1-1 By: Cain, et al. S.B. No. 383 1-2 (In the Senate - Filed January 30, 1997; February 3, 1997, 1-3 read first time and referred to Committee on Economic Development; 1-4 March 3, 1997, reported adversely, with favorable Committee 1-5 Substitute by the following vote: Yeas 11, Nays 0; March 3, 1997, 1-6 sent to printer.) 1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 383 By: Cain 1-8 A BILL TO BE ENTITLED 1-9 AN ACT 1-10 relating to the regulation of preferred provider benefit plans. 1-11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-12 SECTION 1. Chapter 3, Insurance Code, is amended by adding 1-13 Article 3.70-3C to read as follows: 1-14 Art. 3.70-3C. PREFERRED PROVIDER BENEFIT PLANS 1-15 Sec. 1. DEFINITIONS. In this article: 1-16 (1) "Emergency care" means health care services 1-17 provided in a hospital emergency facility or comparable facility to 1-18 evaluate and stabilize medical conditions of a recent onset and 1-19 severity, including but not limited to severe pain, that would lead 1-20 a prudent layperson, possessing an average knowledge of medicine 1-21 and health, to believe that the person's condition, sickness, or 1-22 injury is of such a nature that failure to get immediate medical 1-23 care could result in: 1-24 (A) placing the patient's health in serious 1-25 jeopardy; 1-26 (B) serious impairment to bodily functions; 1-27 (C) serious dysfunction of any bodily organ or 1-28 part; 1-29 (D) serious disfigurement; or 1-30 (E) in the case of a pregnant woman, serious 1-31 jeopardy to the health of the fetus. 1-32 (2) "Health insurance policy" means a group or 1-33 individual insurance policy, certificate, or contract providing 1-34 benefits for medical or surgical expenses incurred as a result of 1-35 an accident or sickness. 1-36 (3) "Health care provider" or "provider" means any 1-37 practitioner, institutional provider, or other person or 1-38 organization that furnishes health care services and that is 1-39 licensed or otherwise authorized to practice in this state, other 1-40 than a physician. 1-41 (4) "Hospital" means a licensed public or private 1-42 institution as defined in Chapter 241, Health and Safety Code, or 1-43 in Subtitle C, Title 7, Health and Safety Code. 1-44 (5) "Institutional provider" means a hospital, nursing 1-45 home, or any other medical or health-related service facility 1-46 caring for the sick or injured or providing care for other coverage 1-47 which may be provided in a health insurance policy. 1-48 (6) "Insurer" means any life, health, and accident; 1-49 health and accident; or health insurance company or company 1-50 operating pursuant to Chapter 3, 10, 20, 22, or 26 of this code 1-51 authorized to issue, deliver, or issue for delivery in this state 1-52 health insurance policies, certificates, or contracts. 1-53 (7) "Life threatening" means a disease or condition 1-54 where the likelihood of death is high unless the course of the 1-55 disease or condition is interrupted. 1-56 (8) "Physician" means anyone licensed to practice 1-57 medicine in the State of Texas; 1-58 (9) "Practitioner" means a person who practices a 1-59 healing art and is a practitioner specified in Section 2(B), 1-60 Chapter 397, Acts of the 54th Legislature, 1955 (Article 3.70-2, 1-61 Vernon's Texas Insurance Code), or Article 21.52 of this code. 1-62 (10) "Preferred provider" means a physician, 1-63 practitioner, hospital, institutional provider, or health care 1-64 provider, or an organization of physicians or health care 2-1 providers, who contracts with an insurer to provide medical care or 2-2 health care to insureds covered by a health insurance policy, 2-3 certificate, or contract. 2-4 (11) "Prospective insured" means: 2-5 (A) for group coverage, an individual, including 2-6 dependents, eligible for coverage under a health insurance policy 2-7 issued to the group; or 2-8 (B) for individual coverage, an individual, 2-9 including dependents, eligible for coverage who has expressed an 2-10 interest in purchasing an individual health insurance policy. 2-11 (12) "Quality assessment" means a mechanism which is 2-12 in place or put into place and utilized by an insurer for the 2-13 purposes of evaluating, monitoring, or improving the quality and 2-14 effectiveness of the medical care delivered by physicians or health 2-15 care providers to persons covered by a health insurance policy to 2-16 insure that the care delivered is consistent with that delivered by 2-17 an ordinary, reasonable, prudent physician or health care provider 2-18 under the same or similar circumstances. 2-19 (13) "Service area" means a geographic area or areas 2-20 set forth in the health insurance policy or preferred provider 2-21 contract in which a network of preferred providers is offered and 2-22 available. 