Texas Prompt Pay Act
The Problem With Billed Charges & The Need For Simplification
Despite the health insurance industry’s rigorous compliance with the law and its demonstrated improvement in prompt payment to providers, the punitive nature of Texas’ prompt pay penalties have resulted in extensive costs and litigation. Texas is the only state that ties the prompt pay penalty to billed charges, which are usually much higher than the prices actually paid and accepted in the market, are self-determined by hospitals, and have large variation within communities and across Texas. Texas’ prompt payment penalties are based on these often arbitrary amounts. The Texas Association of Health Plans recommends common sense simplifications of the Texas prompt pay law, including a shift from using billed charges to the use of an interest-based penalty for all hospital claims not paid correctly and in a timely manner.
Prompt Pay Reform Resources:
Texas Prompt Pay Act: The Problem with Billed Charges & The Need for Simplification
A resource guide on how prompt pay works in Texas
April 2016
In 2003, the Texas Legislature adopted the current Texas Prompt Pay Act to ensure that health plans pay claims correctly and on time to their Texas network providers. More than 10 years later, Texas health plans have demonstrated a strong commitment to the law, yielding more accurate and prompt payments to Texas providers.
TAHP Testimony to House Insurance Committee
Presentation on the Texas Prompt Payment Act and the unintended consequences of tying the penalty to billed charges.
March 2016
Despite increased health plan compliance with prompt pay, the law in its current form is creating excessive costs and litigation. In this presentation TAHP contends that prompt payment should not be tied to hospital billed charges, which are arbitrary and not based on market forces, and thus recommends that Texas shift to an interest rate penalty for all hospital late claims.
TAHP Testimony to Senate Business and Commerce Committee
Presentation on the Texas Prompt Payment Act and the unintended consequences of tying the penalty to billed charges.
April 2016
In this presentation TAHP points out that Texas is the only state in the nation that ties prompt pay penalties to “billed charges”. The use of hospital billed charges creates an inequitable penalty system that rewards the highest-cost providers, incentivizes hospitals to inflate billed charges, and creates substantial costs and litigation for health plans.
Prompt Pay – Texas Department of Insurance
A fact sheet on the Texas Prompt Payment Act.
March 2016
Preferred provider carriers (PPOs) and health maintenance organizations (HMOs) must submit claims payment information, including claim count data, to the Texas Department of Insurance (TDI) on a quarterly basis. TDI uses this information to determine whether claims are paid in a timely manner and may in turn collect prompt pay penalties.
An Interstate Comparison of Health Care Prompt Pay Laws
Texans for Lawsuit Reform’s (TLR) issue brief on the Texas Prompt Payment Act that provides an overview of Texas prompt pay statues and compares those to similar statutes in other states.
January 2016
Texas’s healthcare prompt-pay statutes are among the most punitive in the nation in that they allow substantial penalties when an insurer fails to pay a claim timely, even if by only a single day. TLR Foundation is undertaking further research to address the questions of whether Texas’s statutes are excessively punitive to accomplish the prompt payment of legitimate claims and whether Texas’s statutes are encouraging unnecessary litigation.
Prompt Pay States – 50 States Appendix
TLR’s state-by-state comparison on health care prompt pay statutes.
January 2016
Each state has its own prompt-pay statutes, and Texas’s are among the most punitive in the nation — they allow substantial penalties when an insurer fails to pay a claim timely, even if by only a single day.