By: Madla S.B. No. 1241
A BILL TO BE ENTITLED
AN ACT
relating to financial arrangements between referring health care
providers and providers of designated health services in rural
areas; 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 111 to read as follows:
CHAPTER 111. SELF-REFERRAL BY HEALTH CARE PROVIDERS
Sec. 111.001. SHORT TITLE. This chapter may be cited as the
"Rural Access to Health Care Act."
Sec. 111.002. APPLICATION OF CHAPTER. This chapter applies
only to an entity located in a county with a population of 50,000 or
less.
Sec. 111.003. LEGISLATIVE FINDINGS. (a) It is recognized
by the Legislature that the referral of a patient by a health care
provider of designated health services in which the referring
health care provider has an interest represents a potential
conflict of interest.
(b) The Legislature finds these referral practices may
limit or eliminate access to health care services in rural areas,
may result in over-utilization of health care services, may
increase costs to the health care system, and may adversely affect
the quality of health care.
(c) The Legislature also recognizes, however, that it may be
necessary under certain market conditions for providers to own
entities providing health care services, and to refer patients to
such entities, as long as certain safeguards are present in the
arrangement.
(d) It is the intent of the Legislature to provide guidance
to health care providers regarding prohibited patient referrals
between health care providers and entities providing health care
services in rural communities and to protect the people of rural
Texas from unnecessary and costly health care expenditures.
Sec. 111.004. DEFINITIONS. For the purpose of this
chapter, the word, phrase, or term:
(1) "Designated health services" means:
(A) ambulatory surgery center services;
(B) clinical laboratory services;
(C) diagnostic imaging services;
(D) dialysis services;
(E) durable medical equipment and supplies;
(F) endoscopic services;
(G) electromyogram and other neurological
testing;
(H) home health services;
(I) inpatient and outpatient hospital services;
(J) lithotripsy;
(K) occupational therapy services;
(L) outpatient prescription drugs;
(M) parental and enteral nutrients, equipment
and supplies;
(N) physical rehabilitation and therapy
services;
(O) prosthetics, orthotics, and prosthetic
devices and supplies;
(P) radiation oncology and chemotherapy oncology
services; and
(Q) speech-language pathology services.
(2) "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.
(3) "Entity" means a sole proprietorship,
partnership, corporation, foundation, trust, unincorporated
association or other business entity.
(4) "Health care provider" means any individual or
entity licensed as a health professional or authorized to practice
in health care under Title 3, Subtitles B and C of this Code.
(5) "Immediate family member" means a health care
provider's spouse, child, child's spouse, grandchild, grandchild's
spouse, parent, parent-in-law, or sibling.
(6) "Investment interest" means an equity or debt
security issued by an entity, including, without limitation, shares
of stock in a corporation, units or other interests in a
partnership, bonds, debentures, notes, or other equity interests or
debt instruments; provided, however, that an investment interest in
real property resulting in a landlord-tenant relationship between
the health care provider and the entity in which the equity interest
is held, unless the rent is determined, in whole or in part, by the
business volume or profitability of the tenant or exceeds fair
market value shall be excepted from this definition.
(7) "Investor" means a person or entity owning a legal
or beneficial ownership or investment interest, directly or
indirectly, including, without limitation, through an immediate
family member, trust, or another entity related to the investor
within the meaning of 42 C.F.R. Section 413.17, in an entity.
(8) "Licensing authority" means the department,
board, office or other agency of the state that regulates health
care providers that are subject to this chapter.
(9) "Patient" means a person who receives a physical
examination, evaluation, diagnosis, or treatment by a health care
provider.
(10) "Payor" means an entity, including a third party
payor or other insurance company, a health maintenance organization
or another organization that pays a health care provider to provide
designated health services.
(11) "Referral" means a request by a health care
provider for, or ordering of, designated health care services for a
patient. The term does not include the performance of a designated
health service for a patient by a health care provider or an entity
which provides or supplies the designated health service (i) under
the direct supervision of the patient's health care provider;
(ii) performed in the same building in which the patient's health
care provider operates his or her medical practice; and
(iii) where the performance or supply of the designated health
service results in a total financial cost to the patient or the
patient's payor or third party payor of no more than $250 per year
per patient.
(12) "Third party payor" means:
(A) a company 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
sickness or ill health, as defined 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; or
(C) a publicly funded program of health care
services, including but not limited to Medicaid or the Children's
Health Insurance Program.
Sec. 111.005. PROHIBITED REFERRALS AND CLAIMS FOR PAYMENT.
(a) A health care provider may not refer a patient for the
provision of designated health services to an entity:
(1) in which the health care provider or the health
care provider's immediate family member is directly or indirectly
an investor or has an investment interest; and
(2) which is located within a 30-mile radius of a
hospital which is:
(i) located in a county with a population of
50,000 or less; or
(ii) designated as a critical access
hospital under the authority of and in compliance with 42 U.S.C.
Section 1395i-4; or
(iii) designated as a sole community
hospital under the authority of and in compliance with 42 U.S.C.
Section 1395ww(d)(5)(D)(iii).
(b) No claim for payment may be presented by a health care
provider or entity to any individual, payor, third party payor or
other entity for a service furnished pursuant to a referral
prohibited under this section.
