TITLE 28.INSURANCE

Part 1. TEXAS DEPARTMENT OF INSURANCE

Chapter 3. LIFE, ACCIDENT AND HEALTH INSURANCE AND ANNUITIES

Subchapter X. PREFERRED PROVIDER PLANS

28 TAC §3.3703

The Texas Department of Insurance proposes an amendment to §3.3703, concerning insurer contracting arrangements with preferred providers. This amendment is necessary to implement Senate Bill (SB) 50 enacted during the 79th Regular Legislative Session. Consistent with SB 50, the amendment to §3.3703 requires that upon request from a preferred provider, an insurer shall include a provision in the provider contract providing that the insurer or the insurer’s clearinghouse may not deny or refuse to process an electronic clean claim because the claim is submitted in a batch of claims that contains claims that are deficient. The proposed amendment includes the contracting requirement provided by SB 50 and adds further language regarding the meaning of a batch submission. The proposed language clarifies that the reference to a batch submission is a reference to existing federal standardized transactions and provides that a batch submission is a group of electronic claims which are submitted for processing at the same time within a HIPAA standard ASC X12N 837 Transaction Set and identified by a batch control number. Although the department has, elsewhere in this edition of the Texas Register , proposed language regarding the meaning of batch submissions, insurers must avoid reading the language of SB 50 and the proposed language too narrowly. The language of the statute and the proposed amendment also apply to clean claims that are submitted "together with" claims that are deficient. This language is broader than the term "batch submission" and includes groups of claims that may or may not be properly classified as a batch submission for federal standardized transactions. Therefore, insurers should not inappropriately focus on whether claims that are submitted together are in a batch submission that meets the federal regulatory definition.

The department will consider the adoption of the proposed amendment in a public hearing under Docket No. 2615 scheduled for September 7, 2005, at 10:00 a.m. in Room 100 of the William P. Hobby Jr. State Office Building, 333 Guadalupe Street in Austin, Texas.

Kimberly Stokes, Senior Associate Commissioner for Life, Health and Licensing, has determined that for each year of the first five years the proposed section 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 rule. There will be no measurable effect on local employment or the local economy as a result of the proposal.

Ms. Stokes has determined that for each year of the first five years the section is in effect, the public benefits anticipated as a result of the proposed section will be the implementation of SB 50, which gives preferred providers the ability to request that an insurer include a provision in the provider contract indicating that the insurer will not deny or refuse to process an otherwise clean claim submitted in a batch of claims that may contain deficient claims. This will give preferred providers increased notice of the obligations that an insurer has to process clean claims that are submitted in accordance with the process required by the insurer. Any cost to persons required to comply with this section for each year of the first five years the proposed section will be in effect is the result of enactment of SB 50 and not the result of the adoption, enforcement, or administration of this section. Because any potential costs are mandated by the statute and insurers should be able to include this language in provider contracts at the request of a preferred provider regardless of the size of the insurer, it would be neither legal nor feasible to waive or modify the requirements for insurers that are small or micro businesses.

To be considered, written comments on the proposal must be submitted no later than 5:00 p.m. on September 6, 2005, to Gene C. Jarmon, 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 Kimberly Stokes, Mail Code 107-2A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104.

The amendments are proposed under Insurance Code §1301.0641 and §36.001. Section 1301.0641 provides that if requested by a preferred provider an insurer shall include a provision in the preferred provider's contract providing that the insurer or the insurer's clearinghouse may not refuse to process or pay an electronically submitted clean claim because the claim is submitted together with or in a batch submission with a claim that is deficient. Section 36.001 provides that the Commissioner of Insurance may adopt any rules necessary and appropriate to implement the powers and duties of the Texas Department of Insurance under the Insurance Code and other laws of this state.

The following statute is affected by this proposal: Insurance Code §1301.0641

§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) - (21) (No change.)

(22) Upon request by a preferred provider, an insurer shall include a provision in the preferred provider's contract providing that the insurer and the insurer's clearinghouse may not refuse to process or pay an electronically submitted clean claim because the claim is submitted together with or in a batch submission with a claim that is deficient. As used in this section, the term batch submission is a group of electronic claims submitted for processing at the same time within a HIPAA standard ASC X12N 837 Transaction Set and identified by a batch control number. This paragraph applies to a contract entered into or renewed on or after January 1, 2006.

(b) - (c) (No change.)

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on July 25, 2005.

TRD-200503027

Gene C. Jarmon

General Counsel and Chief Clerk

Texas Department of Insurance

Earliest possible date of adoption: September 4, 2005

For further information, please call: (512) 463-6327

Chapter 11. HEALTH MAINTENANCE ORGANIZATIONS

Subchapter J. PHYSICIAN AND PROVIDER CONTRACTS AND ARRANGEMENTS

28 TAC §11.901

The Texas Department of Insurance proposes amendments to §11.901 concerning health maintenance organization (HMO) contracting arrangements with participating physicians and providers. These amendments are necessary to implement Senate Bill (SB) 50 enacted during the 79th Regular Legislative Session. Consistent with SB 50, the amendments to §11.901 require that upon request from a preferred provider, an HMO shall include a provision in the physician’s or provider’s contract providing that the HMO or the HMO’s clearinghouse may not deny or refuse to process an electronic clean claim because the claim is submitted in a batch of claims that contains claims that are deficient. The proposed amendment includes the contracting requirement provided by SB 50 and adds further language regarding the meaning of a batch submission. The proposed language clarifies that the reference to a batch submission is a reference to existing federal standardized transactions and provides that a batch submission is a group of electronic claims which are submitted for processing at the same time within a HIPAA standard ASC X12N 837 Transaction Set and identified by a batch control number. Although the department has, elsewhere in this edition of the Texas Register, proposed language regarding the meaning of batch submissions, HMOs must avoid reading the language of SB 50 and the proposed language too narrowly. The language of the statute and the proposed amendment also apply to clean claims that are submitted "together with" claims that are deficient. This language is broader than the term "batch submission" and includes groups of claims that may or may not be properly classified as a batch submission for federal standardized transactions. Therefore, HMOs should not inappropriately focus on whether claims that are submitted together are in a batch submission that meets the federal regulatory definition.

The department will consider the adoption of the proposed amendments in a public hearing under Docket No. 2616 scheduled for September 7, 2005, at 10:00 a.m. in Room 100 of the William P. Hobby Jr. State Office Building, 333 Guadalupe Street in Austin, Texas.

Kimberly Stokes, Senior Associate Commissioner for Life, Health and Licensing, has determined that for each year of the first five years the proposed section 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 rule. There will be no measurable effect on local employment or the local economy as a result of the proposal.

Ms. Stokes has determined that for each year of the first five years the section is in effect, the public benefits anticipated as a result of the proposed section will be the implementation of SB 50, which gives participating physicians and providers the ability to request that an HMO include a provision in the physician’s or provider’s contract indicating that the HMO will not deny or refuse to process an otherwise clean claim submitted in a batch of claims that may contain deficient claims. This will give physicians and providers increased notice of the obligations that an HMO has to process clean claims that are submitted in accordance with the process required by the HMO. Any cost to persons required to comply with this section for each year of the first five years the proposed section will be in effect is the result of enactment of SB 50 and not the result of the adoption, enforcement, or administration of this section. Because any potential costs are mandated by the statute and HMOs should be able to include this language in physician and provider contracts at the request of a physician or provider regardless of the size of the HMO, it would be neither legal nor feasible to waive or modify the requirements for HMOs that are small or micro businesses.

To be considered, written comments on the proposal must be submitted no later than 5:00 p.m. on September 6, 2005, to Gene C. Jarmon, 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 Kimberly Stokes, Mail Code 107-2A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104.

The amendments are proposed under the Insurance Code §§843.323 and 36.001. Section 843.323 provides that if requested by a preferred provider an HMO shall include a provision in the preferred provider's contract providing that the HMO or the HMO's clearinghouse may not refuse to process or pay an electronically submitted clean claim because the claim is submitted together with or in a batch submission with a claim that is deficient. Section 36.001 provides that the Commissioner of Insurance may adopt any rules necessary and appropriate to implement the powers and duties of the Texas Department of Insurance under the Insurance Code and other laws of this state.

The following statute is affected by this proposal: §843.323

§11.901.Required Provisions.

(a) - (b) (No change.)

(c) Upon request by a participating physician or provider, an HMO shall include a provision in the physician's or provider's contract providing that the HMO and the HMO’s clearinghouse may not refuse to process or pay an electronically submitted clean claim because the claim is submitted together with or in a batch submission with a claim that is deficient. As used in this section, the term batch submission is a group of electronic claims submitted for processing at the same time within a HIPAA standard ASC X12N 837 Transaction Set and identified by a batch control number. This subsection applies to a contract entered into or renewed on or after January 1, 2006.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on July 25, 2005.

