Texas surprise billing law, known as Senate Bill 1264, protects patients from balance bills after out-of-network care. The Texas Legislature passed SB 1264 in 2019, and it took effect on January 1, 2020. It moves payment disputes away from patients and into a process between providers and health plans.
The federal No Surprises Act adds a second layer of protection. Since January 1, 2022, federal law has banned providers, facilities, and air ambulance services from balance billing for certain items and services. Both laws ban surprise bills, but they cover different health plans and use different dispute processes.
For Texas practices, the challenge is knowing which law governs each claim. The wrong choice can mean a missed deadline or an ineligible dispute. This guide covers both laws, their key differences, how to identify the right law, the two dispute processes, and practical compliance steps.
What Is Texas SB 1264?
Texas SB 1264 is a state law that bans balance billing and creates a dispute process for out-of-network claims. It applies to fully insured health plans, the Employees Retirement System (ERS), and the Teacher Retirement System (TRS). The Texas Department of Insurance (TDI) runs the program.
Before SB 1264, patients had to request mediation themselves, which created long delays. The bill’s author, State Senator Kelly Hancock, said its arbitration process takes the patient out of the billing dispute entirely.
Under SB 1264, the law does the following:
- Bans balance billing. Providers cannot balance bill patients, and health plans must give notice of the balance billing prohibitions.
- Creates two dispute paths. Mediation covers disputes between out-of-network facilities and health plans. Arbitration covers disputes between out-of-network providers (not facilities) and health plans.
- Gives regulators enforcement power. Agencies such as the Texas Medical Board, HHS, TDLR, and TDI can discipline licensees who fail to comply.
- Lets self-funded plans opt in. Texas House Bill 1592 allows ERISA plans to elect participation in the Texas IDR process.
What Is the Federal No Surprises Act?
The No Surprises Act is a federal law that bans surprise bills for plans that state law does not reach. It applies to health plans not regulated by TDI and to air ambulance services. The Centers for Medicare & Medicaid Services (CMS) oversees it with the Departments of Labor and Treasury.
The federal law does not replace Texas protections. It supplements state surprise billing laws and fills the gaps they leave. It also requires Texas to keep enforcing its own law and to manage its own IDR system for state-regulated plans.
The No Surprises Act covers these main areas:
- Emergency services from out-of-network providers and facilities.
- Non-emergency services from out-of-network providers at in-network facilities, such as anesthesia or radiology.
- Air ambulance services, which Texas law does not cover.
- Good faith estimates for uninsured and self-pay patients before scheduled care.
SB 1264 vs. No Surprises Act: Key Differences
Both laws share the same goal, but their scope and dispute rules differ in ways that change how you bill. The table below compares the points that matter most to a Texas practice.
| Factor | Texas SB 1264 | Federal No Surprises Act |
|---|---|---|
| Effective Date | January 1, 2020 | January 1, 2022 |
| Plans Covered | Fully insured TDI-regulated plans, ERS, TRS, and opted-in ERISA plans | Self-funded ERISA plans and other plans not regulated by TDI |
| Air Ambulance | Not covered | Covered |
| Who Runs Disputes | TDI through the Texas IDR portal | CMS through the federal IDR portal |
| Provider Disputes | Arbitration | Federal IDR (baseball-style arbitration) |
| Facility Disputes | Mediation | Federal IDR |
| Benchmark Rate | Factors set by Texas law | Qualifying Payment Amount (QPA) plus other factors |
| Patient Cost-Sharing | Limited to in-network amounts | Limited to in-network amounts |
The plan type is the deciding factor. Self-funded employer plans make up a large share of Texas coverage. During the SB 1264 debate, these plans were estimated at no less than 40% of the Texas health insurance market.
Which Law Applies to Your Out-of-Network Claim?
The patient’s health plan type decides which law applies, not the service or the provider. A billing team should confirm plan type at eligibility verification before the claim goes out. The ID card and the EOB usually show whether a plan is fully insured or self-funded.
Use these steps to identify the governing law:
- Check whether the plan is regulated by TDI. Fully insured HMO and PPO plans sold in Texas fall under SB 1264.
- Check for ERS or TRS coverage. State employee and teacher retirement plans also follow SB 1264.
- Check whether a self-funded plan opted in. An ERISA plan that elected Texas IDR follows the state process.
- Apply federal law to everything else. Self-funded plans that did not opt in follow the No Surprises Act.
- Treat air ambulance claims as federal. Texas law does not apply to air ambulance services.
| Plan Type | Governing Law | Dispute Portal |
|---|---|---|
| Fully insured Texas plan | SB 1264 | Texas IDR (TDI) |
| ERS or TRS | SB 1264 | Texas IDR (TDI) |
| Self-funded ERISA plan that opted in | SB 1264 | Texas IDR (TDI) |
| Self-funded ERISA plan, not opted in | No Surprises Act | Federal IDR (CMS) |
| Air ambulance (any plan) | No Surprises Act | Federal IDR (CMS) |
How Does the Texas IDR Process Work?
The Texas IDR process resolves out-of-network payment disputes through TDI’s online portal. Providers use arbitration, and facilities use mediation. Both start only after the health plan makes an initial payment, and both run on strict timelines.
Arbitration for Providers
Arbitration is the path for physicians and other individual providers. A provider may request arbitration 20 days after receiving the initial claim payment. The first 20 days can be used to try the plan’s internal appeal process.
The main arbitration rules are:
- Request window. Requests can be made 20 to 90 days after the claim payment.
- Late requests are rejected. Claims entered more than 90 days after claim payment are not eligible.
