'Bad faith' stipulation in Texas medical bill concerns mediators

Determining "bad faith" may be bad news for Texas residents who hope that mediation can help them come to a settlement on unexpected medical bills.

A new Texas law allows a legal mediator to step in with providers and patients where there is more than $1,000 in disputed or unexpected bills, but in the process, mediators must decide if a physician or hospital is acting in vaguely defined "bad faith" during the mediation process. Because the law allows the provider to choose the mediator in a billing dispute, mediators fear being blackballed from future cases should they blow the whistle on such doctors or facilities.

"After the mediator [rules against a hospital or physician] once, who's going to ever hire that mediator again?" said Karl Bayer, a mediator critical of the legislation.

There are countless families waiting for clarification of the new law, as well as mediators, who soon will have the chance to make their case to the Texas Department of Insurance, which will set up regulations.

The idea of a mediation law grew out of balance billing, where a patient goes to a hospital in their insurance network but may be treated by hospital-based physicians who are not in network. Medicare does not participate in balance billing, so this affects Texans with private insurance. In these cases, the patient may suddenly owe thousands of dollars in fees that the insurance company does not have to pay.

With Texas state employees dealing with almost $384 million in balance bills alone in 2007 and 2008, the state legislature created the mediation law.

To learn more:
- read the Dallas Morning News article