81R9814 TJS-F
 
  By: Eiland H.B. No. 2750
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the regulation of certain market conduct activities of
  certain life, accident, and health insurers and health benefit plan
  issuers; providing civil liability and administrative and criminal
  penalties.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
  ARTICLE 1.  CANCELLATION OF HEALTH BENEFIT PLAN
         SECTION 1.001.  Subchapter B, Chapter 541, Insurance Code,
  is amended by adding Section 541.062 to read as follows:
         Sec. 541.062.  BAD FAITH CANCELLATION.  It is an unfair
  method of competition or an unfair or deceptive act or practice for
  a health benefit plan issuer to:
               (1)  set cancellation goals, quotas, or targets;
               (2)  pay compensation of any kind, including a bonus or
  award, that varies according to the number of cancellations;
               (3)  set, as a condition of employment, a number or
  volume of cancellations to be achieved; or
               (4)  set a performance standard, for employees or by
  contract with another entity, based on the number or volume of
  cancellations.
         SECTION 1.002.  Chapter 1202, Insurance Code, is amended by
  adding Subchapter C to read as follows:
  SUBCHAPTER C.  INDEPENDENT REVIEW OF CERTAIN CANCELLATION DECISIONS
         Sec. 1202.101.  DEFINITIONS. In this subchapter:
               (1)  "Affected individual" means an individual who is
  otherwise entitled to benefits under a health benefit plan that is
  subject to a decision to cancel.
               (2)  "Independent review organization" means an
  organization certified under Chapter 4202.
               (3)  "Screening criteria" means the elements or factors
  used in a determination of whether to subject an issued health
  benefit plan to additional review for possible cancellation,
  including any applicable dollar amount or number of claims
  submitted.
         Sec. 1202.102.  APPLICABILITY. (a)  This subchapter applies
  only to a health benefit plan, including a small or large employer
  health benefit plan written under Chapter 1501, that provides
  benefits for medical or surgical expenses incurred as a result of a
  health condition, accident, or sickness, including an individual,
  group, blanket, or franchise insurance policy or insurance
  agreement, a group hospital service contract, or an individual or
  group evidence of coverage or similar coverage document that is
  offered by:
               (1)  an insurance company;
               (2)  a group hospital service corporation operating
  under Chapter 842;
               (3)  a fraternal benefit society operating under
  Chapter 885;
               (4)  a stipulated premium company operating under
  Chapter 884;
               (5)  a reciprocal exchange operating under Chapter 942;
               (6)  a Lloyd's plan operating under Chapter 941;
               (7)  a health maintenance organization operating under
  Chapter 843;
               (8)  a multiple employer welfare arrangement that holds
  a certificate of authority under Chapter 846; or
               (9)  an approved nonprofit health corporation that
  holds a certificate of authority under Chapter 844.
         (b)  This subchapter does not apply to:
               (1)  a health benefit plan that provides coverage:
                     (A)  only for a specified disease or for another
  limited benefit other than an accident policy;
                     (B)  only for accidental death or dismemberment;
                     (C)  for wages or payments in lieu of wages for a
  period during which an employee is absent from work because of
  sickness or injury;
                     (D)  as a supplement to a liability insurance
  policy;
                     (E)  for credit insurance;
                     (F)  only for dental or vision care;
                     (G)  only for hospital expenses; or
                     (H)  only for indemnity for hospital confinement;
               (2)  a Medicare supplemental policy as defined by
  Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss),
  as amended;
               (3)  a workers' compensation insurance policy;
               (4)  medical payment insurance coverage provided under
  a motor vehicle insurance policy; or
               (5)  a long-term care insurance policy, including a
  nursing home fixed indemnity policy, unless the commissioner
  determines that the policy provides benefit coverage so
  comprehensive that the policy is a health benefit plan described by
  Subsection (a).
         Sec. 1202.103.  CANCELLATION FOR MISREPRESENTATION OR
  PREEXISTING CONDITION. Notwithstanding any other law, a health
  benefit plan issuer may not cancel a health benefit plan on the
  basis of a misrepresentation or a preexisting condition except as
  provided by this subchapter.
         Sec. 1202.104.  NOTICE OF INTENT TO CANCEL. (a)  A health
  benefit plan issuer may not cancel a health benefit plan on the
  basis of a misrepresentation or a preexisting condition without
  first notifying an affected individual in writing of the issuer's
  intent to cancel the health benefit plan and the individual's
  entitlement to an independent review.
         (b)  The notice required under Subsection (a) must include,
  as applicable:
               (1)  the principal reasons for the decision to cancel
  the health benefit plan;
               (2)  the clinical basis for a determination that a
  preexisting condition exists;
               (3)  a description of any general screening criteria
  used to evaluate issued health benefit plans and determine
  eligibility for a decision to cancel;
               (4)  a statement that the individual is entitled to
  appeal a cancellation decision to an independent review
  organization;
               (5)  a statement that the individual has at least 45
  days in which to appeal the cancellation decision to an independent
  review organization, and a description of the consequences of
  failure to appeal within that time limit;
               (6)  a statement that there is no cost to the individual
  to appeal the cancellation decision to an independent review
  organization; and
               (7)  a description of the independent review process
  under Chapters 4201 and 4202.
         Sec. 1202.105.  INDEPENDENT REVIEW PROCESS; PAYMENT OF
  CLAIMS.  (a)  An affected individual may appeal a health benefit
  plan issuer's cancellation decision to an independent review
  organization not later than the 45th day after the date the
  individual receives notice under Section 1202.104.
         (b)  A health benefit plan issuer shall comply with all
  requests for information made by the independent review
  organization and with the independent review organization's
  determination regarding the appropriateness of the issuer's
  decision to cancel.
         (c)  A health benefit plan issuer shall pay all otherwise
  valid medical claims under an individual's plan until the later of:
               (1)  the date on which an independent review
  organization determines that the decision to cancel is appropriate;
  or
               (2)  the time to appeal to an independent review
  organization has expired without an affected individual initiating
  an appeal.
         Sec. 1202.106.  CANCELLATION AUTHORIZED; RECOVERY OF CLAIMS
  PAID. (a)  A health benefit plan issuer may cancel a health benefit
  plan covering an affected individual on the later of:
               (1)  the date an independent review organization
  determines that cancellation is appropriate; or
               (2)  the 45th day after the date an affected individual
  receives notice under Section 1202.104, if the individual has not
  initiated an appeal.
