The Texas Department of Insurance proposes amendments to §3.3703, concerning required contracting provisions for preferred provider plans. The proposed amendments address the disclosure of certain information concerning fee schedules and coding procedures that affect the payment process relating to services provided by physicians and other health care providers pursuant to a preferred provider contract with an insurer that is subject to Texas Insurance Code Article 3.70-3C. The proposed amendments implement Article 3.70-3C, Sec. 3A(i), which states that insurers shall provide preferred providers with copies of all applicable claim processing policies or procedures. The amendments clarify that an insurer must disclose information concerning fees and coding that relates to or affects the claim payment process and the payment to be made to a preferred provider for services that the preferred provider has contracted to provide on behalf of an insurer. Lack of contractual access to this information may have prohibited some preferred providers from ascertaining whether they had been compensated according to the terms of their contracts with the insurer. The proposed amendments are designed to remedy this problem.
The Department has decided to publish for comment two alternative rule amendments each intended to accomplish the stated purpose. Interested persons may comment on either or both of these proposals, which are contained at §3.3703(a)(20) and (21). However, following public comment, the Department will adopt only one alternative, possibly with changes from the proposed version.
The proposed amendments to §3.3703(a)(11) require that a contract between a preferred provider and an insurer contain terms regarding compliance with all applicable prompt pay statutes and regulations. The first alternative, proposed new paragraph (20) to §3.3703(a), requires that a contract between a preferred provider and an insurer contain preferred provider-specific information in a sufficient level of detail that a reasonable person with sufficient training, experience and competence in claims processing can determine the payment to be made according to the terms of the contract. The information must explain all methodologies that will be used to process and pay claims submitted in accordance with the contract, including a fee schedule, any non-standard coding methodologies, bundling processes, downcoding policies, and any other applicable policy or procedure used by the insurer in processing or paying claims under the contract. Additionally, the insurer must provide any addendum, schedule, exhibit or policy used by the insurer that is necessary to provide a reasonable understanding of the information that is being disclosed to the preferred provider. For example, a fee schedule that indicates that the insurer will reimburse certain claims at a usual and customary rate must explain how the insurer will determine the usual and customary rate for a particular service. An insurer may provide any required information in a document or manual that is separate from the contract, provided that the terms of the contract identify the document or manual as the source of the required information and the document or manual is presented to the preferred provider no later than the execution date of the contract. If the document or manual refers to information that is held by an outside source and is not within the control of the insurer, such as state Medicaid or federal Medicare fee schedules, the contract must provide a specific means by which the preferred provider may access the source. An insurer that cannot provide the information required by proposed §3.3703(a)(20) due to copyright laws or a licensing agreement may supply a summary of the required information. However, the summary must be sufficient to allow the preferred provider to determine the payment to be made under the contract. Any information required to be provided pursuant to this paragraph may be amended, revised or substituted only upon written notice to the preferred provider at least 60 calendar days prior to the effective date of the amendment, revision or substitution. An insurer that fails to provide any required information is in violation of proposed paragraph (20) as set forth in §3.3703(b). The requirements added by proposed paragraph (20) apply to all contracts entered into or renewed on or after the effective date of the amendments. An insurer that has an existing contract with a preferred provider as of the effective date must provide the information required by this paragraph within 90 calendar days of the effective date and any amendments, revisions, or substitutions of any of this information that occur while the contract is in effect must be made pursuant to the notice requirements set forth in proposed paragraph (20). A preferred provider receiving information pursuant to proposed paragraph (20) may not use or disclose the information for any purpose other than practice management, billing activities or other business operations. A preferred provider may not use the information to misrepresent the level of services actually performed when submitting a claim under the contract. Information provided pursuant to these amendments about a particular service does not constitute a verification that the service that a preferred provider has provided or proposes to provide is a covered benefit for a particular insured. Proposed paragraph (20) is not intended to dictate the types of practices, policies or procedures that relate to or affect the claims payment process that an insurer may elect to employ. In addition, other plan requirements, such as co-payments, co-insurance or annual, lifetime or other deductibles, may also affect the actual amount of reimbursement.
