By: Truitt H.B. No. 4341
A BILL TO BE ENTITLED
AN ACT
relating to the regulation of discount health care programs by the
Texas Department of Insurance; providing penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The Insurance Code is amended by adding Title 21
to read as follows:
TITLE 21. DISCOUNT HEALTH CARE PROGRAMS
CHAPTER 7001. REGISTRATION AND REGULATION OF
DISCOUNT HEALTH CARE PROGRAMS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 7001.001. DEFINITIONS. In this chapter:
(1) "Discount health care program" means a business
arrangement or contract in which an entity, in exchange for fees,
dues, charges, or other consideration, offers its members access to
discounts on health care services provided by health care
providers. The term does not include an insurance policy, a
certificate of coverage, or a self-funded or self-insured employee
benefit plan.
(2) "Discount health care program operator" means a
person who, in exchange for fees, dues, charges, or other
consideration, operates a discount health care program and
contracts with providers, provider networks, or other discount
health care program operators to offer access to health care
services at a discount and determines the charge to members.
(3) "Health care services" includes physician care,
inpatient care, hospital surgical services, emergency services,
ambulance services, laboratory services, audiology services,
dental services, vision services, mental health services,
substance abuse services, chiropractic services, and podiatry
services, and medical equipment and supplies.
(4) "Marketer" means a person who sells or
distributes, or offers to sell or distribute, a discount health
care program, including a private label entity that places its name
on and markets or distributes a discount health care program, but
does not operate a discount health care program.
(5) "Member" means a person who pays fees, dues,
charges, or other consideration for the right to participate in a
discount health care program.
(6) "Program operator" means a discount health plan
program operator.
(7) "Provider" means a person who is licensed or
otherwise authorized to provide health care services in this state.
Sec. 7001.002. APPLICABILITY OF OTHER LAW. In addition to
the requirements of this chapter, a program operator or marketer is
subject to the applicable consumer protection laws under Chapter
17, Business & Commerce Code.
Sec. 7001.003. RULES. The commissioner shall adopt the
rules necessary to implement this chapter.
[Sections 7001.004-7001.050 reserved for expansion]
SUBCHAPTER B. PROGRAM REQUIREMENTS
Sec. 7001.051. PROGRAM OPERATOR. Except as otherwise
provided by this chapter, a program operator, including the
operator of a freestanding discount health care program or a
discount health care program marketed by an insurer or a health
maintenance organization, shall comply with this chapter.
Sec. 7001.052. PROHIBITED ADVERTISEMENT, SOLICITATION, AND
MARKETING. (a) Advertisements, solicitations, or marketing
materials of a discount health care program may not contain false,
misleading, or deceptive statements, including statements that:
(1) misrepresent the price range of discounts offered
by the discount health care program;
(2) misrepresent the size or location of the program's
network of providers;
(3) knowingly misrepresent the participation of a
provider in the program's network; or
(4) suggest that a discount card offered through the
program is a federally approved Medicare prescription discount
card.
(b) Each advertisement, solicitation, or marketing material
of a discount health care program must clearly and conspicuously
state that the discount health care program is not insurance.
(c) Advertisements, solicitations, or marketing materials
of a discount health care program may not use the term "insurance,"
except as a disclaimer of any relationship between the discount
health care program and insurance, or as a description of an
insurance product connected with a discount health care program.
(d) Advertisements, solicitations, or marketing materials
of a discount health care program may not use the term "health
plan," "coverage," "copay," "copayments," "deductible,"
"preexisting conditions," "guaranteed issue," "premium," "PPO," or
"preferred provider organization," or another similar term, in a
manner that could reasonably mislead an individual into believing
that the discount health care program is health insurance or
provides similar coverage.
(e) Advertisements, solicitations, or marketing materials
of a discount health care program may not use the term "free," "no
obligation," "discounted," or "reduced," or another similar term,
without disclosing clearly and conspicuously, and in close
proximity to the use of the term, any and all conditions,
limitations, and restrictions on the ability of the member or
prospective member to obtain or use the good or service to which the
term applies.
(f) A program operator may not offer a "free" trial
membership in a discount health care program without disclosing
clearly and conspicuously, and in close proximity to the offer:
(1) any obligation of the member or prospective member
associated with accepting the offered trial membership, including:
(A) an obligation to purchase other goods and
services;
(B) an obligation to cancel membership or take
other affirmative action to avoid incurring payment obligations;
and
(C) the manner in which a cancellation request
may be submitted;
(2) the number of payments and the amount of each
payment that are or may be required and the circumstances under
which additional payments may be required; and
(3) the conditions, limitations, and restrictions on
the ability of the member or prospective member to use or cancel the
offered trial membership.