         (b)  An issuer that cancels a health benefit plan under this
  section may seek to recover from an affected individual amounts
  paid for the individual's medical claims under the canceled health
  benefit plan.
         (c)  An issuer that cancels a health benefit plan under this
  section may not offset against or recoup or recover from a physician
  or health care provider amounts paid for medical claims under a
  canceled health benefit plan.  This subsection may not be waived,
  voided, or modified by contract.
         Sec. 1202.107.  CANCELLATION RELATED TO PREEXISTING
  CONDITION; STANDARDS.  (a)  For purposes of this subchapter, a
  cancellation for a preexisting condition is appropriate if, within
  the 18-month period immediately preceding the date on which an
  application for coverage under a health benefit plan is made, an
  affected individual received or was advised by a physician or
  health care provider to seek medical advice, diagnosis, care, or
  treatment for a physical or mental condition, regardless of the
  cause, and the individual's failure to disclose the condition:
               (1)  affects the risks assumed under the health benefit
  plan; and
               (2)  is undertaken with the intent to deceive the
  health benefit plan issuer.
         (b)  A health benefit plan issuer may not cancel a health
  benefit plan based on a preexisting condition of a newborn
  delivered after the application for coverage is made or as may
  otherwise be prohibited by law.
         Sec. 1202.108.  CANCELLATION FOR MISREPRESENTATION;
  STANDARDS.  For purposes of this subchapter, a cancellation for a
  misrepresentation not related to a preexisting condition is
  inappropriate unless the misrepresentation:
               (1)  is of a material fact;
               (2)  affects the risks assumed under the health benefit
  plan; and
               (3)  is made with the intent to deceive the health
  benefit plan issuer.
         Sec. 1202.109.  REMEDIES NOT EXCLUSIVE. The remedies
  provided by this subchapter are not exclusive and are in addition to
  any other remedy or procedure provided by law or at common law.
         Sec. 1202.110.  RULES.  The commissioner shall adopt rules
  necessary to implement and administer this subchapter.
         Sec. 1202.111.  SANCTIONS AND PENALTIES. A health benefit
  plan issuer that violates this subchapter commits an unfair
  practice in violation of Chapter 541 and is subject to sanctions and
  penalties under Chapter 82.
         Sec. 1202.112.  CONFIDENTIALITY. (a) A record, report, or
  other information received or maintained by a health benefit plan
  issuer, including any material received or developed during a
  review of a cancellation decision under this subchapter, is
  confidential.
         (b)  A health benefit plan issuer may not disclose the
  identity of an individual or a decision to cancel an individual's
  health benefit plan unless:
               (1)  an independent review organization determines the
  decision to cancel is appropriate; or
               (2)  the time to appeal has expired without an affected
  individual initiating an appeal.
         SECTION 1.003.  Section 4202.002, Insurance Code, is amended
  to read as follows:
         Sec. 4202.002.  ADOPTION OF STANDARDS FOR INDEPENDENT REVIEW
  ORGANIZATIONS. (a)  The commissioner shall adopt standards and
  rules for:
               (1)  the certification, selection, and operation of
  independent review organizations to perform independent review
  described by Subchapter C, Chapter 1202, or Subchapter I, Chapter
  4201; and
               (2)  the suspension and revocation of the
  certification.
         (b)  The standards adopted under this section must ensure:
               (1)  the timely response of an independent review
  organization selected under this chapter;
               (2)  the confidentiality of medical records
  transmitted to an independent review organization for use in
  conducting an independent review;
               (3)  the qualifications and independence of each
  physician or other health care provider making a review
  determination for an independent review organization;
               (4)  the fairness of the procedures used by an
  independent review organization in making review determinations;
  [and]
               (5)  the timely notice to an enrollee of the results of
  an independent review, including the clinical basis for the review
  determination; and
               (6)  that review of a cancellation decision based on a
  preexisting condition be conducted under the direction of a
  physician.
         SECTION 1.004.  Sections 4202.003, 4202.004, and 4202.006,
  Insurance Code, are amended to read as follows:
         Sec. 4202.003.  REQUIREMENTS REGARDING TIMELINESS OF
  DETERMINATION. The standards adopted under Section 4202.002 must
  require each independent review organization to make the
  organization's determination:
               (1)  for a life-threatening condition as defined by
  Section 4201.002, not later than the earlier of:
                     (A)  the fifth day after the date the organization
  receives the information necessary to make the determination; or
                     (B)  the eighth day after the date the
  organization receives the request that the determination be made;
  and
               (2)  for a condition other than a life-threatening
  condition or of the appropriateness of a cancellation under
  Subchapter C, Chapter 1202, not later than the earlier of:
                     (A)  the 15th day after the date the organization
  receives the information necessary to make the determination; or
                     (B)  the 20th day after the date the organization
  receives the request that the determination be made.
         Sec. 4202.004.  CERTIFICATION. To be certified as an
  independent review organization under this chapter, an
  organization must submit to the commissioner an application in the
  form required by the commissioner.  The application must include:
               (1)  for an applicant that is publicly held, the name of
  each shareholder or owner of more than five percent of any of the
  applicant's stock or options;
               (2)  the name of any holder of the applicant's bonds or
  notes that exceed $100,000;
               (3)  the name and type of business of each corporation
  or other organization that the applicant controls or is affiliated
  with and the nature and extent of the control or affiliation;
               (4)  the name and a biographical sketch of each
  director, officer, and executive of the applicant and of any entity
  listed under Subdivision (3) and a description of any relationship
  the named individual has with:
                     (A)  a health benefit plan;
                     (B)  a health maintenance organization;
                     (C)  an insurer;
                     (D)  a utilization review agent;
                     (E)  a nonprofit health corporation;
                     (F)  a payor;
                     (G)  a health care provider; or
                     (H)  a group representing any of the entities
  described by Paragraphs (A) through (G);
               (5)  the percentage of the applicant's revenues that
  are anticipated to be derived from independent reviews conducted
  under Subchapter I, Chapter 4201;
               (6)  a description of the areas of expertise of the
  physicians or other health care providers making review
  determinations for the applicant; and
               (7)  the procedures to be used by the applicant in
  making independent review determinations under Subchapter C,
  Chapter 1202, or Subchapter I, Chapter 4201.
         Sec. 4202.006.  PAYORS FEES.  (a) The commissioner shall
  charge payors fees in accordance with this chapter as necessary to
  fund the operations of independent review organizations.
         (b)  A health benefit plan issuer shall pay for an
  independent review of a cancellation decision under Subchapter C,
  Chapter 1202.
