Texas 2015 - 84th Regular

Texas Senate Bill SB1142 Compare Versions

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

Old	New	Differences
1	1	84R3516 PMO-D
2	2	By: Watson S.B. No. 1142
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to regulation of discount drug card program operators;
8	8	authorizing administrative and civil penalties; authorizing fees;
9	9	expanding a registration requirement.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	SECTION 1. The heading to Chapter 562, Insurance Code, is
12	12	amended to read as follows:
13	13	CHAPTER 562. UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE
14	14	ACTS OR PRACTICES REGARDING DISCOUNT [HEALTH CARE] PROGRAMS
15	15	SECTION 2. Section 562.001, Insurance Code, is amended to
16	16	read as follows:
17	17	Sec. 562.001. PURPOSE. The purpose of this chapter is to
18	18	regulate trade practices in the business of discount health care
19	19	programs and discount drug card programs by:
20	20	(1) defining or providing for the determination of
21	21	trade practices in this state that are unfair methods of
22	22	competition or unfair or deceptive acts or practices; and
23	23	(2) prohibiting those unfair or deceptive trade
24	24	practices.
25	25	SECTION 3. Section 562.002, Insurance Code, is amended by
26	26	amending Subdivisions (5) and (8) and adding Subdivision (1-a) to
27	27	read as follows:
28	28	(1-a) "Discount drug card program" and "discount drug
29	29	card program operator" have the meanings assigned by Section
30	30	7001.001.
31	31	(5) "Marketer" means a person who sells or
32	32	distributes, or offers to sell or distribute, a discount health
33	33	care program or a discount drug card program, including a private
34	34	label entity that places its name on and markets or distributes a
35	35	discount health care program or a discount drug card program, but
36	36	does not operate a discount health care program or a discount drug
37	37	card program.
38	38	(8) "Program operator" means a discount health care
39	39	program operator or a discount drug card [plan] program operator.
40	40	SECTION 4. Section 562.004, Insurance Code, is amended to
41	41	read as follows:
42	42	Sec. 562.004. APPLICABILITY. Except as otherwise provided
43	43	by this chapter, a program operator, including the operator of a
44	44	freestanding discount health care program, a freestanding discount
45	45	drug card program, or a discount health care program or discount
46	46	drug card program marketed by an insurer or a health maintenance
47	47	organization, shall comply with this chapter.
48	48	SECTION 5. Sections 562.051, 562.052, 562.053, and 562.054,
49	49	Insurance Code, are amended to read as follows:
50	50	Sec. 562.051. MISREPRESENTATION REGARDING DISCOUNT
51	51	PROGRAMS [HEALTH CARE PROGRAM]. It is an unfair method of
52	52	competition or an unfair or deceptive act or practice in the
53	53	business of discount health care programs or discount drug card
54	54	programs to:
55	55	(1) misrepresent the price range of discounts offered
56	56	by the [discount health care] program;
57	57	(2) misrepresent the size or location of the program's
58	58	network of providers, if any;
59	59	(3) misrepresent the participation of a provider in
60	60	the program's network, if any;
61	61	(4) suggest that a discount card offered through the
62	62	program is a federally approved Medicare prescription discount
63	63	card;
64	64	(5) use the term "insurance," except as:
65	65	(A) a disclaimer of any relationship between the
66	66	[discount health care] program and insurance; or
67	67	(B) a description of an insurance product
68	68	connected with a discount health care program or discount drug card
69	69	program; or
70	70	(6) use the term "health plan," "coverage," "copay,"
71	71	"copayments," "deductible," "preexisting conditions," "guaranteed
72	72	issue," "premium," "PPO," or "preferred provider organization," or
73	73	another similar term, in a manner that could reasonably mislead an
74	74	individual into believing that the [discount health care] program
75	75	is health insurance or provides coverage similar to health
76	76	insurance.
77	77	Sec. 562.052. FALSE INFORMATION AND ADVERTISING. It is an
78	78	unfair method of competition or an unfair or deceptive act or
79	79	practice in the business of discount health care programs or
80	80	discount drug card programs to make, publish, disseminate,
81	81	circulate, or place before the public or directly or indirectly
82	82	cause to be made, published, disseminated, circulated, or placed
83	83	before the public an advertisement, solicitation, or marketing
84	84	material containing an untrue, deceptive, or misleading assertion,
85	85	representation, or statement regarding the [discount health care]
86	86	program.
