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78R6322 YDB-F
By: Deuell S.B. No. 925
A BILL TO BE ENTITLED
AN ACT
relating to financial arrangements between referring health care
providers and providers of health care services; providing
penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle A, Title 3, Occupations Code, is
amended by adding Chapter 107 to read as follows:
CHAPTER 107. FINANCIAL ARRANGEMENTS BETWEEN HEALTH CARE PROVIDERS
Sec. 107.001. DEFINITIONS. In this chapter:
(1) "Board" means any of the following boards as
related to the professions licensed by the board:
(A) the Texas State Board of Medical Examiners;
(B) the Texas Board of Chiropractic Examiners;
(C) the Texas Optometry Board;
(D) the Texas State Board of Pharmacy;
(E) the State Board of Dental Examiners; and
(F) the Texas State Board of Podiatric Medical
Examiners.
(2) "Comprehensive rehabilitation services" means
services provided by a health care professional licensed under
Chapter 401, 453, or 454 to provide speech, occupational, or
physical therapy services on an outpatient or ambulatory basis.
(3) "Designated health services" means clinical
laboratory services, physical therapy services, comprehensive
rehabilitative services, diagnostic imaging services, and
radiation therapy services.
(4) "Diagnostic imaging services" means magnetic
resonance imaging, nuclear medicine, angiography, arteriography,
computed tomography, positron emission tomography, digital
vascular imaging, bronchography, lymphangiography, splenography,
ultrasound, EEG, EKG, nerve conduction studies, and evoked
potentials.
(5) "Direct supervision" means supervision by a
physician who is physically present and immediately available to
provide assistance and direction while services are being
performed. The health care provider is considered physically
present during brief unexpected absences as well as during routine
absences of a short duration if the absences occur during periods in
which the health care provider is otherwise scheduled and
ordinarily expected to be present and the absences do not conflict
with any other applicable Medicare requirement for a certain level
of health care provider supervision.
(6) "Fair market value" means the value in an
arm's-length transaction that is consistent with the general market
value. For a rental or lease, fair market value means the value of
the rental property for general commercial purposes, without
consideration of the property's intended use. The fair market
value of a lease or rental of property may not be adjusted to
reflect the additional value attributable to the proximity or
convenience to the lessor if the lessor is a potential source of
patient referrals to the lessee.
(7) "Group practice" means a group of two or more
health care providers legally organized as a partnership,
professional corporation, or similar association:
(A) in which each health care provider in the
group:
(i) provides substantially the full range
of services that the health care provider routinely provides,
including medical care, consultation, diagnosis, or treatment,
through the joint use of shared office space, facilities,
equipment, and personnel; and
(ii) provides substantially all of the
provider's services through the group, bills for the services in
the name of the group, and credits payments for the services as
receipts of the group; and
(B) that distributes the overhead expenses and
the income from the group in accordance with the methods previously
determined by the members of the group.
(8) "Health care provider" means a person licensed
under Chapter 155, 201, 256, 351, or 558.
(9) "Immediate family member" means a health care
provider's spouse, child, child's spouse, grandchild, grandchild's
spouse, parent, parent-in-law, or sibling.
(10) "Investment interest" means an equity or debt
security issued by a person, including shares of stock in a
corporation, units or other interests in a partnership, bonds,
debentures, notes, or other equity interests or debt instruments.
The term does not include any interest excluded under Section
107.002.
(11) "Investor" means a person owning a legal or
beneficial ownership or investment interest in another person,
directly or indirectly, including, through an immediate family
member, trust, or another person related to the investor in
accordance with 42 C.F.R. Section 413.17.
(12) "Outside referral for diagnostic imaging
services" means a referral of a patient to a group practice or sole
provider for diagnostic imaging services:
(A) by a physician who:
(i) is not a member of the group practice or
of the sole provider's practice; and
(ii) does not have an investment interest
in the group practice or sole provider's practice;
(B) for which the group practice or sole provider
bills for the technical and the professional fee for the patient;
and
(C) with respect to which the patient does not
become a patient of the group practice or sole provider.
