Texas hospitals applaud new bill to end surprise billing

The Texas Ranger statue in front of the Texas Capitol building in Austin, TX
Texas Gov. Greg Abbott ended surprise billing practices in the state with new law signed Friday. (TriciaDaniel/iStock/Getty Images Plus/Getty Images)

Texas Gov. Greg Abbott signed a bill into law Friday that aims to eliminate surprise bills for patients while still allowing out-of-network hospitals to negotiate payments with health insurance plans.

Backed by the Texas Hospital Association (THA), the bipartisan measure calls for an arbitration system for health plans and hospitals to come to a mutually acceptable payment amount without putting patients in the center of the dispute. The bill passed 29 votes to two with the dissenting votes coming from Sens. Donna Campbell and Charles Schwertner, who are both physicians.

“Texas hospitals applaud Gov. Abbott and legislators for working with stakeholders to create a model for the nation on how to protect consumers while avoiding increased health care costs or limiting access to care,” said Ted Shaw, THA president and CEO, in a statement. “Patients should never be surprised by unexpected bills for out-of-pocket costs for emergency or unplanned health care services.”

RELATED: Surprise billing ban included in bipartisan Senate proposal

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Surprise billing, or the practice of charging patients for care that is more expensive than anticipated or not covered by their insurance, has received a flood of attention nationwide in the past year as other news organizations have undertaken investigations into patients’ most outrageous medical bills.

Since the beginning of the legislative session, Texas hospitals have been working with policymakers to preserve the in-network status of patients at hospitals. The THA is urging limited government interference in the marketplace, because inserting government rates into private negotiations could “disincentive health plans from including hospitals as in-network providers and paying them fairly."

Under the previous program, patients that received surprise charges on medical bills were allowed to request a formal mediation by the Texas Department of Insurance. Once the request was acknowledged, insurance companies and providers had 30 days to hold a conference, and if there was still no agreement, a formal mediation was held in the State Office of Administrative Hearings. This process was lengthy and costly to the state.

The new law—which goes into effect Sept. 1—specifically states that all payments must be made directly from the payer to the provider no later than 30 days after the insurer receives an electronic clean claim for those services or 45 days after an insurer receives a non-electronic clean claim. The same goes for emergency room services.

RELATED: Trump calls on Congress to take action on surprise billing 

“For emergency care subject to this section or a supply related to that care, an out-of-network provider or a person asserting a claim as an agent or assignee of the provider may not bill an insured in, and the insured does not have financial responsibility for, an amount greater than an applicable copayment, coinsurance, and deductible under the insured's exclusive provider,” the bill states.

The announcement out of Texas came just a few days after America’s Health Insurance Plans and the Blue Cross Blue Shield Association unveiled the Coalition Against Surprise Medical Billing, which backs national reforms to address surprise medical bills.

The coalition estimates reforms like rate setting and ending surprise billing could save more than $25 billion over the next decade.

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