Medical Economics Feature -- March 2005
Texas physicians aren't taking full advantage of the state's
powerful new prompt pay law, state insurance officials say, even
though rules implementing the 2003 legislation have been in place
for 18 months.
A Texas Department of Insurance (TDI) advisory committee says
physicians have been slow to use a provision allowing them to seek
a guarantee of payment from patients' health plans before providing
services. The reason may be that many physicians still are unaware
of their rights under the verification process.
But physicians, group practice administrators, and even health
plan representatives say the plans themselves are quite confused
about how the new process works. And, many physicians complain that
the plans have been slow to inform them on how to access the
verification systems within their networks.
A Slow Start
In a September 2004 report to the legislature, TDI's Technical
Advisory Committee on Claims Processing said physicians and other
health professionals requested 28,269 payment verifications between
September 2003 and June 2004 -- the first nine months after rules
implementing the prompt pay law (Senate Bill 418) took effect. Of
those requests, 16,297 verifications were issued, meaning
physicians and others were guaranteed payment. Nearly 12,000 were
Audrey Selden, TDI senior associate commissioner for consumer
protection and provider ombudsman, says the agency is disappointed
more physicians have not taken advantage of the process. "As a
department, we'd like to see more verifications requested and more
TDI rules allow physicians to seek a payment guarantee before
providing services by submitting 13 data elements to the health
plan. They include the patient's name, plan identification number,
birth date, enrollee or subscriber name, patient's relationship to
the enrollee or subscriber, presumptive diagnosis or presenting
symptoms, a description of proposed procedures or procedure codes,
and proposed date of service.
The insurer has five days to respond to the request. In some
emergency situations or when a concurrent hospitalization is
involved, a response must be issued within 24 hours.
If the plan issues verification, it must pay for the service
unless the physician misrepresents or fails to perform the service.
An insurer can decline verification for several reasons, however,
including policy deductibles, benefit limitations or exclusions,
and preexisting conditions.
Just because payment verification is declined, however, does not
mean the insurer will refuse to pay if the service is provided and
a claim is filed. Teresa Devine, director of the Texas Medical
Association Health Care Financing Department and a member of the
TDI Technical Advisory Committee, says nearly half of all early
declinations resulted from employers' failure to pay their health
plan premiums on time. Under state law, employers have a 30-day
payment grace period before a policy is canceled.
On the Hook
Ms. Devine says physicians who use it like the verification
provision because it lets them know up front if the health plan
will pay or if they should seek payment from the patient. "It
allows the physician to have those financial discussions with the
patient sooner rather than later," she said. "Once you provide the
service and you find out on the back end that the plan is not going
to pay, it's much more difficult to get the patient to pay."
Plans don't like it because it puts them "on the hook" for
payment with little or no wiggle room, she says. Texas Association
of Health Plans (TAHP) representatives have complained that the
verification process is expensive, particularly since fewer than
30,000 verifications had been requested, while several million
claims were filed during the same period.
Still, TAHP Executive Director Leah Rummel says insurers "are
trying to make the process as easy as possible. Right now, we're
all in a learning process."
Because the plans are not yet fielding large numbers of
verification requests, many are handling the process "manually,"
she says. Physicians have to telephone their verification requests
to an insurer's provider relations office.
Ms. Rummel says many companies are working to establish
electronic verification systems.
County medical society officials and physician practice
administrators say insurers have done little to publicize telephone
numbers, Web site addresses, or other information necessary to
contact staff authorized to receive verification requests. An
exception is Blue Cross and Blue Shield of Texas, which published
its verification process data in the second quarter 2004 edition of
Pam Potter, practice administrator for the eight-physician Bone
& Joint Clinic of Houston, says even when she gets someone on
the phone, he or she frequently does not know anything about the
verification process or does not know whether the plan is subject
to the regulations.
State law normally applies only to traditional insurance
products where the insurance company is at risk for losses. Health
plans fully funded by the employer, and therefore exempt from state
regulation under the federal Employee Retirement Income Security
Act, are not subject to SB 418.
Another problem is confusion over whether the rule applies to
out-of-state insurance plans. Verification is specific to Texas,
but many Texas residents are insured by out-of-state companies.
Generally, Texas laws and regulations do not apply to health plans
that are not licensed by TDI.
Although TDI has received few complaints from physicians about
the verification process, the Senate Health and Human Services
Committee has heard some. An interim committee on health care
information technology urged TDI to create an online repository for
carrier verification protocols.
"Currently, the verification process by which providers can
receive a guarantee of payment from carriers is not heavily
utilized," the committee said. "Broadly speaking, each carrier has
a different verification protocol that providers are required to
follow when requesting verification. Some stakeholders attribute
the low utilization of the verification process to the obscurity
and complexity of the miscellaneous verification protocols. It has
been suggested that having a single location for all verification
phone numbers and protocols would increase utilization."
Ms. Selden says TDI will consider implementing the
Ken Ortolon can be reached by telephone at (800) 880-1300,
ext. 1392, or (512) 370-1392; by fax at (512) 370-1629; or by
Health Plans Report Verification Information
The Texas Medical Association asked several of the state's
largest health plans to submit information on how physicians can
access their verification process. At press time, only Blue Cross
and Blue Shield of Texas had responded.
Physicians can request verification from Blue Cross and Blue
Shield by calling its Customer Service Department at (800) 451-0287
for BlueChoice (PPO/POS) and (877) 299-2377 for HMO Blue Texas.
Physicians will receive a response both by fax and mail.
Written requests may be submitted by completing the Request for
Verification form available in the "Downloadable Forms Section" of
the Blue Cross and Blue Shield Web site at
and mailing it to BCBSTX or HMO Blue Texas, Request for
Verification, PO Box 833908, Richardson, TX 75083.
Physicians can request verification from PacifiCare by calling
(877) 847-2862 or by writing Provider Correspondence, PO Box
400046, San Antonio, TX 78229. A verification or declination may be
issued by telephone or in writing. If issued by telephone, a
written response will be faxed within three calendar days of
providing the verbal response.
The Texas Department of Insurance has posted the information
physicians need to use the prompt payment regulations on its Web
TMA has created demand letters physicians can use to notify
insurers that a claim has not been processed within the time
allowed by the law. They are available on the TMA Web site at