87	87	Sec. 562.053. FAILURE TO REGISTER OR RENEW REGISTRATION;
88	88	FALSE REGISTRATION OR RENEWAL STATEMENT. (a) It is an unfair
89	89	method of competition or an unfair or deceptive act or practice in
90	90	the business of discount health care programs or discount drug card
91	91	programs to:
92	92	(1) fail to register or renew registration as required
93	93	under Chapter 7001; or
94	94	(2) with intent to deceive:
95	95	(A) file with the department a false statement in
96	96	connection with an application for registration as a program
97	97	operator under Chapter 7001; or
98	98	(B) file with the department a false statement in
99	99	connection with an application for renewal of a registration as a
100	100	program operator under Chapter 7001.
101	101	(b) The commissioner may impose on a person operating a
102	102	discount health care program or discount drug card program for the
103	103	person's failure to register or renew registration as required
104	104	under Chapter 7001 any remedy that the commissioner is authorized
105	105	to impose under Chapter 101 for the unauthorized business of
106	106	insurance.
107	107	Sec. 562.054. MISREPRESENTATION OF DISCOUNT [HEALTH CARE]
108	108	PROGRAMS. It is an unfair method of competition or an unfair or
109	109	deceptive act or practice in the business of discount health care
110	110	programs or discount drug card programs to misrepresent a discount
111	111	health care program or a discount drug card program by:
112	112	(1) making an untrue statement of material fact;
113	113	(2) failing to state a material fact necessary to make
114	114	other statements made not misleading, considering the
115	115	circumstances under which the statements were made;
116	116	(3) making a statement in a manner that would mislead a
117	117	reasonably prudent person to a false conclusion of a material fact;
118	118	(4) making a material misstatement of law; or
119	119	(5) failing to disclose a matter required by law to be
120	120	disclosed, including failing to make an applicable disclosure
121	121	required by this code.
122	122	SECTION 6. Sections 562.101, 562.102, 562.103, and 562.104,
123	123	Insurance Code, are amended to read as follows:
124	124	Sec. 562.101. UNFAIR METHODS OF COMPETITION AND UNFAIR OR
125	125	DECEPTIVE ACTS OR PRACTICES PROHIBITED. A person may not engage in
126	126	this state in a trade practice that is defined in this chapter as or
127	127	determined under this chapter to be an unfair method of competition
128	128	or an unfair or deceptive act or practice in the business of
129	129	discount health care programs or discount drug card programs.
130	130	Sec. 562.102. PROHIBITED CONTENT OF CERTAIN DISCOUNT
131	131	[HEALTH CARE] PROGRAM ADVERTISING, SOLICITATION, OR MARKETING.
132	132	Notwithstanding any other provision of this code, it is unlawful
133	133	for a program operator or marketer to advertise, solicit, or market
134	134	a discount health care program or discount drug card program
135	135	containing the words "approved by the Texas Department of
136	136	Insurance" or words with a similar meaning.
137	137	Sec. 562.103. PROGRAM OPERATOR DUTIES. (a) A program
138	138	operator shall:
139	139	(1) provide a toll-free telephone number and Internet
140	140	website for members or cardholders to obtain information about the
141	141	[discount health care] program and confirm or find providers
142	142	currently participating in the program; and
143	143	(2) remove a provider from the [discount health care]
144	144	program not later than the 30th day after the date the program
145	145	operator learns that the provider is no longer participating in the
146	146	program or has lost the authority to provide services, drugs, or
147	147	other products.
148	148	(b) A discount health care program operator shall issue at
149	149	least one membership card to serve as proof of membership in the
150	150	discount health care program that must:
151	151	(1) contain a clear and conspicuous statement that the
152	152	discount health care program is not insurance; and
153	153	(2) if the discount health care program includes
154	154	discount prescription drug benefits, include:
155	155	(A) the name or logo of the entity administering
156	156	the prescription drug benefits;
157	157	(B) the international identification number
158	158	assigned by the American National Standards Institute for the
159	159	entity administering the prescription drug benefits;
160	160	(C) the group number applicable to the member;
161	161	and
162	162	(D) a telephone number to be used to contact an
163	163	appropriate person to obtain information relating to the
164	164	prescription drug benefits provided under the program.