         SECTION 1.005.  Section 4202.009, Insurance Code, is amended
  to read as follows:
         Sec. 4202.009.  CONFIDENTIAL INFORMATION.  (a) 
  Information that reveals the identity of a physician or other
  individual health care provider who makes a review determination
  for an independent review organization is confidential.
         (b)  A record, report, or other information received or
  maintained by an independent review organization, including any
  material received or developed during a review of a cancellation
  decision under Subchapter C, Chapter 1202, is confidential.
         (c)  An independent review organization may not disclose the
  identity of an affected individual or an issuer's decision to
  cancel a health benefit plan under Subchapter C, Chapter 1202,
  unless:
               (1)  an independent review organization determines the
  decision to cancel is appropriate; or
               (2)  the time to appeal a cancellation under that
  subchapter has expired without an affected individual initiating an
  appeal.
         SECTION 1.006.  Section 4202.010(a), Insurance Code, is
  amended to read as follows:
         (a)  An independent review organization conducting an
  independent review under Subchapter C, Chapter 1202, or Subchapter
  I, Chapter 4201, is not liable for damages arising from the review
  determination made by the organization.
         SECTION 1.007.  The change in law made by this article
  applies only to an insurance policy that is delivered, issued for
  delivery, or renewed on or after the effective date of this Act. An
  insurance policy that is delivered, issued for delivery, or renewed
  before the effective date of this Act is governed by the law as it
  existed before the effective date of this Act, and that law is
  continued in effect for that purpose.
  ARTICLE 2.  MEDICAL LOSS RATIOS
         SECTION 2.001.  Subchapter A, Chapter 1301, Insurance Code,
  is amended by adding Section 1301.010 to read as follows:
         Sec. 1301.010.  MEDICAL LOSS RATIO. (a) In this section:
               (1)  "Direct losses incurred" means the sum of direct
  losses paid plus an estimate of losses to be paid in the future for
  all claims arising from the current reporting period and all prior
  periods, minus the corresponding estimate made at the close of
  business for the preceding period. This amount does not include
  home office and overhead costs, advertising costs, commissions and
  other acquisition costs, taxes, capital costs, administrative
  costs, utilization review costs, or claims processing costs.
               (2)  "Direct losses paid" means the sum of all payments
  made during the period for claimants under a preferred provider
  benefit plan before reinsurance has been ceded or assumed. This
  amount does not include home office and overhead costs, advertising
  costs, commissions and other acquisition costs, taxes, capital
  costs, administrative costs, utilization review costs, or claims
  processing costs.
               (3)  "Direct premiums earned" means the amount of
  premium attributable to the coverage already provided in a given
  period before reinsurance has been ceded or assumed.
               (4)  "Medical loss ratio" means direct losses incurred
  divided by direct premiums earned.
         (b)  An insurer may not have or maintain for a preferred
  provider benefit plan a medical loss ratio of less than 72 percent.
         (c)  The medical loss ratio shall be reported annually or
  more often as required by the commissioner by rule or order.
         (d)  A medical loss ratio reported under this section is
  public information.
         (e)  The department shall include information on the medical
  loss ratio on the department's Internet website.
         (f)  An insurer shall report to the policyholder the medical
  loss ratio of the policyholder's preferred provider benefit plan
  for the nine months following the policy effective date or renewal
  date.  A medical loss ratio reported under this subsection is not
  required to include an estimate of future claims not incurred in the
  nine-month reporting period.
         (g)  The commissioner shall require an insurer that violates
  Subsection (b) to:
               (1)  implement a premium rate adjustment;
               (2)  file with the department an actuarial memorandum,
  prepared by a qualified actuary, in accordance with any rules
  adopted by the commissioner to implement this section; and
               (3)  remit to the Texas Health Insurance Risk Pool an
  amount equal to the direct premiums earned by the insurer during the
  relevant reporting period multiplied by a percentage equal to the
  actual medical loss ratio subtracted from the minimum medical loss
  ratio prescribed by Subsection (b).
         (h)  An actuarial memorandum provided under Subsection (g)
  must include:
               (1)  a statement that the past plus future expected
  experience after a rate adjustment will result in a medical loss
  ratio equal to, or greater than, the required minimum medical loss
  ratio;
               (2)  for policies in force less than three years, a
  demonstration to show that the third-year loss ratio is expected to
  be equal to, or greater than, the required minimum medical loss
  ratio; and
               (3)  a certification by the qualified actuary that the
  resulting premiums are reasonable in relation to the benefits
  provided.
         (i)  The commissioner shall adopt rules as necessary to
  implement this section, including rules regarding:
               (1)  credible experience;
               (2)  whether full credibility, partial credibility, or
  no credibility should be assigned to particular experience; and
               (3)  the frequency and form of reporting medical loss
  ratios.
         SECTION 2.002.  (a) Not later than January 1, 2010, the
  commissioner of insurance shall adopt all rules necessary to
  implement Section 1301.010, Insurance Code, as added by this
  article. The first reporting period under Section 1301.010(c) may
  not cover any period that begins before January 1, 2010.
         (b)  Section 1301.010(f), Insurance Code, as added by this
  article, applies only to a preferred provider benefit plan policy
  delivered, issued for delivery, or renewed on or after January 1,
  2010. A policy delivered, issued for delivery, or renewed before
  that date is governed by the law in effect immediately before the
  effective date of this Act, and that law is continued in effect for
  that purpose.
  ARTICLE 3.  PREMIUM RATE INCREASES FOR SMALL EMPLOYER HEALTH
  BENEFIT PLANS
         SECTION 3.001.  Subchapter D, Chapter 501, Insurance Code,
  is amended by amending Sections 501.151 and 501.153 and adding
  Section 501.160 to read as follows:
         Sec. 501.151.  POWERS AND DUTIES OF OFFICE. The office:
               (1)  may assess the impact of insurance rates, rules,
  and forms on insurance consumers in this state; [and]
               (2)  shall advocate in the office's own name positions
  determined by the public counsel to be most advantageous to a
  substantial number of insurance consumers; and
               (3)  shall accept from a small employer, an eligible
  employee, or an eligible employee's dependent and, if appropriate,
  refer to the commissioner, a complaint described by Section
  501.160.
         Sec. 501.153.  AUTHORITY TO APPEAR, INTERVENE, OR INITIATE.  