(13) "Patient of a group practice" or "patient of a
sole provider" means a patient who receives a physical examination,
evaluation, diagnosis, and development of a treatment plan if
medically necessary by a physician who is a member of the group
practice or is a sole provider.
(14) "Referral" means a referral of a patient by a
health care provider for health care services. The term does not
include acts excluded under Section 107.003. The term includes:
(A) forwarding a patient to another health care
provider or to another person that provides designated health
services or another health care item or service; and
(B) requesting or establishing a plan of care,
including the provision of designated health services or another
health care item or service.
(15) "Rural area" means a county with a population
density not greater than 100 persons per square mile according to
the most recent federal decennial census.
(16) "Sole provider" means one health care provider
licensed under Chapter 155, 201, or 351 who maintains a separate
medical office and a medical practice separate from any other
health care provider and who bills for services separately from the
services provided by any other health care provider. The term does
not include a health care provider who shares overhead expenses or
professional income with any other person or group practice.
Sec. 107.002. EXCLUDED INVESTMENT INTERESTS. This chapter
does not apply to:
(1) an investment interest in a person that is the sole
provider of designated health services in a rural area;
(2) an investment interest in notes, bonds,
debentures, or other debt instruments issued by a person that
provides designated health services as an integral part of a plan to
acquire an investor's equity investment interest in the person,
provided the interest rate is consistent with fair market value and
the maturity date of the notes, bonds, debentures, or other debt
instruments issued by the person to the investor is not later than
October 1, 2007;
(3) an investment interest in real property resulting
in a landlord-tenant relationship between the health care provider
and the person that holds the equity interest, unless the rent is
determined, wholly or partly, by the business volume or
profitability of the tenant or exceeds fair market value; or
(4) an investment interest in a person that owns or
leases and operates a hospital licensed under Chapter 241, Health
and Safety Code, or a nursing home licensed under Chapter 242,
Health and Safety Code.
Sec. 107.003. EXCLUDED REFERRALS. (a) This chapter does
not apply to an order, recommendation, or plan by:
(1) a radiologist for diagnostic imaging services;
(2) a physician specializing in the provision of
radiation therapy services for diagnostic imaging services;
(3) a medical oncologist for drugs and solutions
prepared and administered intravenously to the oncologist's
patient and for the supplies and equipment used in connection with
the drugs and solutions to treat the patient for cancer and the
resulting complications;
(4) a cardiologist for cardiac catheterization
services;
(5) a pathologist for diagnostic clinical laboratory
tests and pathological examination services furnished by or under
the supervision of the pathologist pursuant to a consultation
requested by another physician;
(6) except as otherwise provided by this section, a
health care provider who is the sole provider or member of a group
practice for designated health services or other health care items
or services that are:
(A) prescribed or provided solely for the
patients of the referring provider or group practice; and
(B) provided or performed by or under the direct
supervision of the referring health care provider or group
practice;
(7) a health care provider for services provided by an
ambulatory surgical center licensed under Chapter 243, Health and
Safety Code;
(8) a dentist for dental services performed by:
(A) a health care provider who is an independent
contractor with the dentist or group practice of which the dentist
is a member; or
(B) an employee of a health care provider
described by Paragraph (A);
(9) a physician for infusion therapy services to a
patient of that physician or a member of that physician's group
practice;
(10) a nephrologist for renal dialysis services and
supplies, except laboratory services; or
(ll) a health care provider whose principal
professional practice consists of treating patients in the
patients' private residences for services rendered in the private
residences, except for services rendered by a home and community
support services agency licensed under Chapter 142, Health and
Safety Code, including services at a patient's private home, an
independent living center, and an assisted living facility, but not
including a skilled nursing facility.
(b) Effective July 1, 2010, a person licensed under Chapter
155, 201, or 351 may refer a patient to a sole provider or group
practice for diagnostic imaging services, excluding radiation
therapy services, for which the sole provider or group practice
bills both the technical and the professional fee for or on behalf
of the patient, if the referring person does not have an investment
interest in the practice. The diagnostic imaging service referred
to a group practice or sole provider under this subsection must be a
diagnostic imaging service normally provided within the scope of
practice to the patients of the group practice or sole provider.
