Texas' New Surprise Billing Law: Are You Ready?
By Joey Berlin


It’s almost first-pitch time for the state’s new ballgame on out-of-network bill disputes. 

Texas’ baseball-style arbitration law takes effect for certain out-of-network medical care beginning Jan. 1, 2020. It’s a big change from how disputes on out-of-network medical bills have been handled in the past – and you need to know how to navigate it. There are nuances to consider, and disciplinary action from the Texas Medical Board (TMB) may await you if you balance-bill in violation of the law.

That’s why the Texas Medical Association has produced a digestible, seven-page summary of the surprise-billing law, passed during this year’s session of the Texas Legislature as Senate Bill 1264. TMA’s overview explains topics such as when the law applies, and how the arbitration process works.

More details are available in the summary, but essentially, under SB 1264, certain out-of-network physicians can request arbitration if the physician isn’t satisfied with the health plan’s initial payment. The arbitrator – selected either by mutual agreement of each side or by the Texas Department of Insurance (TDI) – will determine which of two amounts is the closest to the reasonable amount for the services: the billed charge, or the payment made by the health plan, “as those amounts were last modified during the health plan’s internal appeals process, if the physician chooses to participate, or the informal settlement teleconference” that’s required prior to arbitration.

As in an offseason baseball arbitration proceeding between a team and one of its players, the arbitrator makes a binary choice: Either the physician’s billed charge or the health plan’s payment is the closest to the reasonable amount, and thus becomes the ordered payment. A claim that goes through the full arbitration process must be decided by the arbitrator within 51 days after the initial request.

As a result of the new system, balance billing will be prohibited for practitioners providing the out-of-network services to patients in the plans SB 1264 covers – with an exception, as explained in TMA’s overview. The law gives TMB latitude to take disciplinary action against a physician who violates the law by billing patients more than their applicable copayment, coinsurance, and deductible.

The summary also details which state-regulated health plans are covered by the arbitration process, as well as which out-of-network services and supplies fall under the new law. It also explains the required steps following an arbitration request and which factors arbitrators will consider in making their decision.

TDI is planning an information session on SB 1264 at 1 pm Dec. 30 in Austin. More details on the information session and SB 1264 in general can be found on the TDI's website.

Last Updated On

February 10, 2023

Originally Published On

December 11, 2019

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