By: Maxey H.B. No. 955
73R4851 T
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the duty of non-profit, tax-exempt hospitals to provide
1-3 charity care.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Chapter 311, Subchapter C, Section 311.031, Health and
1-6 Safety Code, is amended to read as follows:
1-7 Section 311.031. Definitions
1-8 In this subchapter:
1-9 (1) "Board" means the Texas Board of Health.
1-10 (2) "Department" means the Texas Department of Health.
1-11 (3) "Hospital" means a general or special hospital licensed under
1-12 Chapter 241 (Texas Hospital Licensing Law).
1-13 (4) "Community Benefits" means the unreimbursed cost to the
1-14 hospital of providing "charity care", "contractual allowances",
1-15 "subsidized health services", "donations", "research", and
1-16 "education". Community Benefits does not include the cost to the
1-17 hospital of paying any taxes or other governmental assessments.
1-18 (5) "Charity Care" means the unreimbursed cost to the hospital of:
1-19 (a) providing health care service on an inpatient or
1-20 outpatient basis to a person classified by the hospital as
1-21 "financially indigent" or "medically indigent"; and/or
1-22 (b) providing or funding health care services through
1-23 outpatient clinics or other community health programs, provided
1-24 such programs primarily serve persons classified by the hospital as
2-1 "financially indigent" or "medically indigent".
2-2 (c) "Financially Indigent" means an uninsured or
2-3 underinsured person who is accepted for care with no obligation or
2-4 a discounted obligation to pay for the services rendered based on
2-5 the "hospital's eligibility system".
2-6 (d) "Medically Indigent" means a person whose medical or
2-7 hospital bills after payment by third-party payors exceed a
2-8 specified percentage of the patient's annual gross income, in
2-9 accordance with the "hospital's eligibility system" and the person
2-10 is financially unable to pay the remaining bill.
2-11 (e) "Hospital Eligibility System" means the financial
2-12 criteria used by the hospital to determine if a patient is eligible
2-13 for charity care. Such system shall include income levels and
2-14 means testing indexed to the federal poverty guidelines; provided,
2-15 however, that a hospital may not establish an eligibility system
2-16 which sets the income level eligible for charity care lower than
2-17 required by counties under the Indigent Health Care Act, Health and
2-18 Safety Code, Section 61.023.
2-19 (6) "Contractual Allowances" means the cost of providing
2-20 healthcare to the beneficiaries of Medicaid, Medicare, and other
2-21 state or local indigent care programs, which exceeds the
2-22 reimbursement provided by these programs.
2-23 (7) "Subsidized Health Services" means those services provided by
2-24 a hospital in response to community needs for which the
2-25 reimbursement is less than the hospital's costs for providing the
2-26 services, and which must be subsidized by other hospital revenue
2-27 sources. Subsidized health services may include, but are not
3-1 limited to:
3-2 (a) emergency and trauma care;
3-3 (b) air ambulance services;
3-4 (c) free-standing community clinics; and
3-5 (d) collaborative efforts with local government agencies in
3-6 preventive medicine, such as immunization programs.
3-7 (8) "Donations" means the unreimbursed cost of providing cash and
3-8 in-kind gifts to charitable organizations that support the
3-9 charitable purposes of the hospital.
3-10 (9) "Research" means the unreimbursed cost to the hospital of
3-11 providing facilities, equipment, and personnel for conducting
3-12 medical research in response to community needs.
3-13 (10) "Education" means the unreimbursed cost to the hospital of
3-14 providing educational benefits, services, and programs, including:
3-15 (a) education of physicians, nurses, technicians, and other
3-16 medical professionals and health care providers;
3-17 (b) provision of scholarships and funding to colleges and
3-18 universities for health professions education;
3-19 (c) education of patients concerning diseases and home care;
3-20 and
3-21 (d) community health education through informational
3-22 programs, publications, and outreach activities.
3-23 (11) "Unreimbursed Costs" means the costs the hospital incurs for
3-24 providing services after subtracting payments received from any
3-25 source for such services including, but not limited to, the
3-26 following: third-party insurance payments; Medicare DRG payments;
3-27 Medicaid DRG payments; Medicare education reimbursements; state
4-1 reimbursements for education; payments from drug companies to
4-2 pursue research; grant funds for research; and disproportionate
4-3 share payments.
