Yesterday, the Texas Senate’s Committee on Business and Commerce voted 7-2 to approve a substitute Senate Bill 1264 that was introduced in an effort to protect Texas patients from incurring surprise out-of-network medical bills. If passed, the proposed law would require health insurance companies to utilize alternative dispute resolution mechanisms to resolve so-called balance billing issues with Texas doctors and other medical providers before to sending a bill for the difference to patients. The amended Senate Bill 1264 combines two proposed bi-partisan measures aimed at protecting insured Texans from incurring unexpected medical bills following out-of-network medical treatment at emergency and other medical care facilities.
On February 28th, Republican Senator Kelly Hancock of Fort Worth introduced SB 1264 titled, “Relating to consumer protections against billing and limitations on information reported by consumer reporting agencies.” You may read more about the proposed measure in another Disputing blog post. Soon after, Democratic Senator John Whitmire of Houston introduced similar legislation titled “Relating to prohibited balance billing and an independent dispute resolution program for out-of-network coverage under certain managed care plans; authorizing a fee.” The two Senate bills were reportedly merged on Monday.
Before the merged bill becomes law, however, the proposed legislation must be approved by the entire Texas Senate as well as the House of Representatives. Companion legislation was introduced separately in the Texas House by Democratic Representative Trey Martinez Fischer of San Antonio and and Republican Representative Tom Oliverson of Harris County. A proposed House measure related to SB 1264 is currently being considered by the House Insurance Committee.
According to a report from the Houston Chronicle:
The law is modeled in part from a New York system and would replace Texas’ existing mediation process for settling disputed bills with a binding “baseball style arbitration.” Under the proposed arbitration, health providers and insurers submit their best and final offer to cover treatment costs and the final decision for payment is made by an arbiter based on supporting evidence, including in-network rates.
In previous research Cooper, the Yale health economist, found that under the New York arbitration system, out-of-network billing was reduced by 34 percent and in-network emergency physician payments were lowered by 9 percent.
Currently, patients in Texas must initiate the mediation process which was a barrier for many. Under the new legislation, patients are removed completely from the process and are only responsible for in-network rates for out-of-pocket costs, such as co-pays and deductibles.
It is important to note federally-regulated, self-funded health benefit plans, which account for about 40 percent of the health insurance market across the state, would not be required to comply with the currently proposed legislation. As introduced, SB 1264 would have allowed such healthcare plans to opt into the ADR program. Senator Hancock has since “introduced separate legislation that would allow such employers to participate in the state program.”
Two members of the Texas Senate’s Committee on Business and Commerce voted against the compromise measure. Republican Senator Schwertner of Georgetown stated:
While the substitute made some productive changes, I voted against the bill because it still favors unscrupulous, for-profit health insurance companies. It puts all of the onus on the providers and gives health plans with “deep pockets” the upper hand throughout the process. This bill will force more physicians out of network limiting in-network access for the consumer. We need to make sure the insurance products citizens are buying work for them instead of enriching big health insurance companies.
Similarly, Republican Senator Donna Campbell of New Braunfels reportedly believes the proposed legislation fails to hold medical insurers sufficiently accountable.
Please stay tuned to Disputing to learn more about future developments on this proposed Texas law!