81R4452 PB-F
By: Hinojosa S.B. No. 556
A BILL TO BE ENTITLED
AN ACT
relating to requirements for certain contracts with physicians and
health care providers.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle F, Title 8, Insurance Code, is amended
by adding Chapter 1459 to read as follows:
CHAPTER 1459. REQUIREMENTS FOR CERTAIN CONTRACTS WITH PHYSICIANS
AND HEALTH CARE PROVIDERS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1459.001. GENERAL DEFINITIONS. In this chapter,
unless the context otherwise requires:
(1) "Edit" means a practice or procedure under which
an adjustment is made regarding procedure codes that results in:
(A) payment for some, but not all, of the health
care procedures performed under a procedure code;
(B) payment made under a different procedure
code;
(C) a reduced payment as a result of services
provided to a patient that are claimed under more than one procedure
code on the same service date;
(D) a reduced payment related to a modifier used
with a procedure code; or
(E) a reduced payment based on multiple units of
the same procedure code billed for a single date of service.
(2) "Health benefit plan issuer" means an insurance
company, association, organization, group hospital service
corporation, or health maintenance organization that delivers or
issues for delivery an individual, group, blanket, or franchise
insurance policy or insurance agreement, a group hospital service
contract, or an evidence of coverage that provides health insurance
or health care benefits. The term includes:
(A) a life, health, and accident insurance
company operating under Chapter 841 or 982;
(B) a general casualty insurance company
operating under Chapter 861;
(C) a fraternal benefit society operating under
Chapter 885;
(D) a mutual life insurance company operating
under Chapter 882;
(E) a local mutual aid association operating
under Chapter 886;
(F) a statewide mutual assessment company
operating under Chapter 881;
(G) a mutual assessment company or mutual
assessment life, health, and accident association operating under
Chapter 887;
(H) a mutual insurance company operating under
Chapter 883 that writes coverage other than life insurance;
(I) a Lloyd's plan operating under Chapter 941;
(J) a reciprocal exchange operating under
Chapter 942; and
(K) a stipulated premium company operating under
Chapter 884.
(3) "Health care contract" means a contract entered
into or renewed between a health care contractor and a physician or
health care provider for the delivery of health care services to
others.
(4) "Health care contractor" means an individual or
entity whose primary business purpose consists of contracting with
physicians or health care providers for the delivery of health care
services. The term includes a health benefit plan issuer and an
administrator regulated under Chapter 4151.
(5) "Health care provider" means:
(A) an individual licensed or certified in this
state to practice pharmacy, chiropractic, nursing, physical
therapy, podiatry, dentistry, optometry, occupational therapy, or
another healing art; and
(B) an ambulatory surgical center or a licensed
pharmacy.
(6) "Line of business" means one of the following
products offered by or administered by a health care contractor:
(A) a health care plan offered by a health
maintenance organization;
(B) any other contract for the delivery of health
care services;
(C) Medicare coverage;
(D) Medicaid coverage;
(E) health care provided under a workers'
compensation insurance policy; or
(F) the state child health plan.
(7) "Physician" means:
(A) an individual licensed to engage in the
practice of medicine in this state; or
(B) an entity organized under Subchapter B,
Chapter 162, Occupations Code.
(8) "Procedure code" means an alphanumeric code used
to identify a specific health procedure performed by a health care
provider. The term includes:
(A) the American Medical Association's Current
Procedural Terminology code, also known as the "CPT code";
(B) the Centers for Medicare and Medicaid
Services Health Care Common Procedure Coding System; and
(C) other analogous codes published by national
organizations and recognized by the commissioner.
Sec. 1459.002. DEFINITION OF MATERIAL CHANGE. For purposes
of this chapter, a "material change" means a change to a contract
that decreases the physician's or health care provider's payment or
compensation, changes the administrative procedures required under
the contract in a way that increases the provider's administrative
expense, or adds coverage for a new line of business.
Sec. 1459.003. APPLICABILITY OF CHAPTER. (a) This chapter
does not apply to:
(1) an exclusive contract with a single medical group
in a specific geographic area to provide or arrange for health care
services;
(2) an employment contract or arrangement between
physicians or health care providers;
(3) a contract or arrangement entered into by a
hospital or health care facility, other than an ambulatory surgical
center or a licensed pharmacy, that is licensed or certified under
state law; or
(4) contracts for pharmacy benefit management,
including a contract with a pharmacy benefit manager under
Subchapter D, Chapter 4151.
