     OFFICE OF THE ATTORNEYGENERAL. STATEOF TEXAS

     JOHN     CORNYN




                                                  May 8,2002



The Honorable Bob Turner                                  Opinion No. JC-0502
Chairman, Committee on Public Safety
Texas House of Representatives                            Re: Whether Insurance Code article 3.70-3C,
P.O. Box 2910                                             section 3A(c), (i) and article 20A.l8B(c),         (i)
Austin, Texas 78768-2910                                  authorize the Texas Commissioner of Insurance to
                                                          promulgate rules requiring health maintenance
                                                          organizations and preferred provider organizations
                                                          to disclose their policies regarding fees, bundling,
                                                          and downcoding to physicians and other health
                                                          care providers (RQ-046 1-JC)


Dear Representative      Turner:

         Article 3.70-3C, section 3A and article 20A.18B of the Insurance Code require health
maintenance organizations (HMOs) and preferred provider organizations (PPOs) to promptly pay
the claims of physicians and other health care providers (hereinafter “providers”). You ask whether
article 3.70-3C, section 3A(c), (i) and article 20A. 18B(c), (i) authorize the Texas Commissioner of
Insurance (the “Commissioner”) to promulgate rules requiring HMOs and PPOs to disclose their
policies regarding fees, bundling, and downcoding to providers.’ We answer your question in the
affirmative and conclude that these provisions authorize the Commissioner             and the Texas
Department of Insurance to promulgate rules requiring HMOs and PPOs to disclose their policies
regarding fees, bundling, and downcoding.

         Your question requires us to examine statutory language added to the Insurance Code by the
legislature in 1999. As background, we begin with a brief explanation of the terms “bundling” and
“downcoding” and a description of the 1999 legislation and subsequent legal developments.

        The terms “bundling” and “downcoding” refer to ways in which an HMO or a PPO may
evaluate a provider’s request for payment. After treating a patient who is covered by an HMO or
a PPO health plan, a provider submits a claim for payment to the HMO or PPO that will include a
shorthand description of the particular services or procedures performed by the provider in the form
of a code. For this purpose, providers and insurers generally use uniform codes, developed by the



          ‘Letter from Honorable Bob Turner, Chairman, House Committee on Public Safety, to Honorable John Comyn,
Texas Attorney General at 2 (Nov. 2, 2001) (on file with the Opinion Committee) [hereinafter Request Letter]. You
ask about Insurance Code, article 3.70-3C, section 3A and article 20A. 18B as added by Act of May 29,1999,76th Leg.,
R.S., ch. 1343, 1999 Tex. Gen. Laws 4556.
The Honorable Bob Turner           - Page 2               (JC-0502)




American Medical Association, that are often referred to as “Current Procedural Terminology” or
“CPT” codes. See generaZZy Texas Department of Insurance Brief at 3 n.2;2 Texas Association of
Health Plans Brief at 1-2;3 Texas Medical Association Brief at 1-2.4 “Bundling” occurs when a
provider submits a claim listing multiple codes and the insurer combines two or more codes,
effectively reimbursing the provider for fewer procedures than those listed on the claim. See TDI
Brief, supra note 2, at 3 (defining bundling as “a practice whereby a claim submitted . . . for two or
more separate and distinct CPT services or procedures . . . is ‘bundled’ by the carrier who reimburses
for just one of the services or procedures, typically the one of the lowest cost”). “Downcoding” is
a practice whereby CPT codes submitted by a provider are changed unilaterally by an HMO or a
PPO from codes describing higher levels of service to codes describing lower levels of service. See
id. at 3 n.3.

         Your question about HMO and PPO disclosure of fees, bundling, and downcoding policies
arises from 1999 amendments to the Insurance Code, enacted by House Bill 610. As the bill
analyses explain, House Bill 610 was intended to “require[] prompt payment to physicians and
providers for services performed.“5 The bill did this by requiring HMOs and PPOs to pay physicians
and other providers within a time certain after the submission of a “clean claim,” see Tex. H.B. 6 10,
$0 l-2,76th Leg., R.S. (1999), Act ofMay 29, 1999,76th Leg., R.S., ch. 1343, §§ 1-2, 1999 Tex.
Gen. Laws 4556,4556-59 (enacting Tex. Ins. Code art. 3.70-3C, § 3A(a), (c) and art. 20A.l8B(a),
(c)), which it defined as a completed claim, as determined by Texas Department of Insurance (TDI)
rules, see id. (enacting Tex. Ins. Code art. 3.70-3C, 8 3A(a) and art. 20A.l8B(a)). Significantly for
our purposes, House Bill 610 also required HMOs and PPOs to provide physicians and providers
with “copies of all applicable utilization review policies and claim processing policies or procedures,
including required data elements and claim formats” and authorized the Commissioner to adopt
implementing      rules.  See id. (enacting Tex. Ins. Code art. 3.70-3C, 8 3A(i), (n) and art.
20A. 18B(i),(o)).

