Cornyn rules in favor of HMO & PPO fee disclosure

Health insurance plans no longer will be able to keep secret their reimbursement practices if the Texas Department of Insurance performs according to an opinion issued today by Attorney General John Cornyn.

“This is a long overdue victory for Texas physicians and their patients,” said Texas Medical Association President Fred Merian. MD.

“HMOs have been arbitrary and unpredictable in their interpretation of health plan contracts with physicians. This has made it difficult for doctors to continue serving patients, adding to the problem of access to care.

“General Cornyn has paved the way for everyone – patients, employers, and doctors to understand the rules,” Dr. Merian said.

Cornyn ageed with TMA’s assertion that HB 610, passed two sessions ago, authorizes TDI to issue rules requiring HMOs and PPOs to disclose their fee, bundling, and downcoding information.

Physicians submit their reimbursement requests to health plans using a “code” developed by the American Medical Association for each service or procedure. Arbitrary changes to these codes by health plans have been a serious problem for doctors trying to determine whether they have been reimbursed in accordance with their contracts with health insurance providers.

“Bundling’ and “downcoding” are methods HMOs and PPOs use to evaluate a health care provider’s claim for payment. After treating a patient, the provider submits a claim for payment that includes the “code” for each service or procedure. A “code” is a shorthand description of the service or procedure.

The problems occur when the HMO or PPO arbitrarily alters these codes to reduce reimbursement to health care providers. “Bundling” is the practice of combining two or more codes into fewer codes. “Downcoding” is when the code submitted for reimbursement is changed unilaterally by an HMO or PPO to a code describing a lower level of service, hence a lower reimbursement rate

When TDI claimed it did not have authority to require this disclosure, Rep. Bob Turner (D-Voss), chair of the House Committee on Public Safety, requested the AG opinion.

“We urge Gov. Perry to instruct TDI and Commissioner Montemayor to write these rules immediately,” Dr. Merian said. Expedited rule-making could be done within 60 days, if the commitment is really there.”

The Texas Medical Association is the largest state medical society in the nation, representing more than 37,000 physician and medical student members. It is located in Austin and has 119 component county medical societies around the state. TMAs key objective is to improve the health of all Texans.