The second alternative, proposed paragraph (21), requires a contract between an insurer and a preferred provider to provide that the preferred provider may request a description of the coding guidelines, including any underlying bundling, recoding, or other payment processes and fee schedules applicable to specific procedures that the preferred provider will receive under the contract. The insurer or the insurer´s agent must provide the requested information no later than the 30th day after the date the insurer receives the request. In addition, the insurer must provide notice of material changes to the coding guidelines and fee schedules not later than the 60th day before the date the changes are to take effect and cannot make retroactive revisions to the coding guidelines and fee schedules. A preferred provider that receives information pursuant to proposed paragraph (21) may use or disclose the information only for the purpose of practice management, billing activities, or other business operations. The amendments provide that nothing in proposed paragraph (21) shall be interpreted to require an insurer to violate copyright or other law by disclosing proprietary software that the insurer has licensed. In addition to the above, the insurer shall, on request of a preferred provider, provide the name, edition, and model version of the software that the insurer uses to determine bundling and unbundling of claims. The requirements added by proposed paragraph (21) apply to all contracts entered into or renewed on or after the effective date of the amendments. As with proposed paragraph (20), information provided pursuant to these amendments about a particular service does not constitute a verification that the service that a preferred provider has provided or proposes to provide is a covered benefit for a particular insured. Proposed paragraph (21) is not intended to dictate the types of practices, policies or procedures that relate to or affect the claims payment process that an insurer may elect to employ. In addition, other plan requirements, such as co-payments, co-insurance or annual, lifetime or other deductibles, may also affect the actual amount of reimbursement.
The department will consider the adoption of amendments to §3.3703 in a public hearing under Docket Number 2524, scheduled for 9:30 a.m. on July 19, 2002, in Room 100 of the William P. Hobby, Jr. State Office Building, 333 Guadalupe Street, Austin, Texas.
Kimberly Stokes, Senior Associate Commissioner, Life, Health and Licensing Program, has determined that for each year of the first five years the proposed amendments will be in effect, there will be no fiscal impact to state and local governments as a result of the enforcement or administration of the amendments. There will be no measurable effect on local employment or the local economy as a result of the proposal.
Ms. Stokes has also determined that for each year of the first five years the amendments are in effect, the public benefits anticipated as a result of the proposed amendments will be the required disclosure of claim processing policies and procedures by insurers to preferred providers. The benefit of proposed paragraph (11) is that it makes the rule consistent with the statutory requirements of Article 3.70-3C. The benefits of proposed alternative paragraph (20) and proposed alternative paragraph (21) are similar. Paragraph (20) is more comprehensive in that it contains more detail and imposes a standard that the information to be disclosed will ensure that preferred providers receive information of a sufficient level of detail that a reasonable person with sufficient training, experience and competence in claims processing can determine the payment to be made according to the terms of the contract for covered services that are rendered to insureds. Paragraph (21) is more streamlined and does not specify a standard for the required disclosure of the information. It is anticipated that either alternative will increase the number of preferred providers available to provide services to insureds under preferred provider benefit plans and result in a reduction in the time and resources currently being expended on resolution of disputes between preferred providers and insurers, which, in turn, will enhance services to consumers.
The probable economic cost to persons required to comply with paragraphs (20) and (21) will depend upon the number and types of contracts that the insurer enters into with preferred providers involved in preferred provider benefit plans. Some insurers are already providing fee schedules to preferred providers and not all insurers employ bundling processes and/or downcoding policies in claim processing. It is anticipated that the cost to these insurers would be minimal.
