HB 3863

relating to claims payments to health care providers by health
maintenance organizations, preferred provider benefit plans, or
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1.  Section 540.0265, Government Code, as effective
April 1, 2025, is amended to read as follows:
Sec. 540.0265.  PROMPT PAYMENT OF CLAIMS.  (a)  A contract to
which this subchapter applies must require the contracting Medicaid
managed care organization to pay a physician or provider for health
care services provided to a recipient under a Medicaid managed care
plan on any claim for payment the organization receives with
documentation reasonably necessary for the organization to process
(1) [(A)]  the 10th day after the date the organization
receives the claim if the claim relates to services a nursing
facility, intermediate care facility, or group home provided; and
(2) [(B)]  the 30th day after the date the organization
receives the claim if the claim [relates to the provision of
long-term services and supports not subject to Paragraph (A); and
[(C) the 45th day after the date the organization
receives the claim if the claim] is not subject to Subdivision (1)
[(2)  within a period, not to exceed 60 days, specified
by a written agreement between the physician or provider and the
(b)  A contract to which this subchapter applies must require
the contracting Medicaid managed care organization to demonstrate
to the commission that the organization pays claims relating to the
provision of long-term services and supports other than those
described by Subsection (a)(1) [described by Subsection (a)(1)(B)]
on average not later than the 21st day after the date the
organization receives the claim.
(c)  A contract to which this subchapter applies must
prohibit the contracting Medicaid managed care organization from
requiring a physician or provider to accept a claim payment in the
form of a virtual credit card or any other payment method with
respect to which a fee, including a processing fee, administrative
fee, percentage amount, or dollar amount, is assessed to receive
the payment. A nominal fee assessed by the physician's or provider's
bank to receive an electronic funds transfer is not considered to be
a prohibited fee for purposes of this subsection.
SECTION 2.  Section 540.0267(a), Government Code, as
effective April 1, 2025, is amended to read as follows:
(a)  A contract to which this subchapter applies must require
the contracting Medicaid managed care organization to develop,
implement, and maintain a system for tracking and resolving
provider appeals related to claims payment.  The system must
include a process that requires:
(1)  a tracking mechanism to document the status and
final disposition of each provider's claims payment appeal;
(2)  contracting with physicians who are not network
providers and who are of the same or related specialty as the
appealing physician to resolve claims disputes that:
(A)  relate to denial on the basis of medical
(B)  remain unresolved after a provider appeal;
(3)  the determination of the physician resolving the
dispute to be binding on the organization and provider; and
(4)  the organization to allow a provider to initiate
an appeal of a claim that relates to the provision of long-term
services and supports other than those described by Section
540.0265(a)(1) and that has not been paid before the time
prescribed by Section 540.0265(a)(2) [540.0265(a)(1)(B)].
SECTION 3.  Section 843.338, Insurance Code, is amended to
Sec. 843.338.  DEADLINE FOR ACTION ON CLEAN CLAIMS.  Except
as provided by Sections 843.3385 and 843.339, not later than the
[45th day after the date on which a health maintenance organization
receives a clean claim from a participating physician or provider
in a nonelectronic format or the] 30th day after the date the health
maintenance organization receives a clean claim from a
participating physician or provider [that is electronically
submitted], the health maintenance organization shall make a
determination of whether the claim is payable and:
(1)  if the health maintenance organization determines
the entire claim is payable, pay the total amount of the claim  in
accordance with the contract between the physician or provider and
the health maintenance organization;
(2)  if the health maintenance organization determines
a portion of the claim is payable, pay the portion of the claim that
is not in dispute and notify the physician or provider in writing
why the remaining portion of the claim will not be paid; or
(3)  if the health maintenance organization determines
that the claim is not payable, notify the physician or provider in
writing why the claim will not be paid.
