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Texas Medical Billing Transparency Law Takes Effect Sept. 1

A new Texas law requiring hospitals to provide an itemized bill to patients for medical services takes effect on September 1, 2023. Read on for more.
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In May 2023, Texas Gov. Greg Abbott signed Texas Senate Bill 490 into law which would require hospitals to provide an itemized bill to patients when billing for medical services. The new legislation, which is scheduled to take effect on September 1, 2023, will require hospitals to complete the following when requesting payment from patients after healthcare services are rendered:

  • Provide the patient with an itemized bill, in either paper or electronic format, of the cost of each service and supplies utilized during the visit to the provider;
  • Submit the itemized bill to the patient no later than the 30th day after the provider receives a final payment from insurance carriers for the provided service or supply;
  • Include a plain language description of each distinct healthcare service or supply the provider provided to the patient;
  • Include any charges and billing codes submitted to a third party and the corresponding reimbursement from that third party;
  • Calculate the amount the provider alleges is due from the patient for each service and supply provided.

The legislation also will entitle a patient to obtain an updated itemized bill from the provider on request at any time. Providers will not be permitted to pursue debt collection against a patient for a provided service and/or supply unless the provider has complied with the legislation’s provisions.

The legislation defines a healthcare provider as “a facility licensed, certified, or otherwise authorized to provide health care services or supplies in this state in the ordinary course of business, including a hospital, except the term does not include a federally-qualified health center …” Because the definition specifies “healthcare facilities,” physicians also are not anticipated to have to comply with this legislation in its current form.

The legislation allows for disciplinary action against the provider as if the provider had violated an applicable licensing law. To avoid such disciplinary actions, hospitals and other healthcare facilities should immediately begin working with their electronic medical record (EMR), billing software and/or vendors, and statement vendors (if applicable) to implement required system changes to allow the required data points to be added to statements. An organization’s patient portal also should be evaluated to determine if the itemized bill can be sent to patients through the portal, which is permitted under the legislation. Testing also will need to be performed to verify not only that the required data is present on the itemized bill, but also that the information is easily readable and reasonably understood by patients.

It should be noted that the legislation does not prohibit pre-service or time of service (TOS) payments which may allow the organization to collect the patient liability portion of the services rendered without having to send an itemized invoice. However, if the patient liability determined by the insurance carrier is greater than what was collected, the amount collected from the patient should be included in the itemized statement. Organizations should carefully examine their patient scheduling and registration functions to evaluate the accuracy of their patient liability estimations as well as their pre-service TOS payment collection policies and performance to identify how greater portions of patient liability amounts can be collected prior to the service.

If you have any questions about the new itemized billing requirements or would like assistance in assessing your organization’s readiness, please reach out to a professional at FORVIS or use the Contact Us form below.

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