TRD-200503028

Gene C. Jarmon

General Counsel and Chief Clerk

Texas Department of Insurance

Earliest possible date of adoption: September 4, 2005

For further information, please call: (512) 463-6327

Chapter 19. AGENTS' LICENSING

Subchapter R. UTILIZATION REVIEW AGENTS

28 TAC §§19.1703, 19.1723, 19.1724

The Texas Department of Insurance proposes amendments to §§19.1703, 19.1723, and 19.1724 concerning utilization review agents. These amendments are necessary to implement Senate Bill (SB) 51 (79th Regular Legislative Session), which in pertinent part establishes preauthorization and verification procedures for single service HMOs providing dental and routine vision services. The proposed amendments to §19.1703 add definitions for "routine vision services," consistent with the language of SB 51, and "single health care service plan." The proposed amendments to §19.1723 and §19.1724 change the required periods for the availability of personnel to receive and respond to requests for preauthorization and verification for single service HMOs providing dental and routine vision services. In addition, changes were made to §19.1723 and §19.1724(a) to update references and correct a typographical error.

The department will consider the adoption of the proposed amendments in a public hearing under Docket No. 2618 scheduled for September 7, 2005, at 10:00 a.m. in Room 100 of the William P. Hobby Jr. State Office Building, 333 Guadalupe Street in Austin, Texas.

Kimberly Stokes, Senior Associate Commissioner for Life, Health and Licensing, has determined that for each year of the first five years the proposed sections 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 rule. There will be no measurable effect on local employment or the local economy as a result of the proposal.

Ms. Stokes has 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 more specific preauthorization and verification procedures for single service HMOs providing dental and routine vision services, as required by SB 51. Any cost to persons required to comply with these sections for each year of the first five years the proposed sections will be in effect is the result of the enactment of SB 51, and existing law, and not the result of the adoption, enforcement, or administration of the sections. SB 51 amends prompt pay laws that have been in effect since the enactment of Senate Bill (SB) 418 (78th Regular Legislative Session). Because these laws have applied to, among others, single service HMOs providing dental and routine vision services, such HMOs have been required to have systems and procedures in place to comply with the preauthorization and verification procedures. Because the preauthorization and verification procedures should have been in place for all HMOs, and because SB 51 merely changes the required periods for the availability of personnel to receive and respond to requests for preauthorization and verification for all single service HMOs providing dental and routine vision services, there is no additional cost to such HMOs for complying with these procedures. In addition, waiver of the rules could result in a competitive disadvantage for those HMOs to whom the waiver would apply. As a result of this possibility, and because SB 51 applies to all single service HMOs providing dental or routine vision services, it would be neither legal nor feasible to waive or modify the requirements for single service HMOs that are small or micro businesses.

To be considered, written comments on the proposal must be submitted no later than 5:00 p.m. on September 6, 2005, to Gene C. Jarmon, 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 Kimberly Stokes, Mail Code 107-2A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104.

The amendments are proposed under Insurance Code §§843.347(h) and (i), 843.348(i) and (j), and 36.001. Sections 843.347(h) and (i) and 843.348(i) and (j) provide that an HMO providing routine vision services as a single health care service plan or providing dental health care services as a single health care service plan is not required to comply with the timeframes for receiving and responding to requests for preauthorization and verification set forth for other carriers, but must instead have appropriate personnel reasonably available between 8:00 a.m. and 5:00 p.m. central time Monday through Friday to receive and respond to such requests; have a telephone system capable of accepting and recording incoming requests during other times; and respond to those off-hour requests no later than the next business day after the call is received. Section 36.001 provides that the Commissioner of Insurance may adopt any rules necessary and appropriate to implement the powers and duties of the Texas Department of Insurance under the Insurance Code and other laws of this state.

The following sections are affected by this proposal: §843.347 and §843.348

§19.1703.Definitions.

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) - (32) (No change.)

(33) Routine vision services--A routine annual or biennial eye examination to determine ocular health and refractive conditions that may include provision of glasses or contact lenses.

(34) [ (33) ] Screening criteria--The written policies, decision rules, medical protocols, or guides used by the utilization review agent as part of the utilization review process (e.g., appropriateness evaluation protocol (AEP) and intensity of service, severity of illness, discharge, and appropriateness screens (ISD-A)).

(35) Single health care service plan--A single health care service plan as defined by Insurance Code Section 843.002(26).

(36) [ (34) ] Utilization review--A system for prospective or concurrent review of the medical necessity and appropriateness of health care services being provided or proposed to be provided to an individual within the state. Utilization review shall not include elective requests for clarification of coverage.

(37) [ (35) ] Utilization review agent--An entity that conducts utilization review, for an employer with employees in this state who are covered under a health benefit plan or health insurance policy, a payor, or an administrator.

(38) [ (36) ] Utilization review plan--The screening criteria and utilization review procedures of a utilization review agent.

(39) [ (37) ] Verification--A guarantee by an HMO or preferred provider carrier that the HMO or preferred provider carrier will pay for proposed medical care or health care services if the services are rendered within the required timeframe to the patient for whom the services are proposed. The term includes pre-certification, certification, re-certification and any other term that would be a reliable representation by an HMO or preferred provider carrier to a physician or provider if the request for the pre-certification, certification, re-certification, or representation includes the requirements of §19.1724(d) of this title (relating to Verification).

(40) [ (38) ] Working day--A weekday, excluding New Years Day, Memorial Day, Fourth of July, Labor Day, Thanksgiving Day, and Christmas Day.

§19.1723.Preauthorization.

(a) - (c) (No change.)

(d) On receipt of a preauthorization request from a preferred provider for proposed services that require preauthorization, the HMO or preferred provider carrier shall issue and transmit a determination indicating whether the proposed medical or health care services are preauthorized. An HMO or preferred provider carrier shall respond to request for preauthorization within the following time periods.

(1) For services not included under paragraphs (2) and (3) of this subsection, the determination must be issued and transmitted not later than the third calendar day after the date the request is received by the HMO or preferred provider carrier. If the request is received outside of the period requiring the availability of appropriate personnel as required in subsections [ subsection ] (e) and (f) of this section, the determination must be issued and transmitted within three calendar days from the beginning of the next time period requiring such personnel.

(2) If the proposed medical or health care services are for concurrent hospitalization care, the HMO or preferred provider carrier shall issue and transmit a determination indicating whether proposed services are preauthorized within 24 hours of receipt of the request. If the request is received outside of the period requiring the availability of appropriate personnel as required in subsections [ subsection ] (e) and (f) of this section , the determination must be issued and transmitted within 24 hours from the beginning of the next time period requiring such personnel.

(3) If the proposed medical care or health care services involve post-stabilization treatment, or a life-threatening condition as defined in §19.1703 of this title (relating to Definitions), the HMO or preferred provider carrier shall issue and transmit a determination indicating whether proposed services are preauthorized within the time appropriate to the circumstances relating to the delivery of the services and the condition of the patient, but in no case to exceed one hour from receipt of the request. If the request is received outside of the period requiring the availability of appropriate personnel as required in subsections [ subsection ] (e) and (f) of this section , the determination must be issued and transmitted within one hour from the beginning of the next time period requiring such personnel. In such circumstances, the determination shall be provided to the treating physician or health care provider. If the HMO or preferred provider carrier issues an adverse determination in response to a request for post-stabilization treatment or a request for treatment involving a life-threatening condition, the HMO or preferred provider carrier shall provide to the enrollee or person acting on behalf of the enrollee, and the enrollee's provider of record, the notification required by §19.1721(c) of this title (relating to Independent Review of Adverse Determinations).

(e) A preferred provider may inquire via telephone as to the HMO or preferred provider carrier’s preauthorization determination. An HMO or preferred provider carrier shall have appropriate personnel as described in §19.1706 of this title (relating to Personnel) reasonably available at a toll-free telephone number to provide the determination between 6:00 a.m. and 6:00 p.m. central time Monday through Friday on each day that is not a legal holiday and between 9:00 a.m. and noon central time on Saturday, Sunday, and legal holidays. An HMO or preferred provider carrier must have a telephone system capable of accepting or recording incoming inquiries after 6:00 p.m. central time Monday through Friday and after noon central time on Saturday, Sunday, and legal holidays and must acknowledge each of those calls not later than 24 hours after the call is received. An HMO or preferred provider carrier providing a preauthorization determination under [ this ] subsection (d) of this section shall, within three calendar days of receipt of the request, provide a written notification to the preferred provider.

