Texas 2009 - 81st Regular

Texas House Bill HB2750 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	81R9814 TJS-F
2	2	By: Eiland H.B. No. 2750
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the regulation of certain market conduct activities of
8	8	certain life, accident, and health insurers and health benefit plan
9	9	issuers; providing civil liability and administrative and criminal
10	10	penalties.
11	11	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
12	12	ARTICLE 1. CANCELLATION OF HEALTH BENEFIT PLAN
13	13	SECTION 1.001. Subchapter B, Chapter 541, Insurance Code,
14	14	is amended by adding Section 541.062 to read as follows:
15	15	Sec. 541.062. BAD FAITH CANCELLATION. It is an unfair
16	16	method of competition or an unfair or deceptive act or practice for
17	17	a health benefit plan issuer to:
18	18	(1) set cancellation goals, quotas, or targets;
19	19	(2) pay compensation of any kind, including a bonus or
20	20	award, that varies according to the number of cancellations;
21	21	(3) set, as a condition of employment, a number or
22	22	volume of cancellations to be achieved; or
23	23	(4) set a performance standard, for employees or by
24	24	contract with another entity, based on the number or volume of
25	25	cancellations.
26	26	SECTION 1.002. Chapter 1202, Insurance Code, is amended by
27	27	adding Subchapter C to read as follows:
28	28	SUBCHAPTER C. INDEPENDENT REVIEW OF CERTAIN CANCELLATION DECISIONS
29	29	Sec. 1202.101. DEFINITIONS. In this subchapter:
30	30	(1) "Affected individual" means an individual who is
31	31	otherwise entitled to benefits under a health benefit plan that is
32	32	subject to a decision to cancel.
33	33	(2) "Independent review organization" means an
34	34	organization certified under Chapter 4202.
35	35	(3) "Screening criteria" means the elements or factors
36	36	used in a determination of whether to subject an issued health
37	37	benefit plan to additional review for possible cancellation,
38	38	including any applicable dollar amount or number of claims
39	39	submitted.
40	40	Sec. 1202.102. APPLICABILITY. (a) This subchapter applies
41	41	only to a health benefit plan, including a small or large employer
42	42	health benefit plan written under Chapter 1501, that provides
43	43	benefits for medical or surgical expenses incurred as a result of a
44	44	health condition, accident, or sickness, including an individual,
45	45	group, blanket, or franchise insurance policy or insurance
46	46	agreement, a group hospital service contract, or an individual or
47	47	group evidence of coverage or similar coverage document that is
48	48	offered by:
49	49	(1) an insurance company;
50	50	(2) a group hospital service corporation operating
51	51	under Chapter 842;
52	52	(3) a fraternal benefit society operating under
53	53	Chapter 885;
54	54	(4) a stipulated premium company operating under
55	55	Chapter 884;
56	56	(5) a reciprocal exchange operating under Chapter 942;
57	57	(6) a Lloyd's plan operating under Chapter 941;
58	58	(7) a health maintenance organization operating under
59	59	Chapter 843;
60	60	(8) a multiple employer welfare arrangement that holds
61	61	a certificate of authority under Chapter 846; or
62	62	(9) an approved nonprofit health corporation that
63	63	holds a certificate of authority under Chapter 844.
64	64	(b) This subchapter does not apply to:
65	65	(1) a health benefit plan that provides coverage:
66	66	(A) only for a specified disease or for another
67	67	limited benefit other than an accident policy;
68	68	(B) only for accidental death or dismemberment;
69	69	(C) for wages or payments in lieu of wages for a
70	70	period during which an employee is absent from work because of
71	71	sickness or injury;
72	72	(D) as a supplement to a liability insurance
73	73	policy;
74	74	(E) for credit insurance;
75	75	(F) only for dental or vision care;
76	76	(G) only for hospital expenses; or
77	77	(H) only for indemnity for hospital confinement;
78	78	(2) a Medicare supplemental policy as defined by
79	79	Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss),
80	80	as amended;
81	81	(3) a workers' compensation insurance policy;
82	82	(4) medical payment insurance coverage provided under
83	83	a motor vehicle insurance policy; or
84	84	(5) a long-term care insurance policy, including a
85	85	nursing home fixed indemnity policy, unless the commissioner
86	86	determines that the policy provides benefit coverage so
87	87	comprehensive that the policy is a health benefit plan described by
88	88	Subsection (a).
89	89	Sec. 1202.103. CANCELLATION FOR MISREPRESENTATION OR
90	90	PREEXISTING CONDITION. Notwithstanding any other law, a health
91	91	benefit plan issuer may not cancel a health benefit plan on the
92	92	basis of a misrepresentation or a preexisting condition except as
93	93	provided by this subchapter.
94	94	Sec. 1202.104. NOTICE OF INTENT TO CANCEL. (a) A health
95	95	benefit plan issuer may not cancel a health benefit plan on the
96	96	basis of a misrepresentation or a preexisting condition without
97	97	first notifying an affected individual in writing of the issuer's
98	98	intent to cancel the health benefit plan and the individual's
99	99	entitlement to an independent review.
100	100	(b) The notice required under Subsection (a) must include,
101	101	as applicable:
102	102	(1) the principal reasons for the decision to cancel
103	103	the health benefit plan;
104	104	(2) the clinical basis for a determination that a
105	105	preexisting condition exists;
106	106	(3) a description of any general screening criteria
107	107	used to evaluate issued health benefit plans and determine
108	108	eligibility for a decision to cancel;
109	109	(4) a statement that the individual is entitled to
110	110	appeal a cancellation decision to an independent review
111	111	organization;
112	112	(5) a statement that the individual has at least 45
113	113	days in which to appeal the cancellation decision to an independent
114	114	review organization, and a description of the consequences of
115	115	failure to appeal within that time limit;
116	116	(6) a statement that there is no cost to the individual
117	117	to appeal the cancellation decision to an independent review
118	118	organization; and
119	119	(7) a description of the independent review process
120	120	under Chapters 4201 and 4202.
121	121	Sec. 1202.105. INDEPENDENT REVIEW PROCESS; PAYMENT OF
122	122	CLAIMS. (a) An affected individual may appeal a health benefit
123	123	plan issuer's cancellation decision to an independent review
124	124	organization not later than the 45th day after the date the
125	125	individual receives notice under Section 1202.104.
126	126	(b) A health benefit plan issuer shall comply with all
127	127	requests for information made by the independent review
128	128	organization and with the independent review organization's
129	129	determination regarding the appropriateness of the issuer's
130	130	decision to cancel.
131	131	(c) A health benefit plan issuer shall pay all otherwise
132	132	valid medical claims under an individual's plan until the later of:
133	133	(1) the date on which an independent review
134	134	organization determines that the decision to cancel is appropriate;
135	135	or
136	136	(2) the time to appeal to an independent review
137	137	organization has expired without an affected individual initiating
138	138	an appeal.
139	139	Sec. 1202.106. CANCELLATION AUTHORIZED; RECOVERY OF CLAIMS
140	140	PAID. (a) A health benefit plan issuer may cancel a health benefit
141	141	plan covering an affected individual on the later of:
142	142	(1) the date an independent review organization
143	143	determines that cancellation is appropriate; or
144	144	(2) the 45th day after the date an affected individual
145	145	receives notice under Section 1202.104, if the individual has not
146	146	initiated an appeal.
147	147	(b) An issuer that cancels a health benefit plan under this
148	148	section may seek to recover from an affected individual amounts
149	149	paid for the individual's medical claims under the canceled health
150	150	benefit plan.
151	151	(c) An issuer that cancels a health benefit plan under this
152	152	section may not offset against or recoup or recover from a physician
153	153	or health care provider amounts paid for medical claims under a
154	154	canceled health benefit plan. This subsection may not be waived,
155	155	voided, or modified by contract.
156	156	Sec. 1202.107. CANCELLATION RELATED TO PREEXISTING
157	157	CONDITION; STANDARDS. (a) For purposes of this subchapter, a
158	158	cancellation for a preexisting condition is appropriate if, within
159	159	the 18-month period immediately preceding the date on which an
160	160	application for coverage under a health benefit plan is made, an
161	161	affected individual received or was advised by a physician or
162	162	health care provider to seek medical advice, diagnosis, care, or
163	163	treatment for a physical or mental condition, regardless of the
164	164	cause, and the individual's failure to disclose the condition:
165	165	(1) affects the risks assumed under the health benefit
166	166	plan; and
167	167	(2) is undertaken with the intent to deceive the
168	168	health benefit plan issuer.
169	169	(b) A health benefit plan issuer may not cancel a health
170	170	benefit plan based on a preexisting condition of a newborn
171	171	delivered after the application for coverage is made or as may
172	172	otherwise be prohibited by law.
173	173	Sec. 1202.108. CANCELLATION FOR MISREPRESENTATION;
174	174	STANDARDS. For purposes of this subchapter, a cancellation for a
175	175	misrepresentation not related to a preexisting condition is
176	176	inappropriate unless the misrepresentation:
177	177	(1) is of a material fact;
178	178	(2) affects the risks assumed under the health benefit
179	179	plan; and
180	180	(3) is made with the intent to deceive the health
181	181	benefit plan issuer.
