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(a)An MCC that determines under §21.2807 of this title (relating to Effect of Filing a Clean Claim) that a claim is payable must pay the contracted rate owed on the claim; and: (1)if the claim is paid on or before the 45th day after the end of the applicable statutory claims payment period, pay to a noninstitutional preferred provider a penalty in the amount of the lesser of: (A)50 percent of the difference between the billed charges and the contracted rate; or (B)$100,000; (2)if the claim is paid on or after the 46th day and before the 91st day after the end of the applicable statutory claims payment period, pay to a noninstitutional preferred provider, a penalty in the amount of the lesser of: (A)100 percent of the difference between the billed charges and the contracted rate; or (B)$200,000; (3)if the claim is paid on or after the 91st day after the end of the applicable statutory claims payment period: (A)pay to the noninstitutional preferred provider a penalty computed under paragraph (2) of this subsection; and (B)pay to the Texas Health Insurance Pool until its dissolution, and after its dissolution to Texas Department of Insurance (the department) 18 percent annual interest on the penalty amount paid to a noninstitutional preferred provider under paragraph (2) of this subsection. Interest under this paragraph accrues beginning on the date the MCC was required to pay the claim and ending on the date the claim and the penalty are paid in full to the noninstitutional provider; (4)if the claim is paid to an institutional preferred provider on or before the 45th day after the end of the applicable statutory claims payment period, pay a penalty in the amount specified in subparagraph (A) or (B) of this paragraph. The MCC must pay 50 percent of the penalty to the institutional preferred provider and 50 percent of the penalty to the Texas Health Insurance Pool until its dissolution, and after its dissolution to the department. The penalty under this paragraph is in the amount of the lesser of: (A)50 percent of the difference between the billed charges and the contracted rate; or (B)$100,000; (5)if the claim is paid to an institutional preferred provider on or after the 46th day and before the 91st day after the end of the applicable statutory claims payment period, pay a penalty in the amount specified in subparagraph (A) or (B) of this paragraph. The MCC must pay 50 percent of the penalty to the institutional preferred provider and 50 percent of the penalty to the Texas Health Insurance Pool until its dissolution, and after its dissolution to the department. The penalty under this paragraph is in the amount of the lesser of: (A)100 percent of the difference between the billed charges and the contracted rate; or (B)$200,000; and (6)if the claim is paid to an institutional preferred provider on or after the 91st day after the end of the applicable statutory claims payment period: (A)pay the penalty amount to the institutional provider and the Texas Health Insurance Pool until its dissolution, and after its dissolution to the department as specified in paragraph (5) of this subsection; and (B)pay 18 percent annual interest on the penalty amount computed under paragraph (5) of this subsection. Interest under this paragraph accrues beginning on the date the MCC was required to pay the claim and ending on the date the claim and the institutional provider's portion of the penalty are paid in full. The MCC must pay 50 percent of the interest to the institutional preferred provider and 50 percent of the interest to the Texas Health Insurance Pool until its dissolution, and after its dissolution to the department. (b)The following examples demonstrate how to calculate penalty amounts under subsection (a)(1) - (3) of this section: (1)if the contracted rate, including any patient financial responsibility, is $10,000 and the billed charges are $15,000, and the MCC pays the claim on or before the 45th day after the end of the applicable statutory claims payment period, the MCC must pay, in addition to the amount owed on the claim, 50 percent of the difference between the billed charges ($15,000) and the contracted rate ($10,000) or $2,500. The basis for the penalty is the difference between the total contracted amount, including any patient financial responsibility, and the noninstitutional provider's billed charges; (2)if the claim is paid on or after the 46th day and before the 91st day after the end of the applicable statutory claims payment period, the MCC must pay, in addition to the contracted rate owed on the claim, 100 percent of the difference between the billed charges and the contracted rate or $5,000; and (3)if the claim is paid on or after the 91st day after the end of the applicable statutory claims payment period, the MCC must pay to the noninstitutional provider, in addition to the contracted rate owed on the claim, the $5,000 penalty. The MCC must also pay to the Texas Health Insurance Pool until its dissolution, and after its dissolution to the department 18 percent annual interest on the $5,000 penalty amount accruing from the statutory claim payment deadline until the date the claim and penalty are paid in full to the noninstitutional provider. (c)Except as provided by this section, an MCC that determines under §21.2807 of this title that a claim is payable, pays only a portion of the amount of the claim on or before the end of the applicable statutory claims payment period, and pays the balance of the contracted rate owed for the claim after that date must, in addition to paying the contracted amount owed: (1)if the balance of the claim is paid to a noninstitutional preferred provider on or before the 45th day after the applicable statutory claims payment period, pay to the preferred provider a penalty on the amount not timely paid in the amount of the lesser of: (A)50 percent of the underpaid amount; or (B)$100,000; (2)if the balance of the claim is paid to a noninstitutional preferred provider on or after the 46th day and before the 91st day after the end of the applicable statutory claims payment period, pay to the preferred provider a penalty in the amount of the lesser of: (A)100 percent of the underpaid amount; or (B)$200,000; (3)if