165	165	(b-1) A discount drug card issued by a discount drug card
166	166	program operator must contain a clear and conspicuous statement
167	167	that:
168	168	(1) the discount drug card program is not insurance
169	169	and does not guarantee the quality of the services or products
170	170	offered by individual providers; and
171	171	(2) if an individual remains dissatisfied after
172	172	completing the discount drug card program's complaint system, the
173	173	cardholder may contact the cardholder's state insurance
174	174	department.
175	175	(c) Not later than the 15th day after the date of
176	176	enrollment, a discount health care program operator shall issue at
177	177	least one set of disclosure materials describing the terms and
178	178	conditions of the discount health care program to each household in
179	179	which a person is a member, including a statement that:
180	180	(1) the discount health care program is not insurance,
181	181	with the word "not" capitalized;
182	182	(2) the member is required to pay the entire amount of
183	183	the discounted rate;
184	184	(3) the discount health care program does not
185	185	guarantee the quality of the services or products offered by
186	186	individual providers; and
187	187	(4) if the member remains dissatisfied after
188	188	completing the discount health care program's complaint system, the
189	189	member may contact the member's state insurance department.
190	190	(d) A discount health care program operator shall ensure
191	191	that an application form or other membership agreement:
192	192	(1) clearly and conspicuously discloses the duration
193	193	of membership and the amount of payments the member is obligated to
194	194	make for the membership; and
195	195	(2) contains a clear and conspicuous statement that
196	196	the discount health care program is not insurance.
197	197	(e) A discount health care program operator shall allow any
198	198	member who cancels a membership in the discount health care program
199	199	not later than the 30th day after the date the person becomes a
200	200	member to receive a refund, not later than the 30th day after the
201	201	date the program operator receives a valid cancellation notice and
202	202	returned membership card, of all periodic membership charges paid
203	203	by that member to the program operator and the amount of any
204	204	one-time enrollment fee that exceeds $50.
205	205	(f) A program operator shall:
206	206	(1) maintain a surety bond, payable to the department
207	207	for the use and benefit of members or cardholders in a manner
208	208	prescribed by the department, in the principal amount of $50,000,
209	209	except that a program operator that is an insurer that holds a
210	210	certificate of authority under Title 6 is not required to maintain
211	211	the surety bond;
212	212	(2) maintain an agent for service of process in this
213	213	state; and
214	214	(3) establish and operate a fair and efficient
215	215	procedure for resolution of complaints regarding the availability
216	216	of contracted discounts or services or other matters relating to
217	217	the contractual obligations of the discount health care program to
218	218	its members or duties of the discount drug card program to
219	219	cardholders in the discount drug card program.
220	220	Sec. 562.104. MARKETING OF PROGRAM. (a) A program
221	221	operator may market directly or contract with marketers for the
222	222	distribution of the program operator's discount health care
223	223	programs or discount drug card programs.
224	224	(b) A program operator shall enter into a written contract
225	225	with a marketer before the marketer begins marketing, promoting,
226	226	selling, or distributing the program operator's [discount health
227	227	care] program. The contract must prohibit the marketer from using
228	228	an advertisement, solicitation, or other marketing material or a
229	229	discount card that has not been approved in advance and in writing
230	230	by the program operator.
231	231	(c) A program operator must approve in writing before their
232	232	use all advertisements, solicitations, or other marketing
233	233	materials and all discount cards used by marketers to market,
234	234	promote, sell, or distribute the [discount health care] program.
235	235	(d) Each advertisement, solicitation, or marketing material
236	236	of a [discount health care] program must clearly and conspicuously
237	237	state that the [discount health care] program is not insurance.
238	238	SECTION 7. Sections 562.105(a), (b), and (c), Insurance
239	239	Code, are amended to read as follows:
240	240	(a) A program operator shall contract, directly or
241	241	indirectly, with a provider offering discounted health care
242	242	services, drugs, or other products under the discount health care
243	243	program or discount drug card program. The written contract must
244	244	contain all of the following provisions:
245	245	(1) a description of the discounts to be provided
246	246	under the program [to a member];
247	247	(2) a provision prohibiting the provider from charging
248	248	under the program [a member] more than the discounted rate agreed to
249	249	in the written agreement with the provider; and
250	250	(3) a provision requiring the provider to promptly
251	251	notify the program operator if the provider no longer participates
252	252	in the program or loses the authority to provide services, drugs,
253	253	or other products.
