OFFICEOFTHEATTORNEY GENERAL.STATEOFTEXAS 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 ofInsurance to promulgate rules requiring health maintenance organizations andpreferred 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 ofphysicians 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 abrief explanation ofthe terms “bundling” and “downcoding” and adescription 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 aprovider’s request for payment. After treating apatient who is covered by an HMO or aPPO health plan, aprovider submits a claim for payment to the HMO or PPO that will include a shorthand description ofthe particular services orprocedures performed by the provider in the form of acode. For this purpose, providers and insurers generally use uniform codes, developed by the

‘Letter from Honorable Bob Turner, Chairman, House Committee on Public Safety, toHonorable 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 asadded by Act ofMay 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 generaZZyTexas Department of Insurance Brief at 3n.2;2 Texas Association of Health Plans Brief at 1-2;3Texas 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 “apractice whereby aclaim submitted

. . .for two or more separate and distinct CPT services orprocedures

...is ‘bundled’ by the carrier who reimburses forjust one of the services or procedures, typically the one ofthe lowest cost”). “Downcoding” is apractice whereby CPT codes submitted by aprovider 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 3n.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 topay physicians and other providers within atime certain after the submission of a“clean claim,” see Tex. H.B. 610, $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 acompleted claim, asdetermined by Texas Department ofInsurance (TDI) rules, see id. (enacting Tex. Ins. Code art. 3.70-3C, 83A(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 ofall applicable utilization review policies and claim processing policies orprocedures, 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 abill, 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 ofHealth 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. ONINSURANCE,

BILLANALYSIS,

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. ONINSURANCE,

BILL ANALYSIS,

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

PPOs toprovide physicians and providers upon request with “adescription ofthe 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 610inMay 2000, see 25Tex. Reg. 4543 (2000), which it amended in February of 2001, see 26 Tex. Reg. 1341(2001), and September 2001, see id. at 7542. None ofthese 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 ofrulemaking, which ended on September 28,2001, to address disclosure ofbundling 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 ofthe information needed to file aclean 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 ofInsurance Code article 3.70-3C, section 3A(i) and article 20A. 18B(i). Specifically, you ask:

Does the Commissioner ofInsurance 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 aHealth 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 aPPO 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 HMOsy6and 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 ofproviders by HMOs and PPOs following the receipt ofa“clean claim.” A “clean claim” is defined as “a completed claim, as determined under” TDI rules, submitted by aprovider “for medical care or health care services” under ahealth care plan or health insurance policy. See TEX.INS.CODEANN.art. 3.70-3C, 53A(a); id. art. 20A. 18B(a) (Vernon Supp. 2002). The prompt payment provisions require an HMO or aPPO “[nlot later than the 45th day after the date that [it] receives a clean claim” from aprovider to: (1) pay the total amount ofthe 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 orHMO] receives the claim from the

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

@fheHealth 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 aprepaid 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 ofphysicians orhealth care providers, who contracts with an insurer toprovide medical care or health care to insureds covered by ahealth 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 alevel of coverage which is different from the basic level of coverage provided by the health insurance policy ifthe insured uses apreferred 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 ofbilled 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, 93A(f); id. art. 20A. 18B(f), and “is subject to an administrative penalty under Article 1.1OE”ofthe 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) ofthis section.” Id. art. 3.70-3C, 8 3A(h); id. art. 20A. 18B(h).

