80R2538 PB-D

By: Eiland H.B. No. 839

A BILL TO BE ENTITLED

AN ACT

relating to regulation of the secondary market in certain physician discounts.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subtitle D, Title 8, Insurance Code, is amended by adding Chapter 1302 to read as follows: CHAPTER 1302. REGULATION OF SECONDARY MARKET IN PHYSICIAN DISCOUNTS SUBCHAPTER A. GENERAL PROVISIONS

Sec. 1302.001. PURPOSE. (a) The legislature finds that the unregulated secondary market in physician discounts is not only increasingly sophisticated, but has evolved in a part of the system that lacks transparency.

(b) The legislature also finds that the number of intermediary entities involved in the health care claims payment process is increasing dramatically. Rental network preferred provider organizations exist to market a physician's contractually discounted rates primarily to third-party payers, such as insurance brokers, third-party administrators, local or regional preferred provider organizations, or self-insured employers. A rental network preferred provider organization may also rent its networks and associated discounts to entities such as network brokers, repricers, or aggregators, whose sole purpose is finding and applying the lowest discounted rates, often without physician authorization. Many of these entities provide no value and exist for the sole purpose of trafficking in physician discounts.

(c) The legislature also finds that in this era of consumer-driven health care, patients are having an increasingly difficult time assessing the true cost of their health care. While the discounter profits from covertly undercutting the appropriate payment to the physician, it shares little if any information regarding its actions with the patient or the physician. Without this information, it becomes extremely difficult for an individual physician to determine how much the physician is to be paid for a particular health care service and by whom, and for a patient to determine the patient's share of the cost of the patient's health care. As a result, the patient often pays a greater portion of the total bill and the third-party payer ends up paying less.

(d) The legislature declares that regulating the secondary market in physician discounts is the only way to ensure that:

(1) patients have accurate real-time information at their disposal necessary to make critical well-informed decisions relating to the spending of their health care dollars; and

(2) physicians have more control over their practice environment.

Sec. 1302.002. DEFINITIONS. In this chapter:

(1) "Contracting agent" means a covered entity engaged, for monetary or other consideration, in leasing, selling, transferring, aggregating, assigning, or otherwise conveying a physician or physician panel to provide health care services to beneficiaries.

(2) "Covered entity" means any entity responsible for payment for, or coordination of, health care services. The term includes an entity that pays or administers a claim on behalf of another entity.

(3) "Payer" means a self-insured employer, health benefit plan, insurer, or other entity that assumes the risk for payment of claims by, or reimbursement for services provided by, contracted physicians.

Sec. 1302.003. RETALIATION PROHIBITED. A covered entity may not retaliate against a physician for exercising the rights provided under this chapter or Chapter 1301.

Sec. 1302.004. PRIVATE REMEDIES. A physician is not required to exhaust any remedies provided under this chapter before bringing a claim or private cause of action on a claim that a physician may otherwise bring against a covered entity or contracting agent.

Sec. 1302.005. APPLICABILITY OF OTHER LAW. A contracting agent, and any payer for whom the contracting agent acts, shall comply with Subchapters C and C-1, Chapter 1301, with respect to payment of claims in the same manner as an insurer. [Sections 1302.006-1302.050 reserved for expansion] SUBCHAPTER B. REGISTRATION; POWERS AND DUTIES OF COMMISSIONER AND DEPARTMENT

Sec. 1302.051. REGISTRATION REQUIRED. Each contracting agent must register with the department in the manner prescribed by the commissioner before engaging in business in this state.

Sec. 1302.052. RULES. The commissioner shall adopt rules as necessary to implement and administer this chapter. [Sections 1302.053-1302.100 reserved for expansion] SUBCHAPTER C. CONTRACT BETWEEN PHYSICIAN AND CONTRACTING AGENT; CONTRACT REQUIREMENTS

Sec. 1302.101. GENERAL CONTRACT REQUIREMENTS. (a) Each contract between a physician and a contracting agent must comply with the requirements of this chapter and rules adopted by the commissioner.

(b) The contract must include all terms material to the contract and be consistent with state law. Each amendment made to an original contract must be identified and highlighted.