       We note that in the last legislative session, the legislature enacted a bill, House Bill 1862,
which the Governor subsequently vetoed, that would, among other things, have required HMOs and



          2Brief from Lynda H. Nesenholtz, General Counsel, Texas Department of Insurance, to Susan Gusky, Chair,
Opinion   Committee, Office of Attorney General (Dec. 20,200l) (on file with Opinion Committee) [hereinafter TDI
Brief].

          3Brief from Leah Rum.mel, Executive Director, Texas Association of Health Plans, to Honorable   John Comyn,
Texas Attorney    General (Dec. 14,200l) (on file with Opinion Committee).

       4Brief from Lee A. Spangler, Assistant      General Counsel, Texas Medical Association, to Honorable      John
Comyn, Texas Attorney General (Dec. 10,200l)       (on file with Opinion Committee) [hereinafter TMA Brief].

          %eeHousECOMM. ONINSLRANCE,BILLANALYSIS,
                                                Tex. H.B. 610,76thLeg.,    R.S. (1999) (as introduced); HOUSE
COMM.ON INSURANCE,
                BILL ANALYSIS,
                            Tex. H.B. 610,76th    Leg., R.S. (1999) ( committee substitute); SENATE   COMM.ON
ECONOMJCDEVELOPMENT,
                   BILLANALYSIS,Tex. H.B. 610, 76th Leg., R.S. (1999) (as engrossed); SENATECOMM. ON
ECONOMICDEVELOPMENT,
                   BILLANALYSIS,Tex. H.B. 610,76th Leg., R.S. (1999) (committee substitute); HOUSECOMM.
ON INSURANCE,
           BILLANALYSIS,Tex. H.B. 610,76th Leg., R.S. (1999) (enrolled).
The Honorable Bob Turner      - Page 3           (JC-0502)




PPOs to provide physicians and providers upon request with “a description of the coding guidelines,
including any underlying bundling, recoding, or other payment process and fee schedules.” Tex.
H.B. 1862,77th Leg., R.S. (2001); Veto Message of Gov. Perry, Tex. H.B. 1862,77th Leg., R.S.
(2001). The Governor’s veto proclamation acknowledged the strain between health plans and
providers over contract and payment issues and directed TDI “to be more aggressive in assisting
physicians and health care providers in claims disputes” and to “quickly reopen and strengthen
existing prompt pay rules.” Veto Message of Gov. Perry, Tex. H.B. 1862,77th Leg., R.S. (2001).

        TDI adopted rules implementing House Bill 6 10 in May 2000, see 25 Tex. Reg. 4543 (2000),
which it amended in February of 2001, see 26 Tex. Reg. 1341(2001), and September 2001, see id.
at 7542. None of these rules address disclosure of fees, bundling, or downcoding policies. See 28
TEX. ADMIN. CODE $6 21.2801-.28 16 (2001) (Submission of Clean Claims). It appears, however,
that several entities asked TDI in the last round of rulemaking, which ended on September 28,2001,
to address disclosure of bundling and downcoding policies. See 26 Tex. Reg. 7542,7544-45 (2001).
The Department declined to do so, stating:

                         It is the department’s position that Article 20A.l8B(i) and
                Article 3.70-3C 5 3A(i), relating to claims processing policies and
                procedures,     do not require carriers to disclose bundling and
                downcoding procedures. The policies and procedures identified in
                these statutes are those necessary for notifying physicians and
                providers of the information needed to file a clean claim and when the
                physician or provider can expect to be paid, and do not include
                bundling or downcoding disclosures.

Id. at 7545. In essence, your letter questions TDI’s construction   of Insurance Code article 3.70-3C,
section 3A(i) and article 20A. 18B(i). Specifically, you ask:

                Does the Commissioner of Insurance have the authority under Texas
                state law, Insurance Code Art. 20A.l8B(c) & (i) and Art. 3.70-3C
                Sec. 3A(c) & (i), to require a Health Maintenance Organization or a
                Preferred Provider Organization to disclose to a participating
                physician or provider that organization’s claims processing policies
                regarding fees, bundling and downcoding, and should those policies
                be included in the disclosure required by Art. 20A. 18B (i) and Art.
                3.70-3C Sec. 3A(i)?

