81R2730 PB-F
By: Van de Putte S.B. No. 714
A BILL TO BE ENTITLED
AN ACT
relating to regulation of the secondary market in certain physician
and health care provider discounts; providing administrative
penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle D, Title 8, Insurance Code, is amended
by adding Chapter 1302 to read as follows:
CHAPTER 1302. REGULATION OF SECONDARY MARKET IN CERTAIN PHYSICIAN
AND HEALTH CARE PROVIDER DISCOUNTS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1302.001. DEFINITIONS. In this chapter:
(1) "Discount broker" means any entity engaged, for
monetary or other consideration, in disclosing or transferring a
contracted discounted fee of a physician or health care provider.
(2) "Health care provider" means a hospital, a
physician-hospital organization, or an ambulatory surgical center.
(3) "Payor" means a fully self-insured health plan, a
health benefit plan, an insurer, or another entity that assumes the
risk for payment of claims by, or reimbursement for health care
services provided by, physicians and health care providers.
(4) "Physician" means:
(A) an individual licensed to practice medicine
in this state under the authority of Subtitle B, Title 3,
Occupations Code;
(B) a professional entity organized in
conformity with Title 7, Business Organizations Code, and
permitted to practice medicine under Subtitle B, Title 3,
Occupations Code;
(C) a partnership organized in conformity with
Title 4, Business Organizations Code, comprised entirely by
individuals licensed to practice medicine under Subtitle B, Title
3, Occupations Code;
(D) an approved nonprofit health corporation
certified under Chapter 162, Occupations Code;
(E) a medical school or medical and dental unit,
as defined or described by Section 61.003, 61.501, or 74.501,
Education Code, that employs or contracts with physicians to teach
or provide medical services or employs physicians and contracts
with physicians in a practice plan; or
(F) any other person wholly owned by individuals
licensed to practice medicine under Subtitle B, Title 3,
Occupations Code.
(5) "Transfer" means to lease, sell, aggregate,
assign, or otherwise convey a contracted discounted fee of a
physician or health care provider.
Sec. 1302.002. EXEMPTIONS. This chapter does not apply to:
(1) the activities of:
(A) a health maintenance organization's network
that are subject to Subchapter J, Chapter 843; or
(B) an insurer's preferred provider network that
are subject to Subchapters C and C-1, Chapter 1301; or
(2) any aspect of the administration or operation of:
(A) the state child health plan; or
(B) any medical assistance program using a
managed care organization or managed care principal, including the
state Medicaid managed care program under Chapter 533, Government
Code.
Sec. 1302.003. APPLICABILITY OF OTHER LAW. (a) Except as
provided by Subsection (b), with respect to payment of claims, a
discount broker, and any payor for whom a discount broker acts or
who contracts with a discount broker, shall comply with Subchapters
C and C-1, Chapter 1301, in the same manner as an insurer.
(b) This section does not apply to a payor that is a fully
self-insured health plan.
Sec. 1302.004. RETALIATION PROHIBITED. A discount broker
may not engage in any retaliatory action against a physician or
health care provider because the physician or provider has:
(1) filed a complaint against the discount broker; or
(2) appealed a decision of the discount broker.
[Sections 1302.005-1302.050 reserved for expansion]
SUBCHAPTER B. REGISTRATION; POWERS AND DUTIES OF COMMISSIONER AND
DEPARTMENT
Sec. 1302.051. REGISTRATION REQUIRED. Each discount broker
that does not hold a certificate of authority or license otherwise
issued by the department under this code must register with the
department in the manner prescribed by the commissioner before
engaging in business in this state.
Sec. 1302.052. RULES. The commissioner shall adopt rules
in the manner prescribed by Subchapter A, Chapter 36, as necessary
to implement and administer this chapter.
