Your Price Versus Your Contract Rate

Q. I have heard Texas law prohibits charging different fees. Does that mean I must offer the same contract rate for each health insurer?

A. No, you are not required to have the same contract rate for each health insurer because of Texas law (although you may voluntarily do so). Texas law prohibits charging a different price based upon the fact that an insurer will pay for all or part of the services. Interestingly, the offense occurs when the insurer is charged the higher amount. However, your price is always your billed charge. The fact that you many accept different contract rates for payment in specific circumstances doesn't alter the fact that your billed charge is your price.

Note that the Texas law discussed above applies to all lines of insurance, including property and casualty insurers. Thus, an auto repair shop can't have one price for auto repairs when an insurer pays, but a lower price when a customer pays. That would be an instance where someone is actually charging two different prices, and it may constitute an offense.

The law does not prohibit you from offering charity care or waivers for the indigent. In fact, the Texas Legislature specifically clarified the law to expressly permit these charitable policies.

The federal government has also stated, in regard to excess charges, that, when calculating their usual charges for purposes of [the relevant provisions of the Social Security] Act, individuals and entities do not need to consider free or substantially reduced charges to (i) uninsured patients or (ii) underinsured patients who are self-pay patients for the items or services furnished.

Although waivers for the sole purpose of aiding those in true hardship are not per se illegal, you will want to ensure your managed care contracts permit the practice.

Source: TMA’s white paper, “Physician Prices, Fee Schedules, and Managed Care Contract Offer and Acceptance.”

Published April 26, 2016

NOTICE: This information is provided as a commentary on legal issues and is not intended to provide advice on any specific legal matter. This information should NOT be considered legal advice and receipt of it does not create an attorney-client relationship. This is not a substitute for the advice of an attorney. Texas Medical Association provides this information with the express understanding that (1) no attorney-client relationship exists, (2) neither TMA nor its attorneys are engaged in providing legal advice, and (3) the information is of a general character. Although TMA has attempted to present materials that are accurate and useful, some material may be outdated and TMA shall not be liable to anyone for any negligence, inaccuracy, error, or omission, regardless of cause, or for any damages resulting therefrom. Any legal forms are only provided for the use of physicians in consultation with their attorneys. You should not rely on this information when dealing with personal legal matters; rather legal advice from retained legal counsel should be sought.

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Last Updated On

April 29, 2016

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