(f) An HMO providing routine vision services or dental health care services as a single health care service plan is not required to comply with subsection (e) of this section with respect to those services. An HMO that is exempt from subsection (e), as described in this subsection, shall:

(1) have appropriate personnel as described in §19.1706 of this title (relating to Personnel) reasonably available at a toll-free telephone number to provide the preauthorization determination between 8:00 a.m. and 5:00 p.m. central time Monday through Friday on each day that is not a legal holiday;

(2) have a telephone system capable of accepting or recording incoming inquiries after 5:00 p.m. central time Monday through Friday and all day on Saturday, Sunday, and legal holidays, and must acknowledge each of those calls not later than the next business day after the call is received; and

(3) when providing a preauthorization determination under subsection (d) of this section, within three calendar days of receipt of the request, provide a written notification to the preferred provider.

(g) [ (f) ] If an HMO or preferred provider carrier has preauthorized medical care or health care services, the HMO or preferred provider carrier may not deny or reduce payment to the physician or provider for those services based on medical necessity or appropriateness of care unless the physician or provider has materially misrepresented the proposed medical or health care services or has substantially failed to perform the preauthorized medical or health care services.

(h) [ (g) ] If an HMO or preferred provider carrier issues an adverse determination in response to a request made under subsection (d) of this section, a notice consistent with the provisions of §19.1710(c) of this title (relating to Notice of Determinations Made by Utilization Review Agents) shall be provided to the enrollee, a person acting on behalf of the enrollee, or the enrollee’s provider of record. An enrollee may appeal any adverse determination in accordance with §19.1712 of this title (relating to Appeal of Adverse Determination of Utilization Review Agents).

(i) [ (h) ] This section applies to an agent or other person with whom an HMO or preferred provider carrier contracts to perform, or to whom the HMO or preferred provider carrier delegates the performance of preauthorization of proposed medical or health care services. Delegation of preauthorization services does not limit in any way the HMO or preferred provider carrier’s responsibility to comply with all statutory and regulatory requirements.

(j) [ (i) ] The provisions of this section may not be waived, voided, or nullified by contract.

§19.1724.Verification.

(a) The provisions of this section apply to :

(1) HMOs;

(2) preferred provider carriers;

(3) preferred providers; and

(4) physicians or health care providers that provide to an enrollee of an HMO or preferred provider carrier:

(A) care related to an emergency or its attendant episode of care as required by state or federal law; or

(B) specialty or other medical care or health care services at the request of the HMO, preferred provider carrier, or a preferred provider because the services are not reasonably available from a preferred provider who is included in the HMO or preferred provider carrier’s network.

(b) - (c) (No change.)

(d) An HMO providing routine vision services or dental health care services as a single health care service plan is not required to comply with subsection (c) of this section with respect to those services. An HMO that is exempt from subsection (c) of this section, as described in this subsection, shall:

(1) have appropriate personnel reasonably available at a toll-free telephone number to accept telephone requests for verification and to provide determinations of previously requested verifications between 8:00 a.m. and 5:00 p.m. central time Monday through Friday on each day that is not a legal holiday;

(2) have a telephone system capable of accepting or recording incoming inquiries after 5:00 p.m. central time Monday through Friday and all day on Saturday, Sunday, and legal holidays. The HMO must acknowledge each of those calls not later than the next business day after the call is received.

(e) [ (d) ] Any request for verification shall contain the following information:

(1) patient name;

(2) patient ID number, if included on an identification card issued by the HMO or preferred provider carrier;

(3) patient date of birth;

(4) name of enrollee or subscriber, if included on an identification card issued by the HMO or preferred provider carrier;

(5) patient relationship to enrollee or subscriber;

(6) presumptive diagnosis, if known, otherwise presenting symptoms;

(7) description of proposed procedure(s) or procedure code(s);

(8) place of service code where services will be provided and, if place of service is other than provider’s office or provider’s location, name of hospital or facility where proposed service will be provided;

(9) proposed date of service;

(10) group number, if included on an identification card issued by the HMO or preferred provider carrier;

(11) if known to the provider, name and contact information of any other carrier, including the name, address and telephone number, name of enrollee, plan or ID number, group number (if applicable), and group name (if applicable);

(12) name of provider providing the proposed services; and

(13) provider’s federal tax ID number.

(f) [ (e) ] Receipt of a written request or a written response to a request for verification under this section is subject to the provisions of §21.2816 of this title (relating to Date of Receipt).

(g) [ (f) ] If necessary to verify proposed medical care or health care services, an HMO or preferred provider carrier may, within one day of receipt of the request for verification, request information from the preferred provider in addition to the information provided in the request for verification. An HMO or preferred provider carrier may make only one request for additional information from the requesting preferred provider under this section.

(h) [ (g) ] A request for information under subsection (g) [ (f) ] of this section must:

(1) be specific to the verification request;

(2) describe with specificity the clinical and other information to be included in the response;

(3) be relevant and necessary for the resolution of the request; and

(4) be for information contained in or in the process of being incorporated into the enrollee’s medical or billing record maintained by the preferred provider.

(i) [ (h) ] On receipt of a request for verification from a preferred provider, the HMO or preferred provider carrier shall issue a verification or declination. An HMO or preferred provider carrier shall issue the verification or declination within the following time periods.

(1) Except as provided in paragraphs (2) and (3) of this subsection, an HMO or preferred provider carrier shall provide a verification or declination in response to a request for verification without delay, and as appropriate to the circumstances of the particular request, but not later than five days after the date of receipt of the request for verification. If the request is received outside of the period requiring the availability of appropriate personnel as required in subsections [ subsection ] (c) and (d) of this section , the determination must be provided within five days from the beginning of the next time period requiring such personnel.

(2) If the request is related to a concurrent hospitalization, the response must be sent to the preferred provider without delay but not later than 24 hours after the HMO or preferred provider carrier received the request for verification. If the request is received outside of the period requiring the availability of appropriate personnel as required in subsections [ subsection ] (c) and (d) of this section , the determination must be provided within 24 hours from the beginning of the next time period requiring such personnel.

(3) If the request is related to post-stabilization care or a life-threatening condition, the response must be sent to the preferred provider without delay but not later than one hour after the HMO or preferred provider carrier received the request for verification. If the request is received outside of the period requiring the availability of appropriate personnel as required in subsections [ subsection ] (c) and (d) of this section , the determination must be provided within one hour from the beginning of the next time period requiring such personnel.

(j) [ (i) ] If the request involves services for which preauthorization is required, the HMO or preferred provider carrier shall follow the procedures set forth in §19.1723 of this title (relating to Preauthorization) and respond regarding the preauthorization request in compliance with that section.

(k) [ (j) ] A verification or declination may be delivered via telephone call, in writing or by other means, including the Internet, as agreed to by the preferred provider and the HMO or preferred provider carrier. If the verification or declination is delivered via telephone call, the HMO or preferred provider carrier shall, within three calendar days of providing a verbal response, provide a written response which must include, at a minimum:

(1) enrollee name;

(2) enrollee ID number;

(3) requesting provider’s name;

(4) hospital or other facility name, if applicable;

(5) a specific description, including relevant procedure codes, of the services that are verified or declined;

(6) if the services are verified, the effective period for the verification, which shall not be less than 30 days from the date of verification;

(7) if the services are verified, any applicable deductibles, copayments, or coinsurance for which the enrollee is responsible;

(8) if the verification is declined, the specific reason for the declination;

(9) a unique verification number that allows the HMO or preferred provider carrier to match the verification and subsequent claims related to the proposed service; and

(10) a statement that the proposed services are being verified or declined pursuant to Title 28 Texas Administrative Code §19.1724.

(l) [ (k) ] An HMO or preferred provider carrier that issues a verification may not deny or otherwise reduce payment to the preferred provider for those medical care or health care services if provided on or before the expiration date for the verification, which shall not be less than 30 days, unless the preferred provider has materially misrepresented the proposed medical or health care services or has substantially failed to perform the medical or health care services as verified.

(m) [ (l) ] The provisions of this section may not be waived, voided, or nullified by contract.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on July 25, 2005.

TRD-200503029

Gene C. Jarmon

General Counsel and Chief Clerk

Texas Department of Insurance

Earliest possible date of adoption: September 4, 2005

For further information, please call: (512) 463-6327

Chapter 21. TRADE PRACTICES

Subchapter T. SUBMISSION OF CLEAN CLAIMS

28 TAC §§21.2802, 21.2807, 21.2815, 21.2821

The Texas Department of Insurance proposes amendments to §§21.2802, 21.2807, 21.2815, and 21.2821, concerning submission of clean claims. These amendments: (1) ensure that carriers are aware of the responsibility to process a clean claim submitted together with deficient claims; (2) ensure that penalties are calculated consistently and in accordance with statutory requirements; and (3) provide consistency in reporting dates and clarify the reporting period for the required verification data report.

