Seal of the Senate of the State of Texas Welcome to the Official Website for the Texas Senate
Seal of the Senate of the State of Texas
Welcome to the official website for the
Texas Senate
Senator Jane Nelson: District 12
Senator Jane Nelson
P.O. Box 12068, State Capitol
Austin, Texas 78711
Tel. (512) 463-0112
News Release
March 11, 2003
Contact: Dave Nelson
Prompt Pay Bill Unanimously Approved by Senate Health Panel

AUSTIN -- Health insurers would be required to pay health care providers on time and in full under SB 418 by Senator Jane Nelson, R-Lewisville, that was unanimously approved today by the Senate Health & Human Services Committee.

"This boils down to a very simple principle of doing business. If you perform a service, you ought to be paid for that service -- on time and at the rates agreed to in your contract. This legislation will mitigate some of the serious payment problems that exist between health care providers and insurers to ensure timeliness and fairness for all parties involved," Senator Nelson, who chairs the Health & Human Services Committee, said.

SB 418, the so-called "prompt pay bill," now goes to the full Senate for consideration. It contains the following provisions:

  • Requires providers to submit claims within 95 days after service is rendered.
  • Requires insurers to make a determination that a claim: payable in part, payable in whole, or not payable, within 45 days (30 if filed electronically). Allows one request for additional information.
  • Requires that insurers clearly designate claims to be audited and that they pay 100% of such claims within the standard 45-day period (30-day period for claims filed electronically). Provides for recoupment of overpayments.
  • Requires that insurers' claim processing systems use generally accepted coding guidelines.
  • Directs the Commissioner of Insurance to develop an industrywide standard for the elements of a clean claim and make that the exclusive set of elements required to file.
  • Requires disclosure by insurers of coding, bundling and fee schedules. Also requires insurers to provide 90 days written notification of new guidelines & allows providers to cancel contracts when guidelines are changed.
  • Defines the term "preauthorization" as a determination of medical necessity, sets time frames for such determinations, and, prohibits a later denial of a claim that has been preauthorized.
  • Defines "verification" as a reliable representation of intent to pay, sets time frames for such determinations, and, prohibits a later denial of claims that have been verified.
  • Requires that insurers attempt to coordinate payment between themselves before pursuing payment from the provider in cases where a claim is submitted to more than one insurer and one is considered the secondary payor. Enables an insurer to require that a provider retain in office records information regarding a patient's other health care coverage, and requires that a provider notify each insurer in cases where a claim is submitted to more than one insurer.
  • Establishes an administrative penalty for insurers who fail to timely and accurately pay at least 98% of clean claims payable to physicians and facility-based providers.
  • Establishes a graduated penalty payable to the provider for failures to pay claims accurately and timely: the lesser of 50% of the contract rate or $100,000 in the first 45 days after payment is due; the lesser of 100% of the contract rate or $200,000 in the 46th-90th days; and an additional 18% (per annum) interest penalty on claims paid the 91st day or after.
  • Extends to non-preferred providers the provisions of this act in cases where the provider is acting to provide emergency care or specialty care for which no preferred provider is available.
  • Requires that a coverage identification card indicate that the coverage is subject to state regulation and the first date of enrollee coverage or a toll-free number a provider can use to obtain that date.
  • Establishes a technical advisory committee appointed by the Commissioner to assist in regard to issues related to the claims payment process.
  • Requires that all claims for payment be processed via electronic means as of 2006; establishes temporary provisions until that date, including a waiver process.
Senator Jane Nelson represents District 12, which includes the growing suburban communities of Denton and Tarrant counties and parts of the city of Fort Worth.