OFFICE OF THE ATTORNEY GENERAL. STATE OF TEXAS 

JOHN CORNYN 

May 8,2002 

The Honorable Bob Turner 

Chairman, Committee on Public Safety 

Texas House of Representatives 

P.O. Box 2910 

Austin, Texas 78768-2910 

Opinion No. JC-0502 

Re: Whether Insurance Code article 3.70-3C, 

section 3A(c), (i) and article 20A.l8B(c), (i) 

authorize the Texas Commissioner of Insurance to 

promulgate rules requiring health maintenance 

organizations and preferred provider organizations 

to disclose their policies regarding fees, bundling, 

and downcoding to physicians and other health 

care providers (RQ-046 1 -JC) 

Dear Representative Turner: 

Article 3.70-3C, section 3A and article 20A.18B of the Insurance Code require health 

maintenance organizations (HMOs) and preferred provider organizations (PPOs) to promptly pay 

the claims of physicians and other health care providers (hereinafter “providers”). You ask whether 

article 3.70-3C, section 3A(c), (i) and article 20A. 18B(c), (i) authorize the Texas Commissioner of 

Insurance (the “Commissioner”) to promulgate rules requiring HMOs and PPOs to disclose their 

policies regarding fees, bundling, and downcoding to providers.’ We answer your question in the 

affirmative and conclude that these provisions authorize the Commissioner and the Texas 

Department of Insurance to promulgate rules requiring HMOs and PPOs to disclose their policies 

regarding fees, bundling, and downcoding. 

Your question requires us to examine statutory language added to the Insurance Code by the 

legislature in 1999. As background, we begin with a brief explanation of the terms “bundling” and 

“downcoding” and a description of the 1999 legislation and subsequent legal developments. 

The terms “bundling” and “downcoding” refer to ways in which an HMO or a PPO may 

evaluate a provider’s request for payment. After treating a patient who is covered by an HMO or 

a PPO health plan, a provider submits a claim for payment to the HMO or PPO that will include a 

shorthand description of the particular services or procedures performed by the provider in the form 

of a code. For this purpose, providers and insurers generally use uniform codes, developed by the 

‘Letter from Honorable Bob Turner, Chairman, House Committee on Public Safety, to Honorable John Comyn, 

Texas Attorney General at 2 (Nov. 2, 2001) (on file with the Opinion Committee) [hereinafter Request Letter]. You 

ask about Insurance Code, article 3.70-3C, section 3A and article 20A. 18B as added by Act of May 29,1999,76th Leg., 

R.S., ch. 1343, 1999 Tex. Gen. Laws 4556. 
The Honorable Bob Turner - Page 2 (JC-0502) 

American Medical Association, that are often referred to as “Current Procedural Terminology” or 

“CPT” codes. See generaZZy Texas Department of Insurance Brief at 3 n.2;2 Texas Association of 

Health Plans Brief at 1 -2;3 Texas Medical Association Brief at 1-2.4 “Bundling” occurs when a 

provider submits a claim listing multiple codes and the insurer combines two or more codes, 

effectively reimbursing the provider for fewer procedures than those listed on the claim. See TDI 

Brief, supra note 2, at 3 (defining bundling as “a practice whereby a claim submitted . . . for two or 

more separate and distinct CPT services or procedures . . . is ‘bundled’ by the carrier who reimburses 

for just one of the services or procedures, typically the one of the lowest cost”). “Downcoding” is 

a practice whereby CPT codes submitted by a provider are changed unilaterally by an HMO or a 

PPO from codes describing higher levels of service to codes describing lower levels of service. See 

id. at 3 n.3. 

Your question about HMO and PPO disclosure of fees, bundling, and downcoding policies 

arises from 1999 amendments to the Insurance Code, enacted by House Bill 610. As the bill 

analyses explain, House Bill 610 was intended to “require[] prompt payment to physicians and 

providers for services performed.“5 The bill did this by requiring HMOs and PPOs to pay physicians 

and other providers within a time certain after the submission of a “clean claim,” see Tex. H.B. 6 10, 

$0 l-2,76th Leg., R.S. (1999), Act ofMay 29, 1999,76th Leg., R.S., ch. 1343, §§ 1-2, 1999 Tex. 

Gen. Laws 4556,4556-59 (enacting Tex. Ins. Code art. 3.70-3C, § 3A(a), (c) and art. 20A.l8B(a), 

(c)), which it defined as a completed claim, as determined by Texas Department of Insurance (TDI) 

rules, see id. (enacting Tex. Ins. Code art. 3.70-3C, 8 3A(a) and art. 20A.l8B(a)). Significantly for 

our purposes, House Bill 610 also required HMOs and PPOs to provide physicians and providers 

with “copies of all applicable utilization review policies and claim processing policies or procedures, 

including required data elements and claim formats” and authorized the Commissioner to adopt 

implementing rules. See id. (enacting Tex. Ins. Code art. 3.70-3C, 8 3A(i), (n) and art. 

