The Texas Department of Insurance adopted emergency rules regarding the following new and amended sections of the Texas Administrative Code (TAC): 28 TAC §§21.2801-21.2809, 21.2811-21.2819, 21.2821-21.2825, 3.3703, 11.901, 19.1703, 19.1723, and 19.1724. The emergency rules are to implement Senate Bill 418, which was enacted during the 78th regular session of the Texas Legislature. The bill amends Texas Insurance Code Article 3.70-3C, concerning preferred provider benefits carriers, and Texas Insurance Code Chapter 843, the Health Maintenance Organization (HMO) Act, to provide comprehensive changes to the procedures and requirements governing the processing and payment of "clean" claims submitted by physicians and providers.
Senate Bill 418 and the associated emergency rules apply to contracted physicians and providers in HMOs and preferred provider benefit plans. Some of these rules (prompt payment and verification) also apply to non-contracted physicians and providers who provide emergency care or care on referral when services aren´t reasonably available within the HMO´s or preferred provider benefit plan´s network. The law became effective on June 17, 2003. The emergency rules are effective on August 16, 2003, to facilitate the uniform implementation of these new and amended TAC sections and to guide affected parties´ compliance. Because SB 418 applies to contracts between carriers and physicians and providers entered into or renewed on or after the 60th day after the statute´s effective date (which is August 16), it allows the commissioner to adopt rules on an emergency basis.
Note: This document uses the terms "physician," "provider," and "preferred provider" throughout. HMOs and preferred provider benefit plans are referred to collectively as "carriers."
THE FOLLOWING IS A SUMMARY OF THE EMERGENCY RULES. IN THE EVENT OF ANY PERCEIVED CONFLICT BETWEEN THE SUMMARY AND THE EMERGENCY RULES, THE TEXT OF THE EMERGENCY RULES CONTROLS. PERMANENT RULES, WHICH WILL REPLACE THESE EMERGENCY RULES ARE BEING PROPOSED FOR ADOPTION. THE RULES AS FINALLY ADOPTED MAY DIFFER FROM THE EMERGENCY RULES.
Claims Submission Deadline
Physicians and providers must file claims within 95 days of the date the health care service was provided. Unless failure to timely file is due to a catastrophic event, physicians and providers who do not submit claims within the 95-day timeframe forfeit the right to payment. Carriers and physicians and providers can agree to longer (but not shorter) deadlines by contract.
What is a Clean Claim?
The law and rules provide for two types of claim submissions - non-electronic submissions (claims submitted by mail, hand-delivery, or fax), and those submitted electronically. For non-electronic submissions, a claim is considered "clean" if it contains all the required data elements set forth in the rules and, if applicable, the amount paid by the primary plan or other valid coverages. Claims submitted electronically are considered clean if they are submitted using the ASC X12N 837 format and are in compliance with federal Health Insurance Portability and Accountability Act (HIPAA) requirements related to electronic health care claims, including applicable implementation guidelines, companion guides, and trading partner agreements.
Clean Claim Elements
The data elements required for a claim to be considered clean are standardized by rule. For non-electronic claims, the law and rules primarily rely on data elements collected on standardized forms developed by the Centers for Medicare and Medicaid Services (CMS) - the CMS 1500 and UB-92. Required data elements are listed in Section 21.2803 of the proposed rule.
Carriers may not require physicians or providers to submit data elements other than those stipulated in the rule. Nor may carriers require attachments to establish a clean claim. Claims submitted electronically must be compliant with HIPAA.
Once a Claim is Filed
The law and rules establish various deadlines for carriers to act following submission of a claim. Carriers must take action on the claim within 45 days of receipt of a non-electronically submitted claim, within 30 days of receipt of a claim submitted electronically, and within 21 days of receipt of an affirmatively adjudicated electronically submitted pharmacy claim.
