By McDonald H.B. No. 2532
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the Health Care Provider Referral Act; providing
1-3 penalties.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Chapter 161, Health and Safety Code, is amended
1-6 by adding Subchapter K to read as follows:
1-7 SUBCHAPTER K. HEALTH CARE PROVIDER REFERRAL ACT
1-8 Sec. 161.111. SHORT TITLE. This subchapter shall be known
1-9 and may be cited as the Health Care Provider Act.
1-10 Sec. 161.112. LEGISLATIVE INTENT. It is recognized by the
1-11 legislature that a conflict of interest may exist when a patient is
1-12 referred by a health care provider to an entity which provides
1-13 health services in which the referring health care provider has an
1-14 investment or ownership interest. The legislature finds these
1-15 referral practices may limit or eliminate competitive alternatives
1-16 in the health care services market, may result in overutilization
1-17 of health care services, may increase costs to the health care
1-18 system, and may adversely affect the quality of health care. The
1-19 legislature also recognizes that it may be appropriate for
1-20 providers to own entities providing health care services and to
1-21 refer patients to such entities as long as certain safeguards are
1-22 present in the arrangement. It is the intent of the legislature to
1-23 provide guidance to health care providers regarding prohibited
2-1 patient referrals between health care providers and entities
2-2 providing health care services and to protect the citizens of Texas
2-3 from unnecessary and costly health care expenditures.
2-4 Sec. 161.113. DEFINITIONS. In this subchapter:
2-5 (1) "Board" means any board related to licensed health
2-6 care professions, including the Texas State Board of Medical
2-7 Examiners, the Texas Board of Chiropractic Examiners, the Texas
2-8 State Board of Podiatry Examiners, the Texas Optometry Board, the
2-9 State Board of Pharmacy, and the State Board of Dental Examiners.
2-10 (2) "Commission" means the Health and Human Services
2-11 Commission.
2-12 (3) "Direct supervision" means the referring health
2-13 care provider authorizes the services, establishes quality
2-14 standards for the health services rendered, and monitors
2-15 conformance with quality standards on a day-to-day basis.
2-16 (4) "Entity" means any individual, partnership, firm,
2-17 corporation, or other business entity.
2-18 (5) "Fair market value" means value in arms-length
2-19 transactions, consistent with the general market value, and with
2-20 respect to rentals or leases, the value of rental property for
2-21 general commercial purposes, not taking into account its intended
2-22 use, and, in the case of a lease of space not adjusted to reflect
2-23 the additional value the prospective lessee or lessor would
2-24 attribute to the proximity or convenience to the lessor where the
2-25 lessor is a potential source of patient referrals to the lessee.
3-1 (6) "Group practice" means a group of two or more
3-2 health care providers legally organized as a partnership,
3-3 professional corporation, or similar association:
3-4 (A) in which each health care provider who is a
3-5 member of the group provides substantially the full range of
3-6 services which the health care provider routinely provides,
3-7 including medical care, consultation, diagnosis, or treatment,
3-8 through the joint use of shared office space, facilities,
3-9 equipment, and personnel;
3-10 (B) for which substantially all of the services
3-11 of the health care providers who are members of the group are
3-12 provided through the group and are billed in the name of the group,
3-13 and amounts so received are treated as receipts of the group; and
3-14 (C) in which the overhead expenses of and the
3-15 income from the practice are distributed in accordance with methods
3-16 previously determined by members of the group.
3-17 (7) "Health care facility" means an ambulatory
3-18 surgical center, a hospice, a nursing home, a hospital, a
3-19 diagnostic imaging center, a freestanding radiation therapy center,
3-20 a clinical laboratory, a psychiatric treatment facility, a cardiac
3-21 catheterization laboratory, a medical equipment supplier, an
3-22 alcohol or chemical dependency treatment center, a physical
3-23 rehabilitation center, a lithotripsy center, an ambulatory care
3-24 center, a birth center, a subacute care facility, a nursing home
3-25 component licensed under Subchapter B, Chapter 242, within a
4-1 continuing care facility certified under Chapter 246, or a mental
4-2 health care center.
4-3 (8) "Health care provider" means a health care
4-4 provider as defined in Subdivision (3), Section 1, Article 21.24-1,
4-5 Insurance Code.
