AN ACT
1-1 relating to the regulation of preferred provider benefit plans.
1-2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-3 SECTION 1. Chapter 3, Insurance Code, is amended by adding
1-4 Article 3.70-3C to read as follows:
1-5 Art. 3.70-3C. PREFERRED PROVIDER BENEFIT PLANS
1-6 Sec. 1. DEFINITIONS. In this article:
1-7 (1) "Emergency care" means health care services
1-8 provided in a hospital emergency facility or comparable facility to
1-9 evaluate and stabilize medical conditions of a recent onset and
1-10 severity, including but not limited to severe pain, that would lead
1-11 a prudent layperson possessing an average knowledge of medicine and
1-12 health to believe that the person's condition, sickness, or injury
1-13 is of such a nature that failure to get immediate medical care
1-14 could result in:
1-15 (A) placing the patient's health in serious
1-16 jeopardy;
1-17 (B) serious impairment to bodily functions;
1-18 (C) serious dysfunction of any bodily organ or
1-19 part;
1-20 (D) serious disfigurement; or
1-21 (E) in the case of a pregnant woman, serious
1-22 jeopardy to the health of the fetus.
1-23 (2) "Health insurance policy" means a group or
2-1 individual insurance policy, certificate, or contract providing
2-2 benefits for medical or surgical expenses incurred as a result of
2-3 an accident or sickness.
2-4 (3) "Health care provider" or "provider" means any
2-5 practitioner, institutional provider, or other person or
2-6 organization that furnishes health care services and that is
2-7 licensed or otherwise authorized to practice in this state, other
2-8 than a physician.
2-9 (4) "Hospital" means a licensed public or private
2-10 institution as defined in Chapter 241, Health and Safety Code, or
2-11 in Subtitle C, Title 7, Health and Safety Code.
2-12 (5) "Institutional provider" means a hospital, nursing
2-13 home, or any other medical or health-related service facility
2-14 caring for the sick or injured or providing care for other coverage
2-15 which may be provided in a health insurance policy.
2-16 (6) "Insurer" means any life, health, and accident;
2-17 health and accident; or health insurance company or company
2-18 operating pursuant to Chapter 3, 10, 20, 22, or 26 of this code
2-19 authorized to issue, deliver, or issue for delivery in this state
2-20 health insurance policies, certificates, or contracts.
2-21 (7) "Life threatening" means a disease or condition
2-22 for which the likelihood of death is probable unless the course of
2-23 the disease or condition is interrupted.
2-24 (8) "Physician" means anyone licensed to practice
2-25 medicine in the State of Texas.
3-1 (9) "Practitioner" means a person who practices a
3-2 healing art and is:
3-3 (A) a practitioner described by Section 2(B),
3-4 Chapter 397, Acts of the 54th Legislature, 1955 (Article 3.70-2,
3-5 Vernon's Texas Insurance Code), or Article 21.52 of this code; or
3-6 (B) an occupational therapist, physical
3-7 therapist, or advanced practice nurse.
3-8 (10) "Preferred provider" means a physician,
3-9 practitioner, hospital, institutional provider, or health care
3-10 provider, or an organization of physicians or health care
3-11 providers, who contracts with an insurer to provide medical care or
3-12 health care to insureds covered by a health insurance policy,
3-13 certificate, or contract.
3-14 (11) "Prospective insured" means:
3-15 (A) for group coverage, an individual, including
3-16 dependents, eligible for coverage under a health insurance policy
3-17 issued to the group; or
3-18 (B) for individual coverage, an individual,
3-19 including dependents, eligible for coverage who has expressed an
3-20 interest in purchasing an individual health insurance policy.
3-21 (12) "Quality assessment" means a mechanism which is
3-22 in place or put into place and utilized by an insurer for the
3-23 purposes of evaluating, monitoring, or improving the quality and
3-24 effectiveness of the medical care delivered by physicians or health
3-25 care providers to persons covered by a health insurance policy to
4-1 ensure that the care delivered is consistent with that delivered by
4-2 an ordinary, reasonable, prudent physician or health care provider
4-3 under the same or similar circumstances.
4-4 (13) "Service area" means a geographic area or areas
4-5 set forth in the health insurance policy or preferred provider
4-6 contract in which a network of preferred providers is offered and
4-7 available.
4-8 Sec. 2. APPLICATION. This article applies to any preferred
4-9 provider benefit plan in which an insurer provides, through its
4-10 health insurance policy, for the payment of a level of coverage
4-11 which is different from the basic level of coverage provided by the
4-12 health insurance policy if the insured uses a preferred provider.
