84R3516 PMO-D
By: Watson S.B. No. 1142
A BILL TO BE ENTITLED
AN ACT
relating to regulation of discount drug card program operators;
authorizing administrative and civil penalties; authorizing fees;
expanding a registration requirement.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The heading to Chapter 562, Insurance Code, is
amended to read as follows:
CHAPTER 562. UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE
ACTS OR PRACTICES REGARDING DISCOUNT [HEALTH CARE] PROGRAMS
SECTION 2. Section 562.001, Insurance Code, is amended to
read as follows:
Sec. 562.001. PURPOSE. The purpose of this chapter is to
regulate trade practices in the business of discount health care
programs and discount drug card programs by:
(1) defining or providing for the determination of
trade practices in this state that are unfair methods of
competition or unfair or deceptive acts or practices; and
(2) prohibiting those unfair or deceptive trade
practices.
SECTION 3. Section 562.002, Insurance Code, is amended by
amending Subdivisions (5) and (8) and adding Subdivision (1-a) to
read as follows:
(1-a) "Discount drug card program" and "discount drug
card program operator" have the meanings assigned by Section
7001.001.
(5) "Marketer" means a person who sells or
distributes, or offers to sell or distribute, a discount health
care program or a discount drug card program, including a private
label entity that places its name on and markets or distributes a
discount health care program or a discount drug card program, but
does not operate a discount health care program or a discount drug
card program.
(8) "Program operator" means a discount health care
program operator or a discount drug card [plan] program operator.
SECTION 4. Section 562.004, Insurance Code, is amended to
read as follows:
Sec. 562.004. APPLICABILITY. Except as otherwise provided
by this chapter, a program operator, including the operator of a
freestanding discount health care program, a freestanding discount
drug card program, or a discount health care program or discount
drug card program marketed by an insurer or a health maintenance
organization, shall comply with this chapter.
SECTION 5. Sections 562.051, 562.052, 562.053, and 562.054,
Insurance Code, are amended to read as follows:
Sec. 562.051. MISREPRESENTATION REGARDING DISCOUNT
PROGRAMS [HEALTH CARE PROGRAM]. It is an unfair method of
competition or an unfair or deceptive act or practice in the
business of discount health care programs or discount drug card
programs to:
(1) misrepresent the price range of discounts offered
by the [discount health care] program;
(2) misrepresent the size or location of the program's
network of providers, if any;
(3) misrepresent the participation of a provider in
the program's network, if any;
(4) suggest that a discount card offered through the
program is a federally approved Medicare prescription discount
card;
(5) use the term "insurance," except as:
(A) a disclaimer of any relationship between the
[discount health care] program and insurance; or
(B) a description of an insurance product
connected with a discount health care program or discount drug card
program; or
(6) use the term "health plan," "coverage," "copay,"
"copayments," "deductible," "preexisting conditions," "guaranteed
issue," "premium," "PPO," or "preferred provider organization," or
another similar term, in a manner that could reasonably mislead an
individual into believing that the [discount health care] program
is health insurance or provides coverage similar to health
insurance.
Sec. 562.052. FALSE INFORMATION AND ADVERTISING. It is an
unfair method of competition or an unfair or deceptive act or
practice in the business of discount health care programs or
discount drug card programs to make, publish, disseminate,
circulate, or place before the public or directly or indirectly
cause to be made, published, disseminated, circulated, or placed
before the public an advertisement, solicitation, or marketing
material containing an untrue, deceptive, or misleading assertion,
representation, or statement regarding the [discount health care]
program.
Sec. 562.053. FAILURE TO REGISTER OR RENEW REGISTRATION;
FALSE REGISTRATION OR RENEWAL STATEMENT. (a) It is an unfair
method of competition or an unfair or deceptive act or practice in
the business of discount health care programs or discount drug card
programs to:
(1) fail to register or renew registration as required
under Chapter 7001; or
(2) with intent to deceive:
(A) file with the department a false statement in
connection with an application for registration as a program
operator under Chapter 7001; or
(B) file with the department a false statement in
connection with an application for renewal of a registration as a
program operator under Chapter 7001.
