79R7530 UM-F
By: Thompson H.B. No. 3281
A BILL TO BE ENTITLED
AN ACT
relating to financial arrangements between referring health care
providers and providers of designated health services and supplies;
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 112 to read as follows:
CHAPTER 112. RULES REGARDING HEALTH CARE PROVIDER REFERRAL
Sec. 112.001. DEFINITIONS. In this chapter:
(1) "Academic medical center" means an accredited
medical school or accredited academic hospital that provides
substantial academic or clinical teaching services in a field or
fields of medical specialties, together with affiliated hospitals.
(2) "Affiliated hospital" means a medical hospital
that is affiliated in a business arrangement with an academic
medical center, the medical staff of which is composed of a majority
of physicians on the faculty of the academic medical center, and a
majority of the patient admissions of which come from that faculty.
(3) "Designated health services" means:
(A) ambulatory surgery center services;
(B) clinical laboratory services;
(C) diagnostic imaging services;
(D) dialysis services;
(E) endoscopic services;
(F) electromyogram and other neurological
testing;
(G) home health services;
(H) inpatient and outpatient hospital services;
(I) lithotripsy;
(J) occupational therapy services;
(K) physical rehabilitation and therapy
services;
(L) radiation oncology and chemotherapy oncology
services; and
(M) speech-language pathology services.
(4) "Designated health supplies" means:
(A) durable medical equipment and supplies;
(B) outpatient prescription drugs;
(C) parental and enteral nutrients, equipment,
and supplies; and
(D) prosthetics, orthotics, and prosthetic
devices and supplies.
(5) "Diagnostic imaging services" means general
radiography, magnetic resonance imaging, nuclear medicine,
angiography, computed tomography, positron emission tomography,
and ultrasound to include cardiac echo and obstetrical ultrasound.
(6) "Health care provider" means any person licensed
as a health professional or authorized to practice in health care
under Subtitles B and C, Title 3.
(7) "Immediate family member" means the spouse, child,
child's spouse, grandchild, grandchild's spouse, parent,
parent–in–law, or sibling of a health care provider who is an
individual.
(8) "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 an interest in real property resulting in
a landlord–tenant relationship between a health care provider and
another person in which the equity interest is held, unless the
rent:
(A) is determined, in whole or in part, by the
business volume or profitability of the tenant; or
(B) exceeds fair market value.
(9) "Investor" means a person who directly or
indirectly holds a legal, beneficial ownership, or investment
interest, including an interest held through an immediate family
member, trust, or another person related to the investor within the
meaning of 42 C.F.R. Section 413.17.
(10) "Licensing authority" means the department,
board, office, or other agency of the state that regulates a health
care provider that is subject to this chapter.
(11) "Outside referral for designated health services
or supplies" means a referral of a patient to a person for
designated health services or supplies by a health care provider
who does not have an investment interest in the person.
(12) "Patient" means a person who receives a physical
examination, evaluation, diagnosis, or treatment by a health care
provider.
(13) "Referral" means a request by a health care
provider for, or ordering of, designated health services or
designated health supplies for a patient. The term does not include
the performance of a designated health service or provision of a
designated health supply for a patient by a health care provider or
another person that performs or provides the designated health
service or supply:
(A) under the direct supervision of the patient's
health care provider;
(B) performed or provided in the same building in
which the patient's health care provider operates the provider's
medical practice; and
(C) with respect to which the performance or
provision of the designated health service or supply results in a
total financial cost to the patient or the patient's payor equal to
or less than $250 in a year.
(14) "Third party payor" means:
(A) a person authorized to engage in business
involving the payment of money or another thing of value in the
event of loss resulting from disability incurred as a result of
accident or sickness, as described in the Insurance Code;
(B) a health insurance plan offered by an
employer under the provisions of the Employee Retirement and
Insurance Security Act of 1974 (29 U.S.C. Section 1002);
(C) a publicly funded program of health care
services, including Medicaid or the state child health plan; or
(D) any person, other than a patient, that pays a
health care provider to provide designated health services or
supplies, including an insurance company or a health maintenance
organization.
Sec. 112.002. PROHIBITED REFERRALS AND CLAIMS FOR PAYMENT.
(a) A health care provider may not refer a patient for the
provision of designated health services or supplies to a person in
which the health care provider is directly or indirectly an
investor or has an investment interest.
(b) A health care provider or other person may not present a
claim for payment to any person or third party payor for a
designated health service or supply furnished pursuant to a
referral prohibited under this section.