20A. 18B(i),(o)). 

We note that in the last legislative session, the legislature enacted a bill, House Bill 1862, 

which the Governor subsequently vetoed, that would, among other things, have required HMOs and 

2Brief from Lynda H. Nesenholtz, General Counsel, Texas Department of Insurance, to Susan Gusky, Chair, 

Opinion Committee, Office of Attorney General (Dec. 20,200l) (on file with Opinion Committee) [hereinafter TDI 

Brief]. 

3Brief from Leah Rum.mel, Executive Director, Texas Association of Health Plans, to Honorable John Comyn, 

Texas Attorney General (Dec. 14,200l) (on file with Opinion Committee). 

4Brief from Lee A. Spangler, Assistant General Counsel, Texas Medical Association, to Honorable John 

Comyn, Texas Attorney General (Dec. 10,200l) (on file with Opinion Committee) [hereinafter TMA Brief]. 

%eeHousECOMM. ONINSLRANCE,BILLANALYSIS, Tex. H.B. 610,76thLeg., R.S. (1999) (as introduced); HOUSE 

COMM. ON INSURANCE, BILL ANALYSIS, Tex. H.B. 610,76th Leg., R.S. (1999) ( committee substitute); SENATE COMM. ON 

ECONOMJC DEVELOPMENT, BILL ANALYSIS, Tex. H.B. 610, 76th Leg., R.S. (1999) (as engrossed); SENATE COMM. ON 

ECONOMIC DEVELOPMENT, BILL ANALYSIS, Tex. H.B. 610,76th Leg., R.S. (1999) (committee substitute); HOUSE COMM. 

ON INSURANCE, BILL ANALYSIS, Tex. H.B. 610,76th Leg., R.S. (1999) (enrolled). 
The Honorable Bob Turner - Page 3 (JC-0502) 

PPOs to provide physicians and providers upon request with “a description of the coding guidelines, 

including any underlying bundling, recoding, or other payment process and fee schedules.” Tex. 

H.B. 1862,77th Leg., R.S. (2001); Veto Message of Gov. Perry, Tex. H.B. 1862,77th Leg., R.S. 

(2001). The Governor’s veto proclamation acknowledged the strain between health plans and 

providers over contract and payment issues and directed TDI “to be more aggressive in assisting 

physicians and health care providers in claims disputes” and to “quickly reopen and strengthen 

existing prompt pay rules.” Veto Message of Gov. Perry, Tex. H.B. 1862,77th Leg., R.S. (2001). 

TDI adopted rules implementing House Bill 6 10 in May 2000, see 25 Tex. Reg. 4543 (2000), 

which it amended in February of 2001, see 26 Tex. Reg. 1341(2001), and September 2001, see id. 

at 7542. None of these rules address disclosure of fees, bundling, or downcoding policies. See 28 

TEX. ADMIN. CODE $6 21.2801-.28 16 (2001) (Submission of Clean Claims). It appears, however, 

that several entities asked TDI in the last round of rulemaking, which ended on September 28,2001, 

to address disclosure of bundling and downcoding policies. See 26 Tex. Reg. 7542,7544-45 (2001). 

The Department declined to do so, stating: 

It is the department’s position that Article 20A.l8B(i) and 

Article 3.70-3C 5 3A(i), relating to claims processing policies and 

procedures, do not require carriers to disclose bundling and 

downcoding procedures. The policies and procedures identified in 

these statutes are those necessary for notifying physicians and 

providers of the information needed to file a clean claim and when the 

physician or provider can expect to be paid, and do not include 

bundling or downcoding disclosures. 

Id. at 7545. In essence, your letter questions TDI’s construction of Insurance Code article 3.70-3C, 

section 3A(i) and article 20A. 18B(i). Specifically, you ask: 

Does the Commissioner of Insurance have the authority under Texas 

state law, Insurance Code Art. 20A.l8B(c) & (i) and Art. 3.70-3C 

Sec. 3A(c) & (i), to require a Health Maintenance Organization or a 

Preferred Provider Organization to disclose to a participating 

physician or provider that organization’s claims processing policies 

regarding fees, bundling and downcoding, and should those policies 

be included in the disclosure required by Art. 20A. 18B (i) and Art. 

3.70-3C Sec. 3A(i)? 

Request Letter, supra note 1, at 2. Your reference to “policies regarding fees” appears to mean fee 

schedules, information regarding what an HMO or a PPO will pay for particular services. See id. 