The prompt payment provisions also require aPPO or an HMO to “provide a
. . .provider with copies of all applicable utilization review policies and claim processing policies orprocedures, including required data elements and claim formats.” Id. art. 3.70-3C, 83A(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, 83ACj);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 asnecessary to implement this section.“); id. art. 20A. 18B(o) (“The commissioner may adopt rules asnecessary 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 aclaim 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. at4-5; see also 28 TEX.ADMIN.CODE $8 21.2802(4) (2001) (defining clean claim), .2803(b) (required 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 ameans by which
aclaim is valued under the terms of the contract between the carrier and the provider” and do not pertain to whether aclaim 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 ofthat 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 astatute, we must attempt to give effect tothe 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 astatute according to itsplain 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, 12S.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 CODEAN-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. 4 311.Oll(a). When astatute does not define aterm, we apply the term’s ordinary meaning. SeeHopkins v.Spring Indep. Sch. Dist., 736 S.W.2d 617,619 (Tex. 1987).
The specific statutory language atissue requires PPOs and HMOs to disclose “copies of all applicable utilization review policies and claim processing policies orprocedures, including required data elements and claim formats.” TEX.INS.CODEANN. ark3.70-3C, tj3A(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 forprospective or concurrent review ofthe 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 ofhealth care services being provided orproposed to be provided” to apatient. Id. None ofthe other terms are defined by statute and we are not aware of any technical or commonly understood meaning of those terms. See TEX.GOV’TCODE ANN.6311.Ol1(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 beread 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 atime limit within which aPPO or an HMO must pay aprovider’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 aPPO 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, 53A(i); id. art. 20A. 18B(i) (Vemon Supp. 2002)’ are clearly intended, ataminimum, 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 ofthe statute, however, whether disclosure ofThe Honorable Bob Turner - Page 7 (JC-0502)

fee schedules and bundling and downcoding
or whether the disclosure provisions have a policies 1snecessary 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 astatute was enacted, legislative history, the consequences of aparticular construction, and administrative construction ofthe statute. See TEX.GOV’T CODE ANN. 5 311.023 (Vernon 1998); see also id. 8 311.021 (in enacting a statute, it ispresumed that “a just and reasonable result isintended” and “aresult feasible ofexecution isintended”). Inparticular, courts will defer to the construction of a statute by the administrative agency charged with its enforcement, so long asthe construction isreasonable 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 isparticularly true where the statute is ambiguous due to the complexity ofthe subject matter. See Tex.Ass ‘nof 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 610, the legislature intended to establish aprompt payment mechanism:

Currently, [HMOs] arenot required to compensate physicians for services within a specified period oftime. H.B. 610 requires prompt payment tophysicians and providers for services performed. This bill sets further payment schedules forphysicians 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 ofHouse Bill 610to the House

8SeeHOUSE

COMM. ONINSURANCE,

BILL ANALYSIS,

Tex. H.B. 610,76th Leg., R.S. (1999) (as introduced); HOUSE COMM. ONINSURANCE,

BKLANALYSIS,

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. ONINSURANCE,

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 ofthe 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.ONINSURANCE, BILL ANALYSIS,

Tex. H.B. 610, 76th Leg., R.S. (1999) (committee substitute); SENATE

COMM.ONECONOMIC DEVELOPMENT,

BILL ANALYSIS,

Tex. H.B. 610, 76th Leg., R.S. (1999) (as engrossed); SENATE

COMM. ON ECONOMIC DEVELOPMENT,

BILLANALYSIS,

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 ofmoney
. . .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 toproviders their fee schedules orbundling 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 ofworking on aregulatory definition of aclean 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 aclean claim, and with promulgating implementing rules. See TEX.INS. CODE ANN. art. 3.70-3C, 9 3A(a), (h), (n) (Vemon 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 tothe scope ofrequired disclosures, the lack ofconclusive legislative history, and the overall complexity ofthis regulatory area, we believe that acourt, 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 itsdetermination that the purpose ofthe language mandating disclosure of“claim processing policies
orprocedures” is limited to making available information that will allow providers to submit clean claims and its assessment that disclosure offee schedules andbundling and downcoding information is not necessary to the preparation of a clean claim. We believe that a court would find this construction ofthe statute does not conflict with the statute’s plain language and isreasonable. As
we explain below, however, we also believe that a court would find reasonable an alternate TDI construction ofthe 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. ONINSURANCE,

BILLANALYSIS,

Tex. H.B. 610,76th Leg., R.S. (1999) (enrolled). “Hearings on Tex.H.B. 610 Before theHouse Comm. onInsurance, 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 asnecessary to implement the prompt payment provisions. See id. art. 3.70-3C, 93A(a), (h), (n) (“Thecommissioner ofinsurance 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 ofenlargement” that does not limit a setto listed items; a statute’s “use ofthe term[] does not create apresumption that components not expressed are excluded.” TEX.GOV’TCODE ANN. 8311.005( 13) (Vernon 1998); see also BRYANA. GARNER, ADICTIONARY