2-23 Sec. 2. APPLICATION. This article applies to any preferred 2-24 provider benefit plan in which an insurer provides, through its 2-25 health insurance policy, for the payment of a level of coverage 2-26 which is different from the basic level of coverage provided by the 2-27 health insurance policy if the insured uses a preferred provider. 2-28 This article does not apply to provisions for dental care benefits 2-29 in any health insurance policy. 2-30 Sec. 3. CONTRACTING REQUIREMENTS. (a) A health insurance 2-31 policy that includes different benefits from the basic level of 2-32 coverage for the use of preferred providers shall not be considered 2-33 unjust under Article 3.42 of this code, or unfair discrimination 2-34 under Article 21.21-6, as added by Chapter 415, Acts of the 74th 2-35 Legislature, 1995, or Article 21.21-8 of this code or to violate 2-36 Subsection (B), Section 2, Chapter 397, Acts of the 54th 2-37 Legislature, 1955 (Article 3.70-2, Vernon's Texas Insurance Code), 2-38 or Article 21.52 of this code, if it meets the requirements of this 2-39 section. 2-40 (b)(1) Physicians, practitioners, institutional providers, 2-41 and health care providers other than physicians, practitioners, and 2-42 institutional providers, if such other health care providers are 2-43 included by the insurer as preferred providers, licensed to treat 2-44 injuries or illnesses or to provide services covered by the health 2-45 insurance policy that comply with the terms and conditions 2-46 established by the insurer for designation as preferred providers 2-47 may apply for and shall be afforded a fair, reasonable, and 2-48 equivalent opportunity to become preferred providers. Such 2-49 designation shall not be unreasonably withheld. 2-50 (2) If a designation as a preferred provider is 2-51 withheld relating to a physician or practitioner, the insurer shall 2-52 provide a reasonable review mechanism that incorporates, in an 2-53 advisory role only, a review panel. Any recommendation of the 2-54 panel shall be provided on request to the affected physician or 2-55 practitioner. In the event of an insurer determination contrary to 2-56 any recommendation of the panel, a written explanation of the 2-57 insurer's determination shall also be provided on request to the 2-58 affected physician or practitioner. 2-59 (3) The review panel shall be composed of not less 2-60 than three individuals selected by the insurer from a list of the 2-61 physicians or practitioners contracting with the insurer and shall 2-62 include one member who is a physician or practitioner in the same 2-63 or similar specialty as the affected physician or practitioner, if 2-64 available. The list of physicians or practitioners is to be 2-65 provided to the insurer by the physicians or practitioners 2-66 contracting with the insurer in the applicable service area. 2-67 (4) The insurer must give a physician or health care 2-68 provider not designated on initial application written reasons for 2-69 denial of the designation; however, unless otherwise limited by 3-1 this code, this section does not prohibit an insurer from rejecting 3-2 an application from a physician or health care provider based on a 3-3 determination that the preferred provider benefit plan has 3-4 sufficient qualified providers. 3-5 (c) Any insurer, when sponsoring a preferred provider 3-6 benefit plan, shall immediately notify, by publication or in 3-7 writing to each physician and practitioner, all physicians and 3-8 practitioners in the geographic area covered by the plan of its 3-9 intent to offer such a plan and of the opportunity to participate. 3-10 Such notice and opportunity shall be provided on a yearly basis 3-11 thereafter to noncontracting physicians and practitioners in the 3-12 geographic area covered by the plan. The insurer shall on request 3-13 make available to any physician or health care provider information 3-14 concerning the application process and qualification requirements 3-15 for participation as a provider in the plan. 3-16 (d) Insurers which market a preferred provider benefit plan 3-17 must contract with physicians and health care providers to assure 3-18 that all medical and health care services and items contained in 3-19 the package of benefits for which coverage is provided, including 3-20 treatment of illnesses and injuries, will be provided under the 3-21 health insurance policy in a manner assuring both availability and 3-22 accessibility of adequate personnel, specialty care, and 3-23 facilities. 