Protect Patients From Inadequate, Narrow Networks

TMA Testimony by Jason Terk, MD

Senate Business & Commerce Committee
Senate Bill 1264 by Sen. Kelly Hancock

March 21, 2019

Thank you, Mr. Chair and committee members, for allowing me to testify today. My name is Dr. Jason Terk, and I am a pediatrician from Keller, Texas. I am the chair of the Texas Medical Association’s Council on Legislation, and today I am testifying on behalf of the Texas Medical Association and its nearly 53,000 members across the state in opposition to Senate Bill 1264 as substituted.

The issue of surprise balance billing is far from new with the Texas Legislature. In fact, TMA has worked over the past decade with Senator Hancock to address the issue in a fair and reasonable manner, primarily through our current mediation process.

We are very much supportive of the need to protect the patient from a surprise out-of-network bill; however, our opposition to SB 1264, as substituted, is driven by: (1) the bill’s continued failure to directly address the root causes of surprise billing (i.e., health plans’ inadequate networks and inaccurate directories); and (2) the modification of Texas law and the previously successful mediation process in a way that will disrupt the health care marketplace by favoring insurers.

In an out-of-network surprise billing situation, the patient and the insurer have a contractual agreement. The physician and insurer do not. As a result, when we remove the patient from the claims settlement process, the insurer has little market accountability unless additional statutory protections are created.

We appreciate that the committee substitute removes language that would have permitted the HMO or insurer to pay for out-of-network emergency care and care provided by an out-of-network, facility-based physician at an in-network facility at an amount the insurer unilaterally determined to be reasonable.

However, we remain concerned that bill’s use of the “usual and customary or agreed to rate” in conjunction with a new ban on balance billing could be applied in a manner that, nonetheless, reduces the insurers’ existing statutory payment obligations prior to mediation.

For example, under current law and Texas Department of Insurance rules, insurers are required to pay for out-of-network emergency care provided to PPO insureds in the amount of at least the usual and customary charge. It is not clear that the bill’s new “usual and customary or agreed rate” standard would require a payment of at least the usual and customary charge prior to mediation.

With potentially reduced health plan payment obligations (and no additional network scrutiny placed on the plans), we feel SB 1264 as substituted still does not represent a balanced approach to addressing the surprise out-of-network billing issue.

To be clear, TMA is not opposed to addressing surprise billing. We are, however, opposed to health plans skirting responsibility for the products they sell to our patients.

Much of the value of any health plan network product lies in how robust the network is. For this reason, we think it is imperative that the legislature ensure health plans are subject to out-of-network payment obligations and a claim dispute resolution process that are sufficient to encourage plans to develop (rather than dismantle) their networks.

Physicians are willing to discount their charges in exchange for in-network status, patient steerage, and the assurance of statutory protections in the form of prompt-payment penalties. But this bill could further incentivize insurers to ignore physician attempts to contract with them and to avoid negotiating with a physician in good faith.

This potential effect is problematic, as TMA’s 2018 biennial physician survey already shows that physicians are having difficulty bringing insurers to the table. TMA’s survey data demonstrate that 41 percent of physicians with no contracts who attempted to join a network received either no response or a “take it or leave it” offer. Another 30 percent were told the health plan’s narrow network was full and isn’t accepting new physicians. When physicians are not part of a network, it is generally because we have either no choice or no bargaining power.

We have openly advocated for a solution to surprise billing that creates a fair arbitration process with a payment benchmark, based on some amount not set by the health plan, to be considered along with clinical factors associated with the individual patient’s care for determination of fair payment in a surprise billing situation in which the patient is not involved.

Language to this effect has been included in Senate Bill 1591 by Senator Whitmire and House Bill 2967 by Representative Oliverson and seems to be a fair approach to the process once the patient is removed.

Again, while taking the patient out of these disputes is important, that goal should not be used by health plans to relieve themselves of their obligations to sell a meaningful product to Texas consumers. SB 1264 needs to do more to hold health plans accountable for deficiencies in their products.

While patients would be safe from receiving a surprise out-of-network bill in most scenarios, this legislation shifts much of the responsibility to physicians and providers. With record profits being recorded by insurers, the questions become: How much will this add to their windfall, and what will the annual premium increases actually pay for?

As always, we are happy to work with the author of the legislation and would hope to have a seat at the table in the process.

86th Texas Legislature Letters and Testimonies

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Last Updated On

March 21, 2019