182	182	Sec. 1202.109. REMEDIES NOT EXCLUSIVE. The remedies
183	183	provided by this subchapter are not exclusive and are in addition to
184	184	any other remedy or procedure provided by law or at common law.
185	185	Sec. 1202.110. RULES. The commissioner shall adopt rules
186	186	necessary to implement and administer this subchapter.
187	187	Sec. 1202.111. SANCTIONS AND PENALTIES. A health benefit
188	188	plan issuer that violates this subchapter commits an unfair
189	189	practice in violation of Chapter 541 and is subject to sanctions and
190	190	penalties under Chapter 82.
191	191	Sec. 1202.112. CONFIDENTIALITY. (a) A record, report, or
192	192	other information received or maintained by a health benefit plan
193	193	issuer, including any material received or developed during a
194	194	review of a cancellation decision under this subchapter, is
195	195	confidential.
196	196	(b) A health benefit plan issuer may not disclose the
197	197	identity of an individual or a decision to cancel an individual's
198	198	health benefit plan unless:
199	199	(1) an independent review organization determines the
200	200	decision to cancel is appropriate; or
201	201	(2) the time to appeal has expired without an affected
202	202	individual initiating an appeal.
203	203	SECTION 1.003. Section 4202.002, Insurance Code, is amended
204	204	to read as follows:
205	205	Sec. 4202.002. ADOPTION OF STANDARDS FOR INDEPENDENT REVIEW
206	206	ORGANIZATIONS. (a) The commissioner shall adopt standards and
207	207	rules for:
208	208	(1) the certification, selection, and operation of
209	209	independent review organizations to perform independent review
210	210	described by Subchapter C, Chapter 1202, or Subchapter I, Chapter
211	211	4201; and
212	212	(2) the suspension and revocation of the
213	213	certification.
214	214	(b) The standards adopted under this section must ensure:
215	215	(1) the timely response of an independent review
216	216	organization selected under this chapter;
217	217	(2) the confidentiality of medical records
218	218	transmitted to an independent review organization for use in
219	219	conducting an independent review;
220	220	(3) the qualifications and independence of each
221	221	physician or other health care provider making a review
222	222	determination for an independent review organization;
223	223	(4) the fairness of the procedures used by an
224	224	independent review organization in making review determinations;
225	225	[and]
226	226	(5) the timely notice to an enrollee of the results of
227	227	an independent review, including the clinical basis for the review
228	228	determination; and
229	229	(6) that review of a cancellation decision based on a
230	230	preexisting condition be conducted under the direction of a
231	231	physician.
232	232	SECTION 1.004. Sections 4202.003, 4202.004, and 4202.006,
233	233	Insurance Code, are amended to read as follows:
234	234	Sec. 4202.003. REQUIREMENTS REGARDING TIMELINESS OF
235	235	DETERMINATION. The standards adopted under Section 4202.002 must
236	236	require each independent review organization to make the
237	237	organization's determination:
238	238	(1) for a life-threatening condition as defined by
239	239	Section 4201.002, not later than the earlier of:
240	240	(A) the fifth day after the date the organization
241	241	receives the information necessary to make the determination; or
242	242	(B) the eighth day after the date the
243	243	organization receives the request that the determination be made;
244	244	and
245	245	(2) for a condition other than a life-threatening
246	246	condition or of the appropriateness of a cancellation under
247	247	Subchapter C, Chapter 1202, not later than the earlier of:
248	248	(A) the 15th day after the date the organization
249	249	receives the information necessary to make the determination; or
250	250	(B) the 20th day after the date the organization
251	251	receives the request that the determination be made.
252	252	Sec. 4202.004. CERTIFICATION. To be certified as an
253	253	independent review organization under this chapter, an
254	254	organization must submit to the commissioner an application in the
255	255	form required by the commissioner. The application must include:
256	256	(1) for an applicant that is publicly held, the name of
257	257	each shareholder or owner of more than five percent of any of the
258	258	applicant's stock or options;
259	259	(2) the name of any holder of the applicant's bonds or
260	260	notes that exceed $100,000;
261	261	(3) the name and type of business of each corporation
262	262	or other organization that the applicant controls or is affiliated
263	263	with and the nature and extent of the control or affiliation;
264	264	(4) the name and a biographical sketch of each
265	265	director, officer, and executive of the applicant and of any entity
266	266	listed under Subdivision (3) and a description of any relationship
267	267	the named individual has with:
268	268	(A) a health benefit plan;
269	269	(B) a health maintenance organization;
270	270	(C) an insurer;
271	271	(D) a utilization review agent;
272	272	(E) a nonprofit health corporation;
273	273	(F) a payor;
274	274	(G) a health care provider; or
275	275	(H) a group representing any of the entities
276	276	described by Paragraphs (A) through (G);
277	277	(5) the percentage of the applicant's revenues that
278	278	are anticipated to be derived from independent reviews conducted
279	279	under Subchapter I, Chapter 4201;
280	280	(6) a description of the areas of expertise of the
281	281	physicians or other health care providers making review
282	282	determinations for the applicant; and
283	283	(7) the procedures to be used by the applicant in
284	284	making independent review determinations under Subchapter C,
285	285	Chapter 1202, or Subchapter I, Chapter 4201.
286	286	Sec. 4202.006. PAYORS FEES. (a) The commissioner shall
287	287	charge payors fees in accordance with this chapter as necessary to
288	288	fund the operations of independent review organizations.
289	289	(b) A health benefit plan issuer shall pay for an
290	290	independent review of a cancellation decision under Subchapter C,
291	291	Chapter 1202.
292	292	SECTION 1.005. Section 4202.009, Insurance Code, is amended
293	293	to read as follows:
294	294	Sec. 4202.009. CONFIDENTIAL INFORMATION. (a)
295	295	Information that reveals the identity of a physician or other
296	296	individual health care provider who makes a review determination
297	297	for an independent review organization is confidential.
298	298	(b) A record, report, or other information received or
299	299	maintained by an independent review organization, including any
300	300	material received or developed during a review of a cancellation
301	301	decision under Subchapter C, Chapter 1202, is confidential.
302	302	(c) An independent review organization may not disclose the
303	303	identity of an affected individual or an issuer's decision to
304	304	cancel a health benefit plan under Subchapter C, Chapter 1202,
305	305	unless:
306	306	(1) an independent review organization determines the
307	307	decision to cancel is appropriate; or
308	308	(2) the time to appeal a cancellation under that
309	309	subchapter has expired without an affected individual initiating an
310	310	appeal.
311	311	SECTION 1.006. Section 4202.010(a), Insurance Code, is
312	312	amended to read as follows:
313	313	(a) An independent review organization conducting an
314	314	independent review under Subchapter C, Chapter 1202, or Subchapter
315	315	I, Chapter 4201, is not liable for damages arising from the review
316	316	determination made by the organization.
317	317	SECTION 1.007. The change in law made by this article
318	318	applies only to an insurance policy that is delivered, issued for
319	319	delivery, or renewed on or after the effective date of this Act. An
320	320	insurance policy that is delivered, issued for delivery, or renewed
321	321	before the effective date of this Act is governed by the law as it
322	322	existed before the effective date of this Act, and that law is
323	323	continued in effect for that purpose.
324	324	ARTICLE 2. MEDICAL LOSS RATIOS
325	325	SECTION 2.001. Subchapter A, Chapter 1301, Insurance Code,
326	326	is amended by adding Section 1301.010 to read as follows:
327	327	Sec. 1301.010. MEDICAL LOSS RATIO. (a) In this section:
328	328	(1) "Direct losses incurred" means the sum of direct
329	329	losses paid plus an estimate of losses to be paid in the future for
330	330	all claims arising from the current reporting period and all prior
331	331	periods, minus the corresponding estimate made at the close of
332	332	business for the preceding period. This amount does not include
333	333	home office and overhead costs, advertising costs, commissions and
334	334	other acquisition costs, taxes, capital costs, administrative
335	335	costs, utilization review costs, or claims processing costs.
336	336	(2) "Direct losses paid" means the sum of all payments
337	337	made during the period for claimants under a preferred provider
338	338	benefit plan before reinsurance has been ceded or assumed. This
339	339	amount does not include home office and overhead costs, advertising
340	340	costs, commissions and other acquisition costs, taxes, capital
341	341	costs, administrative costs, utilization review costs, or claims
342	342	processing costs.
343	343	(3) "Direct premiums earned" means the amount of
344	344	premium attributable to the coverage already provided in a given
345	345	period before reinsurance has been ceded or assumed.
346	346	(4) "Medical loss ratio" means direct losses incurred
347	347	divided by direct premiums earned.
348	348	(b) An insurer may not have or maintain for a preferred
349	349	provider benefit plan a medical loss ratio of less than 72 percent.
350	350	(c) The medical loss ratio shall be reported annually or
351	351	more often as required by the commissioner by rule or order.
352	352	(d) A medical loss ratio reported under this section is
353	353	public information.
354	354	(e) The department shall include information on the medical
355	355	loss ratio on the department's Internet website.
356	356	(f) An insurer shall report to the policyholder the medical
357	357	loss ratio of the policyholder's preferred provider benefit plan
358	358	for the nine months following the policy effective date or renewal
359	359	date. A medical loss ratio reported under this subsection is not
360	360	required to include an estimate of future claims not incurred in the
361	361	nine-month reporting period.