  The public counsel:
               (1)  may appear or intervene, as a party or otherwise,
  as a matter of right before the commissioner or department on behalf
  of insurance consumers, as a class, in matters involving:
                     (A)  rates, rules, and forms affecting:
                           (i)  property and casualty insurance;
                           (ii)  title insurance;
                           (iii)  credit life insurance;
                           (iv)  credit accident and health insurance;
  or
                           (v)  any other line of insurance for which
  the commissioner or department promulgates, sets, adopts, or
  approves rates, rules, or forms;
                     (B)  rules affecting life, health, or accident
  insurance; or
                     (C)  withdrawal of approval of policy forms:
                           (i)  in proceedings initiated by the
  department under Sections 1701.055 and 1701.057; or
                           (ii)  if the public counsel presents
  persuasive evidence to the department that the forms do not comply
  with this code, a rule adopted under this code, or any other law;
               (2)  may initiate or intervene as a matter of right or
  otherwise appear in a judicial proceeding involving or arising from
  an action taken by an administrative agency in a proceeding in which
  the public counsel previously appeared under the authority granted
  by this chapter;
               (3)  may appear or intervene, as a party or otherwise,
  as a matter of right on behalf of insurance consumers as a class in
  any proceeding in which the public counsel determines that
  insurance consumers are in need of representation, except that the
  public counsel may not intervene in an enforcement or parens
  patriae proceeding brought by the attorney general; [and]
               (4)  may appear or intervene before the commissioner or
  department as a party or otherwise on behalf of small commercial
  insurance consumers, as a class, in a matter involving rates,
  rules, or forms affecting commercial insurance consumers, as a
  class, in any proceeding in which the public counsel determines
  that small commercial consumers are in need of representation; and
               (5)  may appear before the commissioner on behalf of a
  small employer, eligible employee, or eligible employee's
  dependent in a complaint the office refers to the commissioner
  under Section 501.160.
         Sec. 501.160.  COMPLAINT RESOLUTION FOR CERTAIN PREMIUM RATE
  INCREASES. (a)  A small employer, an eligible employee, or an
  eligible employee's dependent may file a complaint with the office
  alleging that a rate is excessive for the risks to which the rate
  applies, if the percentage increase in the premium rate charged to a
  small employer under Subchapter E, Chapter 1501, for a new rating
  period exceeds 10 percent.
         (b)  The office shall refer a complaint received under
  Subsection (a) to the commissioner if the office determines that
  the complaint substantially attests to a rate charged that is
  excessive for the risks to which the rate applies.
         (c)  With respect to a complaint filed under Subsection (a),
  the office may issue a subpoena applicable throughout the state
  that requires the production of records.
         (d)  On application of the office in the case of disobedience
  of a subpoena, a district court may issue an order requiring any
  individual or person, including a small employer health benefit
  plan issuer described by Section 1501.002, that is subpoenaed to
  obey the subpoena and produce records, if the individual or person
  has refused to do so. An application under this subsection must be
  made in a district court in Travis County.
         SECTION 3.002.  Section 1501.204, Insurance Code, is amended
  to read as follows:
         Sec. 1501.204.  INDEX RATES.  Under a small employer health
  benefit plan:
               (1)  the index rate for a class of business may not
  exceed the index rate for any other class of business by more than
  15 [20] percent; and
               (2)  premium rates charged during a rating period to
  small employers in a class of business with similar case
  characteristics for the same or similar coverage, or premium rates
  that could be charged to those employers under the rating system for
  that class of business, may not vary from the index rate by more
  than 20 [25] percent.
         SECTION 3.003.  Section 1501.205, Insurance Code, is amended
  by adding Subsection (d) to read as follows:
         (d)  A small employer health benefit plan issuer shall
  disclose the risk load assessed to a small employer group to the
  group, along with a description of the risk characteristics
  material to the risk load assessment.
         SECTION 3.004.  Section 1501.206(a), Insurance Code, is
  amended to read as follows:
         (a)  The percentage increase in the premium rate charged to a
  small employer for a new rating period may not exceed the sum of:
               (1)  the percentage change in the new business premium
  rate, measured from the first day of the preceding rating period to
  the first day of the new rating period;
               (2)  any adjustment, not to exceed 10 [15] percent
  annually and adjusted pro rata for a rating period of less than one
  year, due to the claims experience, health status, or duration of
  coverage of the employees or dependents of employees of the small
  employer, as determined under the small employer health benefit
  plan issuer's rate manual for the class of business; and
               (3)  any adjustment, not to exceed five percent
  annually and adjusted pro rata for a rating period of less than one
  year, due to change in coverage or change in the case
  characteristics of the small employer, as determined under the
  issuer's rate manual for the class of business.
         SECTION 3.005.  Subchapter E, Chapter 1501, Insurance Code,
  is amended by adding Section 1501.2131 and amending Section
  1501.214 to read as follows:
         Sec. 1501.2131.  COMPLAINT FACILITATION FOR PREMIUM RATE
  ADJUSTMENTS. If the percentage increase in the premium rate
  charged to a small employer for a new rating period exceeds 10
  percent, the small employer, an eligible employee, or an eligible
  employee's dependent may file a complaint with the office of public
  insurance counsel as provided by Section 501.160.
         Sec. 1501.214.  ENFORCEMENT. (a)  Subject to Subsection
  (b), if [If] the commissioner determines that a small employer
  health benefit plan issuer subject to this chapter exceeds the
  applicable premium rate established under this subchapter, the
  commissioner may order restitution and assess penalties as provided
  by Chapter 82.
         (b)  The commissioner shall enter an order under this section
  if the commissioner makes the finding described by Section
  1501.653.
         SECTION 3.006.  Chapter 1501, Insurance Code, is amended by
  adding Subchapter N to read as follows:
  SUBCHAPTER N. RESOLUTION OF CERTAIN COMPLAINTS AGAINST SMALL
  EMPLOYER HEALTH BENEFIT PLAN ISSUERS
         Sec. 1501.651.  DEFINITIONS. In this chapter:
               (1)  "Honesty-in-premium account" means the account
  established under Section 1501.656.
               (2)  "Office" means the office of public insurance
  counsel.
         Sec. 1501.652.  COMPLAINT RESOLUTION PROCEDURE. (a) On the
  receipt of a referral of a complaint from the office of public
  insurance counsel under Section 501.160, the commissioner shall
  request written memoranda from the office and the small employer
  health benefit plan issuer that is the subject of the complaint.
         (b)  After receiving the initial memoranda described by
  Subsection (a), the commissioner may request one rebuttal
  memorandum from the office.
