81R9707 ALB-F
By: Coleman H.B. No. 3473
A BILL TO BE ENTITLED
AN ACT
relating to charity care.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The legislature finds that:
(1) uninsured or underinsured individuals in this
state usually seek health care services at a health care facility
when the individuals are vulnerable and in an unfair bargaining
position;
(2) uninsured and underinsured individuals in this
state are often charged two to four times the reimbursement rate
sought by health care facilities from third party payors for the
same or similar health care services;
(3) medical debt is considered one of the leading
causes of personal bankruptcy and harms the commerce of this state;
and
(4) charging uninsured and underinsured individuals
disproportionately higher reimbursement rates than the rates
charged to third party payors for the same or similar health care
services is unconscionable, fosters bankruptcy, and is contrary to
this state's public policy of promoting fair business practices and
a healthy economy.
SECTION 2. Subchapter A, Chapter 311, Health and Safety
Code, is amended by adding Sections 311.0011 and 311.0012 to read as
follows:
Sec. 311.0011. DISCRIMINATION PROHIBITED. (a) In this
section:
(1) "Contractual allowances" has the meaning assigned
by Section 311.031.
(2) "Discount" means the contractual allowance
expressed as a percentage of the health care facility's established
rates.
(3) "Hospital" has the meaning assigned by Section
311.031.
(4) "Medically necessary health care services" means
an inpatient or outpatient hospital service, including
pharmaceuticals or supplies provided by a hospital to a patient,
that are covered under Medicare for beneficiaries with the same
clinical presentation as the uninsured or underinsured patient.
The term does not include:
(A) nonmedical services such as social and
vocational services; and
(B) elective cosmetic surgery, but not including
plastic surgery designed to correct disfigurement caused by injury,
illness, or congenital defect or deformity.
(5) "Underinsured individual" means an individual
seeking health care services who has third party coverage under a
public or private health insurance plan and whose out-of-pocket
expenses for health care services are estimated by a health care
facility to equal five percent or more of the applicant's after-tax
income.
(6) "Uninsured individual" means an individual
seeking health care services who lacks third party coverage from a
health insurer, a health care service plan, Medicare, or Medicaid
and whose injury is not compensable for purposes of workers'
compensation, automobile insurance, or other insurance as
determined and documented by a health care facility.
(b) A hospital may not deny medically necessary health care
services to an otherwise eligible individual based on the
individual's status as an uninsured or underinsured individual.
(c) A hospital may not discriminate against an uninsured or
underinsured individual for health care services through the
hospital's pricing policies, including discounts provided and
actual reimbursement rates charged. The price charged by a
hospital to an uninsured or underinsured individual for a medically
necessary health care service may not exceed the greater of:
(1) 125 percent of the hospital's Medicare
reimbursement rate for that service; or
(2) a reimbursement rate based on a discount that is
not less than 90 percent of the hospital's weighted average
contract allowance.
(d) The Department of State Health Services shall enforce
this section. The department may audit a hospital for
noncompliance and bring an enforcement action against the hospital.
The department shall investigate complaints made under this chapter
by members of the public.
(e) A person who files a complaint has a right to a hearing
under Chapter 2001, Government Code, including the right to
judicial review of the department's decision under the substantial
evidence rule.
(f) The executive commissioner of the Health and Human
Services Commission shall be a named defendant in a proceeding for
judicial review.
(g) An uninsured or underinsured individual may bring a
private cause of action for a violation of this section and has the
right to recover attorney's fees as part of the damages awarded.
(h) The attorney general may bring suit for injunctive
relief against any hospital that violates this section and may
recover refunds from the hospital on behalf of uninsured and
underinsured individuals charged prices in violation of this
section.
(i) The executive commissioner of the Health and Human
Services Commission may adopt rules to enforce this section.
