The bill amends the Texas Insurance Code to prohibit health maintenance organizations (HMOs) and insurers from using extrapolation in their audits of participating physicians and providers. Extrapolation is defined as a mathematical technique used to estimate audit results for a larger group of claims that were not individually reviewed. The new provisions specify that any payments or refunds due to physicians or providers must be based on actual overpayments or underpayments rather than extrapolated estimates.

Additionally, the bill clarifies that certain sections of the Insurance Code do not apply to governmental health benefit plans, including Medicaid programs and child health plans. The changes will only apply to contracts with insurers or HMOs that are entered into or renewed on or after the effective date of the Act, which is set for September 1, 2025.

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