, Mail Code 103-6A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104;

(7) regarding indemnification of the HMO as described in Insurance Code §843.310;

(8) regarding prompt payment of claims as described in Insurance Code Article 20A.09Z and all applicable statutes and rules pertaining to prompt payment of clean claims, including Insurance Code Chapter 843, Subchapter J (Payment of Claims to Physicians and Providers) and Chapter 21, Subchapter T of this title (relating to Submission of Clean Claims) with respect to the payment to the physician or provider for covered services that are rendered to enrollees;

(9) regarding capitation, if applicable, as described in Insurance Code §§843.315 and 843.316;

(10) regarding selection of a primary physician or provider, if applicable, as described in Insurance Code §843.315;

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

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

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

(I) by which the HMO will calculate and pay all claims for covered services submitted by or on behalf of the contracting physician or provider; or

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

(ii) all applicable coding methodologies;

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

(iv) all applicable downcoding policies;

(v) a description of any other applicable policy or procedure the HMO may use that affects the payment of specific claims submitted by or on behalf of the contracting physician or provider, including recoupment;

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

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

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

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

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

(E) Failure to comply with this paragraph constitutes a violation of Insurance Code Chapters 843 and 20A (Texas Health Maintenance Organization Act).

(F) Upon receipt of a request, the HMO must provide the information required by subparagraphs (A) - (D) of this paragraph to the contracting physician or provider by the 30th day after the date the HMO receives the contracting physician's or provider's request.

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

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

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

(II) billing activities,

(III) other business operations, or

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

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

(iii) may not rely upon information provided pursuant to this paragraph about a service as a representation that an enrollee is covered for that service under the terms of the enrollee's evidence of coverage.

(H) A physician or provider that receives information under this paragraph may terminate the contract on or before the 30th day after the date the physician or provider receives the information without penalty or discrimination in participation in other health care products or plans. The contract between the HMO and physician or provider shall provide for reasonable advance notice to enrollees being treated by the physician or provider prior to the termination consistent with Insurance Code §843.309.

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

(12) providing that a podiatrist, practicing within the scope of the law regulating podiatry, is permitted to furnish x-rays and nonprefabricated orthotics covered by the evidence of coverage; and

(13) regarding electronic health care transactions as set forth in §21.3701 of this title (relating to Electronic Health Care Transactions) if the contract requires electronic submission of any information described by that section.

(b) An HMO may require a contracting physician or provider to retain in the contracting physician or provider's records updated information concerning a patient's other health benefit plan coverage.

(c) Upon request by a participating physician or provider, an HMO shall include a provision in the physician's or provider's contract providing that the HMO and the HMO's clearinghouse may not refuse to process or pay an electronically submitted clean claim because the claim is submitted together with or in a batch submission with a claim that is deficient. As used in this section, the term batch submission is a group of electronic claims submitted for processing at the same time within a HIPAA standard ASC X12N 837 Transaction Set and identified by a batch control number. This subsection applies to a contract entered into or renewed on or after January 1, 2006.



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