Request Letter, supra note 1, at 2. Your reference to “policies regarding fees” appears to mean fee
schedules, information regarding what an HMO or a PPO will pay for particular services. See id.
For the reasons explained below, we conclude that these provisions authorize the Commissioner and
TDI to promulgate rules requiring HMOs and PPOs to disclose their policies regarding fees,
bundling, and downcoding.
The Honorable       Bob Turner       - Page 4              (JC-0502)




        House Bill 610 amended two different provisions of the Insurance Code - the Health
Maintenance Organization Act, chapter 20 ofthe Insurance Code, which governs HMOsy6 and article
3.70-36, which contains certain provisions applicable only to preferred provider benefit pla.n~.~
Because the prompt payment provisions governing HMOs and PPOs are identical, we will describe
and analyze them together.

        As enacted by House Bill 610, article 20A.18B and article 3.70-3C, section 3A require the
prompt payment of providers by HMOs and PPOs following the receipt of a “clean claim.” A “clean
claim” is defined as “a completed claim, as determined under” TDI rules, submitted by a provider
“for medical care or health care services” under a health care plan or health insurance policy. See
TEX. INS. CODE ANN. art. 3.70-3C, 5 3A(a); id. art. 20A. 18B(a) (Vernon Supp. 2002). The prompt
payment provisions require an HMO or a PPO “[nlot later than the 45th day after the date that [it]
receives a clean claim” from a provider to:

                           (1) pay the total amount of the claim in accordance with the
                   contract between the . . . provider and the [PPO or HMO];

                           (2) pay the portion of the claim that is not in dispute and
                   notify the . . . provider in writing why the remaining portion of the
                   claim will not be paid; or

                              (3) notify the . . . provider in writing why the claim will not
                   be paid.

Id. art. 3.70-3C, 8 3A(c); id. art. 20A.l8B(c).       If the PPO or HMO acknowledges coverage
of an insured or enrollee under the health insurance policy or health care plan “but intends to audit
the . . . provider claim, the [PPO or HMO] shall pay the charges submitted at 85 percent of the
contracted rate on the claim not later than the 45th day after the date that the [PPO or HMO] receives
the claim from the . . . provider.” Id. art. 3.70-3C, 6 3A(e); id. art. 20A.l8B(e).




           @fhe Health Maintenance Organization Act defines an HMO as “any person who arranges for or provides a
health care plan, a limited health care service plan, or a single health care service plan to enrollees on a prepaid basis.”
TEX. INS.CODEANN. art. 20A.O2(n) (Vernon Supp. 2002). A “health maintenance organization delivery network” is “a
health care delivery system in which a health maintenance organization arranges for health care services directly or
indirectly through contracts and subcontracts with providers and physicians.” Id. art. 20A.O2(w).

          7Under article 3.70-3C, a “preferred provider” is “a physician, practitioner, hospital, institutional provider, or
health care provider, or an organization of physicians or health care providers, who contracts with an insurer to provide
medical care or health care to insureds covered by a health insurance policy, certificate, or contract.” TEX. INS.CODE
ANN. art. 3.70-3C, 3 l( 10) (Vernon Supp. 2002). Article 3.70-3C applies to “any preferred provider benefit plan in
which an insurer provides, through its health insurance policy, for the payment of a level of coverage which is different
from the basic level of coverage provided by the health insurance policy if the insured uses a preferred provider.” Id.
$ 2 (“This article does not apply to provisions for dental care benefits in any health insurance policy.“).
The Honorable Bob Turner      - Page 5           (JC-0502)




         A PPO or an HMO that fails to pay a provider in accordance with these requirements “is
liable to a . . . provider for the full amount of billed charges submitted on the claim or the amount
payable under the contracted penalty rate, less any amount previously paid or any charge for a
service that is not covered by” the health insurance policy or health care plan, id. art. 3.70-3C,
9 3A(f); id. art. 20A. 18B(f), and “is subject to an administrative penalty under Article 1.1 OE” of the
Insurance Code, id. art. 3.70-36’8 3A(h); id. art. 20A. 18B(h). “The administrative penalty imposed
under that article may not exceed $1,000 for each day the claim remains unpaid in violation of
Subsection (c) or (e) of this section.” Id. art. 3.70-3C, 8 3A(h); id. art. 20A. 18B(h).

         The prompt payment provisions also require a PPO or an HMO to “provide a . . . provider
with copies of all applicable utilization review policies and claim processing policies or procedures,
including required data elements and claim formats.” Id. art. 3.70-3C, 8 3A(i); id. art. 20A.l8B(i).
A PPO or an HMO “may, by contract with a. . . provider, add or change the data elements that must
be submitted with the . . . provider claim.” Id. art. 3.70-3C, 8 3ACj); id. art. 20A.l8B(j). “Not later
than the 60th day before the date of an addition or change in the data elements that must
be submitted with a claim or any other change” in a PPO or an HMO’s “claim processing and
payment procedures,” the PPO or HMO “shall provide written notice of the addition or change to
each . . . provider.” Id. art. 3.70-3C, 9 3A(k); id. art. 20A.l8B(k).   Finally, both prompt payment
provisions provide that the Commissioner may adopt necessary implementing rules. See id. art.
3.70-3C, $3A(n) (“The commissioner of insurance may adopt rules as necessary to implement this
section.“); id. art. 20A. 18B(o) (“The commissioner may adopt rules as necessary to implement this
section.“).

