Section 1301.0642 - Contract Provisions Allowing Certain Adverse Material Changes Prohibited(a) In this section, "adverse material change" means a change to a preferred provider contract with a physician, health care practitioner, or organization of physicians or health care practitioners that would decrease the preferred provider's payment or compensation, change the provider's tier to a less preferred tier, or change the administrative procedures in a way that may reasonably be expected to significantly increase the provider's administrative expenses or decrease the provider's payment or compensation. The term does not include: (1) a decrease in payment or compensation resulting solely from a change in a published governmental fee schedule on which the payment or compensation is based if the applicability of the schedule is clearly identified in the contract; (2) a decrease in payment or compensation that was anticipated under the terms of the contract, if the amount and date of applicability of the decrease is clearly identified in the contract; (3) an administrative change that may significantly increase the provider's administrative expense, the specific applicability of which is clearly identified in the contract; (4) a change that is required by federal or state law; (5) a termination for cause; or (6) a termination without cause at the end of the term of the contract. (b) An adverse material change to a preferred provider contract may only be made during the term of the preferred provider contract with the mutual agreement of the parties. A provision in a preferred provider contract that allows the insurer to unilaterally make an adverse material change during the term of the contract is void and unenforceable. (c) Any adverse material change to the preferred provider contract may not go into effect until the 120th day after the date the preferred provider affirmatively agrees to the adverse material change in writing. (d) A proposed amendment by an insurer seeking an adverse material change to a preferred provider contract must include notice that clearly and conspicuously states that a preferred provider may choose to not agree to the amendment and that the decision to not agree to the amendment may not affect: (1) the terms of the provider's existing contract with the insurer; or (2) the provider's participation in other health plans or products. (e) A preferred provider's failure to agree to an adverse material change to a preferred provider contract does not affect: (1) the terms of the provider's existing contract with the insurer; or (2) the provider's participation in other health care products or plans. (f) An insurer's failure to include the notice described by Subsection (d) with the proposed amendment makes an otherwise agreed-to adverse material change void and unenforceable. (g) This section does not apply to a preferred provider contract: (1) with an unspecified and indefinite duration; (2) with no stated or automatic renewal period or event; and (3) that may only be terminated by notice from one party to the other. Tex. Ins. Code § 1301.0642
Added by Acts 2023, Texas Acts of the 88th Leg.- Regular Session, ch. 740,Sec. 10, eff. 9/1/2023, app. only to a contract entered into, amended, or renewed on or after the effective date of this Act.