(c) A contract between a contracting agent and a physician may not supersede the requirements of this chapter or Chapter 1301.

Sec. 1302.102. IDENTIFICATION OF PAYERS. (a) In a separate section of a contract between a physician and a contracting agent, the contract must clearly name each payer eligible to claim a discounted rate under the contract.

(b) To be eligible to claim a discounted rate, directly or indirectly, after execution of a contract, a payer must be added to the contract through a separate amendment to the contract that is signed by the affected physician. The contract amendment must be presented to the physician for the physician's signature not later than the 90th day before the date of any anticipated disclosure, lease, sale, transfer, aggregation, assignment, or conveyance to the payer of the physician's discounted rate.

Sec. 1302.103. RIGHTS OF PHYSICIAN. (a) A contract between a physician and a contracting agent must contain a provision stating the right of the physician, without any penalty, sanction, or retaliation, to affirmatively opt in or opt out of each agreement to lease, sell, transfer, aggregate, assign, or otherwise convey the physician or a physician panel and associated discounts.

(b) The contract must state the physician's contracting and payment rights, as specified by Chapter 1301, other provisions of this code, and commissioner rule.

(c) The contract may not authorize or require the physician to consent to the sale of the physician's name and contracted rates:

(1) for use with more than a single product or line of business; or

(2) more than once.

Sec. 1302.104. OBLIGATION OF PAYER OR COVERED ENTITY. (a) A payer or covered entity may not disclose, lease, sell, transfer, aggregate, assign, or otherwise convey a physician or physician panel and associated discounts obtained under a contract with a contracting agent to any other payer or entity.

(b) A contract entered into between the contracting agent and a payer or other covered entity must state the requirements of Subsection (a) and a contract between a physician and a contracting agent must state that the contracting agent is bound by the requirements of this subsection.

Sec. 1302.105. USE OF PHYSICIAN'S CONTRACTED RATE. A payer, payer representative, administrator of claims payment, or other third party acting on behalf of a payer may not claim or otherwise offer a physician's specific contracted rate for services except to the extent that the rate:

(1) is based on the contract that directly controls payment for services provided to that patient; and

(2) is stated on the explanation of benefits or remittance advice and on any patient identification card issued to the patient.

Sec. 1302.106. TERMINATION OF CONTRACT; NOTICE. (a) On termination of a contract between a physician and a contracting agent, the contracting agent shall notify each payer or covered entity that the payer or covered entity:

(1) is no longer authorized to access the physician's discounted rate; and

(2) may not disclose, lease, sell, transfer, aggregate, assign, or otherwise convey the physician's discounted rate.

(b) A contracting agent shall require each payer or covered entity that is by contract eligible to claim a physician's discounted rates to cease claiming those rates on termination of:

(1) the underlying contract between the contracting agent and the physician; or

(2) the physician's authorization for the payer or covered entity to pay the contracted reimbursement rate as permitted under the terms of the contract between the contracting agent and the physician.

(c) A contract between a physician and a contracting agent must state the requirements of this section. [Sections 1302.107-1302.150 reserved for expansion] SUBCHAPTER D. RIGHTS AND DUTIES OF CONTRACTING AGENT

Sec. 1302.151. CONTRACTING AGENT RIGHTS AND DUTIES. (a) A contracting agent that proposes to sell, lease, assign, transfer, or otherwise convey a physician's name, discounted rate, or any other information must have a direct contract with the affected physician.

(b) The contract between the contracting agent and a physician must fully disclose any access fee or other remuneration the contracting agent may receive and the specific benefits and service the contracting agent will provide.

(c) A contracting agent shall ensure through contract terms that each payer or covered entity to which the agent has leased, sold, transferred, aggregated, assigned, or otherwise conveyed a physician or physician panel and any associated discounts:

(1) complies with the underlying contract between the contracting agent and the physician; and

(2) pays the physician according to the rates of payment and methodology established in the underlying contract.

Sec. 1302.152. PROHIBITED CONVEYANCE. A contracting agent may not lease, sell, transfer, aggregate, assign, or otherwise convey a physician, physician panel, or any associated discounts or any other contractual obligation to any entity that is not a payer or covered entity.

