Texas 2009 - 81st Regular

Texas Senate Bill SB556 Compare Versions

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

Old	New	Differences
1	1	81R4452 PB-F
2	2	By: Hinojosa S.B. No. 556
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to requirements for certain contracts with physicians and
8	8	health care providers.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Subtitle F, Title 8, Insurance Code, is amended
11	11	by adding Chapter 1459 to read as follows:
12	12	CHAPTER 1459. REQUIREMENTS FOR CERTAIN CONTRACTS WITH PHYSICIANS
13	13	AND HEALTH CARE PROVIDERS
14	14	SUBCHAPTER A. GENERAL PROVISIONS
15	15	Sec. 1459.001. GENERAL DEFINITIONS. In this chapter,
16	16	unless the context otherwise requires:
17	17	(1) "Edit" means a practice or procedure under which
18	18	an adjustment is made regarding procedure codes that results in:
19	19	(A) payment for some, but not all, of the health
20	20	care procedures performed under a procedure code;
21	21	(B) payment made under a different procedure
22	22	code;
23	23	(C) a reduced payment as a result of services
24	24	provided to a patient that are claimed under more than one procedure
25	25	code on the same service date;
26	26	(D) a reduced payment related to a modifier used
27	27	with a procedure code; or
28	28	(E) a reduced payment based on multiple units of
29	29	the same procedure code billed for a single date of service.
30	30	(2) "Health benefit plan issuer" means an insurance
31	31	company, association, organization, group hospital service
32	32	corporation, or health maintenance organization that delivers or
33	33	issues for delivery an individual, group, blanket, or franchise
34	34	insurance policy or insurance agreement, a group hospital service
35	35	contract, or an evidence of coverage that provides health insurance
36	36	or health care benefits. The term includes:
37	37	(A) a life, health, and accident insurance
38	38	company operating under Chapter 841 or 982;
39	39	(B) a general casualty insurance company
40	40	operating under Chapter 861;
41	41	(C) a fraternal benefit society operating under
42	42	Chapter 885;
43	43	(D) a mutual life insurance company operating
44	44	under Chapter 882;
45	45	(E) a local mutual aid association operating
46	46	under Chapter 886;
47	47	(F) a statewide mutual assessment company
48	48	operating under Chapter 881;
49	49	(G) a mutual assessment company or mutual
50	50	assessment life, health, and accident association operating under
51	51	Chapter 887;
52	52	(H) a mutual insurance company operating under
53	53	Chapter 883 that writes coverage other than life insurance;
54	54	(I) a Lloyd's plan operating under Chapter 941;
55	55	(J) a reciprocal exchange operating under
56	56	Chapter 942; and
57	57	(K) a stipulated premium company operating under
58	58	Chapter 884.
59	59	(3) "Health care contract" means a contract entered
60	60	into or renewed between a health care contractor and a physician or
61	61	health care provider for the delivery of health care services to
62	62	others.
63	63	(4) "Health care contractor" means an individual or
64	64	entity whose primary business purpose consists of contracting with
65	65	physicians or health care providers for the delivery of health care
66	66	services. The term includes a health benefit plan issuer and an
67	67	administrator regulated under Chapter 4151.
68	68	(5) "Health care provider" means:
69	69	(A) an individual licensed or certified in this
70	70	state to practice pharmacy, chiropractic, nursing, physical
71	71	therapy, podiatry, dentistry, optometry, occupational therapy, or
72	72	another healing art; and
73	73	(B) an ambulatory surgical center or a licensed
74	74	pharmacy.
75	75	(6) "Line of business" means one of the following
76	76	products offered by or administered by a health care contractor:
77	77	(A) a health care plan offered by a health
78	78	maintenance organization;
79	79	(B) any other contract for the delivery of health
80	80	care services;
81	81	(C) Medicare coverage;
82	82	(D) Medicaid coverage;
83	83	(E) health care provided under a workers'
84	84	compensation insurance policy; or
85	85	(F) the state child health plan.
86	86	(7) "Physician" means:
87	87	(A) an individual licensed to engage in the
88	88	practice of medicine in this state; or
89	89	(B) an entity organized under Subchapter B,
90	90	Chapter 162, Occupations Code.
