SB 926 amends the Texas Insurance Code to regulate how health benefit plan issuers, including health maintenance organizations (HMOs) and insurers, structure financial incentives that steer patients toward specific physicians or healthcare providers. The bill expressly permits these entities to offer incentives—such as modified deductibles, copayments, and coinsurance rates—to encourage enrollees to use selected providers. However, this authority is balanced by the imposition of a new fiduciary duty that obligates insurers and HMOs to act primarily in the best interest of the enrollee or policyholder when implementing these incentive structures.
The bill defines a violation of this fiduciary duty as any practice where incentives are offered solely because a provider is under common ownership or control with the health plan. It prohibits incentive strategies that prioritize cost savings or corporate affiliation over the quality of care, and mandates that insurers adopt reasonable procedures to ensure the quality of incentivized providers is not materially lower than others in the network. Furthermore, it requires that the information used to support incentive-based referrals be objective, accurate, and verifiable, and bans false or misleading representations regarding provider quality or cost.
SB 926 also adds similar provisions to Chapter 1301 of the Insurance Code, applying these standards to preferred provider benefit plans offered by insurers. These new sections align regulatory expectations across managed care and traditional health insurance products. Ultimately, the bill seeks to safeguard consumer interests by increasing accountability and transparency in how health plans design and promote network structures.
The Committee Substitute for SB 926 introduces significant refinements and expansions to the originally filed version while preserving its core purpose of regulating how health benefit plan issuers use financial incentives to steer patients toward certain physicians or healthcare providers. One of the most substantial changes is the elaboration of what constitutes a violation of the fiduciary duty imposed on insurers and HMOs. While the original bill merely established that insurers must act in the best interest of enrollees when offering incentives, the substitute version outlines specific violations—such as favoring providers due to corporate affiliation or offering incentives that reduce access to medically necessary or higher-quality care. This shift adds legal clarity and strengthens the bill's enforceability.
Another major difference lies in the handling of provider rankings and tier classifications. The original bill included an extensive procedural framework granting physicians robust due process protections when disputing their placement in rankings or tiers. These included notice requirements, fair reconsideration hearings, and opportunities to rebut plan data. In contrast, the committee substitute streamlines this section by removing the procedural details and instead focusing on ensuring that the standards used for rankings are accurate, objective, and approved by the commissioner. This simplification likely reflects a legislative preference for regulatory flexibility over statutory micromanagement.
Additionally, the substitute bill broadens the regulatory authority of the Texas Department of Insurance by allowing the commissioner to designate third-party organizations whose provider evaluation standards are used in health plan rankings. It moves away from fixed references to specific national organizations, like the National Quality Forum, in favor of general criteria emphasizing transparency, impartiality, and evidence-based practices. This change provides greater adaptability in oversight, enabling the state to respond more swiftly to evolving healthcare quality benchmarks and data tools.
Overall, the Committee Substitute version of SB 926 represents a more focused and enforceable approach, placing stronger guardrails around how incentives are structured while eliminating rigid procedural elements that could create compliance burdens without adding corresponding consumer protection benefits. It reflects a shift from detailed prescriptive mandates to principle-based regulatory oversight, balancing flexibility for insurers with protections for consumers and providers.
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Sen. Kelly Hancock
