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FAQ on preauthorization exemptions under HB 3459

Initial notice of exemptions or denials

Communication methods


Applicable health benefit plans

Applicable physicians and providers

Particular health care services subject to an exemption

Timeframes for exemptions and rescissions


Appeals and Independent Review Organizations (IROs)

Peer-to-Peer reviews

Additional HB 3459 resources

Initial notice of exemptions or denials

Which physicians and providers qualify for an exemption?

A physician or provider qualifies for an exemption for a particular health care service if:

  • They submitted five or more eligible preauthorization requests for the particular health care service in the most recent evaluation period; and
  • At least 90% of the eligible preauthorization requests were approved. 28 TAC §19.1731(b) and Insurance Code §4201.563.

How do I obtain an exemption?

Physicians and providers don't need to take any action to obtain an exemption beyond submitting preauthorization requests as they typically would. Each applicable health benefit plan issuer is responsible for conducting evaluations and issuing notices of exemptions or denial of exemptions. Exemptions are not issued by TDI. Insurance Code §4201.563 and 28 TAC §19.1731(b).

How can I update my preferred contact information for receiving communications regarding exemptions?

Notices of exemption or denial will include information on how the physician or provider can update their preferred contact information for communications related to exemptions. This information will also be available on the issuer's website that lists preauthorization requirements. 28 TAC §19.1732.

When will I receive notice of my exemption?

Health benefit plan issuers are required to send notices of exemption or denial within five days of completing an evaluation and the deadline for initial notices was October 1.

Will I receive a notice if my exemption is denied?

Health benefit plan issuers are required to send notices when denying an exemption. Refer to Insurance Code §4201.655(c) and 28 TAC §19.1732(b). However, a notice is not required if there were not at least five eligible preauthorization requests submitted to the issuer for a particular health care service by the physician or provider during the evaluation period. Refer to 28 TAC §19.1732(c).

What should I do if I haven't received a notice?

If you routinely perform preauthorization for TDI-regulated health benefit plans and you haven't received a notice regarding the preauthorization exemption, we encourage you to:

  • Check the health benefit plan issuer's website where they post their preauthorization requirements.
  • Reach out to the health benefit plan issuer.
  • Contact TDI if you have concerns with the issuer's response. How to file a complaint with TDI.

If I don't get an exemption, when is my next chance to qualify?

If in the initial evaluation period (January 1 - June 30, 2022), a physician or provider does not qualify for an exemption, they will have another opportunity to qualify in future evaluation periods (July 1, 2022 - December 31, 2022, and subsequent six-month periods). Refer to the definition of evaluation period in 28 TAC §19.1730(5)(A).

Communication methods

What communication methods must the health benefit plan issuer offer for sending communications related to preauthorization exemptions?

At a minimum, health benefit plan issuers must allow physicians and providers to designate an email address or mailing address for communications. They may also choose to offer other communication methods, like an online portal or fax number. Refer to 28 TAC §19.1732(e).

What is the required method and timing of the notice that must be sent under Insurance Code §4201.659(e) if an exempt provider submits a preauthorization request that is subject to an exemption?

The health benefit plan issuer must promptly send the notice to the physician or provider's preferred point of contact. Refer to 28 TAC §19.1732(a) and (e). The exemption does not waive an issuer's responsibility to respond to a request for preauthorization as provided in 28 TAC §19.1718(d).


How will TDI monitor compliance? What happens if a health benefit plan issuer does not follow the exemption requirements?

TDI will monitor compliance primarily through complaints. If you have a concern, we encourage you to first reach out to the health benefit plan issuer to see if they can resolve your concern. If they do not resolve your concern, we encourage you to file a complaint with TDI.

When we receive complaints on issues that indicate a pattern of noncompliance, those issues get elevated within the agency to support a broader investigation. We will work to get the issuer into compliance and take enforcement action if necessary.

How will Texas monitor the impact of exemptions on costs, access to care, patient safety, waste, and abuse?

TDI is interested in hearing from stakeholders on how the preauthorization exemptions are impacting patients, health care providers, and health benefit plan issuers. Please send such feedback to

Can health benefit plan issuers withhold payment for a claim subject to an exemption until completing a retrospective review?

No. A claim for a service for which an exemption is in place can be retrospectively reviewed only as part of a rescission evaluation or an investigation under Insurance Code §4201.659(a). Prompt pay requirements under 28 TAC Chapter 21, Subchapter T continue to apply.

Applicable health benefit plans

Which plans does this law apply to?

The law applies to HMO, PPO, and EPO health benefit plans offered by TDI-regulated issuers in the commercial market. This includes plans in the individual marketplace sold on and employer plans that are fully insured. Enrollees covered by TDI-regulated plans should have "TDI" or "DOI" on their ID cards. Refer to Insurance Code §4201.652 and §4201.653.