(b) Notwithstanding Subsection (a)(1) or (2), this chapter
applies to contracts for health care services between a medical
group and other medical groups.
(c) Notwithstanding Subsection (a)(4), this chapter applies
to a contract for health care services between a health care
contractor and a pharmacy, a pharmacist, or a professional
corporation composed of pharmacies or pharmacists as permitted by
the laws of this state.
Sec. 1459.004. CODE OF ETHICS; DISCRIMINATION LAWS. This
chapter may not be used to justify any act or omission by a
physician or health care provider that is prohibited by any
applicable professional code of ethics or a state or federal law
prohibiting discrimination against any person.
[Sections 1459.005-1459.050 reserved for expansion]
SUBCHAPTER B. GENERAL CONTRACT REQUIREMENTS
Sec. 1459.051. REQUIREMENTS FOR REIMBURSEMENT ON
DISCOUNTED FEE BASIS. (a) A health care contractor may not
reimburse a physician or health care provider on a discounted fee
basis for covered services furnished to a covered person unless:
(1) the health care contractor has directly contracted
with the physician or provider and:
(A) the physician or provider:
(i) has agreed in writing to the terms of
the contract for specific payors; and
(ii) has agreed in writing to provide
health care services under the terms of the contract;
(B) the health care contractor has agreed in
writing to provide coverage for those health care services under
the terms of the health benefit plan; and
(C) the contract was in effect at the time the
physician or provider furnished the covered services to the
insured;
(2) the health care contractor has contracted with a
preferred provider organization and:
(A) the preferred provider organization has
directly contracted with the physician or provider;
(B) the physician or provider has agreed in
writing to the terms of the contract and has agreed in writing to
provide health care services under the terms of the contract; and
(C) the physician or provider has actual prior
notice of the specific payors who may access the contract rate; or
(3) the health care contractor has contracted with:
(A) any other entity and:
(i) the entity has indirectly contracted
with the provider;
(ii) the physician or provider has agreed
in writing to the terms of the contract and has agreed in writing to
provide health care services under the terms of the contract; and
(iii) the health care contractor can
demonstrate that the contractor furnished the physician or
provider, before the date on which the contract rate is purchased,
leased, or accessed, written notice of the specific contractor's or
other entity's right to access the contract rate under a specific
contract, and, as applicable, underlying contracts, by
demonstrating submission of the notice in compliance with
Subsection (b); or
(B) a preferred provider organization that has
contracted with any other entity and:
(i) the entity has directly or indirectly
contracted with the provider;
(ii) the physician or health care provider
has agreed in writing to the terms of the provider contract and has
agreed in writing to provide health care services under the terms of
the contract; and
(iii) the health care contractor can
demonstrate that the contractor furnished the physician or health
care provider, before the date on which the contract rate is
purchased, leased, or accessed, written notice of the specific
contractor's right to access the contract rate under a specific
preferred provider organization contract, and, as applicable,
underlying contracts, by demonstrating submission of the notice in
compliance with Subsection (b).
(b) A health care contractor is presumed to have submitted
timely notice of the contractor's right to reimburse the physician
or health care provider on a discounted fee basis for covered
services furnished to a covered person if the contractor submits a
notice to the physician or provider, before the date on which the
contractor purchases the discount, that contains the following:
(1) the name of the preferred provider organization or
other entity that has the direct contract with the physician or
provider;
(2) the date of the contract; and
(3) the address to which the physician or provider may
send a letter terminating the contract.
(c) The notice required by Subsection (b) may be provided:
(1) by United States mail, sent first class, return
receipt requested, or by overnight delivery;
(2) electronically, if the health care contractor
maintains proof of the electronic submission;
(3) by facsimile transmission, if the physician or
health care provider accepts facsimile transmissions for the type
of notice being sent and the health care contractor maintains proof
of the transmission; or
(4) by hand delivery, if the health care contractor
maintains proof of the delivery.
Sec. 1459.052. WAIVER OF CERTAIN RIGHTS PROHIBITED. Except
as permitted by this chapter, a health care contractor may not
require, as a condition of contracting, that a physician or health
care provider waive any right or benefit to which the physician or
health care provider may be entitled under a state or federal law or
regulation that provides legal protections to a person solely based
on the person's status as a physician or health care provider
providing services in this state.
