Texas Health Insurance Set for Massive Steering and Tiering Shakeup


Significant changes to health insurance plans as health insurance plans file HB 711which allows employers to direct employees to higher-performing health centers and rated hospitals based on performance within the health insurance plan.

Currently, if an employer wants to include a particular hospital in its insurance network, the insurance plan must cover all hospitals in the network, even if some are underperforming. Additionally, these programs fail to incentivize employees to go to certain hospitals over others by providing more coverage at higher-performing institutions. But that’s about to change. Although Abbott did not sign the bill, it was submitted without his signature and took effect immediately.

HB 711, introduced by North Texas legislator and business owner Rep. James Frank, passed the Texas House of Representatives on a 146-0 vote and received only one vote in the Senate from physician legislator Charles Schwertner “No” vote. For Frank, the bill brought competition to the healthcare industry.

“House Bill 711 is a step in the right direction to correct anti-competitive practices and encourage competition in the marketplace,” said Rep. Frank. “Prohibiting certain unfair contract terms will allow employees and employers to spend their medical dollars receiving the highest quality care.”

Frank is motivated by his experience as a business owner and rising health care prices, which he hopes will improve competition. Incentivizing staff to go to higher quality hospitals will reduce hospital readmissions and errors that make going to the hospital more expensive.

HB 711 was originally intended to remove the “all or nothing” clause in insurance contracts that stated that if an employer wanted to own one hospital in the network, it must own all hospitals, even if those hospitals were more expensive or less effective than others others. Hospital prices vary widely from one side of town to the other, even within the same network. This part of the bill was removed during the legislative process.

It would also eliminate “anti-piloting,” which allows insurance plans to direct patients to specific providers, and eliminate “anti-tiering” clauses, which do not allow insurers to classify providers into different tiers based on results or price, and classify those providers into different tiers. Grades are communicated to members.

Chris Skisak, the group’s executive director, said the nonprofit Employers of Affordable Health Care of Texas has been advocating for the bill, meeting with lawmakers and discussing with them what the bill will provide. played a key role in the changes. Texas 2036 and regional and statewide health business groups are also involved in the field lobbying effort.

Since the bill takes effect immediately, brokers and benefit managers can incorporate this legislation into their next health plan. But the anti-steering and anti-stratification clauses in the contract remain in effect through the end of the year.

After the New Year, plans can use incentives like no deductibles or copays to steer patients toward higher-quality hospitals, but the onus for driving change lies with employers, Skisak said. “If an employer doesn’t take advantage of stratification and mentoring, a reasonable person would ask why there isn’t more trust in that,” he said. “The bullseye is on their backs, but this legislation gives them the tools to make a difference.”

Leapfrog Group’s rating is a good measure of quality because they prioritize safety, Skisak said. Other rankings place more emphasis on specialization and sophistication. “External spina bifida surgery is great, but it’s not what most people go to the hospital for,” he said. “Leapfrog combines safety and quality while others build on upcoming innovations.”

Skisak highlighted the National Institute of Health Policy’s Hospital Pricing Dashboard to examine profit margins at different hospitals. Employers in Texas pay a median Medicare reimbursement rate of 315% for hospital procedures, while NAHP data shows most hospitals break even at 110% of the Medicare rate. For Skisak, building a network is all about balancing profit and quality when choosing a hospital. “We’re in no way saying that hospitals should break even.”

Time will tell if employers and brokers take advantage of the bill, create narrower networks or steer patients. Telling employees that their preferred hospital is not in the network or in an incentive plan can be destabilizing. “We are well aware of HB 711, and our only comment on this or other bills regarding patient guidance has always been to allow patients to make choices and have a voice in their health care,” said Steve Love, DFW Hospital Board Chairman and CEO explain.

As transparency and competition bills move forward in different states, Texas’ bill stands out. We’ll see if employers use the tools they have to use now to make a difference. “We are now considered a national leader in terms of what House Bill 711 is about,” Skisak said.


will maddox

Will is Senior Editor CEO Editor of magazine and D CEO Healthcare. He writes about health care…


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