[Sections 1302.053-1302.100 reserved for expansion]
SUBCHAPTER C. PROHIBITION OF CERTAIN TRANSFERS;
NOTICE REQUIREMENTS
Sec. 1302.101. PROHIBITION OF CERTAIN TRANSFERS. (a) A
discount broker may not transfer a physician's or health care
provider's contracted discounted fee or any other contractual
obligation unless the transfer is authorized by a contractual
agreement that complies with this chapter.
(b) This section does not affect the authority of the
commissioner of insurance or the commissioner of workers'
compensation under this code or Title 5, Labor Code, to request and
obtain information.
Sec. 1302.102. IDENTIFICATION OF PAYORS; TERMINATION OF
CONTRACT. (a) A discount broker shall notify each physician and
health care provider of the identity of the payors and discount
brokers authorized to access a contracted discounted fee of the
physician or provider. The notice requirement under this
subsection does not apply to an employer authorized to access a
discounted fee through a discount broker.
(b) The notice required under Subsection (a) must:
(1) be provided, at least every 45 days, through:
(A) electronic mail, after provision by the
affected physician or health care provider of a current electronic
mail address; and
(B) posting of a list on a secure Internet
website; and
(2) include a separate prominent section that lists
the payors that the discount broker knows will have access to a
discounted fee of the physician or health care provider in the
succeeding 45-day period.
(b-1) Notwithstanding Subsection (b), and on the request of
the affected physician or health care provider, the notice required
under Subsection (a) may be provided through United States mail.
This subsection expires September 1, 2011.
(c) The identity of a payor or discount broker authorized to
access a contracted discounted fee of the physician or provider
that becomes known to the discount broker required to submit the
notice under Subsection (a) must be included in the subsequent
notice.
(d) If, after receipt of the notice required under
Subsection (a), a physician or health care provider objects to the
addition of a payor to access to a discounted fee, other than a
payor that is an employer or a discount broker listed in the notice
required under Subsection (a), the physician or health care
provider may terminate its contract by providing written notice to
the discount broker not later than the 30th day after the date on
which the physician or health care provider receives the notice
required under Subsection (a). Termination of a contract under
this subsection is subject to applicable continuity of care
requirements under Section 843.362 and Subchapter D, Chapter 1301.
[Sections 1302.103-1302.150 reserved for expansion]
SUBCHAPTER D. RESTRICTIONS ON TRANSFERS
Sec. 1302.151. RESTRICTIONS ON TRANSFERS; EXCEPTION. (a)
In this section, "line of business" includes noninsurance plans,
fully self-insured health plans, Medicare Advantage plans, and
personal injury protection under an automobile insurance policy.
(b) A contract between a discount broker and a physician or
health care provider may not require the physician or health care
provider to:
(1) consent to the disclosure or transfer of the
physician's or health care provider's name and a contracted
discounted fee for use with more than one line of business;
(2) accept all insurance products; or
(3) consent to the disclosure or transfer of the
physician's or health care provider's name and access to a
contracted discounted fee of the physician or provider in a chain of
transfers that exceeds two transfers.
(c) Notwithstanding Subsection (b)(2), a contract between a
discount broker and a physician or health care provider may require
the physician or health care provider to accept all insurance
products within a line of business covered by the contract.
[Sections 1302.152-1302.199 reserved for expansion]
SUBCHAPTER E. DISCLOSURE REQUIREMENTS
Sec. 1302.200. IMPLEMENTATION. (a) This subchapter takes
effect January 1, 2010.
(b) This section expires January 2, 2010.
Sec. 1302.201. IDENTIFICATION OF DISCOUNT BROKER. An
explanation of payment or remittance advice in an electronic or
paper format must include the identity of the discount broker
authorized to disclose or transfer the name and associated
discounts of a physician or health care provider.
Sec. 1302.202. IDENTIFICATION OF ENTITY ASSUMING FINANCIAL
RISK; DISCOUNT BROKER. A payor or representative of a payor that
processes claims or claims payments must clearly identify in an
electronic or paper format on the explanation of payment or
remittance advice the identity of:
(1) the payor that assumes the risk for payment of
claims or reimbursement for services; and
(2) the discount broker through which the payment rate
and any discount are claimed.