For the reasons explained below, we conclude that these provisions authorize the Commissioner and 

TDI to promulgate rules requiring HMOs and PPOs to disclose their policies regarding fees, 

bundling, and downcoding. 
The Honorable Bob Turner - Page 4 (JC-0502) 

House Bill 610 amended two different provisions of the Insurance Code - the Health 

Maintenance Organization Act, chapter 20 ofthe Insurance Code, which governs HMOsy6 and article 

3.70-36, which contains certain provisions applicable only to preferred provider benefit pla.n~.~ 

Because the prompt payment provisions governing HMOs and PPOs are identical, we will describe 

and analyze them together. 

As enacted by House Bill 610, article 20A.18B and article 3.70-3C, section 3A require the 

prompt payment of providers by HMOs and PPOs following the receipt of a “clean claim.” A “clean 

claim” is defined as “a completed claim, as determined under” TDI rules, submitted by a provider 

“for medical care or health care services” under a health care plan or health insurance policy. See 

TEX. INS. CODE ANN. art. 3.70-3C, 5 3A(a); id. art. 20A. 18B(a) (Vernon Supp. 2002). The prompt 

payment provisions require an HMO or a PPO “[nlot later than the 45th day after the date that [it] 

receives a clean claim” from a provider to: 

(1) pay the total amount of the claim in accordance with the 

contract between the . . . provider and the [PPO or HMO]; 

(2) pay the portion of the claim that is not in dispute and 

notify the . . . provider in writing why the remaining portion of the 

claim will not be paid; or 

(3) notify the . . . provider in writing why the claim will not 

be paid. 

Id. art. 3.70-3C, 8 3A(c); id. art. 20A.l8B(c). If the PPO or HMO acknowledges coverage 

of an insured or enrollee under the health insurance policy or health care plan “but intends to audit 

the . . . provider claim, the [PPO or HMO] shall pay the charges submitted at 85 percent of the 

contracted rate on the claim not later than the 45th day after the date that the [PPO or HMO] receives 

the claim from the . . . provider.” Id. art. 3.70-3C, 6 3A(e); id. art. 20A.l8B(e). 

@fhe Health Maintenance Organization Act defines an HMO as “any person who arranges for or provides a 

health care plan, a limited health care service plan, or a single health care service plan to enrollees on a prepaid basis.” 

TEX. INS. CODE ANN. art. 20A.O2(n) (Vernon Supp. 2002). A “health maintenance organization delivery network” is “a 

health care delivery system in which a health maintenance organization arranges for health care services directly or 

indirectly through contracts and subcontracts with providers and physicians.” Id. art. 20A.O2(w). 

7Under article 3.70-3C, a “preferred provider” is “a physician, practitioner, hospital, institutional provider, or 

health care provider, or an organization of physicians or health care providers, who contracts with an insurer to provide 

medical care or health care to insureds covered by a health insurance policy, certificate, or contract.” TEX. INS. CODE 

ANN. art. 3.70-3C, 3 l( 10) (Vernon Supp. 2002). Article 3.70-3C applies to “any preferred provider benefit plan in 

which an insurer provides, through its health insurance policy, for the payment of a level of coverage which is different 

from the basic level of coverage provided by the health insurance policy if the insured uses a preferred provider.” Id. 

$ 2 (“This article does not apply to provisions for dental care benefits in any health insurance policy.“). 
The Honorable Bob Turner - Page 5 (JC-0502) 

A PPO or an HMO that fails to pay a provider in accordance with these requirements “is 

liable to a . . . provider for the full amount of billed charges submitted on the claim or the amount 

payable under the contracted penalty rate, less any amount previously paid or any charge for a 

service that is not covered by” the health insurance policy or health care plan, id. art. 3.70-3C, 

9 3A(f); id. art. 20A. 18B(f), and “is subject to an administrative penalty under Article 1.1 OE” of the 

Insurance Code, id. art. 3.70-36’8 3A(h); id. art. 20A. 18B(h). “The administrative penalty imposed 

under that article may not exceed $1,000 for each day the claim remains unpaid in violation of 

Subsection (c) or (e) of this section.” Id. art. 3.70-3C, 8 3A(h); id. art. 20A. 18B(h). 

The prompt payment provisions also require a PPO or an HMO to “provide a . . . provider 

with copies of all applicable utilization review policies and claim processing policies or procedures, 

including required data elements and claim formats.” Id. art. 3.70-3C, 8 3A(i); id. art. 20A.l8B(i). 

A PPO or an HMO “may, by contract with a. . . provider, add or change the data elements that must 

be submitted with the . . . provider claim.” Id. art. 3.70-3C, 8 3ACj); id. art. 20A.l8B(j). “Not later 

than the 60th day before the date of an addition or change in the data elements that must 

be submitted with a claim or any other change” in a PPO or an HMO’s “claim processing and 

payment procedures,” the PPO or HMO “shall provide written notice of the addition or change to 

each . . . provider.” Id. art. 3.70-3C, 9 3A(k); id. art. 20A.l8B(k). Finally, both prompt payment 

provisions provide that the Commissioner may adopt necessary implementing rules. See id. art. 