SECTION 4.  Section 843.340(a), Insurance Code, is amended
(a)  Except as provided by Section 843.3385, if a health
maintenance organization intends to audit a claim submitted by a
participating physician or provider, the health maintenance
organization shall pay the charges submitted at 100 percent of the
contracted rate on the claim not later than the 30th day after the
date the health maintenance organization receives the clean claim
from the participating physician or provider [if submitted
electronically or if submitted nonelectronically not later than the
45th day after the date on which the health maintenance
organization receives the clean claim from a participating
physician or provider].  The health maintenance organization shall
clearly indicate on the explanation of payment statement in the
manner prescribed by the commissioner by rule that the clean claim
is being paid at 100 percent of the contracted rate, subject to
SECTION 5.  Sections 843.342(b) and (e), Insurance Code, are
(b)  If the claim is paid on or after the 31st [46th] day and
before the 91st day after the date the health maintenance
organization is required to make a determination or adjudication of
the claim, the health maintenance organization shall pay a penalty
in the amount of the lesser of:
(1)  100 percent of the difference between the billed
charges, as submitted on the claim, and the contracted rate; or
(e)  If the balance of the claim is paid on or after the 31st
[46th] day and before the 91st day after the date the health
maintenance organization is required to make a determination or
adjudication of the claim, the health maintenance organization
shall pay a penalty on the balance of the claim in the amount of the
(1)  100 percent of the underpaid amount; or
SECTION 6.  Section 843.346, Insurance Code, is amended to
Sec. 843.346.  PAYMENT OF CLAIMS.  (a)  Except as provided by
this subchapter, a health maintenance organization shall pay a
physician or provider for health care services and benefits
provided to an enrollee not later than[:
[(1)]  the 30th [45th] day after the date on which a
claim for payment is received with the documentation reasonably
necessary to process the claim[; or
[(2)  if applicable, within the number of calendar days
specified by written agreement between the physician or provider
and the health maintenance organization].
(b)  A health maintenance organization may not require a
physician or provider to accept a claim payment in the form of a
virtual credit card or any other payment method with respect to
which a fee, including a processing fee, administrative fee,
percentage amount, or dollar amount, is assessed to receive the
payment.  A nominal fee assessed by the physician's or provider's
bank to receive an electronic funds transfer is not considered to be
a prohibited fee for purposes of this subsection.
SECTION 7.  Section 1301.0053(a), Insurance Code, is amended
(a)  If an out-of-network provider provides emergency care
as defined by Section 1301.155 or post-emergency stabilization care
to an enrollee in an exclusive provider benefit plan, the issuer of
the plan shall reimburse the out-of-network provider at the usual
and customary rate or at a rate agreed to by the issuer and the
out-of-network provider for the provision of the services and any
supply related to those services.  The insurer shall make a payment
required by this subsection directly to the provider not later
[(1)]  the 30th day after the date the insurer receives
a [an electronic] clean claim as defined by Section 1301.101 for
those services that includes all information necessary for the
[(2)  the 45th day after the date the insurer receives a
nonelectronic clean claim as defined by Section 1301.101 for those
services that includes all information necessary for the insurer to
SECTION 8.  Section 1301.064, Insurance Code, is amended to
Sec. 1301.064.  CONTRACT PROVISIONS RELATING TO PAYMENT OF
CLAIMS.  Subject to Subchapter C, a preferred provider contract
must provide for payment to a physician or health care provider for
health care services and benefits provided to an insured under the
contract and to which the insured is entitled under the terms of the
[(1)]  the 30th [45th] day after the date on which a
claim for payment is received with the documentation reasonably
necessary to process the claim[; or
[(2)  if applicable, within the number of calendar days
specified by written agreement between the physician or health care
SECTION 9.  Section 1301.103, Insurance Code, is amended to
Sec. 1301.103.  DEADLINE FOR ACTION ON CLEAN CLAIMS.  Except
as provided by Sections 1301.104 and 1301.1054, not later than the
[45th day after the date an insurer receives a clean claim from a
preferred provider in a nonelectronic format or the] 30th day after
the date an insurer receives a clean claim from a preferred provider
[that is electronically submitted], the insurer shall make a
determination of whether the claim is payable and:
(1)  if the insurer determines the entire claim is
payable, pay the total amount of the claim in accordance with the
contract between the preferred provider and the insurer;
(2)  if the insurer determines a portion of the claim is
payable, pay the portion of the claim that is not in dispute and
notify the preferred provider in writing why the remaining portion
of the claim will not be paid; or
(3)  if the insurer determines that the claim is not
payable, notify the preferred provider in writing why the claim
SECTION 10.  Section 1301.105(a), Insurance Code, is amended
(a)  Except as provided by Section 1301.1054, an insurer that
intends to audit a claim submitted by a preferred provider shall pay
the charges submitted at 100 percent of the contracted rate on the
[(1)]  the 30th day after the date the insurer receives
the clean claim from the preferred provider [if the claim is
[(2)  the 45th day after the date the insurer receives