Sec. 1459.053. EFFECT ON NEW PATIENTS. (a) In this
section, "new patient" means an individual who has not received
services from a physician or health care provider in the three years
immediately preceding the date of the notice under Subsection (b).
A patient does not become a "new patient" solely by changing
coverage from one health care contractor to another.
(b) On 60 days' notice, a physician or health care provider
may decline to provide service under a health care contract to new
patients covered by the health care contractor. The notice must
state the reasons for the declination.
Sec. 1459.054. EFFECT OF CONTRACT TERMINATION. A contract
provision concerning compensation or payment of a physician or
health care provider does not survive the termination of a health
care contract, other than a provision for continuation of coverage
required by law or made with the agreement of the physician or
health care provider.
Sec. 1459.055. DISCLOSURE TO THIRD PARTY. A health care
contract may not preclude the use of the contract or disclosure of
the contract to a third party to enforce this chapter or other state
or federal law. The third party is bound by any applicable
confidentiality requirements, including those stated in the
contract.
Sec. 1459.056. RIGHT TO TERMINATE CONTRACT. In addition to
termination rights described under Section 1459.152, a health care
contract must provide to each party a right to terminate the
contract without cause on at least 90 days' written notice.
Sec. 1459.057. ARBITRATION AGREEMENTS. A health care
contract subject to this chapter may include an agreement for
binding arbitration.
Sec. 1459.058. ENFORCEMENT. (a) With respect to the
enforcement of this chapter, including enforcement through
arbitration, a physician or health care provider:
(1) may exercise private rights of action at law and in
equity;
(2) is entitled to equitable relief, including
injunctive relief;
(3) is entitled to reasonable attorney's fees when the
physician or health care provider is the prevailing party in an
action to enforce this chapter, except to the extent that the
violation of this chapter consisted of a mere failure to make
payment under a contract; and
(4) may introduce as persuasive authority prior
arbitration awards regarding a violation of this chapter.
(b) An arbitration award related to the enforcement of this
chapter may be disclosed to persons who have a bona fide interest in
the arbitration.
[Sections 1459.059-1459.100 reserved for expansion]
SUBCHAPTER C. DISCLOSURE OF CONTRACT CHANGES
Sec. 1459.101. NOTICE REGARDING CHANGE TO CONTRACT. (a) A
health care contractor must notify each physician and health care
provider affected by a change to a health care contract of the
change. The notice must include information sufficient for the
physician or health care provider to determine the effect of the
change.
(b) A change to a health care contract that is
administrative only takes effect on the date stated in the notice,
which may not be earlier than the 30th day after the date of the
notice.
(c) A health care contractor shall provide notice regarding
a material change in the manner prescribed by Section 1459.102 and
the contract.
Sec. 1459.102. MATERIAL CHANGES; NOTICE. (a) A material
change to a contract may be implemented only if the health care
contractor provides written notice to the affected physician or
health care provider regarding the proposed change at least 90 days
before the effective date of the change. The notice must be
conspicuously entitled "Notice of Material Change to Contract."
(b) If the physician or health care provider does not object
to the material change, the change takes effect in the manner
specified in the notice of material change to the contract made
under Subsection (a).
(c) If the physician or health care provider objects to the
material change not later than the 30th day after the date of the
notice under Subsection (a), the change does not take effect, and
the objection does not constitute a basis on which the health care
contractor may terminate the contract.
[Sections 1459.103-1459.150 reserved for expansion]
SUBCHAPTER D. DISCLOSURE OF OTHER INFORMATION
Sec. 1459.151. SUMMARY DISCLOSURE FORM. (a) Each health
care contract must include a summary disclosure form that states,
in plain language, the following information:
(1) the terms of the contract governing compensation
and payment;
(2) any line of business for which the physician or
health care provider is to provide services;
(3) the duration of the contract and how the contract
may be terminated;
(4) the identity of the health care contractor
responsible for the processing of the physician's or health care
provider's claims for compensation or payment;
(5) any internal mechanism required by the health care
contractor to resolve disputes that arise under the terms or
conditions of the contract;
(6) the subject and order of any addenda to the
contract; and
(7) other information as required by this subchapter.
(b) The disclosure form is for informational purposes only
and may not be construed as a term or condition of the contract.