         (c)  The commissioner may by rule limit the number of
  exhibits submitted with or the time frame allowed for the submittal
  of the memoranda described by Subsection (a) or (b).
         Sec. 1501.653.  ORDER; FINDINGS.  The commissioner shall
  issue an order under Section 1501.214(b) if the commissioner
  determines that the rate complained of is excessive for the risks to
  which the rate applies.
         Sec. 1501.654.  COSTS. The office may request, and the
  commissioner may award to the office, reasonable costs and fees
  associated with the investigation and resolution of a complaint
  filed under Section 501.160 and disposed of in accordance with this
  subchapter.
         Sec. 1501.655.  ASSESSMENT.  (a)  The commissioner may make
  an assessment against each small employer health benefit plan
  issuer in an amount that is sufficient to cover the costs of
  investigating and resolving a complaint filed under Section 501.160
  and disposed of in accordance with this subchapter.
         (b)  The commissioner shall deposit assessments collected
  under this section to the credit of the honesty-in-premium account.
         Sec. 1501.656.  HONESTY-IN-PREMIUM ACCOUNT.  (a)  The
  honesty-in-premium account is an account in the general revenue
  fund that may be appropriated only to cover the cost associated with
  the investigation and resolution of a complaint filed under Section
  501.160 and disposed of in accordance with this subchapter.
         (b)  Interest earned on the honesty-in-premium account shall
  be credited to the account. The account is exempt from the
  application of Section 403.095, Government Code.
         Sec. 1501.657.  RATE CHANGE NOT PROHIBITED.  Nothing in this
  subchapter prohibits a small employer health benefit plan issuer
  from, at any time, offering a different rate to the group whose rate
  is the subject of a complaint.
         SECTION 3.007.  The change in law made by Chapter 1501,
  Insurance Code, as amended by this article, applies only to a small
  employer health benefit plan that is delivered, issued for
  delivery, or renewed on or after January 1, 2010. A small employer
  health benefit plan that is delivered, issued for delivery, or
  renewed before January 1, 2010, is covered by the law in effect at
  the time the health benefit plan was delivered, issued for
  delivery, or renewed, and that law is continued in effect for that
  purpose.
  ARTICLE 4.  STANDARDIZED PROCESSING OF CERTAIN HEALTH BENEFIT PLAN
  CLAIMS
         SECTION 4.001.  Subtitle F, Title 8, Insurance Code, is
  amended by adding Chapter 1458 to read as follows:
  CHAPTER 1458. REQUIREMENTS FOR STANDARDIZED PROCESSING OF CERTAIN
  HEALTH BENEFIT PLAN CLAIMS
         Sec. 1458.001.  DEFINITIONS. In this chapter:
               (1)  "Add-on CPT code" means a CPT code listed in
  Appendix D of the American Medical Association's "Current
  Procedural Terminology 2009 Professional Edition" or a subsequent
  edition of that publication adopted by the commissioner by rule.
               (2)  "CPT code" means the number assigned to identify a
  specific health care procedure performed by a health care provider
  under the American Medical Association's "Current Procedural
  Terminology 2009 Professional Edition" or a subsequent edition of
  that publication adopted by the commissioner by rule.
               (3)  "Multiple procedure logic" means an adjustment to
  a payment for one or more health care procedures or other services
  that constitute covered services when multiple procedures are
  performed at the same visit.
         Sec. 1458.002.  APPLICABILITY. (a) This chapter applies to
  any health benefit plan that:
               (1)  provides benefits for medical or surgical expenses
  incurred as a result of a health condition, accident, or sickness,
  including an individual, group, blanket, or franchise insurance
  policy or insurance agreement, a group hospital service contract,
  or an individual or group evidence of coverage that is offered by:
                     (A)  an insurance company;
                     (B)  a group hospital service corporation
  operating under Chapter 842;
                     (C)  a fraternal benefit society operating under
  Chapter 885;
                     (D)  a stipulated premium company operating under
  Chapter 884;
                     (E)  a health maintenance organization operating
  under Chapter 843;
                     (F)  a multiple employer welfare arrangement that
  holds a certificate of authority under Chapter 846;
                     (G)  an approved nonprofit health corporation
  that holds a certificate of authority under Chapter 844; or
                     (H)  an entity not authorized under this code or
  another insurance law of this state that contracts directly for
  health care services on a risk-sharing basis, including a
  capitation basis; or
               (2)  provides health and accident coverage through a
  risk pool created under Chapter 172, Local Government Code,
  notwithstanding Section 172.014, Local Government Code, or any
  other law.
         (b)  This chapter applies to a person with whom a health
  benefit plan contracts to:
               (1)  process or pay claims; or
               (2)  obtain the services of physicians or other health
  care providers to provide health care services to enrollees in the
  plan.
         (c)  This chapter does not apply to the state child health
  plan operated under Chapter 62 or 63, Health and Safety Code.
         Sec. 1458.003.  STANDARDIZED RECOGNITION OF CODING;
  RESTRICTIONS. (a) A health benefit plan issuer may not subject a
  modifier 51-exempt CPT code to multiple procedure logic.
         (b)  A health benefit plan issuer shall recognize add-on CPT
  codes as eligible for payment as separate codes and may not subject
  add-on CPT codes to multiple procedure logic.
         (c)  If a claim contains both a CPT code for performance of an
  evaluation and management service procedure appended with a
  modifier 25 and a CPT code for performance of a non-evaluation and
  management service procedure, a health benefit plan issuer must
  recognize both codes as eligible for payment unless the applicable
  clinical information indicates that use of the modifier 25 was
  inappropriate.
         (d)  A health benefit plan issuer shall separately recognize
  a CPT code that includes supervision and interpretation as eligible
  for payment to the extent that the associated CPT code is recognized
  and eligible for payment. The health benefit plan issuer may not be
  required to pay for supervision or interpretation by more than one
  physician for each of those procedures.
         (e)  Other than CPT codes specifically identified as
  modifier 51-exempt or add-on CPT codes, a health benefit plan
  issuer may not reassign into another CPT code a CPT code that is
  considered an indented code under the American Medical
  Association's "Current Procedural Terminology 2009 Professional
  Edition" or a subsequent edition of that publication adopted by the
  commissioner by rule unless more than one indented code under the
  same indentation is also submitted with respect to the same
  service, in which case only one such code is eligible for payment.