254	254	(b) The discount health care program operator may not charge
255	255	or receive from a provider any fee or other compensation for
256	256	entering into the agreement. The discount drug card program
257	257	operator may only charge or receive from a provider the fee
258	258	established by the commissioner under Section 7001.051.
259	259	(c) If the program operator contracts with a network of
260	260	providers, the program operator shall obtain written assurance from
261	261	the network that:
262	262	(1) the network has a written agreement with each
263	263	network provider that includes a discounted rate that is applicable
264	264	to a program operator's [discount health care] program and contains
265	265	all of the terms described in Subsection (a); and
266	266	(2) the network is authorized to obligate the network
267	267	providers to provide services, drugs, or other products to members
268	268	of the discount health care program or cardholders under the
269	269	discount drug card program, as applicable.
270	270	SECTION 8. Section 562.151, Insurance Code, is amended to
271	271	read as follows:
272	272	Sec. 562.151. EXAMINATION AND INVESTIGATION. The
273	273	department may examine and investigate the affairs of a person
274	274	engaged in the business of discount health care programs or
275	275	discount drug card programs in this state to determine whether the
276	276	person:
277	277	(1) has or is engaged in an unfair method of
278	278	competition or unfair or deceptive act or practice prohibited by
279	279	this chapter; or
280	280	(2) has violated Subchapter B or C.
281	281	SECTION 9. Section 562.152(a), Insurance Code, is amended
282	282	to read as follows:
283	283	(a) When the department has reason to believe that a person
284	284	engaged in the business of discount health care programs or
285	285	discount drug card programs in this state has engaged or is engaging
286	286	in this state in an unfair method of competition or unfair or
287	287	deceptive act or practice defined by Subchapter B or has violated
288	288	Subchapter B or C and that a proceeding by the department regarding
289	289	the charges is in the interest of the public, the department shall
290	290	issue and serve on the person:
291	291	(1) a statement of the charges; and
292	292	(2) a notice of the hearing on the charges, including
293	293	the time and place for the hearing.
294	294	SECTION 10. Section 562.201(a), Insurance Code, is amended
295	295	to read as follows:
296	296	(a) The attorney general may bring an action under this
297	297	section if the attorney general has reason to believe that:
298	298	(1) a person engaged in the business of discount
299	299	health care programs or discount drug card programs in this state is
300	300	engaging in, has engaged in, or is about to engage in an act or
301	301	practice defined as unlawful under:
302	302	(A) this chapter; or
303	303	(B) Section 17.46, Business & Commerce Code; and
304	304	(2) the action is in the public interest.
305	305	SECTION 11. Subchapter D, Chapter 4151, Insurance Code, is
306	306	amended by adding Section 4151.154 to read as follows:
307	307	Sec. 4151.154. DISCOUNT DRUG CARD PROGRAMS. A pharmacy
308	308	benefit manager may not require a pharmacist or pharmacy to:
309	309	(1) accept or process a claim under a discount drug
310	310	card program as defined by Section 7001.001 unless the pharmacist
311	311	or pharmacy agrees in writing to accept or process the claim;
312	312	(2) participate in a specified provider network as a
313	313	condition of processing a claim under a discount drug card program;
314	314	or
315	315	(3) participate in, or process claims under, a
316	316	discount drug card program as a condition of participation in a
317	317	provider network.