With regard to paragraph (20), insurers that are not currently making this information available to preferred providers will need to review their claim payment processes to determine the kind of information that will have to be provided to comply with the amendments. For example, an insurer that leases software or other modalities from a vendor relating to bundling and/or downcoding will need to review the agreements and, if necessary, consult with the vendor to determine how it can comply with the requirements of these amendments. Some vendor contracts may specify a cost associated with such consultations. Insurers will also need to review current contracts, prepare the required information and identify all preferred providers that must be provided with this information. The amount of time involved will depend upon the complexity of the individual insurer's contracts and processes. The cost to the insurer will vary depending upon the types of individuals utilized to review existing contracts and prepare the information required by these amendments. The department estimates that the labor costs will range from an average of $27 per hour of labor to an average of $43 per hour of labor. The labor figures are based upon the 2001 Occupational Wage Data collected by the Texas Workforce Commission. The range of figures represents the average cost, per hour, for review of existing contracts and preparation of the required information by an administrative service manager at the low end of the range and for preparation by an attorney at the high end of the range. An insurer utilizing outside counsel may incur increased costs for labor. Both small businesses and the largest businesses affected by these amendments would incur the same cost per hour of labor. Paragraph (20) is designed to provide maximum flexibility to insurers to determine the mechanism by which information that is not physically contained in a current contract, such as any information required to be provided pursuant to §3.3703(a)(20)(A) (i)(II) , (D) or (F), will be made available to preferred providers. Costs involved with providing the information to preferred providers will depend upon the mechanism selected by the insurer. For example, it is estimated that an insurer that chooses to mail required information would incur a cost of $5.00 per 50-page mailing. This figure includes the cost of paper, printing, envelopes and postage. The actual total cost to each insurer will vary depending on the number of preferred providers to whom the required information must be sent. If an insurer chooses to use a toll-free telephone system to make any required information available to a preferred provider, it is estimated that the insurer would incur costs of $27.50 per telephone line per month and an additional $5.00 per port per month for each line. It is estimated that the cost per call will be from 5 10 cents per minute per call. The estimates for providing toll-free telephone assistance are based on the department´s costs for its toll-free telephone information assistance lines. The costs incurred by a specific insurer would vary based upon the number of lines or ports required or already in use by the insurer and the expected call volume. The call volume experienced by an insurer would vary based upon the number of preferred providers with which the insurer contracts. Based on discussions with industry, the estimated labor cost for one employee to answer the telephone calls from preferred providers on a full-time basis is $38,000 per year. The estimate is based upon the assumption that a claims examiner would be the most qualified employee for answering such inquiries. The actual costs would vary depending upon the volume of calls received and whether there are currently adequate personnel to respond to these telephone calls as part of their job activities. Insurers that opt to provide information through a searchable database would have different costs depending upon the type and sophistication of the system utilized. The department estimates that the cost of developing a Web-based search mechanism of an existing database will range from $22,000 to $45,000, depending upon the complexity of the database. This estimate is based upon the department´s own experiences in developing similar tools for customers and consumers. Insurers with highly complex databases may require additional modifications that would increase the cost for these insurers. As in the case of labor costs, both small businesses and the largest businesses affected by these amendments would incur the same costs for providing information to preferred providers.
There may be somewhat different costs for proposed alternative paragraph (21). As with paragraph (20), an insurer that leases software or other modalities from a vendor relating to bundling and/or downcoding will need to review the agreements and, if necessary, consult with the vendor to determine how it can comply with the requirements of these amendments. Some vendor contracts may specify a cost associated with such consultations. Insurers will also need to review contracts and prepare the requested information. However, since paragraph (21) requires the information to be provided only upon request, an insurer will be required to review only the contracts for which a specific type of preferred provider has made a request. In addition, without the reasonable person standard imposed in paragraph (20), the review of each contract and preparation of the materials under this paragraph may not take as much time as the reviews and preparation that would take place under paragraph (20). The cost to the insurer will vary depending upon the types of individuals utilized to review existing contracts and prepare the information required by paragraph (21). The department estimates that the labor costs will range from an average of $27 per hour of labor to an average of $43 per hour of labor. The labor figures are based upon the 2001 Occupational Wage Data collected by the Texas Workforce Commission. The range of figures represents the average cost, per hour, for review of existing contracts and preparation of the required information by an administrative service manager at the low end of the range and for preparation by an attorney at the high end of the range. An insurer utilizing outside counsel may incur increased costs for labor. Both small businesses and the largest businesses affected by these amendments would incur the same cost per hour of labor. It is estimated that the cost of mailing requested information would be $5.00 per 50-page mailing. This figure includes the cost of paper, printing, envelopes and postage. If an insurer chooses to deliver requested information using some alternative method, it is anticipated that costs would be similar to those described for compliance with the alternative delivery methods set forth for paragraph (20). Again, there should be no difference in cost for large and small employers.