4-13 This article does not apply to provisions for dental care benefits
4-14 in any health insurance policy.
4-15 Sec. 3. CONTRACTING REQUIREMENTS. (a) A health insurance
4-16 policy that includes different benefits from the basic level of
4-17 coverage for the use of preferred providers shall not be considered
4-18 unjust under Article 3.42 of this code, or unfair discrimination
4-19 under Article 21.21-6, as added by Chapter 415, Acts of the 74th
4-20 Legislature, 1995, or Article 21.21-8 of this code or to violate
4-21 Subsection (B), Section 2, Chapter 397, Acts of the 54th
4-22 Legislature, 1955 (Article 3.70-2, Vernon's Texas Insurance Code),
4-23 or Article 21.52 of this code, if it meets the requirements of this
4-24 section.
4-25 (b)(1) Physicians, practitioners, institutional providers,
5-1 and health care providers other than physicians, practitioners, and
5-2 institutional providers, if such other health care providers are
5-3 included by the insurer as preferred providers, licensed to treat
5-4 injuries or illnesses or to provide services covered by the health
5-5 insurance policy that comply with the terms and conditions
5-6 established by the insurer for designation as preferred providers
5-7 may apply for and shall be afforded a fair, reasonable, and
5-8 equivalent opportunity to become preferred providers. Such
5-9 designation shall not be unreasonably withheld.
5-10 (2) If a designation as a preferred provider is
5-11 withheld relating to a physician or practitioner, the insurer shall
5-12 provide a reasonable review mechanism that incorporates, in an
5-13 advisory role only, a review panel. Any recommendation of the
5-14 panel shall be provided on request to the affected physician or
5-15 practitioner. In the event of an insurer determination contrary to
5-16 any recommendation of the panel, a written explanation of the
5-17 insurer's determination shall also be provided on request to the
5-18 affected physician or practitioner.
5-19 (3) The review panel shall be composed of not less
5-20 than three individuals selected by the insurer from a list of the
5-21 physicians or practitioners contracting with the insurer and shall
5-22 include one member who is a physician or practitioner in the same
5-23 or similar specialty as the affected physician or practitioner, if
5-24 available. The list of physicians or practitioners is to be
5-25 provided to the insurer by the physicians or practitioners
6-1 contracting with the insurer in the applicable service area.
6-2 (4) The insurer must give a physician or health care
6-3 provider not designated on initial application written reasons for
6-4 denial of the designation; however, unless otherwise limited by
6-5 this code, this section does not prohibit an insurer from rejecting
6-6 an application from a physician or health care provider based on a
6-7 determination that the preferred provider benefit plan has
6-8 sufficient qualified providers.
6-9 (c) Any insurer, when sponsoring a preferred provider
6-10 benefit plan, shall immediately notify, by publication or in
6-11 writing to each physician and practitioner, all physicians and
6-12 practitioners in the geographic area covered by the plan of its
6-13 intent to offer such a plan and of the opportunity to participate.
6-14 Such notice and opportunity shall be provided on a yearly basis
6-15 thereafter to noncontracting physicians and practitioners in the
6-16 geographic area covered by the plan. The insurer shall on request
6-17 make available to any physician or health care provider information
6-18 concerning the application process and qualification requirements
6-19 for participation as a provider in the plan.
6-20 (d) Insurers which market a preferred provider benefit plan
6-21 must contract with physicians and health care providers to assure
6-22 that all medical and health care services and items contained in
6-23 the package of benefits for which coverage is provided, including
6-24 treatment of illnesses and injuries, will be provided under the
6-25 health insurance policy in a manner assuring both availability and
7-1 accessibility of adequate personnel, specialty care, and
7-2 facilities.
7-3 (e) Each insured patient shall have the right to treatment
7-4 and diagnostic techniques as prescribed by the physician or other
7-5 health care provider included in the preferred provider benefit
7-6 plan.
7-7 (f) Every contract by an insurer with a physician,
7-8 physicians group, or practitioner shall have a mechanism for the
7-9 resolution of complaints initiated by the insured, physicians,
7-10 physicians groups, or practitioners. Such mechanism shall provide
7-11 for reasonable due process which includes, in an advisory role
7-12 only, a review panel selected in the manner described in Subsection
7-13 (b)(3) of this section.
7-14 (g) Before terminating a contract with a preferred provider,
7-15 the insurer shall provide written reasons for the termination.
