Surprise Billing Law Reduces Consumer Complaints in Texas, but Flaws Persist

A Texas surprise billing law that became effective in January has had mixed results among consumers, insurers and health care workers.

What is Surprise Billing?

The term surprise billing usually refers to a medical bill that arrives in the mail weeks or months after treatment has been provided, and you believed you had already paid everything you owed.

For example, you may receive a surprise medical bill if you receive care at an emergency room at a hospital that is within your health care insurance’s network, but you are seen by a doctor who is not on your plan. This surprise medical bill is also a practice known as balance billing.

Texas Surprise Billing Law

Like many states, Texas decided to tackle consumer complaints regarding surprise medical bills by enacting a new law.

Since Jan. 1, 2020, SB 1264 has referred out-of-network doctors to arbitration when the doctor isn’t happy with initial payment from the health insurance plan. The arbitrator is chosen by either the Texas Department of Insurance or by both parties agreeing on who will conduct the arbitration. The goal is to determine an appropriate payment for the services provided.

This is often referred to as “baseball-style” arbitration because it’s similar to how a baseball player and a team are able to agree upon a salary through an arbitration process.

According to Texas law, the arbitrator is tasked with choosing what is seen as closest to a reasonable amount for the services provided by considering the 80^th percentile of billed charges. Any claim conducted through the Texas arbitration has to be decided by the arbitrator within 51 days after the request is received.

Issues with Texas Law

More doctors’ recommended billing amounts than health insurance companies’ recommended invoiced amounts have been deemed acceptable through arbitration, according to Bloomberg Law.

The Texas Department of Insurance published recent data showing that insurers are paying high charges proposed by out-of-network physicians. Even though many states have their own laws to protect consumers against surprise medical bills, Texas is one of three states that use this arbitration process to resolve payment disputes.

Some who have observed the large payouts in arbitration states of Texas, New York and New Jersey say they would prefer a nationwide effort to pay rates closer to negotiated in-network amounts rather than a physician’s open market rate. Consumer watchdog groups have expressed concern that higher payments made by the insurance companies to pay the out-of-network rates will eventually mean higher insurance premiums will be charged to consumers.

Texas Department of Insurance Tracks Data

According to the Texas Department of Insurance, the number of consumer complaints regarding surprise medical bills is down significantly from the year prior. The department received 19 consumer complaints within the first six months of 2020 compared with 546 consumer complaints received during the same period in 2019.

Of the arbitration requests received, a total of 2,850 were settled in the first 30 days, 763 were decided by the arbitrator and 518 were deemed ineligible or “other.”

The Texas Department of Insurance has received fewer requests for mediation compared to arbitration since the onset of the Texas surprise billing law. A total of 242 requests for mediation were settled within 30 days, eight were resolved with the help of a mediator and 103 were considered ineligible or “other.”

Patients who receive multiple surprise medical bills from one facility and total $5,000 or less can bundle their request for arbitration into one single request. The rules allow disputes to request mediation on multiple claims no matter what the total amount as long as the disputes involve a single facility.

A consumer who has received a surprise medical bill from an out-of-network physician at an in-network facility may wish to speak with an attorney regarding legal options.