HB 3812

relating to health benefit plan preauthorization requirements for
certain health care services and the direction of utilization
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1.  Section 4201.152, Insurance Code, is amended to
Sec. 4201.152.  UTILIZATION REVIEW UNDER DIRECTION OF
PHYSICIAN.  A utilization review agent shall conduct utilization
review under the direction of a physician licensed to practice
medicine in this state.  The physician may not hold a license to
practice administrative medicine under Section 155.009,
SECTION 2.  Subchapter M, Chapter 4201, Insurance Code, is
amended by adding Section 4201.6015 to read as follows:
Sec. 4201.6015.  INQUIRY BY TEXAS MEDICAL BOARD.  (a)  This
section does not apply to chiropractic treatments.
(b)  If the Texas Medical Board believes that a physician has
directed a utilization review in an arbitrary manner or without a
medical basis or receives a complaint with that allegation, the
Texas Medical Board may request the department to determine whether
the health insurance policy or health benefit plan that is the
subject of the utilization review covers the health care service
(c)  If the department determines the health care service is
covered under Subsection (b), the Texas Medical Board:
(1)  shall notify the physician of the allegation; and
(2)  may compel the production of documents or other
information as necessary to determine whether the utilization
review was directed in an arbitrary manner or without a medical
(d)  An inquiry and determination under this section is
limited to whether the utilization review was directed in an
arbitrary manner or without a medical basis in accordance with the
standards of medical practice. If the commissioner initiates a
proceeding under Section 4201.601 in relation to the same
utilization review for which the inquiry is being conducted, the
Texas Medical Board shall suspend the inquiry until the conclusion
of the commissioner's proceeding.
(e)  The Texas Medical Board may conduct an inquiry under
this section in the manner provided by Section 154.0561,
SECTION 3.  The heading to Section 4201.602, Insurance Code,
Sec. 4201.602.  ENFORCEMENT PROCEEDINGS [PROCEEDING].
SECTION 4.  Section 4201.602(a), Insurance Code, is amended
(a)  The commissioner may initiate a proceeding under
Section 4201.601 [this subchapter]. The Texas Medical Board may
initiate a proceeding under Section 4201.6015.
SECTION 5.  Section 4201.603, Insurance Code, is amended to
Sec. 4201.603.  REMEDIES AND PENALTIES; EMERGENCY REMEDIES
[FOR VIOLATION].  (a)  If the commissioner determines that a
utilization review agent, health maintenance organization,
insurer, or other person or entity conducting utilization review
has violated or is violating this chapter, the commissioner may:
(1)  impose a sanction under Chapter 82;
(2)  issue a cease and desist order under Chapter 83; or
(3)  assess an administrative penalty under Chapter 84.
(b)  The Texas Medical Board may restrict, suspend, or revoke
the license of a physician the board determines has directed a
utilization review in an arbitrary manner or without a medical
basis at the conclusion of a proceeding conducted under Section
(c)  If a utilization review results in the serious injury or
death of the individual who is the subject of the review, the
commissioner may temporarily prohibit a physician who directed the
review from directing utilization review and the Texas Medical
Board may temporarily suspend the physician's license.  The
commissioner or Texas Medical Board, as applicable, shall conduct a
proceeding under Section 4201.601 or 4201.6015, as applicable,
regarding the utilization review, and the prohibition or suspension
is effective until the conclusion of the proceeding.
SECTION 6.  Section 4201.651(a), Insurance Code, is amended
(1)  "Affiliate" has the meaning assigned by Section
(2)  "Preauthorization"[, "preauthorization"] means a
determination by a health maintenance organization, insurer, or
person contracting with a health maintenance organization or
insurer that health care services proposed to be provided to a
patient are medically necessary and appropriate.
SECTION 7.  Section 4201.653, Insurance Code, is amended by
amending Subsections (a) and (b) and adding Subsection (a-1) to
(a)  A health maintenance organization or an insurer that
uses a preauthorization process for health care services may not
require a physician or provider to obtain preauthorization for a
particular health care service if, in the most recent one-year
[six-month] evaluation period, as described by Subsection (b):
(1)  [,] the health maintenance organization or
insurer, including any affiliate, has approved or would have
approved not less than 90 percent of the preauthorization requests
submitted by the physician or provider for the particular health
(2)  the physician or provider has provided the
particular health care service at least five times during the
(a-1)  In conducting an evaluation for an exemption under
this section, a health maintenance organization or insurer must
include all preauthorization requests submitted by a physician or
provider to the health maintenance organization or insurer, or its
affiliate, considering all health insurance policies and health
benefit plans issued or administered by the health maintenance
organization or insurer, or its affiliate, regardless of whether
the preauthorization request was made in connection with a health
insurance policy or health benefit plan that is subject to this
(b)  Except as provided by Subsection (c), a health
maintenance organization or insurer shall evaluate whether a
physician or provider qualifies for an exemption from
preauthorization requirements under Subsection (a) once every year
SECTION 8.  Section 4201.655, Insurance Code, is amended by
amending Subsections (a) and (b) and adding Subsection (b-1) to
(a)  A health maintenance organization or insurer may
rescind an exemption from preauthorization requirements under
(1)  during January [or June] of a [each] year
beginning on or after the first anniversary of the last day of the
most recent evaluation period for the exemption;
(2)  if the health maintenance organization or insurer
makes a determination, on the basis of a retrospective review of a
random sample of not fewer than five and no more than 20 claims
submitted by the physician or provider during the most recent
evaluation period described by Section 4201.653(b), that less than
90 percent of the claims for the particular health care service met
the medical necessity criteria that would have been used by the
health maintenance organization or insurer when conducting
preauthorization review for the particular health care service
during the relevant evaluation period; and
(3)  if the health maintenance organization or insurer
complies with other applicable requirements specified in this
(A)  notifying the physician or provider not less
than 25 days before the proposed rescission is to take effect; and
(B)  providing with the notice under Paragraph
(i)  the sample information used to make the
determination under Subdivision (2); and
(ii)  a plain language explanation of how
the physician or provider may appeal and seek an independent review
(b)  A determination made under Subsection (a)(2) must be
made by an individual licensed to practice medicine in this state.
