Chargemaster Analysis for Freestanding Emergency Departments

House Bill 1941 

The 2019 Texas Legislature passed House Bill 1941, “An Act relating to unconscionable prices charged by certain health care facilities for medical care.” A copy of the bill can be found here. This new law took effect September 1, 2019. It determines when the Attorney General may take action against Freestanding Emergency Departments for “unconscionable charges.”

A FSED that charges an “unconscionable price” for its services violates the Texas Deceptive Trade Practices Act, Section 17.46 of the Texas Business & Commerce Code. A FSED violating the act may be sued by the Consumer Protection Division of the Attorney General’s Office. The act provides for fines, patient reimbursement, and injunctions. Fines can be up to $20,000 per violation, with additional penalties if the patient was over age 65.

What makes a FSED price “unconscionable?”

HB 1941 says a price charged by a FSED is unconscionable if it equals or exceeds 200% of the average charge for the same or substantially similar service provided in hospital EDs in the same county in which the FSED is located, or in the nearest county with a hospital ED.

How can RPC help FSEDs comply with HB 1941?

RPC purchases the most recent hospital charge data from the Department of State Health Services and has the IT resources and experience necessary to use the data. RPC can

• Take the chargemaster for the FSED
• Identify the relevant hospitals
• Calculate the average charge for each hospital for each CPT and HCPCS code in the FSED’s chargemaster using the most recent 12 months of data from the state
• Adjust the hospital charges for inflation using Bureau of Labor Statistics data
• Identify the FSED charges by CPT code at or above 200% of the average hospital ER charge (the “unconscionable prices”)
• Provide the FSED the data in an EXCEL workbook with a report explaining our sources and methods

RPC can also determine the revenue impact of eliminating “unconscionable prices” by analyzing the FSED’s most recent twelve months of claims data against a revised chargemaster.

RPC notes that the Office of the Attorney General (“OAG”) has responsibility to enforce the statute. The OAG has not yet provided guidance on its interpretation of the statute through rulemaking. The statute is ambiguous regarding:

• whether in counties with hospitals the average charge should be calculated for only the hospitals in that county or should also include hospitals in the “nearest county.”
• whether the average charge should be calculated giving each hospital equal weight or weighting the average by the volume of charges at each hospital.
• whether unconscionability will be determined at the claim level or the code level.
• whether the OAG will compare the FED charges to the Section 108 data as reported or will adjust for inflation.
• whether the OAG will consider a charge unconscionable if it is not billed consistently with the National Correct Coding Initiative.

RPC is not a law firm and does not offer any legal advice or legal opinion on how the OAG will interpret the statute. You should consult your legal counsel on these ambiguities.