(c) The disclosure form must reasonably summarize the
applicable contract provisions.
Sec. 1459.152. TERMINATION INFORMATION. (a) A health care
contract that provides for termination for cause by either party
must state the reasons that may be grounds for termination for
cause. The terms must be reasonable.
(b) The contract must state the time by which notice of
termination for cause must be provided and to whom the notice must
be given.
Sec. 1459.153. INFORMATION REGARDING UTILIZATION REVIEW
AND RELATED PROGRAMS. A health care contractor shall identify any
utilization review program or management program, quality
improvement program, or similar program that the contractor uses to
review, monitor, evaluate, or assess the services provided under a
contract.
Sec. 1459.154. COMPENSATION INFORMATION; FEE SCHEDULES.
(a) The disclosure of payment and compensation terms under
Sections 1459.151-1459.153 must include information sufficient for
a physician or health care provider to determine the compensation
or payment for the physician's or provider's services.
(b) The summary disclosure form under Section 1459.151 must
include:
(1) the manner of payment, such as fee-for-service,
capitation, or risk sharing;
(2) the methodology used to compute any fee schedule,
such as use of a relative value unit system and conversion factor,
percentage of Medicare payment system, or percentage of billed
charges;
(3) the fee schedule for procedure codes reasonably
expected to be billed by the physician or health care provider for
services provided under the contract and, on request, the fee
schedule for other procedure codes used by, or which may be used by,
the physician or health care provider; and
(4) the effect of edits, if any, on payment or
compensation.
(c) As applicable, the methodology disclosure under
Subsection (b)(2) must include:
(1) the name of any relative value system used;
(2) the version, edition, or publication date of that
system;
(3) any applicable conversion or geographic factors;
and
(4) the date by which compensation or fee schedules
may be changed by the methodology, if allowed under the contract.
(d) The fee schedule described by Subsection (b)(3) must
include, as applicable, service or procedure codes and the
associated payment or compensation for each code. The fee schedule
may be provided electronically.
(e) The health care contractor shall provide the fee
schedule described by Subsection (b)(3) to an affected physician or
health care provider when a material change related to payment or
compensation occurs. Additionally, a physician or health care
provider may request that a written fee schedule be provided up to
twice annually, and the health care contractor must provide the
written fee schedule promptly.
(f) A health care contractor may satisfy the requirement
under Subsection (b)(4) regarding the effect of edits by providing
a clearly understandable, readily available mechanism that allows a
physician or health care provider to determine the effect of an
edit on payment or compensation before a service is provided or a
claim is submitted.
Sec. 1459.155. REQUIRED INFORMATION AFTER CLAIM
PROCESSING. On completion of processing of a claim, a health care
contractor shall provide information to the affected physician or
health care provider stating how the claim was adjudicated and the
responsibility of any party other than the contractor for any
outstanding balance.
Sec. 1459.156. PROPOSED CONTRACT; CONFIDENTIALITY. (a) If
a proposed contract is presented by a health care contractor for
consideration by a physician or health care provider, the
contractor shall provide in writing or make reasonably available
the information required under Section 1459.154. If the
information is not disclosed in writing, the information must be
disclosed in a manner that allows the physician or health care
provider to timely evaluate the proposed payment or compensation
for services under the contract.
(b) The disclosure obligations under this chapter do not
prevent a health care contractor from requiring a reasonable
confidentiality agreement regarding the terms of a proposed
contract.
(c) Notwithstanding Subsections (a) and (b), a contract may
be modified by operation of law as required by any applicable state
or federal law or regulation, and the health care contractor may
disclose this change by any reasonable means.
SECTION 2. (a) A health care contractor that contracts with
a physician or health care provider is required to comply with
Chapter 1459, Insurance Code, as added by this Act, beginning on
January 1, 2010, and shall include the provisions required by that
chapter in each health care contract entered into or renewed on or
after that date.
(b) A health care contract in existence before January 1,
2010, must comply with the disclosure requirements of Sections
1459.151, 1459.153, 1459.154, and 1459.155, Insurance Code, as
added by this Act, not later than January 31, 2010. Chapter 1459,
Insurance Code, as added by this Act, may not be construed to
require the renegotiation of a contract in existence before January
1, 2010.
SECTION 3. This Act takes effect September 1, 2009.