Transparency in Out-of-Network Payments Needed

TMA Testimony by Doug Curran, MD

House Insurance Committee
House Bill 1406
March 19, 2013

Good afternoon, Chairman Smithee and members of the committee. My name is Doug Curran, and I am a family practice physician in Athens and member of the Texas Medical Association’s Board of Trustees. On behalf of the Texas Medical Association (TMA) and 47,000 physicians and medical students, I would like to thank the chair and committee members for the opportunity to testify on House Bill 1406 by Chairman Smithee. 

Over past several sessions, there has been much discussion by this committee, in other legislative committees, and in interim committees on out-of-network payments. The discussions have left us all wondering:

  • How are these out-of-network payments determined by health plans?
  • What is the subsequent impact of those determinations on the patient?

Chairman Smithee, in 2001— more than a decade ago — you filed House Bill 2831 that passed and became law. TMA supported your bill. It was, as they say, “a simple little bill” simply requiring a health plan to provide upon written request from an out-of-network health care provider a description of the factors used to determine the out-of-network payment. The legislation went on to say it didn’t require the health plan to disclose proprietary information.  That line was the poison pill. Health plans never shared a thing, stating the information was proprietary when an out-of-network provider submitted a written request

Now in 2013, under this bill, health plans are required to share this information at the request of the enrollee, as opposed to the provider. Since the health plan’s contract or agreement is with the enrollee, we hope health plans don’t use the same argument, saying, “It’s proprietary” to circumvent the spirit of this legislation when their own enrollees make the same inquiry about the out-of-network payment methodology. 

In addition to requiring health plans to once again provide the methodology, HB 1406 as filed places in statute what a “usual charge for out-of-network health care service” means. It places the rate at the 99th percentile of the actual charges of a physician or provider who doesn’t participate in the health plan network. As far as TMA can tell, the percentile is based on a benchmarking database maintained by FAIR Health and found at (see attached, PDF). Its website is very well done and consumer friendly, but TMA has concerns about would happen if this website is no longer available. Could another nonprofit organization step up, fill this void, and meet the requirements of the statute?   

Although TMA appreciates the intention of this language, we’re concerned about placing in statute any percentile or amount that would have to be defended from legislative session to legislative session, much like the Sustainable Growth Rate (SGR) formula Medicare uses to pay physicians at the federal level, which has been a fiasco. Much like the SGR, all we can expect to see is the percentage to decrease with each year.

Chairman Smithee and members of the committee, thank you again for allowing me to testify today on HB 1406. I would be happy to answer any questions. 

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April 27, 2018