Sec. 7001.053. DISCLOSURE MATERIALS REQUIRED. (a) A
program operator, before enrollment or with the written materials
describing the terms and conditions of the program that are
provided not later than the 15th day after the date of enrollment,
shall provide each prospective or new member disclosure materials
containing the following information:
(1) a general description of the services and products
offered through the discount health care program and the types of
providers available;
(2) a toll-free telephone number and an Internet
website address through which a person may:
(A) obtain information about the discount health
care program; and
(B) confirm or find a provider currently
participating in that program;
(3) a clear and conspicuous statement that:
(A) the discount health care program is not
insurance, with the word "not" capitalized; and
(B) the member is required to pay the entire
amount of the discounted rate;
(4) a statement that a member who cancels the
membership not later than the 30th day after the date the member
joins the discount health care program is entitled to a refund of
all periodic membership charges paid to the discount health care
program and the amount of any one-time enrollment fee that exceeds
$50;
(5) a statement that the discount health care program
does not guarantee the quality of the services or products offered
by individual providers;
(6) a statement that a member may file a complaint
under the discount health care program's complaint resolution
procedure regarding the availability of contracted discounts or
services or other matters relating to the contractual obligations
of the program to its members; and
(7) information that, if the member remains
dissatisfied after completing the discount health care program's
complaint system, the member may contact the department.
(b) A marketer shall use disclosure materials that comply
with Subsection (a).
Sec. 7001.054. PROGRAM OPERATOR DUTIES. A program operator
shall:
(1) provide a toll-free telephone number and Internet
website for members to obtain information about the discount health
care program and confirm or find providers currently participating
in the program;
(2) remove a provider from the discount health care
program not later than the 30th day after the date the operator
learns that the provider has lost the authority to provide services
or products, including the suspension or revocation of the
provider's license;
(3) issue at least one membership card to serve as
proof of membership in the discount health care program that must:
(A) contain a clear and conspicuous statement
that the discount health care program is not insurance; and
(B) if the discount health care program includes
discount prescription drug benefits, include:
(i) the name or logo of the entity
administering the prescription drug benefits;
(ii) the international identification
number assigned by the American National Standards Institute for
the entity administering the prescription drug benefits;
(iii) the group number applicable to the
member; and
(iv) a telephone number to be used to
contact an appropriate person to obtain information relating to the
prescription drug benefits provided under the program;
(4) issue at least one set of disclosure materials to
each household in which a person is a member;
(5) ensure that an application form or other
membership agreement:
(A) clearly and conspicuously discloses the
duration of membership and the amount of payments the member is
obligated to make for the membership; and
(B) contains a clear and conspicuous statement
that the discount health care program is not insurance;
(6) allow any member who cancels a membership in the
discount health care program not later than the 30th day after the
date the person becomes a member to receive a refund, not later than
the 30th day after the date the operator receives a valid
cancellation notice and returned membership card, of all periodic
membership charges paid by that member to the program operator and
the amount of any one-time enrollment fee that exceeds $50;
(7) maintain a surety bond, payable to the department
for the use and benefit of members in a manner prescribed by the
department, in the principal amount of $50,000, except that a
program operator that is an insurer that holds a certificate of
authority under Title 6 is not required to maintain the surety bond;
(8) maintain an agent for service of process in this
state; and
(9) establish and operate a fair and efficient
procedure for resolution of complaints regarding the availability
of contracted discounts or services or other matters relating to
the contractual obligations of the discount health care program to
its members.
Sec. 7001.055. MARKETING OF PROGRAM. (a) A program
operator may market directly or contract with marketers for the
distribution of the operator's discount health care programs.
(b) A program operator shall enter into a written contract
with a marketer before the marketer begins marketing, promoting,
selling, or distributing the program operator's discount health
care program. The contract must prohibit the marketer from using
advertising, solicitations, or other marketing materials, or
discount cards that have not been approved in advance and in writing
by the program operator.
(c) A program operator must approve in writing all
advertisements, solicitations, or other marketing materials, and
discount cards used by marketers to market, promote, sell, or
distribute the discount health care program before their use.
Sec. 7001.056. CONTRACT REQUIREMENTS. (a) A program
operator shall contract, directly or indirectly, with a provider
offering discounted health care services or products under the
discount health care program. The written contract must contain
all of the following provisions:
(1) a description of the discounts to be provided to a
member;
(2) a provision prohibiting the provider from charging
a member more than the discounted rate agreed to in the written
agreement with the provider; and
(3) a provision requiring the provider to promptly
notify the program operator if the provider loses the authority to
provide services or products, including by suspension or revocation
of the provider's license.
(b) The program operator may not charge or receive from a
provider any fee or other compensation for entering into the
agreement.
(c) If the program operator contracts with a network of
providers, the program operator shall obtain written assurance from
the network that:
(1) the network has a written agreement with each
network provider that includes a discounted rate that is applicable
to a program operator's discount health care program and contains
all of the terms described in Subsection (a); and
(2) the network is authorized to obligate the network
providers to provide services to members of the discount health
care program.
(d) The program operator shall require the network to:
(1) maintain and provide the program operator on a
monthly basis an up-to-date list of providers in the network; and
(2) promptly remove a provider from its network if the
provider loses the authority to provide services or products.
(e) The program operator shall maintain a copy of each
written agreement the program operator has with a provider or a
network for at least two years following termination of the
agreement.