7-16 Prior to termination of a physician or practitioner, but within a
7-17 period not to exceed 60 days, the insurer shall, on request,
7-18 provide a reasonable review mechanism that incorporates, in an
7-19 advisory role only, a review panel selected in the manner described
7-20 in Subsection (b)(3) of this section, except in cases in which
7-21 there is imminent harm to a patient's health or an action by a
7-22 state medical or other physician licensing board or other
7-23 government agency that effectively impairs a physician's or
7-24 practitioner's ability to practice medicine or in cases of fraud or
7-25 malfeasance. Any recommendation of the panel shall be provided to
8-1 the affected physician or practitioner. In the event of an insurer
8-2 determination contrary to any recommendation of the panel, a
8-3 written explanation of the insurer's determination shall also be
8-4 provided on request to the affected physician or practitioner. On
8-5 request, an expedited review process shall be made available to a
8-6 physician or practitioner who is being terminated. The expedited
8-7 review process shall comply with rules established by the
8-8 commissioner.
8-9 (h) An insurer that conducts, uses, or relies on economic
8-10 profiling to admit or terminate physicians or health care providers
8-11 shall make available to a physician or health care provider on
8-12 request the economic profile of that physician or health care
8-13 provider, including the written criteria by which the physician or
8-14 health care provider's performance is to be measured. An economic
8-15 profile must be adjusted to recognize the characteristics of a
8-16 physician's or health care provider's practice that may account for
8-17 variations from expected costs.
8-18 (i) No insurer shall engage in quality assessment except
8-19 through a panel of not less than three physicians selected by the
8-20 insurer from among a list of physicians contracting with the
8-21 insurer, which list is to be provided by the physicians contracting
8-22 with the insurer in the applicable service area.
8-23 (j) A preferred provider contract may not require any health
8-24 care provider, physician, or physicians group to execute hold
8-25 harmless clauses in order to shift the insurer's tort liability
9-1 resulting from acts or omissions of the insurer to the preferred
9-2 provider.
9-3 (k) A preferred provider contract must include a provision
9-4 by which the physician or health care provider agrees that if the
9-5 preferred provider is compensated on a discounted fee basis, the
9-6 insured may be billed only on the discounted fee and not the full
9-7 charge.
9-8 (l) An insurer may enter into an agreement with a preferred
9-9 provider organization for the purposes of offering a network of
9-10 preferred providers. The agreement may provide that the notice and
9-11 other insurer requirements of this section may be complied with by
9-12 either the insurer or the preferred provider organization on the
9-13 insurer's behalf. If an insurer enters into an agreement with a
9-14 preferred provider organization under this section, it is the
9-15 insurer's responsibility to meet the requirements of this article
9-16 or to assure that the requirements are met. All preferred provider
9-17 insurance benefit plans offered in this state shall comply with the
9-18 requirements of this article.
9-19 (m) An insurer shall comply with Article 21.55 of this code
9-20 with respect to prompt payment of insureds. A preferred provider
9-21 contract must include a provision for payment to the physician or
9-22 health care provider for covered services that are rendered to
9-23 insureds under the contract not later than the 45th day after the
9-24 date on which a claim for payment is received with the
9-25 documentation reasonably necessary to process the claim or, if
10-1 applicable, within the number of calendar days specified by written
10-2 agreement between the physician or health care provider and the
10-3 insurer. For purposes of this subsection, "covered services" means
10-4 health care services and benefits to which an insured is entitled
10-5 under the terms of the contract.
10-6 Sec. 4. CONTINUITY OF CARE. (a) The insurer shall
10-7 establish reasonable procedures for assuring a transition of
10-8 insureds to physicians or health care providers and for continuity
10-9 of treatment. Insurers shall provide, subject to Section 6(e) of
10-10 this article, reasonable advance notice to the insured of the
10-11 impending termination from the plan of a physician or health care
10-12 provider who is currently treating the insured and in the event of
10-13 termination of a preferred provider's participation in the plan
10-14 shall make available to the insured a current listing of preferred
10-15 providers.
10-16 (b) Each contract between an insurer and a physician or
10-17 health care provider must provide that the termination of a
10-18 preferred provider's participation in the plan, except for reason
10-19 of medical competence or professional behavior, shall not release
10-20 the physician or health care provider from the generally recognized
10-21 obligation to treat the insured and to cooperate in arranging for
10-22 appropriate referrals; nor does it release the insurer from the
10-23 obligation to reimburse the physician or health care provider or,
10-24 if applicable, the insured at the same preferred provider rate if,
10-25 at the time of the preferred provider's termination, the insured
11-1 has special circumstances such as a disability, acute condition, or
11-2 life-threatening illness or is past the 24th week of pregnancy and
11-3 is receiving treatment in accordance with the dictates of medical
11-4 prudence.