91	91	(8) "Procedure code" means an alphanumeric code used
92	92	to identify a specific health procedure performed by a health care
93	93	provider. The term includes:
94	94	(A) the American Medical Association's Current
95	95	Procedural Terminology code, also known as the "CPT code";
96	96	(B) the Centers for Medicare and Medicaid
97	97	Services Health Care Common Procedure Coding System; and
98	98	(C) other analogous codes published by national
99	99	organizations and recognized by the commissioner.
100	100	Sec. 1459.002. DEFINITION OF MATERIAL CHANGE. For purposes
101	101	of this chapter, a "material change" means a change to a contract
102	102	that decreases the physician's or health care provider's payment or
103	103	compensation, changes the administrative procedures required under
104	104	the contract in a way that increases the provider's administrative
105	105	expense, or adds coverage for a new line of business.
106	106	Sec. 1459.003. APPLICABILITY OF CHAPTER. (a) This chapter
107	107	does not apply to:
108	108	(1) an exclusive contract with a single medical group
109	109	in a specific geographic area to provide or arrange for health care
110	110	services;
111	111	(2) an employment contract or arrangement between
112	112	physicians or health care providers;
113	113	(3) a contract or arrangement entered into by a
114	114	hospital or health care facility, other than an ambulatory surgical
115	115	center or a licensed pharmacy, that is licensed or certified under
116	116	state law; or
117	117	(4) contracts for pharmacy benefit management,
118	118	including a contract with a pharmacy benefit manager under
119	119	Subchapter D, Chapter 4151.
120	120	(b) Notwithstanding Subsection (a)(1) or (2), this chapter
121	121	applies to contracts for health care services between a medical
122	122	group and other medical groups.
123	123	(c) Notwithstanding Subsection (a)(4), this chapter applies
124	124	to a contract for health care services between a health care
125	125	contractor and a pharmacy, a pharmacist, or a professional
126	126	corporation composed of pharmacies or pharmacists as permitted by
127	127	the laws of this state.
128	128	Sec. 1459.004. CODE OF ETHICS; DISCRIMINATION LAWS. This
129	129	chapter may not be used to justify any act or omission by a
130	130	physician or health care provider that is prohibited by any
131	131	applicable professional code of ethics or a state or federal law
132	132	prohibiting discrimination against any person.
133	133	[Sections 1459.005-1459.050 reserved for expansion]
134	134	SUBCHAPTER B. GENERAL CONTRACT REQUIREMENTS
135	135	Sec. 1459.051. REQUIREMENTS FOR REIMBURSEMENT ON
136	136	DISCOUNTED FEE BASIS. (a) A health care contractor may not
137	137	reimburse a physician or health care provider on a discounted fee
138	138	basis for covered services furnished to a covered person unless:
139	139	(1) the health care contractor has directly contracted
140	140	with the physician or provider and:
141	141	(A) the physician or provider:
142	142	(i) has agreed in writing to the terms of
143	143	the contract for specific payors; and
144	144	(ii) has agreed in writing to provide
145	145	health care services under the terms of the contract;
146	146	(B) the health care contractor has agreed in
147	147	writing to provide coverage for those health care services under
148	148	the terms of the health benefit plan; and
149	149	(C) the contract was in effect at the time the
150	150	physician or provider furnished the covered services to the
151	151	insured;
152	152	(2) the health care contractor has contracted with a
153	153	preferred provider organization and:
154	154	(A) the preferred provider organization has
155	155	directly contracted with the physician or provider;
156	156	(B) the physician or provider has agreed in
157	157	writing to the terms of the contract and has agreed in writing to
158	158	provide health care services under the terms of the contract; and
159	159	(C) the physician or provider has actual prior
160	160	notice of the specific payors who may access the contract rate; or
161	161	(3) the health care contractor has contracted with:
162	162	(A) any other entity and:
163	163	(i) the entity has indirectly contracted
164	164	with the provider;
165	165	(ii) the physician or provider has agreed
166	166	in writing to the terms of the contract and has agreed in writing to
167	167	provide health care services under the terms of the contract; and
168	168	(iii) the health care contractor can
169	169	demonstrate that the contractor furnished the physician or
170	170	provider, before the date on which the contract rate is purchased,
171	171	leased, or accessed, written notice of the specific contractor's or
172	172	other entity's right to access the contract rate under a specific
173	173	contract, and, as applicable, underlying contracts, by
174	174	demonstrating submission of the notice in compliance with
175	175	Subsection (b); or
176	176	(B) a preferred provider organization that has
177	177	contracted with any other entity and:
178	178	(i) the entity has directly or indirectly
179	179	contracted with the provider;
180	180	(ii) the physician or health care provider
181	181	has agreed in writing to the terms of the provider contract and has
182	182	agreed in writing to provide health care services under the terms of
183	183	the contract; and
184	184	(iii) the health care contractor can
185	185	demonstrate that the contractor furnished the physician or health
186	186	care provider, before the date on which the contract rate is
187	187	purchased, leased, or accessed, written notice of the specific
188	188	contractor's right to access the contract rate under a specific
189	189	preferred provider organization contract, and, as applicable,
190	190	underlying contracts, by demonstrating submission of the notice in
191	191	compliance with Subsection (b).