[Sections 7001.057-7001.100 reserved for expansion]
SUBCHAPTER C. REGISTRATION
Sec. 7001.101. REGISTRATION REQUIRED; FEES. (a) A program
operator may not offer a discount health care program in this state
unless the operator is registered with the department.
(b) An applicant for registration under this chapter or an
applicant for renewal of registration under this chapter whose
information has changed must submit:
(1) a registration form indicating the program
operator's name, physical address, mailing address, and its agent
for service of process;
(2) a list of names, addresses, official positions,
and biographical information of:
(A) the individuals responsible for conducting
the program operator's affairs, including:
(i) each member of the board of directors,
board of trustees, executive committee, or other governing board or
committee;
(ii) the officers of the program operator;
and
(iii) any contracted management company
personnel; and
(B) any person owning or having the right to
acquire 10 percent or more of the voting securities of the program
operator;
(3) a statement generally describing the applicant,
its facilities and personnel, and the health care services or
products for which a discount will be made available under its
discount health care programs;
(4) a list of the marketers authorized to sell or
distribute the program operator's programs under the program
operator's name and a list of the marketing entities authorized to
private label the program operator's programs; and
(5) a copy of the form of all contracts made or to be
made between the program operator and any providers or provider
networks regarding the provision of health care services or
products to members.
(c) After the initial registration, if the form of a
contract described by Subsection (b)(5) changes, the program
operator must file the modified contract form with the department
before it may be used.
(d) As part of the registration required under Subsection
(b), and annually thereafter, the program operator shall certify to
the department that its programs comply with the requirements of
this chapter.
(e) A discount health care program operator shall pay the
department an initial registration fee of $1,000 and an annual
renewal fee not to exceed $500.
(f) The department may conduct a criminal background check
on the individuals responsible for conducting the program
operator's affairs, each member of the board of directors, board of
trustees, executive committee, or other governing board or
committee, the officers of the program operator, any contracted
management company personnel, and any person owning or having the
right to acquire 10 percent or more of the voting securities of the
program operator.
(g) This section does not apply to a program operator that
is an insurer that holds a certificate of authority under Title 6.
[Sections 7001.102-7001.150 reserved for expansion]
SUBCHAPTER D. ENFORCEMENT
Sec. 7001.151. INVESTIGATION. If the commissioner
reasonably believes that a program operator or marketer is not
operating in compliance with this chapter, the program operator or
marketer must submit to the commissioner any advertising,
solicitations, marketing materials, disclosure materials, discount
cards, agreements, or other documents requested by the
commissioner.
Sec. 7001.152. CIVIL PENALTY. (a) The attorney general may
bring an action for a civil penalty against a person who violates
this chapter or a rule adopted under this chapter.
(b) A civil penalty assessed under this section may not be
less than $2,500 for each violation.
(c) A civil penalty authorized by this section is in
addition to any other civil, administrative, or criminal action
provided by law.
Sec. 7001.152. CRIMINAL PENALTIES. (a) A person who
willfully operates as, or aids and abets another operating as, a
discount health care program operator in violation of Section
7001.101 commits insurance fraud and is subject to Chapter 35,
Penal Code, as if the unregistered discount health care program
operator were an unauthorized insurer, and the fees, dues, charges,
or other consideration collected from the members by the
unregistered discount health care program operator or marketer were
insurance premiums.
(b) A person that collects fees for purported membership in
a discount health care program, but purposefully fails to provide
the promised benefits commits an offense of theft and is subject to
Chapter 31, Penal Code. On conviction, the court shall order the
person to pay restitution to persons aggrieved by the violation of
this chapter. The restitution is in addition to a fine or
imprisonment.
Sec. 7001.153. INJUNCTIONS. (a) In addition to the
penalties and other enforcement provisions of this chapter, the
commissioner may seek both temporary and permanent injunctive
relief if:
(1) a discount health care program is being operated
by a person or entity that is not registered under this chapter; or
(2) a person, entity, or program operator has engaged
in any activity prohibited by this chapter or a rule adopted under
this chapter.
(b) An action for injunctive relief must be brought in a
Travis County district court.
(b) The commissioner's authority to seek injunctive relief
is not conditioned on having conducted any proceeding required
under Chapter 2001, Government Code.
SECTION 2. Chapter 76, Health & Safety Code, is repealed.
SECTION 3. Not later than January 1, 2010, the Commissioner
of Insurance shall adopt the rules and procedures necessary to
implement Chapter 7001, Insurance Code, as added by this Act.
SECTION 4. (a) Notwithstanding Section 7001.101,
Insurance Code, as added by this Act, a person is not required to
register under that section before April 1, 2010, except as
provided by Subsection (b).
(b) A program operator that is registered with the
Department of Licensing and Regulation on January 1, 2010, as
required by Chapter 76, Health and Safety Code, shall file an
application for renewal of registration with the Texas Department
of Insurance under Chapter 7001, Insurance Code, not later than
April 1, 2010.
SECTION 5. (a) Except as provided by Subsections (b) and
(c), this Act takes effect September 1, 2009.
(b) Section 2 of this Act takes effect April 1, 2010.
(c) Subchapter D, Chapter 7001, Insurance Code, takes
effect April 1, 2010.