the clean claim from the preferred provider if the claim is
SECTION 11.  Sections 1301.137(b) and (e), Insurance Code,
are amended to read as follows:
(b)  If the claim is paid on or after the 31st [46th] day and
before the 91st day after the date the insurer is required to make a
determination or adjudication of the claim, the insurer shall pay a
penalty in the amount of the lesser of:
(1)  100 percent of the difference between the billed
charges, as submitted on the claim, and the contracted rate; or
(e)  If the balance of the claim is paid on or after the 31st
[46th] day and before the 91st day after the date the insurer is
required to make a determination or adjudication of the claim, the
insurer shall pay a penalty on the balance of the claim in the
(1)  100 percent of the underpaid amount; or
SECTION 12.  Subchapter C-1, Chapter 1301, Insurance Code,
is amended by adding Section 1301.141 to read as follows:
Sec. 1301.141.  FORM OF CLAIM PAYMENTS.  An insurer may not
require a physician or health care provider to accept a claim
payment in the form of a virtual credit card or any other payment
method with respect to which a fee, including a processing fee,
administrative fee, percentage amount, or dollar amount, is
assessed to receive the payment.  A nominal fee assessed by the
physician's or provider's bank to receive an electronic funds
transfer is not considered to be a prohibited fee for purposes of
SECTION 13.  Section 1301.155(c), Insurance Code, is amended
(c)  For emergency care subject to this section or a supply
related to that care, an insurer shall make a payment required by
this section directly to the out-of-network provider not later
[(1)]  the 30th day after the date the insurer receives
a [an electronic] clean claim as defined by Section 1301.101 for
those services that includes all information necessary for the
[(2)  the 45th day after the date the insurer receives a
nonelectronic clean claim as defined by Section 1301.101 for those
services that includes all information necessary for the insurer to
SECTION 14.  Section 1301.164(b), Insurance Code, is amended
(b)  Except as provided by Subsection (d), an insurer shall
pay for a covered medical care or health care service performed for
or a covered supply related to that service provided to an insured
by an out-of-network provider who is a facility-based provider at
the usual and customary rate or at an agreed rate if the provider
performed the service at a health care facility that is a preferred
provider.  The insurer shall make a payment required by this
subsection directly to the provider not later than[, as applicable:
[(1)]  the 30th day after the date the insurer receives
a [an electronic] clean claim as defined by Section 1301.101 for
those services that includes all information necessary for the
[(2)  the 45th day after the date the insurer receives a
nonelectronic clean claim as defined by Section 1301.101 for those
services that includes all information necessary for the insurer to
SECTION 15.  Section 1301.165(b), Insurance Code, is amended
(b)  Except as provided by Subsection (d), an insurer shall
pay for a covered medical care or health care service performed by
or a covered supply related to that service provided to an insured
by an out-of-network provider who is a diagnostic imaging provider
or laboratory service provider at the usual and customary rate or at
an agreed rate if the provider performed the service in connection
with a medical care or health care service performed by a preferred
provider.  The insurer shall make a payment required by this
subsection directly to the provider not later than[, as applicable:
[(1)] the 30th day after the date the insurer receives a
[an electronic] clean claim as defined by Section 1301.101 for
those services that includes all information necessary for the
[(2)  the 45th day after the date the insurer receives a
nonelectronic clean claim as defined by Section 1301.101 for those
services that includes all information necessary for the insurer to
SECTION 16.  Section 1301.166(d), Insurance Code, is amended
(d)  The insurer shall make a payment required by this
section directly to the provider not later than[, as applicable:
[(1)]  the 30th day after the date the insurer receives
a [an electronic] clean claim as defined by Section 1301.101 for
those services that includes all information necessary for the
[(2)  the 45th day after the date the insurer receives a
nonelectronic clean claim as defined by Section 1301.101 for those
services that includes all information necessary for the insurer to
SECTION 17.  (a)  Sections 540.0265 and 540.0267,
Government Code, as amended by this Act, apply only to a contract
entered into on or after the effective date of this Act.  A contract
entered into 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 for that purpose.
(b)  Except as provided by Subsection (c) of this section,
the changes in law made by this Act to Chapters 843 and 1301,
Insurance Code, apply only to a claim submitted on or after the
effective date of this Act.  A claim submitted 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
(c)  With respect to a claim submitted under a contract with
a health maintenance organization or insurer, the changes in law
made by this Act to Chapters 843 and 1301, Insurance Code, apply
only to a claim submitted under a contract entered into on or after
the effective date of this Act.  A claim submitted under a contract
entered into 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 for that purpose.
SECTION 18.  If before implementing any provision of this
Act a state agency determines that a waiver or authorization from a
federal agency is necessary for implementation of that provision,
the agency affected by the provision shall request the waiver or
authorization and may delay implementing that provision until the
waiver or authorization is granted.
SECTION 19.  This Act takes effect September 1, 2025.