11-5 (c) For purposes of Subsection (b) of this section, "special
11-6 circumstances" means a condition such that the treating physician
11-7 or health care provider reasonably believes that discontinuing care
11-8 by the treating physician or provider could cause harm to the
11-9 patient. Special circumstances shall be identified by the treating
11-10 physician or health care provider, who must request that the
11-11 insured be permitted to continue treatment under the physician's or
11-12 provider's care and agree not to seek payment from the patient of
11-13 any amounts for which the insured would not be responsible if the
11-14 physician or provider were still a preferred provider.
11-15 (d) Contracts between an insurer, physicians, and health
11-16 care providers shall include procedures for resolving disputes
11-17 regarding the necessity for continued treatment by a physician or
11-18 provider.
11-19 (e) This section does not extend the obligation of the
11-20 insurer to reimburse, at the preferred provider level of coverage,
11-21 the terminated physician or health care provider or, if applicable,
11-22 the insured for ongoing treatment of an insured after the 90th day
11-23 from the effective date of the termination, or beyond nine months
11-24 in the case of an enrollee who at the time of the termination has
11-25 been diagnosed with a terminal illness. However, the obligation of
12-1 the insurer to reimburse, at the preferred provider level of
12-2 coverage, the terminated physician or health care provider or, if
12-3 applicable, the insured who at the time of the termination is past
12-4 the 24th week of pregnancy, extends through delivery of the child,
12-5 immediate post-partum care, and the follow-up checkup within the
12-6 first six weeks of delivery.
12-7 Sec. 5. EMERGENCY CARE PROVISIONS. If the insured cannot
12-8 reasonably reach a preferred provider, an insurer shall provide
12-9 reimbursement for the following emergency care services at the
12-10 preferred level of benefits until the insured can reasonably be
12-11 expected to transfer to a preferred provider:
12-12 (1) any medical screening examination or other
12-13 evaluation required by state or federal law to be provided in the
12-14 emergency facility of a hospital which is necessary to determine
12-15 whether a medical emergency condition exists;
12-16 (2) necessary emergency care services including the
12-17 treatment and stabilization of an emergency medical condition; and
12-18 (3) services originating in a hospital emergency
12-19 facility following treatment or stabilization of an emergency
12-20 medical condition.
12-21 Sec. 6. MANDATORY DISCLOSURE REQUIREMENTS. (a) All health
12-22 insurance policies, health benefit plan certificates, endorsements,
12-23 amendments, applications, or riders shall be written in plain
12-24 language, must be in a readable and understandable format, and must
12-25 comply with all applicable requirements relating to minimum
13-1 readability requirements.
13-2 (b) The insurer shall provide to a current or prospective
13-3 group contract holder or current or prospective insured on request
13-4 an accurate written description of the terms and conditions of the
13-5 policy to allow the current or prospective group contract holder or
13-6 current or prospective insured to make comparisons and informed
13-7 decisions before selecting among health care plans. The written
13-8 description must be in a readable and understandable format as
13-9 prescribed by the commissioner and must include a current list of
13-10 preferred providers. The insurer may provide its handbook to
13-11 satisfy this requirement provided the handbook's content is
13-12 substantively similar to and achieves the same level of disclosure
13-13 as the written description prescribed by the commissioner and the
13-14 current list of physicians and health care providers is provided.
13-15 (c) A current list of preferred providers shall be provided
13-16 to all insureds no less than annually.
13-17 (d) No insurer, or agent or representative of an insurer,
13-18 may cause or permit the use or distribution of prospective insured
13-19 information which is untrue or misleading.
13-20 (e)(1) If a physician or practitioner is terminated for
13-21 reasons other than at the preferred provider's request, an insurer
13-22 shall not notify enrollees of the termination until the effective
13-23 date of the termination or at such time as a review panel makes a
13-24 formal recommendation regarding the termination, whichever is
13-25 later.
14-1 (2) If a physician or provider voluntarily terminates
14-2 the physician's or provider's relationship with an insurer, the
14-3 physician or provider shall provide reasonable notice to enrollees
14-4 under the physician's or provider's care. The insurer shall
14-5 provide assistance to the physician or provider in assuring that
14-6 the notice requirements of this subdivision are met.
