The Committee met to take up and consider bills. The following report focuses only on the bills listed below.
SB 481 (Hancock) – Relating to notice and availability of mediation for balance billing by a facility-based physician. (Left Pending)
- SB 481 addresses the practice of physicians billing patients for the portion of medical expenses not covered by patients’ insurance; most often this occurs when a facility based physician does not have a k with the same health benefit plans that have k with the facility in which they practice; an enrollee who is admitted into one of these facilities for a procedure for an emergency is responsible for the unexpected bill
- Mediation is working for consumers when its available and has been hugely successful resulting in a large portion of settlements
- SB 481 seeks to protect consumers from the balance billing process; the bill expands mediation options for consumers who are balanced billed by simply eliminating the $1000 threshold for claims to go to mediation
- Sen. Watson asked if there were any matters that would otherwise qualify for mediation that there is not capacity for. He said 800 cases were referred to SOA, but asked if there were matters that were not able to go to mediation. How will dropping the threshold affect the process?
- Sen. Hancock said 885 went to mediation, and 110 went to the SOA level; lowering the threshold will allow more consumers to utilize the mediation process
- Sen. Schwertner said dropping the floor from $1000 to $0 could incentivize individuals to fight these issues out, which would "clog up the pipeline," and asked if there should be a floor in the bill
- Sen. Hancock said balance bill was over what was already considered a fair payment. He didn't know if consumers were interested in wasting their time over small charges, and said the bill would provide additional balance between providers and consumers
- Sen. Hancock says the $0 floor provides a necessary balance, allowing physicians to determine if it’s worth charging that additional small amount if it could result in contention
Michael Friar, self, in support of bill
- After having an appendectomy, he realized there were charges on his bill for services that he never received and doctors he never met
Blake Hudson, Consumer's Union
- Testified in support of the bill; he noted the importance of the $0 threshold in protecting consumers, and said the bill wouldn't add unnecessary strain to the system; he echoed much of the same sentiment as Sen. Hancock
Bill Hammond, CEO of the Texas Association of Business
- Most patients go into hospitals that are in their network only to find out after treatment that the provider they used at that facility chose not to join the patient’s specific network; such practice is misleading to consumers
- Many physicians and other medical personnel make business decisions not to join certain networks resulting in the practice of balance billing; taking the threshold to $0 would cause a lot of doctors to join networks
- Medical bills are the number one cause of bankruptcy in the U.S. and we need to solve the balance billing issue and protect consumers
Don Hawkins, Middleby Corporation
- Testified in support of the bill; he also had an emergency appendectomy that resulted in out of pocket bills right under $1000 because doctors at the hospital did not mesh with networks the hospital was in
Dawn Buckingham, Ophthalmologist, Texas Medical Association
- Testified in support of the bill. She said the Association was in agreement that assistant physicians should be included in network billing; in 2014, there were over 1400 complaints, with 76% coming from one insurer (United Healthcare)
- TDI has proper network adequacy mechanisms in place, but an inadequate level of enforcement, and the narrow networks put together by insurance companies were part of the larger problem
Dr. Shareef Zaffer, Texas Society of Anesthesiologists
- Testified on the bill with strong reservations; he said the law unfairly targets five types of physicians, and believes it needs to have a wider scope of providers
- The problem comes from with particular carriers that don’t have an adequate network
- Would like to see the $1000 threshold restored
Stacey Pogue, Senior Analyst, Center for Public Policy Priorities
- Testified in support of the bill; said up to 56% of in network hospitals in Texas have no ER doctors in network, and the bill was a considerable consumer protection; she said the bill fixes several aspects of access
- The problem with the $1000 threshold is that it must be met with a bill from a single provider; four $300 bills totaling $1200 from different providers would not suffice for the threshold
Jennifer Hopper, Self