Prior to expiration of the statutory (21 days, 30 days, or 45 days) deadline, the carrier must either
- pay the entire contracted amount of a clean claim
- deny the entire claim and notify the physician or provider why the claim will not be paid
- pay part of the claim and deny or audit the remainder and pay 100 percent of the applicable contracted rate for the audited portion and notify the physician or provider
- notify the physician or provider that the claim is being audited and pay 100 percent of the applicable contracted rate
- notify the physician or provider that the claim is deficient.
Requests for Additional Information
The carrier may make one request to the treating physician or provider for additional information to process a claim. The request must be made within 30 days of the date the claim was received. The carrier must be specific about the additional information requested and may only request information that is in the patient´s medical or billing records and that is relevant to the resolution of the claim. If a carrier requests additional information, the carrier´s deadline for the carrier to act on the claim is suspended until the additional information, or a response that the physician or provider does not have the information, is received. Once the carrier has received the requested information, it must act within 15 days of receipt of the information or by the statutory deadline, whichever is later.
A carrier may also request additional information from a third party. If a carrier requests information from a third party, it must notify the physician or provider of the request. The carrier´s deadline is not suspended for requests for information from third parties.
If the Carrier Audits a Claim
Carriers that opt to audit a claim must pay 100 percent of the applicable contracted rate and notify the physician or provider of the audit in writing within the statutory (21-, 30-, or 45-day) deadline. The explanation of payment to the physician or provider must clearly indicate that the claim is being audited. A carrier that audits a claim may request additional information within the audit period. The carrier must notify the physician or provider that the additional information must be provided within 45 days, and may recover the amount paid if the physician or provider fails to respond within the time limit. Audits must be completed within 180 days of the date the claim was received.
Physicians and providers may appeal the results of audits. Appeals of audits must be made within 30 days.
Coordination of Benefits
Carriers may not require physicians or providers to investigate coordination of benefits with other coverages. Physicians and providers are required, however, to maintain information about a patient´s other coverages. In instances where multiple coverages apply, the physician or provider must file a claim with the secondary payor within 95 days of receipt of the determination of the primary payor. If a carrier that is a secondary payor overpays a claim, the carrier must recover the overpayment from the carrier that is a primary payor. However, if the primary payor has already paid the claim, the secondary payor may recover overpayment directly from the physician or provider.
Submitting Duplicate Claims
A duplicate claim is any claim for payment 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. Physicians and providers may not submit duplicate claims before the expiration of the statutory (21-, 30-, or 45-day) payment deadline. A duplicate claim does not include corrected claims or additional information provided to satisfy a carrier´s request. Physicians and providers are required to indicate on the claim form whether the claim is a duplicate claim or a corrected claim.
Overpayments
A carrier must request refunds for overpayments to physicians and providers within 180 days of the physician´s or provider´s receipt of the payment. If the carrier does not make the request for refund within the 180-day deadline, the carrier forfeits the refund of the overpayment. A physician or provider has 45 days to appeal a notice of overpayment. A carrier may recover an overpayment if all appeal rights have been exhausted and the physician or provider has not made arrangements to refund the overpayment to the carrier on or before the 45th day from the date of receipt of the notice of overpayment. A carrier may recover an overpayment in the case of fraud or material misrepresentation by a physician or provider.
Late Payment and Underpayment Penalties
Carriers are subject to penalties for late payment of claims to contracted physicians and providers based on the number of days the payment is late:
- If the carrier pays a clean claim between one and 45 days late, it must pay the full contracted rate of the services provided plus either 50 percent of the difference between the billed charges and the applicable contracted rate or $100,000, whichever is less.
- If the carrier pays a clean claim between 46 and 90 days late, it must pay the full contracted rate of the services provided plus either 100 percent of the difference between the billed charges and the applicable contracted rate or $200,000, whichever is less.
- If the carrier pays a clean claim 91 or more days late, it must pay the full contracted rate of the services provided plus either 100 percent of the difference between the billed charges and the applicable contracted rate or $200,000, whichever is less, plus 18 percent annual interest on the penalty amount, accruing from the date payment was originally due and through the date of actual payment.