3.70-3C, $3A(n) (“The commissioner of insurance may adopt rules as necessary to implement this 

section.“); id. art. 20A. 18B(o) (“The commissioner may adopt rules as necessary to implement this 

section.“). 

In its rules, TDI has construed the requirement that a PPO or an HMO “provide a . . . provider with copies of all applicable utilization review policies and claim processing policies 

or procedures, including required data elements and claim formats,” id. art. 3.70-3C, 5 3A(i); 

id. art. 20A.l8B(i), to require a PPO or an HMO to disclose “claims processing policies and 

procedures. . . which are necessary to submit a claim that is clean for prompt payrnent,” TDI Brief, 

supra note 2, at 4, including, for example, policies specifying which claim form, attachments, and 

other information must be submitted, when and where a claim must be submitted, and whether a 

claim must be submitted by mail, e-mail, or facsimile, see id. at 4-5; see also 28 TEX. ADMIN. CODE 

$8 21.2802(4) (2001) (defining clean claim), .2803(b) ( re q uired data elements), (c) (necessary 

attachments). TDI takes the position that the language mandating disclosure of “claim processing 

policies or procedures” requires PPOs and HMOs to disclose only information relevant to what 

makes a claim complete. It asserts that bundling and downcoding policies do not fall within the 

scope of the information that must be disclosed because such policies “provide a means by which 

a claim is valued under the terms of the contract between the carrier and the provider” and do not 

pertain to whether a claim is clean. TDI Brief, supra note 2, at 5. The Texas Medical Association, 

on the other hand, contends that the prompt payment provisions not only require PPOs and HMOs 

to pay providers promptly, but to pay them correctly, and asserts that the disclosure requirements 

must be construed in light of that goal: “[Tlhe legislature passed an Act that is intended to facilitate 

payment to physicians and provide physicians with the policies and procedures information they 

need to determine they have been paid correctly.” TMA Brief, supra note 4, at 3. 
The Honorable Bob Turner - Page 6 (JC-0502) 

When construing a statute, we must attempt to give effect to the legislature’s intent. See TEX. 

GOV’TCODEANN. $8 311.021, .023 (Vernon 1998);MitchellEnergyCorp.v. Ashworth, S.W.2d 

436,438 (Tex. 1997). To give effect to legislative intent, we construe a statute according to its plain 

language. See RepublicBank Dallas, N.A. v. Interkal, Inc., 691 S.W.2d 605, 607-08 (Tex. 1985); 

Bouldin v. Bexar County Sheriff’s Civil Serv. Comm iz, 12 S.W.3d 527,529 (Tex. App.-San Antonio 

1999, no pet.). When interpreting a statute, words and phrases that have acquired a technical or 

particular meaning, by legislative definition or otherwise, must be construed accordingly. See TEX. 

GOV’T CODE AN-N. 8 311.01 l(b) (Vernon 1998). Otherwise, words and phrases shall be read in 

context and construed according to the rules of grammar and common usage. Id. 4 3 11 .Ol l(a). 

When a statute does not define a term, we apply the term’s ordinary meaning. See Hopkins v. Spring 

Indep. Sch. Dist., 736 S.W.2d 617,619 (Tex. 1987). 

The specific statutory language at issue requires PPOs and HMOs to disclose “copies of all 

applicable utilization review policies and claim processing policies or procedures, including required 

data elements and claim formats.” TEX. INS. CODE ANN. ark 3.70-3C, tj 3A(i); id. art. 20A. 18B(i) 

(Vernon Supp. 2002). The legislature did not define the terms “utilization review policies,” “claim 

processing policies or procedures, ” “data elements,” and “claim formats” anywhere in the prompt 

payment provisions. Article 21.58A of the Insurance Code, which governs health care utilization 

review agents, defines “utilization review” as “a system for prospective or concurrent review of the 

medical necessity and appropriateness of health care services being provided or proposed to be 

provided to an individual within this state. Utilization review shall not include elective requests for 

clarification of coverage.” Id. art. 21.58A, 5 2(20). It is not clear to us that fee schedules or 

bundling or downcoding policies, which pertain to how providers are compensated for services 

performed, are policies regarding “prospective or concurrent review of the medical necessity and 

appropriateness of health care services being provided or proposed to be provided” to a patient. Id. 

None of the other terms are defined by statute and we are not aware of any technical or commonly 

understood meaning of those terms. See TEX. GOV’T CODE ANN. 6 3 11 .Ol 1 (Vernon 1998) (words 

and phrases that have acquired a technical or particular meaning, by legislative definition or 

otherwise, must be construed accordingly; otherwise, words and phrases shall be read in context and 

construed according to the rules of grammar and cornmon usage). 