         In its rules, TDI has construed the requirement that a PPO or an HMO “provide a . . . pro-
vider with copies of all applicable utilization review policies and claim processing policies
or procedures, including required data elements and claim formats,” id. art. 3.70-3C, 5 3A(i);
id. art. 20A.l8B(i), to require a PPO or an HMO to disclose “claims processing policies and
procedures. . . which are necessary to submit a claim that is clean for prompt payrnent,” TDI Brief,
supra note 2, at 4, including, for example, policies specifying which claim form, attachments, and
other information must be submitted, when and where a claim must be submitted, and whether a
claim must be submitted by mail, e-mail, or facsimile, see id. at 4-5; see also 28 TEX.ADMIN. CODE
$8 21.2802(4) (2001) (defining clean claim), .2803(b) (re q uired data elements), (c) (necessary
attachments). TDI takes the position that the language mandating disclosure of “claim processing
policies or procedures” requires PPOs and HMOs to disclose only information relevant to what
makes a claim complete. It asserts that bundling and downcoding policies do not fall within the
scope of the information that must be disclosed because such policies “provide a means by which
a claim is valued under the terms of the contract between the carrier and the provider” and do not
pertain to whether a claim is clean. TDI Brief, supra note 2, at 5. The Texas Medical Association,
on the other hand, contends that the prompt payment provisions not only require PPOs and HMOs
to pay providers promptly, but to pay them correctly, and asserts that the disclosure requirements
must be construed in light of that goal: “[Tlhe legislature passed an Act that is intended to facilitate
payment to physicians and provide physicians with the policies and procedures information they
need to determine they have been paid correctly.” TMA Brief, supra note 4, at 3.
The Honorable Bob Turner      - Page 6           (JC-0502)




         When construing a statute, we must attempt to give effect to the legislature’s intent. See TEX.
GOV’TCODEANN. $8 311.021, .023 (Vernon 1998);MitchellEnergyCorp.v.                Ashworth,      S.W.2d
436,438 (Tex. 1997). To give effect to legislative intent, we construe a statute according to its plain
language. See RepublicBank Dallas, N.A. v. Interkal, Inc., 691 S.W.2d 605, 607-08 (Tex. 1985);
Bouldin v. Bexar County Sheriff’s Civil Serv. Comm iz, 12 S.W.3d 527,529 (Tex. App.-San Antonio
1999, no pet.). When interpreting a statute, words and phrases that have acquired a technical or
particular meaning, by legislative definition or otherwise, must be construed accordingly. See TEX.
GOV’T CODE AN-N. 8 311.01 l(b) (Vernon 1998). Otherwise, words and phrases shall be read in
context and construed according to the rules of grammar and common usage. Id. 4 3 11 .Ol l(a).
When a statute does not define a term, we apply the term’s ordinary meaning. See Hopkins v. Spring
Indep. Sch. Dist., 736 S.W.2d 617,619 (Tex. 1987).

          The specific statutory language at issue requires PPOs and HMOs to disclose “copies of all
applicable utilization review policies and claim processing policies or procedures, including required
data elements and claim formats.” TEX. INS. CODE ANN. ark 3.70-3C, tj 3A(i); id. art. 20A. 18B(i)
(Vernon Supp. 2002). The legislature did not define the terms “utilization review policies,” “claim
processing policies or procedures, ” “data elements,” and “claim formats” anywhere in the prompt
payment provisions. Article 21.58A of the Insurance Code, which governs health care utilization
review agents, defines “utilization review” as “a system for prospective or concurrent review of the
medical necessity and appropriateness of health care services being provided or proposed to be
provided to an individual within this state. Utilization review shall not include elective requests for
clarification of coverage.” Id. art. 21.58A, 5 2(20). It is not clear to us that fee schedules or
bundling or downcoding policies, which pertain to how providers are compensated for services
performed, are policies regarding “prospective or concurrent review of the medical necessity and
appropriateness of health care services being provided or proposed to be provided” to a patient. Id.
None of the other terms are defined by statute and we are not aware of any technical or commonly
understood meaning of those terms. See TEX. GOV’T CODEANN. 6 3 11 .Ol 1 (Vernon 1998) (words
and phrases that have acquired a technical or particular meaning, by legislative definition or
otherwise, must be construed accordingly; otherwise, words and phrases shall be read in context and
construed according to the rules of grammar and cornmon usage).

