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Texas’ New Pre-Authorization Exemption Law

By: Jon Jablon, Esq.

Texas is no stranger to breaking the mold when it comes to enacting laws that impact the health benefit industry. Health plans subject to Texas state law have had to deal with legislation such as the Texas Prompt Pay Act, which needs no introduction for those who’ve dealt with it. In that vein, the state has passed H.B. 3459, which creates pre-authorization exemptions for certain providers, based on the provider’s historical 90%-plus success rate in obtaining approved pre-authorization with a given health plan.

To start, it’s important to note that this law would presumably be subject to ERISA preemption, since the new provisions it creates sit squarely within the Insurance Code, and it explicitly governs the practices of insurance products. Health plans subject to this law will need to rely on their TPAs, as is so often the case – and that means that TPAs servicing health plans governed by Texas law will need to make sure their processes align with the new requirements of this law.


Plans For Exemption

This law specifies that a provider need not proactively apply for an exemption. Instead, twice annually, the health plan is required to proactively evaluate whether an exemption is warranted for a given provider. That’s especially interesting since providers are allowed to appeal a health plan’s decision to not provide an exemption, considering it to be an adverse benefit determination, which the provider can have reviewed by an independent review organization (at the plan’s expense). Exemptions are not necessarily granted on an indefinite basis, though; a previously-given exemption can be rescinded prospectively if the claims for which pre-authorization would have been requested (but was not, since the provider currently had an exemption) cause the provider’s would-be pre-authorization success rate to drop below 90%.


Obtaining Data for Pre-Authorization

Since this applies broadly to all providers, this may require examination of data regarding all claims for which pre-authorization was requested, which the plan’s pre-authorization vendor will hopefully be able to provide in a timely manner. That also means health plans will need to make sure their service agreements with pre-authorization vendors guarantee the provision of that data, since – as we know from things like the NQTL Analysis required under the Mental Health Parity and Addiction Equity Act – the inability to obtain data from a vendor does not excuse the health plan from compliance with applicable law!


What Does This Mean?

I was recently asked the interesting question of whether this law would tend to prohibit a health plan from incentivizing pre-authorization, even if not required for a given provider. Based on the text of this law, its intent, and the fact that it creates an exemption for providers, it seems that the answer is that a health plan would still be permitted to incentivize a plan participant to obtain pre-authorization for a given service, as long as there is no penalty for the failure to do so. There’s certainly no guarantee that a given provider would cooperate if asked, but if the patient chooses to communicate all available information to the plan to reap an incentive reward, that could be enough to accomplish an effective pre-authorization.

The bill passed in the Texas House of Representatives by a truly overwhelming majority of 140-4. The official record also contains statements from two Representatives who accidentally voted yes, but intended to vote no, so please join me in giving a nice big eye-roll for those two.

Contact Us to learn more about the pre-authorization law in Texas and whether this would prohibit health plans from incentivizing pre-authorization.