By Nelson                                              S.B. No. 130
         Substitute the following for S.B. No. 130:
         By Eiland                                          C.S.S.B. No. 130
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to certain unfair practices by insurers and certain
 1-3     related entities regarding preferred providers of health care.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Article 3.70-3C, Insurance Code, as added by
 1-6     Chapter 1024, Acts of the 75th Legislature, Regular Session, 1997,
 1-7     is amended by adding Section 7A to read as follows:
 1-8           Sec. 7A.  RESTRICTIONS ON PAYMENT AND REIMBURSEMENT.  (a)  An
 1-9     insurer or third party administrator may not reimburse a physician,
1-10     practitioner, hospital, institutional provider, or organization of
1-11     physicians and health care providers on a discounted fee basis for
1-12     covered services that are provided to an insured unless:
1-13                 (1)  the insurer or third party administrator has
1-14     contracted with either:
1-15                       A.  the physician, practitioner, hospital,
1-16     institutional provider, organization of physicians and health care
1-17     providers; or
1-18                       B.  a preferred provider organization that has a
1-19     network of preferred providers and such organization has contracted
1-20     with the health care preferred provider;
1-21                 (2)  the physician, practitioner, hospital,
1-22     institutional provider, or organization of physicians and health
1-23     care providers has agreed to the contract and has agreed to provide
1-24     health care services under the terms of the contract; and
 2-1                 (3)  the insurer or third party administrator has
 2-2     agreed to provide coverage for those health care services under the
 2-3     health insurance policy.
 2-4           (b)  A party to a preferred provider contract including, a
 2-5     contract with a preferred provider organization, may not sell,
 2-6     lease, or otherwise transfer information regarding the payment or
 2-7     reimbursement terms of the contract without the express authority
 2-8     and prior adequate notification of the other contracting parties.
 2-9     This subsection does not affect the commissioner's authority under
2-10     this code to 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.