  For indented code series contemplating that multiple codes in the
  series may be properly reported and billed concurrently, the health
  benefit plan issuer shall recognize all codes properly billed as
  eligible for payment.
         (f)  A health benefit plan issuer shall recognize a CPT code
  appended with a modifier 59 as separately eligible for payment to
  the extent the code designates a distinct or independent procedure
  performed on the same day by the same physician, but only to the
  extent that:
               (1)  those procedures or services are not normally
  reported together but are appropriately reported together under the
  particular circumstances; and
               (2)  it would not be more appropriate under the
  American Medical Association's "Current Procedural Terminology
  2009 Professional Edition" or a subsequent edition of that
  publication adopted by the commissioner by rule to append any other
  modifier to the CPT code.
         (g)  Global periods for surgical procedures may not be longer
  than any period designated on a national basis by the Centers for
  Medicare and Medicaid Services for those surgical procedures as in
  effect on September 1, 2009, or any successor designation by the
  Centers for Medicare and Medicaid Services that is adopted by the
  commissioner.
         (h)  A health benefit plan issuer may not change a CPT code to
  a CPT code reflecting a reduced intensity of the service if that CPT
  code is one among a series that differentiates among simple,
  intermediate, and complex procedures.
         Sec. 1458.004.  CONSTRUCTION OF CHAPTER. This chapter is
  not intended, and may not be construed, to require a health benefit
  plan issuer to pay for health care services other than covered
  services or to supply health care services other than covered
  services.
  ARTICLE 5.  PHYSICIAN RANKING BY HEALTH BENEFIT PLAN ISSUERS
         SECTION 5.001.  Subtitle F, Title 8, Insurance Code, is
  amended by adding Chapter 1460 to read as follows:
  CHAPTER 1460. PHYSICIAN RANKING BY HEALTH BENEFIT PLANS   
  SUBCHAPTER A. GENERAL PROVISIONS
         Sec. 1460.001.  DEFINITIONS. In this chapter:
               (1)  "Hearing panel" means the physician panel
  described by Section 1460.056(a).
               (2)  "Physician" means an individual licensed to
  practice medicine in this state under Subtitle B, Title 3,
  Occupations Code.
         Sec. 1460.002.  APPLICABILITY. This chapter applies to any
  health benefit plan that:
               (1)  provides benefits for medical or surgical expenses
  incurred as a result of a health condition, accident, or sickness,
  including an individual, group, blanket, or franchise insurance
  policy or insurance agreement, a group hospital service contract,
  or an individual or group evidence of coverage that is offered by:
                     (A)  an insurance company;
                     (B)  a group hospital service corporation
  operating under Chapter 842;
                     (C)  a fraternal benefit society operating under
  Chapter 885;
                     (D)  a stipulated premium company operating under
  Chapter 884;
                     (E)  a health maintenance organization operating
  under Chapter 843;
                     (F)  a multiple employer welfare arrangement that
  holds a certificate of authority under Chapter 846;
                     (G)  an approved nonprofit health corporation
  that holds a certificate of authority under Chapter 844; or
                     (H)  an entity not authorized under this code or
  another insurance law of this state that contracts directly for
  health care services on a risk-sharing basis, including a
  capitation basis; or
               (2)  provides health and accident coverage through a
  risk pool created under Chapter 172, Local Government Code,
  notwithstanding Section 172.014, Local Government Code, or any
  other law.
  [Sections 1460.003-1460.050 reserved for expansion]
  SUBCHAPTER B. RESTRICTIONS ON PHYSICIAN RANKING
         Sec. 1460.051.  PHYSICIAN RANKING. A health benefit plan
  issuer, including a subsidiary or an affiliate of the health
  benefit plan issuer, may not, in any manner, disseminate
  information to the public that compares, rates, tiers, classifies,
  measures, or ranks a physician's performance, efficiency, or
  quality of practice against objective standards or the practice of
  other physicians unless:
               (1)  the objective standards or comparison criteria
  used by the health benefit plan issuer are disclosed to the
  physician prior to the evaluation period;
               (2)  the data used to establish satisfaction of the
  objective criteria or to make the comparison are available to the
  physician for verification before any dissemination of information
  to the public; and
               (3)  the health benefit plan issuer provides due
  process to the physician as provided by this chapter.
         Sec. 1460.052.  INJUNCTIVE RELIEF. (a)  A writ of injunction
  may be granted by any district court if a health benefit plan issuer
  disseminates, or intends to disseminate, information that
  compares, rates, tiers, classifies, measures, or ranks physician
  performance, efficiency, or quality without meeting the criteria
  required under Section 1460.051.
         (b)  An action under Subsection (a) may be brought by any
  affected physician or on the behalf of affected physicians.
         (c)  Subchapter B, Chapter 26, Civil Practice and Remedies
  Code, does not apply to an action brought under this chapter.
         Sec. 1460.053.  DUE PROCESS; NOTICE OF INTENT. (a)  Before a
  health benefit plan issuer declines to invite a physician into a
  preferred tier, classifies a physician into a particular tier, or
  otherwise differentiates a physician from the physician's peers
  based on performance, efficiency, or quality, the issuer must
  notify the affected physician of its intent in a written notice
  that meets the requirements of this section.
         (b)  A notice of intent issued under Subsection (a) must
  include:
               (1)  a statement describing the proposed action of the
  health benefit plan issuer and the reasons for that proposed
  action;
               (2)  a statement that the affected physician has the
  right to request a hearing on the proposed action as provided by
  this chapter;
               (3)  any time limit within which the physician must
  request a hearing under this chapter, which may not be less than 60
  days from the date on which the notice of intent is issued; and
               (4)  a summary of the physician's rights under Section
  1460.055.
         Sec. 1460.054.  NOTICE OF HEARING.  If a hearing is requested
  by a physician who receives a notice of intent under Section
  1460.053, not later than the 30th day after the date on which the
  physician requests the hearing the physician must be given a
  written notice of the hearing that includes:
               (1)  a statement of the place, time, and date of the
  hearing, which must be conducted:
                     (A)  not less than 60 days after the date the
  notice of the hearing is received by the physician; and
                     (B)  not more than 90 days after the date the
  notice of the hearing is received by the physician; and
               (2)  a list of the witnesses, if any, expected to
  testify at the hearing on behalf of the health benefit plan issuer.