3-24 (e) Each insured patient shall have the right to treatment 3-25 and diagnostic techniques as prescribed by the physician or other 3-26 health care provider included in the preferred provider benefit 3-27 plan. 3-28 (f) Every contract by an insurer with a physician, 3-29 physicians group, or practitioner shall have a mechanism for the 3-30 resolution of complaints initiated by the insured, physicians, 3-31 physicians groups, or practitioners. Such mechanism shall provide 3-32 for reasonable due process which includes, in an advisory role 3-33 only, a review panel selected in the manner described in Subsection 3-34 (b)(3) of this section. 3-35 (g) Before terminating a contract with a preferred provider, 3-36 the insurer shall provide written reasons for the termination. 3-37 Prior to termination of a physician or practitioner, the insurer 3-38 shall, on request, provide a reasonable review mechanism that 3-39 incorporates, in an advisory role only, a review panel selected in 3-40 the manner described in Subsection (b)(3) of this section, except 3-41 in cases in which there is imminent harm to a patient's health or 3-42 an action by a state medical or other physician licensing board or 3-43 other government agency that effectively impairs a physician's or 3-44 practitioner's ability to practice medicine or in cases of fraud or 3-45 malfeasance. Any recommendation of the panel shall be provided to 3-46 the affected physician or practitioner. In the event of an insurer 3-47 determination contrary to any recommendation of the panel, a 3-48 written explanation of the insurer's determination shall also be 3-49 provided on request to the affected physician or practitioner. On 3-50 request, an expedited review process shall be made available to a 3-51 physician or practitioner who is being terminated. The expedited 3-52 review process shall comply with rules established by the 3-53 commissioner. 3-54 (h) An insurer that conducts, uses, or relies on economic 3-55 profiling to admit or terminate physicians or health care providers 3-56 shall make available to a physician or health care provider on 3-57 request the economic profile of that physician or health care 3-58 provider, including the written criteria by which the physician or 3-59 health care provider's performance is to be measured. An economic 3-60 profile must be adjusted to recognize the characteristics of a 3-61 physician's or health care provider's practice that may account for 3-62 variations from expected costs. 3-63 (i) No insurer shall engage in quality assessment except 3-64 through a panel of not less than three physicians selected by the 3-65 insurer from among a list of physicians contracting with the 3-66 insurer, which list is to be provided by the physicians contracting 3-67 with the insurer in the applicable service area. 3-68 (j) A preferred provider contract may not require any health 3-69 care provider, physician, or physicians group to execute hold 4-1 harmless clauses in order to shift the insurer's tort liability 4-2 resulting from acts or omissions of the insurer to the preferred 4-3 provider. 4-4 (k) A preferred provider contract must include a provision 4-5 by which the physician or health care provider agrees that if the 4-6 preferred provider is compensated on a discounted fee basis, the 4-7 insured may be billed only on the discounted fee and not the full 4-8 charge. 4-9 (l) An insurer may enter into an agreement with a preferred 4-10 provider organization for the purposes of offering a network of 4-11 preferred providers. The agreement may provide that the notice 4-12 and other insurer requirements of this section may be complied with 4-13 by either the insurer or the preferred provider organization on the 4-14 insurer's behalf. If an insurer enters into an agreement with a 4-15 preferred provider organization under this section, it is the 4-16 insurer's responsibility to meet the requirements of this article 4-17 or to assure that the requirements are met. All preferred provider 4-18 insurance benefit plans offered in this state shall comply with the 4-19 requirements of this article. 4-20 Sec. 4. CONTINUITY OF CARE. (a) The insurer shall 4-21 establish reasonable procedures for assuring a transition of 4-22 insureds to physicians or health care providers and for continuity 4-23 of treatment. Insurers shall provide, subject to Section 6(e) of 4-24 this article, reasonable advance notice to the insured of the 4-25 impending termination from the plan of a physician or health care 4-26 provider who is currently treating the insured and in the event of 4-27 termination of a preferred provider's participation in the plan 4-28 shall make available to the insured a current listing of preferred 4-29 providers. 