TMA Testimony by James Cullington, MD
Senate Bill 2127 by Larry Taylor
House Business and Industry Committee
May 15, 2017
Thank you, chairman and members of the House Business and Industry Committee, for allowing me to testify on behalf of the Texas Medical Association and it’s more than 50,000 members. My name is Dr. James Cullington, and I am a plastic surgeon from Austin. I will be testifying respectfully against Senate Bill 2127.
SB 2127 generally would prohibit a credit reporting agency from including on a credit report a collection account for certain health care services if (1) the consumer was covered by a health benefit plan when he or she received services, and (2) the collection was for an outstanding balance (after copays, deductibles, and coinsurance).
While physicians are not in the business of, or interested in, reporting a patient to a credit agency, this legislation could result in consequences adverse to the health care market and patients as it relates to out-of-network care.
When an insurance company does not fully cover out-of-network medical services in a PPO plan, a physician may bill the portion not paid by the insurance company directly to the patient. This bill is often called a “balance bill” or a “surprise bill” because the patient thought his or her insurance would fully cover the procedure.
With insurance companies’ increased use of narrow networks, physicians sometimes have no choice but to be out of network. And, when health plans pay low maximum allowables out of network, physicians may have to balance bill to get paid for out-of-network services.
By reducing patient responsibility for these unpaid bills, SB 2127 lessens the incentive for the insurer to be accountable to the insured (the health plan’s client). This, therefore, reduces the likelihood of the insurer (1) building a robust network (which would mean there would be NO balance bill if the service were provided in network) and (2) paying sufficiently for out-of-network care, as there is less impact on the insured for nonpayment of the amount not paid by the health plan.
Texas physicians have taken many steps to reduce the financial impact of unanticipated balance bills by (1) advocating for increased network adequacy requirements and updated network directories, and (2) this legislative session, supporting expansion of mediation under Senate Bill 507 by Sen. Kelly Hancock. This bill has expanded the mediation process for any out-of-network physicians and providers at an in-network facility and for emergency care for a bill more than $500.
However, we do not support further removing health plan accountability for payments for out-of-network services, as we are concerned that SB 2127 would do, especially because we believe there already are strong protections in credit industry reporting practices and state law that address the underlying goal of this legislation (i.e., reducing the negative impact of unpaid debt on consumers’ credit scores).
First, under existing Texas law, if the amount owed on the statement is greater than $200, over any applicable copayment or deductibles, and the patient finalizes a payment plan agreement within 45 days of receiving the first billing statement and complies with the agreement, then a facility-based physician may not furnish adverse information to a consumer reporting agency regarding an amount owed by the patient for the receipt of medical treatment.
Additionally, under a 2015 agreement, the three nationwide consumer reporting agencies will not report medical debt until after a 180-day waiting period. This initiative is in place because many instances of medical debt reporting on a consumer’s report are the result of insurance coverage disputes and delays. The 180-day waiting period gives the consumer time to pay the bill and to work with the insurance company, if necessary, to hold it accountable for any amount the insurer may owe on the debt. Additionally, the credit reporting agencies will remove from credit reports previously reported medical collections that insurance has paid.
Furthermore, there are multiple versions of FICO credit scores, but the version adopted in 2015 has medical debt carrying less weight than under previous FICO scores. This version also does not look at medical debt paid off by the consumer; consequently, paid collection accounts do not impact a consumer’s credit.
Physicians prefer not to send patients to collections if at all possible. They often will send multiple billing statements, call patients, and offer to work out payment plan arrangements to accommodate the patients’ current ability to pay off their debt.
SB 2127 would create an undue burden on physicians and reduce the motivation for the health plan to meet its out-of-network benefit obligations. Thank you, and I am happy to answer any questions.
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