Billed charges are defined as the charges for medical care or health care services included on a claim submitted by a physician or provider. 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.
The emergency rule provides an example of how penalties for late payments are calculated.
Carriers are also subject to penalties for late underpayment of clean claims:
- If the carrier underpays a clean claim between one and 45 days late, it must pay the full contracted rate of the services provided plus either 50 percent of the underpaid amount or $100,000, whichever is less
- If the carrier underpays a clean claim between 46 and 90 days late, it must pay the full contracted rate of the services provided plus either 100 percent of the underpaid amount or $200,000, whichever is less
- If the carrier underpays a clean claim 91 or more days late, it must pay the full contracted rate of the services provided plus either 100 percent of the underpaid amount or $200,000, whichever is less, plus 18 percent annual interest on the penalty amount, accruing from the date payment was originally due and through the date of actual payment.
- The underpaid amount, for the purposes of calculating the penalty payment, is calculated on the ratio of the amount underpaid on the contracted rate to the contracted rate as applied to the billed charges.
The emergency rule provides an example of how penalties for underpayments are calculated.
A physician or provider must notify the carrier within 180 days of receipt of an underpayment to obtain a penalty payment. If the notice is given after the 180th day and the carrier pays the balance within 45 days of receipt of the underpayment notice, no penalty accrues.
Penalties are not assessed for late payments or underpayments if the failure to timely pay was the result of a catastrophic event that interrupted the carrier´s operations for more than two consecutive business days and the carrier filed proper notice with TDI. In such a case, the statutory claims payment period is suspended only for the period of time that the carrier´s operations were interrupted.
The carrier must provide the physician or provider with an explanation of payment that clearly notes any penalties paid.
Extension of Deadlines because of a Catastrophic Event
The statutory claims submission and payment deadlines are suspended because of catastrophic events under the following conditions:
- Within five days of the event, the carrier, physician, or provider must notify TDI that it is unable to meet its statutory deadlines because of a catastrophic event that interrupted its normal business operations for at least two consecutive business days.
- Within 10 days of returning to normal operations, the carrier, physician, or provider must provide TDI with a sworn affidavit specifying the specific nature of the event and the length of time normal operations were suspended.
The statutory claims payment period is suspended only for the period of time that the carrier´s operations were interrupted.
Administrative Penalties
In addition to other penalties under the Insurance Code, TDI may assess administrative penalties against carriers that have more than a 2 percent noncompliance rate for either claims submitted by health care institutions or for claims submitted by non-institutional physicians and providers, as determined on a quarterly basis. Carriers that have more than a 2 percent noncompliance rate on either type of claim may be assessed penalties of up to $1,000 per day for each claim not in full compliance with the prompt pay law and rules.
Claims Payment Processing Information
A contract between a carrier and a preferred provider must require that carriers must provide claims payment information within 30 days of receipt of a request from a physician or provider. The information provided by the carrier must include payment methodologies and bundling processes. Bundling processes must be consistent with nationally recognized and generally accepted bundling edits and logic. The information provided about the bundling software must include the publisher´s name, product name, and version used by the carrier.
The contract must also require carriers to provide 90 days written notice regarding changes to the claims payment information. Carriers may not apply changes retroactively to claims payment procedures.
Physicians and providers may only use the claims payment information in their practice management, billing activities and other business operations, and in their communications with governmental agencies that regulate health care and insurance.
A physician or provider may terminate their contract with a carrier within 30 days after receiving the claims payment information from the carrier. The carrier cannot penalize the physician or provider who chooses to terminate a contract. If a physician or provider terminates a contract, then the plan´s enrollees/insureds must receive reasonable advance notification of the termination.
Identification Card
The emergency rules will require carriers to include on their coverage identification cards the first date that the enrollee/subscriber or the toll-free number that the physician or provide may call to obtain that date. The rules also requires identification cards to include a specific symbol that the health care coverage is subject to state regulation. The symbol is
These requirements will be effective January 1, 2004.
