H.B. No. 2256
 
 
 
 
AN ACT
  relating to mediation of out-of-network health benefit claim
  disputes concerning enrollees, facility-based physicians, and
  certain health benefit plans; imposing an administrative penalty.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subtitle F, Title 8, Insurance Code, is amended
  by adding Chapter 1467 to read as follows:
  CHAPTER 1467. OUT-OF-NETWORK CLAIM DISPUTE RESOLUTION
  SUBCHAPTER A. GENERAL PROVISIONS
         Sec. 1467.001.  DEFINITIONS. In this chapter:
               (1)  "Administrator" means:
                     (A)  an administering firm for a health benefit
  plan providing coverage under Chapter 1551; and
                     (B)  if applicable, the claims administrator for
  the health benefit plan.
               (2)  "Chief administrative law judge" means the chief
  administrative law judge of the State Office of Administrative
  Hearings.
               (3)  "Enrollee" means an individual who is eligible to
  receive benefits through a preferred provider benefit plan or a
  health benefit plan under Chapter 1551.
               (4)  "Facility-based physician" means a radiologist,
  an anesthesiologist, a pathologist, an emergency department
  physician, or a neonatologist:
                     (A)  to whom the facility has granted clinical
  privileges; and
                     (B)  who provides services to patients of the
  facility under those clinical privileges.
               (5)  "Mediation" means a process in which an impartial
  mediator facilitates and promotes agreement between the insurer
  offering a preferred provider benefit plan or the administrator and
  a facility-based physician or the physician's representative to
  settle a health benefit claim of an enrollee.
               (6)  "Mediator" means an impartial person who is
  appointed to conduct a mediation under this chapter.
               (7)  "Party" means an insurer offering a preferred
  provider benefit plan, an administrator, or a facility-based
  physician or the physician's representative who participates in a
  mediation conducted under this chapter. The enrollee is also
  considered a party to the mediation.
         Sec. 1467.002.  APPLICABILITY OF CHAPTER.  This chapter
  applies to:
               (1)  a preferred provider benefit plan offered by an
  insurer under Chapter 1301; and
               (2)  an administrator of a health benefit plan, other
  than a health maintenance organization plan, under Chapter 1551.
         Sec. 1467.003.  RULES. The commissioner, the Texas Medical
  Board, and the chief administrative law judge shall adopt rules as
  necessary to implement their respective powers and duties under
  this chapter.
         Sec. 1467.004.  REMEDIES NOT EXCLUSIVE. The remedies
  provided by this chapter are in addition to any other defense,
  remedy, or procedure provided by law, including the common law.
         Sec. 1467.005.  REFORM. This chapter may not be construed to
  prohibit:
               (1)  an insurer offering a preferred provider benefit
  plan or administrator from, at any time, offering a reformed claim
  settlement; or
               (2)  a facility-based physician from, at any time,
  offering a reformed charge for medical services.
  [Sections 1467.006-1467.050 reserved for expansion]
  SUBCHAPTER B. MANDATORY MEDIATION
         Sec. 1467.051.  AVAILABILITY OF MANDATORY MEDIATION;
  EXCEPTION. (a) An enrollee may request mediation of a settlement of
  an out-of-network health benefit claim if:
               (1)  the amount for which the enrollee is responsible
  to a facility-based physician, after copayments, deductibles, and
  coinsurance, including the amount unpaid by the administrator or
  insurer, is greater than $1,000; and
               (2)  the health benefit claim is for a medical service
  or supply provided by a facility-based physician in a hospital that
  is a preferred provider or that has a contract with the
  administrator.
         (b)  Except as provided by Subsections (c) and (d), if an
  enrollee requests mediation under this subchapter, the
  facility-based physician or the physician's representative and the
  insurer or the administrator, as appropriate, shall participate in
  the mediation.
         (c)  Except in the case of an emergency and if requested by
  the enrollee, a facility-based physician shall, before providing a
  medical service or supply, provide a complete disclosure to an
  enrollee that:
               (1)  explains that the facility-based physician does
  not have a contract with the enrollee's health benefit plan;
               (2)  discloses projected amounts for which the enrollee
  may be responsible; and
               (3)  discloses the circumstances under which the
  enrollee would be responsible for those amounts.