Sec. 112.003. ALLOWED REFERRALS. Section 112.002 does not
apply to:
(1) the referral by a health care provider on the
faculty of an academic medical center to the academic medical
center or an affiliated hospital;
(2) the referral by a health care provider who is
employed by a person that is under the common control and governance
of a corporate parent that also has under its common control and
governance a health maintenance organization regulated under
Chapter 843, Insurance Code;
(3) a referral by a health care provider if the health
care provider's investment interest is in registered securities
purchased on a national exchange and issued by a publicly held
corporation:
(A) the shares of which are traded on a national
exchange; and
(B) the total assets of which at the end of the
corporation's most recent fiscal quarter exceeded $200 million; or
(4) a referral of a patient for designated health
services or supplies the cost of which is being reimbursed or paid
for by a third party payor that has entered into a contract with the
referring health care provider as described in Section 112.007.
Sec. 112.004. ENFORCEMENT. (a) Any health care provider or
other person that presents or causes to be presented a bill or a
claim for service for a designated health service or supply
furnished pursuant to a referral that is prohibited by Section
112.002 is subject to a civil penalty of not more than $15,000 for
each bill or claim.
(b) The licensing authority that regulates the health care
provider shall bring an action to impose and collect the civil
penalty. A penalty collected under this section must be maintained
in a segregated account outside the state treasury by the licensing
authority to be used in the enforcement of this chapter. If there
is no licensing authority that regulates the health care provider
or other person against whom the civil penalty should be imposed,
the attorney general may bring the action to impose and collect the
penalty and the penalty collected under this section must be
maintained in a segregated account outside the state treasury by
the Office of the Attorney General to be used in the enforcement of
this chapter and other statutes for protection of health care
consumers.
(c) A health care provider or other person that enters into
an agreement or other arrangement that the provider or person knows
or should know has a material purpose of assuring referrals to a
particular person which, if the health care provider directly made
referrals to that person, would be in violation of this chapter, is
subject to a civil penalty of not more than $100,000 for each
agreement or arrangement.
(d) The licensing authority that regulates the health care
provider shall bring an action to impose and collect the civil
penalty. All penalties collected must be maintained in a
segregated account outside the state treasury by the licensing
authority to be used in the enforcement of this chapter. If there
is no licensing authority that regulates the health care provider
or other person against whom the civil penalty should be imposed,
the attorney general may bring the action to impose and collect the
penalty and the penalties collected shall be maintained in a
segregated account outside the state treasury by the Office of the
Attorney General to be used in the enforcement of this chapter and
other statutes for protection of health care consumers.
(e) If a health care provider or other person collects any
amount that was billed in violation of this chapter, the provider or
person shall refund the amount to the third party payor or patient,
not later than the 45th day after the date of receipt of payment.
(f) In addition to the penalties or other remedies in this
chapter, an action for an injunction or other relief to enforce this
chapter may be brought by the attorney general in the name of the
state and against the health care provider or other person alleged
to have violated this chapter to restrain the violation by
temporary restraining order, temporary injunction, or permanent
injunction.
(g) An action brought under this section may be commenced in
the district court of the county in which the health care provider
or other person against whom the action is brought resides, has its
principal place of business, or has done business, or in the
district court of the county in which the transaction occurred, or,
on the consent of the parties, in a district court of Travis County.
The court may issue temporary orders and temporary or permanent
injunctions to restrain and prevent violations of this chapter and
the injunctive relief shall be issued without bond.
(h) In addition to the request for a temporary restraining
order or permanent injunction in a proceeding brought under this
section, the attorney general may request, and the trier of fact may
award, civil penalties otherwise authorized under this chapter.
(i) In an action under this section, the court may make
additional orders or judgments as necessary to compensate a third
party payor or patient.
(j) A person who violates an injunction under this section
shall forfeit and pay to the state a civil penalty of not more than
$10,000 for each violation, not to exceed a total of $50,000. For
the purposes of this section, the district court issuing the
injunction shall retain jurisdiction and the cause shall be
continued and in these cases the attorney general, acting in the
name of the state, may petition for recovery of civil penalties
under this section. A penalty collected under this subsection must
be maintained in a segregated account outside the state treasury by
the licensing authority that regulates the person against whom the
civil penalty is being imposed to be used in the enforcement of the
provisions of this chapter. If there is no licensing authority that
regulates the health care provider or other person against whom the
civil penalty should be imposed, the penalties collected shall be
maintained in a segregated account outside the state treasury by
the Office of the Attorney General to be used in the enforcement of
this chapter and other statutes for protection of health care
consumers.
(k) In bringing an action under this section, the attorney
general acts in the name of the state and does not establish an
attorney-client relationship with another person, including a
third party payor or patient.
(l) A third party payor or another health care provider may
maintain an action against a health care provider or other person
that violates this chapter.