362	362	(g) The commissioner shall require an insurer that violates
363	363	Subsection (b) to:
364	364	(1) implement a premium rate adjustment;
365	365	(2) file with the department an actuarial memorandum,
366	366	prepared by a qualified actuary, in accordance with any rules
367	367	adopted by the commissioner to implement this section; and
368	368	(3) remit to the Texas Health Insurance Risk Pool an
369	369	amount equal to the direct premiums earned by the insurer during the
370	370	relevant reporting period multiplied by a percentage equal to the
371	371	actual medical loss ratio subtracted from the minimum medical loss
372	372	ratio prescribed by Subsection (b).
373	373	(h) An actuarial memorandum provided under Subsection (g)
374	374	must include:
375	375	(1) a statement that the past plus future expected
376	376	experience after a rate adjustment will result in a medical loss
377	377	ratio equal to, or greater than, the required minimum medical loss
378	378	ratio;
379	379	(2) for policies in force less than three years, a
380	380	demonstration to show that the third-year loss ratio is expected to
381	381	be equal to, or greater than, the required minimum medical loss
382	382	ratio; and
383	383	(3) a certification by the qualified actuary that the
384	384	resulting premiums are reasonable in relation to the benefits
385	385	provided.
386	386	(i) The commissioner shall adopt rules as necessary to
387	387	implement this section, including rules regarding:
388	388	(1) credible experience;
389	389	(2) whether full credibility, partial credibility, or
390	390	no credibility should be assigned to particular experience; and
391	391	(3) the frequency and form of reporting medical loss
392	392	ratios.
393	393	SECTION 2.002. (a) Not later than January 1, 2010, the
394	394	commissioner of insurance shall adopt all rules necessary to
395	395	implement Section 1301.010, Insurance Code, as added by this
396	396	article. The first reporting period under Section 1301.010(c) may
397	397	not cover any period that begins before January 1, 2010.
398	398	(b) Section 1301.010(f), Insurance Code, as added by this
399	399	article, applies only to a preferred provider benefit plan policy
400	400	delivered, issued for delivery, or renewed on or after January 1,
401	401	2010. A policy delivered, issued for delivery, or renewed before
402	402	that date is governed by the law in effect immediately before the
403	403	effective date of this Act, and that law is continued in effect for
404	404	that purpose.
405	405	ARTICLE 3. PREMIUM RATE INCREASES FOR SMALL EMPLOYER HEALTH
406	406	BENEFIT PLANS
407	407	SECTION 3.001. Subchapter D, Chapter 501, Insurance Code,
408	408	is amended by amending Sections 501.151 and 501.153 and adding
409	409	Section 501.160 to read as follows:
410	410	Sec. 501.151. POWERS AND DUTIES OF OFFICE. The office:
411	411	(1) may assess the impact of insurance rates, rules,
412	412	and forms on insurance consumers in this state; [and]
413	413	(2) shall advocate in the office's own name positions
414	414	determined by the public counsel to be most advantageous to a
415	415	substantial number of insurance consumers; and
416	416	(3) shall accept from a small employer, an eligible
417	417	employee, or an eligible employee's dependent and, if appropriate,
418	418	refer to the commissioner, a complaint described by Section
419	419	501.160.
420	420	Sec. 501.153. AUTHORITY TO APPEAR, INTERVENE, OR INITIATE.
421	421	The public counsel:
422	422	(1) may appear or intervene, as a party or otherwise,
423	423	as a matter of right before the commissioner or department on behalf
424	424	of insurance consumers, as a class, in matters involving:
425	425	(A) rates, rules, and forms affecting:
426	426	(i) property and casualty insurance;
427	427	(ii) title insurance;
428	428	(iii) credit life insurance;
429	429	(iv) credit accident and health insurance;
430	430	or
431	431	(v) any other line of insurance for which
432	432	the commissioner or department promulgates, sets, adopts, or
433	433	approves rates, rules, or forms;
434	434	(B) rules affecting life, health, or accident
435	435	insurance; or
436	436	(C) withdrawal of approval of policy forms:
437	437	(i) in proceedings initiated by the
438	438	department under Sections 1701.055 and 1701.057; or
439	439	(ii) if the public counsel presents
440	440	persuasive evidence to the department that the forms do not comply
441	441	with this code, a rule adopted under this code, or any other law;
442	442	(2) may initiate or intervene as a matter of right or
443	443	otherwise appear in a judicial proceeding involving or arising from
444	444	an action taken by an administrative agency in a proceeding in which
445	445	the public counsel previously appeared under the authority granted
446	446	by this chapter;
447	447	(3) may appear or intervene, as a party or otherwise,
448	448	as a matter of right on behalf of insurance consumers as a class in
449	449	any proceeding in which the public counsel determines that
450	450	insurance consumers are in need of representation, except that the
451	451	public counsel may not intervene in an enforcement or parens
452	452	patriae proceeding brought by the attorney general; [and]
453	453	(4) may appear or intervene before the commissioner or
454	454	department as a party or otherwise on behalf of small commercial
455	455	insurance consumers, as a class, in a matter involving rates,
456	456	rules, or forms affecting commercial insurance consumers, as a
457	457	class, in any proceeding in which the public counsel determines
458	458	that small commercial consumers are in need of representation; and
459	459	(5) may appear before the commissioner on behalf of a
460	460	small employer, eligible employee, or eligible employee's
461	461	dependent in a complaint the office refers to the commissioner
462	462	under Section 501.160.
463	463	Sec. 501.160. COMPLAINT RESOLUTION FOR CERTAIN PREMIUM RATE
464	464	INCREASES. (a) A small employer, an eligible employee, or an
465	465	eligible employee's dependent may file a complaint with the office
466	466	alleging that a rate is excessive for the risks to which the rate
467	467	applies, if the percentage increase in the premium rate charged to a
468	468	small employer under Subchapter E, Chapter 1501, for a new rating
469	469	period exceeds 10 percent.
470	470	(b) The office shall refer a complaint received under
471	471	Subsection (a) to the commissioner if the office determines that
472	472	the complaint substantially attests to a rate charged that is
473	473	excessive for the risks to which the rate applies.
474	474	(c) With respect to a complaint filed under Subsection (a),
475	475	the office may issue a subpoena applicable throughout the state
476	476	that requires the production of records.
477	477	(d) On application of the office in the case of disobedience
478	478	of a subpoena, a district court may issue an order requiring any
479	479	individual or person, including a small employer health benefit
480	480	plan issuer described by Section 1501.002, that is subpoenaed to
481	481	obey the subpoena and produce records, if the individual or person
482	482	has refused to do so. An application under this subsection must be
483	483	made in a district court in Travis County.
484	484	SECTION 3.002. Section 1501.204, Insurance Code, is amended
485	485	to read as follows:
486	486	Sec. 1501.204. INDEX RATES. Under a small employer health
487	487	benefit plan:
488	488	(1) the index rate for a class of business may not
489	489	exceed the index rate for any other class of business by more than
490	490	15 [20] percent; and
491	491	(2) premium rates charged during a rating period to
492	492	small employers in a class of business with similar case
493	493	characteristics for the same or similar coverage, or premium rates
494	494	that could be charged to those employers under the rating system for
495	495	that class of business, may not vary from the index rate by more
496	496	than 20 [25] percent.
497	497	SECTION 3.003. Section 1501.205, Insurance Code, is amended
498	498	by adding Subsection (d) to read as follows:
499	499	(d) A small employer health benefit plan issuer shall
500	500	disclose the risk load assessed to a small employer group to the
501	501	group, along with a description of the risk characteristics
502	502	material to the risk load assessment.
503	503	SECTION 3.004. Section 1501.206(a), Insurance Code, is
504	504	amended to read as follows:
505	505	(a) The percentage increase in the premium rate charged to a
506	506	small employer for a new rating period may not exceed the sum of:
507	507	(1) the percentage change in the new business premium
508	508	rate, measured from the first day of the preceding rating period to
509	509	the first day of the new rating period;
510	510	(2) any adjustment, not to exceed 10 [15] percent
511	511	annually and adjusted pro rata for a rating period of less than one
512	512	year, due to the claims experience, health status, or duration of
513	513	coverage of the employees or dependents of employees of the small
514	514	employer, as determined under the small employer health benefit
515	515	plan issuer's rate manual for the class of business; and
516	516	(3) any adjustment, not to exceed five percent
517	517	annually and adjusted pro rata for a rating period of less than one
518	518	year, due to change in coverage or change in the case
519	519	characteristics of the small employer, as determined under the
520	520	issuer's rate manual for the class of business.
521	521	SECTION 3.005. Subchapter E, Chapter 1501, Insurance Code,
522	522	is amended by adding Section 1501.2131 and amending Section
523	523	1501.214 to read as follows:
524	524	Sec. 1501.2131. COMPLAINT FACILITATION FOR PREMIUM RATE
525	525	ADJUSTMENTS. If the percentage increase in the premium rate
526	526	charged to a small employer for a new rating period exceeds 10
527	527	percent, the small employer, an eligible employee, or an eligible
528	528	employee's dependent may file a complaint with the office of public
529	529	insurance counsel as provided by Section 501.160.