Which plans does this law NOT apply to?

  • Self-funded employer plans. These are generally regulated by the federal Department of Labor, rather than TDI – even if the plan is administered by an insurer. They will not include "TDI" or "DOI" on the ID cards.
  • Workers' Compensation coverage.
  • Medicaid or CHIP, including plans administered by managed care organizations. Refer to Insurance Code §4201.652.
  • Medicare Advantage or Medicare Part D.

If I receive an exemption from a particular issuer, does it apply to all plans offered by that issuer?

Exemptions are granted at the issuer level, not the plan level. However, issuers are only required to apply the exemption to TDI-regulated plans. For example, if a physician obtains an exemption from issuer ABC-TX, it will apply to every TDI-regulated plan offered by ABC-TX, but the physician would need to continue requesting preauthorization for patients covered under Medicaid and Medicare Advantage plans offered by ABC-TX. The exemption would also not extend to self-funded employer plans administered by ABC-TX. See 28 TAC §19.1730 for definition of “issuer” and Insurance Code §4201.652.

Applicable physicians and providers

What types of physicians and providers qualify for exemptions? Are provider group, facilities, and hospitals eligible?

The terms "physician" and "provider" are defined broadly with reference to Insurance Code §843.002(22) and (24). Provider groups, facilities, and hospitals that meet that definition may qualify for exemptions. Exemptions are granted under the National Provider Identifier (NPI) number under which a physician or provider makes preauthorization requests. See 28 TAC §19.1731(a).

When can a physician or provider properly rely on another’s exemption? If the ordering professional has an exemption, then the furnishing professional will not have to provide an additional exemption, correct?

The exemption extends to the care ordered or referred by the exempt provider – regardless of who renders the care. The rendering provider does not have to obtain their own exemption to furnish care that is subject to the ordering provider's exemption. See 28 TAC §19.1730(10) and (14).

If care is rendered by or billed by a physician or provider other than the exempt physician or provider, how will the rendering provider know the preauthorization requirement has been fulfilled via exemption?

A physician or provider that has an exemption may share information about their exemption when they are making referrals or ordering care for which a preauthorization requirement would normally apply. The rendering or billing provider must include the exempt provider's name and NPI number on the claim, consistent with 28 TAC §19.1731(e).

Can an out-of-network provider qualify for an exemption?

The law does not limit exemptions to in-network physicians and providers.

As an Advanced Practice Registered Nurse (APRN), I don't practice under a physician. Do I need my own exemption?

Yes. If you currently request preauthorization under your own NPI number, you would need to qualify for your own exemption.

Particular health care services subject to an exemption

Are exemptions granted for a provider with a 90% approval rate across all services, or separately for each service?

Exemptions are granted for particular health care services that are subject to a preauthorization requirement. See Insurance Code §4201.653 and 28 TAC§19.1730(7).

Which services are eligible for an exemption? Are eligible services defined by CPT code? How do exemptions apply to prescription drugs?

Eligible services are defined based on the list of services subject to preauthorization. Issuers are required to publish these lists on their websites, consistent with 28 TAC§19.1718(j) and SB 1742 from 2019 (86R). The list will vary by each health benefit plan issuer; TDI does not restrict how issuers define preauthorization requirements.

If an exempted service transitions into a more complicated service, additional services or surgery, will the exemption continue to apply?

An exemption applies only to the specified service See Insurance Code §4201.653 and 28 TAC §19.1730(7).

Timeframes for exemptions and rescissions

When does an exemption become effective?

An exemption starts on the day the notice of exemption is issued.

When does an exemption end?

An exemption ends on the earlier of:

  • The day the particular health care service is no longer subject to a preauthorization requirement; or
  • The day the exemption is rescinded.

When is a rescission effective?

The effective date of a rescission must be at least six months after the exemption was initially granted. Consistent with Insurance Code §4201.654(a), a rescission is effective on the later of:

  • The effective date of the rescission, as listed on the proposed rescission notice (30 days after the notice is provided); or
  • If the rescission is appealed, the fifth day after the date the IRO affirms the rescission.


Are evaluation periods always the same?

No. Evaluation periods vary depending on whether the physician or provider has an exemption in place. Refer to the definition of "evaluation period" in 28 TAC §19.1730(5) and to the examples provided in TDI's presentation.

  • No exemption. The initial evaluation period was January 1 - June 30, 2022. If an exemption is not granted, the issuer must evaluate the physician or provider in each subsequent six-month period (July 1 - December 31, 2022, and so forth) in which the physician or provider submits at least five preauthorization requests for a particular service.
  • Exemption granted. Once an exemption is in place, the issuer may, but is not required to, evaluate whether the physician or provider continues to qualify. Insurance Code §4201.653(c). An exemption must be in place at least six months before it may be rescinded (spanning from the date the exemption notice is granted to the rescission date stated in the rescission notice.) 28 TAC §19.1732(a). Rescission notices may be issued only in January or June. Insurance Code §4201.655. Issuers have flexibility to determine the appropriate evaluation period, however, there cannot be more than two months between the day an evaluation period ends and the day the rescission notice is issued. 28 TAC §19.1732(c).