(m) In a suit filed under Subsection (i), a third party
payor may obtain:
(1) the amount of money paid by the third party payor
to the health care provider or other person for a service or supply
furnished pursuant to a referral prohibited by this chapter and if
the trier of fact finds that the conduct of the defendant was
committed knowingly, the third party payor may also recover an
award of not more than three times the amount of the payment;
(2) an order enjoining a violation of this chapter;
(3) all orders necessary to restore to the third party
payor all sums of money that were acquired by the health care
provider or other person in violation of this chapter; and
(4) any other relief which the court deems proper.
(n) In a suit filed under Subsection (i), a health care
provider may obtain:
(1) an order enjoining a violation of this chapter;
and
(2) any other relief that the court deems proper.
(o) Each third party payor or health care provider who files
an action under Subsection (i) and prevails in that action shall be
awarded court costs and reasonable and necessary attorney's fees.
(p) The court, on a showing of good cause, may allow the
attorney general, as a representative of the public, to intervene
in the action to which this section applies. The attorney general
shall file its motion for intervention with the court before which
the action is pending and serve a copy of the motion on each party to
the action.
Sec. 112.005. LIMITATION ON FILING SUIT. (a) An action
under Section 112.004 must be brought before the fourth anniversary
of the date on which a violation of this chapter has occurred.
(b) Not later than the 61st day before the date a third party
payor or health care provider files an action under Section
112.004(i), the third party payor or health care provider shall
give a defendant health care provider written notice of the
intention to maintain the action, stating in reasonable detail the
nature of the alleged violation.
(c) A health care provider who receives a notice under this
section may correct the violation as provided by Section 112.006
during the period beginning on the date the notice is received and
ending on the 60th day after that date. A health care provider who
corrects a violation as provided in Section 112.006 is not liable to
a third party payor for the violation.
Sec. 112.006. EXCEPTION FROM LIABILITY. A health care
provider is not liable to a third party payor for a violation of
this chapter if, prior to or during the 60-day period of time
following the provider's receipt of the notice described in Section
112.005, the health care provider pays to the third party payor the
amount of money paid by the third party payor to the health care
provider for a designated health service or supply furnished
pursuant to a referral prohibited by this chapter.
Sec. 112.007. WAIVER BY CONTRACT. A third party payor may
waive its claims for liability under Section 112.004 by contract
with a health care provider if the health care provider does not
provide more than 25 percent of the designated health services or
supplies in a medical specialty in a county in which the health care
provider offers their services. A patient or a person other than a
third party payor who is financially responsible for a patient's
care may not waive claims for liability under Section 112.004.
Sec. 112.008. REPORTING AND DISCLOSURE OF REFERRALS. (a) A
health care provider who refers a patient for the provision of
designated health services or supplies pursuant to Section 112.003
to a person in which the health care provider is an investor or has
an investment interest shall provide the licensing authority with a
quarterly report containing the total number of the referrals and
all claims data for those referrals required by the Center for
Health Statistics of the Department of State Health Services.
(b) A person providing designated health services or
supplies that performs services or provides supplies for a
referring health care provider that has an investment interest in
the person shall report to the Center for Health Statistics of the
Department of State Health Services the identity of the referring
health care provider, the exact nature of the investment interest,
and the total number of all patients receiving designated health
services or supplies that were referred by the provider, together
with additional claims data required by the center.
(c) A health care provider making a referral permitted under
Section 112.003 must:
(1) disclose the provider's investment interest to the
provider's patients in writing;
(2) advise the provider's patients that the patient
may choose to have another person provide the designated health
services or supplies; and
(3) obtain the patient's written consent after the
disclosure and prior to the provision of the designated health
service or supply.
(d) A report required by this section must be made to the
appropriate licensing agency and the Center for Health Statistics
of the Department of State Health Services on a form provided to
each health care provider by the center.
(e) A health care provider shall pay to the Center for
Health Statistics of the Department of State Health Services a fee
in the amount of $500 with the initial disclosure made to the center
and each year that the health care provider provides a report to the
center.
(f) The executive commissioner of the Health and Human
Services Commission on behalf of the Center for Health Statistics
of the Department of State Health Services shall adopt rules
specifying the procedures and forms health care providers must use
to comply with this section. A health care provider that violates
rules adopted by the executive commissioner is subject to a civil
penalty of not more than $15,000 for each violation. The center
shall bring an action to impose and collect penalties under this
section. All penalties collected under this section must be
maintained in a segregated account outside the state treasury by
the Center for Health Statistics of the Department of State Health
Services to be used in the enforcement of this chapter. Each
calendar month that the health care provider is in violation of the
rules constitutes a separate violation.
Sec. 112.009. DISCIPLINARY ACTION. A violation of this
chapter by a health care provider is grounds for disciplinary
action to be taken by the licensing authority that regulates the
health care provider.
SECTION 2. This Act applies only to conduct relating to
designated health services or supplies that are provided on or
after September 1, 2007.
SECTION 3. This Act takes effect September 1, 2005.