Utilization Review - Preauthorization and Verification
Preauthorization
A preauthorization is a determination by the carrier that the services are medically necessary and appropriate.
Upon request, a carrier must provide a list of services within 10 days of receipt of the request from a physician or provider that will allow the physician or provider to determine which services require preauthorization and information concerning the preauthorization process. Deadlines for responding to requests for preauthorization are as follows:
- For post-stabilization treatment and life-threatening conditions, the carrier´s response must be given within the time appropriate to the circumstances, but not more than one hour.
- For concurrent hospitalization care, the carrier´s response must be given in 24 hours.
- For all other services, the carrier´s response must be given within three days from the date of the request for preauthorization.
If a preauthorization is issued, a carrier may not deny or reduce payment of the claim for reasons of medical necessity or appropriateness unless the preferred provider materially misrepresented the proposed services or substantially failed to perform the preauthorized services.
A carrier must provide a notice of adverse determination to the provider, the enrollee or person acting on the enrollee´s behalf. The enrollee, or person acting on the enrollee´s behalf, has the right to appeal an adverse determination.
Verification
Verification is a guarantee of payment for health care or medical care services if the services are rendered within the required timeframe to the patient for whom the services are proposed. A verification may include a preauthorization.
A request for verification must contain:
- patient name
- patient ID number, if included on a health care coverage identification card
- patient date of birth
- name of enrollee or subscriber, if included on a health care coverage identification card
- patient relationship to enrollee or subscriber
- presumptive diagnosis, if known, otherwise, presenting symptoms
- description of proposed procedure(s) or procedure code(s)
- place of service code where services will be provided; if place of service is not provider´s office/location, then provide name and address of hospital or facility
- proposed date of service
- group number, if included on a health care coverage identification card
- name and contact information of any other carrier, if known, including the other carrier´s name, address and telephone number, name of enrollee, plan or ID number, group number (if applicable), and group name (if applicable)
- name of preferred provider providing the proposed services
- preferred provider´s federal tax ID number
The physician or provider may request verification via telephone, in writing, or any other means agreed to by the physician, provider, and carrier.
If a physician or provider requests verification, a carrier may make one request for additional information within 24 hours of receipt of the request.
A carrier must issue either a verification or a declination without delay, but not later than 5 days after receipt of the request. For requests for verification regarding concurrent hospitalization, the carrier must respond without delay, but not later than 24 hours.For post-stabilization care and a life-threatening condition, the carrier must respond without delay, but not later than one hour after receipt of the request. A declination is not the equivalent of a denial of the claim.
A carrier may deliver the determination in writing, or via telephone followed by a written response within three days. In both cases, the carrier´s written response must include:
- enrollee name
- enrollee ID number
- requesting provider´s name
- hospital or other facility name, if applicable
- a specific description, including relevant procedure codes, of the services that are verified or declined
- if the services are verified, the effective period for the verification, which shall not be less than 30 days from the date of verification
- if the services are verified, any applicable deductibles, copayments, or coinsurance for which the enrollee is responsible
- if the verification is declined, the specific reason for the declination
- if the request involved services for which preauthorization is required, a decision as to whether the proposed services are medically necessary and appropriate, as required in §19.1723 of this title (regarding Preauthorization) and
- a statement that the proposed services are being verified or declined pursuant to Title 28 Texas Administrative Code §19.1724.
- a unique verification number allowing the carrier to match the verification with a subsequent claim.
A verification must be valid for at least 30 days.
Carriers must maintain a call center with qualified staff during specified hours to receive requests for preauthorization and verification. During off-hours, carriers must have a recording/answering system for these calls, and return calls within
- 24 hours for preauthorization
- two days for verification.
Reporting Requirements
Carriers are required to submit quarterly and annual reports on their claims processing activities, catastrophic events, and verifications to TDI.
State Medicaid and CHIP Waiver
The emergency rules do not apply to claims related to contracted services provided under the state Medicaid and CHIP programs.