530	530	Sec. 1501.214. ENFORCEMENT. (a) Subject to Subsection
531	531	(b), if [If] the commissioner determines that a small employer
532	532	health benefit plan issuer subject to this chapter exceeds the
533	533	applicable premium rate established under this subchapter, the
534	534	commissioner may order restitution and assess penalties as provided
535	535	by Chapter 82.
536	536	(b) The commissioner shall enter an order under this section
537	537	if the commissioner makes the finding described by Section
538	538	1501.653.
539	539	SECTION 3.006. Chapter 1501, Insurance Code, is amended by
540	540	adding Subchapter N to read as follows:
541	541	SUBCHAPTER N. RESOLUTION OF CERTAIN COMPLAINTS AGAINST SMALL
542	542	EMPLOYER HEALTH BENEFIT PLAN ISSUERS
543	543	Sec. 1501.651. DEFINITIONS. In this chapter:
544	544	(1) "Honesty-in-premium account" means the account
545	545	established under Section 1501.656.
546	546	(2) "Office" means the office of public insurance
547	547	counsel.
548	548	Sec. 1501.652. COMPLAINT RESOLUTION PROCEDURE. (a) On the
549	549	receipt of a referral of a complaint from the office of public
550	550	insurance counsel under Section 501.160, the commissioner shall
551	551	request written memoranda from the office and the small employer
552	552	health benefit plan issuer that is the subject of the complaint.
553	553	(b) After receiving the initial memoranda described by
554	554	Subsection (a), the commissioner may request one rebuttal
555	555	memorandum from the office.
556	556	(c) The commissioner may by rule limit the number of
557	557	exhibits submitted with or the time frame allowed for the submittal
558	558	of the memoranda described by Subsection (a) or (b).
559	559	Sec. 1501.653. ORDER; FINDINGS. The commissioner shall
560	560	issue an order under Section 1501.214(b) if the commissioner
561	561	determines that the rate complained of is excessive for the risks to
562	562	which the rate applies.
563	563	Sec. 1501.654. COSTS. The office may request, and the
564	564	commissioner may award to the office, reasonable costs and fees
565	565	associated with the investigation and resolution of a complaint
566	566	filed under Section 501.160 and disposed of in accordance with this
567	567	subchapter.
568	568	Sec. 1501.655. ASSESSMENT. (a) The commissioner may make
569	569	an assessment against each small employer health benefit plan
570	570	issuer in an amount that is sufficient to cover the costs of
571	571	investigating and resolving a complaint filed under Section 501.160
572	572	and disposed of in accordance with this subchapter.
573	573	(b) The commissioner shall deposit assessments collected
574	574	under this section to the credit of the honesty-in-premium account.
575	575	Sec. 1501.656. HONESTY-IN-PREMIUM ACCOUNT. (a) The
576	576	honesty-in-premium account is an account in the general revenue
577	577	fund that may be appropriated only to cover the cost associated with
578	578	the investigation and resolution of a complaint filed under Section
579	579	501.160 and disposed of in accordance with this subchapter.
580	580	(b) Interest earned on the honesty-in-premium account shall
581	581	be credited to the account. The account is exempt from the
582	582	application of Section 403.095, Government Code.
583	583	Sec. 1501.657. RATE CHANGE NOT PROHIBITED. Nothing in this
584	584	subchapter prohibits a small employer health benefit plan issuer
585	585	from, at any time, offering a different rate to the group whose rate
586	586	is the subject of a complaint.
587	587	SECTION 3.007. The change in law made by Chapter 1501,
588	588	Insurance Code, as amended by this article, applies only to a small
589	589	employer health benefit plan that is delivered, issued for
590	590	delivery, or renewed on or after January 1, 2010. A small employer
591	591	health benefit plan that is delivered, issued for delivery, or
592	592	renewed before January 1, 2010, is covered by the law in effect at
593	593	the time the health benefit plan was delivered, issued for
594	594	delivery, or renewed, and that law is continued in effect for that
595	595	purpose.
596	596	ARTICLE 4. STANDARDIZED PROCESSING OF CERTAIN HEALTH BENEFIT PLAN
597	597	CLAIMS
598	598	SECTION 4.001. Subtitle F, Title 8, Insurance Code, is
599	599	amended by adding Chapter 1458 to read as follows:
600	600	CHAPTER 1458. REQUIREMENTS FOR STANDARDIZED PROCESSING OF CERTAIN
601	601	HEALTH BENEFIT PLAN CLAIMS
602	602	Sec. 1458.001. DEFINITIONS. In this chapter:
603	603	(1) "Add-on CPT code" means a CPT code listed in
604	604	Appendix D of the American Medical Association's "Current
605	605	Procedural Terminology 2009 Professional Edition" or a subsequent
606	606	edition of that publication adopted by the commissioner by rule.
607	607	(2) "CPT code" means the number assigned to identify a
608	608	specific health care procedure performed by a health care provider
609	609	under the American Medical Association's "Current Procedural
610	610	Terminology 2009 Professional Edition" or a subsequent edition of
611	611	that publication adopted by the commissioner by rule.
612	612	(3) "Multiple procedure logic" means an adjustment to
613	613	a payment for one or more health care procedures or other services
614	614	that constitute covered services when multiple procedures are
615	615	performed at the same visit.
616	616	Sec. 1458.002. APPLICABILITY. (a) This chapter applies to
617	617	any health benefit plan that:
618	618	(1) provides benefits for medical or surgical expenses
619	619	incurred as a result of a health condition, accident, or sickness,
620	620	including an individual, group, blanket, or franchise insurance
621	621	policy or insurance agreement, a group hospital service contract,
622	622	or an individual or group evidence of coverage that is offered by:
623	623	(A) an insurance company;
624	624	(B) a group hospital service corporation
625	625	operating under Chapter 842;
626	626	(C) a fraternal benefit society operating under
627	627	Chapter 885;
628	628	(D) a stipulated premium company operating under
629	629	Chapter 884;
630	630	(E) a health maintenance organization operating
631	631	under Chapter 843;
632	632	(F) a multiple employer welfare arrangement that
633	633	holds a certificate of authority under Chapter 846;
634	634	(G) an approved nonprofit health corporation
635	635	that holds a certificate of authority under Chapter 844; or
636	636	(H) an entity not authorized under this code or
637	637	another insurance law of this state that contracts directly for
638	638	health care services on a risk-sharing basis, including a
639	639	capitation basis; or
640	640	(2) provides health and accident coverage through a
641	641	risk pool created under Chapter 172, Local Government Code,
642	642	notwithstanding Section 172.014, Local Government Code, or any
643	643	other law.
644	644	(b) This chapter applies to a person with whom a health
645	645	benefit plan contracts to:
646	646	(1) process or pay claims; or
647	647	(2) obtain the services of physicians or other health
648	648	care providers to provide health care services to enrollees in the
649	649	plan.
650	650	(c) This chapter does not apply to the state child health
651	651	plan operated under Chapter 62 or 63, Health and Safety Code.
652	652	Sec. 1458.003. STANDARDIZED RECOGNITION OF CODING;
653	653	RESTRICTIONS. (a) A health benefit plan issuer may not subject a
654	654	modifier 51-exempt CPT code to multiple procedure logic.
655	655	(b) A health benefit plan issuer shall recognize add-on CPT
656	656	codes as eligible for payment as separate codes and may not subject
657	657	add-on CPT codes to multiple procedure logic.
658	658	(c) If a claim contains both a CPT code for performance of an
659	659	evaluation and management service procedure appended with a
660	660	modifier 25 and a CPT code for performance of a non-evaluation and
661	661	management service procedure, a health benefit plan issuer must
662	662	recognize both codes as eligible for payment unless the applicable
663	663	clinical information indicates that use of the modifier 25 was
664	664	inappropriate.
665	665	(d) A health benefit plan issuer shall separately recognize
666	666	a CPT code that includes supervision and interpretation as eligible
667	667	for payment to the extent that the associated CPT code is recognized
668	668	and eligible for payment. The health benefit plan issuer may not be
669	669	required to pay for supervision or interpretation by more than one
670	670	physician for each of those procedures.
671	671	(e) Other than CPT codes specifically identified as
672	672	modifier 51-exempt or add-on CPT codes, a health benefit plan
673	673	issuer may not reassign into another CPT code a CPT code that is
674	674	considered an indented code under the American Medical
675	675	Association's "Current Procedural Terminology 2009 Professional
676	676	Edition" or a subsequent edition of that publication adopted by the
677	677	commissioner by rule unless more than one indented code under the
678	678	same indentation is also submitted with respect to the same
679	679	service, in which case only one such code is eligible for payment.
680	680	For indented code series contemplating that multiple codes in the
681	681	series may be properly reported and billed concurrently, the health
682	682	benefit plan issuer shall recognize all codes properly billed as
683	683	eligible for payment.
684	684	(f) A health benefit plan issuer shall recognize a CPT code
685	685	appended with a modifier 59 as separately eligible for payment to
686	686	the extent the code designates a distinct or independent procedure
687	687	performed on the same day by the same physician, but only to the
688	688	extent that:
689	689	(1) those procedures or services are not normally
690	690	reported together but are appropriately reported together under the
691	691	particular circumstances; and
692	692	(2) it would not be more appropriate under the
693	693	American Medical Association's "Current Procedural Terminology
694	694	2009 Professional Edition" or a subsequent edition of that
695	695	publication adopted by the commissioner by rule to append any other
696	696	modifier to the CPT code.