4-30 (b) Each contract between an insurer and a physician or 4-31 health care provider must provide that the termination of a 4-32 preferred provider's participation in the plan, except for reason 4-33 of medical competence or professional behavior, shall not release 4-34 the physician or health care provider from the generally recognized 4-35 obligation to treat the insured and cooperate in arranging for 4-36 appropriate referrals; nor does it release the insurer from the 4-37 obligation to reimburse the physician or health care provider or, 4-38 if applicable, the insured at the same preferred provider rate if, 4-39 at the time of the preferred provider's termination, the insured 4-40 has special circumstances such as a disability, acute condition, or 4-41 life-threatening illness or is past the 24th week of pregnancy and 4-42 is receiving treatment in accordance with the dictates of medical 4-43 prudence. 4-44 (c) For purposes of Subsection (b) of this section, "special 4-45 circumstances" means a condition such that the treating physician 4-46 or health care provider reasonably believes that discontinuing care 4-47 by the treating physician or provider could cause harm to the 4-48 patient. Special circumstances shall be identified by the treating 4-49 physician or health care provider, who must request that the 4-50 insured be permitted to continue treatment under the physician's or 4-51 provider's care and agree not to seek payment from the patient of 4-52 any amounts for which the insured would not be responsible if the 4-53 physician or provider were still a preferred provider. 4-54 (d) Contracts between an insurer, physicians, and health 4-55 care providers shall include procedures for resolving disputes 4-56 regarding the necessity for continued treatment by a physician or 4-57 provider. 4-58 (e) This section does not extend the obligation of the 4-59 insurer to reimburse, at the preferred provider level of coverage, 4-60 the terminated physician or health care provider or, if applicable, 4-61 the insured for ongoing treatment of an insured after the 90th day 4-62 from the effective date of the termination. However, the 4-63 obligation of the insurer to reimburse, at the preferred provider 4-64 level of coverage, the terminated physician or health care provider 4-65 or, if applicable, the insured who at the time of the termination 4-66 is past the 24th week of pregnancy, extends through delivery of the 4-67 child, immediate post-partum care, and the follow-up checkup within 4-68 the first six weeks of delivery. 4-69 Sec. 5. EMERGENCY CARE PROVISIONS. If the insured cannot 5-1 reasonably reach a preferred provider, an insurer shall provide 5-2 reimbursement for the following emergency care services at the 5-3 preferred level of benefits until the insured can reasonably be 5-4 expected to transfer to a preferred provider: 5-5 (1) any medical screening examination or other 5-6 evaluation required by state or federal law to be provided in the 5-7 emergency facility of a hospital which is necessary to determine 5-8 whether a medical emergency condition exists; 5-9 (2) necessary emergency care services including the 5-10 treatment and stabilization of an emergency medical condition; and 5-11 (3) services originating in a hospital emergency 5-12 facility following treatment or stabilization of an emergency 5-13 medical condition. 5-14 Sec. 6. MANDATORY DISCLOSURE REQUIREMENTS. (a) All health 5-15 insurance policies, health benefit plan certificates, endorsements, 5-16 amendments, applications, or riders shall be written in plain 5-17 language, must be in a readable and understandable format, and must 5-18 comply with all applicable requirements relating to minimum 5-19 readability requirements. 5-20 (b) The insurer shall provide to a current or prospective 5-21 group contract holder or current or prospective insured on request 5-22 an accurate written description of the terms and conditions of the 5-23 policy to allow the current or prospective group contract holder or 5-24 current or prospective insured to make comparisons and informed 5-25 decisions before selecting among health care plans. The written 5-26 description must be in a readable and understandable format as 5-27 prescribed by the commissioner and must include a current list of 5-28 preferred providers. The insurer may provide its handbook to 5-29 satisfy this requirement provided the handbook's content is 5-30 substantively similar to and achieves the same level of disclosure 5-31 as the written description prescribed by the commissioner and the 5-32 current list of physicians and health care providers is provided. 5-33 (c) A current list of preferred providers shall be provided 5-34 to all insureds no less than annually. 5-35 (d) No insurer, or agent or representative of an insurer, 5-36 may cause or permit the use or distribution of prospective insured 5-37 information which is untrue or misleading. 