14-7 (3) If a physician or practitioner is terminated for
14-8 reasons related to imminent harm, an insurer may notify enrollees
14-9 immediately.
14-10 Sec. 7. PROHIBITED PRACTICES. (a) No insurer shall engage
14-11 in any retaliatory action against an insured, including
14-12 cancellation of or refusal to renew a policy, because the insured,
14-13 or a person acting on behalf of the insured, has filed a complaint
14-14 against the insurer or against a preferred provider or has appealed
14-15 a decision of the insurer.
14-16 (b) No insurer shall engage in any retaliatory action
14-17 against a physician or health care provider, including termination
14-18 of or refusal to renew a contract, because the physician or
14-19 provider has, on behalf of an insured, reasonably filed a complaint
14-20 against the insurer or has appealed a decision of the insurer.
14-21 (c)(1) An insurer shall not, as a condition of a contract
14-22 with a physician or health care provider or in any other manner,
14-23 prohibit, attempt to prohibit, or discourage a physician or
14-24 provider from:
14-25 (A) discussing with or communicating to a
15-1 current, prospective, or former patient, or a party designated by a
15-2 patient, information or opinions regarding that patient's health
15-3 care, including but not limited to the patient's medical condition
15-4 or treatment options; or
15-5 (B) discussing with or communicating in good
15-6 faith to a current, prospective, or former patient, or a party
15-7 designated by a patient, information or opinions regarding the
15-8 provisions, terms, requirements, or services of the health care
15-9 plan as they relate to the medical needs of the patient.
15-10 (2) An insurer shall not in any way penalize,
15-11 terminate, or refuse to compensate for covered services a physician
15-12 or provider for discussing or communicating with a current,
15-13 prospective, or former patient, or a party designated by a patient,
15-14 pursuant to this section.
15-15 (d) An insurer shall not use any financial incentive or make
15-16 payment to a physician or health care provider which acts directly
15-17 or indirectly as an inducement to limit medically necessary
15-18 services. This subsection does not prohibit the use of capitation
15-19 as a method of payment.
15-20 Sec. 8. AVAILABILITY OF PREFERRED PROVIDERS. (a) Any
15-21 insurer offering a preferred provider benefit plan must ensure that
15-22 both preferred provider benefits and basic level benefits are
15-23 reasonably available to all insureds within a designated service
15-24 area.
15-25 (b) If services are not available through preferred
16-1 providers within the service area, nonpreferred providers shall be
16-2 reimbursed at the same percentage level of reimbursement as the
16-3 preferred providers would have been reimbursed had the insured been
16-4 treated by them. Nothing in this subsection requires reimbursement
16-5 at a preferred level of coverage solely because an insured resides
16-6 out of the service area and chooses to receive services from
16-7 providers other than preferred providers for the insured's own
16-8 convenience.
16-9 Sec. 9. RULEMAKING AUTHORITY. The commissioner shall adopt
16-10 rules as necessary to implement the provisions of this article and
16-11 to ensure reasonable accessibility and availability of preferred
16-12 provider and basic level benefits to Texas citizens.
16-13 SECTION 2. The requirements of Article 3.70-3C, Insurance
16-14 Code, as added by Section 1 of this Act, apply to any insurance
16-15 policy or contract issued, delivered, or renewed on or after the
16-16 effective date of this Act.
16-17 SECTION 3. The importance of this legislation and the
16-18 crowded condition of the calendars in both houses create an
16-19 emergency and an imperative public necessity that the
16-20 constitutional rule requiring bills to be read on three several
16-21 days in each house be suspended, and this rule is hereby suspended,
16-22 and that this Act take effect and be in force from and after its
16-23 passage, and it is so enacted.
S.B. No. 383
________________________________ ________________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 383 passed the Senate on
March 6, 1997, by the following vote: Yeas 29, Nays 0;
May 28, 1997, Senate refused to concur in House amendments and
requested appointment of Conference Committee; May 29, 1997, House
granted request of the Senate; June 1, 1997, Senate adopted
Conference Committee Report by the following vote: Yeas 31,
Nays 0.
_______________________________
Secretary of the Senate
I hereby certify that S.B. No. 383 passed the House, with
amendments, on May 25, 1997, by the following vote: Yeas 139,
Nays 0, one present not voting; May 29, 1997, House granted request
of the Senate for appointment of Conference Committee;
June 1, 1997, House adopted Conference Committee Report by the
following vote: Yeas 146, Nays 0, one present not voting.
_______________________________
Chief Clerk of the House
Approved:
________________________________
Date
________________________________
Governor