OFMODERNLEGALUSAGE287 (1987) (discussing “include”); BLACK’SLAWDICTIONARY 766 (7th ed. 1999) (defining “include”). The term “include” signifies an“illustrative” list. BRYANA. GARNER, ADICTIONARY

OF MODERNLEGAL USAGE287 (1987) (quoting Puerto Rico Maritime Shipping Auth. v. I.C.C., 645 F.2d 1102, 1112 n.26 (D.C. Cir. 1981)). 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 CODEANN. 5 311 .Oll(b) (Vernon 1998) (words and phrases that have acquired atechnical orparticular meaning, by legislative definition or otherwise, must be construed accordingly).
Second, the plain language ofthe prompt payment provisions as awhole does not foreclose such aconstruction ofthe 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.CODEANN. art.3.70-3C, 83A(c)( 1); id. art. 20A. 18B(c)( 1)(Vemon Supp. 2002) (emphasis added). And, ifthe PPO orHMO 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 orHMO] shall pay the charges submitted at 85 percent ofthe 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 acopy ofthe fee schedule, bundling logic, or downcoding policies, there is no way for aphysician 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 torequire 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 toconstrue the disclosure provisions in this manner, we do not believe acourt 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 aclean claim or to construing the disclosure requirements. See TEX.INS. CODEANN.art. 3.70-3C, 83A(n) (Vemon Supp. 2002) (“The commissioner ofinsurance may adoptThe Honorable Bob Turner - Page 10 (JC-0502)

rules asnecessary 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 ofthe prompt payment provisions to require disclosure of fee schedules and bundling and downcoding policies is foreclosed by Senate Bill 781,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 ofthe Insurance Code, the same provisions amended by House Bill 610, adding provisions mandating special contractual rights for podiatrists providing services under HMO and PPO plans:

Apreferredprovider contract between aninsurer and apodiatrist licensed by the Texas State Board of Podiatric Medical Examiners mustprovide that: (1) thepodiatrist may request, and the insurer shall provide not later than the 30th day after the date ofthe request, a copy ofthe coding guidelines and payment schedules applicable to the compensation that thepodiatrist 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, 83(n)(l)-(2) (Vemon Supp. 2002) (emphasis added), as amended by Tex. S.B. 781,76thLeg., R.S. (1999).

A contract between ahealth maintenance organization and a podiatrist licensed by the Texas State Board of Podiatric Medical Examiners mustprovide that: (1) thepodiatrist may request, and the insurer shallprovide not later than the 30th day after the date ofthe request, a copy ofthe coding guidelines and payment schedules applicable to the compensation that thepodiatrist will receive under the contract for services;The Honorable Bob Turner - Page 11 (JC-0502)

(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 apodiatrist

. . .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 aPPO and aprovider. Specifically, it would have required that contracts permit physicians and other providers to request “a description of coding guidelines, including any underlying bundling, recoding, orother 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 ofSenate Bill 781to exclude allproviders 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 610 did not require carriers to provide this information as part ofthe prompt pay requirements.” Id. at 8.

We conclude, however, that the legislature’s adoption ofaright torequest 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 781,the Seventy-sixth Legislature adopted amandatory contract term for podiatrists, requiring IIMOs and PPOs upon request to disclose to apodiatrist coding guidelines and payment schedules applicable to the compensation that the podiatrist will receive under acontract 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 arightThe 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 itis within TDI’s authority to construe the prompt payment provisions requiring PPOs and HMOs to disclose to physicians and other health care providers “copies ofall applicable utilization review policies and claim processing policies or procedures, including required data elements and claim formats,” TEX.INS.CODEANN. art. 3.70-3C, 83A(i); id. art. 20A. 18B(i) (Vernon Supp. 2002)’ torequire disclosure offee schedules and bundling and downcoding policies.The Honorable Bob Turner - Page 13 (JC-0502)

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.CODEANN. 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