the balance of the claim is paid to a noninstitutional preferred provider on or after the 91st day after the end of the applicable statutory claims payment period, pay to the preferred provider a penalty computed under paragraph (2) of this subsection plus 18 percent annual interest on the penalty amount. Interest under this subsection accrues beginning on the date the MCC was required to pay the claim and ending on the date the claim and the penalty are paid in full; (4)if the balance of the claim is paid to an institutional preferred provider on or before the 45th day after the applicable statutory claims payment period, pay a penalty in the amount specified in subparagraphs (A) and (B) of this paragraph. The MCC must pay 50 percent of the penalty to the institutional preferred provider and 50 percent of the penalty to the Texas Health Insurance Pool until its dissolution, and after its dissolution to the department. The penalty under this paragraph on the amount not timely paid is in the amount of the lesser of: (A)50 percent of the underpaid amount; or (B)$100,000; (5)if the balance of the claim is paid to an institutional preferred provider on or after the 46th day and before the 91st day after the end of the applicable statutory claims payment period, pay a penalty in the amount specified in subparagraphs (A) and (B) of this paragraph. The MCC must pay 50 percent of the penalty to the institutional preferred provider and 50 percent of the penalty to the Texas Health Insurance Pool until its dissolution, and after its dissolution to the department. The penalty under this paragraph is in the amount of the lesser of: (A)100 percent of the underpaid amount; or (B)$200,000; and (6)if the balance of the claim is paid to an institutional preferred provider on or after the 91st day after the end of the applicable statutory claims payment period, pay a penalty computed under paragraph (5) of this subsection plus 18 percent annual interest on the penalty amount. Interest under this subsection accrues beginning on the date the MCC was required to pay the claim and ending on the date the claim and the institutional provider's portion of the penalty are paid in full. The MCC must pay 50 percent of the interest to the institutional preferred provider and 50 percent of the interest to the Texas Health Insurance Pool until its dissolution, and after its dissolution to the department. (d)For the purposes of subsection (c) of this section, the underpaid amount is calculated on the ratio of the balance owed by the MCC to the total contracted rate, including any patient financial responsibility, as applied to an amount equal to the billed charges minus the contracted rate. For example, a claim for a contracted rate to a noninstitutional preferred provider of $1,000 and billed charges of $1,500 is initially underpaid at $600, with the insured owing $200 and the MCC owing a balance of $200. The MCC pays the $200 balance on the 30th day after the end of the applicable statutory claims payment period. The amount the MCC initially underpaid, $200, is 20 percent of the contracted rate. To determine the penalty, the MCC must calculate 20 percent of the billed charges minus the contracted rate, which is $100. This amount represents the underpaid amount for subsection (c)(1) of this section. The MCC must pay, as a penalty, 50 percent of $100, or $50. (e)For purposes of calculating a penalty when an MCC is a secondary plan MCC for a claim, the contracted rate and billed charges must be reduced in proportion to the percentage of the entire claim that is owed by the secondary plan MCC. The following example illustrates this method: Carrier A pays 80 percent of a claim to a noninstitutional preferred provider for a contracted rate of $1,000 and billed charges of $1,500, leaving $200 unpaid as the patient's financial responsibility. The patient has coverage through Carrier B that is secondary, and Carrier B will owe the $200 balance under the coordination of benefits provision of Carrier B's policy. If Carrier B fails to pay the $200 within the applicable statutory claims payment period, Carrier B will pay a penalty based on the percentage of the claim that it owed. The contracted rate for Carrier B will be $200 (20 percent of Carrier A's $1,000 contracted rate), and the billed charges will be $300 (20 percent of $1,500). Although Carrier B may have a contracted rate with the provider that is different from Carrier A's contracted rate, it is Carrier A's contracted rate that establishes the entire claim amount for the purpose of calculating Carrier B's penalty. (f)An MCC is not liable for a penalty under this section: (1)if the failure to pay the claim within the applicable statutory claims payment period is a result of a catastrophic event that the MCC certified according to the provisions of §21.2819 of this title (relating to Catastrophic Event); or (2)if the claim was paid in compliance with §21.2807 of this title, but for less than the contracted rate, and: (A)the preferred provider notifies the MCC of the underpayment after the 270th day after the date the underpayment was received; and (B)the MCC pays the balance of the claim on or before the 30th day after the date the insurer receives the notice of underpayment. (g)Subsection (f) of this section does not relieve the MCC of the obligation to pay the remaining unpaid contracted rate owed the preferred provider. (h)An MCC that pays a penalty under this section must clearly indicate on the explanation of payment the amount of the contracted rate paid, the amount of the billed charges as submitted by the physician or the provider, and the amount paid as a penalty. A nonelectronic explanation of payment complies with this requirement if it clearly and prominently identifies the notice of the penalty amount.
The agency certifies that legal counsel has
reviewed
the adoption and found it to be a valid exercise of the agency's legal
authority.
Filed with the Office
of the Secretary of State on January 27, 2014
TRD-201400305 Sara Waitt
General Counsel
Texas Department of Insurance
Effective date: February 16, 2014
Proposal publication date: November 15, 2013
For further information, please call: (512) 463-6327
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