What evaluation periods will apply for an issuer entering the market?

New issuers will follow the same January 1 - June 30 and July 1 - December 31 evaluation periods. 28 TAC §19.1730(5)(A).

How do evaluations take into account partial approvals?

If a preauthorization request includes more than one particular health care service, each is counted individually for the purposes of calculating eligibility for an exemption. If a preauthorization request is modified (for example, from drug A to drug B, or from five inpatient days to three inpatient days), the evaluation would be based on the outcome of the request as modified. A preauthorization request may only be counted as denied if an adverse determination notice is issued. Refer to the definition of “eligible preauthorization request” in 28 TAC §19.1730(3).

Appeals and Independent Review Organizations (IROs)

How can I appeal a denial or rescission?

If your exemption is denied, refer to the denial notice for the issuer's complaints and appeal process. You can also contact TDI if you have concerns. How to file a complaint with TDI.

If your exemption is rescinded, you can request an independent review of the decision. You do not have to first complete the issuer's internal appeals process. See Insurance Code §4201.656. Refer to the rescission notice for how to submit your appeal. You must submit your IRO request before the rescission effective date. Once you submit an appeal, the rescission will not be effective until the IRO completes its review. See Insurance Code §4201.654(a)(2).

How are IROs regulated by TDI?

To practice as an IRO under Insurance Code Chapter 4202 and 28 TAC Chapter 12, the organization must apply for a certificate of registration and submit documentation to TDI that demonstrates they meet the requirements. IROs must apply to renew their certificate of registration every two years.

What review criteria do IROs use to determine whether to uphold or overturn a rescission?

TDI does not prescribe review criteria but reviews it as part of the IRO's application. Among other things, review criteria must be “objective, clinically valid, compatible with established principles of health care, and flexible enough to allow for deviations from the norms when justified on a case-by-case basis.” Refer to 28 TAC §12.201.

Are appeals of rescissions required to use form LHL011?

No. LHL011 is an example of a form that issuers may use to provide notice of a rescission and an opportunity for the physician or provider to request that an IRO review the rescission. The requirements for a rescission notice and appeals request form are explained in 28 TAC §19.1732(d).

How much time does the IRO have to affirm or overturn a rescission?

The IRO has 30 days from the date the physician or provider submits the request for an IRO to complete its review and notify the issuer of its determination. This timeframe includes the time it takes for the issuer to submit the IRO request to TDI, for TDI to randomly assign an IRO, and for the IRO to collect any necessary medical records. Refer to Insurance Code §4201.656(c) and 28 TAC §12.601(g).

Who pays for the IRO?

Consistent with Insurance Code §4201.656(b), the health benefit plan issuer is responsible for paying the IRO fee.

How much is the IRO fee? Does it change if a second sample is requested?

IRO fee amounts are specified in 28 TAC §12.403 and vary depending on the specialty classification. The fee is for a review of “an adverse determination regarding a preauthorization exemption” and does not change if a second sample is requested.

Peer-to-Peer reviews

How will TDI ensure that health plans are offering an opportunity for a peer-to-peer discussion with a Texas-licensed physician in the same or similar specialty? We've heard that this has led to delays or the use of a physician without an appropriate specialty.

Under Insurance Code §4201.206, a health plan must provide an opportunity for discussion with a Texas-licensed physician of the same or similar specialty before the plan can issue an adverse determination. This requirement does not change the timeframes applicable to the utilization review.

TDI encourages physicians and providers to file complaints if health plans are not meeting the timeframes required in Insurance Code §4201.304 and 28 TAC §19.1718(d).

TDI’s rules require URAs to maintain documentation on the qualifications of their physicians and submit documentation to TDI on request concerning the peer-to- peer opportunity provided. Refer to 28 TAC §19.1706 and §19.1710.

Are health benefit plans required to offer a peer-to-peer opportunity before issuing an adverse determination regarding a preauthorization exemption?

No. The requirement for a peer-to-peer opportunity is tied to issuance of an adverse determination. The definition of an adverse determination regarding a preauthorization exemption in 28 TAC §19.1730(1) explains that it is not an adverse determination as defined in 28 TAC §19.1703.

Additional HB 3459 resources

Information on Implementation of HB 3459 includes related rules and guidance.

TDI hosted the webinar “Preauthorization exemption process” on September 29, 2022.

For more information, contact:

Last updated: 10/18/2022