Biennial Report to the 83rd Texas Legislature: Department of Insurance Page: 36
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Legislative Considerations
PPOs and EPOs 2005-2006 - Senate State Affairs Interim
Charge to study reimbursement of health
care plans for out-of-network claims,
Background: adequacy of health plan networks, the
Most health insurance today is provided under a "network" impact of balance billing and the accurate
disclosure of out-of-pocket costs.
in which insurers contract with healthcare providers,
including physicians and hospitals, to provide care to the advisory com directs TDI to work with an
insurers' policyholders according to a set of agreed to terms, recommendations to the legislature. No
conditions, and charges. These types of insurance agreements consensus could be reached among
condiionsstakeholders.
and networks are commonly referred to as preferred provider
organizations (PPOs). Policyholders using "in-network" Committee and TDI report to the
providers in a PPO are generally responsible for a relatively Legislature. HB 2256 enacted to provide
low co-payment and providers in the network agree not to for mediation on certain high-cost claims.
Same legislation also requires TDI to write
charge the policyholders more than the provider has agreed rules on network adequacy, and TDI begins
to accept from the insurer under the network agreement. the discussion with a concept paper.
2011 - PPO rule adopted in July, to be
These network plans typically include higher co-payments for effective in May 2012, to accommodate
possible legislative changes. HB 1772
out-of-network care. Likewise, non-network providers often enacted, creating EPOs. PPO rule is placed
charge more than network providers because the provider is incor ration o EPo reuiremwe ts.
not bound by contract to any network agreement with the
2012 - 2011 EPO/PPO rule is withdrawn
insurer. These charges are commonly referred to as "billed and re-proposed. After receiving
charges." Because there is no agreement between the stakeholder input the rule was again
provider and the insurer regarding payment, the non- modified and re-proposed with anticipated
provderand he nsuer rgaring aymntadoption in early 2013.
network provider may "balance bill" the policyholder for the
difference between the amount the insurer pays and the billed amount if the insurer does not pay the full
billed charge.
When the policyholder knowingly chooses an out-of-network provider, the policyholder generally
understands the ramifications. Problems arise, however, when the policyholder unknowingly receives
treatment from an out-of-network provider, usually an anesthesiologist, pathologist, radiologist, or other
specialist, at an in-network hospital. Often times, the insurer has been unable to contract with any such
specialty providers in the hospital, and, therefore, cannot offer the policyholder a complete network
solution, including agreed-to contract terms on the level of reimbursement, for the policyholder's healthcare.
Unfortunately, the insurer's inability to find a complete network solution often results in balance bills and
higher out of pocket costs to the policyholder.
Concerns:
In 2009, Chapter 1301 of the Texas Insurance Code was amended to require TDI to adopt, by rule, certain
network adequacy standards applicable to PPOs. In 2011, Chapter 1301 was amended again to authorize
"exclusive" provider organizations (EPOs), which resemble PPOS but contain more stringent out-of-36
A History of Network Adequacy and
Balance Billing in Texas
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Texas. Department of Insurance. Biennial Report to the 83rd Texas Legislature: Department of Insurance, report, December 2012; Austin, Texas. (https://texashistory.unt.edu/ark:/67531/metapth575994/m1/37/: accessed July 8, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu.; crediting UNT Libraries Government Documents Department.