PPOs Soon May be Regulated by the Texas Insurance Department

The Texas Department of Insurance is considering overseeing Preferred Provider Organization (PPO) health insurance plans operating in the state, according to a report by the HealthLeaders-InterStudy. The Sunset Advisory Committee recommended the oversight after its review of the department. 

The TDI currently regulates some types of plans, including Health Maintenance Organizations (HMOs) operating in the state. But the commission noted that about 4.5 million of the 5.5 million Texans fully insured by commercial providers are covered by a PPO. The committee said it believes PPO governance will monitor illegal practices that could potentially harm consumers.

Initial recommendations call for all PPOs working within the state to obtain a certificate of authority, which would be issued once and not subject to renewal.  And proposed regulation would give the insurance department the ability to take action against PPOs engaged in illegal activity, as well as the ability to track and analyze complaints against PPOs in the state.

“Proponents of the regulation believe that requiring PPOs to obtain a certificate to operate in the state would ensure the department has the information about the companies and could take action against them if necessary,” HealthLeaders-Interstudy Analyst Bill Melville said in a press release.

HealthLeaders said the insurance department agrees with the proposed regulation, but wants to modify recommendations outlining what a PPO must do to maintain its certificate of authority.

Melville told insideARM the insurance department agrees with the proposals that will presented to the legislature in January, but wants to modify recommendations outlining what a PPO must do to maintain its certificate of authority. Any final regulation affecting PPOs may exclude some PPOs, namely those run by insurers, he said.

However, in a letter supporting the commission’s recommendation, the Association of Aging and Retired Persons, also known as AARP, urged the department to require all PPOs operating in the state to obtain a certificate of authority and that it be renewed annually. 

“If the goal of this effort is to allow the state to understand more about the PPO market, and enforce against organizations that violate current law, at a minimum AARP thinks this certificate should be renewed on a regular basis, either annually or biannually,” AARP said. “Without some renewal process, TOI would simply have a list of the PPOs that at some time operated in Texas with no idea as to whether they are still operating and any updates on operational changes that may be of interest to TOI and consumers.”

AARP added that it wants the insurance department’s authority to include a requirement that it review the adequacy of the PPO network and enforce contract provisions.

“AARP believes that an adequate network is essential to ensuring consumers have access to care at the preferred level of benefits and TOI is the government entity that should be making sure insurers are selling products that deliver what they promise,” the non-profit nonpartisan membership organization for people 50 and older said in the letter.

In any case, Melville said there is a good likelihood that the PPOs will be regulated.
 
“The numbers are on the side of PPO regulation and its (proposed legislation) is relatively basic. That would help the chance,” he said.

HealthLeaders-InStudy is a Nashville, Tenn.-based research firm specializing in monitoring trends affecting state-run insurance plans.