697	697	(g) Global periods for surgical procedures may not be longer
698	698	than any period designated on a national basis by the Centers for
699	699	Medicare and Medicaid Services for those surgical procedures as in
700	700	effect on September 1, 2009, or any successor designation by the
701	701	Centers for Medicare and Medicaid Services that is adopted by the
702	702	commissioner.
703	703	(h) A health benefit plan issuer may not change a CPT code to
704	704	a CPT code reflecting a reduced intensity of the service if that CPT
705	705	code is one among a series that differentiates among simple,
706	706	intermediate, and complex procedures.
707	707	Sec. 1458.004. CONSTRUCTION OF CHAPTER. This chapter is
708	708	not intended, and may not be construed, to require a health benefit
709	709	plan issuer to pay for health care services other than covered
710	710	services or to supply health care services other than covered
711	711	services.
712	712	ARTICLE 5. PHYSICIAN RANKING BY HEALTH BENEFIT PLAN ISSUERS
713	713	SECTION 5.001. Subtitle F, Title 8, Insurance Code, is
714	714	amended by adding Chapter 1460 to read as follows:
715	715	CHAPTER 1460. PHYSICIAN RANKING BY HEALTH BENEFIT PLANS
716	716	SUBCHAPTER A. GENERAL PROVISIONS
717	717	Sec. 1460.001. DEFINITIONS. In this chapter:
718	718	(1) "Hearing panel" means the physician panel
719	719	described by Section 1460.056(a).
720	720	(2) "Physician" means an individual licensed to
721	721	practice medicine in this state under Subtitle B, Title 3,
722	722	Occupations Code.
723	723	Sec. 1460.002. APPLICABILITY. This chapter applies to any
724	724	health benefit plan that:
725	725	(1) provides benefits for medical or surgical expenses
726	726	incurred as a result of a health condition, accident, or sickness,
727	727	including an individual, group, blanket, or franchise insurance
728	728	policy or insurance agreement, a group hospital service contract,
729	729	or an individual or group evidence of coverage that is offered by:
730	730	(A) an insurance company;
731	731	(B) a group hospital service corporation
732	732	operating under Chapter 842;
733	733	(C) a fraternal benefit society operating under
734	734	Chapter 885;
735	735	(D) a stipulated premium company operating under
736	736	Chapter 884;
737	737	(E) a health maintenance organization operating
738	738	under Chapter 843;
739	739	(F) a multiple employer welfare arrangement that
740	740	holds a certificate of authority under Chapter 846;
741	741	(G) an approved nonprofit health corporation
742	742	that holds a certificate of authority under Chapter 844; or
743	743	(H) an entity not authorized under this code or
744	744	another insurance law of this state that contracts directly for
745	745	health care services on a risk-sharing basis, including a
746	746	capitation basis; or
747	747	(2) provides health and accident coverage through a
748	748	risk pool created under Chapter 172, Local Government Code,
749	749	notwithstanding Section 172.014, Local Government Code, or any
750	750	other law.
751	751	[Sections 1460.003-1460.050 reserved for expansion]
752	752	SUBCHAPTER B. RESTRICTIONS ON PHYSICIAN RANKING
753	753	Sec. 1460.051. PHYSICIAN RANKING. A health benefit plan
754	754	issuer, including a subsidiary or an affiliate of the health
755	755	benefit plan issuer, may not, in any manner, disseminate
756	756	information to the public that compares, rates, tiers, classifies,
757	757	measures, or ranks a physician's performance, efficiency, or
758	758	quality of practice against objective standards or the practice of
759	759	other physicians unless:
760	760	(1) the objective standards or comparison criteria
761	761	used by the health benefit plan issuer are disclosed to the
762	762	physician prior to the evaluation period;
763	763	(2) the data used to establish satisfaction of the
764	764	objective criteria or to make the comparison are available to the
765	765	physician for verification before any dissemination of information
766	766	to the public; and
767	767	(3) the health benefit plan issuer provides due
768	768	process to the physician as provided by this chapter.
769	769	Sec. 1460.052. INJUNCTIVE RELIEF. (a) A writ of injunction
770	770	may be granted by any district court if a health benefit plan issuer
771	771	disseminates, or intends to disseminate, information that
772	772	compares, rates, tiers, classifies, measures, or ranks physician
773	773	performance, efficiency, or quality without meeting the criteria
774	774	required under Section 1460.051.
775	775	(b) An action under Subsection (a) may be brought by any
776	776	affected physician or on the behalf of affected physicians.
777	777	(c) Subchapter B, Chapter 26, Civil Practice and Remedies
778	778	Code, does not apply to an action brought under this chapter.
779	779	Sec. 1460.053. DUE PROCESS; NOTICE OF INTENT. (a) Before a
780	780	health benefit plan issuer declines to invite a physician into a
781	781	preferred tier, classifies a physician into a particular tier, or
782	782	otherwise differentiates a physician from the physician's peers
783	783	based on performance, efficiency, or quality, the issuer must
784	784	notify the affected physician of its intent in a written notice
785	785	that meets the requirements of this section.
786	786	(b) A notice of intent issued under Subsection (a) must
787	787	include:
788	788	(1) a statement describing the proposed action of the
789	789	health benefit plan issuer and the reasons for that proposed
790	790	action;
791	791	(2) a statement that the affected physician has the
792	792	right to request a hearing on the proposed action as provided by
793	793	this chapter;
794	794	(3) any time limit within which the physician must
795	795	request a hearing under this chapter, which may not be less than 60
796	796	days from the date on which the notice of intent is issued; and
797	797	(4) a summary of the physician's rights under Section
798	798	1460.055.
799	799	Sec. 1460.054. NOTICE OF HEARING. If a hearing is requested
800	800	by a physician who receives a notice of intent under Section
801	801	1460.053, not later than the 30th day after the date on which the
802	802	physician requests the hearing the physician must be given a
803	803	written notice of the hearing that includes:
804	804	(1) a statement of the place, time, and date of the
805	805	hearing, which must be conducted:
806	806	(A) not less than 60 days after the date the
807	807	notice of the hearing is received by the physician; and
808	808	(B) not more than 90 days after the date the
809	809	notice of the hearing is received by the physician; and
810	810	(2) a list of the witnesses, if any, expected to
811	811	testify at the hearing on behalf of the health benefit plan issuer.
812	812	Sec. 1460.055. PHYSICIAN RIGHTS. A physician who requests
813	813	a hearing under this chapter has the following rights at the
814	814	hearing:
815	815	(1) the right to be represented by counsel;
816	816	(2) the right to have a record made of the proceedings
817	817	and to obtain a copy of the record for a reasonable charge;
818	818	(3) the right to call, examine, and cross-examine
819	819	witnesses;
820	820	(4) the right to present evidence;
821	821	(5) the right to submit a written statement to the
822	822	hearing panel at the close of the hearing; and
823	823	(6) the right to receive, following the hearing, the
824	824	written decision of the hearing panel, including a statement of the
825	825	basis for any recommendations by the panel.
826	826	Sec. 1460.056. HEARING PANEL; CONDUCT OF HEARING. (a) A
827	827	hearing requested under Section 1460.054 must be held before a
828	828	panel of three physicians who practice the same medical specialty
829	829	as the affected physician or a similar medical specialty.
830	830	(b) The order of presentation in the hearing shall be as
831	831	follows:
832	832	(1) opening statements by the health benefit plan
833	833	issuer followed by the physician or the physician's counsel;
834	834	(2) presentation of the case by the health benefit
835	835	plan issuer followed by presentation of the case by the physician or
836	836	the physician's counsel;
837	837	(3) rebuttal by the health benefit plan issuer
838	838	followed by the physician or the physician's counsel; and
839	839	(4) closing statements by the health benefit plan
840	840	issuer followed by the physician or the physician's counsel.
841	841	Sec. 1460.057. EFFECT OF NONAPPEARANCE; WAIVER. (a) The
842	842	hearing panel is not precluded from proceeding with a hearing
843	843	conducted under this chapter by the failure to appear at all or any
844	844	part of the hearing of:
845	845	(1) the affected physician or the physician's legal
846	846	counsel, if any; or
847	847	(2) any witness.
848	848	(b) Failure of a physician not represented by counsel or
849	849	failure of both a physician and the physician's counsel to appear
850	850	at the hearing is deemed a waiver of all procedural rights under
851	851	this chapter that could have been exercised by, or on behalf of, the
852	852	affected physician at the hearing.
853	853	Sec. 1460.058. EXAMINATION OF WITNESSES. Each of the
854	854	following persons present at a hearing conducted under this chapter
855	855	may examine or cross-examine any witness testifying at the hearing
856	856	in person, telephonically, or electronically through the Internet
857	857	or otherwise:
858	858	(1) the physician or, at the physician's option, the
859	859	physician's counsel, but not both;
860	860	(2) the representative of the health benefit plan
861	861	issuer, as designated by the issuer; and
862	862	(3) the members of the hearing panel.
