Latest: Texas defends landmark vision plan law

A federal appellate court will hear Texas’ case for its landmark vision plan reform law—still largely in effect—after a lower court grants temporary injunction of certain provisions.

Slated to go before the 5th Circuit Court of Appeals, the State of Texas appealed a federal district court ruling that denied the state's motion to dismiss plaintiffs’ lawsuit and granted a temporary injunction against the law’s notable anti-steering and anti-tiering provisions. Currently, the law remains in effect, but the state is unable to enforce these two provisions. An appellate timeline has not yet been set.

Texas’ first-in-the-nation vision plan reform law is noteworthy for its unanimous legislative support in curbing recognized anti-patient, anti-competitive policies and requirements levied on optometrists by major plans and vision benefit managers (VBMs).

Learn more about Texas’ vision plan reform law and the present legal challenge below.

What is the legal challenge about?

Plaintiffs, including Visionworks of America, Inc., the National Association of Vision Care Plans, Inc., VSP, and Healthy Vision Association, filed suit alleging the anti-steering and anti-tiering provisions of Texas’ law (H.B.1696) were unconstitutional, violating their 1st and 14th amendment rights.

How did this legal challenge get here?

Signed into law in June 2023, H.B. 1696 took effect Sept. 1, 2023. In August 2023, plaintiffs filed suit in the U.S. District Court for the Northern District of Texas. At the time, the judge denied plaintiffs’ request for a temporary restraining order allowing these provisions to become effective.

In January 2024, the judge granted the Texas Optometric Association's (TOA's) motion to intervene in the lawsuit, allowing the TOA to advocate alongside the State of Texas and the Attorney General’s office in defense of H.B. 1696.

In March, the judge denied the state’s motion to dismiss and granted the temporary injunction against the anti-steering and anti-tiering provisions.

The case now goes to the 5th Circuit Court of Appeals for the limited purpose of ruling on the Court’s denial of the State’s motion to dismiss and granting of the plaintiffs’ motion for a temporary injunction.

What is being done to defend this law?

The TOA worked tirelessly to build unanimous support within the Texas legislature for passage of H.B. 1696, then the TOA successfully petitioned the court to be granted intervenor status in the lawsuit. The State of Texas and the TOA maintain that the plaintiffs’ assertations are incorrect and no aspect of H.B. 1696 is unconstitutional.

While the TOA is committed to vigorously defending Texas’ optometrists and their patients against VBM abuses, financial support is necessary. A vision plan litigation defense fund has been established to help ensure the TOA has the necessary resources throughout the legal process.

Why is Texas’ vision plan reform law so significant?

H.B. 1696 works to restore doctors’ independent judgement and patient choice in light of vision plans' vertical integration and market consolidation.

Specifically, Texas’ law (H.B. 1696) prevents egregious plan abuses, such as:

• Patient steering. Plans cannot encourage or incentivize patients to seek services at any particular in-network provider, or at locations, retailers or e-commerce sites that the plan owns or affiliates with.
• Doctor tiering. Plans cannot tier in-network providers based on noncovered service discounts, amount doctors spend on products or brands, etc.
• Practice control. Plans cannot offer different fee schedules based on doctors’ practice or business decisions, such as lab or supplier choice or affiliations.
• Plans cannot utilize chargebacks when the plan isn’t paying for the cost of goods to be delivered.
• Covered services. Plans cannot call a product or service “covered” when there is no reimbursement from the plan to the doctor nor can plans require doctors to provide a covered service or product at a loss.
• Requiring unrelated information on claims. Plans cannot require reporting of unrelated or unneeded patient information to file a claim or receive reimbursement, e.g., prescription information or facial measurements and photographs.
• Extrapolation in audits. Vision plans cannot use extrapolation as a technique to complete an audit.

Additionally, the Texas law requires plans to provide transparency about in- and out-of-network coverage for both patients and doctors, as well as requires a 90-day notice for contract changes. And importantly, the law empowers doctors to call out violations directly to the state.

Why is the profession watching Texas’ law so closely?

Nationwide, some 200 million Americans rely on supplemental preventive eye exam and materials benefits through VBMs. However, seeing as two-thirds of these people are covered by the two most dominant VBMs, plans can monopolize markets in communities and force costly mandates on doctors. In turn, doctors face a difficult decision of providing much-needed patient care in their communities or keeping their practices viable.

Compounded by increased costs and new challenges to deliver care, plans’ stagnant pay scales add to doctors' concerns. The AOA and affiliates understand this dynamic, developing a campaign for a more equitable system that fairly values optometric care.

⏩ Learn more about the AOA and affiliates’ fight against VBM abuses.

Looking for even more information? Access the reports the AOA references in its health and vision plan advocacy, including:

• The AOA Health Policy Institute Report on stagnation in vision plan fee schedules.
• The Avalon Health Economics Report on how plan mandates result in higher costs, less convenience and worse health outcomes.
• The AOA’s advocacy reading list with the top 15 advocacy-related articles from 2023.

If you or your practice experience difficulties with a health or vision plan, please report these challenges to the AOA Third Party Center at stopplanabuses@aoa.org.