Sec. 1302.203. INFORMATION ON IDENTIFICATION CARDS. If a
discount broker or payor issues member or subscriber identification
cards, the identification cards must identify, in a clear and
legible manner, any third-party entity, including any discount
broker:
(1) who is responsible for paying claims; and
(2) through whom the payment rate and any discount are
claimed.
[Sections 1302.204-1302.250 reserved for expansion]
SUBCHAPTER F. ENFORCEMENT
Sec. 1302.251. PENALTIES. (a) A discount broker who holds a
certificate of authority or license under this code and who
violates this chapter:
(1) commits an unfair settlement practice in violation
of Chapter 541;
(2) commits an unfair claim settlement practice in
violation of Subchapter A, Chapter 542; and
(3) is subject to administrative penalties in the
manner prescribed by Chapters 82 and 84.
(b) A violation of this chapter by a discount broker who
does not hold a certificate of authority or license under this code
constitutes a violation of Subchapter E, Chapter 17, Business &
Commerce Code.
Sec. 1302.252. PRIVATE CAUSE OF ACTION. An affected
physician or health care provider may bring a private action for
damages in the manner prescribed by Subchapter D, Chapter 541,
against a discount broker who violates this chapter.
SECTION 2. Sections 1301.001(4) and (6), Insurance Code,
are amended to read as follows:
(4) "Institutional provider" means a hospital,
nursing home, or other medical or health-related service facility
that provides care for the sick or injured or other care that may be
covered in a health insurance policy. The term includes an
ambulatory surgical center.
(6) "Physician" means:
(A) an individual [a person] licensed to practice
medicine in this state under the authority of Title 3, Subtitle B,
Occupations Code;
(B) a professional entity organized in
conformity with Title 7, Business Organizations Code, and
permitted to practice medicine under Subtitle B, Title 3,
Occupations Code;
(C) a partnership organized in conformity with
Title 4, Business Organizations Code, comprised entirely by
individuals licensed to practice medicine under Subtitle B, Title
3, Occupations Code;
(D) an approved nonprofit health corporation
certified under Chapter 162, Occupations Code;
(E) a medical school or medical and dental unit,
as defined or described by Section 61.003, 61.501, or 74.501,
Education Code, that employs or contracts with physicians to teach
or provide medical services or employs physicians and contracts
with physicians in a practice plan; or
(F) any other person wholly owned by individuals
licensed to practice medicine under Subtitle B, Title 3,
Occupations Code.
SECTION 3. Section 1301.056, Insurance Code, is amended to
read as follows:
Sec. 1301.056. RESTRICTIONS ON PAYMENT AND REIMBURSEMENT.
(a) An insurer, [or] third-party administrator, or other entity may
not reimburse a physician or other practitioner, institutional
provider, or organization of physicians and health care providers
on a discounted fee basis for covered services that are provided to
an insured unless:
(1) the insurer, [or] third-party administrator, or
other entity has contracted with either:
(A) the physician or other practitioner,
institutional provider, or organization of physicians and health
care providers; or
(B) a preferred provider organization that has a
network of preferred providers and that has contracted with the
physician or other practitioner, institutional provider, or
organization of physicians and health care providers;
(2) the physician or other practitioner,
institutional provider, or organization of physicians and health
care providers has agreed to the contract and has agreed to provide
health care services under the terms of the contract; and
(3) the insurer, [or] third-party administrator, or
other entity has agreed to provide coverage for those health care
services under the health insurance policy.
(b) A party to a preferred provider contract, including a
contract with a preferred provider organization, may not sell,
lease, assign, aggregate, disclose, or otherwise transfer the
discounted fee, or any other information regarding the discount,
payment, or reimbursement terms of the contract without the express
authority of and [prior] adequate notification to the other
contracting parties. This subsection does not:
(1) prohibit a payor from disclosing any information,
including fees, to an insured; or
(2) affect the authority of the commissioner of
insurance or the commissioner of workers' compensation under this
code or Title 5, Labor Code, to request and obtain information.