4-6 (9) "Immediate family member" means a health care
4-7 provider's spouse, child, child's spouse, grandchild, grandchild's
4-8 spouse, parent, parent-in-law, or sibling.
4-9 (10) "Investment interest" means an equity or debt
4-10 security issued by an entity including without limitation shares of
4-11 stock in a corporation, units or other interest in a partnership,
4-12 bonds, debentures, notes, or other equity interest or debt
4-13 instruments. "Investment interest" does not include:
4-14 (A) an investment interest in an entity that is
4-15 the sole provider of designated health services in a rural area or
4-16 in an underserved urban area where the provider practices and has
4-17 offices;
4-18 (B) an investment interest in notes, bonds,
4-19 debentures, or other debt instruments issued by an entity which
4-20 provides designated health services as an integral part of a plan
4-21 by such entity to acquire such investor's equity investment
4-22 interest in the entity, provided that the interest rate is
4-23 consistent with fair market value and that the maturity date of the
4-24 notes, bonds, debentures, or other debt instruments issued by the
4-25 entity to the investor is not later than October 1, 1993; or
5-1 (C) an investment interest in real property
5-2 resulting in a landlord-tenant relationship between the health care
5-3 provider and the entity in which the equity interest is held,
5-4 unless the rent is determined, in whole or in part, by the business
5-5 volume or profitability of the tenant or exceeds fair market value.
5-6 (11) "Investor" means a person or entity owning a
5-7 legal or beneficial ownership or investment interest, directly or
5-8 indirectly, including without limitation through an immediate
5-9 family member, trust, or another entity related to the investor
5-10 within the meaning of 42 C.F.R. Section 413.17.
5-11 (12) "Referral" means any referral of a patient by a
5-12 health care provider for health care services, including but not
5-13 limited to:
5-14 (A) the forwarding of a patient by a health care
5-15 provider to another health care provider, health care facility as
5-16 defined in Section 104.002 or to an entity which provides or
5-17 supplies health services or any other health care item or service;
5-18 or
5-19 (B) the request or establishment of a plan of
5-20 care by a health care provider, which includes the provision of
5-21 health services or other health care items or services.
5-22 (13) "Rural area" means a county with a population
5-23 density of no greater than 100 persons per square mile as defined
5-24 by the United States Department of Commerce Bureau of the Census.
5-25 Sec. 161.114. PROHIBITED REFERRALS AND CLAIMS FOR PAYMENT.
6-1 (a) A health care provider may not refer a patient for the
6-2 provision of any health care item or health service to an entity in
6-3 which the health care provider is an investor or to any health care
6-4 facility in which the health care provider is an investor unless:
6-5 (1)(A) the provider's ownership or investment interest
6-6 is in registered securities purchased on a national exchange or
6-7 over-the-counter and issued by a publicly held corporation:
6-8 (i) whose shares are traded on a national
6-9 exchange or on the over-the-counter market; and
6-10 (ii) whose total assets at the end of the
6-11 corporation's most recent fiscal quarter exceeded $50 million;
6-12 (B) the entity or health care facility does not
6-13 loan funds to or guarantee a loan for an investor who is a health
6-14 care provider if the investor uses any part of such loan to obtain
6-15 the investment interest; and
6-16 (C) the amount distributed to an investor
6-17 representing a return on the investment interest is directly
6-18 proportional to the amount of the capital investment, including the
6-19 fair market value of any preoperational services rendered, invested
6-20 in the entity or health care facility by the investor; or
6-21 (2) the referral is made within a medical practice by
6-22 a licensed health care provider who is the sole provider or member
6-23 of a group practice for health services or other health care items
6-24 or services that are prescribed or provided solely for such
6-25 referring health care provider's own patients and that are provided
7-1 or performed by or under the direct supervision of the referring
7-2 licensed health care provider, and the group delivers health care
7-3 services to patients solely on a prepaid basis or through a managed
7-4 care plan.
7-5 (b) Each board and, in the case of hospitals, the department
7-6 shall encourage its licensees to report all investment and
7-7 ownership interests in entities or health care facilities held by
7-8 health care providers to the commission. The commission shall
7-9 determine the applicability of this section or any rule adopted
7-10 pursuant to this section as it applies to the licensee and approve
7-11 those provider interests which are not in violation of this
7-12 section. A board shall submit to the department the name of any
7-13 entity in which a provider investment interest has been approved
7-14 pursuant to this section, and the department shall adopt rules
7-15 providing for periodic quality assurance utilization review of such
7-16 entities.