         (d)  A facility-based physician who makes a disclosure under
  Subsection (c) and obtains the enrollee's written acknowledgment of
  that disclosure may not be required to mediate a billed charge under
  this subchapter if the amount billed is less than or equal to the
  maximum amount projected in the disclosure.
         Sec. 1467.052.  MEDIATOR QUALIFICATIONS. (a) Except as
  provided by Subsection (b), to qualify for an appointment as a
  mediator under this chapter a person must have completed at least 40
  classroom hours of training in dispute resolution techniques in a
  course conducted by an alternative dispute resolution organization
  or other dispute resolution organization approved by the chief
  administrative law judge.
         (b)  A person not qualified under Subsection (a) may be
  appointed as a mediator on agreement of the parties.
         (c)  A person may not act as mediator for a claim settlement
  dispute if the person has been employed by, consulted for, or
  otherwise had a business relationship with an insurer offering the
  preferred provider benefit plan or a physician during the three
  years immediately preceding the request for mediation.
         Sec. 1467.053.  APPOINTMENT OF MEDIATOR; FEES. (a) A
  mediation shall be conducted by one mediator.
         (b)  The chief administrative law judge shall appoint the
  mediator through a random assignment from a list of qualified
  mediators maintained by the State Office of Administrative
  Hearings.
         (c)  Notwithstanding Subsection (b), a person other than a
  mediator appointed by the chief administrative law judge may
  conduct the mediation on agreement of all of the parties and notice
  to the chief administrative law judge.
         (d)  The mediator's fees shall be split evenly and paid by
  the insurer or administrator and the facility-based physician.
         Sec. 1467.054.  REQUEST AND PRELIMINARY PROCEDURES FOR
  MANDATORY MEDIATION. (a) An enrollee may request mandatory
  mediation under this chapter.
         (b)  A request for mandatory mediation must be provided to
  the department on a form prescribed by the commissioner and must
  include:
               (1)  the name of the enrollee requesting mediation;
               (2)  a brief description of the claim to be mediated;
               (3)  contact information, including a telephone
  number, for the requesting enrollee and the enrollee's counsel, if
  the enrollee retains counsel;
               (4)  the name of the facility-based physician and name
  of the insurer or administrator; and
               (5)  any other information the commissioner may require
  by rule.
         (c)  On receipt of a request for mediation, the department
  shall notify the facility-based physician and insurer or
  administrator of the request.
         (d)  In an effort to settle the claim before mediation, all
  parties must participate in an informal settlement teleconference
  not later than the 30th day after the date on which the enrollee
  submits a request for mediation under this section.
         (e)  A dispute to be mediated under this chapter that does
  not settle as a result of a teleconference conducted under
  Subsection (d) must be conducted in the county in which the medical
  services were rendered.
         (f)  The enrollee may elect to participate in the mediation.
  A mediation may not proceed without the consent of the enrollee. An
  enrollee may withdraw the request for mediation at any time before
  the mediation.
         (g)  Notwithstanding Subsection (f), mediation may proceed
  without the participation of the enrollee or the enrollee's
  representative if the enrollee or representative is not present in
  person or through teleconference.
         Sec. 1467.055.  CONDUCT OF MEDIATION; CONFIDENTIALITY. (a)
  A mediator may not impose the mediator's judgment on a party about
  an issue that is a subject of the mediation.
         (b)  A mediation session is under the control of the
  mediator.
         (c)  Except as provided by this chapter, the mediator must
  hold in strict confidence all information provided to the mediator
  by a party and all communications of the mediator with a party.
         (d)  If the enrollee is participating in the mediation in
  person, at the beginning of the mediation the mediator shall inform
  the enrollee that if the enrollee is not satisfied with the mediated
  agreement, the enrollee may file a complaint with:
               (1)  the Texas Medical Board against the facility-based
  physician for improper billing; and
               (2)  the department for unfair claim settlement
  practices.
         (e)  A party must have an opportunity during the mediation to
  speak and state the party's position.
         (f)  Except on the agreement of the participating parties, a
  mediation may not last more than four hours.
         (g)  Except at the request of an enrollee, a mediation shall
  be held not later than the 180th day after the date of the request
  for mediation.
         (h)  On receipt of notice from the department that an
  enrollee has made a request for mediation that meets the
  requirements of this chapter, the facility-based physician may not
  pursue any collection effort against the enrollee who has requested
  mediation for amounts other than copayments, deductibles, and
  coinsurance before the earlier of:
               (1)  the date the mediation is completed; or
               (2)  the date the request to mediate is withdrawn.
