Texas prompt pay law: deadlines, interest, and how to use it

Yes, and Texas has one of the strongest prompt-pay laws in the country. Under the Texas Insurance Code (Chapters 843 and 1301) and Texas Department of Insurance rules, HMOs and PPOs must pay clean claims within a set window or owe penalties that are calculated as a percentage of the billed charge, not just simple interest.

The key rules

• Clean electronic claims are generally due within 30 days of receipt; clean paper claims within 45 days
• Late payment triggers a statutory penalty tied to the billed charges and how late the payment is, which can be a substantial percentage of the claim, well beyond ordinary interest
• The rules apply to state-regulated HMO and PPO plans; the penalty structure is one reason Texas payers tend to pay on time
• Contracted (in-network) claims are the core of the prompt-pay protection; verify how out-of-network claims are treated

How to use it

• Establish the receipt date with clearinghouse or payer acknowledgment, then measure against the 30/45-day window
• For late clean claims, calculate the statutory penalty (a percentage of the billed charge) rather than assuming plain interest, because Texas's penalty is larger
• Raise it with the payer citing the specific Insurance Code chapter, then escalate unresolved patterns to the Texas Department of Insurance
• Track late-payment patterns by payer, since the percentage penalty makes a batch of late Texas claims worth pursuing

Texas's penalty is a percentage of billed charges scaled by lateness, not a flat annual rate, so confirm the current tiers and caps in the TDI rules before quoting an amount. Prompt-pay rules reach state-regulated (fully insured) commercial plans, not ERISA self-funded employer plans, which are a large share of commercial volume. Medicare and Medicaid pay under their own separate prompt-payment rules. Confirm the current payment window, interest rate, and penalty against the statute or your state insurance department before citing a figure in an appeal, since rates are reset by legislation and by annual DOI rate-setting.

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