863	863	Sec. 1460.059. BURDEN OF PROOF; DECISION. (a) The health
864	864	benefit plan issuer must prove, by a preponderance of evidence,
865	865	that:
866	866	(1) in the case of a methodology using objective
867	867	standards, the affected physician's performance, efficiency, or
868	868	quality and the effectiveness of the medical care delivered by the
869	869	physician have not met the standards disclosed under Section
870	870	1460.051; or
871	871	(2) in the case of a methodology using relative
872	872	comparison criteria, the data is accurate and correctly portrays
873	873	the affected physician's performance, efficiency, or quality
874	874	relative to other physicians in the same or similar medical
875	875	specialty with comparable patient populations.
876	876	(b) The decision of the hearing panel is binding.
877	877	(c) If the hearing panel's decision is that the health
878	878	benefit plan issuer has met its burden of proof, the health benefit
879	879	plan issuer may publish the comparison, rating, tier,
880	880	classification, measurement, or ranking.
881	881	(d) If the hearing panel's decision is that the health
882	882	benefit plan issuer has not met its burden of proof, the panel shall
883	883	instruct the health benefit plan issuer to appropriately modify the
884	884	comparison, rating, tier, classification, measurement, or ranking
885	885	before publication.
886	886	Sec. 1460.060. EFFECT OF CONTINUED DISAGREEMENT. (a) On
887	887	written notice that the affected physician disagrees with the
888	888	health benefit plan issuer's comparison, rating, tier,
889	889	classification, measurement, or ranking or the decision of the
890	890	hearing panel, the health benefit plan issuer shall prominently
891	891	display a symbol indicating the physician disputes the comparison,
892	892	rating, tier, classification, measurement, or ranking next to any
893	893	comparison, rating, tier, classification, measurement, or ranking
894	894	information for that physician.
895	895	(b) Each Internet web page displaying comparison, rating,
896	896	tier, classification, measurement, or ranking information must
897	897	contain a key explaining the meaning of the symbol required by
898	898	Subsection (a).
899	899	ARTICLE 6. REGULATION OF SECONDARY MARKET IN CERTAIN PHYSICIAN AND
900	900	PROVIDER DISCOUNTS
901	901	SECTION 6.001. Subtitle D, Title 8, Insurance Code, is
902	902	amended by adding Chapter 1302 to read as follows:
903	903	CHAPTER 1302. REGULATION OF SECONDARY MARKET IN CERTAIN PHYSICIAN
904	904	AND HEALTH CARE PROVIDER DISCOUNTS
905	905	SUBCHAPTER A. GENERAL PROVISIONS
906	906	Sec. 1302.001. DEFINITIONS. In this chapter:
907	907	(1) "Contracting agent" means any entity engaged, for
908	908	monetary or other consideration, in disclosing or transferring a
909	909	contracted discounted fee of a physician or health care provider.
910	910	(2) "Health care provider" means a hospital, a
911	911	physician-hospital organization, or an ambulatory surgical center.
912	912	(3) "Payor" means a fully self-insured health plan, a
913	913	health benefit plan, an insurer, or another entity that assumes the
914	914	risk for payment of claims by, or reimbursement for health care
915	915	services provided by, physicians and health care providers.
916	916	(4) "Physician" means:
917	917	(A) an individual licensed to practice medicine
918	918	in this state under the authority of Subtitle B, Title 3,
919	919	Occupations Code;
920	920	(B) a professional entity organized in
921	921	conformity with Title 7, Business Organizations Code, and
922	922	permitted to practice medicine under Subtitle B, Title 3,
923	923	Occupations Code;
924	924	(C) a partnership organized in conformity with
925	925	Title 4, Business Organizations Code, comprised entirely by
926	926	individuals licensed to practice medicine under Subtitle B, Title
927	927	3, Occupations Code;
928	928	(D) an approved nonprofit health corporation
929	929	certified under Chapter 162, Occupations Code;
930	930	(E) a medical school or medical and dental unit,
931	931	as defined or described by Section 61.003, 61.501, or 74.501,
932	932	Education Code, that employs or contracts with physicians to teach
933	933	or provide medical services or employs physicians and contracts
934	934	with physicians in a practice plan; or
935	935	(F) any other person wholly owned by individuals
936	936	licensed to practice medicine under Subtitle B, Title 3,
937	937	Occupations Code.
938	938	(5) "Transfer" means to lease, sell, aggregate,
939	939	assign, or otherwise convey a contracted discounted fee of a
940	940	physician or health care provider.
941	941	Sec. 1302.002. EXEMPTIONS. This chapter does not apply to:
942	942	(1) the activities of:
943	943	(A) a health maintenance organization's network
944	944	that are subject to Subchapter J, Chapter 843; or
945	945	(B) an insurer's preferred provider network that
946	946	are subject to Subchapters C and C-1, Chapter 1301; or
947	947	(2) any aspect of the administration or operation of:
948	948	(A) the state child health plan; or
949	949	(B) any medical assistance program using a
950	950	managed care organization or managed care principal, including the
951	951	state Medicaid managed care program under Chapter 533, Government
952	952	Code.
953	953	Sec. 1302.003. APPLICABILITY OF OTHER LAW. (a) Except as
954	954	provided by Subsection (b), with respect to payment of claims, a
955	955	contracting agent, and any payor for whom a contracting agent acts
956	956	or who contracts with a contracting agent, shall comply with
957	957	Subchapters C and C-1, Chapter 1301, in the same manner as an
958	958	insurer.
959	959	(b) This section does not apply to a payor that is a fully
960	960	self-insured health plan.
961	961	Sec. 1302.004. RETALIATION PROHIBITED. A contracting agent
962	962	may not engage in any retaliatory action against a physician or
963	963	health care provider because the physician or provider has:
964	964	(1) filed a complaint against the contracting agent;
965	965	or
966	966	(2) appealed a decision of the contracting agent.
967	967	[Sections 1302.005-1302.050 reserved for expansion]
968	968	SUBCHAPTER B. REGISTRATION; POWERS AND DUTIES OF COMMISSIONER AND
969	969	DEPARTMENT
970	970	Sec. 1302.051. REGISTRATION REQUIRED. (a) Except as
971	971	provided by Subsection (b), each contracting agent that does not
972	972	hold a certificate of authority or license otherwise issued by the
973	973	department under this code must register with the department in the
974	974	manner prescribed by the commissioner before engaging in business
975	975	in this state.
976	976	(b) A certified workers' compensation network is not
977	977	required to register under this section if the network does not
978	978	transfer the physician or health care provider contract or contract
979	979	rates for any other line of business.
980	980	Sec. 1302.052. RULES. The commissioner shall adopt rules
981	981	in the manner prescribed by Subchapter A, Chapter 36, as necessary
982	982	to implement and administer this chapter.
983	983	Sec. 1302.053. REGISTRATION APPLICATION. Each application
984	984	for registration as a contracting agent must include:
985	985	(1) a description or a copy of the applicant's basic
986	986	organizational structure documents and a copy of other related
987	987	documents, including organizational charts or lists that show:
988	988	(A) the relationships and contracts between the
989	989	applicant and any affiliates of the applicant; and
990	990	(B) the internal organizational structure of the
991	991	applicant's management and administrative staff;
992	992	(2) biographical information regarding each person
993	993	who governs or manages the affairs of the applicant, accompanied by
994	994	information sufficient to allow the commissioner to determine the
995	995	competence, fitness, and reputation of each officer or director of
996	996	the applicant or other person having control of the applicant;
997	997	(3) a copy of the form of any contract between the
998	998	applicant and any provider or group of providers, and with any third
999	999	party performing services on behalf of the applicant;
1000	1000	(4) a copy of the form of each contract with a payor;
1001	1001	(5) a financial statement, current as of the date of
1002	1002	the application, that is prepared using generally accepted
1003	1003	accounting practices and includes:
1004	1004	(A) a balance sheet that reflects a solvent
1005	1005	financial position;
1006	1006	(B) an income statement;
1007	1007	(C) a cash flow statement; and
1008	1008	(D) the sources and uses of all funds;
1009	1009	(6) a statement acknowledging that lawful process in a
1010	1010	legal action or proceeding against the contracting agent on a cause
1011	1011	of action arising in this state is valid if served in the manner
1012	1012	provided by Chapter 804 for a domestic company; and
1013	1013	(7) any other information that the commissioner
1014	1014	requires by rule to implement this chapter.
1015	1015	Sec. 1302.053A. IMMEDIATE REGISTRATION. (a)
1016	1016	Notwithstanding Section 1302.053, a contracting agent is eligible
1017	1017	for immediate registration under this chapter if the contracting
1018	1018	agent:
1019	1019	(1) has entered into direct contracts during the 18
1020	1020	months immediately preceding January 1, 2009, with physicians or
1021	1021	health care providers in this state and with payors;
1022	1022	(2) does not have an officer or director who has been
1023	1023	convicted of a felony;
1024	1024	(3) files with the department an affidavit, signed by
1025	1025	an officer with sufficient authority to bind the contracting agent,
1026	1026	that:
1027	1027	(A) attests to the existence of the conditions
1028	1028	described in Subsections (a)(1) and (2);
1029	1029	(B) contains a statement acknowledging that
1030	1030	lawful process in a legal action or proceeding against the
1031	1031	contracting agent on a cause of action arising in this state is
1032	1032	valid if served in the manner provided by Chapter 804 for a domestic
1033	1033	company; and
1034	1034	(C) contains basic identifying information as
1035	1035	the commissioner may require; and
1036	1036	(4) files with the department, for informational
1037	1037	purposes only, a copy of the form of any contract entered into
1038	1038	between the contracting agent and physicians or health care
1039	1039	providers in this state or with payors.