- Husband went to emergency room with broken eye socket and received treatment at two in network emergency rooms but neither treating physician was in network
- The resulting bill was just under $1000 dollars; Ms. Hopper can’t help but wonder if the balance bill was intentionally calculated at just under a $1000 to avoid mediation
Committee Questions
- Asked if there was an incentive for doctors to stay out of network in order to avoid balance bills altogether; he also asked if balance bills are intentionally calculated at right under $1000
- Dr. Zaffer said there wasn't incentive for doctors to stay out of network because it’s an administrative hassle and looks bad from a customer service standpoint; highly skeptical that doctors would ever “doctor” balance bills to be just under $1000
- Dr. Buckingham said it was impossible that doctors were intentionally billing under $1000
- Sen. Hancock mentioned that in a number of mediations they looked at the provider was required to pay the physician the billed amount
- Sen. Taylor asked how physicians know what charges are and what kind of transparency accompanies that
- Dr. Zaffer says charges are always the same, it’s a matter of what deductible the patient has and whether the hospital or doctor’s bill hits the insurance carrier first
- Sen. Hancock said disconnect occurs between the insurance companies and doctors; this bill attempts to take the patient out of the argument between the provider and doctor
Jamie Dudensing, Texas Association of Health Plans
- Testified in support of the bill; she said it was important to point out that doctors were getting paid more if they were out of network, incentivizing them to stay out of network
- There are payment protections for consumers and doctors but they’re still balance billing above that; of the requested mediations only one has gone beyond phone call mediation and required in person mediation—clearly mediation is convenient and working
SB 94 (Hinojosa) – Relating to certain fees charged for the adjudication of pharmacy benefit claims. (Left Pending)
- SB 94 deals with pharmacy benefit managers (PBMs) who charge fees to pharmacists; the Insurance Code prohibits health benefit plans and the entities who administering planned benefits from charging a fee for the submissions and adjudication of health care plans; health benefit plans k with a PBM to process prescription claims from pharmacists; PBM have been requiring pharmacists to pay a fee for claims submitted electronically and violating the insurance code and have been unjustly enriched for nine years at the expense of our citizens
- PBMs contend that because they are acting on behalf of a health benefit plan they have authority to charge such fees
- PBMs have found loopholes in the statute and have implemented creative coding so it looks as if PBMs are not educating the claims; TDI reported theses issues while investigating claims filed after last session
- SB 94 amends the Insurance Code to prohibit PBMs from charging fees to pharmacists for any part of the claim adjudication process and close those existing loopholes in the statute
- Sen. Schwertner said every time a pharmacy submits a claim, they are charged a transaction charge, which add up and results in the PBM basically stealing from the pharmacy
Miguel Rodriguez, Texas Pharmacy Business Council
- Testified in support of the bill; the type of charges being made by PBM were prohibited by SB 418 in 2003, which PBMs circumvented with a loophole
- Sen. Seliger asked if he was aware of any situation in which the PBM is owned by the health benefit plan
- Mr. Rodriguez said sometimes the health benefit plan worked in close partnership with the PBM; there are instances where the health benefit plan is sponsored by the PBM, creating a double dip function
Jay Bueche, Texas Federation of Drug Stores
- Testified in support of the bill
Alan Horn, Government Relations, CVS Health
- Testified in opposition to the bill but not the intent, saying his company has agreed to stop charging these fees; he said currently there is a fee to put a pharmacy within their network, and the bill went farther than it needs to
- Sen. Seliger asked about the fee that is charged to add a pharmacy into their network, and how many pharmacies they had that were outside pharmacies
- Mr. Horn said it was about 68,000 pharmacies; when CVS and CareMark merged, there was a firewall between the two, and there wasn't information flowing between the two entities.
- Sen. Seliger is concerned that when health benefit plans are sponsored by PBMs they are double dipping on the electronic claim fees
- Sen. Ellis would like to know the costs of bringing a pharmacy into the network; he would also like to know if CVS chose to do away with the fee prior to TDI bringing it to their attention.
