Gov. Abbott Approves Surprise Medical Bill Law

Score one for the little guy. Especially the sick one.

Texas Governor Greg Abbott has signed into law a measure to protect Texans from surprise medical bills.

Senate Bill 1264 protects Texans from being sandbagged by bills from out-of-network providers by requiring insurance companies and medical providers to enter into state supervised negotiations or arbitration over payment.

The bill had bipartisan support and backing from the Texas Hospital Association.

Supporters of the bill argued that patients who cannot choose their medical provider, such as in emergency situations in which they are transported to the nearest care facility, shouldn't be slammed with a massive bill because their insurance company failed to cover the cost. Under the new law (which kicks in September 1), the bill will go through a process of mediation or arbitration between the provider and the insurer until they can agree upon a reasonable price.

"Requiring the mediation or arbitration processes to take place between the insurer and provider would relieve consumers of the stress, confusion, and difficulty of having to navigate the mediation process and protect consumers from unexpected high costs associated with care that they either had no choice in receiving or that they thought was covered under their health insurance," the House Research Organization's analysis reads. "The bill also would incentivize compliance by allowing the attorney general to bring a civil action against any entity that violated the prohibition on balance billing. Regulatory agencies also would be required to enforce the prohibition, giving the bill the penalties necessary for it to be successful."

According to the HRO analysis, "baseball-style arbitration" would require each party to suggest a price they consider reasonable to an arbiter charged with choosing the suitable rate. This technique has reportedly led to a decrease in physician charges and out-of-network billing in other states.

Opponents of the legislation made an interesting point. They argued that the law doesn't correct the central cause of surprised medical billing because it doesn't create a standard billing rate for services.

"Instead, the bill should define a usual and customary rate as no more than the 80th percentile of billed charges of all physicians or health care providers in the region," the HRO analysis reads. "Without defining rates, the arbiters, insurance companies, and providers would have no reference point for what a reasonable charge would be and too many claims would have to be arbitrated through this system. Providing a reference point would allow for fewer claims and a more transparent and streamlined system."

What do you think of the new law? Have you ever had to deal with a ridiculous surprise medical bill? Do you welcome this legislation, or do you feel it doesn't do enough? Let us know in the comments.