81R10259 YDB-F
By: Williams S.B. No. 2299
A BILL TO BE ENTITLED
AN ACT
relating to registration and regulation of certain discount health
care programs.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 76.001, Health and Safety Code, is
amended by adding Subdivision (1-a) and amending Subdivision (3) to
read as follows:
(1-a) "Controlling person" means an individual who:
(A) possesses the authority to set policy, direct
management, and conduct the affairs of a program operator or
marketer;
(B) is an officer, director, general partner, or
a member of a governing board of a business entity that is a program
operator or marketer;
(C) is employed, appointed, or authorized by a
program operator or marketer to enter into a contract with a program
operator, marketer, provider, or provider network on behalf of the
program operator or marketer; or
(D) possesses direct or indirect control of 25
percent or more of the voting securities of the program operator or
marketer.
(3) "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:
(A) an insurance policy, certificate of
coverage, or other product regulated by the Texas Department of
Insurance;
(B) [or] a self-funded or self-insured employee
benefit plan; or
(C) a benefit program regulated by the federal
government, including Medicare and Medicaid.
SECTION 2. Section 76.051, Health and Safety Code, is
amended to read as follows:
Sec. 76.051. PROGRAM OPERATOR AND MARKETER COMPLIANCE. (a)
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.
(b) Except as otherwise provided by this chapter, a
marketer, including a marketer who has a contract with another
marketer to sell a discount health care program, shall comply with
this chapter.
SECTION 3. The heading to Section 76.056, Health and Safety
Code, is amended to read as follows:
Sec. 76.056. PROVIDER CONTRACT REQUIREMENTS.
SECTION 4. The heading to Section 76.101, Health and Safety
Code, is amended to read as follows:
Sec. 76.101. PROGRAM OPERATOR REGISTRATION REQUIRED; FEES.
SECTION 5. Section 76.101, Health and Safety Code, is
amended by amending Subsections (a), (b), (e), (f), and (g), and
adding Subsections (h) and (i) to read as follows:
(a) A program operator may not offer a discount health care
program in this state unless the operator is registered with the
department. A registration is valid for one year.
(b) An applicant for registration as a program operator
under this chapter or an applicant for renewal of registration as a
program operator under this chapter whose information has changed
must submit:
(1) a registration form indicating the program
operator's name and address and its agent for service of process;
(2) a list of names, addresses, official positions,
and biographical information of the program operator's controlling
persons[:
[(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 the
discount health care program;
(4) a list of the marketers authorized to sell or
distribute the program operator's program under the program
operator's name and a list of the marketing entities authorized to
private label the program operator's program; 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.
(e) To register or renew a registration, a program operator
must pay the appropriate fees. The commission shall set by rule the
amount of the fees required by this section to cover the costs of
administering this chapter. These fees must include:
(1) a registration or renewal application fee; and
(2) a fee based on the number of [A] discount health
care program memberships sold or issued by the program operator and
in force in this state during the preceding 12-month period [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 controlling persons [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) The department may deny or revoke a program operator's
registration or renewal based on the findings of the criminal
background check of the program operator's controlling persons,
including a conviction or deferred adjudication of a controlling
person. The commission shall establish the criteria and standards
for denying or revoking a program operator's registration or
renewal under this subsection.
(h) The department may deny or revoke a program operator's
registration or renewal based on the information contained in the
materials required to be filed with or reported to the department.
The commission shall establish the criteria and standards for
denying or revoking a program operator's registration or renewal
under this subsection.
(i) A person or entity who is [This section does not apply to
a program operator] licensed under Title 6, Insurance Code, and who
operates a discount health care program in this state is not
required to meet the registration requirements in Subsections (a)
through (h). The person or entity must notify the department that it
is operating a discount health care program in this state and
provide the department with the person's or entity's name, the name
of a designated contact person, and the license number issued by the
Texas Department of Insurance.