192	192	(b) A health care contractor is presumed to have submitted
193	193	timely notice of the contractor's right to reimburse the physician
194	194	or health care provider on a discounted fee basis for covered
195	195	services furnished to a covered person if the contractor submits a
196	196	notice to the physician or provider, before the date on which the
197	197	contractor purchases the discount, that contains the following:
198	198	(1) the name of the preferred provider organization or
199	199	other entity that has the direct contract with the physician or
200	200	provider;
201	201	(2) the date of the contract; and
202	202	(3) the address to which the physician or provider may
203	203	send a letter terminating the contract.
204	204	(c) The notice required by Subsection (b) may be provided:
205	205	(1) by United States mail, sent first class, return
206	206	receipt requested, or by overnight delivery;
207	207	(2) electronically, if the health care contractor
208	208	maintains proof of the electronic submission;
209	209	(3) by facsimile transmission, if the physician or
210	210	health care provider accepts facsimile transmissions for the type
211	211	of notice being sent and the health care contractor maintains proof
212	212	of the transmission; or
213	213	(4) by hand delivery, if the health care contractor
214	214	maintains proof of the delivery.
215	215	Sec. 1459.052. WAIVER OF CERTAIN RIGHTS PROHIBITED. Except
216	216	as permitted by this chapter, a health care contractor may not
217	217	require, as a condition of contracting, that a physician or health
218	218	care provider waive any right or benefit to which the physician or
219	219	health care provider may be entitled under a state or federal law or
220	220	regulation that provides legal protections to a person solely based
221	221	on the person's status as a physician or health care provider
222	222	providing services in this state.
223	223	Sec. 1459.053. EFFECT ON NEW PATIENTS. (a) In this
224	224	section, "new patient" means an individual who has not received
225	225	services from a physician or health care provider in the three years
226	226	immediately preceding the date of the notice under Subsection (b).
227	227	A patient does not become a "new patient" solely by changing
228	228	coverage from one health care contractor to another.
229	229	(b) On 60 days' notice, a physician or health care provider
230	230	may decline to provide service under a health care contract to new
231	231	patients covered by the health care contractor. The notice must
232	232	state the reasons for the declination.
233	233	Sec. 1459.054. EFFECT OF CONTRACT TERMINATION. A contract
234	234	provision concerning compensation or payment of a physician or
235	235	health care provider does not survive the termination of a health
236	236	care contract, other than a provision for continuation of coverage
237	237	required by law or made with the agreement of the physician or
238	238	health care provider.
239	239	Sec. 1459.055. DISCLOSURE TO THIRD PARTY. A health care
240	240	contract may not preclude the use of the contract or disclosure of
241	241	the contract to a third party to enforce this chapter or other state
242	242	or federal law. The third party is bound by any applicable
243	243	confidentiality requirements, including those stated in the
244	244	contract.
245	245	Sec. 1459.056. RIGHT TO TERMINATE CONTRACT. In addition to
246	246	termination rights described under Section 1459.152, a health care
247	247	contract must provide to each party a right to terminate the
248	248	contract without cause on at least 90 days' written notice.
249	249	Sec. 1459.057. ARBITRATION AGREEMENTS. A health care
250	250	contract subject to this chapter may include an agreement for
251	251	binding arbitration.