The proposed amendment to §21.2802 adds a definition of patient responsibility to clarify that the term does not include amounts that are not a portion of the contracted rate. Section 21.2802 also contains a proposed definition of "batch submission" to add clarity to the proposed amendments to §21.2807 that detail a carrier's obligations with respect to multiple claims submitted together. The proposed amendments to §21.2807 provide that a carrier may not deny or refuse to process a clean electronic claim because the claim is submitted together with or in a batch submission with claims that are deficient. This is consistent with the statutory and regulatory requirements that, upon receiving an electronic clean claim at the designated address for claims receipt, a carrier must pay, deny or audit the claim within 30 days. The department recognizes that Senate Bill (SB) 50 (79th Regular Legislative Session) requires carriers to, upon request, include a provision in the provider’s contract indicating that the carrier will not deny or refuse to process an otherwise clean claim submitted in a batch of claims that may contain deficient claims. The department has, elsewhere in this edition of the Texas Register , proposed amendments to the contracting requirement rules in Chapters 3 and 11 that implement SB 50. The changes in law allow providers to be better aware of their rights under their contracts with health plans. The proposed changes to §21.2807 clarify that the requirement to process an electronic clean claim exists when the carrier receives the claim despite the claim being included among other claims that may or may not be clean. The requirement to process clean claims submitted together with deficient claims exists whether or not there is language in the contract addressing batch claim submissions. The proposed definition of "batch submission" identifies the intended consistency between the term and its usage in federal standardized electronic health care transactions by clarifying that the reference to a batch submission is a reference to existing federal standardized electronic health care transactions. Although the department has proposed language regarding the meaning of "batch submissions," carriers must avoid reading the language of SB 50 and the proposed language too narrowly. The language of the statute and the proposed amendment also apply to clean claims that are submitted "together with" claims that are deficient. This language is broader than the term "batch submission" and includes groups of claims that may or may not be properly classified as a batch submission for federal standardized transactions. Therefore, carriers should not unduly focus on whether claims that are submitted together are in a batch submission that meets the federal regulatory definition. In addition, changes were made to this section to change specific references to more general references to reduce the need for frequent updating and revisions.

The proposed amendments to §21.2815 clarify the methodology for calculating a penalty when applicable patient responsibility under the terms of the health care plan is taken into consideration. The department has received inquiries regarding the particular issue of coinsurance responsibilities when calculating a penalty under the underpayment provisions of §21.2815. In seeking to address this issue, the department recognizes the need to address the penalty section as a whole to avoid any further confusion and has proposed amendments to both the late payment and underpayment sections of the penalty provisions in the subchapter.

For late payment penalties, the existing rule language and the statute provide that the basis for the penalty is the difference between billed charges and the contracted rate for the services. Because a single carrier may offer several different health plans that include varying levels of patient responsibility, the amount the carrier owes for a particular claim may vary. The design of the health plan’s patient responsibility provisions will not affect the total amount the provider is due under the contract, but will affect the respective obligations of the carrier and patient. In order to consistently base prompt pay penalties on the difference between the provider’s billed charges and the contracted rate for the services as required by the statute, the proposed amendments clarify that the contracted rate is the total amount the provider is due under the terms of the contract, which includes patient responsibility.

To interpret "contracted rate" in a late payment penalty calculation to include only the amount owed by the carrier would allow penalty amounts to vary based upon patient responsibility. This would actually increase penalties as the carrier’s responsibility for a particular claim decreases. For example, assume the billed charge for a service is $1,500, and the contracted rate for the services is $1,000. If the patient owes $950 due to an unpaid deductible, the carrier will owe only a small amount ($50) for the claim. If the carrier fails to pay the $50 within the statutory claims payment period, the penalty will be $1,500 minus $1,000, or $500. If the amount owed by the carrier is used as the contracted rate, the penalty increases to $1,500 minus $50, or $1,450. To avoid this potential and inappropriate result, the amendments to §21.2815(b)(1) clarify that patient financial responsibility is included in the contracted rate used for calculating a penalty.

The proposed amendments to §21.2815(d) clarify the method for calculating a penalty on an underpaid claim. The statute requires the carrier to calculate "the ratio of the amount underpaid on the contracted rate to the contracted rate as applied to the billed charges." This results in the carrier paying the billed charges rate for the portion of the claim the carrier failed to pay on time. The proposal includes an example that clarifies how coinsurance or other patient responsibility should be treated when calculating an underpayment penalty. The proposal also clarifies that the ratio used in the calculation should be the balance the carrier owes on the claim to the total amount the provider is due under the contract with the health plan. This represents the percentage of the claim that was left unpaid after the carrier’s initial payment. This is consistent with the statutory directive that the carrier must pay "a penalty on the amount not timely paid." (Insurance Code Article 3.70-3C §3I(d) and §843.342(d).) This percentage is then applied to the billed charges so that the penalty is based upon the specific portion of the claim that was paid late. The proposed amendments provide examples that include patient responsibility amounts so that providers and carriers are better aware of the correct calculation methods.

The department has also proposed an amendment to subsection (e) to clarify penalty calculations for claims that are subject to coordination of benefits for multiple carriers. The proposed amendment indicates that the overall percentage of the claim owed by the secondary carrier will impact the penalty calculations such that the contracted rate and billed charges amounts are both reduced to be consistent with the secondary carrier’s obligation on the claim.

The proposed amendments to §21.2821 change the deadline for the annual verification reporting requirement and clarify the time period for which reporting is required. The proposed reporting date has been changed to August 15 to make it consistent with one of the existing dates for quarterly reporting of claims data. The proposed amendment to the reporting time period establishes the 12-month period for reporting as July 1 of the prior year through June 31 of the current year.

The department will consider the adoption of the proposed amendments in a public hearing under Docket No. 2617 scheduled for September 7, 2005, at 10:00 a.m. in Room 100 of the William P. Hobby Jr. State Office Building, 333 Guadalupe Street in Austin, Texas.

Kimberly Stokes, Senior Associate Commissioner for Life, Health and Licensing, has determined that for each year of the first five years the proposed sections 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 rule. There will be no measurable effect on local employment or the local economy as a result of the proposal.

Ms. Stokes has determined that for each year of the first five years the sections are in effect, the public benefits anticipated as a result of the proposed amendments will be the clarification of a carrier’s obligation to pay all properly submitted clean claims regardless of whether they are submitted together with claims that are deficient. This will avoid improper denials of clean claims and the unnecessary delays and penalties that result from those denials. In addition, the proposed amendments will add clarity and consistency to the calculation of prompt pay penalties. The proposed amendments also specify a reporting period for verification request data so that carriers will be better aware of the requirements for collecting data. Finally, the proposed amendments provide greater efficiency by consolidating reporting dates for annual verification reporting with the second quarter claims data reporting requirement. Any cost to persons required to comply with these proposed amendments for each year of the first five years the amendments will be in effect is the result of the enactment of Senate Bill 418 (SB 418) (78th Regular Legislative Session) and not the result of the adoption, enforcement, or administration of the amendments. The proposed amendments clarify existing requirements under this subchapter and do not create new obligations or processes for persons required to comply with the rules. Consistent with SB 418, the proposed amendment to §21.2807 explains the application of the requirement to process a clean claim in a timely manner to circumstances in which clean claims are submitted together with deficient claims, an obligation that existed prior to the proposed amendments. The proposed amendments to §21.2815 provide clarifying language and examples to better enable carriers to calculate penalties and do not create any new obligations not already required under the existing rules or SB 418. The proposed amendments to §21.2821 include minor changes to existing reporting requirements and do not impose any additional costs. Ms. Stokes has determined that there is no adverse economic impact on entities that qualify as a small business or micro-business under Government Code §2006.001 as a result of the proposed amendments. In addition, the department believes it is neither legal nor feasible to waive the provisions of the proposed amendments for small or micro businesses since all carriers, regardless of size, are subject to the statutory penalty requirements and will benefit from the additional guidance provided in the proposed amendments.

To be considered, written comments on the proposal must be submitted no later than 5:00 p.m. on September 6, 2005, to Gene C. Jarmon, 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 Kimberly Stokes, Mail Code 107-2A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104.