1040	1040	(b) The commissioner may adopt rules or issue orders as
1041	1041	necessary to implement this section.
1042	1042	(c) This section expires September 1, 2010.
1043	1043	[Sections 1302.054-1302.100 reserved for expansion]
1044	1044	SUBCHAPTER C. PROHIBITION OF CERTAIN TRANSFERS;
1045	1045	NOTICE REQUIREMENTS
1046	1046	Sec. 1302.101. PROHIBITION OF CERTAIN TRANSFERS. (a) A
1047	1047	contracting agent may not transfer a physician's or health care
1048	1048	provider's contracted discounted fee or any other contractual
1049	1049	obligation unless the transfer is authorized by a contractual
1050	1050	agreement that complies with this chapter.
1051	1051	(b) This section does not affect the authority of the
1052	1052	commissioner of insurance or the commissioner of workers'
1053	1053	compensation under this code or Title 5, Labor Code, to request and
1054	1054	obtain information.
1055	1055	Sec. 1302.102. IDENTIFICATION OF PAYORS; TERMINATION OF
1056	1056	CONTRACT. (a) A contracting agent shall notify each physician and
1057	1057	health care provider of the identity of, and contact information
1058	1058	for, the payors and contracting agents authorized to access a
1059	1059	contracted discounted fee of the physician or provider. The notice
1060	1060	requirement under this subsection does not apply to an employer
1061	1061	authorized to access a discounted fee through a contracting agent.
1062	1062	(b) The notice required under Subsection (a) must:
1063	1063	(1) be provided, at least every calendar quarter,
1064	1064	through:
1065	1065	(A) electronic mail, after provision by the
1066	1066	affected physician or health care provider of a current electronic
1067	1067	mail address; and
1068	1068	(B) posting of a list on a secure Internet
1069	1069	website; and
1070	1070	(2) include a separate prominent section that lists:
1071	1071	(A) the payors that the contracting agent knows
1072	1072	will have access to a discounted fee of the physician or health care
1073	1073	provider in the succeeding calendar quarter; and
1074	1074	(B) the effective date of any applicable contract
1075	1075	and the termination date of the contract.
1076	1076	(c) The electronic mail notice under Subsection (b)(1)(A)
1077	1077	may contain a link to a secure Internet website that contains a list
1078	1078	of payors that complies with this section.
1079	1079	(d) The identity of a payor or contracting agent authorized
1080	1080	to access a contracted discounted fee of the physician or provider
1081	1081	that becomes known to the contracting agent required to submit the
1082	1082	notice under Subsection (a) must be included in the subsequent
1083	1083	notice.
1084	1084	(e) If, after receipt of the notice required under
1085	1085	Subsection (a), a physician or health care provider objects to the
1086	1086	addition of a payor to access to a discounted fee, other than a
1087	1087	payor that is an employer that is a self-insured health plan, the
1088	1088	physician or health care provider may terminate its contract by
1089	1089	providing written notice to the contracting agent not later than
1090	1090	the 30th day after the date on which the physician or health care
1091	1091	provider receives the notice required under Subsection (a).
1092	1092	Termination of a contract under this subsection is subject to
1093	1093	applicable continuity of care requirements under Section 843.362
1094	1094	and Subchapter D, Chapter 1301.
1095	1095	[Sections 1302.103-1302.150 reserved for expansion]
1096	1096	SUBCHAPTER D. RESTRICTIONS ON TRANSFERS
1097	1097	Sec. 1302.151. RESTRICTIONS ON TRANSFERS; EXCEPTION. (a)
1098	1098	In this section, "line of business" includes noninsurance plans,
1099	1099	fully self-insured health plans, Medicare Advantage plans, and
1100	1100	personal injury protection under an automobile insurance policy.
1101	1101	(b) Except as provided by Subsection (d), a contract between
1102	1102	a contracting agent and a physician or health care provider may not
1103	1103	require the physician or health care provider to:
1104	1104	(1) consent to the disclosure or transfer of the
1105	1105	physician's or health care provider's name and a contracted
1106	1106	discounted fee for use with more than one line of business;
1107	1107	(2) accept all insurance products; or
1108	1108	(3) consent to the disclosure or transfer of the
1109	1109	physician's or health care provider's name and access to a
1110	1110	contracted discounted fee of the physician or provider in a chain of
1111	1111	transfers that exceeds two transfers.
1112	1112	(c) A contract between a contracting agent and a physician
1113	1113	or health care provider must require that any third party who
1114	1114	accesses the physician's or health care provider's health care
1115	1115	contract is obligated to comply with all of the applicable terms and
1116	1116	conditions of the contract, including the lines of business for
1117	1117	which the physician or health care provider has agreed to provide
1118	1118	services.
1119	1119	(d) Notwithstanding Subsection (b)(1):
1120	1120	(1) a contracting agent may offer, but may not
1121	1121	require, a contract containing more than one line of business if:
1122	1122	(A) the physician's or health care provider's
1123	1123	assent is invited via a separate signature line for each line of
1124	1124	business;
1125	1125	(B) a fee schedule for each line of business is
1126	1126	presented in a separate section of the contract or in an appendix to
1127	1127	the contract, including applicable Current Procedural Terminology
1128	1128	(CPT) codes, Healthcare Common Procedure Coding System (HCPCS)
1129	1129	codes, International Classification of Diseases, Ninth Revision,
1130	1130	Clinical Modification (ICD-9-CM) codes, and modifiers:
1131	1131	(i) by which all claims for services
1132	1132	submitted by or on behalf of the physician or health care provider
1133	1133	will be computed and paid; or
1134	1134	(ii) that relates to the range of health
1135	1135	care services reasonably expected to be delivered under the
1136	1136	contract by that physician or health care provider on a routine
1137	1137	basis; and
1138	1138	(C) the fee schedule described by Paragraph (B)
1139	1139	is accompanied by a toll-free telephone number or electronic
1140	1140	address through which the physician may request the fee schedules,
1141	1141	applicable coding methodologies, and bundling processes applicable
1142	1142	for any services that the physician intends to provide; and
1143	1143	(2) a contract that uses a single fee schedule for all
1144	1144	lines of business may contain a single appendix that is prominently
1145	1145	referenced with the signature line for each line of business.
1146	1146	(e) Notwithstanding Subsection (b)(2), a contract between a
1147	1147	contracting agent and a physician or health care provider may
1148	1148	require the physician or health care provider to accept all
1149	1149	insurance products within a line of business covered by the
1150	1150	contract.
1151	1151	[Sections 1302.152-1302.200 reserved for expansion]
1152	1152	SUBCHAPTER E. DISCLOSURE REQUIREMENTS
1153	1153	Sec. 1302.201. IDENTIFICATION OF CONTRACTING AGENT. An
1154	1154	explanation of payment or remittance advice in an electronic or
1155	1155	paper format must include the identity of the contracting agent
1156	1156	authorized to disclose or transfer the name and associated
1157	1157	discounts of a physician or health care provider.
1158	1158	Sec. 1302.202. IDENTIFICATION OF ENTITY ASSUMING FINANCIAL
1159	1159	RISK; CONTRACTING AGENT. A payor or representative of a payor that
1160	1160	processes claims or claims payments must clearly identify in an
1161	1161	electronic or paper format on the explanation of payment or
1162	1162	remittance advice the identity of:
1163	1163	(1) the payor that assumes the risk for payment of
1164	1164	claims or reimbursement for services; and
1165	1165	(2) the contracting agent through which the payment
1166	1166	rate and any discount are claimed.
1167	1167	Sec. 1302.203. INFORMATION ON IDENTIFICATION CARDS. If a
1168	1168	contracting agent or payor issues member or subscriber
1169	1169	identification cards, the identification cards must identify, in a
1170	1170	clear and legible manner, any third-party entity, including any
1171	1171	contracting agent:
1172	1172	(1) who is responsible for paying claims; and
1173	1173	(2) through whom the payment rate and any discount are
1174	1174	claimed.
1175	1175	[Sections 1302.204-1302.250 reserved for expansion]
1176	1176	SUBCHAPTER F. ENFORCEMENT
1177	1177	Sec. 1302.251. PENALTIES. (a) A contracting agent who
1178	1178	holds a certificate of authority or license under this code and who
1179	1179	violates this chapter is subject to administrative penalties in the
1180	1180	manner prescribed by Chapters 82 and 84.
1181	1181	(b) A violation of this chapter by a contracting agent who
1182	1182	does not hold a certificate of authority or license under this code
1183	1183	constitutes a violation of Subchapter E, Chapter 17, Business &
1184	1184	Commerce Code.
1185	1185	SECTION 6.002. Sections 1301.001(4) and (6), Insurance
1186	1186	Code, are amended to read as follows:
1187	1187	(4) "Institutional provider" means a hospital,
1188	1188	nursing home, or other medical or health-related service facility
1189	1189	that provides care for the sick or injured or other care that may be
1190	1190	covered in a health insurance policy. The term includes an
1191	1191	ambulatory surgical center.