(b) The commissioner may impose on a person operating a
discount health care program or discount drug card program for the
person's failure to register or renew registration as required
under Chapter 7001 any remedy that the commissioner is authorized
to impose under Chapter 101 for the unauthorized business of
insurance.
Sec. 562.054. MISREPRESENTATION OF DISCOUNT [HEALTH CARE]
PROGRAMS. It is an unfair method of competition or an unfair or
deceptive act or practice in the business of discount health care
programs or discount drug card programs to misrepresent a discount
health care program or a discount drug card program by:
(1) making an untrue statement of material fact;
(2) failing to state a material fact necessary to make
other statements made not misleading, considering the
circumstances under which the statements were made;
(3) making a statement in a manner that would mislead a
reasonably prudent person to a false conclusion of a material fact;
(4) making a material misstatement of law; or
(5) failing to disclose a matter required by law to be
disclosed, including failing to make an applicable disclosure
required by this code.
SECTION 6. Sections 562.101, 562.102, 562.103, and 562.104,
Insurance Code, are amended to read as follows:
Sec. 562.101. UNFAIR METHODS OF COMPETITION AND UNFAIR OR
DECEPTIVE ACTS OR PRACTICES PROHIBITED. A person may not engage in
this state in a trade practice that is defined in this chapter as or
determined under this chapter to be an unfair method of competition
or an unfair or deceptive act or practice in the business of
discount health care programs or discount drug card programs.
Sec. 562.102. PROHIBITED CONTENT OF CERTAIN DISCOUNT
[HEALTH CARE] PROGRAM ADVERTISING, SOLICITATION, OR MARKETING.
Notwithstanding any other provision of this code, it is unlawful
for a program operator or marketer to advertise, solicit, or market
a discount health care program or discount drug card program
containing the words "approved by the Texas Department of
Insurance" or words with a similar meaning.
Sec. 562.103. PROGRAM OPERATOR DUTIES. (a) A program
operator shall:
(1) provide a toll-free telephone number and Internet
website for members or cardholders to obtain information about the
[discount health care] program and confirm or find providers
currently participating in the program; and
(2) remove a provider from the [discount health care]
program not later than the 30th day after the date the program
operator learns that the provider is no longer participating in the
program or has lost the authority to provide services, drugs, or
other products.
(b) A discount health care program operator shall issue at
least one membership card to serve as proof of membership in the
discount health care program that must:
(1) contain a clear and conspicuous statement that the
discount health care program is not insurance; and
(2) if the discount health care program includes
discount prescription drug benefits, include:
(A) the name or logo of the entity administering
the prescription drug benefits;
(B) the international identification number
assigned by the American National Standards Institute for the
entity administering the prescription drug benefits;
(C) the group number applicable to the member;
and
(D) a telephone number to be used to contact an
appropriate person to obtain information relating to the
prescription drug benefits provided under the program.
(b-1) A discount drug card issued by a discount drug card
program operator must contain a clear and conspicuous statement
that:
(1) the discount drug card program is not insurance
and does not guarantee the quality of the services or products
offered by individual providers; and
(2) if an individual remains dissatisfied after
completing the discount drug card program's complaint system, the
cardholder may contact the cardholder's state insurance
department.
(c) Not later than the 15th day after the date of
enrollment, a discount health care program operator shall issue at
least one set of disclosure materials describing the terms and
conditions of the discount health care program to each household in
which a person is a member, including a statement that:
(1) the discount health care program is not insurance,
with the word "not" capitalized;
(2) the member is required to pay the entire amount of
the discounted rate;
(3) the discount health care program does not
guarantee the quality of the services or products offered by
individual providers; and
(4) if the member remains dissatisfied after
completing the discount health care program's complaint system, the
member may contact the member's state insurance department.
