See DCMS comments to Commissioner José Montemayor

On June 17, Gov Perry signed a bill that forever will change the reimbursement practices for medical services. Senate Bill 418, sponsored by Sen Jane Nelson (R-Flower Mound) and Rep John Smithee (R-Amarillo), and championed by Rep Craig Eiland (D-Galveston) will close many of the loopholes that insurance companies use to delay and avoid paying for medical services.

After four legislative sessions of negotiating, passing compromised bills, and surviving a veto, this bill could accomplish what physicians have been asking for years—get claims paid in a timely manner.

This bill introduces a business process called verification. Verification is a reliable representation, made by the insurer, that the proposed service is eligible for payment. Three elements critical to establishing that a service will be paid for are eligibility, medical necessity, and verification. With those elements in place, a claim would not be paid only if the service needed were misrepresented or a physician substantially failed to perform it.

The loophole has been closed that allowed health plans to define a “clean claim,” which forced medical practices to manage 20 or 30 definitions,. The new law promulgates Texas Department of Insurance to define the elements required to deem a claim “clean.” Health plans cannot contract around this definition. Under proposed rules already published, TDI will require boxes 14 and 15 to be completed only when the case is an accident.

Audit provisions also will change. When a health plan audits a claim, it will have to prepay 100 percent of the contracted rate and notify the practice on the explanation of payment that the claim is being audited. If the plan requires additional information to clarify the claim, the information must be clinical in nature, and specific to the claim and episode of care being billed. The information also must be contained in or be in the process of being incorporated into the patient’s chart or billing record. If the health plan determines that the claim was inappropriately paid and the health plan is not allowed to make a recoupment until all appeal rights are exhausted. The health plan must complete an audit within 180 days from the time the claim is received. Plans no longer will be able to recoup payments for services provided years previous, leaving the physician to chase down payment from a patient.

Timelines and penalties will change. The new law requires electronic claims to be paid in 30 days, and paper claims in 45. A penalty of half the difference between the contracted rate and billed charges will apply to claims paid after the 30-/45-day timelines before day 90. After 90 days, the plan will owe the practice full-billed charges, plus 18% interest. All penalties must be paid automatically and be reflected on the explanation of payment. The statute provides penalties for inaccurate payment. The guidelines are set in statute but will depend on rulemaking for explanation.

The bill also changes the process previously known as “coordination of benefits.” In a more accurate reflection of the process, the new terminology, “coordination of payment,” will be an insurer-to-insurer responsibility. Currently, a practice must file a claim with a primary payor, wait for payment, and then forward the explanation of payment to the secondary payor. The intent of the statute allows for the primary and secondary payor information, submitted on the claim, to be sufficient information to allow the plans to coordinate payment to the physician. If a payor makes a payment as primary and later learns he should have paid as secondary, the statute requires the primary payor—not the physician—to seek payment from the secondary payor.

After struggling for years to learn fee schedules and rules by which health plans bundled codes, SB 418 requires the use of nationally recognized, generally accepted Current Procedural Terminology codes, notes and guidelines, including all relevant modifiers, and be consistent with nationally recognized generally accepted bundling edits and logic.

The statute requires that all claims must be filed within 95 days. It extends the current “mailbox rule” from 3 days to 5 days. This provision says that a claim sent via US mail is deemed received 5 business days after mailing. In an effort to create efficiencies within the claims payment process, the statute prevents submission of duplicate claims until 45 days after the original filing.

As a matter of contract law, this statute will apply only to new and renewed contracts for services delivered after September 1.

SB 418 is a complicated bill that requires Texas Department of Insurance to develop rules of implementation. Rules were published in the Texas Register July 4 and are open for comment until Aug 4. The proposed rules may be found at www.tdi.state.tx.us/commish/parules.html. On August 7, TDI will hold a hearing for public comment on the proposed rules.

The legislators who fought hard for this groundbreaking legislation are monitoring the rulemaking process closely to make sure the legislative intent is carried out. The DCMS Socioeconomic Committee, chaired by Presley Mock, MD, submitted comments on the proposed rules, and committee member H.A. Tillman Hein, MD, planned to testify at the hearing. TDI invites testimony from all medical practices and interested parties. For more information contact Shellie Pruden, DCMS director of medical practice relations, at 214-948-3622, ext. 223, or e-mail Shellie@dallas-cms.org.