The Texas Legislature recently enacted amendments to the laws concerning prompt payment of claims filed by physicians and providers who provide certain services to enrollees and insureds of HMOs and preferred provider benefit plans (Senate Bill 418). Among the changes to current law was a procedure by which physicians and providers may ask HMOs and insurers, collectively called "carriers," to verify payment of a claim for a patient. The Texas Department of Insurance recently adopted emergency rules that would implement this provision, and will adopt final rules in the near future. These rules can be accessed at www.tdi.state.tx.us/consumer/doctors.html. Because the SB 418 verification process is new to everyone involved, and because the department has received many questions about its applicability, this bulletin is designed to clarify parties' understanding and expectations in order to reduce potential confusion.
At the outset, it is important to note that the provisions of SB 418 do not apply to everyone. Nor does it apply to all insurance plans or health care coverage. SB 418 applies to contracts between carriers and physicians and providers that are entered into or renewed on or after August 16, 2003. Certain provisions also apply to emergency services and specialty services provided after August 16th at the request of the carrier, by a non-network physician or provider because those services are not reasonably available from a network physician or provider. Contracts that were entered into before August 16th are governed by the previous law and rules, which did not contain any provisions regarding verification. SB 418 does not apply to benefits under valid self-funded ERISA plans.
Even though the prior law did not contain a verification procedure, many physicians and providers customarily called a patient's insurance carrier to confirm that the patient was eligible for benefits---that is, that the patient was still covered by the plan. Generally, the carrier would confirm that coverage was in effect, but would state that such confirmation was not a guarantee of payment. Physicians and providers complained that they would treat a patient only to find out later that the person did not have insurance coverage. Accordingly, SB 418 enacted new verification procedures whereby a physician could seek a carrier's guarantee of payment for medical or health care services prior to performing the service. If a carrier provides a verification, it cannot reduce or deny payment to the physician or provider unless he or she does not perform the service within the stated time frame of the verification (which cannot be less than 30 days) or materially misrepresented the service.
The new law does not require a carrier to verify a service, although if it declines to do so it must notify the physician or provider within the time prescribed by the rule. Most importantly for patients, however, neither the law nor the rule says that a medical or health service will not be provided if a carrier declines to verify. A declination simply means that the carrier did not guarantee payment for the requested service prior to the service being performed. It does not automatically mean that a patient does not have insurance coverage. If a carrier does not verify, it also does not mean that the physician or provider will not be paid for a covered service if a physician or provider timely files a clean claim for that covered service.
Some carriers have indicated that they will continue to provide eligibility determinations, as in the past, to physicians who request them, as well as verifications under SB 418. Some physicians and providers may also be satisfied with continuing to call the carrier simply to confirm eligibility and forego the verification process. Others may not yet be entitled to receive verification because they are operating under a contract that was entered into or last renewed prior to August 16th, or because the patient's plan is an ERISA plan not regulated by TDI.
Regardless of what procedure is followed, this is a time when everyone who is potentially affected by SB 418 is learning about its new requirements. For that reason, I am asking that all insurance carriers, physicians and providers keep lines of communication open among themselves and with the individuals who are their insureds, enrollees, and patients.
If you are a physician or provider: Maintain a dialogue with the carriers and plans with which you do business. Ask questions when necessary; if a carrier informs you of a new procedure or requirement, find out specifically what is being required and why. Familiarize yourself with the new law and related rules that set forth the information physicians and providers must furnish in order to request verification. Know the dates of your contracts in order to understand whether the new requirements apply to you. Remember that, regardless of whether you request or receive a verification, you are entitled to be paid for clean claims for covered services that are submitted in compliance with the law and rules. Finally, if you receive a declination from a carrier, remember that the patient still needs treatment and that you may still provide that treatment and be paid subject to the normal claims payment processes.
If you are an HMO or insurer writing a preferred provider benefit plan: Maintain a dialogue with the physicians and providers with which you do business, and explain procedures and requirements clearly. It is also important that materials sent to enrollees and insureds explain the verification process clearly.
If you are an enrollee, insured, or patient: Understand that, even if your insurance carrier does not verify a health care or medical service your doctor is proposing, that does not necessarily mean that you are not covered, nor that your claim will not be paid by your carrier. Even if your claim is not verified, you are entitled to the benefits under your health care policy or contract.
For further information concerning SB 418 and the department's rules, please refer to www.tdi.state.tx.us/consumer/doctors.html.
Commissioner of Insurance
Texas Department of Insurance