Sec. 311.0012. INSTALLMENT PAYMENTS FOR QUALIFIED
PATIENTS. (a) In this section:
(1) "Family income" means the sum of a family's annual
earnings and cash benefits from all sources before taxes.
(2) "Hospital" has the meaning assigned by Section
311.031.
(3) "Medically necessary health care services" has the
meaning assigned by Section 311.0011.
(b) This section applies only to an individual whose family
income is not more than 600 percent of the federal poverty level and
whose estimated or actual charges for medically necessary health
care services provided by a hospital under this chapter exceed 20
percent of the individual's income after taxes.
(c) A hospital may not collect an amount equal to more than
20 percent of an individual's family income during a 12-month
period for medically necessary health care services provided by the
hospital to an individual described by Subsection (b). The
12-month period begins on the first day an individual is determined
to be covered by this section and receives medically necessary
health care services from the hospital.
(d) A hospital may adopt policies to exclude an individual
from the application of Subsection (c) if the individual owns
assets that exceed 200 percent of the greater of the estimated
charges for medically necessary health care services that have been
and will be provided to the individual or the incurred charges that
have been provided. The policies must provide that the hospital may
not count the following assets:
(1) the individual's homestead;
(2) personal property exempt from a creditor's claims
under Chapter 42, Property Code; or
(3) any amounts held in a pension or retirement plan,
except that distributions and payments from pension or retirement
plans may be included as income for the purposes of this section.
(e) This section does not apply to a hospital that does not
charge for services.
(f) The attorney general shall ensure compliance with this
section. The attorney general may audit a hospital's books and
records, may conduct any investigation considered necessary
regarding possible violations of this section by a hospital, may
bring suit against the hospital for violations of this section, and
may seek relief, including an injunction.
(g) Subsection (f) does not preclude the application of any
other compliance and enforcement provisions permitted under this
chapter.
SECTION 3. Sections 311.031(2) and (16), Health and Safety
Code, are amended to read as follows:
(2) "Charity care" means the unreimbursed cost, not
including bad debt expense, to a hospital of:
(A) providing, funding, or otherwise financially
supporting health care services on an inpatient or outpatient basis
to a person classified by the hospital as "financially indigent" or
"medically indigent"; and/or
(B) providing, funding, or otherwise financially
supporting health care services provided to financially indigent
persons through other nonprofit or public outpatient clinics,
hospitals, or health care organizations.
(16) "Unreimbursed costs" means the costs a hospital
incurs for providing services after subtracting payments received
from any source for such services including but not limited to the
following: third-party insurance payments; Medicare payments;
Medicaid payments; Medicare education reimbursements; state
reimbursements for education; payments from drug companies to
pursue research; grant funds for research; and disproportionate
share payments. For purposes of this definition, the term "costs"
shall be calculated by applying the hospital's Medicare cost ratio
[to charge ratios derived in accordance with generally accepted
accounting principles for hospitals] to billed charges. The
executive commissioner of the Health and Human Services Commission
by rule may supplement the Medicare cost ratio with additional
expenses and revenues that are reasonable and medically necessary
and subject to third-party insurer reimbursement. The calculation
of the cost to charge ratios shall be based on the most recently
completed and audited prior fiscal year of the hospital or hospital
system. Prior to January 1, 1996, for purposes of this definition,
charitable contributions and grants to a hospital, including
transfers from endowment or other funds controlled by the hospital
or its nonprofit supporting entities, shall not be subtracted from
the costs of providing services for purposes of determining
unreimbursed costs. After January 1, 1996, for purposes of this
definition, charitable contributions and grants to a hospital,
including transfers from endowment or other funds controlled by the
hospital or its nonprofit supporting entities, shall not be
subtracted from the costs of providing services for purposes of
determining the unreimbursed costs of charity care and
government-sponsored indigent health care.