The amendments are proposed under Insurance Code Articles 3.70-3C §3A(e), 3.70-3C §3I, and 21.52Y, and §§843.342, 843.338, and 36.001. Article 3.70-3C §3A(e) and §843.338 require carriers to pay clean claims upon receipt and within the statutory claims payment period. Article 3.70-3C §3I and §843.342 provide for the calculation of penalties for violations of prompt pay requirements. Article 21.52Y creates the Technical Advisory Committee on Claims Processing (TACCP) to advise the commissioner on claims processing, payment and adjudication. The statute requires the TACCP to submit a biannual report to the legislature concerning the activities of the committee. The reporting requirements in this subchapter are necessary to provide information to the TACCP in fulfilling its statutory role. Section 36.001 provides that the Commissioner of Insurance may adopt any rules necessary and appropriate to implement the powers and duties of the Texas Department of Insurance under the Insurance Code and other laws of this state.

The following statutes are affected by this proposal: Insurance Code Articles 3.70-3C §3A(e), 3.70-3C §3I, and 21.52Y, and §843.342 and §843.338

§21.2802.Definitions.

The following words and terms when used in this subchapter shall have the following meanings:

(1) (No change.)

(2) Batch submission--A group of electronic claims submitted for processing at the same time within a HIPAA standard ASC X12N 837 Transaction Set and identified by a batch control number.

(3) [ (2) ] Billed charges--The charges for medical care or health care services included on a claim submitted by a physician or provider. For purposes of this subchapter, billed charges must comply with all other applicable requirements of law, including Texas Health and Safety Code §311.0025, Texas Occupations Code §105.002, and Texas Insurance Code Art. 21.79F.

(4) [ (3) ] CMS--The Centers for Medicare and Medicaid Services of the U.S. Department of Health and Human Services.

(5) [ (4) ] Catastrophic event--An event, including acts of God, civil or military authority, acts of public enemy, war, accidents, fires, explosions, earthquake, windstorm, flood or organized labor stoppages, that cannot reasonably be controlled or avoided and that causes an interruption in the claims submission or processing activities of an entity for more than two consecutive business days.

(6) [ (5) ] Clean claim--

(A) For non-electronic claims, a claim submitted by a physician or provider for medical care or health care services rendered to an enrollee under a health care plan or to an insured under a health insurance policy that includes:

(i) the required data elements set forth in §21.2803(b) of this title (relating to Elements of a Clean Claim); and

(ii) if applicable, the amount paid by the primary plan or other valid coverage pursuant to §21.2803(c) of this title (relating to Elements of a Clean Claim);

(B) For electronic claims, a claim submitted by a physician or provider for medical care or health care services rendered to an enrollee under a health care plan or to an insured under a health insurance policy using the ASC X12N 837 format and in compliance with all applicable federal laws related to electronic health care claims, including applicable implementation guides, companion guides and trading partner agreements.

(7) [ (6) ] Condition code--The code utilized by CMS to identify conditions that may affect processing of the claim.

(8) [ (7) ] Contracted rate--Fee or reimbursement amount for a preferred provider's services, treatments, or supplies as established by agreement between the preferred provider and the HMO or preferred provider carrier.

(9) [ (8) ] Corrected claim--A claim containing clarifying or additional information necessary to correct a previously submitted claim.

(10) [ (9) ] Deficient claim--A submitted claim that does not comply with the requirements of §21.2803(b), (c) or (e) of this title.

(11) [ (10) ] Diagnosis code--Numeric or alphanumeric codes from the International Classification of Diseases (ICD-9-CM), Diagnostic and Statistical Manual (DSM-IV), or their successors, valid at the time of service.

(12) [ (11) ] Duplicate claim--Any claim submitted by a physician or provider for the same health care service provided to a particular individual on a particular date of service that was included in a previously submitted claim. The term does not include corrected claims, or claims submitted by a physician or provider at the request of the HMO or preferred provider carrier.

(13) [ (12) ] HMO--A health maintenance organization as defined by Insurance Code §843.002(14).

(14) [ (13) ] HMO delivery network--As defined by Insurance Code §843.002(15).

(15) [ (14) ] Institutional provider--An institution providing health care services, including but not limited to hospitals, other licensed inpatient centers, ambulatory surgical centers, skilled nursing centers and residential treatment centers.

(16) [ (15) ] Occurrence span code--The code utilized by CMS to define a specific event relating to the billing period.

(17) [ (16) ] Patient control number--A unique alphanumeric identifier assigned by the institutional provider to facilitate retrieval of individual financial records and posting of payment.

(18) Patient responsibility--Any portion of the contracted rate for which the patient is responsible. Patient responsibility does not include amounts due from a patient in addition to the contracted fee or reimbursement amount for the specific services, treatments, or supplies.

(19) [ (17) ] Patient-status-at-discharge code--The code utilized by CMS to indicate the patient's status at time of discharge or billing.

(20) [ (18) ] Physician--Anyone licensed to practice medicine in this state.

(21) [ (19) ] Place of service code--The codes utilized by CMS that identify the place at which the service was rendered.

(22) [ (20) ] Preferred provider--

(A) with regard to a preferred provider carrier, a preferred provider as defined by Insurance Code Article 3.70-3C, §1(10) (Preferred Provider Benefit Plans) or Article 3.70-3C, §1(1) (Use of Advanced Practice Nurses and Physician Assistants by Preferred Provider Plans).

(B) with regard to an HMO,

(i) a physician, as defined by Insurance Code §843.002(22), who is a member of that HMO's delivery network; or

(ii) a provider, as defined by Insurance Code §843.002(24), who is a member of that HMO's delivery network.

(23) [ (21) ] Preferred provider carrier--An insurer that issues a preferred provider benefit plan as provided by Insurance Code Article 3.70-3C, Section 2 (Preferred Provider Benefit Plans).

(24) [ (22) ] Primary plan--As defined in §3.3506 of this title (relating to Use of the Terms "Plan," "Primary Plan," "Secondary Plan," and "This Plan" in Policies, Certificates and Contracts).

(25) [ (23) ] Procedure code--Any alphanumeric code representing a service or treatment that is part of a medical code set that is adopted by CMS as required by federal statute and valid at the time of service. In the absence of an existing federal code, and for non-electronic claims only, this definition may also include local codes developed specifically by Medicaid, Medicare, an HMO, or a preferred provider carrier to describe a specific service or procedure.

(26) [ (24) ] Provider--Any practitioner, institutional provider, or other person or organization that furnishes health care services and that is licensed or otherwise authorized to practice in this state, other than a physician.

(27) [ (25) ] Revenue code--The code assigned by CMS to each cost center for which a separate charge is billed.

(28) [ (26) ] Secondary plan--As defined in §3.3506 of this title.

(29) [ (27) ] Source of admission code--The code utilized by CMS to indicate the source of an inpatient admission.

(30) [ (28) ] Statutory claims payment period--

(A) the 45-calendar-day period in which an HMO or preferred provider carrier shall make claim payment or denial, in whole or in part, after receipt of a non-electronic clean claim pursuant to Insurance Code Article 3.70-3C, §3A (Preferred Provider Benefit Plans) and Chapter 843;

(B) the 30-calendar-day period in which an HMO or preferred provider carrier shall make claim payment or denial, in whole or in part, after receipt of an electronically submitted clean claim pursuant to Insurance Code Article 3.70-3C, §3A (Preferred Provider Benefit Plans) and Chapter 843; or

(C) the 21-calendar-day period in which an HMO or preferred provider carrier shall make claim payment after affirmative adjudication of an electronically submitted clean claim for a prescription benefit pursuant to Insurance Code Article 3.70-3C, §3A(f) (Preferred Provider Benefit Plans) and §843.339, and §21.2814 of this title (relating to Electronic Adjudication of Prescription Benefits).

(31) [ (29) ] Subscriber--If individual coverage, the individual who is the contract holder and is responsible for payment of premiums to the HMO or preferred provider carrier; or if group coverage, the individual who is the certificate holder and whose employment or other membership status, except for family dependency, is the basis for eligibility for enrollment in a group health benefit plan issued by the HMO or the preferred provider carrier.

(32) [ (30) ] Type of bill code--The three-digit alphanumeric code utilized by CMS to identify the type of facility, the type of care, and the sequence of the bill in a particular episode of care.

§21.2807.Effect of Filing a Clean Claim.

(a) (No change.)

(b) After receipt of a clean claim, prior to the expiration of the applicable statutory claims payment period specified in §21.2802 [ §21.2802(28) ] of this title (relating to Definitions), an HMO or preferred provider carrier shall:

(1) - (4) (No change.)