4-4 SECTION 2. Chapter 311, Subchapter C, Section 311.033, Health and
4-5 Safety Code, is amended to read as follows:
4-6 Section 311.033. Financial and Utilization Data Required
4-7 (a) A hospital shall submit to the department financial and
4-8 utilization data for that hospital, including data relating to the
4-9 hospital's:
4-10 . . .
4-11 <(10) total cost of reimbursed and unreimbursed care for
4-12 indigent patients; and>
4-13 (10) unreimbursed costs of subsidized health services
4-14 reported separately in the following categories:
4-15 (a) Emergency care;
4-16 (b) Trauma care;
4-17 (c) Air ambulance services;
4-18 (d) Free-standing community clinics;
4-19 (e) Collaborative efforts with local government
4-20 agencies in preventive medicine, such as immunization programs; and
4-21 (f) Other services that satisfy the definition of
4-22 "subsidized health services" contained in Section 311.031(7).
4-23 (11) donations;
4-24 (12) total cost of reimbursed and unreimbursed research;
4-25 (13)<(11)> total cost of reimbursed and unreimbursed
4-26 <medical> education separated into the following categories:
4-27 (a) Education of physicians, nurses, technicians, and
5-1 other medical professionals and health care providers;
5-2 (b) Provision of scholarships and funding to colleges
5-3 and universities for health professions education;
5-4 (c) Education of patients concerning diseases and home
5-5 care;
5-6 (d) Community health education through informational
5-7 programs, publications, and outreach activities; and
5-8 (e) Other educational services that satisfy the
5-9 definition of "education" contained in Section 311.031(10).
5-10 SECTION 3. Chapter 311, Subchapter C, Section 311.037, Health and
5-11 Safety Code, is amended to read as follows:
5-12 Section 311.037. Confidential Data; Criminal Penalty
5-13 (a) The following data reported or submitted to the department
5-14 under this subchapter is confidential:
5-15 (1) data regarding a specific patient. <or>
5-16 <(2) financial data regarding a provider or facility.>
5-17 (b) Before the department may disclose confidential data under
5-18 this subchapter, the department must remove any information that
5-19 identifies a specific patient<, provider, or facility>.
5-20 (c) A person commits an offense if the person:
5-21 (1) discloses, distributes, or sells confidential data
5-22 obtained under this subchapter; or
5-23 (2) violates Subsection (b).
5-24 (d) An offense under Subsection (c) is a Class B misdemeanor.
5-25 SECTION 4. Chapter 311, Health and Safety Code, is amended to add
5-26 Subchapter D to read as follows:
5-27 SUBCHAPTER D. DUTIES OF NON-PROFIT, TAX-EXEMPT HOSPITALS.
6-1 Section 311.039. Policy Statement. It is the purpose of this
6-2 subchapter to clarify the duties and responsibilities of
6-3 non-profit, tax-exempt hospitals for providing community benefits
6-4 that include charity care.
6-5 Section 311.040. Definitions.
6-6 (a) "Charity Care" means services defined as charity care in
6-7 Subchapter C, section 311.031(5), Health and Safety Code.
6-8 (b) "Community Benefits" means services defined as community
6-9 benefits in Subchapter C, section 311.031(4), Health and Safety
6-10 Code.
6-11 (c) "Affiliate" means any non-profit or for-profit business entity
6-12 which is owned or controlled by a non-profit hospital; its parent
6-13 entity; or one or more of the affiliates of a non-profit hospital
6-14 or its parent. An entity is controlled if the hospital, parent, or
6-15 affiliate has the authority to appoint the board of directors of
6-16 the entity, or otherwise exercises control over the operations of
6-17 the entity.
6-18 (d) "Available resources" means the combined resources, financial
6-19 and otherwise, of a non-profit hospital and its affiliates.
6-20 (e) "Board of Directors" means the group of persons vested with
6-21 the management of the affairs of the hospital, irrespective of the
6-22 name by which such group is designated.