(d) A discount health care program operator shall ensure
that an application form or other membership agreement:
(1) clearly and conspicuously discloses the duration
of membership and the amount of payments the member is obligated to
make for the membership; and
(2) contains a clear and conspicuous statement that
the discount health care program is not insurance.
(e) A discount health care program operator shall allow any
member who cancels a membership in the discount health care program
not later than the 30th day after the date the person becomes a
member to receive a refund, not later than the 30th day after the
date the program operator receives a valid cancellation notice and
returned membership card, of all periodic membership charges paid
by that member to the program operator and the amount of any
one-time enrollment fee that exceeds $50.
(f) A program operator shall:
(1) maintain a surety bond, payable to the department
for the use and benefit of members or cardholders in a manner
prescribed by the department, in the principal amount of $50,000,
except that a program operator that is an insurer that holds a
certificate of authority under Title 6 is not required to maintain
the surety bond;
(2) maintain an agent for service of process in this
state; and
(3) establish and operate a fair and efficient
procedure for resolution of complaints regarding the availability
of contracted discounts or services or other matters relating to
the contractual obligations of the discount health care program to
its members or duties of the discount drug card program to
cardholders in the discount drug card program.
Sec. 562.104. MARKETING OF PROGRAM. (a) A program
operator may market directly or contract with marketers for the
distribution of the program operator's discount health care
programs or discount drug card programs.
(b) A program operator shall enter into a written contract
with a marketer before the marketer begins marketing, promoting,
selling, or distributing the program operator's [discount health
care] program. The contract must prohibit the marketer from using
an advertisement, solicitation, or other marketing material or a
discount card that has not been approved in advance and in writing
by the program operator.
(c) A program operator must approve in writing before their
use all advertisements, solicitations, or other marketing
materials and all discount cards used by marketers to market,
promote, sell, or distribute the [discount health care] program.
(d) Each advertisement, solicitation, or marketing material
of a [discount health care] program must clearly and conspicuously
state that the [discount health care] program is not insurance.
SECTION 7. Sections 562.105(a), (b), and (c), Insurance
Code, are amended to read as follows:
(a) A program operator shall contract, directly or
indirectly, with a provider offering discounted health care
services, drugs, or other products under the discount health care
program or discount drug card program. The written contract must
contain all of the following provisions:
(1) a description of the discounts to be provided
under the program [to a member];
(2) a provision prohibiting the provider from charging
under the program [a member] more than the discounted rate agreed to
in the written agreement with the provider; and
(3) a provision requiring the provider to promptly
notify the program operator if the provider no longer participates
in the program or loses the authority to provide services, drugs,
or other products.
(b) The discount health care program operator may not charge
or receive from a provider any fee or other compensation for
entering into the agreement. The discount drug card program
operator may only charge or receive from a provider the fee
established by the commissioner under Section 7001.051.
(c) If the program operator contracts with a network of
providers, the program operator shall obtain written assurance from
the network that:
(1) the network has a written agreement with each
network provider that includes a discounted rate that is applicable
to a program operator's [discount health care] program and contains
all of the terms described in Subsection (a); and
(2) the network is authorized to obligate the network
providers to provide services, drugs, or other products to members
of the discount health care program or cardholders under the
discount drug card program, as applicable.
SECTION 8. Section 562.151, Insurance Code, is amended to
read as follows:
Sec. 562.151. EXAMINATION AND INVESTIGATION. The
department may examine and investigate the affairs of a person
engaged in the business of discount health care programs or
discount drug card programs in this state to determine whether the
person:
(1) has or is engaged in an unfair method of
competition or unfair or deceptive act or practice prohibited by
this chapter; or
(2) has violated Subchapter B or C.
