The Texas Department of Insurance reminds all health maintenance organizations, health insurers offering preferred provider or exclusive provider benefit plans, and health care providers that a portion of prompt pay penalties must be paid to the State of Texas. State law does not allow prompt pay penalties owed to the State of Texas to be waived by a provider contract or through a dispute settlement.
The requirements under state law are:
- For a penalty owed to a physician or provider other than an institutional provider, the carrier shall pay the entire penalty to the physician or provider, except for any interest computed under either Insurance Code Section 843.342(c) or Section 1301.137(c), which shall be paid to the State of Texas.
- For a penalty owed to an institutional provider, the carrier shall pay 50 percent of the total penalty amount computed under either Insurance Code Section 843.342 or Section 1301.137, including interest, to the institutional provider and the remaining 50 percent of that amount to the State of Texas.
Carriers may find it beneficial to maintain a system to track when penalties are owed and what portion was paid to the state. If one is not in place, TDI recommends that carriers establish one and verify past payments to the state of prompt pay penalties.
If a carrier discovers that it has not correctly paid the state’s portion of past prompt pay penalties, it should transmit full payment as soon as possible. TDI will verify compliance through periodic carrier examinations.
For questions about this bulletin, contact Debra Diaz-Lara at Debra.Diaz‑Lara@tdi.texas.gov.