6-23 (f) "Community" means the geographic area and patient categories
6-24 for which the hospital provides health care services; provided,
6-25 however, that "community" shall at least encompass the entire
6-26 county or counties in which the hospital and its affiliates are
6-27 located.
7-1 (g) "Non-profit Hospital" and "Non-profit, Tax-exempt Hospital"
7-2 means a hospital that is"
7-3 (1) eligible for tax-exempt bond financing; or
7-4 (2) exempt from state franchise, sales, ad valorem, or other
7-5 state or local taxes; or
7-6 (3) organized as a non-profit corporation under the laws of
7-7 this state or any other state or country.
7-8 (h) "Tax-exempt benefits" means:
7-9 (1) the dollar amount of federal, state, and local taxes
7-10 foregone by a non-profit hospital and its affiliates;
7-11 (2) the dollar amount of donations, whether cash or in-kind,
7-12 received by a non-profit hospital and its affiliates;
7-13 (3) the value of tax-exempt bond financing received by a
7-14 non-profit hospital and its affiliates; and
7-15 (4) the value of volunteer services donated to a non-profit
7-16 hospital and its affiliates.
7-17 Section 311.041. Duty of Non-Profit Hospitals to Provide Community
7-18 Benefits.
7-19 The board of directors of a non-profit hospital shall provide
7-20 healthcare services to the community through the hospital and its
7-21 affiliates; and shall comply with all federal, state, and local
7-22 government requirements for tax exemption. These healthcare
7-23 services to the community shall include charity care and may
7-24 include other components of community benefits as both terms are
7-25 defined in Section 311.040 of this Subchapter.
7-26 Section 311.042. Community Benefits Planning by Non-Profit
7-27 Hospitals.
8-1 (a) The board of directors of a non-profit hospital shall develop:
8-2 (1) an organizational mission statement that identifies the
8-3 hospital's commitment to serving the healthcare needs of the
8-4 community; and
8-5 (2) a community benefits plan defined as an operational plan
8-6 for serving the community's healthcare needs that sets out goals
8-7 and objectives for providing community benefits that include
8-8 charity care, as both the terms community benefit and charity care
8-9 are defined by Section 311.040; and that identifies the populations
8-10 and communities served by the hospital.
8-11 (b) When developing the community benefits plan, the board of
8-12 directors shall consider the healthcare needs of the community as
8-13 determined by community-wide needs assessments.
8-14 (c) The board of directors shall include at least the following
8-15 elements in the community benefits plan:
8-16 (1) mechanisms to evaluate the plan's effectiveness on at
8-17 least an annual basis, including but not limited to, a method for
8-18 soliciting the views of the communities served by the hospital;
8-19 (2) measurable objectives to be achieved within a specified
8-20 timeframe which may be achieved through specific projects designed
8-21 to meet those objectives; and
8-22 (3) a budget for the plan which establishes explicit budget
8-23 amounts:
8-24 (i) that are sufficient to implement the plan; and
8-25 (ii) that include a reasonable amount of charity care.
8-26 Section 311.043. Budgeting Criteria.
8-27 (a) The board of directors shall consider at least the following
9-1 criteria to determine whether budget amounts established pursuant
9-2 to Section 311.042(c)(3)(ii) are reasonable:
9-3 (1) "Responsiveness to needs" defined as whether the level
9-4 of effort is reasonable in relation to community needs assessments
9-5 considered pursuant to Section 311.042(b);
9-6 (2) "Comparison to available resources" defined as whether
9-7 budget amounts are set at a level sufficiently high to be
9-8 reasonable in relation to the financial capacity of the hospital
9-9 given its available resources;
9-10 (3) "Comparison to tax-exempt benefits" defined as whether
9-11 budget amounts are set at a level sufficiently high to be
9-12 reasonable in relation to the benefits received by the hospital
9-13 from its tax-exempt status.
9-14 (b) If the hospital's payor mix consists of a large percentage of
9-15 Medicaid patients, the Board of Directors may consider any impact
9-16 the unreimbursed costs of Medicaid services has on the hospital's
9-17 ability to provide charity care in determining whether budget
9-18 amounts established pursuant to Section 311.042(c)(3)(ii) are
9-19 reasonable.
