2019 Update on Balance Billing and Texas Health Insurance Law
This article updates the prior article, “Balance billing and Texas healthcare law.”
“Balance billing” occurs when doctors, hospitals, or other health care providers who are not contracted with a patient’s health maintenance organization (HMO) or preferred provider benefit plan (PPO) bill the patient for the difference between the amount the health plan pays and the amount the provider believes to be the adequate cost of a service.
For example, a patient may visit the emergency room at a hospital that is contracted with her health plan, but the emergency room doctor who treats her is not contracted with that health plan. The emergency room doctor and the hospital each bill $1,000 for their services, and the health plan pays them each $400. The hospital, which is contracted with the patient’s health plan, may bill the patient only for the copayments, deductibles, and coinsurance amounts under her plan. However, the emergency room doctor, who is not contracted with the patient’s health plan, may bill her for the $600 that her health plan didn’t pay, as well as any copayments, deductibles, and coinsurance that she owes.
Some providers and health plans display cost information on their websites. Texas law also gives patients the right to request, in advance, estimates of charges from providers and facilities and estimated payments from health plans. However, the law allows doctors, other providers, and health plans up to 10 days to provide patients the estimates. As a result, patients cannot obtain advance notice of possible balance billing costs in emergent situations.
Senate Bill 1264
To combat this issue, the Texas Legislature recently passed Senate Bill 1264 (“SB 1264”), which makes balance billing illegal for emergency services but is limited to Texas regulated health plans. SB 1264 contains an exemption if the provider provides written disclosure to the patient informing them:
- that their health plan does not cover the provider,
- the projected cost the patient could be responsible for, and
- under what circumstances the patient will be responsible for those amounts.
Before SB 1264, Texas law did not give consumers many rights with regard to disputing a balance billing they were surprised to receive. SB 1264 significantly improves the dispute resolution process for consumers by removing the patient from the process altogether.
Instead, the onus is on the health plan to initiate mediation or arbitration because the excess charges cannot be passed down to the patient.
Mediation is conducted for health plans and facility providers, i.e., hospitals, but is only applicable if the patient cannot be billed, and the charges are for emergency services, diagnostic imaging, or laboratory services. Arbitration will be for health plans and providers that are not facilities, i.e., individual physicians. While arbitration is binding, the arbitrator may only determine reasonable cost of the medical services rendered.
While the remedies of SB 1264 are still being implemented, including the mediation and arbitration processes, it is a great first step in protecting Texas consumers from inequitable balance billing practices.
Attorney Scott Chase is a health law and corporate attorney at Farrow-Gillespie Heath Witter LLP. Mr. Chase has been named to the lists of Best Lawyers in America (U.S. News & World Report), Texas Super Lawyers (a Thomson Reuters service), and Best Lawyers in Dallas (D Magazine) in every year for more than a decade.
Mr. Chase thanks intern Stephen Chance for his contributions to the article. Stephen Chance is a 2019 summer intern with Farrow-Gillespie Heath Witter and a law student at SMU Dedman School of Law.