- It was done away with after being brought to attention by TDI
- Sen. Hinojosa said the TDI thought they had the ability to get rid of these fees, but the PBMs found ways to keep charging them in new ways.
SB 332 (Schwertner) – Relating to the use of maximum allowable cost lists related to pharmacy benefits. (Left Pending)
- Sen. Schwertner noted SB 332 does the following:
- Provides transparency and the methodology used by pharmacy benefit managers to reimburse pharmacies for dispensing prescriptions to patients under the maximum allowable cost list
- Helps plan contract of the PBMs to administer pharmacy benefits for insured patients to develop provider networks and to process pharmacy claims
- Each PBM uses its own formula based on maximum allowable cost to reimburse pharmacies for dispensing generic medications
- Sen. Schwertner recognized SB 332 will add transparency to the commercial insurance market
- Committee substitute adopted to increase transparency in mac pricing:
- Provisions do not apply to the maximum allowable cost for pharmacy benefits provided under a worker’s compensation insurance policy, Medicaid or CHIP
- Appeal deadline reduced from 14 to 10 days
Michael Rodriguez and Michael Wright, Texas Pharmacy Business Council
- Support the bill
- Recognized the success Sen. Schwertner’s bill, SB 1106, has had since last session
Jay Bueche, Texas Federation of Drug Stores
- Support the bill
- SB 332 adds transparency to mac pricing since there is little transparency now
SB 543 (Zaffirini) – Relating to certain requirements applicable to contracts entered into by, and the contract management process of, state agencies. (Left Pending)
- Sen. Zaffirini introduced SB 543 by noting the bill was identical to HB 1426; an updated refile of SB 1680 that was passed unanimously last session
- SB 543 would create greater uniformity and standardized contract management practices by adding essential contracting requirements and best practices to state law
- Committee substitute adopted – state agencies are appropriated billions of dollars each biennium to purchase goods and services and need adequate training to engage in contract management
- Strengthen contract management and risk assessment
- Focus on contracts of more than $5 million
- The substitute would require state agency auditors to keep all contract documents throughout the length of the contract; prohibit indefinite term contracts; and several technical changes
SB 1176 (Eltife) – Relating to the authority and rights of pharmacy services administrative organizations to conduct the business of independent pharmacies with respect to certain pharmacy benefits (Left Pending)
- Chair Eltife said he had a committee substitute for S.B. 1176 that would reword the bill to apply to all pharmacists
- PSAOs allow pharmacies to outsource various administrative functions and serve as watchdogs for pharmacist to ensure they are treated fairly and reasonably under the terms of their contracts under state and federal laws
- Some PBMs are refusing to communicate with PSAOs creating unnecessary administrative burden on pharmacists
- SB 1176 amends the Insurance Code to recognize PSAOs and adds statutory protections afforded to pharmacies and pharmacists contracting with PSAOs
- The committee substitute removes section G and additionally removes the definition of an independent pharmacist and all references to the term in order to clarify that SB 1176 applies to all pharmacists
J.D. Fain, Independent Pharmacy Owner, Giddings, Texas
- Testified in support of the bill; he said the use of PSAOs was standard in the industry, and there were issues where PBMs were not recognizing the right of PSAOs to act on independent pharmacies’ behalf
Dwayne Gallagher, Texas Independent Pharmacies Association
- Testified in support of the bill, saying it was trying to protect current standard practices with independent pharmacies in the industry
- This bill is not about mandating negotiations between PBMs and PSAOs
- Any statutory protection or obligation on behalf of a PBM or pharmacy would apply whether a PSAO was involved in that contract or not
Jamie Dudensing, Texas Association of Health Plans
- Testified on the bill, saying she wanted additional language put in the bill providing protections against collusions and trusts for negotiating rates
- Would like clarification that if entities are using PBMs to negotiate rates, those entities must choose to negotiate as independents or as a group, but not both