For a determination made under Subsection (a)(2) with respect to a
physician, the determination must be made by an individual licensed
to practice medicine in this state who has the same or similar
specialty as that physician.  The reviewing physician may not hold a
license to practice administrative medicine under Section 155.009,
(b-1)  Notwithstanding Subsection (a)(2), if there are fewer
than five claims submitted by the physician or provider during the
most recent evaluation period described by Section 4201.653(b) for
a particular health care service, the health maintenance
organization or insurer shall review all the claims submitted by
the physician or provider during the most recent evaluation period
SECTION 9.  Section 4201.656(a), Insurance Code, is amended
(a)  A physician or provider has a right to a review of an
adverse determination regarding a preauthorization exemption,
including a health maintenance organization's or insurer's
determination to deny an exemption to the physician or provider
under Section 4201.653, to be conducted by an independent review
organization.  A health maintenance organization or insurer may not
require a physician or provider to engage in an internal appeal
process before requesting a review by an independent review
organization under this section.
SECTION 10.  Section 4201.658, Insurance Code, is amended to
Sec. 4201.658.  ELIGIBILITY FOR PREAUTHORIZATION EXEMPTION
FOLLOWING FINALIZED EXEMPTION RESCISSION OR DENIAL.  After a final
determination or review affirming the rescission or denial of an
exemption for a specific health care service under Section
4201.653, a physician or provider is eligible for consideration of
an exemption for the same health care service after the one-year
[six-month] evaluation period that follows the evaluation period
which formed the basis of the rescission or denial of an exemption.
SECTION 11.  Sections 4201.659(b) and (c), Insurance Code,
are amended to read as follows:
(b)  Regardless of whether an exemption is rescinded after
the provision of a health care service subject to the exemption, a
[A] health maintenance organization or an insurer may not conduct a
utilization [retrospective] review or require another review
similar to preauthorization of the [a health care] service [subject
(1)  to determine if the physician or provider still
qualifies for an exemption under this subchapter; or
(2)  if the health maintenance organization or insurer
has a reasonable cause to suspect a basis for denial exists under
(c)  For a utilization [retrospective] review described by
Subsection (b)(2), nothing in this subchapter may be construed to
(1)  the requirements under or application of Section
4201.305, including any timeframes specified by that section; or
(2)  any other applicable law, except to prescribe the
only circumstances under which:
(A)  a [retrospective] utilization review may
occur as specified by Subsection (b)(2); or
(B)  payment may be denied or reduced as specified
SECTION 12.  Subchapter N, Chapter 4201, Insurance Code, is
amended by adding Section 4201.660 to read as follows:
Sec. 4201.660.  REPORT.  (a)  Each health maintenance
organization and insurer shall submit to the department, in the
form and manner prescribed by the commissioner, an annual written
report, for each health care service subject to an exemption under
(1)  exemptions granted by the health maintenance
organization or insurer for the service;
(2)  determinations by the health maintenance
organization or insurer to rescind or deny an exemption for the
service, including the number of exemptions denied or rescinded by
the health maintenance organization or insurer under Section
(3)  independent reviews of determinations conducted
by an independent review organization under Section 4201.656,
(A)  the number of determinations made by the
health maintenance organization or insurer for which a physician or
provider requested an independent review under Section 4201.656;
(B)  the outcome of each independent review
(b)  Subject to this subsection, a report submitted under
Subsection (a) is public information subject to disclosure under
Chapter 552, Government Code.  The department shall ensure that the
report does not contain any identifying information before
disclosing the report in accordance with Chapter 552, Government
SECTION 13.  Section 151.002(a)(13), Occupations Code, is
(13)  "Practicing medicine" means:
(A)  the diagnosis, treatment, or offer to treat a
mental or physical disease or disorder or a physical deformity or
injury by any system or method, or the attempt to effect cures of
those conditions, by a person who:
(i) [(A)]  publicly professes to be a
(ii) [(B)]  directly or indirectly charges
money or other compensation for those services; and
(B)  the direction of utilization review
conducted by a utilization review agent under Section 4201.152,
SECTION 14.  (a)  The change in law made by this Act applies
only to utilization review conducted on or after the effective date
of this Act. Utilization review conducted before the effective date
of this Act is governed by the law as it existed immediately before
the effective date of this Act, and that law is continued in effect
(b)  A preauthorization exemption provided under Section
4201.653, Insurance Code, before the effective date of this Act may
not be rescinded before the first anniversary of the last day of the
most recent evaluation period for the exemption.
SECTION 15.  This Act takes effect September 1, 2025.