Texas’ tough new law to ban surprise medical bills has hit a snag even before going into effect as backers now fear an obscure provision will be stretched by doctors into a loophole that leaves patients still vulnerable to crippling charges.

The law’s supporters also worry that the president of the Texas Medical Board, which will oversee how the new rules for doctors are written and enforced, has strong ties to a national lobbying group trying to block federal legislation against surprise medical bills that involves price controls.

“I am very concerned,” said state Sen. Kelly Hancock, R-North Richland Hills, one of the co-authors of SB1264. “This was not legislation where providers should be free to write the rules any way they want.”

Doctor and hospital groups counter no one is trying to circumvent the law and they remain strongly committed to protecting patients against unexpected bills. They say they will follow the language of the law as written.

And therein lies the problem.

Considered one of the strictest in the nation, the sweeping, hard-fought Texas law that goes into effect Jan. 1 adds many protections, including keeping patients with state-regulated health plans out of the middle of billing disputes between providers and insurers, as well as shielding them from a business practice known as balance billing, in which out-of- network charges not covered by their insurance are shifted onto patients.

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Out-of-network charges can be two or three times more than in-network and run into the thousands of dollars. Insurers have long blamed doctors and hospitals for using out-of-network status to generate higher profits while providers paint insurers as the true culprits behind balance billing by refusing to pay for treatments at reasonable rates and misleading customers into thinking they are fully covered.

Under the new law, balance billing is banned in all emergency care. It is also prohibited in some non-emergency care. If a patient goes to an in-network facility for a scheduled or non-emergency procedure, they cannot later be balance billed by an out-of-network doctor, such as an anesthesiologist or assistant surgeon, who was part of their treatment.

In that second scenario, however, the law has an exception: A patient can waive their billing protection in writing if they are informed in advance that a provider involved in their care is out-of-network. In such cases, patients must by law be given a complete written estimate of their higher costs.

It seemed like a simple enough caveat, one the law’s framers said would satisfy patient choice, but also be rarely used.

But in money and medicine, things are rarely simple.

Fragile truce

The trouble started in the summer when the freshly-minted law moved to Texas Department of Insurance for the rule-making phase, where the mechanics of how the law will be implemented are hammered out. Insurance Commissioner Kent Sullivan asked interested parties for feedback, including how much advance notice non-emergency patients should get from an-out-network doctor who could then balance bill them.

More than two dozen organizations or individuals weighed in and cracks began to form in the fragile truce the law had struck. .

On one side, the law’s authors, consumer groups and the state’s insurance trade association said “yes,” the law should include a minimum notification time before treatment, fearing situations in which patients about to undergo procedures are suddenly presented with the choice of waiving their protections or canceling procedures. Some proponents suggested three days; others wanted at least a week.

But doctor and hospitals groups said they didn’t want to be bound to a state-imposed timeline, arguing that as long as patients are informed about network status and potential financial liability in writing prior to treatment - as the law states -- the timing should stay flexible. Treatment is too variable for one-size-fits-all timelines, the provider groups argued.

In a July 15 letter to Sullivan, a coalition of nine medical specialty organizations including the Texas Medical Association, a physicians’ group with nearly 53,000 members, argued that “to impose a particular time frame through rule making could have unintended consequence on patient care,” such as forcing delays or cancellations of needed treatment because the patient had to find an in-network provider.

Doctors insist they are holding up their end of the law.

“There is no longer a surprise bill because the patient and the physician will have discussed that it is out-of-network and the procedure is elective,” said Dr. David Fleeger president of the Texas Medical Association. “It’s up to the physician to make sure patients understand their financial responsibilities and it’s up to (patients) to decide whether to proceed or delay or find another facility.”

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He likened such notification to the state’s informed consent law where doctors must disclose the risks and hazards of medical care that might influence a patient’s decision to agree to treatment. Fleeger said the patient decision on waiving balance billing protection could come “a week or an hour before the procedure.”

“No, it can’t be an hour,” said state Rep. Tom Oliverson, R-Houston, an anesthesiologist who co-authored the law with Hancock, “It’s got to be crystal clear to the patient that they are giving up their protection.”

He favors a “cooling-off period” of about a week between the time a patient is notified of out-of-network charges and the planned procedure. “If this is not handled correctly it will undo the law,” he said.

That level of vehemence puzzles some providers who say there is no dark intent behind wanting discretion in providing patient notification.

“It was not meant to be some kind of universal escape clause,” said Cameron Duncan, associate general counsel for the Texas Hospital Association who also does not want state-mandated timelines written into the law.“It kind of surprises me that this has become a big deal.”

Unfolding drama

But for consumer advocates such as Stacey Pogue, a senior health policy analyst at the Austin-based Center for Public Policy Priorities, it is a very big deal.

She argues that the law was never intended to set up a choice between agreeing to pay more or not be treated. “They’re giving you a lose-lose when the legislature was trying to give you a win,” she said. “How this question gets answered will determine whether patients get protected.”

That answer will come from the Texas Medical Board, a 19-member regulatory body appointed by the governor and made up of physicians and members of the public. The board, which meets five times a year, adopts rules, grants licenses, and oversees disciplinary matters. It has not yet been determined when the rules over patient notification will be addressed, a spokesman for the board said in an email.

TDI shifted the drafting of final language and enforcement for billing infractions to the medical board because it has jurisdiction over doctors, a spokeswoman for the state insurance agency said.

“Of all of the regulated entities in Texas involved in the implementation of the surprise billing prohibition,” said Jamie Dudensing, CEO of Texas Association of Health Plans, the state’s insurance trade association, “doctors are the only ones who get to regulate themselves”

Insurers and lawmakers also are raising concerns about whether of the president of the Texas Medical Board, Dr. Sherif Zaafran, could remain impartial. Zaafran, a Houston board- certified anesthesiologist, is also chair of Physicians for Fair Coverage, a large national lobbying group that represents specialists often at the heart of balance billing disputes.

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Physicians for Fair Coverage is among the groups lobbying in opposition to any bill in Congress that would use benchmarks to determine how out-of-network doctors get paid, alleging that such models favor insurers. It has spent about $240,000 in that campaign this year, according to the Center for Responsive Politics, a nonprofit, nonpartisan group that tracks money in politics.

Under a benchmark price-setting system, an out-of-network provider who cannot come to a payment agreement with an insurer is paid the average of what similar in-network providers in the area receive. The other method under discussion in Congress is arbitration, in which an insurer and provider each submit their price to an independent arbitrator to decide. Texas adopted an arbitration process in its new law. Doctors and hospitals tend to support that method, while insurers typically favor benchmarks.

A spokeswoman for Physicians for Fair Coverage said Zaafran was out of the country and not available for an interview or comment. A spokesman for the Texas Medical Board said other members declined to be interviewed at this time.

In a statement, the spokesman said, “It should come as no surprise that medical board members have affiliations with various national and state associations connected to their respective professions. Physician board members hold memberships and leadership roles in state and national organizations that advocate on behalf of physicians on a whole host of health policy issues, including the American Medical Association, Texas Medical Association, state and national practice specialty associations, among others,”

Michele Kimball, CEO of Physicians for Fair Coverage acknowledged that Zaafran’s affiliation could appear problematic for the Texas rule-making. “My recommendation would be he recuse himself,” she said.

Oliverson said he is confident the medical board will come up with an equitable solution. Hancock, who has alerted the governor about the dust-up, is less sure. “I will be watching closely,” he said, but added, “I’ve ceased being surprised.”

jenny.deam@chron.com