The prompt payment provisions as a whole are ambiguous with respect to whether fee 

schedules and bundling and downcoding policies must be disclosed. Looking at the disclosure 

requirements in the context of the prompt payment provisions in their entirety, it is clear from the 

plain language that the statutes’ purpose is to establish a mechanism for prompt payment of 

providers’ claims. They do this by establishing a time limit within which a PPO or an HMO must 

pay a provider’s claim. This time limit is triggered by the submission of a “clean” or “complete” 

claim. Viewed in this light, the disclosure provisions, which require a PPO or an HMO to provide 

a “provider with copies of all applicable utilization review policies and claim processing policies or 

procedures, including required data elements and claim formats,” TEX. INS. CODE ANN. art. 3.70-3C, 

5 3A(i); id. art. 20A. 18B(i) (V emon Supp. 2002)’ are clearly intended, at a minimum, to ensure that 

providers will have the information necessary to determine that a claim is complete before 

submitting it. It is not clear from the plain language of the statute, however, whether disclosure of 
The Honorable Bob Turner - Page 7 (JC-0502) 

fee schedules and bundling and downcoding 

or whether the disclosure provisions have a 

policies 1s necessary to the submission ofa clean claim 

broader purpose. 

When a statute is ambiguous, we may consider, among other things, the object sought to be 

attained, the circumstances under which a statute was enacted, legislative history, the consequences 

of a particular construction, and administrative construction of the statute. See TEX. GOV’T CODE 

ANN. 5 3 11.023 (Vernon 1998); see also id. 8 3 11.021 (in enacting a statute, it is presumed that “a 

just and reasonable result is intended” and “a result feasible of execution is intended”). In particular, 

courts will defer to the construction of a statute by the administrative agency charged with its 

enforcement, so long as the construction is reasonable and does not contradict the plain language of 

the statute. See Tarrant Appraisal Dist. v. Moore, 845 S.W.2d 820, 823 (Tex. 1993); Tex. Utils. 

Elec. Co. v. Sharp, 962 S.W.2d 723,726 (Tex. App.-Austin 1998, pet. denied). This is particularly 

true where the statute is ambiguous due to the complexity of the subject matter. See Tex. Ass ‘n of 

Long Distance Tel. Cos. v. Pub. Util. Comm ‘n, 798 S.W.2d 875,884 (Tex. App.-Austin 1990, writ 

denied). 

We have reviewed the bill analyses, the committee hearings, and the floor debates pertaining 

to House Bill 610,’ none of which specifically address fee schedules or bundling or downcoding 

policies or the disclosure of such information. The bill analyses, for example, reiterate that, in 

enacting House Bill 6 10, the legislature intended to establish a prompt payment mechanism: 

Currently, [HMOs] are not required to compensate physicians for 

services within a specified period of time. H.B. 610 requires prompt 

payment to physicians and providers for services performed. This bill 

sets further payment schedules for physicians and provides penalties 

for late payments. 

HOUSE COMM. ON INSURANCE, BILL ANALYSIS, Tex. H.B. 610, 76th Leg., R.S. (1999) (as 

introduced) (Background and Purpose).9 In explaining the purpose of House Bill 6 10 to the House 

8See HOUSE COMM. ON INSURANCE, BILL ANALYSIS, Tex. H.B. 610,76th Leg., R.S. (1999) (as introduced); HOUSE 

COMM. ON INSURANCE, BKL ANALYSIS, Tex. H.B. 610,76th Leg., R.S. (1999) ( committee substitute); SENATE COMM. ON 

ECONOMIC DEVELOPMENT, BILL ANALYSIS, Tex. H.B. 610, 76th Leg., R.S. (1999) (as engrossed); SENATE COMM. ON 

ECONOMIC DEVELOPMENT, BILL ANALYSIS, Tex. H.B. 610,76th Leg., R.S. (1999) (committee substitute); HOUSE COMM. 

ON INSURANCE, BILL ANALYSIS, Tex. H.B. 610,76th Leg., R.S. (1999) ( enrolled); Hearings on Tex. H. B. 610 Before the 

House Comm. on Insurance, 76th Leg., R.S. (Mar. 30, 1999) (tape available from House Video/Audio Services); 

Hearings on Tex. H.B. 610 Before the Senate Comm. on Economic Development, 76th Leg., R.S. (May 11, 1999) (tape 

available from Senate Staff Services Office); Debate on Tex. H.B. 610 on the Floor of the House, 76th Leg., R.S. (May 

4, 1999) (2d & 3d Reading) (tape available from House Video/Audio Services); Debate on Tex. H.B. 610 on the Floor 

of the Senate, 76th Leg., R.S. (May 18, 1999) (2d & 3d Reading) (tape available from Senate Staff Services Office). 