- Batched claims. A single arbitration claim can be for any amount, but a request with multiple claims has a $5,000 maximum disputed amount.
- Payment deadline. Under Texas Insurance Code Chapter 1467.089(d), payment is due within 30 days of the arbitrator’s decision.
- Notice requirement. The provider must send the arbitration notice to the email address listed in the health plan’s explanation of benefits.
Mediation for Facilities
Mediation is the path for hospitals, surgery centers, and other facilities. A trained mediator helps the facility and plan reach a settlement. Most disputes never reach a formal decision. In TDI’s 2022 data, about 74% of closed mediation requests settled informally, compared with about 59% of arbitration requests.
| Step | Arbitration (Providers) | Mediation (Facilities) |
|---|---|---|
| Who Uses It | Physicians and individual providers | Hospitals and other facilities |
| When to File | 20 to 90 days after initial payment | 20 to 90 days after initial payment |
| First Stage | 30-day informal settlement period | 30-day informal settlement period |
| Outcome | Arbitrator decision, paid within 30 days | Mediated settlement |
How Does the Federal IDR Process Work?
The federal IDR process resolves No Surprises Act disputes through a portal run by CMS. It starts with a required negotiation period. If the parties cannot agree, a certified IDR entity picks one of the two final offers.
The federal process follows these steps:
- Receive the initial payment or denial. The plan must respond to the out-of-network claim first.
- Open negotiation. Either party starts a 30-business-day open negotiation period.
- Start IDR. If negotiation fails, either party has 4 business days to start federal IDR.
- Submit offers. Each side submits a final payment offer with supporting information.
- Receive the decision. The IDR entity selects one offer, and the losing party pays the entity fee.
The federal process pays close attention to the Qualifying Payment Amount (QPA), which is the plan’s median in-network rate. Practices should document why their offer exceeds the QPA, such as case complexity or provider training.
What Should Texas Providers Do to Stay Compliant?
Texas providers stay compliant by confirming plan type early, billing the plan instead of the patient, and filing disputes on time. Facility-based specialties carry the most risk. These include emergency medicine, anesthesiology, radiology, pathology, and neonatology. Surprise billing rules also sit alongside state filing deadlines, covered in our guide to Texas timely billing law.
Build these steps into your billing workflow:
- Verify plan type at every visit. Record whether the plan is fully insured, ERS, TRS, or self-funded.
- Hold patient balances on protected claims. Bill only the in-network cost-sharing amount. For balances outside these protections, follow the Texas law on unpaid medical bills.
- Track the initial payment date. Both dispute processes count days from this date.
- Keep the plan’s EOB on file. It shows the plan type and the arbitration notice email.
- Give good faith estimates. Uninsured and self-pay patients must receive one before scheduled care.
- Train front desk staff. Staff should know which services fall under the protections.
Common Surprise Billing Mistakes Texas Practices Make
Most surprise billing problems come from process gaps, not bad intent. The table below lists the errors that cost Texas practices the most money or create compliance risk.
| Mistake | What Happens | How to Prevent It |
|---|---|---|
| Sending a balance bill on a protected claim | Regulatory complaint and possible board action | Flag protected claims before patient statements go out |
| Filing in the wrong portal | Dispute rejected as ineligible | Confirm plan type before choosing Texas or federal IDR |
| Missing the 90-day Texas window | Right to arbitration lost | Track the initial payment date for every claim |
| Filing before day 20 | Request not accepted | Use the first 20 days for the plan’s internal appeal |
| Batching claims over $5,000 | Request rejected | Keep batched requests under the limit |
| Weak documentation in federal IDR | Offer loses to the plan’s QPA-based offer | Support offers with complexity and quality evidence |
How Transcure Helps Texas Practices With Surprise Billing
Surprise billing rules add work to every out-of-network claim. The billing team must identify the plan type, apply the correct law, and track several deadlines at once. Mistakes cost revenue and can trigger complaints to the Texas Medical Board.
Transcure’s medical billing services in Texas cover the full out-of-network workflow. Our team does the following:
- Verifies plan type and governing law during eligibility checks.
- Holds patient statements on claims protected by SB 1264 or the No Surprises Act.
- Files Texas arbitration, mediation, and federal IDR requests on time.
- Tracks payments due after arbitration decisions.
We support practices across the state, including groups in Houston and Dallas. Transcure also works with facility-based specialties that see the most out-of-network disputes.
Frequently Asked Questions
Does Texas SB 1264 Apply to Self-Funded Plans?
No, SB 1264 does not apply to most self-funded plans, which follow the federal No Surprises Act. A self-funded ERISA plan follows Texas law only if it opted into the Texas IDR process.
Can a Texas Provider Balance Bill a Patient for Emergency Care?
No, both SB 1264 and the No Surprises Act ban balance billing for emergency care. The patient pays only the in-network cost-sharing amount, and payment disputes go between the provider and the plan.
How Long Do Texas Providers Have to Request Arbitration?
Texas providers can request arbitration between 20 and 90 days after receiving the initial claim payment. Requests entered after the 90-day mark are not eligible.
What Is the Difference Between Arbitration and Mediation in Texas?
Arbitration resolves disputes between individual providers and health plans, while mediation resolves disputes involving facilities. Arbitration ends in a binding decision, and mediation ends in a negotiated settlement.
Does Texas Law Cover Air Ambulance Bills?
No, Texas SB 1264 does not apply to air ambulance services. Air ambulance disputes follow the federal No Surprises Act and the federal IDR process.
