SRC-JXG C.S.S.B. 130 76(R)   BILL ANALYSIS


Senate Research Center   C.S.S.B. 130
By: Nelson
Economic Development
2/26/1999
Committee Report (Substituted)


DIGEST 

Currently, health care providers may contract with health insurance plans
to give a discounted rate on their services in exchange for being listed as
a "preferred provider." An insurer or independent  
agent may deliberately mislead providers and doctors by claiming to belong
to an exclusive preferred provider arrangement to receive a discount. This
bill would hold insurers in violation of an unfair act or deceptive
practice under the Insurance Code, if the insurers knowingly mislead a
provider into giving them discounts to which the insurers are not entitled. 

PURPOSE

As proposed, C.S.S.B. 130 holds insurers in violation of an unfair act or
deceptive practice under the Insurance Code, if the insurers knowingly
mislead a provider into giving them discounts to which the insurers are not
entitled.  

RULEMAKING AUTHORITY

This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Article 3.70-3C, Insurance Code, as added by Chapter
1024, Acts of the 75th Legislature, Regular Session, 1997, by adding
Section 7A, as follows: 

Sec.7A. MISREPRESENTATION REGARDING DISCOUNT PROHIBITED. (a) Provides that
this section applies to an insurer, an agent of an insurer, an
administrator regulated under Article 21.07-6 of this code, or a preferred
provider organization.  

(b) Prohibits a person to whom this section applies from reimbursing a
physician, practitioner, hospital, institutional provider, or an
organization of physicians and health care providers on a discounted fee
basis for covered services rendered to an insured unless the insured is
covered by a preferred provider benefit plan to which the providers have
contracted and to which the person has agreed to provide coverage. 

(c) Provides that no party to a preferred provider contract may buy,
purchase, acquire, obtain, lease, rent, or otherwise transfer information
concerning the payment or reimbursement terms of the contract without
express authority and prior adequate notification to contracted parties. 

(d) Provides that a person violating this section commits an unfair act or
deceptive practice in violation of Articles 21.21 and 21.21-2 of this code. 

SECTION 2. Emergency clause.
           Effective date: upon passage.


SUMMARY OF COMMITTEE CHANGES

SECTION 1.

Amends Article 3.70-3C, Insurance Code, by adding Section 7A, to add a
preferred provider  organization to the list of entities to which this
section applies. Prohibits a person to whom this section applies from
reimbursing a physician, practitioner, hospital, institutional provider, or
an organization of physicians and health care providers, rather than only a
physician or health care provider, on a discounted fee basis for covered
services rendered to an insured unless the insured is covered by a
preferred provider benefit plan to which the providers have contracted and
to which the person has agreed to provide coverage. Provides that no party
to a preferred provider contract may buy, purchase, acquire, obtain, lease,
rent, or otherwise transfer information concerning the payment or
reimbursement terms of the contract without express authority and prior
adequate notification to contracted parties. Deletes text prohibiting this
section from being waived by contract. Makes conforming changes.