         (i)  A service provided by a facility-based physician may not
  be summarily disallowed. This subsection does not require an
  insurer or administrator to pay for an uncovered service.
         (j)  A mediator may not testify in a proceeding, other than a
  proceeding to enforce this chapter, related to the mediation
  agreement.
         Sec. 1467.056.  MATTERS CONSIDERED IN MEDIATION; AGREED
  RESOLUTION. (a) In a mediation under this chapter, the parties
  shall:
               (1)  evaluate whether:
                     (A)  the amount charged by the facility-based
  physician for the medical service or supply is excessive; and
                     (B)  the amount paid by the insurer or
  administrator represents the usual and customary rate for the
  medical service or supply or is unreasonably low; and
               (2)  as a result of the amounts described by
  Subdivision (1), determine the amount, after copayments,
  deductibles, and coinsurance are applied, for which an enrollee is
  responsible to the facility-based physician.
         (b)  The facility-based physician may present information
  regarding the amount charged for the medical service or supply. The
  insurer or administrator may present information regarding the
  amount paid by the insurer.
         (c)  Nothing in this chapter prohibits mediation of more than
  one claim between the parties during a mediation.
         (d)  The goal of the mediation is to reach an agreement among
  the enrollee, the facility-based physician, and the insurer or
  administrator, as applicable, as to the amount paid by the insurer
  or administrator to the facility-based physician, the amount
  charged by the facility-based physician, and the amount paid to the
  facility-based physician by the enrollee.
         Sec. 1467.057.  NO AGREED RESOLUTION. (a) The mediator of
  an unsuccessful mediation under this chapter shall report the
  outcome of the mediation to the department, the Texas Medical
  Board, and the chief administrative law judge.
         (b)  The chief administrative law judge shall enter an order
  of referral of a matter reported under Subsection (a) to a special
  judge under Chapter 151, Civil Practice and Remedies Code, that:
               (1)  names the special judge on whom the parties agreed
  or appoints the special judge if the parties did not agree on a
  judge;
               (2)  states the issues to be referred and the time and
  place on which the parties agree for the trial;
               (3)  requires each party to pay the party's
  proportionate share of the special judge's fee; and
               (4)  certifies that the parties have waived the right
  to trial by jury.
         (c)  A trial by the special judge selected or appointed as
  described by Subsection (b) must proceed under Chapter 151, Civil
  Practice and Remedies Code, except that the special judge's verdict
  is not relevant or material to any other balance bill dispute and
  has no precedential value.
         (d)  Notwithstanding any other provision of this section,
  Section 151.012, Civil Practice and Remedies Code, does not apply
  to a mediation under this chapter.
         Sec. 1467.058.  CONTINUATION OF MEDIATION. After a referral
  is made under Section 1467.057, the facility-based physician and
  the insurer or administrator may elect to continue the mediation to
  further determine their responsibilities. Continuation of
  mediation under this section does not affect the amount of the
  billed charge to the enrollee.
         Sec. 1467.059.  MEDIATION AGREEMENT. The mediator shall
  prepare a confidential mediation agreement and order that states:
               (1)  the total amount for which the enrollee will be
  responsible to the facility-based physician, after copayments,
  deductibles, and coinsurance; and
               (2)  any agreement reached by the parties under Section
  1467.058.
         Sec. 1467.060.  REPORT OF MEDIATOR. The mediator shall
  report to the commissioner and the Texas Medical Board:
               (1)  the names of the parties to the mediation; and
               (2)  whether the parties reached an agreement or the
  mediator made a referral under Section 1467.057.
  [Sections 1467.061-1467.100 reserved for expansion]
  SUBCHAPTER C. BAD FAITH MEDIATION
         Sec. 1467.101.  BAD FAITH. (a) The following conduct
  constitutes bad faith mediation for purposes of this chapter:
               (1)  failing to participate in the mediation;
               (2)  failing to provide information the mediator
  believes is necessary to facilitate an agreement; or
               (3)  failing to designate a representative
  participating in the mediation with full authority to enter into
  any mediated agreement.
         (b)  Failure to reach an agreement is not conclusive proof of
  bad faith mediation.
         (c)  A mediator shall report bad faith mediation to the
  commissioner or the Texas Medical Board, as appropriate, following
  the conclusion of the mediation.
