Texas Attorney General John Cornyn has ruled that the Texas Department of Insurance (TDI) can require HMOs to reveal their forumlas for paying doctors.

Cornyn's ruling concurs with an assertion made by the Texas Medical Association (TMA) that the Texas Department of Insurance (TDI) has the authority to write rules requiring HMOs to disclose their reimbursement formulas that they use to pay doctors. Texas doctors, lawmakers, and the TDI had asked Cornyn to interpret the state's prompt-pay law that requires insurance companies to pay doctors for services within 45 days after a proper claim is filed. Cornyn says he based his decision on the spirit of what lawmakers intended to accomplish when they passed the legislation because the law itself is somewhat ambiguous.

"This is a long overdue victory for Texas physicians and their patients," says Dr. Fred Merian, president of the Texas Medical Association. "[Attorney] General Cornyn has paved the way for everyone — patients, employers, and doctors — to understand the rules."

Texas doctors, like doctors nationwide, are up in arms over HMO industry practices known as "downcoding," meaning changing billing codes to indicate a doctor should be paid less, and "bundling," meaning issuing a single lower payment for a group of related medical services rather than paying for each service individually. Five state medical societies (Connecticut, New Jersey, New York, South Carolina, and Tennessee) have filed lawsuits against the nation's top HMOs alleging deceptive business practices like these.

Upon Cornyn's ruling, the Texas Association of Health Plans issued a statement saying: "Requiring release of how health plans detect physician coding errors will remove safety measures to detect double billing, incorrect billing errors, fraudulent claims, and will ultimately drive up the costs of health care even further."

Texas Gov. Rick Perry has directed the TDI to immediately begin developing rules for HMO's disclosure of information on their fees and bundling and downcoding of claims by June 3, 2002. TDI Commissioner Jose Montemayor says he is "firmly committed" to meeting that deadline.