(c) An insurer, third-party administrator, or other entity
may not access a discounted fee, other than through a direct
contract, unless notice has been provided to the contracted
physicians, practitioners, institutional providers, and
organizations of physicians and health care providers. For the
purposes of the notice requirements of this subsection, the term
"other entity" does not include an employer that contracts with an
insurer or third-party administrator.
(d) The notice required under Subsection (c) must:
(1) be provided, at least every 45 days, through:
(A) electronic mail, after provision by the
affected physician or health care provider of a current electronic
mail address; and
(B) posting of a list on a secure Internet
website; and
(2) include a separate prominent section that lists
the insurers, third-party administrators, or other entities that
the contracting party knows will have access to a discounted fee of
the physician or health care provider in the succeeding 45-day
period.
(d-1) Notwithstanding Subsection (d), and on the request of
the affected physician or health care provider, the notice required
under Subsection (c) may be provided through United States mail.
This subsection expires September 1, 2011.
(e) The identity of an insurer, third-party administrator,
or other entity authorized to access a contracted discounted fee of
the physician or provider that becomes known to the contracting
party required to submit the notice under Subsection (c) must be
included in the subsequent notice.
(f) If, after receipt of the notice required under
Subsection (c), a physician or other practitioner, institutional
provider, or organization of physicians and health care providers
objects to the addition of an insurer, third-party administrator,
or other entity to access to a discounted fee, the physician or
other practitioner, institutional provider, or organization of
physicians and health care providers may terminate its contract by
providing written notice to the contracting party not later than
the 30th day after the date of the receipt of the notice required
under Subsection (c).
(g) An insurer, third-party administrator, or other entity
that processes claims or claims payments shall clearly identify in
an electronic or paper format on the explanation of payment or
remittance advice:
(1) the identity of the party responsible for
administering the claims; and
(2) if the insurer, third-party administrator, or
other entity does not have a direct contract with the physician or
other practitioner, institutional provider, or organization of
physicians and health care providers, the identity of the preferred
provider organization or other contracting party that authorized a
discounted fee.
(h) If an insurer, third-party administrator, or other
entity issues member or insured identification cards, the
identification cards must include, in a clear and legible format,
the information required under Subsection (g).
(i) An insurer, [or] third-party administrator, or other
entity that holds a certificate of authority or license under this
code who violates this section:
(1) commits an unfair settlement practice in violation
of Chapter 541;
(2) commits an unfair claim settlement practice in
violation of Subchapter A, Chapter 542; and
(3) [(2)] is subject to administrative penalties
under Chapters 82 and 84.
(j) A violation of this section by an entity described by
this section who does not hold a certificate of authority or license
issued under this code constitutes a violation of Subchapter E,
Chapter 17, Business & Commerce Code.
(k) A physician or health care provider affected by a
violation of this section may bring a private action for damages in
the manner prescribed by Subchapter D, Chapter 541, against a
discount broker who violates this section.
SECTION 4. The change in law made by this Act applies only
to a cause of action that accrues on or after the effective date of
this Act. A cause of action that accrues before that date is
governed by the law as it existed immediately before the effective
date of this Act, and that law is continued in effect for that
purpose.
SECTION 5. The commissioner of insurance shall adopt rules
as necessary to implement Chapter 1302, Insurance Code, as added by
this Act, not later than December 1, 2009.
SECTION 6. This Act applies only to a contract entered into
or renewed on or after January 1, 2010. A contract entered into or
renewed before January 1, 2010, is governed by the law as it existed
immediately before the effective date of this Act, and that law is
continued in effect for that purpose.
SECTION 7. This Act takes effect September 1, 2009.