(c) With regard to a clean claim for a prescription benefit subject to the statutory claims payment period specified in §21.2802 [ §21.2802(28)(C) ] of this title [ (relating to Definitions) ], an HMO or preferred provider carrier shall, after receipt of an electronically submitted clean claim for a prescription benefit that is affirmatively adjudicated pursuant to Insurance Code Article 3.70-3C, §3A(f) (Preferred Provider Benefit Plans) and Insurance Code §843.339, pay the prescription benefit claim within 21 calendar days after the clean claim is adjudicated.

(d) An HMO or preferred provider carrier or an HMO’s or preferred provider carrier’s clearinghouse that receives an electronic clean claim is subject to the requirements of this subchapter regardless of whether the claim is submitted together with, or in a batch submission with, a claim that is deficient.

§21.2815.Failure to Meet the Statutory Claims Payment Period.

(a) (No change.)

(b) The following examples demonstrate how to calculate penalty amounts under subsection (a) of this section:

(1) If the contracted rate , including any patient financial responsibility, [ owed by the HMO or preferred provider carrier ] is $10,000 and the billed charges are $15,000, and the HMO or preferred provider carrier pays the claim [ is paid ] on or before the 45th day after the end of the applicable statutory claims payment period, the HMO or preferred provider carrier shall pay, in addition to the amount [ contracted rate ] owed on the claim, 50% of the difference between the billed charges ($15,000) and the contracted rate ($10,000) or $2,500 . The basis for the penalty is the difference between the total contracted amount, including any patient responsibility, and the provider’s billed charges ;

(2) - (3) (No change.)

(c) (No change.)

(d) For the purposes of subsection (c) of this section, the underpaid amount is calculated on the ratio of the balance owed by the carrier [ amount underpaid on the contracted rate ] to the total contracted rate, including any patient financial responsibility, [ contracted rate ] as applied to the billed charges. For example, a claim for a contracted rate of $1,000.00 and billed charges of $1,500.00 is initially underpaid at $600.00, with the insured owing $200.00 and the HMO or preferred provider carrier owing a balance of $200.00. The HMO or preferred provider carrier pays the [ $800.00 and the ] $200.00 balance [ is paid ] on the 30th day after the end of the applicable statutory claims payment period. The amount the HMO or preferred provider carrier initially underpaid, $200.00, is 20% of the contracted rate. To [ In order to ] determine the penalty, the HMO or preferred provider carrier must calculate 20% of the billed charges, which is $300.00. This amount represents the underpaid amount for subsection (c)(1) of this section. Therefore, the HMO or preferred provider carrier must pay, as a penalty, 50% of $300.00, or $150.00.

(e) For purposes of calculating a penalty when an HMO or preferred provider carrier is a secondary carrier for a claim, the contracted rate and billed charges must be reduced in accordance with the percentage of the entire claim that is owed by the secondary carrier. The following example illustrates this method: Carrier A pays 80% of a claim for a contracted rate of $1,000 and billed charges of $1,500, leaving $200 unpaid as the patient's responsibility. The patient has coverage through Carrier B that is secondary and Carrier B will owe the $200 balance. If Carrier B fails to pay the $200 within the applicable statutory claims payment period, Carrier B will pay a penalty based on the percentage of the claim that it owed. The contracted rate for Carrier B will therefore be $200 (20% of $1,000), and the billed charges will be $300 (20% of $1,500).

(f) [ (e) ] An HMO or preferred provider carrier is not liable for a penalty under this section:

(1) if the failure to pay the claim in accordance with the applicable statutory claims payment period is a result of a catastrophic event that the HMO or preferred provider carrier certified according to the provisions of §21.2819 of this title (relating to Catastrophic Event); or

(2) if the claim was paid in accordance with §21.2807 of this title, but for less than the contracted rate, and:

(A) the preferred provider notifies the HMO or preferred provider carrier of the underpayment after the 180th day after the date the underpayment was received; and

(B) the HMO or preferred provider carrier pays the balance of the claim on or before the 45th day after the date the insurer receives the notice of underpayment.

(g) [ (f) ] Subsection (f) [ (e) ] of this section does not relieve the HMO or preferred provider carrier of the obligation to pay the remaining unpaid contracted rate owed the preferred provider.

(h) [ (g) ] An HMO or preferred provider carrier that pays a penalty under this section shall clearly indicate on the explanation of payment the amount of the contracted rate paid, the amount of the billed charges as submitted by the physician or provider and the amount paid as a penalty. A non-electronic explanation of payment complies with this requirement if it clearly and prominently identifies the notice of the penalty amount.

§21.2821.Reporting Requirements.

(a) - (d) (No change.)

(e) An HMO or preferred provider carrier shall annually submit to the department, on or before August 15th [ July 31 ], at a minimum, information related to the number of declinations of requests for verifications from July 1st of the prior year to June 30th of the current year, in the following categories:

(1) policy or contract limitations:

(A) premium payment timeframes that prevent verifying eligibility for 30-day period;

(B) policy deductible, specific benefit limitations or annual benefit maximum;

(C) benefit exclusions;

(D) no coverage or change in membership eligibility, including individuals not eligible, not yet effective or membership cancelled;

(E) pre-existing condition limitations; and

(F) other.

(2) declinations due to inability to obtain necessary information in order to verify requested services from the following persons:

(A) the requesting physician or provider;

(B) any other physician or provider; and

(C) any other person.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on July 25, 2005.

TRD-200503026

Gene C. Jarmon

General Counsel and Chief Clerk

Texas Department of Insurance

Earliest possible date of adoption: September 4, 2005

For further information, please call: (512) 463-6327

Subchapter DD. ELIGIBILITY STATEMENTS

28 TAC §§21.3801 - 21.3808

The Texas Department of Insurance proposes new Subchapter DD, §§21.3801 - 21.3808, concerning eligibility statements. These new sections are necessary to implement the provisions of Senate Bill (SB) 1149 (79th Regular Legislative Session), requiring carriers to provide certain eligibility information to contracted physicians and providers (hereinafter collectively referred to as "providers"). Consistent with SB 1149, the department consulted with the Technical Advisory Committee on Claims Processing (TACCP) in a meeting held June 30, 2005, and solicited comments prior to initiating the rulemaking process. The proposed amendments create a new Subchapter DD relating to eligibility statements. Proposed §21.3801 defines the scope of the subchapter and provides that, consistent with SB 1149, the provisions of Insurance Code §1274.002 and this subchapter do not apply to Medicaid and Children's Health Insurance Program (CHIP) plans. Insurance Code §1274.005 allows the Commissioner of Insurance, in consultation with the Commissioner of the Health and Human Services Commission, to determine whether certain provisions of §1274.002 will cause a negative fiscal impact to the state with respect to providing benefits or services under the Medicaid and CHIP plans and, if so, to waive application of those provisions. Based upon a request from the Commissioner of the Health and Human Services Commission, proposed §21.3801 states that the statute and rules do not apply to Medicaid and CHIP plans. Proposed §21.3802 provides definitions for terms used within the subchapter. Proposed §21.3803 sets forth the requirement that carriers provide written notice to providers of the acceptable method(s) for requesting eligibility statements. The written notice is required to be delivered to providers that enter into or renew contracts with a health benefit plan issuer on or after January 31, 2006. The notice may be included in existing materials, such as a provider manual or other provider communication, which may be available on a website or in other electronic format. If an issuer chooses to make the eligibility statement process available to all participating providers and not limit the availability of the process to only those providers that enter into or renew a contract on or after January 31, 2006, the issuer may provide the notice to all participating providers. Proposed §21.3804 identifies the information required in a request for an eligibility statement. As a result of the consultation process with the TACCP, the department is aware that existing processes that closely mirror the requirements of SB 1149 require the inclusion of an identification number or other information in the provider’s initial request. Consistent with the statutory framework, the proposed rules require health benefit plan issuers to maintain a system that is able to provide eligibility statements in response to the three items of information required for a request. If a health benefit plan issuer is unable to locate an enrollee using the three pieces of information provided in the request, the health benefit plan issuer may request additional information. However, a health benefit plan issuer may not require that the provider include any additional information as part of an initial request for an eligibility statement. The ability to request additional information may not be used as a substitute for compliance with the requirement to provide eligibility statements in response to the three items of information required in a request. The department anticipates that requests for additional information should rarely be necessary if the health benefit plan issuer is compliant with the requirements of proposed §21.3805(a).