7-17 (c) No claim for payment may be presented by any entity to
7-18 any individual, third-party payor, or other entity for a service
7-19 furnished pursuant to a referral prohibited under this section.
7-20 (d) If an entity collects any amount that was billed in
7-21 violation of this section, the entity shall timely refund the
7-22 amount to the payor or individual, whichever is applicable.
7-23 (e) Any person that in violation of this section presents or
7-24 causes to be presented a bill or a claim for service which may not
7-25 be presented or that fails to refund an amount required to be
8-1 refunded is subject to a civil penalty of not more than $15,000 for
8-2 each such bill or claim or refund, to be imposed and collected by
8-3 the appropriate board.
8-4 (f) Any health care provider or other entity that enters
8-5 into an arrangement or scheme, such as a cross-referral
8-6 arrangement, which the health care provider or entity knows or
8-7 should know has a principal purpose of assuring referrals by the
8-8 health care provider to a particular entity which, if the health
8-9 care provider directly made referrals to such entity, would be in
8-10 violation of this section, is subject to a civil penalty of not
8-11 more than $100,000 for each such arrangement or scheme, to be
8-12 imposed and collected by the appropriate board.
8-13 (g) A violation of this section by a health care provider
8-14 shall constitute grounds for disciplinary action to be taken by the
8-15 department or applicable board. Any hospital licensed under
8-16 Chapter 241 found in violation of this section shall be subject to
8-17 the rules adopted by the department pursuant to Section 241.053.
8-18 (h) Any hospital licensed under Chapter 241 that
8-19 discriminates against or otherwise penalizes a health care provider
8-20 for compliance with this Act is in violation of this section.
8-21 Sec. 161.115. DEPARTMENT STUDIES. (a) The department is
8-22 empowered to conduct data-based studies and evaluations and to make
8-23 recommendations to the legislature and the governor concerning
8-24 exemptions, the effectiveness of limitations of referrals,
8-25 restrictions on investment interests and compensation arrangements,
9-1 and the effectiveness of public disclosure. Such analysis may
9-2 include utilization of services, cost of care, quality of care, and
9-3 access to care.
9-4 (b) The department may require the submission by the
9-5 commission, health care facilities, health care providers, and
9-6 health insurers of data necessary to carry out the department's
9-7 duties.
9-8 (c) Such data may include data related to ownership,
9-9 Medicare and Medicaid, charity care, types of services offered to
9-10 patients, revenues and expenses, and patient encounters and such
9-11 other data that are reasonably necessary to study utilization
9-12 patterns and to study the impact of health care provider ownership
9-13 interests in health-care-related entities on the cost, quality, and
9-14 accessibility of health care.
9-15 (d)(1) The department may collect such data from any health
9-16 care facility or other health-care-related entity as a special
9-17 study.
9-18 (2) Each facility identified in Subsection (b) shall
9-19 submit an accounting report to the department on a form prescribed
9-20 in a rule and furnished by the department. The report shall
9-21 include:
9-22 (A) an audited balance sheet detailing the
9-23 assets, liabilities, and net worth of the facility;
9-24 (B) a statement of income and expenses;
9-25 (C) a statement of cash flows; and
10-1 (D) utilization and staffing and standard units
10-2 of measure as prescribed by rules.
10-3 (e) The department shall report its findings to the
10-4 governor, the lieutenant governor, and the speaker of the house of
10-5 representatives by January 1, 1995. Such report shall include
10-6 recommendations by the department regarding the need for additional
10-7 legislation relating to health care provider self-referral
10-8 practices.
10-9 Sec. 161.116. MARKUP ON CHARGES PROHIBITED. A health care
10-10 provider shall not charge a markup or commission for ancillary
10-11 services rendered by others.
10-12 SECTION 2. This Act takes effect September 1, 1993.
10-13 SECTION 3. The importance of this legislation and the
10-14 crowded condition of the calendars in both houses create an
10-15 emergency and an imperative public necessity that the
10-16 constitutional rule requiring bills to be read on three several
10-17 days in each house be suspended, and this rule is hereby suspended.