SECTION 6. Subchapter C, Chapter 76, Health and Safety
Code, is amended by adding Section 76.102 to read as follows:
Sec. 76.102. MARKETER REGISTRATION REQUIRED; FEES. (a) A
marketer may not sell or distribute a discount health care program
in this state unless the marketer is registered with the
department. A registration is valid for one year.
(b) An applicant for registration as a marketer under this
chapter or renewal of registration as a marketer under this chapter
must submit:
(1) a registration form indicating the marketer's name
and address and its agent for service of process; and
(2) a list of names, addresses, official positions,
and biographical information of the marketer's controlling
persons, if applicable.
(c) To register or renew a registration, a marketer must pay
the appropriate fees. The commission by rule shall set the amount
of the fees required by this section to cover the costs of
administering this chapter.
(d) If the marketer is an individual, the department may
conduct a criminal background check on the individual. If the
marketer is a business entity, the department may conduct a
criminal background check on the marketer's controlling persons.
(e) The department may deny or revoke a marketer's
registration or renewal based on the findings of the criminal
background check of the persons in Subsection (d), including a
conviction or deferred adjudication of a person in Subsection (d).
The commission shall establish the criteria and standards for
denying or revoking a marketer's registration or renewal under this
subsection.
(f) The department may deny or revoke a marketer's
registration or renewal based on the information contained in the
materials required to be filed with or reported to the department.
The commission shall establish the criteria and standards for
denying or revoking a marketer's registration or renewal under this
subsection.
SECTION 7. Section 76.151, Health and Safety Code, is
amended to read as follows:
Sec. 76.151. DISCIPLINARY ACTION. A program operator or
marketer is subject to the denial of an application, imposition of
[On a finding that a ground for disciplinary action exists under
this chapter, the executive director of the department may impose]
an administrative [sanction, including any administrative] penalty
under Subchapter F, [as provided by] Chapter 51, Occupations Code,
or imposition of an administrative sanction under Section 51.353,
Occupations Code, if the program operator or marketer violates this
chapter or a rule or an order of the executive director of the
commission.
SECTION 8. Sections 76.152(a), (b), (c), and (d), Health
and Safety Code, are amended to read as follows:
(a) The attorney general or executive director of the
department may institute an action against a program operator or
marketer for injunctive relief under Section 51.352, Occupations
Code, to restrain a violation or a threatened violation of this
chapter or an order issued or rule adopted under this chapter.
(b) In addition to the injunctive relief provided by
Subsection (a), the attorney general or executive director of the
department may institute an action for a civil penalty as provided
by Section 51.352, Occupations Code.
(c) The amount of any civil penalty assessed under this
section may not exceed $5,000 [$2,500] for each violation. Each day
a violation continues is a separate violation.
(d) Advertising, selling, or distributing a discount health
care program that violates this chapter is a false, misleading, or
deceptive act or practice for purposes of Section 17.46, Business &
Commerce Code. A public or private right or [The exclusive] remedy
authorized by Chapter 17, Business & Commerce Code, may be used to
bring an action for a [the] violation of Section 17.46, Business &
Commerce Code[, is an action by the office of the attorney general
as provided by Section 17.46(a), Business & Commerce Code].
SECTION 9. Section 76.154, Health and Safety Code, is
amended to read as follows:
Sec. 76.154. APPEAL. A person affected by a ruling, order,
decision, or other action of the executive director of the
department or the commission [department] may appeal by filing a
petition in a district court in Travis County.
SECTION 10. Not later than January 1, 2010, the Texas
Commission of Licensing and Regulation shall adopt the rules and
procedures necessary to implement the changes in law made by this
Act.
SECTION 11. (a) Except as provided by Subsection (b) of
this section, this Act takes effect September 1, 2009.
(b) Section 76.101(e), Health and Safety Code, as amended by
this Act, and Section 76.102, Health and Safety Code, as added by
this Act, take effect April 30, 2010.