Additionally, if the provider is seeking information concerning whether the service to be performed is a covered benefit, the provider must include a description of the specific type or category of service. Consistent with the requirement that a health benefit plan issuer provide benefit information related to the type or category of service, the provider need not include such detailed information as procedure codes or a specific description of the service. If a provider would like confirmation of whether a particular service will be covered under the terms of the policy, the provider may request a verification under §19.1724 of this title. Under that process, the provider will include an increased level of detail regarding the proposed services and the response will include a more definite answer as to the coverage terms of the policy. Consistent with this concept, §21.3807 specifies that an eligibility statement is not a verification under §19.1724 of this title.

Proposed §21.3805 details the required content of an eligibility statement and the requirement that the health benefit plan issuer provide an eligibility statement in such a manner as to give a provider access to the information at the time of the enrollee’s visit. An eligibility statement provided under this proposed section is not required to be in writing and may be delivered telephonically, electronically, or by internet website portal consistent with the procedures detailed by the health benefit plan issuer pursuant to §21.3803. If the provider includes in the request information concerning the proposed services, the health benefit plan issuer must respond with information concerning whether that type or category of service is a covered benefit under the policy. Because the eligibility statement process is designed to quickly provide information to a provider so that a patient’s eligibility status is known at the time of the visit, a health benefit plan issuer is required to provide more general coverage information regarding the type or category of service and not to issue a guarantee that a particular service is covered. A provider that wishes to receive a guarantee that a claim resulting from a proposed service will be paid should utilize the existing verification process that is designed for that purpose.

Proposed §21.3806 provides that a health benefit plan issuer may refuse to provide all or a portion of an eligibility statement if applicable privacy laws prevent disclosure. Proposed §21.3806 also requires the health benefit plan issuer to describe the reason(s) for refusing to provide the eligibility information. Within three days, the health benefit plan issuer must also provide a written explanation of the reason(s) and identify the applicable law(s) that prevent disclosure. The health benefit plan issuer may provide this information via e-mail, facsimile or other electronic means. The department believes it is important that the information be provided in written form because it ensures that the provider has the opportunity to evaluate the factual and legal basis for the health benefit plan issuer’s refusal to provide the information and, if appropriate, respond to the identified privacy concerns. Proposed §21.3808 provides for the severability of the subchapter.

The department will consider the adoption of the proposed new sections in a public hearing under Docket No. 2619 scheduled for September 7, 2005, at 10:00 a.m. in Room 100 of the William P. Hobby Jr. State Office Building, 333 Guadalupe Street in Austin, Texas.

Kimberly Stokes, Senior Associate Commissioner for Life, Health and Licensing, has determined that for each year of the first five years the proposed sections 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 rule. There will be no measurable effect on local employment or the local economy as a result of the proposal.

Ms. Stokes has determined that for each year of the first five years the sections are in effect, the public benefits anticipated as a result of the proposed sections will be the establishment of a clear process by which providers may make requests for eligibility information and health benefit plan issuers may respond to such requests. Implementation should result in greater availability to providers of current information relating to enrollee demographics, enrollment and eligibility status, benefits, and financial responsibility. Except as provided in this discussion, any cost to persons required to comply with these sections for each year of the first five years the proposed sections will be in effect is the result of the enactment of SB 1149 and not the result of the adoption, enforcement, or administration of the sections. The probable economic cost to persons required to comply with the sections is as follows. The requirement that health benefit plan issuers provide written notice of methods for eligibility statement requests set forth in §21.3803 may impose an additional cost not required by the statute. This requirement is necessary to enable providers to request eligibility statements efficiently by providing a clear understanding of each health benefit plan issuer’s process for receiving and responding to eligibility requests. The proposal does not require health benefit plan issuers to deliver the notice by any particular means, and they may reduce or avoid costs by including the notice in existing materials, such as a provider manual or other provider communication, which may be available on a website or in other electronic format. Notices that are delivered electronically, whether included with other materials or sent separately, should not result in additional cost. For printed notices, a health benefit plan issuer should not incur additional cost if the notice will fit on an existing page of a provider manual or other similar materials. If a health benefit plan issuer decides to print the notice and it does not fit on an existing page, the health benefit plan issuer will be subject to the cost of one additional printed sheet of paper, which the department estimates will cost between one and four cents per page. If a health benefit plan issuer intends to distribute a separate printed notice to participating providers, it will incur the cost of paper plus the cost of delivery to all participating providers, which should not exceed 40 cents per provider. The costs associated with delivery of the notice may include postage or expenses related to facsimile transmission. The total cost to a health benefit plan issuer will depend on the number of notices it needs to print and distribute and the method it uses for distribution. Except to the extent that the size of a health benefit plan issuer may impact the number of providers with which the issuer may contract, and thus the number of notices that it must provide, the cost of the notices should not vary between health benefit plan issuers that are large, small, or micro businesses. The department believes it would be neither legal nor feasible to exempt small or micro businesses from this part of the proposed rule, or to establish separate compliance standards, since to do so would unfairly deprive providers that have contracted with small or micro businesses of information critical to the eligibility statement process.

The requirement that health benefit plan issuers provide a written explanation of the inability to provide an eligibility statement due to privacy laws will impose an additional cost not required by the statute. This requirement is necessary to ensure that a provider has the opportunity to evaluate the factual and legal basis for the health benefit plan issuer’s refusal to provide an eligibility statement and, if appropriate, respond to the identified privacy concerns. A health benefit plan issuer may deliver the written explanation via e-mail, facsimile transmission, U.S. mail, or other electronic means. No matter which method the issuer employs, the requirement that an issuer identify a privacy law that prevents disclosure is not purely a function of the rule. SB 1149 states that health benefit plan issuers may only provide information to providers authorized under state and federal law to receive personally identifiable information, and privacy laws prevent unauthorized disclosure of such information. In order to comply with these requirements, health benefit plan issuers must be able to determine whether a requesting provider is authorized under state and federal law to receive the information. Therefore, the only cost related to the requirement that a health benefit plan issuer provide an explanation for its inability to provide an eligibility statement is related to reducing the explanation to written form and transmitting it to the provider. As with the notice for methods of eligibility statement requests, an issuer may combine this notice with other transmissions, such as the eligibility statement for another enrollee. If the issuer transmits the notice separately, costs will depend on the method used. As indicated herein, the department estimates the cost of one printed sheet of paper at between one and four cents. If a health benefit plan issuer intends to provide the explanation to providers via U.S. mail or facsimile, it will incur the cost of paper plus the cost of delivery, which should not exceed 40 cents per explanation. The costs associated with delivery of the notice may include postage or expenses related to facsimile transmission. If a health benefit plan issuer transmits the information via e-mail, the health benefit plan issuer should not incur any additional cost for transmission. For existing electronic systems designed to provide eligibility information to providers, such as web portals, some programming costs may be necessary to enable the system to produce a written explanation of the applicable privacy issue that prevents disclosure. According to May 2004 data from the U.S. Bureau of Labor Statistics, the mean hourly rate for a computer programmer in the insurance business is $33.92. The amount of time necessary to implement system changes will vary greatly based upon the complexity of the system and current capabilities of the system. If an issuer has an existing system to provide eligibility information to providers, the system should include a function that will enable the health benefit plan issuer to evaluate whether privacy laws prevent disclosure of information, which is not a part of the cost that results from this proposal. Any capabilities that an existing system has to evaluate and identify privacy considerations will mitigate any cost this proposal imposes.

The cost to a health benefit plan issuer is not dependent upon the size of the health benefit plan issuer, but rather is dependent upon the number of persons to whom the health benefit plan issuer provides health coverage and the number of providers with whom the health benefit plan issuer contracts. Both small and micro businesses and the largest businesses affected by these sections would incur the same cost per notice. The cost per hour of labor for any required computer system changes would not vary between the smallest and largest businesses. Therefore, it is the department's position that the adoption of these proposed sections will have no adverse economic effect on small or micro businesses. Regardless of the fiscal effect, it is neither legal nor feasible to waive or modify the requirements of this rule for small or micro businesses because the proposed amendments are either required by statute or would potentially result in certain providers not receiving necessary information regarding the effect of privacy laws on the provider’s request based solely on the size of the health benefit plan issuer.

To be considered, written comments on the proposal must be submitted no later than 5:00 p.m. on September 6, 2005, to Gene C. Jarmon, 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 Kimberly Stokes, Mail Code 107-2A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104.

The new sections are proposed under Insurance Code Chapter 1274 and §36.001. Chapter 1274 requires health benefit plan issuers to provide specific eligibility information to participating providers upon request. Section 36.001 provides that the Commissioner of Insurance may adopt any rules necessary and appropriate to implement the powers and duties of the Texas Department of Insurance under the Insurance Code and other laws of this state.

The following statutes are affected by this proposal: Insurance Code §§1274.001 - 1274.005

§21.3801.Scope and Applicability.