SECTION 9. Section 562.152(a), Insurance Code, is amended
to read as follows:
(a) When the department has reason to believe that a person
engaged in the business of discount health care programs or
discount drug card programs in this state has engaged or is engaging
in this state in an unfair method of competition or unfair or
deceptive act or practice defined by Subchapter B or has violated
Subchapter B or C and that a proceeding by the department regarding
the charges is in the interest of the public, the department shall
issue and serve on the person:
(1) a statement of the charges; and
(2) a notice of the hearing on the charges, including
the time and place for the hearing.
SECTION 10. Section 562.201(a), Insurance Code, is amended
to read as follows:
(a) The attorney general may bring an action under this
section if the attorney general has reason to believe that:
(1) a person engaged in the business of discount
health care programs or discount drug card programs in this state is
engaging in, has engaged in, or is about to engage in an act or
practice defined as unlawful under:
(A) this chapter; or
(B) Section 17.46, Business & Commerce Code; and
(2) the action is in the public interest.
SECTION 11. Subchapter D, Chapter 4151, Insurance Code, is
amended by adding Section 4151.154 to read as follows:
Sec. 4151.154. DISCOUNT DRUG CARD PROGRAMS. A pharmacy
benefit manager may not require a pharmacist or pharmacy to:
(1) accept or process a claim under a discount drug
card program as defined by Section 7001.001 unless the pharmacist
or pharmacy agrees in writing to accept or process the claim;
(2) participate in a specified provider network as a
condition of processing a claim under a discount drug card program;
or
(3) participate in, or process claims under, a
discount drug card program as a condition of participation in a
provider network.
SECTION 12. The heading to Title 21, Insurance Code, is
amended to read as follows:
TITLE 21. DISCOUNT [HEALTH CARE] PROGRAMS
SECTION 13. The heading to Chapter 7001, Insurance Code, is
amended to read as follows:
CHAPTER 7001. REGISTRATION OF DISCOUNT [HEALTH CARE] PROGRAM
OPERATORS
SECTION 14. Chapter 7001, Insurance Code, is amended by
designating Sections 7001.001 through 7001.009 as Subchapter A and
adding a subchapter heading to read as follows:
SUBCHAPTER A. GENERAL PROVISIONS; REGISTRATION
SECTION 15. Section 7001.001, Insurance Code, is amended by
amending Subdivisions (1) and (6) and adding Subdivisions (1-a) and
(1-b) to read as follows:
(1) "Discount drug card program" means a business
arrangement or contract in which an entity, in exchange for
consideration paid by the entity, or a third party administrator,
health benefit plan issuer, pharmacy benefit manager, or other
business entity, directly or indirectly, provides an individual
access, without charge to the individual, to discounts on drugs
provided by a pharmacist or pharmacy, or makes, publishes,
disseminates, circulates, or places before the public, or causes to
be made, published, disseminated, circulated, or placed before the
public, an advertisement, solicitation, or offer of access without
charge to discounts on drugs provided by a pharmacist or pharmacy.
The term does not include an insurance policy, certificate of
coverage, or other product otherwise regulated by the department or
a self-funded or self-insured employee benefit plan.
(1-a) "Discount drug card program operator" means a
person who operates a discount drug card program.
(1-b) "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 an insurance policy,
certificate of coverage, or other product otherwise regulated by
the department or a self-funded or self-insured employee benefit
plan.
(6) "Program operator" means:
(A) a discount health care [plan] program
operator; or
(B) a discount drug card program operator.
SECTION 16. Section 7001.004, Insurance Code, is amended to
read as follows:
Sec. 7001.004. REGISTRATION REQUIRED. A [discount health
care] program operator may not offer a discount health care program
or a discount drug card program in this state unless the program
operator is registered with the department.
