Good morning Chairman Eltife and members of the committee.

My name is John McGee. My partner and I own two freestanding emergency medical facilities in the Dallas area, and have one under construction in Lubbock. We have operated freestanding facilities since 2007. I am here to testify against Senate Bill 425.

In my opinion, SB 425 is an egregious overreach of State authority. I think it is important to understand the legal fundamentals relating to the payment of services for emergency medical care.

Both state and federal law requires emergency medical facilities, including freestanding emergency medical care facilities, to provide a medical screening examination, and if the patient is found to have a emergency, treat the patient to the capabilities of the facility. In the process of determining whether or not a patient suffers from an emergent condition various laboratory and radiology, tests may be required – all without regard to whether the patient has the ability to pay for the services rendered. Therefore, the cost of care is not discussed until after the patient has been determined to be non-emergent or has been stabilized. Additionally, as a practical matter, it is impossible to tell a patient what the cost of service is until the doctor has completed the necessary testing.

Payment for healthcare is based upon two important legal agreements: one between the patient and their insurance company, and the other between the patient and the facility upon entering.

• An insured patient has a legal agreement between himself or herself and the insurance company regarding what will and will not be paid. The facility is not a party to this agreement.
• Typically, a facility requires a patient to guarantee any unpaid balance that the insurance company does not pay. This is a legal contract between the patient and the facility.

What the mediation provisions of SB 425 effectively do is make the facility accept one or more broken legal agreements when a medical bill has not be paid in full – either by the insurance company on the patient’s behalf, or by the patient who has signed a contract to guarantee payment’s the State of Texas becomes the de facto “Enforcer,” forcing a legitimate business to accept less than invoice price for its services.

Mr. Chairman and members of the Committee, I do sympathize with patients regarding balance billing. It is my opinion that the vast majority of balance billing cases originate because the insurance company failed to make the claims in accordance with Texas law, leaving the patient to bear the burden. I have with me two examples by an executive of a major insurance company, who on February 25, 2015 said the following to my company:

• With respect to Claim #1, a $10,656.00 claim – “We didn’t pay anything on it, you get to collect from the patient.” The patient has/had a $3,000 deductible so some portion of the balance should have been paid by the insurance company.
• With respect to Claim #2, an $1,846 claim – “So we paid you $312 and you can go collect the remaining balance from the member.”

I think there is a way to significantly reduce the incidents of balance billing without the unintended consequences of the mediation provisions listed in SB 425:

• The term “Usual and Customary” is used a lot; however, it is an undefined term. Insurance companies have taken the position that it means whatever they are paying for a particular item or procedure, including those in their negotiated contracts. Others say “X” times Medicare. And, I’m sure there are many more ways insurance companies calculate reimbursements. I believe a fair, legal definition of “Usual and Customary” is necessary. I believe SB 1097 by Senator Donna Campbell provides a basis for developing this database. I also believe that with a definition based upon the principles outlined in SB 1097, the 80 percent reimbursement rate will be acceptable to a large number of providers, thereby significantly reducing the number of balance billings.
• Lastly, I think insurance companies should be required to provide a reasonable level of customer service to providers who have issues with denied claims. It is not uncommon for our claims staff to be on hold for two or more hours to speak to a representative, and then be told that the insurance company has a policy that prohibits the customer service representative from adjudicating more than two claims at a time. This, I believe, causes many providers to give up trying to collect from the insurance companies and instead seek payment from the patients.

Thank you for this opportunity to speak today and I will be happy to respond to your questions.