This subchapter applies to a health benefit plan issuer that enters into or renews a contract with a participating provider on or after January 31, 2006. The provisions of Insurance Code §1274.002 and this subchapter are not applicable to Medicaid and Children's Health Insurance Program (CHIP) plans provided by a health benefit plan issuer to persons enrolled in the medical assistance program established under Chapter 32, Human Resources Code, or the child health plan established under Chapter 62, Health and Safety Code.

§21.3802.Definitions.

The following words and terms, when used in this subchapter, shall have the following meanings unless the context clearly indicates otherwise.

(1) Enrollee--An individual who is eligible for coverage under a health benefit plan, including a covered dependent.

(2) Health benefit plan--A group, blanket, or franchise insurance policy, a certificate issued under a group policy, a group hospital service contract, or a group subscriber contract or evidence of coverage issued by a health maintenance organization that provides benefits for health care services. The term does not include:

(A) accident-only or disability income insurance coverage or a combination of accident-only and disability income insurance coverage;

(B) credit-only insurance coverage;

(C) disability insurance coverage;

(D) coverage only for a specified disease or illness;

(E) Medicare services under a federal contract;

(F) Medicare supplement and Medicare Select policies regulated in accordance with federal law;

(G) long-term care coverage or benefits, nursing home care coverage or benefits, home health care coverage or benefits, community-based care coverage or benefits, or any combination of those coverages or benefits;

(H) coverage that provides only dental or vision benefits;

(I) coverage provided by a single service health maintenance organization;

(J) coverage issued as a supplement to liability insurance;

(K) workers' compensation insurance coverage or similar insurance coverage;

(L) automobile medical payment insurance coverage;

(M) a jointly managed trust authorized under 29 U.S.C. Section 141 et seq. that contains a plan of benefits for employees that is negotiated in a collective bargaining agreement governing wages, hours, and working conditions of the employees that is authorized under 29 U.S.C. Section 157;

(N) hospital indemnity or other fixed indemnity insurance coverage;

(O) reinsurance contracts issued on a stop-loss, quota-share, or similar basis;

(P) liability insurance coverage, including general liability insurance and automobile liability insurance coverage; or

(Q) coverage that provides other limited benefits specified by federal regulations.

(3) Health benefit plan issuer--Any entity that issues a health benefit plan, including:

(A) a health maintenance organization operating under Insurance Code Chapter 843;

(B) an approved nonprofit health corporation that holds a certificate of authority under Insurance Code Chapter 844;

(C) an insurance company;

(D) a group hospital service corporation operating under Insurance Code Chapter 842;

(E) a fraternal benefit society operating under Insurance Code Chapter 885; or

(F) a stipulated premium company operating under Insurance Code Chapter 884.

(4) Health care provider--

(A) a person, other than a physician, who is licensed or otherwise authorized to provide a health care service in this state, including:

(i) a pharmacist or dentist; or

(ii) a pharmacy, hospital, or other institution or organization;

(B) a person who is wholly owned or controlled by a provider or by a group of providers who are licensed or otherwise authorized to provide the same health care service; or

(C) a person who is wholly owned or controlled by one or more hospitals and physicians, including a physician-hospital organization.

(5) Participating provider--

(A) a physician or health care provider who contracts with a health benefit plan issuer to provide medical care or health care to enrollees in a health benefit plan; or

(B) a physician or health care provider who accepts and treats a patient on a referral from a physician or provider described by subparagraph (A) of this paragraph.

(6) Physician--

(A) an individual licensed to practice medicine in this state under Subtitle B, Title 3, Occupations Code;

(B) a professional association organized under the Texas Professional Association Act (Article 1528f, Vernon's Texas Civil Statutes);

(C) a nonprofit health corporation certified under Chapter 162, Occupations Code;

(D) a medical school or medical and dental unit, as defined or described by §§61.003, 61.501, or 74.601, Education Code, that employs or contracts with physicians to teach or provide medical services or employs physicians and contracts with physicians in a practice plan; or

(E) another entity wholly owned by physicians.

(7) Primary enrollee--The individual who is the certificate holder and whose employment or other membership status, except for family dependency, is the basis for eligibility under the health benefit plan.

§21.3803.Method for Requesting Eligibility Statements.

(a) Beginning January 31, 2006, a health benefit plan issuer shall, in writing, communicate to each participating provider that enters into or renews a contract with the health benefit plan issuer, the method or methods by which the provider may request an eligibility statement. The health benefit plan issuer may communicate the method or methods a provider may use to request an eligibility statement in existing materials, such as a provider manual, so long as the information is clearly identified and properly captioned with an underlined or bold-faced, or otherwise conspicuous heading.

(b) A health benefit plan issuer may accept a request for an eligibility statement by:

(1) telephone;

(2) internet website portal; or

(3) other electronic means.

§21.3804.Requests for Eligibility Statements.

(a) A participating provider may, prior to providing services to an enrollee, request an eligibility statement using a method designated by the health benefit plan issuer.

(b) A request under subsection (a) of this section must include:

(1) the enrollee’s full name;

(2) the enrollee’s relationship to the primary enrollee; and

(3) the enrollee’s birth date.

(c) If the participating provider is seeking information concerning the enrollee’s benefits under §21.3805(b)(2)(B) of this subchapter (relating to Requirement to Provide Eligibility Statements), the request must also include a description of the specific type or category of service.

§21.3805.Requirement to Provide Eligibility Statements.

(a) A health benefit plan issuer shall maintain a system to enable it to provide eligibility statements to participating providers using the information provided under §21.3804(b) and (c) of this subchapter (relating to Requests for Eligibility Statements). On receipt of a request for an eligibility statement that complies with §21.3804 of this subchapter, a health benefit plan issuer must provide an eligibility statement to the participating provider allowing the provider access to the information at the time of the enrollee’s visit.

(b) If the health benefit plan issuer is unable to provide an eligibility statement, the health benefit plan issuer shall notify the participating provider and may request additional information to assist the health benefit plan issuer in providing an eligibility statement. A health benefit plan issuer may not use a request for additional information to satisfy the requirement that the issuer maintain a system to provide eligibility statements using the information described in §21.3804(b) and (c) of this subchapter.

(c) An eligibility statement provided under this section shall include information that will enable the participating provider to determine at the time of the request:

(1) the enrollee’s identification and eligibility under the health benefit plan, including:

(A) the enrollee's identification number assigned by the health benefit plan issuer;

(B) the name of the enrollee and all covered dependents, if necessary to provide services to the patient;

(C) the birth date of the enrollee and the birth dates of all covered dependents, if necessary to provide services to the patient;

(D) the gender of the enrollee and the gender of each covered dependent, if necessary to provide services to the patient; and

(E) the current enrollment and eligibility status of the enrollee under the health benefit plan;

(2) the enrollee's benefits, including:

(A) excluded benefits or limitations, both group and individual; and

(B) if the participating provider included the information required by §21.3804(c) of this subchapter, whether the specific type or category of service is a benefit under the policy; and

(3) the enrollee's financial information, including:

(A) copayment requirements, if any; and

(B) the unmet amount of the enrollee's deductible or enrollee financial responsibility.

(d) The information required to be provided under this section is limited to information in the possession of and maintained by the health benefit plan issuer in the ordinary course of business at the time of a request for an eligibility statement.

(e) A health benefit plan issuer may not directly or indirectly charge a participating provider for an eligibility statement.

§21.3806.Privacy Issues.

A health benefit plan issuer may refuse to provide all or part of an eligibility statement if applicable state or federal law prevents the disclosure of an enrollee's or dependent's personally identifiable information to the requesting participating provider. A health benefit plan issuer that refuses to provide all or part of an eligibility statement shall provide a response to the request for an eligibility statement indicating the reason(s) for refusing to provide the information. Within three days of refusing to provide an eligibility statement under this section, a health benefit plan issuer shall provide a written response indicating the reason(s) for refusing to provide the information and describing the particular state or federal law provision(s) that prevent the disclosure.

§21.3807.Effect of Eligibility Statement.

An eligibility statement provided under this subchapter is not a verification under §19.1724 of this title (relating to Verification).

§21.3808.Severability.

If a court of competent jurisdiction holds that any provision of this subchapter is inconsistent with any statutes of this state, is unconstitutional, or is invalid for any reason, the remaining provisions of this subchapter shall remain in full effect.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on July 25, 2005.

TRD-200503030

Gene C. Jarmon

General Counsel and Chief Clerk

Texas Department of Insurance

Earliest possible date of adoption: September 4, 2005

For further information, please call: (512) 463-6327