5-38 (e)(1) If a physician or practitioner is terminated for 5-39 reasons other than at the preferred provider's request, an insurer 5-40 shall not notify enrollees of the termination until the effective 5-41 date of the termination or at such time as a review panel makes a 5-42 formal recommendation regarding the termination, whichever is 5-43 later. 5-44 (2) If a physician or provider voluntarily terminates 5-45 the physician's or provider's relationship with an insurer, the 5-46 physician or provider shall provide reasonable notice to enrollees 5-47 under the physician's or provider's care. The insurer shall 5-48 provide assistance to the physician or provider in assuring that 5-49 the notice requirements of this subdivision are met. 5-50 (3) If a physician or practitioner is terminated for 5-51 reasons related to imminent harm, an insurer may notify enrollees 5-52 immediately. 5-53 Sec. 7. PROHIBITED PRACTICES. (a) No insurer shall engage 5-54 in any retaliatory action against an insured, including 5-55 cancellation of or refusal to renew a policy, because the insured, 5-56 or a person acting on behalf of the insured, has filed a complaint 5-57 against the insurer or against a preferred provider or has appealed 5-58 a decision of the insurer. 5-59 (b) No insurer shall engage in any retaliatory action 5-60 against a physician or health care provider, including termination 5-61 of or refusal to renew a contract, because the physician or 5-62 provider has, on behalf of an insured, reasonably filed a complaint 5-63 against the insurer or has appealed a decision of the insurer. 5-64 (c)(1) An insurer shall not, as a condition of a contract 5-65 with a physician or health care provider or in any other manner, 5-66 prohibit, attempt to prohibit, nor discourage a physician or 5-67 provider from: 5-68 (A) discussing with or communicating to a 5-69 current, prospective, or former patient, or a party designated by a 6-1 patient, information or opinions regarding that patient's health 6-2 care, including but not limited to the patient's medical condition 6-3 or treatment options; or 6-4 (B) discussing with or communicating in good 6-5 faith to a current, prospective, or former patient, or a party 6-6 designated by a patient, information or opinions regarding the 6-7 provisions, terms, requirements, or services of the health care 6-8 plan as they relate to the medical needs of the patient. 6-9 (2) An insurer shall not in any way penalize, 6-10 terminate, nor refuse to compensate for covered services a 6-11 physician or provider for discussing or communicating with a 6-12 current, prospective, or former patient, or a party designated by a 6-13 patient, pursuant to this section. 6-14 (d) An insurer shall not use any financial incentive or make 6-15 payment to a physician or health care provider which acts directly 6-16 or indirectly as an inducement to limit medically necessary 6-17 services. 6-18 Sec. 8. AVAILABILITY OF PREFERRED PROVIDERS. (a) Any 6-19 insurer offering a preferred provider benefit plan must ensure that 6-20 both preferred provider benefits and basic level benefits are 6-21 reasonably available to all insureds within a designated service 6-22 area. 6-23 (b) If services are not available through preferred 6-24 providers within the service area, nonpreferred providers shall be 6-25 reimbursed at the same percentage level of reimbursement as the 6-26 preferred providers would have been reimbursed had the insured been 6-27 treated by them. Nothing in this subsection requires reimbursement 6-28 at a preferred level of coverage solely because an insured resides 6-29 out of the service area and chooses to receive services from 6-30 providers other than preferred providers for the insured's own 6-31 convenience. 6-32 Sec. 9. RULEMAKING AUTHORITY. The commissioner shall adopt 6-33 rules as necessary to implement the provisions of this article and 6-34 to ensure reasonable accessibility and availability of preferred 6-35 provider and basic level benefits to Texas citizens. 6-36 SECTION 2. The requirements of Article 3.70-3C, Insurance 6-37 Code, as added by Section 1 of this Act, apply to any insurance 6-38 policy or contract issued, delivered, or renewed on or after the 6-39 effective date of this Act. 6-40 SECTION 3. The importance of this legislation and the 6-41 crowded condition of the calendars in both houses create an 6-42 emergency and an imperative public necessity that the 6-43 constitutional rule requiring bills to be read on three several 6-44 days in each house be suspended, and this rule is hereby suspended, 6-45 and that this Act take effect and be in force from and after its 6-46 passage, and it is so enacted. 6-47 * * * * *