The Texas Department of Insurance has received complaints that some insurers and Health Maintenance Organizations (HMOs) are not complying with the requirements of Senate Bills 383 and 385. Senate Bills 383 and 385, which were passed by the 75th Legislature and are now effective, require all preferred provider benefit plans and HMOs to make payment to providers for covered services rendered not later than the 45th day after the date a properly completed claim for payment is received; or, if applicable, within the number of calendar days specified by the written agreement between the provider and the HMO or insurer. Covered services means health care services and benefits to which covered individuals are entitled under the terms of the applicable contract. Senate Bill 385 also requires HMOs to make capitation payments no later than the 60th day from the date an enrollee has selected or been assigned a primary care physician.
Senate Bill 383 (codified as Insurance Code Article 3.70-3C) applies specifically to preferred provider benefit plans, and Senate Bill 385 (codified as Insurance Code Article 20A.09) applies specifically to HMOs. In addition, pursuant to the Insurance Code Article 21.21-2, Sec. 2(b)(4) all insurers are required to in good faith effectuate prompt, fair, and equitable settlements of claims submitted in which liability has become reasonably clear. Therefore, I expect all accident and health plans to have substantially similar procedures to those contained in Senate Bills 383 and 385 regarding prompt payment to providers.
Since Senate Bills 383 and 385 went into effect, the Texas Department of Insurance has received numerous complaints from providers across Texas that HMOs and accident and health insurers are not complying with the payment provisions of the new laws. Due to these complaints, spot investigations have been conducted to ascertain the extent of the problem. Our investigations found that there appear to be significant violations to the provisions of the new laws. As a result, I have directed the examiners to include specific verification procedures on all examinations of HMOs to ensure prompt payment of claims, as well as capitation payments, are being made as required by Senate Bill 385; and also to test accident and health insurers for their business practices pertaining to prompt payment to providers. In both cases, the benchmark for payment that will be tested is 45 days from receipt of a properly completed claim; or, as provided by contract between the HMO/Insurer and the provider (if payment provisions are addressed in their contract); and 60 days from the date an HMO enrollee has selected or been assigned a primary care physician for capitation payments.
Please understand that compliance with both Senate Bills 383 and 385 will be closely monitored and enforcement action will be initiated as appropriate to ensure that these laws are observed.
For questions pertaining to Senate Bill 383, please contact Kim Stokes, Deputy Commissioner, Life/Health Group at 512-322-3401. For questions pertaining to Senate Bill 385, please contact Cady Crismon, Director HMO Quality Assurance at 512-322-4266.
For questions pertaining to examinations, please call Jose Montemayor, Associate Commissioner, at 512-322-5040 or E. Joy Little, Chief Examiner, at 512-322-5038.
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ELTON BOMER
COMMISSIONER OF INSURANCE