It is the department's position that the adoption of these proposed amendments will have no adverse economic effect on small or micro businesses. It is neither legal nor feasible to waive or modify the requirements of these amendments for small or micro businesses, because physicians and providers contracting with insurers should be able to obtain information regarding claims processing policies and procedures whether they are contracting with a small insurer or a large insurer.
To be considered, written comments on the proposal must be submitted no later than 5:00 p.m. on July 15, 2002 to Lynda H. Nesenholtz, General Counsel and Chief Clerk, Mail Code 113-2A, Texas Department of Insurance, P. O. Box 149104, Austin, Texas 78714-9104. An additional copy of the comment must be simultaneously submitted to Barbara Holthaus, Director of Project Development, Life, Health and Licensing Program, Mail Code 107-2A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104.
The amendments are proposed under the Insurance Code Article 3.70-3C, Section 3A and §36.001. Article 3.70-3C, Section 3A(n) gives the Commissioner the authority to adopt rules as necessary to implement Article 3.70-3C, Section 3A. Article 3.70-3C, Section 3A(i) provides that an insurer shall make available to a preferred provider its claim processing policies and procedures. The Commissioner´s authority to adopt rules relating to the disclosure of claims payment processes such as fee schedules, bundling processes, and downcoding policies was clarified by Attorney General Opinion No. JC-0502. The opinion states that the Texas Department of Insurance is authorized to promulgate rules to require preferred provider benefit plans and HMOs to disclose their fee schedules, bundling processes, and downcoding policies. Section 36.001 provides that the Commissioner of Insurance may adopt rules to execute the duties and functions of the Texas Department of Insurance as authorized by statute.
The following article is affected by this proposal: Article 3.70-3C, Preferred Provider Benefit Plans
§3.3703. Contracting Requirements.
(a) An insurer marketing a preferred provider benefit plan must contract with physicians and health care providers to assure that all medical and health care services and items contained in the package of benefits for which coverage is provided, including treatment of illnesses and injuries, will be provided under the plan in a manner that assures both availability and accessibility of adequate personnel, specialty care, and facilities. Each contract must meet the following requirements:
(1) (10) (No change.)
(11) A contract between a preferred provider and an insurer shall require
the insurer to comply with all applicable statutes and rules pertaining to prompt payment of clean claims, including, but not limited to, Insurance Code Article 3.70-3C §3A (Prompt Payment of Preferred Providers) and §§21.2801-21.2820 of this title (relating to Submission of Clean Claims) with respect to payment to the provider for covered services that are rendered to insureds
.[
:]
[
(A) within 45 calendar days after the date on which the claim for payment is received by the insurer with the documentation reasonably necessary to process the claim; or]
[
(B) within a specified number of calendar days, which number has been agreed upon by the parties and included in the contract, after the date on which the claim for payment is received by the insurer with the documentation reasonably necessary to process the claim.]
(12) (19) (No change.)
(20) A contract between a preferred provider and an insurer must contain information of a sufficient level of detail that a reasonable person with sufficient training, experience and competence in claims processing can determine the payment to be made according to the terms of the contract for covered services that are rendered to insureds.(A) This information must include a preferred provider-specific summary and explanation of all payment and reimbursement methodologies that will be used to process and pay claims submitted by a preferred provider which must, in turn, include:
(i) a fee schedule, including, if applicable, CPT, HCPCS, ICD-9-CM codes and modifiers:
(I) by which all claims submitted by or on behalf of the preferred provider will be calculated and paid; or
(II) that pertains to the range of health care services reasonably expected to be delivered by that type of contracting physician or health care provider on a routine basis along with a toll-free number or electronic address through which the physician or health care provider may request the fee schedules applicable to any covered services that the physician or health care provider intends to provide to an insured and any other information required by this paragraph, including non-standard coding methodologies, bundling processes, and downcoding policies, that pertain to the service for which the fee schedule is being requested if that information has not previously been provided to the preferred provider;
(ii) any non-standard coding methodologies;
(iii) any bundling processes, including if applicable, global service periods, comprehensive codes, component codes and mutually exclusive procedures;
(iv) downcoding policies, including, if applicable, evaluation and management criteria;
(v) a description of any other applicable policy or procedure the insurer may use that affects the processing or payment of specific claims submitted by or on behalf of the preferred provider, including recoupment;
(vi) any addenda, schedules, exhibits or policies used by the insurer in carrying out the processing or payment of claims submitted by or on behalf of the preferred provider that are necessary to provide a reasonable understanding of the information provided pursuant to this paragraph; and
(vii) any information required to be provided by the insurer to the preferred provider through the contract under any applicable statutes and rules pertaining to prompt payment of clean claims, including, but not limited to, Insurance Code Article 3.70-3C §3A (Prompt Payment of Preferred Providers) and §§21.2801 21.2820 of this title.