‘See also HOUSE COMM. ON INSURANCE, BILL ANALYSIS, Tex. H.B. 610, 76th Leg., R.S. (1999) (committee 

substitute); SENATE COMM. ON ECONOMIC DEVELOPMENT, BILL ANALYSIS, Tex. H.B. 610, 76th Leg., R.S. (1999) (as 

engrossed); SENATE COMM. ON ECONOMIC DEVELOPMENT, BILL ANALYSIS, Tex. H.B. 610, 76th Leg., R.S. (1999) 

(continued.. .) 
The Honorable Bob Turner - Page 8 (JC-0502) 

Committee on Insurance, the bill’s author indicated that PPOs and HMOs might be intentionally 

delaying payments to providers: “ [IInsurance companies, HMOs, PPOs will drag out the payment 

process and, in doing so, they’re able to sit on large sums of money . . . while they earn interest on 

that.“‘O Clearly, the legislative goal was to ensure that PPOs and HMOs would not delay paying 

providers’ claims. But there is no indication that the legislature specifically considered whether or 

not PPOs and HMOs should be required to disclose to providers their fee schedules or bundling and 

downcoding policies. 

It is clear from the legislative history, however, that the legislature intended to rely on TDI 

to work out the technical details. See, e.g., supra note 10 (Janek testimony noting that TDI was 

already in the process of working on a regulatory definition of a clean claim and stating that the bill 

“will put the definition of ‘clean claim’ back to TDI. I don’t want to get into defining it in the bill 

only to have something substantially different than what TDI would propose.“). Moreover, in 

enacting the statute, the legislature specifically charged TDI with enforcing the prompt payment 

provisions, with defining a clean claim, and with promulgating implementing rules. See TEX. INS. 

CODE ANN. art. 3.70-3C, 9 3A(a), (h), (n) (V emon Supp. 2002) (“The commissioner of insurance 

may adopt rules as necessary to implement this section.“); id. art. 20A.l8B(a), (h), (0) (“The 

commissioner may adopt rules as necessary to implement this section.“). Given the statute’s 

ambiguity with respect to the scope ofrequired disclosures, the lack of conclusive legislative history, 

and the overall complexity of this regulatory area, we believe that a court, recognizing the agency’s 

expertise in the field, would defer to TDI’s construction of the prompt payment provisions’ 

disclosure requirements. 

As noted above, TDI has concluded that the prompt payment provisions do not require 

HMOs and PPOs to disclose their fee schedules and bundling and downcoding policies, based upon 

its determination that the purpose of the language mandating disclosure of “claim processing policies 

or procedures” is limited to making available information that will allow providers to submit clean 

claims and its assessment that disclosure of fee schedules and bundling and downcoding information 

is not necessary to the preparation of a clean claim. We believe that a court would find this 

construction of the statute does not conflict with the statute’s plain language and is reasonable. As 

we explain below, however, we also believe that a court would find reasonable an alternate TDI 

construction of the prompt payment provisions to require disclosure of fee schedules and bundling 

and downcoding policies. 

First, the prompt payment provisions’ disclosure requirements mandate the disclosure of 

“copies of all applicable utilization review policies and claim processing policies or procedures, 

including required data elements and claim formats.” TEX. INS. CODE ANN. art. 3.70-3C, 0 3A(i); 

9(. . .continued) 

(committee substitute); HOUSE COMM. ON INSURANCE, BILL ANALYSIS, Tex. H.B. 610,76th Leg., R.S. (1999) (enrolled). 

“Hearings on Tex. H.B. 610 Before the House Comm. on Insurance, 76thLeg., R.S. (Mar. 30,1999) (testimony 

of Representative Janek) (tape available from House Video/Audio Services). 
The Honorable Bob Turner - Page 9 (JC-0502) 

id. art. 20A. 18B(i) (Vernon Supp. 2002) (emphasis added). As noted above, the legislature did not 

define the terms “utilization review policies,” “ claim processing policies or procedures,” “data 

elements,” and “claim formats” anywhere in the prompt payment provisions. Under its rulemaking 

authority, TDI has the authority to define these terms as necessary to implement the prompt payment 

provisions. See id. art. 3.70-3C, 9 3A(a), (h), (n) (“Th e commissioner of insurance may adopt rules 

as necessary to implement this section.“); id. art. 20A.l8B(a), (h), (0) (“The commissioner may 

adopt rules as necessary to implement this section.“). Furthermore, the word “include” is a “term 

of enlargement” that does not limit a set to listed items; a statute’s “use of the term[] does not create 

a presumption that components not expressed are excluded.” TEX. GOV’T CODE ANN. 8 3 11.005( 13) 

