bill banning extrapolation in health plan claim audits

The text as introduced · 416 words

89R4401 SCR-F

By: Menéndez
S.B. No. 1811

A BILL TO BE ENTITLED

AN ACT

relating to the use of extrapolation by a health maintenance

organization or an insurer to audit claims.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 843.010, Insurance Code, as effective

April 1, 2025, is amended to read as follows:

Sec. 843.010. APPLICABILITY OF CERTAIN PROVISIONS TO

GOVERNMENTAL HEALTH BENEFIT PLANS. Sections 843.306(f) , 843.322,

and 843.363(a)(4) do not apply to coverage under:

(1) the child health plan program under Chapter 62,

Health and Safety Code, or the health benefits plan for children

under Chapter 63, Health and Safety Code; or

(2) a Medicaid program, including a Medicaid managed

care program operated under Chapter 540 or 540A, Government Code,

as applicable.

SECTION 2. Subchapter I, Chapter 843, Insurance Code, is

amended by adding Section 843.322 to read as follows:

Sec. 843.322. USE OF EXTRAPOLATION PROHIBITED. (a) In this

section, "extrapolation" means a mathematical process or technique

used by a health maintenance organization in the audit of a

participating physician or provider to estimate audit results or

findings for a larger batch or group of claims not reviewed by the

health maintenance organization.

(b) A health maintenance organization may not use

extrapolation to complete an audit of a participating physician or

provider. Any additional payment due a participating physician or

provider or any refund due the health maintenance organization must

be based on the actual overpayment or underpayment and may not be

based on an extrapolation.

SECTION 3. Subchapter B, Chapter 1301, Insurance Code, is

amended by adding Section 1301.0643 to read as follows:

Sec. 1301.0643. USE OF EXTRAPOLATION PROHIBITED. (a) In

this section, "extrapolation" means a mathematical process or

technique used by an insurer in the audit of a preferred provider to

estimate audit results or findings for a larger batch or group of

claims not reviewed by the insurer.

(b) An insurer may not use extrapolation to complete an

audit of a preferred provider. Any additional payment due a

preferred provider or any refund due the insurer must be based on

the actual overpayment or underpayment and may not be based on an

extrapolation.

SECTION 4. The change in law made by this Act applies only

to the audit of a physician or provider under a contract with an

insurer or health maintenance organization entered into or renewed

on or after the effective date of this Act.

SECTION 5. This Act takes effect September 1, 2025.