SECTION 4. Section 311.032(a), Health and Safety Code, is
amended to read as follows:
(a) The department shall establish a uniform and
transparent reporting and collection system for hospital financial
and utilization data and for nonprofit hospital reporting of the
hospital's duties as required by Subchapter D. The department may
rely on the Internal Revenue Service Form 990, Schedule H, as
adopted in 2008, for the nonprofit hospital's reporting of data to
the extent not inconsistent with the requirements prescribed by
this chapter.
SECTION 5. Section 311.042(2), Health and Safety Code, is
amended to read as follows:
(2) "Community benefits" means the unreimbursed cost
to a hospital of providing charity care and [,]
government-sponsored indigent health care, and to the extent not
otherwise included in this subdivision, donations, education,
government-sponsored program services, research, and subsidized
health services provided in response to community health needs and
not for marketing purposes. "Community benefits" does not include
the cost to the hospital of paying any taxes or other governmental
assessments.
SECTION 6. Section 311.044, Health and Safety Code, is
amended by amending Subsections (a) and (c) and adding Subsection
(f) to read as follows:
(a) A nonprofit hospital shall develop:
(1) an organizational mission statement that
identifies the hospital's commitment to serving the health care
needs of the community; and
(2) a community benefits plan defined as an
operational plan for serving the community's health care needs in
coordination with local governmental and public health care
planning that sets out goals and objectives for providing community
benefits that include charity care and government-sponsored
indigent health care, as the terms community benefits, charity
care, and government-sponsored indigent health care are defined by
Sections 311.031 and 311.042, and that identifies the populations
and communities served by the hospital.
(c) The hospital shall include at least the following
elements in the community benefits plan:
(1) mechanisms to evaluate the plan's effectiveness,
including but not limited to a method for soliciting the views of
the communities served by the hospital;
(2) measurable objectives to be achieved within a
specified time frame; [and]
(3) a budget for the plan; and
(4) a list of the goals and objectives chosen by the
hospital, including a description of the process used to choose the
goals and objectives and an explanation of how the goals and
objectives are consistent with local governmental and public health
care planning.
(f) Before adopting a community benefits plan, the hospital
must hold at least one public hearing to provide for public input
into the community benefits planning process.
SECTION 7. Section 311.045(b), Health and Safety Code, is
amended to read as follows:
(b)(1) A nonprofit hospital or hospital system may elect to
provide community benefits, which include charity care and
government-sponsored indigent health care, according to any of the
following standards:
(A) [charity care and government-sponsored
indigent health care are provided at a level which is reasonable in
relation to the community needs, as determined through the
community needs assessment, the available resources of the hospital
or hospital system, and the tax-exempt benefits received by the
hospital or hospital system;
[(B)] charity care and government-sponsored
indigent health care are provided in an amount equal to at least 100
percent of the hospital's or hospital system's tax-exempt
benefits[, excluding federal income tax]; or
(B) [(C)] charity care and community benefits
are provided in a combined amount equal to at least five percent of
the hospital's or hospital system's net patient revenue, provided
that charity care and government-sponsored indigent health care are
provided in an amount equal to at least four percent of net patient
revenue.
(2) For purposes of satisfying Subdivision (1)(B)
[(1)(C)], a hospital or hospital system may not change its existing
fiscal year unless the hospital or hospital system changes its
ownership or corporate structure as a result of a sale or merger.
[(3) A nonprofit hospital that has been designated as
a disproportionate share hospital under the state Medicaid program
in the current fiscal year or in either of the previous two fiscal
years shall be considered to have provided a reasonable amount of
charity care and government-sponsored indigent health care and
shall be deemed in compliance with the standards in this
subsection.]
SECTION 8. Section 311.046, Health and Safety Code, is
amended by adding Subsections (d-1) and (f) to read as follows:
(d-1) The hospital shall include in the first bill sent to a
patient by the hospital a notice that includes a hospital contact
name and telephone number. The notice must be on the first page of
the bill or in an insert, must be written in at least 12-point type,
and shall inform the patient that:
(1) the hospital has a charity care program for
low-income patients;
(2) the patient may qualify; and
(3) the patient may contact the hospital for more
information or to apply for the program.