         Sec. 1467.102.  PENALTIES. (a) Bad faith mediation, by a
  party other than the enrollee, is grounds for imposition of an
  administrative penalty by the regulatory agency that issued a
  license or certificate of authority to the party who committed the
  violation.
         (b)  Except for good cause shown, on a report of a mediator
  and appropriate proof of bad faith mediation, the regulatory agency
  that issued the license or certificate of authority shall impose an
  administrative penalty.
  [Sections 1467.103-1467.150 reserved for expansion]
  SUBCHAPTER D. COMPLAINTS; CONSUMER PROTECTION
         Sec. 1467.151.  CONSUMER PROTECTION; RULES. (a) The
  commissioner and the Texas Medical Board, as appropriate, shall
  adopt rules regulating the investigation and review of a complaint
  filed that relates to the settlement of an out-of-network health
  benefit claim that is subject to this chapter. The rules adopted
  under this section must:
               (1)  distinguish among complaints for out-of-network
  coverage or payment and give priority to investigating allegations
  of delayed medical care;
               (2)  develop a form for filing a complaint and
  establish an outreach effort to inform enrollees of the
  availability of the claims dispute resolution process under this
  chapter;
               (3)  ensure that a complaint is not dismissed without
  appropriate consideration;
               (4)  ensure that enrollees are informed of the
  availability of mandatory mediation; and
               (5)  require the administrator to include a notice of
  the claims dispute resolution process available under this chapter
  with the explanation of benefits sent to an enrollee.
         (b)  The department and the Texas Medical Board shall
  maintain information:
               (1)  on each complaint filed that concerns a claim or
  mediation subject to this chapter; and
               (2)  related to a claim that is the basis of an enrollee
  complaint, including:
                     (A)  the type of services that gave rise to the
  dispute;
                     (B)  the type and specialty of the facility-based
  physician who provided the out-of-network service;
                     (C)  the county and metropolitan area in which the
  medical service or supply was provided;
                     (D)  whether the medical service or supply was for
  emergency care; and
                     (E)  any other information about:
                           (i)  the insurer or administrator that the
  commissioner by rule requires; or
                           (ii)  the physician that the Texas Medical
  Board by rule requires.
         (c)  The information collected and maintained by the
  department and the Texas Medical Board under Subsection (b)(2) is
  public information as defined by Section 552.002, Government Code,
  and may not include personally identifiable information or medical
  information.
         (d)  A facility-based physician who fails to provide a
  disclosure under Section 1467.051 is not subject to discipline by
  the Texas Medical Board for that failure and a cause of action is
  not created by a failure to disclose as required by Section
  1467.051.
         SECTION 2.  Subchapter A, Chapter 1301, Insurance Code, is
  amended by adding Section 1301.0055 to read as follows:
         Sec. 1301.0055.  NETWORK ADEQUACY STANDARDS. The
  commissioner shall by rule adopt network adequacy standards that:
               (1)  are adapted to local markets in which an insurer
  offering a preferred provider benefit plan operates;
               (2)  ensure availability of, and accessibility to, a
  full range of contracted physicians and health care providers to
  provide health care services to insureds; and
               (3)  on good cause shown, may allow departure from
  local market network adequacy standards if the commissioner posts
  on the department's Internet website the name of the preferred
  provider plan, the insurer offering the plan, and the affected
  local market.
         SECTION 3.  Section 1456.004, Insurance Code, is amended by
  adding Subsection (c) to read as follows:
         (c)  A facility-based physician who bills a patient covered
  by a preferred provider benefit plan or a health benefit plan under
  Chapter 1551 that does not have a contract with the facility-based
  physician shall send a billing statement to the patient with
  information sufficient to notify the patient of the mandatory
  mediation process available under Chapter 1467 if the amount for
  which the enrollee is responsible, after copayments, deductibles,
  and coinsurance, including the amount unpaid by the administrator
  or insurer, is greater than $1,000.
         SECTION 4.  Section 324.001, Health and Safety Code, is
  amended by adding Subsection (8) to read as follows:
               (8)  "Facility-based physician" means a radiologist,
  an anesthesiologist, a pathologist, an emergency department
  physician, or a neonatologist.