318	318	SECTION 12. The heading to Title 21, Insurance Code, is
319	319	amended to read as follows:
320	320	TITLE 21. DISCOUNT [HEALTH CARE] PROGRAMS
321	321	SECTION 13. The heading to Chapter 7001, Insurance Code, is
322	322	amended to read as follows:
323	323	CHAPTER 7001. REGISTRATION OF DISCOUNT [HEALTH CARE] PROGRAM
324	324	OPERATORS
325	325	SECTION 14. Chapter 7001, Insurance Code, is amended by
326	326	designating Sections 7001.001 through 7001.009 as Subchapter A and
327	327	adding a subchapter heading to read as follows:
328	328	SUBCHAPTER A. GENERAL PROVISIONS; REGISTRATION
329	329	SECTION 15. Section 7001.001, Insurance Code, is amended by
330	330	amending Subdivisions (1) and (6) and adding Subdivisions (1-a) and
331	331	(1-b) to read as follows:
332	332	(1) "Discount drug card program" means a business
333	333	arrangement or contract in which an entity, in exchange for
334	334	consideration paid by the entity, or a third party administrator,
335	335	health benefit plan issuer, pharmacy benefit manager, or other
336	336	business entity, directly or indirectly, provides an individual
337	337	access, without charge to the individual, to discounts on drugs
338	338	provided by a pharmacist or pharmacy, or makes, publishes,
339	339	disseminates, circulates, or places before the public, or causes to
340	340	be made, published, disseminated, circulated, or placed before the
341	341	public, an advertisement, solicitation, or offer of access without
342	342	charge to discounts on drugs provided by a pharmacist or pharmacy.
343	343	The term does not include an insurance policy, certificate of
344	344	coverage, or other product otherwise regulated by the department or
345	345	a self-funded or self-insured employee benefit plan.
346	346	(1-a) "Discount drug card program operator" means a
347	347	person who operates a discount drug card program.
348	348	(1-b) "Discount health care program" means a business
349	349	arrangement or contract in which an entity, in exchange for fees,
350	350	dues, charges, or other consideration, offers its members access to
351	351	discounts on health care services provided by health care
352	352	providers. The term does not include an insurance policy,
353	353	certificate of coverage, or other product otherwise regulated by
354	354	the department or a self-funded or self-insured employee benefit
355	355	plan.
356	356	(6) "Program operator" means:
357	357	(A) a discount health care [plan] program
358	358	operator; or
359	359	(B) a discount drug card program operator.
360	360	SECTION 16. Section 7001.004, Insurance Code, is amended to
361	361	read as follows:
362	362	Sec. 7001.004. REGISTRATION REQUIRED. A [discount health
363	363	care] program operator may not offer a discount health care program
364	364	or a discount drug card program in this state unless the program
365	365	operator is registered with the department.
366	366	SECTION 17. Section 7001.005(a), Insurance Code, is amended
367	367	to read as follows:
368	368	(a) An applicant for registration under this chapter or an
369	369	applicant for renewal of registration under this chapter whose
370	370	information has changed shall submit:
371	371	(1) a completed registration application on the form
372	372	prescribed by the department indicating the program operator's
373	373	name, physical address, and mailing address and its agent for
374	374	service of process;
375	375	(2) a list of names, addresses, official positions,
376	376	and biographical information of:
377	377	(A) the individuals responsible for conducting
378	378	the program operator's affairs, including:
379	379	(i) each member of the board of directors,
380	380	board of trustees, executive committee, or other governing board or
381	381	committee;
382	382	(ii) the officers of the program operator;
383	383	and
384	384	(iii) any contracted management company
385	385	personnel; and
386	386	(B) any person owning or having the right to
387	387	acquire 10 percent or more of the voting securities of the program
388	388	operator;
389	389	(3) a statement generally describing the applicant,
390	390	its facilities and personnel, and the health care services, drugs,
391	391	or other products for which a discount will be made available under
392	392	its discount health care programs or discount drug card programs;
393	393	(4) a list of the marketers authorized to sell or
394	394	distribute the program operator's programs under the program
395	395	operator's name, a list of the marketing entities authorized to
396	396	private label the program operator's programs, and other
397	397	information about the marketers and marketing entities considered
398	398	necessary by the commissioner; and
399	399	(5) a copy of the form of all contracts made or to be
400	400	made between the program operator and any providers, [or] provider
401	401	networks, or pharmacy benefit managers regarding the provision of
402	402	health care services or products to members or regarding discount
403	403	drug cards generally.
404	404	SECTION 18. Section 7001.006, Insurance Code, is amended to
405	405	read as follows:
406	406	Sec. 7001.006. FEES. A [discount health care] program
407	407	operator shall pay the department an initial registration fee of
408	408	$1,000 and an annual renewal fee in the amount set by the
409	409	commissioner not to exceed $500.