         Sec. 1460.055.  PHYSICIAN RIGHTS. A physician who requests
  a hearing under this chapter has the following rights at the
  hearing:
               (1)  the right to be represented by counsel;
               (2)  the right to have a record made of the proceedings
  and to obtain a copy of the record for a reasonable charge;
               (3)  the right to call, examine, and cross-examine
  witnesses;
               (4)  the right to present evidence;
               (5)  the right to submit a written statement to the
  hearing panel at the close of the hearing; and
               (6)  the right to receive, following the hearing, the
  written decision of the hearing panel, including a statement of the
  basis for any recommendations by the panel.
         Sec. 1460.056.  HEARING PANEL; CONDUCT OF HEARING. (a)  A
  hearing requested under Section 1460.054 must be held before a
  panel of three physicians who practice the same medical specialty
  as the affected physician or a similar medical specialty.
         (b)  The order of presentation in the hearing shall be as
  follows:
               (1)  opening statements by the health benefit plan
  issuer followed by the physician or the physician's counsel;
               (2)  presentation of the case by the health benefit
  plan issuer followed by presentation of the case by the physician or
  the physician's counsel;
               (3)  rebuttal by the health benefit plan issuer
  followed by the physician or the physician's counsel; and
               (4)  closing statements by the health benefit plan
  issuer followed by the physician or the physician's counsel.
         Sec. 1460.057.  EFFECT OF NONAPPEARANCE; WAIVER. (a) The
  hearing panel is not precluded from proceeding with a hearing
  conducted under this chapter by the failure to appear at all or any
  part of the hearing of:
               (1)  the affected physician or the physician's legal
  counsel, if any; or
               (2)  any witness.
         (b)  Failure of a physician not represented by counsel or
  failure of both a physician and the physician's counsel to appear
  at the hearing is deemed a waiver of all procedural rights under
  this chapter that could have been exercised by, or on behalf of, the
  affected physician at the hearing.
         Sec. 1460.058.  EXAMINATION OF WITNESSES. Each of the
  following persons present at a hearing conducted under this chapter
  may examine or cross-examine any witness testifying at the hearing
  in person, telephonically, or electronically through the Internet
  or otherwise:
               (1)  the physician or, at the physician's option, the
  physician's counsel, but not both;
               (2)  the representative of the health benefit plan
  issuer, as designated by the issuer; and
               (3)  the members of the hearing panel.
         Sec. 1460.059.  BURDEN OF PROOF; DECISION.  (a)  The health
  benefit plan issuer must prove, by a preponderance of evidence,
  that:
               (1)  in the case of a methodology using objective
  standards, the affected physician's performance, efficiency, or
  quality and the effectiveness of the medical care delivered by the
  physician have not met the standards disclosed under Section
  1460.051; or
               (2)  in the case of a methodology using relative
  comparison criteria, the data is accurate and correctly portrays
  the affected physician's performance, efficiency, or quality
  relative to other physicians in the same or similar medical
  specialty with comparable patient populations.
         (b)  The decision of the hearing panel is binding.
         (c)  If the hearing panel's decision is that the health
  benefit plan issuer has met its burden of proof, the health benefit
  plan issuer may publish the comparison, rating, tier,
  classification, measurement, or ranking.
         (d)  If the hearing panel's decision is that the health
  benefit plan issuer has not met its burden of proof, the panel shall
  instruct the health benefit plan issuer to appropriately modify the
  comparison, rating, tier, classification, measurement, or ranking
  before publication.
         Sec. 1460.060.  EFFECT OF CONTINUED DISAGREEMENT. (a)  On
  written notice that the affected physician disagrees with the
  health benefit plan issuer's comparison, rating, tier,
  classification, measurement, or ranking or the decision of the
  hearing panel, the health benefit plan issuer shall prominently
  display a symbol indicating the physician disputes the comparison,
  rating, tier, classification, measurement, or ranking next to any
  comparison, rating, tier, classification, measurement, or ranking
  information for that physician.
         (b)  Each Internet web page displaying comparison, rating,
  tier, classification, measurement, or ranking information must
  contain a key explaining the meaning of the symbol required by
  Subsection (a).
  ARTICLE 6.  REGULATION OF SECONDARY MARKET IN CERTAIN PHYSICIAN AND
  PROVIDER DISCOUNTS
         SECTION 6.001.  Subtitle D, Title 8, Insurance Code, is
  amended by adding Chapter 1302 to read as follows:
  CHAPTER 1302. REGULATION OF SECONDARY MARKET IN CERTAIN PHYSICIAN
  AND HEALTH CARE PROVIDER DISCOUNTS
  SUBCHAPTER A. GENERAL PROVISIONS
         Sec. 1302.001.  DEFINITIONS. In this chapter:
               (1)  "Contracting agent" means any entity engaged, for
  monetary or other consideration, in disclosing or transferring a
  contracted discounted fee of a physician or health care provider.
               (2)  "Health care provider" means a hospital, a
  physician-hospital organization, or an ambulatory surgical center.
               (3)  "Payor" means a fully self-insured health plan, a
  health benefit plan, an insurer, or another entity that assumes the
  risk for payment of claims by, or reimbursement for health care
  services provided by, physicians and health care providers.
               (4)  "Physician" means:
                     (A)  an individual licensed to practice medicine
  in this state under the authority of Subtitle B, Title 3,
  Occupations Code;
                     (B)  a professional entity organized in
  conformity with Title 7, Business Organizations Code,  and
  permitted  to practice medicine under Subtitle B, Title 3,
  Occupations Code;
                     (C)  a partnership organized in conformity with
  Title 4, Business Organizations Code, comprised entirely by
  individuals licensed to practice medicine under Subtitle B, Title
  3, Occupations Code;
                     (D)  an approved nonprofit health corporation
  certified under Chapter 162, Occupations Code;
                     (E)  a medical school or medical and dental unit,
  as defined or described by Section 61.003, 61.501, or 74.501,
  Education Code, that employs or contracts with physicians to teach
  or provide medical services or employs physicians and contracts
  with physicians in a practice plan; or
                     (F)  any other person wholly owned by individuals
  licensed to practice medicine under Subtitle B, Title 3,
  Occupations Code.
               (5)  "Transfer" means to lease, sell, aggregate,
  assign, or otherwise convey a contracted discounted fee of a
  physician or health care provider.
         Sec. 1302.002.  EXEMPTIONS. This chapter does not apply to:
               (1)  the activities of:
                     (A)  a health maintenance organization's network
  that are subject to Subchapter J, Chapter 843; or
                     (B)  an insurer's preferred provider network that
  are subject to Subchapters C and C-1, Chapter 1301; or
               (2)  any aspect of the administration or operation of:
                     (A)  the state child health plan; or
                     (B)  any medical assistance program using a
  managed care organization or managed care principal, including the
  state Medicaid managed care program under Chapter 533, Government
  Code.