        The prompt payment provisions as a whole are ambiguous with respect to whether fee
schedules and bundling and downcoding policies must be disclosed. Looking at the disclosure
requirements in the context of the prompt payment provisions in their entirety, it is clear from the
plain language that the statutes’ purpose is to establish a mechanism for prompt payment of
providers’ claims. They do this by establishing a time limit within which a PPO or an HMO must
pay a provider’s claim. This time limit is triggered by the submission of a “clean” or “complete”
claim. Viewed in this light, the disclosure provisions, which require a PPO or an HMO to provide
a “provider with copies of all applicable utilization review policies and claim processing policies or
procedures, including required data elements and claim formats,” TEX.INS.CODEANN. art. 3.70-3C,
5 3A(i); id. art. 20A. 18B(i) (V emon Supp. 2002)’ are clearly intended, at a minimum, to ensure that
providers will have the information necessary to determine that a claim is complete before
submitting it. It is not clear from the plain language of the statute, however, whether disclosure of
The Honorable Bob Turner          - Page 7             (JC-0502)




fee schedules and bundling and downcoding policies 1s necessary to the submission ofa clean claim
or whether the disclosure provisions have a broader purpose.

          When a statute is ambiguous, we may consider, among other things, the object sought to be
attained, the circumstances under which a statute was enacted, legislative history, the consequences
of a particular construction, and administrative construction of the statute. See TEX. GOV’T CODE
ANN. 5 3 11.023 (Vernon 1998); see also id. 8 3 11.021 (in enacting a statute, it is presumed that “a
just and reasonable result is intended” and “a result feasible of execution is intended”). In particular,
courts will defer to the construction of a statute by the administrative agency charged with its
 enforcement, so long as the construction is reasonable and does not contradict the plain language of
the statute. See Tarrant Appraisal Dist. v. Moore, 845 S.W.2d 820, 823 (Tex. 1993); Tex. Utils.
Elec. Co. v. Sharp, 962 S.W.2d 723,726 (Tex. App.-Austin 1998, pet. denied). This is particularly
true where the statute is ambiguous due to the complexity of the subject matter. See Tex. Ass ‘n of
Long Distance Tel. Cos. v. Pub. Util. Comm ‘n, 798 S.W.2d 875,884 (Tex. App.-Austin 1990, writ
 denied).

        We have reviewed       the bill analyses, the committee hearings, and the floor debates pertaining
to House Bill 610,’ none      of which specifically address fee schedules or bundling or downcoding
policies or the disclosure      of such information.    The bill analyses, for example, reiterate that, in
enacting House Bill 6 10,     the legislature intended to establish a prompt payment mechanism:

                     Currently, [HMOs] are not required to compensate physicians for
                 services within a specified period of time. H.B. 610 requires prompt
                 payment to physicians and providers for services performed. This bill
                 sets further payment schedules for physicians and provides penalties
                 for late payments.

HOUSE    COMM.     ON INSURANCE, BILL        ANALYSIS, Tex. H.B. 610, 76th Leg., R.S. (1999) (as
introduced)   (Background      and Purpose).9 In explaining the purpose of House Bill 6 10 to the House



          8SeeHOUSECOMM.ONINSURANCE,       BILLANALYSIS,Tex. H.B. 610,76th Leg., R.S. (1999) (as introduced); HOUSE
COMM.ON INSURANCE,    BKL ANALYSIS,Tex. H.B. 610,76th Leg., R.S. (1999) ( committee substitute); SENATE     COMM.ON
ECONOMIC    DEVELOPMENT,  BILLANALYSIS,Tex. H.B. 610, 76th Leg., R.S. (1999) (as engrossed); SENATECOMM. ON
ECONOMIC   DEVELOPMENT,   BILLANALYSIS,Tex. H.B. 610,76th Leg., R.S. (1999) (committee substitute); HOUSECOMM.
ON INSURANCE,  BILLANALYSIS,Tex. H.B. 610,76th Leg., R.S. (1999) ( enrolled); Hearings on Tex. H. B. 610 Before the
House Comm. on Insurance, 76th Leg., R.S. (Mar. 30, 1999) (tape available from House Video/Audio            Services);
Hearings on Tex. H.B. 610 Before the Senate Comm. on Economic Development, 76th Leg., R.S. (May 11, 1999) (tape
available from Senate Staff Services Office); Debate on Tex. H.B. 610 on the Floor of the House, 76th Leg., R.S. (May
4, 1999) (2d & 3d Reading) (tape available from House Video/Audio Services); Debate on Tex. H.B. 610 on the Floor
of the Senate, 76th Leg., R.S. (May 18, 1999) (2d & 3d Reading) (tape available from Senate Staff Services Office).