(Vernon 1998); see also BRYAN A. GARNER, A DICTIONARY OF MODERN LEGAL USAGE 287 (1987) 

(discussing “include”); BLACK’S LAW DICTIONARY 766 (7th ed. 1999) (defining “include”). The 

term “include” signifies an “illustrative” list. BRYAN A. GARNER, A DICTIONARY OF MODERN LEGAL 

USAGE 287 (1987) (quoting Puerto Rico Maritime Shipping Auth. v. I.C.C., 645 F.2d 1102, 1112 

n.26 (D.C. Cir. 198 1)). Thus, it is within TDI’s authority to determine that fee schedules and 

bundling and downcoding policies are similar to “data elements” or “claim formats.” Were TDI to 

conclude that fee schedules and bundling and downcoding policies constitute “utilization review 

policies, ” “claim processing policies or procedures, ” “data elements,” or “claim formats,“or are 

sufficiently like “data elements” or “claim formats,” we believe that a court would defer to its 

expertise in this matter. See TEX. GOV’T CODE ANN. 5 311 .Ol l(b) (Vernon 1998) (words and 

phrases that have acquired a technical or particular meaning, by legislative definition or otherwise, 

must be construed accordingly). 

Second, the plain language of the prompt payment provisions as a whole does not foreclose 

such a construction of the disclosure provisions. As the Texas Medical Association points out, the 

prompt payment provisions require PPOs and HMOs upon receiving a clean claim to “pay the 

total amount of the claim in accordance with the contract.” TEX. INS. CODE ANN. art. 3.70-3C, 

8 3A(c)( 1); id. art. 20A. 18B(c)( 1) (V emon Supp. 2002) (emphasis added). And, if the PPO or HMO 

acknowledges coverage of an insured or enrollee under the health insurance policy or health care 

plan “but intends to audit the. . . provider claim, the [PPO or HMO] shall pay the charges submitted 

at 85 percent of the contracted rate on the claim not later than the 45th day after the date that the 

[PPO or HMO] receives the claim from the . . . provider.” Id. art. 3.70-3C, 9 3A(e); id. art. 

20A. 18B(e) (emphasis added). The Texas Medical Association argues that “without a copy of the 

fee schedule, bundling logic, or downcoding policies, there is no way for a physician to determine 

whether he has been paid according to contract.” TMA Brief, supra note 4, at 3. Based on this 

statutory language, we believe that TDI could reasonably construe the prompt payment provisions’ 

disclosure requirements more broadly to require PPOs and HMOs to disclose information that would 

provide physicians with a basis for determining whether they have been paid according to the 

contract, including fee, bundling, and downcoding information. Were TDI to construe the disclosure 

provisions in this manner, we do not believe a court would conclude that the agency had exceeded 

its statutory authority, which is quite broad. TDI is charged with adopting rules necessary to 

implement the prompt payment provisions as a whole; its rulemaking authority is not limited to 

defining the meaning of a clean claim or to construing the disclosure requirements. See TEX. INS. 

CODEANN. art. 3.70-3C, 8 3A(n) (V emon Supp. 2002) (“The commissioner of insurance may adopt 
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rules as necessary to implement this section.“); id. art. 20A. 18B(o) (“The commissioner may adopt 

rules as necessary to implement this section.“). 

Finally, in its brief, TDI suggests that any construction of the prompt payment provisions to 

require disclosure of fee schedules and bundling and downcoding policies is foreclosed by Senate 

Bill 78 1, also enacted by the Seventy-sixth Legislature that enacted House Bill 610, and House Bill 

1862, enacted by the Seventy-seventh Legislature and subsequently vetoed by the Governor. We 

disagree. 

Senate Bill 781 amended article 3.70-3C and chapter 20A of the Insurance Code, the same 

provisions amended by House Bill 6 10, adding provisions mandating special contractual rights for 

podiatrists providing services under HMO and PPO plans: 

A preferredprovider contract between an insurer and a podiatrist 

licensed by the Texas State Board of Podiatric Medical Examiners 

must provide that: 

(1) the podiatrist may request, and the insurer shall provide 

not later than the 30th day after the date of the request, a copy of the 

coding guidelines and payment schedules applicable to the 

compensation that the podiatrist will receive under the contract for 

services; 

(2) the insurer may not unilaterally make material retroactive 

revisions to the coding guidelines and payment schedules; 

TEX. INS. CODE ANN. art. 3.70-3C, 8 3(n)(l)-(2) (V emon Supp. 2002) (emphasis added), as amended 

by Tex. S.B. 781,76thLeg., R.S. (1999). 