1192	1192	(6) "Physician" means:
1193	1193	(A) an individual [a person] licensed to practice
1194	1194	medicine in this state under the authority of Title 3, Subtitle B,
1195	1195	Occupations Code;
1196	1196	(B) a professional entity organized in
1197	1197	conformity with Title 7, Business Organizations Code, and
1198	1198	permitted to practice medicine under Subtitle B, Title 3,
1199	1199	Occupations Code;
1200	1200	(C) a partnership organized in conformity with
1201	1201	Title 4, Business Organizations Code, comprised entirely by
1202	1202	individuals licensed to practice medicine under Subtitle B, Title
1203	1203	3, Occupations Code;
1204	1204	(D) an approved nonprofit health corporation
1205	1205	certified under Chapter 162, Occupations Code;
1206	1206	(E) a medical school or medical and dental unit,
1207	1207	as defined or described by Section 61.003, 61.501, or 74.501,
1208	1208	Education Code, that employs or contracts with physicians to teach
1209	1209	or provide medical services or employs physicians and contracts
1210	1210	with physicians in a practice plan; or
1211	1211	(F) any other person wholly owned by individuals
1212	1212	licensed to practice medicine under Subtitle B, Title 3,
1213	1213	Occupations Code.
1214	1214	SECTION 6.003. Section 1301.056, Insurance Code, is amended
1215	1215	to read as follows:
1216	1216	Sec. 1301.056. RESTRICTIONS ON PAYMENT AND REIMBURSEMENT.
1217	1217	(a) An insurer, [or] third-party administrator, or other entity may
1218	1218	not reimburse a physician or other practitioner, institutional
1219	1219	provider, or organization of physicians and health care providers
1220	1220	on a discounted fee basis for covered services that are provided to
1221	1221	an insured unless:
1222	1222	(1) the insurer, [or] third-party administrator, or
1223	1223	other entity has contracted with either:
1224	1224	(A) the physician or other practitioner,
1225	1225	institutional provider, or organization of physicians and health
1226	1226	care providers; or
1227	1227	(B) a preferred provider organization that has a
1228	1228	network of preferred providers and that has contracted with the
1229	1229	physician or other practitioner, institutional provider, or
1230	1230	organization of physicians and health care providers;
1231	1231	(2) the physician or other practitioner,
1232	1232	institutional provider, or organization of physicians and health
1233	1233	care providers has agreed to the contract and has agreed to provide
1234	1234	health care services under the terms of the contract; and
1235	1235	(3) the insurer, [or] third-party administrator, or
1236	1236	other entity has agreed to provide coverage for those health care
1237	1237	services under the health insurance policy.
1238	1238	(b) A party to a preferred provider contract, including a
1239	1239	contract with a preferred provider organization, may not sell,
1240	1240	lease, assign, aggregate, disclose, or otherwise transfer the
1241	1241	discounted fee, or any other information regarding the discount,
1242	1242	payment, or reimbursement terms of the contract without the express
1243	1243	authority of and [prior] adequate notification to the other
1244	1244	contracting parties. This subsection does not:
1245	1245	(1) prohibit a payor from disclosing any information,
1246	1246	including fees, to an insured; or
1247	1247	(2) affect the authority of the commissioner of
1248	1248	insurance or the commissioner of workers' compensation under this
1249	1249	code or Title 5, Labor Code, to request and obtain information.
1250	1250	(c) An insurer, third-party administrator, or other entity
1251	1251	may not access a discounted fee, other than through a direct
1252	1252	contract, unless notice has been provided to the contracted
1253	1253	physicians, practitioners, institutional providers, and
1254	1254	organizations of physicians and health care providers. For the
1255	1255	purposes of the notice requirements of this subsection, the term
1256	1256	"other entity" does not include an employer that contracts with an
1257	1257	insurer or third-party administrator.
1258	1258	(d) The notice required under Subsection (c) must:
1259	1259	(1) be provided, at least every calendar quarter,
1260	1260	through:
1261	1261	(A) electronic mail, after provision by the
1262	1262	affected physician or health care provider of a current electronic
1263	1263	mail address; and
1264	1264	(B) posting of a list on a secure Internet
1265	1265	website; and
1266	1266	(2) include a separate prominent section that lists:
1267	1267	(A) the insurers, third-party administrators, or
1268	1268	other entities that the contracting party knows will have access to
1269	1269	a discounted fee of the physician or health care provider in the
1270	1270	succeeding calendar quarter; and
1271	1271	(B) the effective date of any applicable contract
1272	1272	and the termination date of the contract.
1273	1273	(e) The electronic mail notice under Subsection (d)(1)(A)
1274	1274	may contain a link to a secure Internet website that contains a list
1275	1275	of payors that complies with this section.
1276	1276	(f) The identity of an insurer, third-party administrator,
1277	1277	or other entity authorized to access a contracted discounted fee of
1278	1278	the physician or provider that becomes known to the contracting
1279	1279	party required to submit the notice under Subsection (c) must be
1280	1280	included in the subsequent notice.
1281	1281	(g) If, after receipt of the notice required under
1282	1282	Subsection (c), a physician or other practitioner, institutional
1283	1283	provider, or organization of physicians and health care providers
1284	1284	objects to the addition of an insurer, third-party administrator,
1285	1285	or other entity to access to a discounted fee, the physician or
1286	1286	other practitioner, institutional provider, or organization of
1287	1287	physicians and health care providers may terminate its contract by
1288	1288	providing written notice to the contracting party not later than
1289	1289	the 30th day after the date of the receipt of the notice required
1290	1290	under Subsection (c).
1291	1291	(h) An insurer, third-party administrator, or other entity
1292	1292	that processes claims or claims payments shall clearly identify in
1293	1293	an electronic or paper format on the explanation of payment or
1294	1294	remittance advice:
1295	1295	(1) the identity of the party responsible for
1296	1296	administering the claims; and
1297	1297	(2) if the insurer, third-party administrator, or
1298	1298	other entity does not have a direct contract with the physician or
1299	1299	other practitioner, institutional provider, or organization of
1300	1300	physicians and health care providers, the identity of the preferred
1301	1301	provider organization or other contracting party that authorized a
1302	1302	discounted fee.
1303	1303	(i) If an insurer, third-party administrator, or other
1304	1304	entity issues member or insured identification cards, the
1305	1305	identification cards must include, in a clear and legible format,
1306	1306	the information required under Subsection (h).
1307	1307	(j) An insurer, [or] third-party administrator, or other
1308	1308	entity that holds a certificate of authority or license under this
1309	1309	code who violates this section:
1310	1310	(1) commits an unfair settlement practice in violation
1311	1311	of Chapter 541;
1312	1312	(2) commits an unfair claim settlement practice in
1313	1313	violation of Subchapter A, Chapter 542; and
1314	1314	(3) [(2)] is subject to administrative penalties
1315	1315	under Chapters 82 and 84.
1316	1316	(k) A violation of this section by an entity described by
1317	1317	this section who does not hold a certificate of authority or license
1318	1318	issued under this code constitutes a violation of Subchapter E,
1319	1319	Chapter 17, Business & Commerce Code.
1320	1320	(l) A physician or health care provider affected by a
1321	1321	violation of this section may bring a private action for damages in
1322	1322	the manner prescribed by Subchapter D, Chapter 541, against a
1323	1323	contracting agent who violates this section.
1324	1324	SECTION 6.004. The change in law made by this article
1325	1325	applies only to a cause of action that accrues on or after the
1326	1326	effective date of this article. A cause of action that accrues
1327	1327	before that date is governed by the law as it existed immediately
1328	1328	before the effective date of this article, and that law is continued
1329	1329	in effect for that purpose.
1330	1330	SECTION 6.005. The commissioner of insurance shall adopt
1331	1331	rules as necessary to implement Chapter 1302, Insurance Code, as
1332	1332	added by this article, not later than December 1, 2009.
1333	1333	SECTION 6.006. This article applies only to a contract
1334	1334	entered into or renewed on or after January 1, 2010. A contract
1335	1335	entered into or renewed before January 1, 2010, is governed by the
1336	1336	law as it existed immediately before the effective date of this
1337	1337	article, and that law is continued in effect for that purpose.
1338	1338	SECTION 6.007. A person is not required to register under
1339	1339	Subchapter B, Chapter 1302, Insurance Code, as added by this
1340	1340	article, until September 1, 2010.
1341	1341	SECTION 6.008. (a) Except as provided by Subsections (b)
1342	1342	and (c) of this section, this article takes effect September 1,
1343	1343	2009.
1344	1344	(b) Subchapter E, Chapter 1302, Insurance Code, as added by
1345	1345	this article, takes effect January 1, 2010.
1346	1346	(c) Subchapter F, Chapter 1302, Insurance Code, as added by
1347	1347	this article, takes effect September 1, 2010.
1348	1348	ARTICLE 7. EFFECTIVE DATE
1349	1349	SECTION 7.001. Except as otherwise provided by this Act,
1350	1350	this Act takes effect immediately if it receives a vote of
1351	1351	two-thirds of all the members elected to each house, as provided by
1352	1352	Section 39, Article III, Texas Constitution. If this Act does not
1353	1353	receive the vote necessary for immediate effect, this Act takes
1354	1354	effect September 1, 2009.