252	252	Sec. 1459.058. ENFORCEMENT. (a) With respect to the
253	253	enforcement of this chapter, including enforcement through
254	254	arbitration, a physician or health care provider:
255	255	(1) may exercise private rights of action at law and in
256	256	equity;
257	257	(2) is entitled to equitable relief, including
258	258	injunctive relief;
259	259	(3) is entitled to reasonable attorney's fees when the
260	260	physician or health care provider is the prevailing party in an
261	261	action to enforce this chapter, except to the extent that the
262	262	violation of this chapter consisted of a mere failure to make
263	263	payment under a contract; and
264	264	(4) may introduce as persuasive authority prior
265	265	arbitration awards regarding a violation of this chapter.
266	266	(b) An arbitration award related to the enforcement of this
267	267	chapter may be disclosed to persons who have a bona fide interest in
268	268	the arbitration.
269	269	[Sections 1459.059-1459.100 reserved for expansion]
270	270	SUBCHAPTER C. DISCLOSURE OF CONTRACT CHANGES
271	271	Sec. 1459.101. NOTICE REGARDING CHANGE TO CONTRACT. (a) A
272	272	health care contractor must notify each physician and health care
273	273	provider affected by a change to a health care contract of the
274	274	change. The notice must include information sufficient for the
275	275	physician or health care provider to determine the effect of the
276	276	change.
277	277	(b) A change to a health care contract that is
278	278	administrative only takes effect on the date stated in the notice,
279	279	which may not be earlier than the 30th day after the date of the
280	280	notice.
281	281	(c) A health care contractor shall provide notice regarding
282	282	a material change in the manner prescribed by Section 1459.102 and
283	283	the contract.
284	284	Sec. 1459.102. MATERIAL CHANGES; NOTICE. (a) A material
285	285	change to a contract may be implemented only if the health care
286	286	contractor provides written notice to the affected physician or
287	287	health care provider regarding the proposed change at least 90 days
288	288	before the effective date of the change. The notice must be
289	289	conspicuously entitled "Notice of Material Change to Contract."
290	290	(b) If the physician or health care provider does not object
291	291	to the material change, the change takes effect in the manner
292	292	specified in the notice of material change to the contract made
293	293	under Subsection (a).
294	294	(c) If the physician or health care provider objects to the
295	295	material change not later than the 30th day after the date of the
296	296	notice under Subsection (a), the change does not take effect, and
297	297	the objection does not constitute a basis on which the health care
298	298	contractor may terminate the contract.
299	299	[Sections 1459.103-1459.150 reserved for expansion]
300	300	SUBCHAPTER D. DISCLOSURE OF OTHER INFORMATION
301	301	Sec. 1459.151. SUMMARY DISCLOSURE FORM. (a) Each health
302	302	care contract must include a summary disclosure form that states,
303	303	in plain language, the following information:
304	304	(1) the terms of the contract governing compensation
305	305	and payment;
306	306	(2) any line of business for which the physician or
307	307	health care provider is to provide services;
308	308	(3) the duration of the contract and how the contract
309	309	may be terminated;
310	310	(4) the identity of the health care contractor
311	311	responsible for the processing of the physician's or health care
312	312	provider's claims for compensation or payment;
313	313	(5) any internal mechanism required by the health care
314	314	contractor to resolve disputes that arise under the terms or
315	315	conditions of the contract;
316	316	(6) the subject and order of any addenda to the
317	317	contract; and
318	318	(7) other information as required by this subchapter.
319	319	(b) The disclosure form is for informational purposes only
320	320	and may not be construed as a term or condition of the contract.
321	321	(c) The disclosure form must reasonably summarize the
322	322	applicable contract provisions.
323	323	Sec. 1459.152. TERMINATION INFORMATION. (a) A health care
324	324	contract that provides for termination for cause by either party
325	325	must state the reasons that may be grounds for termination for
326	326	cause. The terms must be reasonable.
327	327	(b) The contract must state the time by which notice of
328	328	termination for cause must be provided and to whom the notice must
329	329	be given.
330	330	Sec. 1459.153. INFORMATION REGARDING UTILIZATION REVIEW
331	331	AND RELATED PROGRAMS. A health care contractor shall identify any
332	332	utilization review program or management program, quality
333	333	improvement program, or similar program that the contractor uses to
334	334	review, monitor, evaluate, or assess the services provided under a
335	335	contract.
336	336	Sec. 1459.154. COMPENSATION INFORMATION; FEE SCHEDULES.