(f) Each hospital shall maintain a copy of the hospital's
current community benefits plan and most recently filed annual
report of the community benefits plan for public inspection and
copying at the hospital's admission office or other location
readily available to the public and shall post the plan and report
in a conspicuous and readily accessible location on the hospital's
website.
SECTION 9. Subchapter D, Chapter 311, Health and Safety
Code, is amended by adding Section 311.0462 to read as follows:
Sec. 311.0462. AGENCY WEBSITE PUBLICATION OF CHARITY
CARE-RELATED REPORTS. (a) In this section, "department" means the
Department of State Health Services.
(b) The department shall timely and annually post for public
access in a conspicuous location on the department's website:
(1) the most recent individual nonprofit hospital
reports concerning the nonprofit hospitals' charity care
obligations under this subchapter; and
(2) annual reports required under Sections 311.035 and
311.0455.
(c) The department shall:
(1) maintain an accessible archive of previously
posted reports described by Subsection (b); and
(2) post a link to the specific web page on the
attorney general's website that addresses nonprofit charity care.
(d) Reports described by:
(1) Subsection (b)(1) shall be indexed by hospital,
report, and year; and
(2) Subsection (b)(2) shall be indexed by report and
year.
SECTION 10. Subchapter D, Chapter 311, Health and Safety
Code, is amended by adding Section 311.0471 to read as follows:
Sec. 311.0471. INVESTIGATION AND ENFORCEMENT. (a) Except
as otherwise provided, this section applies only to a hospital, as
that term is defined by Section 311.031.
(b) The attorney general shall investigate whether a
hospital has violated this chapter on receipt of a public
complaint.
(c) The attorney general may conduct any investigation
considered necessary regarding possible violations of this chapter
by a hospital, including:
(1) examination of the hospital's premises;
(2) on written request to the chief operating officer
of the hospital, examination of any record, book, document,
account, or paper necessary to investigate the alleged violation;
(3) requiring the hospital to file a statement or
report or answer interrogatories in writing relating to all
information relevant to the alleged violations; and
(4) subpoena examination under oath of any person who
possesses knowledge or information directly related to the alleged
violations.
(d) If the attorney general has reason to believe that a
hospital has violated this chapter, the attorney general may bring
action on behalf of the state against the hospital to obtain
temporary, preliminary, or permanent injunctive relief for any act,
policy, or practice by the hospital that violates this chapter.
Before bringing an action, the attorney general may permit the
hospital to submit a correction plan for the attorney general's
approval.
(e) The attorney general may seek a civil monetary penalty
not to exceed $1,000 per violation per day if a hospital, by pattern
or practice, knowingly violates this chapter. In an action filed
under this chapter, the attorney general may seek the recovery of
court costs and legal fees.
(f) If a court grants a final order of relief against a
nonprofit hospital subject to this subchapter for a violation of
this chapter, the attorney general shall notify each taxing
authority that has granted the nonprofit hospital a tax exemption
about the court's decision.
(g) The attorney general shall establish a complaint
process through which the public may file complaints involving
violations of this chapter. The complaint process at a minimum must
include:
(1) a mail address, a toll-free telephone number, and
an e-mail address for receiving complaints;
(2) a public education campaign concerning the
obligations hospitals have to the public under this chapter;
(3) a public education campaign concerning the
attorney general's complaint process; and
(4) complaint forms and instructions to aid the public
in making complaints.
(h) The attorney general shall prepare and publicly
distribute, including posting in a conspicuous location on the
attorney general's website, an annual report that informs the
public of the attorney general's activities under this chapter for
the previous year.
SECTION 11. Sections 311.045(c) and (d), Health and Safety
Code, are repealed.
SECTION 12. This Act takes effect September 1, 2009.