Legislative Update

Insurance Law

By W. Ryan Brannan

Affordability and accessibility continue to be central motifs for insurance-related legislation at the Texas Legislature. The past couple of legislative sessions have also added transparency legislation to the list of central issues, this session included. More health-related bills passed than those related to property and casualty this session. Medicaid is a separate subtopic in this article. Given the number of insurance bills that passed this session, the article below is to be viewed as a summary of the more significant legislation. All bills are effective September 1, 2023, unless otherwise indicated.

Addressing Accessibility, Affordability, and Transparency
HB 711 attempts to address the rising costs of health care due to consolidation in the health care market. HB 711 addresses market competition by prohibiting insurance companies and providers from entering into provider network contracts with anti-competitive clauses. The prohibited clauses include: anti-steering clauses, which restrict insurers from encouraging enrollees to get care from competitors of the provider; anti-tiering clauses, which restrict insurers from having a tiered network plan or placing provider members on different tiers; and gag clauses, which restrict insurers or providers from disclosing price or quality information. HB 711 went into effect immediately on June 12, 2023.

The Legislature again attempted to protect consumers from surprise medical bills, this time by passing SB 490, ensuring patients received itemized bills prior to any debt collection activity and requiring health plans to provide real-time data to providers on patient out-of-pocket expenses and coverage information for prescription drugs. The bill must include an itemized list of each medical service provided, the amount the provider will accept as payment in full for that service, and a plain-language description of the service.

The Legislature also addressed consumer protections by temporarily prohibiting out-of-network ambulance billing in SB 2476. This bill expands on SB 1264 (86th R., 2019), the “Surprise Billing Act,” which prohibited providers from billing a patient for the balance of the cost when a carrier refused to pay the total cost, which often resulted in unexpected bills for patients. SB 2476 prohibits ground-ambulance services provided by municipalities from engaging in balance billing. This change would ensure that patients are not charged for urgent trips to the hospital in the manner that others can no longer charge.

HB 3414 allows third-party access to the statewide all-payor claims database, or APCD, allowing for the reporting of information as long as the information is made available to the public at no cost. All payers that are subject to Texas law must submit claims forms to the database. The data that is being collected has been useful to the state, however, researchers have claimed difficulties on what they can publish when accessing the data. HB 3414 allows access to the data, specifies how entities qualify to access the data, and includes what data is shareable in its aggregated form. HB 3414 went into effect on June 11, 2023.

HB 290 allows for sole proprietorships to participate in a multiple employer welfare agreement, or MEWA, and allows businesses to form an MEWA if they can show a commonality of interest. This bill is in response to federal rules on MEWA expansions that were struck down by a court in 2019. HB 3359, mentioned below, also includes MEWAs into the network adequacy provisions in state statute.

HB 3359 strengthens network adequacy requirements and creates additional contracting requirements between carriers and providers, limiting the contractual changes that can be made by a carrier without the express agreement by the provider. Specifically, HB 3359 prevents exclusive provider organizations, or EPOs, and preferred provider organizations, or PPOs, from making any “adverse material changes” to a preferred provider contract during the term of the agreement without both parties’ consent and defines “adverse material change” as well. The bill also codifies federal adequacy requirements for PPOs and EPOs and make several key changes. One part, regarding wait time standards, does not go into effect until September 1, 2025. The rest of the bill becomes law on September 1, 2023, applying to plans that go into effect after January 1, 2024.

HB 1900 extends the amount of time carriers must give their policyholders if they intend to not renew the policy, previously from 30 days, now to 60 days before the policy ends. The Legislature previously passed legislation that allows insurers to use their own forms (with Texas Department of Insurance, or TDI, approval) and not standard forms. The argument for this legislation is that in doing so, it made shopping for insurance more involved by the consumer and that additional 30-days notice would help ensure continuation of coverage.

HB 1647 prohibits mandatory “white bagging” in physician offices. HB 1647 prohibits commercial insurers from requiring clinician-administered drugs to be dispensed only by certain pharmacies or in-network pharmacies for a patient with a chronic, complex, rare, or life-threatening condition. Health plans also cannot recover any cost differences from the patient. HB 1647 goes into effect on September 1, 2023, and applies to plans beginning on or after January 1, 2024.