Sec. 111.006. EXCEPTIONS. The provisions of Section
111.005 shall not apply where the health care provider's investment
interest is in registered securities purchased on a national
exchange and issued by a publicly held corporation:
(1) whose shares are traded on a national exchange;
and
(2) whose total assets at the end of the corporation's
most recent fiscal quarter exceeded $200 million.
Sec. 111.007. ENFORCEMENT. (a) Any health care provider
or entity that presents or causes to be presented a bill or a claim
for service for a service for which payment may not be made under
Section 111.005(b) shall be subject to a civil penalty of not more
than $15,000 for each such service to be imposed and collected by
the licensing authority that regulates the health care provider or
entity against whom the civil penalty is being imposed. All
penalties collected hereunder shall be maintained in a segregated
account by the licensing authority 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 entity against whom the
civil penalty described herein should be imposed, the penalties
collected hereunder shall be maintained in a segregated account by
the Office of the Attorney General to be used in the enforcement of
the provisions of this chapter and other statutes for protection of
health care consumers.
(b) Any health care provider or entity that enters into an
agreement or scheme, such as a cross-referral arrangement, which
the health care provider or entity knows or should know has a
material purpose of assuring referrals by the health care provider
to a particular entity which, if the health care provider directly
made referrals to such entity, would be in violation of this
chapter, shall be subject to a civil penalty of not more than
$100,000 for each such circumvention arrangement or scheme to be
imposed and collected by the licensing authority that regulates the
health care provider or entity against whom the civil penalty is
being imposed. All penalties collected hereunder shall be
maintained in a segregated account by the licensing authority 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 entity against whom the civil penalty described herein should be
imposed, the penalties collected hereunder shall be maintained in a
segregated account by the Office of the Attorney General to be used
in the enforcement of the provisions of this chapter and other
statutes for protection of health care consumers.
(c) If a health care provider or entity collects any amount
that was billed in violation of this chapter, the health care
provider or entity shall refund such amount within 45 days of
receipt of payment to the payor, third party payor or patient,
whichever is applicable.
(d) Notwithstanding the penalties or any other remedy
contained in this chapter, the Attorney General may maintain an
action for an injunction or other relief to enforce the provisions
of this chapter.
(e) An action for an injunction or other relief to enforce
the provisions of this chapter may be brought by the Attorney
General in the name of the State and against the health care
provider or other entity alleged to have violated a provision of
this chapter to restrain such a violation by temporary restraining
order, temporary injunction, or permanent injunction.
(f) An action brought under this section may be commenced in
the district court of the county in which the health care provider
or entity against whom it is brought resides, has its principal
place of business or has done business, or in the district court of
the county where 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 such injunctive relief
shall be issued without bond.
(g) 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, the civil penalties to be paid to the State as contained in
this section or as otherwise contained in this chapter.
(h) The court may make such additional orders or judgments
as are necessary to compensate a payor, third party payor or patient
as contained in this section.
(i) Any person who violates the terms of an injunction under
this section shall forfeit and pay to the State a civil penalty of
not more than $10,000 per 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. All penalties collected hereunder
shall be maintained in a segregated account 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 entity against whom the civil penalty
described herein should be imposed, the penalties collected
hereunder shall be maintained in a segregated account by the Office
of the Attorney General to be used in the enforcement of the
provisions of this chapter and other statutes for protection of
health care consumers.
(j) 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.
(k) A payor, third party payor or another health care
provider may maintain an action against a health care provider or
other entity that violates a provision of this chapter.
(l) In a suit filed under this section, a payor or third
party payor may obtain:
(1) The amount of money paid by the payor or third
party payor to the health care provider for a service furnished
pursuant to a referral prohibited by this chapter. If the trier of
fact finds that the conduct of the defendant was committed
knowingly, the payor or 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 payor or
third party payor all sums of money which were acquired by the
health care provider in violation of this chapter; and
(4) Any other relief which the court deems proper.
(m) In a suit filed under this section a health care
provider may obtain:
(1) An order enjoining a violation of this chapter;
and
(2) Any other relief which the court deems proper.
(n) Each payor, third party payor or health care provider
filing an action under this section and who prevails in that action
under this section shall be awarded court costs and reasonable and
necessary attorney's fees.
(o) 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. 111.008. LIMITATION ON FILING SUIT. (a) An action
under Section 111.007 must be brought within four years after the
date on which a violation of a provision of this chapter has
occurred.
(b) Not later than the 61st day before the date a payor,
third party payor or health care provider files an action under
Section 111.007, the payor, third party payor or health care
provider shall give the health care provider written notice of its
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 111.009
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 111.009 is not liable to
a payor or third party payor for the violation.
Sec. 111.009. EXCEPTION FROM LIABILITY. A health care
provider is not liable to a payor or third party payor for a
violation of this chapter if, prior to or during the 60-day period
of time following its receipt of the notice described in Section
111.008, the health care provider pays to all payors and third party
payors the amount of money paid by all payors and third party payors
to the health care provider for a service furnished pursuant to a
referral prohibited by this chapter.
Sec. 111.010. DISCIPLINARY ACTION. A violation of this
chapter by a health care provider shall constitute grounds for
disciplinary action to be taken by the licensing authority that
regulates the health care provider pursuant to Occupations Code,
Title 3, Subtitles B and C.
SECTION 2. EFFECTIVE DATE. (a) This Act takes effect on
September 1, 2005.
(b) This Act applies to patient referrals for designated
health services that are provided on or after September 1, 2006.