            ‘See also HOUSECOMM. ON INSURANCE,
                                             BILLANALYSIS,Tex. H.B. 610, 76th Leg., R.S. (1999) (committee
substitute); SENATECOMM. ON ECONOMIC    DEVELOPMENT,
                                                   BILLANALYSIS,Tex. H.B. 610, 76th Leg., R.S. (1999) (as
engrossed); SENATECOMM. ON ECONOMIC      DEVELOPMENT,BILL ANALYSIS,Tex. H.B. 610, 76th Leg., R.S. (1999)
                                                                                               (continued.. .)
The Honorable         Bob Turner     - Page 8           (JC-0502)




Committee on Insurance, the bill’s author indicated that PPOs and HMOs might be intentionally
delaying payments to providers: “[IInsurance companies, HMOs, PPOs will drag out the payment
process and, in doing so, they’re able to sit on large sums of money . . . while they earn interest on
that.“‘O Clearly, the legislative goal was to ensure that PPOs and HMOs would not delay paying
providers’ claims. But there is no indication that the legislature specifically considered whether or
not PPOs and HMOs should be required to disclose to providers their fee schedules or bundling and
downcoding policies.

         It is clear from the legislative history, however, that the legislature intended to rely on TDI
to work out the technical details. See, e.g., supra note 10 (Janek testimony noting that TDI was
already in the process of working on a regulatory definition of a clean claim and stating that the bill
“will put the definition of ‘clean claim’ back to TDI. I don’t want to get into defining it in the bill
only to have something substantially different than what TDI would propose.“).             Moreover, in
enacting the statute, the legislature specifically charged TDI with enforcing the prompt payment
provisions, with defining a clean claim, and with promulgating implementing rules. See TEX. INS.
CODE ANN. art. 3.70-3C, 9 3A(a), (h), (n) (V emon Supp. 2002) (“The commissioner            of insurance
may adopt rules as necessary to implement this section.“); id. art. 20A.l8B(a), (h), (0) (“The
commissioner may adopt rules as necessary to implement this section.“).               Given the statute’s
ambiguity with respect to the scope ofrequired disclosures, the lack of conclusive legislative history,
and the overall complexity of this regulatory area, we believe that a court, recognizing the agency’s
expertise in the field, would defer to TDI’s construction of the prompt payment provisions’
disclosure requirements.

         As noted above, TDI has concluded that the prompt payment provisions do not require
HMOs and PPOs to disclose their fee schedules and bundling and downcoding policies, based upon
its determination that the purpose of the language mandating disclosure of “claim processing policies
or procedures” is limited to making available information that will allow providers to submit clean
claims and its assessment that disclosure of fee schedules and bundling and downcoding information
is not necessary to the preparation of a clean claim. We believe that a court would find this
construction of the statute does not conflict with the statute’s plain language and is reasonable. As
we explain below, however, we also believe that a court would find reasonable an alternate TDI
construction of the prompt payment provisions to require disclosure of fee schedules and bundling
and downcoding policies.

        First, the prompt payment provisions’ disclosure requirements mandate the disclosure of
“copies of all applicable utilization review policies and claim processing policies or procedures,
including required data elements and claim formats.” TEX. INS. CODE ANN. art. 3.70-3C, 0 3A(i);



         9(. . .continued)
(committee substitute);      HOUSECOMM.ON INSURANCE,
                                                  BILL ANALYSIS,Tex. H.B. 610,76th     Leg., R.S. (1999) (enrolled).


          “Hearings on Tex. H.B. 610 Before the House Comm. on Insurance, 76thLeg., R.S. (Mar. 30,1999) (testimony
of Representative Janek) (tape available from House Video/Audio Services).
The Honorable Bob Turner      - Page 9           (JC-0502)