The group practice or sole provider may not accept more than 15
percent of its patients receiving diagnostic imaging services from
outside referrals, excluding radiation therapy services.
Sec. 107.004. DUTIES OF BOARDS. (a) Each board and, for
hospitals, the Texas Board of Health, shall encourage each person
licensed by the board to use the declaratory statement procedure to
determine the applicability of this chapter or any rule adopted
under this chapter to the license holder.
(b) A board shall submit to the Texas Board of Health the
name of any person in which a provider investment interest has been
approved under this chapter.
(c) The Texas Board of Health by rule shall provide for
periodic quality assurance and utilization review of a person
approved under Subsection (b).
Sec. 107.005. REQUIREMENTS FOR ACCEPTING OUTSIDE REFERRALS
FOR DIAGNOSTIC IMAGING. (a) A group practice or sole provider may
accept outside referrals for diagnostic imaging services only if
the practice or provider complies with this section.
(b) The diagnostic imaging services may be provided only by
the group practice or sole provider or by a full-time or part-time
employee of the group practice or sole provider.
(c) The physicians comprising the group practice or the
physician who is a sole provider:
(1) must hold all equity in the practice, and each
physician must provide at least 75 percent of the physician's
professional services to the practice; or
(2) must be incorporated under the Texas Non-Profit
Corporation Act (Article 1396-1.01 et seq., Vernon's Texas Civil
Statutes), be exempt under Section 501(c)(3), Internal Revenue Code
of 1986, be part of a foundation in existence before January 1,
1999, and exist for the purposes of patient care, medical
education, and research.
(d) The group practice or sole provider may not enter into,
extend, or renew any contract with a practice management company
that provides a financial incentive, directly or indirectly, based
on an increase in outside referrals for diagnostic imaging services
from a group practice or sole provider managed by the same practice
management company.
(e) The group practice or sole provider must bill for the
professional and technical service on behalf of the patient. The
group practice or sole provider may not share any portion of the
payment or any type of consideration, directly or indirectly, with
the referring health care provider.
(f) A group practice or sole provider that has a Medicaid
provider agreement with the Texas Board of Health must furnish
diagnostic imaging services to the practice's or provider's
Medicaid patients and may not refer a Medicaid recipient to a
hospital for outpatient diagnostic imaging services unless the
physician furnishes the hospital with documentation demonstrating
the medical necessity for the referral. If necessary, the Texas
Board of Health may apply for a federal waiver to implement this
subsection.
Sec. 107.006. ANNUAL REPORT OF REFERRALS FOR DIAGNOSTIC
IMAGING. A group practice or sole provider that accepts outside
referrals for diagnostic imaging shall annually report to the Texas
Board of Health the number of outside referrals accepted for
diagnostic imaging services and the total number of all patients
receiving diagnostic imaging services.
Sec. 107.007. ANNUAL STATEMENT OF REFERRALS FOR DIAGNOSTIC
IMAGING. (a) Each managing physician member of a group practice
and each sole provider who accepts outside referrals for diagnostic
imaging services shall annually submit to the Texas Board of Health
a statement signed under oath declaring that each group practice or
sole provider is in compliance with the percentage limitations for
accepting outside referrals and the requirements for accepting
outside referrals under Section 107.005.
(b) The Texas Board of Health may verify a statement
submitted by a group practice or sole provider under this section.
Sec. 107.008. PROHIBITED REFERRALS. (a) Except as
provided by this chapter, a health care provider may not:
(1) refer a patient for designated health services to
a person in which the health care provider is an investor or has an
investment interest; or
(2) refer a patient for any other health care item or
service to a person in which the health care provider is an investor
or has an investment interest unless:
(A) the provider's investment interest is in
registered securities purchased on a national exchange or
over-the-counter market and issued by a publicly held corporation
that:
(i) has shares traded on a national
exchange or on the over-the-counter market; and
(ii) has total assets at the end of the
corporation's most recent fiscal quarter that exceeded $50 million;
or
(B) for a person other than a publicly held
corporation and a referring provider's investment interest in the
person, the person:
(i) does not have more than 50 percent of
the value of the investment interests held by investors who are in a
position to make referrals to the entity;
(ii) offers terms for an investment
interest to an investor who is in a position to make referrals to
the person that are not different from the terms offered to
investors who are not in a position to make referrals;
(iii) offers terms for an investor who is in
a position to make referrals to the person that are not related to
the previous or expected volume of referrals from that investor to
the entity; and
(iv) does not require that an investor make
referrals or be in a position to make referrals to the entity as a
condition for becoming or remaining an investor.