9-20 (c) The board of directors may consider any other criteria
9-21 relevant to the hospital's ability to provide charity care to
9-22 determine whether budget amounts established pursuant to Section
9-23 311.042(c)(3)(ii) are reasonable.
9-24 (d) Reductions in charity care will be considered reasonable when
9-25 necessary to prevent a hospital from endangering its ability to
9-26 continue operations.
9-27 Section 311.044. Annual Report of Community Benefits Plan
10-1 (a) The board of directors shall prepare an annual report of the
10-2 community benefits plan and shall include in the plan at least the
10-3 following information:
10-4 (1) the hospital's mission statement;
10-5 (2) a disclosure of the healthcare needs of the community
10-6 that were considered in developing the hospital's community
10-7 benefits plan pursuant to Section 311.042(b);
10-8 (3) a disclosure of the objectives and specific projects, if
10-9 any, designed to address those objectives that were included in the
10-10 hospital's community benefits plan pursuant to Section 311.042(c);
10-11 (4) a disclosure of the amount and types of community
10-12 benefits, including charity care, actually provided. Charity care
10-13 shall be reported as a separate item from community benefits.
10-14 (b) The board shall file the annual report of the community
10-15 benefits plan with the Bureau of State Health Data and Policy
10-16 Analysis at the Texas Department of Health. The report shall be
10-17 filed no later than 90 days after the end of the hospital's fiscal
10-18 year; provided, however, that the first report shall be filed no
10-19 later than March 30, 1995.
10-20 (c) The Board shall prepare a statement that notifies the public
10-21 that the annual report of the community benefits plan is public
10-22 information; is filed with the Health Department; and is available
10-23 to the public upon request from the Health Department. The
10-24 statement shall be posted in prominent places throughout the
10-25 Hospital, including but not limited to the Emergency Room waiting
10-26 area and the Admissions Office waiting area. The statement shall
10-27 also be printed in the Hospital patient guide or other material
11-1 that provides the patient with information about the admissions
11-2 criteria of the hospital.
11-3 Section 311.045. Remedies.
11-4 (a) The department may assess a civil penalty against a non-profit
11-5 hospital that fails to make a report of the community benefits plan
11-6 as required under this subchapter.
11-7 (1) The penalty may not exceed $1000 for each day the report
11-8 is delinquent after the date upon which such reports are due.
11-9 (2) No penalty will be assessed against a hospital under
11-10 Subsection (a) until 10 days have elapsed after written
11-11 notification to the hospital of its failure to file a report.
11-12 (b) The attorney general may petition a district court to restrain
11-13 a non-profit hospital or its board of directors from continuing to
11-14 violate this subchapter. Venue for a suit for injunctive relief is
11-15 in the county in which the hospital is located or in Travis County.
11-16 (c) On application for injunctive relief and a finding that a
11-17 hospital or its board of directors has violated this subchapter,
11-18 the district court shall grant the injunctive relief that the facts
11-19 warrant.
11-20 (d) Failure to comply with any provision of this subchapter
11-21 constitutes a breach of fiduciary duty by the board of directors.
11-22 No board member shall be personally liable for a breach of such
11-23 fiduciary duty if he or she exercised prudent business judgement
11-24 and acted in good faith in attempting to comply with the
11-25 requirements of this subchapter.
11-26 Section 311.046. Remedies Cumulative. The rights and remedies
11-27 provided for in this subchapter are cumulative of all other laws in
12-1 force in this state, and shall not limit, affect, change, or repeal
12-2 any other statutory or common-law rights or remedies available to
12-3 the state.
12-4 SECTION 5. If any provisions of the amendments made to
12-5 Subchapter C, or of Subchapter D, are or become invalid, illegal or
12-6 unenforceable in any respect, the remaining provisions shall not be
12-7 in any way affected or impaired.
12-8 SECTION 6. This Act takes effect September 1, 1993.
12-9 SECTION 7. The importance of this legislation and the
12-10 crowded condition of the calendars in both houses create an
12-11 emergency and an imperative public necessity that the
12-12 constitutional rule requiring bills to be read on three several
12-13 days in each house be suspended, and this rule is hereby suspended.