(B) An insurer may comply with this paragraph by providing the required information in a document or manual that is separate from the contract only if:
(i) the additional document or manual is clearly identified as the source of the specific information required by this paragraph;
(ii) the additional document or manual is provided to the preferred provider no later than the time at which the contract is presented for execution; or
(iii) in the case of a reference to an outside source of information as the basis for fee computation that is not within the control of the insurer, such as state Medicaid or federal Medicare fee schedules, the contract clearly identifies the source and provides within the contract the means by which the provider may readily access the source electronically, telephonically, or as otherwise agreed to by the parties; and
(iv) the additional document or manual document is clearly identified by and incorporated into the contract by reference.
(C) Nothing in this paragraph shall be construed to require an insurer to provide specific information that would violate any applicable copyright law or licensing agreement. However, the insurer 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 insureds as required by subparagraph (A) of this paragraph.
(D) No amendment, revision, or substitution of any of the information, including addenda, schedules, exhibits, or documents or manuals incorporated by reference required by this paragraph shall be effective as to the preferred provider, unless the insurer provides at least 60 calendar days written notice to the preferred provider identifying with specificity the amendment, revision or substitution. In the case of a contractual provision between the insurer and the preferred provider that provides for mutual agreement of the parties as the sole mechanism for requiring amendment, revision or substitution of the information required by this paragraph, then 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 as set forth in subsection (b) of this section.
(F) This paragraph applies to all contracts entered into or renewed after the effective date of this paragraph. Notwithstanding this subparagraph, if a preferred provider contract does not contain the terms set forth in subparagraphs (A) and (B) of this paragraph, the insurer must provide the information required by subparagraphs (A) and (B) of this paragraph to the preferred provider within 90 calendar days of the effective date of these amendments. If the preferred provider has previously agreed to communicate with the insurer electronically, the insurer may provide the required information via e-mail, or by the use of an electronic database through which the preferred provider can access this information. Any amendments, revisions or substitutions of any information provided pursuant to this subparagraph must be made in accordance with subparagraph (D) of this paragraph.
(G) A preferred provider that receives information under this paragraph:
(i) may not use or disclose the information for any purpose other than the preferred provider´s practice management, billing activities, or other business operations;
(ii) may not use this information to knowingly submit a claim that does not accurately represent the level, type or amount of services that were actually provided to an insured or to misrepresent any aspect of the services for purposes of payment; and
(iii) may not rely upon information provided pursuant to this paragraph about a service as a verification that an insured is covered for that service under the terms of the insured's policy or certificate.
(21) A preferred provider contract between an insurer and a physician or provider must provide that the physician or provider may request a description of the coding guidelines, including any underlying bundling, recoding, or other payment process and fee schedules applicable to specific procedures that the physician or provider will receive under the contract.
(A) The insurer or the insurer's agent will provide the coding guidelines and fee schedules not later than the 30th day after the date the insurer receives the request.
(B) The insurer will provide notice of material changes to the coding guidelines and fee schedules not later than the 60th day before the date the changes take effect and will not make retroactive revisions to the coding guidelines and fee schedules.
(C) A physician or provider who receives information under subparagraph (A) of this paragraph may use or disclose the information only for the purpose of practice management, billing activities, or other business operations.
(D) Nothing in this paragraph shall be interpreted to require an insurer to violate copyright or other law by disclosing proprietary software that the insurer has licensed. In addition to the above, the insurer shall, on request of a physician or provider, provide the name, edition, and model version of the software that the insurer uses to determine bundling and unbundling of claims.
(E) This paragraph applies to all contracts entered into or renewed after the effective date of this paragraph.
(b) (c) (No change.)