410	410	SECTION 19. Section 7001.009(a), Insurance Code, is amended
411	411	to read as follows:
412	412	(a) The department may deny a registration application or
413	413	take any action authorized under Chapters 82, 83, and 84 if the
414	414	department determines that the applicant or registered [discount
415	415	health care] program operator, individually or through an officer,
416	416	director, or shareholder:
417	417	(1) has wilfully violated a provision of this code or
418	418	an order or rule of the commissioner;
419	419	(2) has intentionally made a material misstatement in
420	420	the registration application;
421	421	(3) has obtained or attempted to obtain a registration
422	422	by fraud or misrepresentation;
423	423	(4) has misappropriated, converted to the applicant's
424	424	or registration holder's own use, or illegally withheld money
425	425	belonging to a member of a discount health care program;
426	426	(5) has engaged in fraudulent or dishonest acts or
427	427	practices; or
428	428	(6) has been convicted of a felony.
429	429	SECTION 20. Chapter 7001, Insurance Code, is amended by
430	430	adding Subchapter B to read as follows:
431	431	SUBCHAPTER B. DISCOUNT DRUG CARD PROGRAMS
432	432	Sec. 7001.051. PROGRAM FEES. The commissioner shall
433	433	establish a reasonable fee that a discount drug card program
434	434	operator may charge a pharmacist or pharmacy to process a claim
435	435	under a discount drug card program. The fee may not be computed as a
436	436	percentage of the cost of a drug provided.
437	437	Sec. 7001.052. NETWORK REQUIREMENTS PROHIBITED. A
438	438	discount drug card program operator or an affiliate or agent of a
439	439	discount drug card program operator may not require a pharmacy or
440	440	pharmacist to:
441	441	(1) participate in a specified provider network as a
442	442	condition of processing a claim in the discount drug card program;
443	443	or
444	444	(2) participate in, or process claims under, a
445	445	discount drug card program as a condition of participation in a
446	446	provider network.
447	447	Sec. 7001.053. PROHIBITED CONDUCT. (a) A discount drug
448	448	card program operator may not pay any consideration to a health care
449	449	services provider or employee of a health care services provider:
450	450	(1) to encourage an individual to claim a discount
451	451	under a discount drug card program; or
452	452	(2) to include discount drug card program information
453	453	on a prescription for a drug or in materials accompanying the
454	454	prescription.
455	455	(b) A discount drug card program operator may not, directly
456	456	or indirectly:
457	457	(1) represent that a discount drug card program is a
458	458	pharmacy benefit or health insurance or provides coverage similar
459	459	to health insurance by any manner or method; or
460	460	(2) provide written prescription forms that could
461	461	reasonably mislead an individual to believe that the discount drug
462	462	card program is health insurance or provides coverage similar to
463	463	health insurance.
464	464	SECTION 21. (a) The changes in law made by this Act to
465	465	Chapter 562, Insurance Code, apply only to conduct that occurs on or
466	466	after the effective date of this Act. Conduct that occurs before the
467	467	effective date of this Act is governed by the law as it existed when
468	468	the conduct occurred, and the former law is continued in effect for
469	469	that purpose.
470	470	(b) Section 562.105, Insurance Code, as amended by this Act,
471	471	applies only to a contract with a pharmacy or pharmacist signed on
472	472	or after the effective date of this Act. A contract signed before
473	473	the effective date of this Act is governed by the law as it existed
474	474	immediately before the effective date of this Act, and that law is
475	475	continued in effect for that purpose.
476	476	(c) The changes in law made by this Act apply only to a claim
477	477	submitted under a discount drug card program on or after the
478	478	effective date of this Act. A claim filed before the effective date
479	479	of this Act is governed by the law as it existed immediately before
480	480	the effective date of this Act, and that law is continued in effect
481	481	for that purpose.
482	482	(d) Notwithstanding Section 562.053, Insurance Code, or
483	483	Section 7001.004, Insurance Code, as amended by this Act, a person
484	484	is not required to register as a discount drug card program operator
485	485	under Chapter 7001, Insurance Code, as amended by this Act, before
486	486	January 1, 2016.
487	487	SECTION 22. This Act takes effect September 1, 2015.