The start of the new year brings with it some new laws to Texas, including one that will affect patients and their health care providers. The law is intended to prevent patients from receiving surprise medical bills, a practice known as balance billing.
Who is Affected?
The change in law is significant, but it will only affect people whose health insurance is through fully insured plans that are regulated by the state of Texas. If your health insurance claims are paid directly by your insurance company, you have a fully insured plan. These plans are regulated by the Texas Department of Insurance (TDI) and are subject to the new surprise billing law.
However, the majority of people in Texas with health insurance are covered by their employer in a self-funded plan. That means the employer pays the health claim, even if it contracts with an insurance company to administer the health insurance benefits. These types of plans are regulated by the U.S. Department of Labor under the Employee Retirement Income Security Act of 1974 (ERISA). Additionally, health coverage through the Health Insurance Marketplace, Medicare and the Veterans Administration are not subject to the Texas surprise billing law.
What is Balance Billing?
Surprise medical bills can happen when patients see providers who are not in their plan’s insurance network. Because the provider does not have an agreed-to reimbursement rate schedule with the health plan, the provider does not receive a full reimbursement from the insurer and in turn sends a bill for the remaining balance to the patient.
Balance billing can occur with any type of provider or health care facility, such as a lab or hospital, but has been more common with certain types of specialists, such as radiologists and anesthesiologists. For various reasons, these specialists are less likely to be included in a health plan’s provider network. Here are a couple of scenarios where a patient might be balance billed:
- Because you’ve been having problems with painful gallstones, your physician advises you to have your gallbladder removed. You schedule the surgery after confirming that the surgeon is in your plan’s network. The hospital or surgery center you are going to is also in network. However, the anesthesiologist who is on duty the day of your surgery is not in your network, so her group later sends you a bill for the balance the insurer did not pay.
- Your son has a bad fall while he’s playing soccer on a Saturday morning. You’re afraid his arm may be fractured, so you rush him to the hospital to be checked out. The doctor orders an x-ray to find out the extent of the injury. The radiologist who reads the x-ray is not in your insurance network and you therefore receive a bill several weeks later to cover the balance of what he is owed.
Additionally, many consumers have reported receiving unexpected bills after visiting a free-standing emergency room. It is important to recognize the difference between an urgent care clinic – a facility that can treat common illnesses such as an upper-respiratory infection, the flu or digestive illness – and free-standing emergency rooms, which are designed to deal with medical emergencies. Some free-standing ERs are not in network with major plans. In other cases, the facility itself may be in network, but one or more of the providers working there is out of network.
“Physicians don’t want to see our patients receive a surprise medical bill,” said Fort Worth general surgeon, Dr. Travis Crudup. “Unfortunately, this sometimes happens because insurance companies have failed to maintain adequate networks for their policyholders, and they have also made it difficult for consumers to understand which providers are actually included in their networks.”
That’s why Texas physicians led the effort in 2019 to pass Senate Bill (SB) 1742, which requires health plans to clearly identify physicians who are in their networks, grouped by specialty area. This law will help patients better understand what providers are actually included in their plan’s network.
Surprise Billing Ban
The Texas Legislature also passed SB 1264 in 2019, aimed at ending surprise billing in state-regulated health insurance plans. This law will become effective on January 1, 2020.
SB 1264 aims to simply take the policyholder – the patient or patient’s family – out of billing disputes that arise when an out-of-network facility or provider is seeking payment. Instead of the facility or provider sending a bill to the patient, they will instead resolve it directly with the insurance company. In cases when agreement cannot be reached between the provider or facility and the insurer, the dispute will be settled via mediation when a facility is involved and arbitration when a provider is involved. In either case, the patient is not a party to the billing dispute.
The patient is still responsible for all co-pays and deductibles; nothing in SB 1264 changes that. The law allows for a patient to opt out of balanced billing protections in limited circumstances – a patient may choose to do this in order to see a specific specialist and is willing to pay more out of pocket to do so.
As of early December 2019, TDI and the Texas Medical Board – the two state agencies that are responsible for implementing SB 1264 – were still developing official rules that will determine precisely how the law will be implemented and enforced. Privia Medical Group North Texas will update this information once these rules have been finalized.
Surprise billing has become an important issue across the country and polls indicate a significant majority of Americans strongly support efforts to stop surprise medical bills. Legislation to enact a federal ban on surprise bills is pending in Congress. If passed, it would impact all ERISA health plans, the ones that provide coverage to the majority of Americans. Wherever this debate leads, physicians will continue to advocate for transparency in health insurance policies at both the state and federal levels.
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