A contract between a health maintenance organization and a 

podiatrist licensed by the Texas State Board of Podiatric Medical 

Examiners must provide that: 

(1) the podiatrist may request, and the insurer shall provide 

not later than the 30th day after the date of the request, a copy of the 

coding guidelines and payment schedules applicable to the 

compensation that the podiatrist will receive under the contract for 

services; 
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(2) the insurer may not unilaterally make material retroactive 

revisions to the coding guidelines and payment schedules; 

Id. art. 20A.l8A(j)(l)-(2) (emphasis added), as amended by Tex. S.B. 781,76th Leg., R.S. (1999). 

The introduced version of Senate Bill 781 extended this contractual right to all providers, but the 

senate committee substitute version of the bill limited its scope to podiatrists. Compare Tex. S.B. 

781,76th Leg., R.S. (1999) ( as introduced) (PPO or HMO contract with provider “must include a 

complete fee schedule, all applicable treatment codes, and a complete explanation of the method 

of determining payment to the . . . provider”) with Tex. S.B. 781, 76th Leg., R.S. (1999) 

(Senate committee substitute) (“contract between [a PPO or an HMO] and a podiatrist . . . must 

provide that . . . the podiatrist may request, and the insurer shall provide . . . a copy of the coding 

guidelines and payment schedules applicable to the compensation that the podiatrist will receive 

under the contract for services”). 

Similarly, House Bill 1862 would have mandated a right of access to information as a 

contract term between an HMO or a PPO and a provider. Specifically, it would have required that 

contracts permit physicians and other providers to request “a description of coding guidelines, 

including any underlying bundling, recoding, or other payment process and fee schedules applicable 

to specific procedures that the physician or provider will receive under the contract.” Tex. H.B. 

1862, 77th Leg., R.S. (2001). Under the mandatory contract term, the HMO or PPO would have 

been required to provide the information within 30 days. 

TDI asserts that the amendment of Senate Bill 78 1 to exclude all providers except podiatrists 

“indicates that the Legislature specifically elected to limit access to payment methodology 

information only to this type of provider. Its failure to include this provision in HB 610 further 

indicates no intention that payment methodology be considered information relevant to prompt 

payment of claims.” TDI Brief, supra note 2, at 7. And it argues that House Bill 1862 “indicates 

a cognizance [on the part of the Seventy-seventh Legislature] that HB 6 10 did not require carriers 

to provide this information as part of the prompt pay requirements.” Id. at 8. 

We conclude, however, that the legislature’s adoption of a right to request and receive coding 

and fee schedule information as a mandatory contract term does not establish that the legislature 

intended to exclude fee schedules and bundling and downcoding policies from the scope of 

information that must be automatically disclosed under the prompt payment provisions. In Senate 

Bill 78 1, the Seventy-sixth Legislature adopted a mandatory contract term for podiatrists, requiring 

IIMOs and PPOs upon request to disclose to a podiatrist coding guidelines and payment schedules 

applicable to the compensation that the podiatrist will receive under a contract for services. House 

Bill 1862 would have required a similar contract term for all providers. The prompt payment 

provisions, on the other hand, require automatic disclosure of certain information by HMOs and 

PPOs to all providers by statute, rather than pursuant to contract. The scope and existence of a right 
The Honorable Bob Turner - Page 12 (JC-0502) 

to information pursuant to contract does not definitively establish the legislature’s intent with respect 

to the scope of the prompt payment provisions’ disclosure requirements. 

In conclusion, to answer your specific question, we believe that it is within TDI’s authority 

to construe the prompt payment provisions requiring PPOs and HMOs to disclose to physicians and 

other health care providers “copies of all applicable utilization review policies and claim processing 

policies or procedures, including required data elements and claim formats,” TEX. INS. CODE ANN. 

art. 3.70-3C, 8 3A(i); id. art. 20A. 18B(i) (Vernon Supp. 2002)’ to require disclosure of fee schedules 

and bundling and downcoding policies. 
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SUMMARY 

Under the prompt payment provisions requiring preferred 

provider organizations (PPOs) and health maintenance organizations 

(HMOs) to disclose to physicians and other health care providers 

“copies of all applicable utilization review policies and claim 

processing policies or procedures, including required data elements 

and claim formats,” TEX. INS. CODE ANN. art. 3.70-3C, 8 3A(i); id. 

art. 20A.l8B(i) (Vernon Supp. 2002), the Texas Department of 

Insurance is authorized to promulgate rules to require PPOs and 

HMOs to disclose their fee schedules and bundling and downcoding 

policies. 

Attorney General of Texas 

HOWARD G. BALDWIN, JR. 

First Assistant Attorney General 

NANCY FULLER 

Deputy Attorney General - General Counsel 

SUSAN DENMON GUSKY 

Chair, Opinion Committee 

Mary R. Crouter 

Assistant Attorney General, Opinion Committee