HB 755 is the most recent effort to look at pre-authorization by insurance companies for medical procedures or prescriptions. With several key limitations, HB 755 prohibits an insurer from requiring prior authorization for drugs prescribed to treat an autoimmune disease, hemophilia, or Von Willebrand disease more than once annually. The law goes into effect on September 1, 2023, and applies to plans beginning on or after January 1, 2024.

Medicaid
The Legislature passed several provisions having an impact on Medicaid.

HB 12 expands post-partum coverage for new mothers for up to 12 months. It went into effect on June 18, 2023. HB 1283 extends the Sunset provision and allows for the statewide preferred drug list to continue to be managed by Health and Human Services until August 31, 2033. HB 2802 will streamline the process for Texans to receive updates regarding changes to their eligibility to align with recent changes to law by the FCC.

HB 2727 expands Medicaid coverage for home telemonitoring services and adds federally qualified health centers, or FQHCs, and rural health clinics to the list of eligible participating providers. HB 2727 changes the determination that triggers reimbursement to one that shows the program is clinically effective and changes several significant requirements including ensuring that data gathered is shared with the patient’s physician. This bill went into effect on June 13, 2023.

HB 4990 attempts to reduce the cost of prescription drugs for taxpayers, employers, and consumers through the establishment of the Texas Pharmaceutical Initiative. Through this initiative, the bill provides for the establishment of a statewide pharmacy benefit manager, or PBM, focused on price transparency and providing savings not only to the state but also ultimately to consumers. HB 4990 went into effect on June 13, 2023.

SB 2193 allows for the direct primary care model of coverage for FQHCs and requires TDI to review all FQHC programs to evaluate success. FQHCs deliver services for participating employers and uninsured or underinsured groups. SB 2193 became effective on May 19, 2023.

Other Bills of Interest
SB 833 prohibits carriers operating in Texas from using an environmental, social, or governance, or ESG, model or score to charge a different rate for businesses in the same class. SB 833 was one of several pieces of legislation targeting ESG scoring in various industries.

Most legislation that attempted to extend or otherwise keep COVID-19 presumptions and rule suspensions failed, signaling that the Legislature is moving beyond COVID in its decision-making. One exception was SB 1286, which grants TDI the authority to write rules clarifying and extending the deadlines for prompt payment of claims-handling in a case of a catastrophic event as defined by the Texas Administrative Code. Prompt pay extensions were initially granted as part of the governor’s COVID-19 orders and clarified by subsequent TDI bulletins. Those orders were rescinded on September 20, 2021.

SB 14 addresses gender modification. As passed, SB 14 prohibits medical professionals from providing puberty-inhibiting drugs, cross-sex hormones, and surgical interventions to children under 18 for the purpose of altering a child’s biological characteristics to align with their perceived gender identity. The bill also requires the Texas Medical Board to revoke the license of a physician who provides these services and prohibits the use of public funds to pay for related medical interventions.

SB 2008 affects where farm mutual insurance companies can write coverage. Since at least the 1970s, Texas statutes dictate in which counties farm mutual insurance companies can operate by stating that a majority of each farm mutual’s policies must apply coverage to “rural property.” For decades, “rural property” has been defined as property located outside an area of land subject to the taxing authority of a municipality with a population of more than 2,500. The final version signed into law increases that amount from 2,500 to 6,500 and allows for a change of that number based on census changes (every 10 years) going forward.

SB 1659 extends the TDI Sunset review to 2029. This is now at least the third time in as many legislative sessions that the Legislature has pushed reviewing TDI and insurance-related agencies. The Sunset process is essentially a rigorous audit of a state agency for the Legislature to review processes and procedures and make recommendations regarding changing them. SB 1659 went into effect on June 18, 2023.

W. RYAN BRANNAN is the principal attorney and a registered lobbyist with the Austin firm of W.R. Brannan & Associates. He was previously appointed by Gov. Greg Abbott and Gov. Rick Perry to serve as the commissioner of Workers’ Compensation at the Texas Department of Insurance and served as an adviser to Perry. Brannan currently represents businesses, associations, nonprofits, and other entities at the Texas Capitol.