The bill amends the Texas Insurance Code to prohibit health maintenance organizations (HMOs) and insurers from using extrapolation in the auditing of claims for participating physicians and providers. Extrapolation is defined as a mathematical technique used to estimate audit results for a larger group of claims that have not been individually reviewed. The bill specifies 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 provisions of the Insurance Code do not apply to governmental health benefit plans, including the child health plan program and Medicaid programs. 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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