(b) A person described by Subsection (a)(2)(A) or (B):
(1) may not loan funds to or guarantee a loan for an
investor who is in a position to make referrals to the person if the
investor uses any part of the loan to obtain the investment
interest; and
(2) may only distribute to an investor an amount that
represents a return on the investment interest directly
proportional to the amount of the capital investment, including the
fair market value of any preoperational services rendered and
invested in the person by that investor.
Sec. 107.009. PROHIBITED CLAIMS AND PAYMENTS. (a) A person
may not present a claim for payment to any individual, third-party
payor, or other person for a service furnished pursuant to a
referral prohibited under this chapter.
(b) A person that collects an amount billed in violation of
this chapter shall refund the amount on a timely basis to the
individual, third-party payor, or other person.
Sec. 107.010. CIVIL PENALTY. (a) A person that presents or
causes to be presented a claim for payment prohibited under Section
107.009 is subject to a civil penalty of not more than $15,000 for
each claim. The attorney general may bring an action in the name of
the state to impose and collect a penalty under this subsection.
(b) A health care provider or other person that enters into
an arrangement, including a cross-referral arrangement, for which
the person knows or should know has a principal purpose of assuring
referrals by a health care provider to a particular person that, if
the health care provider directly made the referrals, would be in
violation of this chapter, is subject to a civil penalty of not more
than $100,000. The attorney general may bring an action in the name
of the state to impose and collect a penalty under this subsection.
Sec. 107.011. VIOLATION OF CHAPTER; PENALTIES. (a) A group
practice or sole provider that accepts an outside referral for
diagnostic imaging services in violation of this chapter or accepts
outside referrals for diagnostic imaging services in excess of the
percentage limitation established by Section 107.005 violates this
chapter and is subject to penalties under this section.
(b) A violation of this chapter by a health care provider
constitutes grounds for disciplinary action to be taken by the
appropriate licensing board as provided by Chapter 164, 201, 202,
263, or 351. A hospital licensed under Chapter 241, Health and
Safety Code, that violates this section is subject to Subchapter C,
Chapter 241, Health and Safety Code, as if the hospital had violated
a rule or minimum standard under that chapter.
Sec. 107.012. DISCRIMINATION BY HOSPITAL. A hospital
licensed under Chapter 241, Health and Safety Code, may not
discriminate against or otherwise penalize a health care provider
for complying with this chapter.
Sec. 107.013. CERTAIN FACILITIES EXEMPT. (a) Section
107.008(a)(1) does not apply to referrals:
(1) to radiation therapy centers managed by an entity
or subsidiary or general partner of the center that performs
radiation therapy services before April 1, 2002; or
(2) for radiation therapy performed at not more than
one additional office of any entity described by Subdivision (1)
before February 1, 2003, that had a binding purchase contract on and
a nonrefundable deposit paid for a linear accelerator to be used at
the additional office.
(b) The physical site of the radiation treatment centers
described by Subsection (a) may be relocated as a result of:
(1) an act of God;
(2) fire;
(3) a strike;
(4) an accident;
(5) war;
(6) an eminent domain action by a governmental body;
or
(7) refusal by the lessor to renew a lease.
(c) A relocation under Subsection (b) is limited to
relocation of an existing facility to a replacement location within
the county of the existing facility on written notification to the
licensing board.
(d) A health care provider that meets the requirements of
Section 107.008(a)(2) and Subsection (a) must disclose the
investment interest to the provider's patients in writing and
obtain the patient's written consent to service or treatment in
light of the disclosure before rendering services.
Sec. 107.014. RESTRICTIONS CUMULATIVE. The restrictions of
this chapter are in addition to the restrictions of Chapter 102.
SECTION 2. This Act takes effect September 1, 2003.