SECTION 17. Section 7001.005(a), Insurance Code, is amended
to read as follows:
(a) An applicant for registration under this chapter or an
applicant for renewal of registration under this chapter whose
information has changed shall submit:
(1) a completed registration application on the form
prescribed by the department indicating the program operator's
name, physical address, and mailing address and its agent for
service of process;
(2) a list of names, addresses, official positions,
and biographical information of:
(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, drugs,
or other products for which a discount will be made available under
its discount health care programs or discount drug card programs;
(4) a list of the marketers authorized to sell or
distribute the program operator's programs under the program
operator's name, a list of the marketing entities authorized to
private label the program operator's programs, and other
information about the marketers and marketing entities considered
necessary by the commissioner; 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, or pharmacy benefit managers regarding the provision of
health care services or products to members or regarding discount
drug cards generally.
SECTION 18. Section 7001.006, Insurance Code, is amended to
read as follows:
Sec. 7001.006. FEES. A [discount health care] program
operator shall pay the department an initial registration fee of
$1,000 and an annual renewal fee in the amount set by the
commissioner not to exceed $500.
SECTION 19. Section 7001.009(a), Insurance Code, is amended
to read as follows:
(a) The department may deny a registration application or
take any action authorized under Chapters 82, 83, and 84 if the
department determines that the applicant or registered [discount
health care] program operator, individually or through an officer,
director, or shareholder:
(1) has wilfully violated a provision of this code or
an order or rule of the commissioner;
(2) has intentionally made a material misstatement in
the registration application;
(3) has obtained or attempted to obtain a registration
by fraud or misrepresentation;
(4) has misappropriated, converted to the applicant's
or registration holder's own use, or illegally withheld money
belonging to a member of a discount health care program;
(5) has engaged in fraudulent or dishonest acts or
practices; or
(6) has been convicted of a felony.
SECTION 20. Chapter 7001, Insurance Code, is amended by
adding Subchapter B to read as follows:
SUBCHAPTER B. DISCOUNT DRUG CARD PROGRAMS
Sec. 7001.051. PROGRAM FEES. The commissioner shall
establish a reasonable fee that a discount drug card program
operator may charge a pharmacist or pharmacy to process a claim
under a discount drug card program. The fee may not be computed as a
percentage of the cost of a drug provided.
Sec. 7001.052. NETWORK REQUIREMENTS PROHIBITED. A
discount drug card program operator or an affiliate or agent of a
discount drug card program operator may not require a pharmacy or
pharmacist to:
(1) participate in a specified provider network as a
condition of processing a claim in the discount drug card program;
or
(2) participate in, or process claims under, a
discount drug card program as a condition of participation in a
provider network.
Sec. 7001.053. PROHIBITED CONDUCT. (a) A discount drug
card program operator may not pay any consideration to a health care
services provider or employee of a health care services provider:
(1) to encourage an individual to claim a discount
under a discount drug card program; or
(2) to include discount drug card program information
on a prescription for a drug or in materials accompanying the
prescription.
(b) A discount drug card program operator may not, directly
or indirectly:
(1) represent that a discount drug card program is a
pharmacy benefit or health insurance or provides coverage similar
to health insurance by any manner or method; or
(2) provide written prescription forms that could
reasonably mislead an individual to believe that the discount drug
card program is health insurance or provides coverage similar to
health insurance.
SECTION 21. (a) The changes in law made by this Act to
Chapter 562, Insurance Code, apply only to conduct that occurs on or
after the effective date of this Act. Conduct that occurs before the
effective date of this Act is governed by the law as it existed when
the conduct occurred, and the former law is continued in effect for
that purpose.
(b) Section 562.105, Insurance Code, as amended by this Act,
applies only to a contract with a pharmacy or pharmacist signed on
or after the effective date of this Act. A contract signed before
the effective date of this Act 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.
(c) The changes in law made by this Act apply only to a claim
submitted under a discount drug card program on or after the
effective date of this Act. A claim filed before the effective date
of this Act 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.
(d) Notwithstanding Section 562.053, Insurance Code, or
Section 7001.004, Insurance Code, as amended by this Act, a person
is not required to register as a discount drug card program operator
under Chapter 7001, Insurance Code, as amended by this Act, before
January 1, 2016.
SECTION 22. This Act takes effect September 1, 2015.