id. art. 20A. 18B(i) (Vernon Supp. 2002) (emphasis added). As noted above, the legislature did not
define the terms “utilization review policies,” “claim processing policies or procedures,” “data
elements,” and “claim formats” anywhere in the prompt payment provisions. Under its rulemaking
authority, TDI has the authority to define these terms as necessary to implement the prompt payment
provisions. See id. art. 3.70-3C, 9 3A(a), (h), (n) (“Th e commissioner of insurance may adopt rules
as necessary to implement this section.“); id. art. 20A.l8B(a), (h), (0) (“The commissioner may
adopt rules as necessary to implement this section.“). Furthermore, the word “include” is a “term
of enlargement” that does not limit a set to listed items; a statute’s “use of the term[] does not create
a presumption that components not expressed are excluded.” TEX.GOV’T CODEANN. 8 3 11.005( 13)
(Vernon 1998); see also BRYAN A. GARNER,A DICTIONARYOFMODERNLEGAL USAGE 287 (1987)
(discussing “include”); BLACK’S LAW DICTIONARY766 (7th ed. 1999) (defining “include”). The
term “include” signifies an “illustrative” list. BRYAN A. GARNER,A DICTIONARYOFMODERNLEGAL
USAGE 287 (1987) (quoting Puerto Rico Maritime Shipping Auth. v. I.C.C., 645 F.2d 1102, 1112
n.26 (D.C. Cir. 198 1)). Thus, it is within TDI’s authority to determine that fee schedules and
bundling and downcoding policies are similar to “data elements” or “claim formats.” Were TDI to
conclude that fee schedules and bundling and downcoding policies constitute “utilization review
policies, ” “claim processing policies or procedures, ” “data elements,” or “claim formats,“or are
sufficiently like “data elements” or “claim formats,” we believe that a court would defer to its
expertise in this matter. See TEX. GOV’T CODE ANN. 5 311 .Ol l(b) (Vernon 1998) (words and
phrases that have acquired a technical or particular meaning, by legislative definition or otherwise,
must be construed accordingly).

         Second, the plain language of the prompt payment provisions as a whole does not foreclose
such a construction of the disclosure provisions. As the Texas Medical Association points out, the
prompt payment provisions require PPOs and HMOs upon receiving a clean claim to “pay the
total amount of the claim in accordance with the contract.” TEX. INS. CODE ANN. art. 3.70-3C,
8 3A(c)( 1); id. art. 20A. 18B(c)( 1) (V emon Supp. 2002) (emphasis added). And, if the PPO or HMO
acknowledges coverage of an insured or enrollee under the health insurance policy or health care
plan “but intends to audit the. . . provider claim, the [PPO or HMO] shall pay the charges submitted
at 85 percent of the contracted rate on the claim not later than the 45th day after the date that the
[PPO or HMO] receives the claim from the . . . provider.” Id. art. 3.70-3C, 9 3A(e); id. art.
20A. 18B(e) (emphasis added). The Texas Medical Association argues that “without a copy of the
fee schedule, bundling logic, or downcoding policies, there is no way for a physician to determine
whether he has been paid according to contract.” TMA Brief, supra note 4, at 3. Based on this
statutory language, we believe that TDI could reasonably construe the prompt payment provisions’
disclosure requirements more broadly to require PPOs and HMOs to disclose information that would
provide physicians with a basis for determining whether they have been paid according to the
contract, including fee, bundling, and downcoding information. Were TDI to construe the disclosure
provisions in this manner, we do not believe a court would conclude that the agency had exceeded
its statutory authority, which is quite broad. TDI is charged with adopting rules necessary to
implement the prompt payment provisions as a whole; its rulemaking authority is not limited to
defining the meaning of a clean claim or to construing the disclosure requirements. See TEX. INS.
CODEANN. art. 3.70-3C, 8 3A(n) (V emon Supp. 2002) (“The commissioner of insurance may adopt
The Honorable Bob Turner     - Page 10          (JC-0502)




rules as necessary to implement this section.“); id. art. 20A. 18B(o) (“The commissioner   may adopt
rules as necessary to implement this section.“).

        Finally, in its brief, TDI suggests that any construction of the prompt payment provisions to
require disclosure of fee schedules and bundling and downcoding policies is foreclosed by Senate
Bill 78 1, also enacted by the Seventy-sixth Legislature that enacted House Bill 610, and House Bill
1862, enacted by the Seventy-seventh Legislature and subsequently vetoed by the Governor. We
disagree.

         Senate Bill 781 amended article 3.70-3C and chapter 20A of the Insurance Code, the same
provisions amended by House Bill 6 10, adding provisions mandating special contractual rights for
podiatrists providing services under HMO and PPO plans:

                    A preferredprovider contract between an insurer and a podiatrist
               licensed by the Texas State Board of Podiatric Medical Examiners
               must provide that:

                        (1) the podiatrist may request, and the insurer shall provide
               not later than the 30th day after the date of the request, a copy of the
               coding guidelines and payment schedules applicable to the
               compensation that the podiatrist will receive under the contract for
               services;

                        (2) the insurer may not unilaterally make material retroactive
               revisions to the coding guidelines and payment schedules;




TEX.INS. CODEANN. art.3.70-3C, 8 3(n)(l)-(2)     (V emon Supp. 2002) (emphasis added), as amended
by Tex. S.B. 781,76thLeg.,    R.S. (1999).