Sec. 1302.153. CONTRACTING AGENT DUTIES ON NONCOMPLIANCE. After receiving written notice from a contracted physician that a payer or covered entity to whom a contracting agent has leased, sold, transferred, aggregated, assigned, or otherwise conveyed a physician, physician panel, and any associated discounts is not complying with the terms of the underlying contract between the contracting agent and a physician, including compliance with statutory requirements for timely and accurate payment of claims, and the contracted physician has fulfilled the applicable appeal or grievance process without satisfaction, the contracting agent shall, not later than the 45th day after the date of receipt of the physician's notice:

(1) ensure the payer or covered entity:

(A) causes correct payment to be made to the physician; and

(B) otherwise complies with the terms of the underlying contract; or

(2) terminate the contracting agent's agreement with that payer or covered entity and assume direct responsibility for the payment of the claim in question by paying the physician the amount owed under the contract in the manner required by state law. [Sections 1302.154-1302.199 reserved for expansion] SUBCHAPTER E. DISCLOSURE REQUIREMENTS

Sec. 1302.200. IMPLEMENTATION. (a) This subchapter takes effect January 1, 2008.

(b) This section expires January 2, 2008.

Sec. 1302.201. IDENTIFICATION OF ENTITY MAKING CONVEYANCE. An explanation of benefits or remittance advice in an electronic or paper format must include the identity of the contracting agent or other entity authorized to have leased, sold, transferred, aggregated, assigned, or otherwise conveyed the physician's name and associated discounts.

Sec. 1302.202. IDENTIFICATION OF ENTITY ASSUMING FINANCIAL RISK; CONTRACTING AGENT. (a) A payer, representative of a payer, or covered entity, that processes claims or claims payments shall clearly identify in an electronic or paper format on the explanation of benefits or remittance advice:

(1) the payer that assumes the risk for payment of claims or reimbursement for services; and

(2) the identity of the contracting agent through which the payment rate and any discount are claimed.

(b) A copy of the contract between the contracting agent and payer or covered entity must be provided to the physician on request.

Sec. 1302.203. INFORMATION ON IDENTIFICATION CARDS. If a covered entity, contracting agent, or payer issues member or subscriber identification cards, the identification cards must identify, in a clear and legible manner, any third-party entity, including any contracting agent:

(1) who is responsible for paying claims; or

(2) whose contract with a payer or covered entity controls or otherwise affects reimbursement for claims filed according to the subscriber contract. [Sections 1302.204-1302.250 reserved for expansion] SUBCHAPTER F. ENFORCEMENT

Sec. 1302.251. CEASE AND DESIST ORDER; ADMINISTRATIVE PENALTIES. On determining that a contracting agent, insurer, or other entity is operating in violation of this chapter, the commissioner may:

(1) issue and enforce a cease and desist order in the manner prescribed by Subchapters B and C, Chapter 83, to prevent the violation; and

(2) impose administrative penalties under Chapter 84.

Sec. 1302.252. ADMINISTRATIVE PROCEDURE; REMEDIES. (a) A person aggrieved by a violation of this chapter may apply to the department for relief for a violation of the person's rights under this chapter. The person is entitled to an administrative hearing in the manner prescribed by Subchapter A, Chapter 40.

(b) Remedies under this section may include the recoupment of payments lost by a physician due to an unauthorized agreement to lease, sell, transfer, aggregate, assign, or otherwise convey the physician, a physician panel, and associated discounts in violation of this chapter.

SECTION 2. Section 1301.004, Insurance Code, is amended to read as follows:

Sec. 1301.004. COMPLIANCE [WITH CHAPTER] REQUIRED. Each preferred provider benefit plan offered in this state must comply with this chapter and Chapter 1302.

SECTION 3. The commissioner of insurance shall adopt rules as necessary to implement Chapter 1302, Insurance Code, as added by this Act, not later than December 1, 2007.

SECTION 4. This Act applies only to a contract entered into or renewed on or after January 1, 2008. A contract entered into or renewed before January 1, 2008, is governed by the law as it existed immediately before the effective date of this Act, and that law is continued in effect for that purpose.

SECTION 5. This Act takes effect September 1, 2007.