AN ACT
 1-1     relating to certain unfair practices by insurers and certain
 1-2     related entities regarding preferred providers of health care.
 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-4           SECTION 1.  Article 3.70-3C, Insurance Code, as added by
 1-5     Chapter 1024, Acts of the 75th Legislature, Regular Session, 1997,
 1-6     is amended by adding Section 7A to read as follows:
 1-7           Sec. 7A.  RESTRICTIONS ON PAYMENT AND REIMBURSEMENT.  (a)  An
 1-8     insurer or third party administrator may not reimburse a physician,
 1-9     practitioner, hospital, institutional provider, or organization of
1-10     physicians and health care providers on a discounted fee basis for
1-11     covered services that are provided to an insured unless:
1-12                 (1)  the insurer or third party administrator has
1-13     contracted with either:
1-14                       (A)  the physician, practitioner, hospital,
1-15     institutional provider, organization of physicians and health care
1-16     providers; or
1-17                       (B)  a preferred provider organization that has a
1-18     network of preferred providers and such organization has contracted
1-19     with the health care preferred provider;
1-20                 (2)  the physician, practitioner, hospital,
1-21     institutional provider, or organization of physicians and health
1-22     care providers has agreed to the contract and has agreed to provide
1-23     health care services under the terms of the contract; and
1-24                 (3)  the insurer or third party administrator has
 2-1     agreed to provide coverage for those health care services under the
 2-2     health insurance policy.
 2-3           (b)  A party to a preferred provider contract, including a
 2-4     contract with a preferred provider organization, may not sell,
 2-5     lease, or otherwise transfer information regarding the payment or
 2-6     reimbursement terms of the contract without the express authority
 2-7     and prior adequate notification of the other contracting parties.
 2-8     This subsection does not affect the authority of the commissioner
 2-9     or the Texas Workers' Compensation Commission under this code to
2-10     request and obtain information.
2-11           (c)  An insurer or third party administrator who violates
2-12     this section commits an unfair claim settlement practice in
2-13     violation of Article 21.21-2 of this code and is also subject to
2-14     administrative penalties under Articles 1.10 and 1.10E of this
2-15     code.
         _______________________________     _______________________________
             President of the Senate              Speaker of the House
               I hereby certify that S.B. No. 130 passed the Senate on
         March 23, 1999, by the following vote:  Yeas 30, Nays 0; and that
         the Senate concurred in House amendments on May 11, 1999, by the
         following vote:  Yeas 30, Nays 0.
                                             _______________________________
                                                 Secretary of the Senate
               I hereby certify that S.B. No. 130 passed the House, with
         amendments, on May 6, 1999, by a non-record vote.
                                             _______________________________
                                                 Chief Clerk of the House
         Approved:
         _______________________________
                     Date
         _______________________________
                   Governor