                        A contract between a health maintenance organization and a
               podiatrist licensed by the Texas State Board of Podiatric Medical
               Examiners must provide that:

                        (1) the podiatrist may request, and the insurer shall provide
               not later than the 30th day after the date of the request, a copy of the
               coding guidelines and payment schedules applicable to the
               compensation that the podiatrist will receive under the contract for
               services;
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                        (2) the insurer may not unilaterally make material retroactive
               revisions to the coding guidelines and payment schedules;




Id. art. 20A.l8A(j)(l)-(2)   (emphasis added), as amended by Tex. S.B. 781,76th Leg., R.S. (1999).
The introduced version of Senate Bill 781 extended this contractual right to all providers, but the
senate committee substitute version of the bill limited its scope to podiatrists. Compare Tex. S.B.
781,76th Leg., R.S. (1999) ( as introduced) (PPO or HMO contract with provider “must include a
complete fee schedule, all applicable treatment codes, and a complete explanation of the method
of determining payment to the . . . provider”) with Tex. S.B. 781, 76th Leg., R.S. (1999)
(Senate committee substitute) (“contract between [a PPO or an HMO] and a podiatrist . . . must
provide that . . . the podiatrist may request, and the insurer shall provide . . . a copy of the coding
guidelines and payment schedules applicable to the compensation that the podiatrist will receive
under the contract for services”).

         Similarly, House Bill 1862 would have mandated a right of access to information as a
contract term between an HMO or a PPO and a provider. Specifically, it would have required that
contracts permit physicians and other providers to request “a description of coding guidelines,
including any underlying bundling, recoding, or other payment process and fee schedules applicable
to specific procedures that the physician or provider will receive under the contract.” Tex. H.B.
 1862, 77th Leg., R.S. (2001). Under the mandatory contract term, the HMO or PPO would have
been required to provide the information within 30 days.

         TDI asserts that the amendment of Senate Bill 78 1 to exclude all providers except podiatrists
“indicates that the Legislature specifically elected to limit access to payment methodology
information only to this type of provider. Its failure to include this provision in HB 610 further
indicates no intention that payment methodology be considered information relevant to prompt
payment of claims.” TDI Brief, supra note 2, at 7. And it argues that House Bill 1862 “indicates
a cognizance [on the part of the Seventy-seventh Legislature] that HB 6 10 did not require carriers
to provide this information as part of the prompt pay requirements.” Id. at 8.

         We conclude, however, that the legislature’s adoption of a right to request and receive coding
and fee schedule information as a mandatory contract term does not establish that the legislature
intended to exclude fee schedules and bundling and downcoding policies from the scope of
information that must be automatically disclosed under the prompt payment provisions. In Senate
Bill 78 1, the Seventy-sixth Legislature adopted a mandatory contract term for podiatrists, requiring
IIMOs and PPOs upon request to disclose to a podiatrist coding guidelines and payment schedules
applicable to the compensation that the podiatrist will receive under a contract for services. House
Bill 1862 would have required a similar contract term for all providers. The prompt payment
provisions, on the other hand, require automatic disclosure of certain information by HMOs and
PPOs to all providers by statute, rather than pursuant to contract. The scope and existence of a right
The Honorable    Bob Turner    - Page   12        (JC-0502)




to information pursuant to contract does not definitively establish the legislature’s intent with respect
to the scope of the prompt payment provisions’ disclosure requirements.

         In conclusion, to answer your specific question, we believe that it is within TDI’s authority
to construe the prompt payment provisions requiring PPOs and HMOs to disclose to physicians and
other health care providers “copies of all applicable utilization review policies and claim processing
policies or procedures, including required data elements and claim formats,” TEX. INS. CODE ANN.
art. 3.70-3C, 8 3A(i); id. art. 20A. 18B(i) (Vernon Supp. 2002)’ to require disclosure of fee schedules
and bundling and downcoding policies.
The Honorable Bob Turner    - Page 13         (JC-0502)




                                      SUMMARY

                         Under the prompt payment provisions requiring preferred
               provider organizations (PPOs) and health maintenance organizations
               (HMOs) to disclose to physicians and other health care providers
               “copies of all applicable utilization review policies and claim
               processing policies or procedures, including required data elements
               and claim formats,” TEX. INS. CODE ANN. art. 3.70-3C, 8 3A(i); id.
               art. 20A.l8B(i) (Vernon Supp. 2002), the Texas Department of
               Insurance is authorized to promulgate rules to require PPOs and
               HMOs to disclose their fee schedules and bundling and downcoding
               policies.




                                            Attorney General of Texas



HOWARD G. BALDWIN, JR.
First Assistant Attorney General

NANCY FULLER
Deputy Attorney General - General Counsel

SUSAN DENMON GUSKY
Chair, Opinion Committee

Mary R. Crouter
Assistant Attorney General, Opinion Committee