         SECTION 5.  Section 324.101(a), Health and Safety Code, is
  amended to read as follows:
         (a)  Each facility shall develop, implement, and enforce
  written policies for the billing of facility health care services
  and supplies.  The policies must address:
               (1)  any discounting of facility charges to an
  uninsured consumer, subject to Chapter 552, Insurance Code;
               (2)  any discounting of facility charges provided to a
  financially or medically indigent consumer who qualifies for
  indigent services based on a sliding fee scale or a written charity
  care policy established by the facility and the documented income
  and other resources of the consumer;
               (3)  the providing of an itemized statement required by
  Subsection (e);
               (4)  whether interest will be applied to any billed
  service not covered by a third-party payor and the rate of any
  interest charged;
               (5)  the procedure for handling complaints; [and]
               (6)  the providing of a conspicuous written disclosure
  to a consumer at the time the consumer is first admitted to the
  facility or first receives services at the facility that:
                     (A)  provides confirmation whether the facility
  is a participating provider under the consumer's third-party payor
  coverage on the date services are to be rendered based on the
  information received from the consumer at the time the confirmation
  is provided; [and]
                     (B)  informs consumers [the consumer] that a
  facility-based physician [or other health care provider] who may
  provide services to the consumer while the consumer is in the
  facility may not be a participating provider with the same
  third-party payors as the facility;
                     (C)  informs consumers that the consumer may
  receive a bill for medical services from a facility-based physician
  for the amount unpaid by the consumer's health benefit plan;
                     (D)  informs consumers that the consumer may
  request a listing of facility-based physicians who have been
  granted medical staff privileges to provide medical services at
  the facility; and
                     (E)  informs consumers that the consumer may
  request information from a facility-based physician on whether the
  physician has a contract with the consumer's health benefit plan
  and under what circumstances the consumer may be responsible for
  payment of any amounts not paid by the consumer's health benefit
  plan;
               (7)  the requirement that a facility provide a list, on
  request, to a consumer to be admitted to, or who is expected to
  receive services from, the facility, that contains the name and
  contact information for each facility-based physician or
  facility-based physician group that has been granted medical staff
  privileges to provide medical services at the facility; and
               (8)  if the facility operates a website that includes a
  listing of physicians who have been granted medical staff
  privileges to provide medical services at the facility, the posting
  on the facility's website of a list that contains the name and
  contact information for each facility-based physician or
  facility-based physician group that has been granted medical staff
  privileges to provide medical services at the facility and the
  updating of the list in any calendar quarter in which there are any
  changes to the list.
         SECTION 6.  (a)  Except as provided by Subsection (b), this
  Act applies only to a health benefit claim filed on or after the
  effective date of this Act. A claim filed before the effective date
  of this Act is governed by the law as it existed immediately before
  the effective date of this Act, and that law is continued in effect
  for that purpose.
         (b)  Section 1467.002(2), Insurance Code, as added by this
  Act, applies to a health benefit claim filed under a group policy or
  contract executed under Chapter 1551, Insurance Code, on or after
  September 1, 2010. A claim filed under a group policy or contract
  executed under Chapter 1551, Insurance Code, before September 1,
  2010, is governed by the law as it existed immediately before
  September 1, 2010, and that law is continued in effect for that
  purpose.
         SECTION 7.  As soon as practicable after the effective date
  of this Act, the commissioner of insurance, Texas Medical Board,
  and chief administrative law judge of the State Office of
  Administrative Hearings shall adopt rules as necessary to implement
  and enforce this Act.
         SECTION 8.  This Act takes effect immediately if it receives
  a vote of two-thirds of all the members elected to each house, as
  provided by Section 39, Article III, Texas Constitution. If this
  Act does not receive the vote necessary for immediate effect, this
  Act takes effect September 1, 2009.
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
 
         I certify that H.B. No. 2256 was passed by the House on May
  11, 2009, by the following vote:  Yeas 139, Nays 2, 3 present, not
  voting; and that the House concurred in Senate amendments to H.B.
  No. 2256 on May 29, 2009, by the following vote:  Yeas 136, Nays 1,
  4 present, not voting.
 
  ______________________________
  Chief Clerk of the House   
 
         I certify that H.B. No. 2256 was passed by the Senate, with
  amendments, on May 27, 2009, by the following vote:  Yeas 31, Nays
  0.
 
  ______________________________
  Secretary of the Senate   
  APPROVED: __________________
                  Date       
   
           __________________
                Governor