337	337	(a) The disclosure of payment and compensation terms under
338	338	Sections 1459.151-1459.153 must include information sufficient for
339	339	a physician or health care provider to determine the compensation
340	340	or payment for the physician's or provider's services.
341	341	(b) The summary disclosure form under Section 1459.151 must
342	342	include:
343	343	(1) the manner of payment, such as fee-for-service,
344	344	capitation, or risk sharing;
345	345	(2) the methodology used to compute any fee schedule,
346	346	such as use of a relative value unit system and conversion factor,
347	347	percentage of Medicare payment system, or percentage of billed
348	348	charges;
349	349	(3) the fee schedule for procedure codes reasonably
350	350	expected to be billed by the physician or health care provider for
351	351	services provided under the contract and, on request, the fee
352	352	schedule for other procedure codes used by, or which may be used by,
353	353	the physician or health care provider; and
354	354	(4) the effect of edits, if any, on payment or
355	355	compensation.
356	356	(c) As applicable, the methodology disclosure under
357	357	Subsection (b)(2) must include:
358	358	(1) the name of any relative value system used;
359	359	(2) the version, edition, or publication date of that
360	360	system;
361	361	(3) any applicable conversion or geographic factors;
362	362	and
363	363	(4) the date by which compensation or fee schedules
364	364	may be changed by the methodology, if allowed under the contract.
365	365	(d) The fee schedule described by Subsection (b)(3) must
366	366	include, as applicable, service or procedure codes and the
367	367	associated payment or compensation for each code. The fee schedule
368	368	may be provided electronically.
369	369	(e) The health care contractor shall provide the fee
370	370	schedule described by Subsection (b)(3) to an affected physician or
371	371	health care provider when a material change related to payment or
372	372	compensation occurs. Additionally, a physician or health care
373	373	provider may request that a written fee schedule be provided up to
374	374	twice annually, and the health care contractor must provide the
375	375	written fee schedule promptly.
376	376	(f) A health care contractor may satisfy the requirement
377	377	under Subsection (b)(4) regarding the effect of edits by providing
378	378	a clearly understandable, readily available mechanism that allows a
379	379	physician or health care provider to determine the effect of an
380	380	edit on payment or compensation before a service is provided or a
381	381	claim is submitted.
382	382	Sec. 1459.155. REQUIRED INFORMATION AFTER CLAIM
383	383	PROCESSING. On completion of processing of a claim, a health care
384	384	contractor shall provide information to the affected physician or
385	385	health care provider stating how the claim was adjudicated and the
386	386	responsibility of any party other than the contractor for any
387	387	outstanding balance.
388	388	Sec. 1459.156. PROPOSED CONTRACT; CONFIDENTIALITY. (a) If
389	389	a proposed contract is presented by a health care contractor for
390	390	consideration by a physician or health care provider, the
391	391	contractor shall provide in writing or make reasonably available
392	392	the information required under Section 1459.154. If the
393	393	information is not disclosed in writing, the information must be
394	394	disclosed in a manner that allows the physician or health care
395	395	provider to timely evaluate the proposed payment or compensation
396	396	for services under the contract.
397	397	(b) The disclosure obligations under this chapter do not
398	398	prevent a health care contractor from requiring a reasonable
399	399	confidentiality agreement regarding the terms of a proposed
400	400	contract.
401	401	(c) Notwithstanding Subsections (a) and (b), a contract may
402	402	be modified by operation of law as required by any applicable state
403	403	or federal law or regulation, and the health care contractor may
404	404	disclose this change by any reasonable means.
405	405	SECTION 2. (a) A health care contractor that contracts with
406	406	a physician or health care provider is required to comply with
407	407	Chapter 1459, Insurance Code, as added by this Act, beginning on
408	408	January 1, 2010, and shall include the provisions required by that
409	409	chapter in each health care contract entered into or renewed on or
410	410	after that date.
411	411	(b) A health care contract in existence before January 1,
412	412	2010, must comply with the disclosure requirements of Sections
413	413	1459.151, 1459.153, 1459.154, and 1459.155, Insurance Code, as
414	414	added by this Act, not later than January 31, 2010. Chapter 1459,
415	415	Insurance Code, as added by this Act, may not be construed to
416	416	require the renegotiation of a contract in existence before January
417	417	1, 2010.
418	418	SECTION 3. This Act takes effect September 1, 2009.