The Texas Prompt Pay Act (TPPA) took effect in 2003, but it wasn’t until eight years later in 2011 that the issue of delayed payments to contracted pharmacies was addressed.

The TPPA is a piece of legislation that was four years in the making, beginning in 1999 when the first bill was passed to the state’s House of Representatives. Several revisions later, it was finally signed by Texas Governor Rick Perry which effectively made it a law on September 3, 2003. It addressed the issue of timely payments made to health service providers by Health Management and Preferred Provider Organizations (HMOs and PPOs), or rather the lack thereof.

HMOs and PPOs are health insurance companies that typically contract with third-party providers to do the actual service and in exchange the companies would pay the service providers. Unfortunately, as stated on the website of law firm Williams Kherkher, it became common practice for these carriers to delay payments for claims, and the service providers lobbied for legal leverage to use against these carriers to discourage them from stretching the gap between the service rendered and actual payment.

But the TPPA did not specifically include pharmacies in the list of covered service providers. It wasn’t until House Bills 528 and 2292 were passed in 2011 that it was finally clarified that not only pharmacies but Pharmacy Benefits Managers contracted with HMOs were eligible for protection under the TPPA. Under the clarified TPPA, insurers had 18 days after a clean claim was electronically filed by the pharmacy to pay or explain why a claim is denied. The sanctions for late payments are similar to those for doctors and hospitals except that the late periods are 19-63 days, 64-108, and 109- up.

If you believe that you are eligible for TPPA protection, you need to determine if you are correct in your belief. Consult with an experienced prompt pay lawyer in your area before filing a complaint.