         Sec. 1302.003.  APPLICABILITY OF OTHER LAW. (a) Except as
  provided by Subsection (b), with respect to payment of claims, a
  contracting agent, and any payor for whom a contracting agent acts
  or who contracts with a contracting agent, shall comply with
  Subchapters C and C-1, Chapter 1301, in the same manner as an
  insurer.
         (b)  This section does not apply to a payor that is a fully
  self-insured health plan.
         Sec. 1302.004.  RETALIATION PROHIBITED. A contracting agent
  may not engage in any retaliatory action against a physician or
  health care provider because the physician or provider has:
               (1)  filed a complaint against the contracting agent;
  or
               (2)  appealed a decision of the contracting agent.
  [Sections 1302.005-1302.050 reserved for expansion]
  SUBCHAPTER B. REGISTRATION; POWERS AND DUTIES OF COMMISSIONER AND
  DEPARTMENT
         Sec. 1302.051.  REGISTRATION REQUIRED. (a)  Except as
  provided by Subsection (b), each contracting agent that does not
  hold a certificate of authority or license otherwise issued by the
  department under this code must register with the department in the
  manner prescribed by the commissioner before engaging in business
  in this state.
         (b)  A certified workers' compensation network is not
  required to register under this section if the network does not
  transfer the physician or health care provider contract or contract
  rates for any other line of business.
         Sec. 1302.052.  RULES. The commissioner shall adopt rules
  in the manner prescribed by Subchapter A, Chapter 36, as necessary
  to implement and administer this chapter.
         Sec. 1302.053.  REGISTRATION APPLICATION. Each application
  for registration as a contracting agent must include:
               (1)  a description or a copy of the applicant's basic
  organizational structure documents and a copy of other related
  documents, including organizational charts or lists that show:
                     (A)  the relationships and contracts between the
  applicant and any affiliates of the applicant; and
                     (B)  the internal organizational structure of the
  applicant's management and administrative staff;
               (2)  biographical information regarding each person
  who governs or manages the affairs of the applicant, accompanied by
  information sufficient to allow the commissioner to determine the
  competence, fitness, and reputation of each officer or director of
  the applicant or other person having control of the applicant;
               (3)  a copy of the form of any contract between the
  applicant and any provider or group of providers, and with any third
  party performing services on behalf of the applicant;
               (4)  a copy of the form of each contract with a payor;
               (5)  a financial statement, current as of the date of
  the application, that is prepared using generally accepted
  accounting practices and includes:
                     (A)  a balance sheet that reflects a solvent
  financial position;
                     (B)  an income statement;
                     (C)  a cash flow statement; and
                     (D)  the sources and uses of all funds;
               (6)  a statement acknowledging that lawful process in a
  legal action or proceeding against the contracting agent on a cause
  of action arising in this state is valid if served in the manner
  provided by Chapter 804 for a domestic company; and
               (7)  any other information that the commissioner
  requires by rule to implement this chapter.
         Sec. 1302.053A.  IMMEDIATE REGISTRATION. (a)  
  Notwithstanding Section 1302.053, a contracting agent is eligible
  for immediate registration under this chapter if the contracting
  agent:
               (1)  has entered into direct contracts during the 18
  months immediately preceding January 1, 2009, with physicians or
  health care providers in this state and with payors;
               (2)  does not have an officer or director who has been
  convicted of a felony;
               (3)  files with the department an affidavit, signed by
  an officer with sufficient authority to bind the contracting agent,
  that:
                     (A)  attests to the existence of the conditions
  described in Subsections (a)(1) and (2);
                     (B)  contains a statement acknowledging that
  lawful process in a legal action or proceeding against the
  contracting agent on a cause of action arising in this state is
  valid if served in the manner provided by Chapter 804 for a domestic
  company; and
                     (C)  contains basic identifying information as
  the commissioner may require; and
               (4)  files with the department, for informational
  purposes only, a copy of the form of any contract entered into
  between the contracting agent and physicians or health care
  providers in this state or with payors.
         (b)  The commissioner may adopt rules or issue orders as
  necessary to implement this section.
         (c)  This section expires September 1, 2010.
  [Sections 1302.054-1302.100 reserved for expansion]
  SUBCHAPTER C. PROHIBITION OF CERTAIN TRANSFERS;
  NOTICE REQUIREMENTS
         Sec. 1302.101.  PROHIBITION OF CERTAIN TRANSFERS. (a) A
  contracting agent may not transfer a physician's or health care
  provider's contracted discounted fee or any other contractual
  obligation unless the transfer is authorized by a contractual
  agreement that complies with this chapter.
         (b)  This section does not affect the authority of the
  commissioner of insurance or the commissioner of workers'
  compensation under this code or Title 5, Labor Code, to request and
  obtain information.
         Sec. 1302.102.  IDENTIFICATION OF PAYORS; TERMINATION OF
  CONTRACT.  (a)  A contracting agent shall notify each physician and
  health care provider of the identity of, and contact information
  for, the payors and contracting agents authorized to access a
  contracted discounted fee of the physician or provider. The notice
  requirement under this subsection does not apply to an employer
  authorized to access a discounted fee through a contracting agent.
         (b)  The notice required under Subsection (a) must:
               (1)  be provided, at least every calendar quarter,
  through:
                     (A)  electronic mail, after provision by the
  affected physician or health care provider of a current electronic
  mail address; and
                     (B)  posting of a list on a secure Internet
  website; and
               (2)  include a separate prominent section that lists:
                     (A)  the payors that the contracting agent knows
  will have access to a discounted fee of the physician or health care
  provider in the succeeding calendar quarter; and
                     (B)  the effective date of any applicable contract
  and the termination date of the contract.
         (c)  The electronic mail notice under Subsection (b)(1)(A)
  may contain a link to a secure Internet website that contains a list
  of payors that complies with this section.
         (d)  The identity of a payor or contracting agent authorized
  to access a contracted discounted fee of the physician or provider
  that becomes known to the contracting agent required to submit the
  notice under Subsection (a) must be included in the subsequent
  notice.
         (e)  If, after receipt of the notice required under
  Subsection (a), a physician or health care provider objects to the
  addition of a payor to access to a discounted fee, other than a
  payor that is an employer that is a self-insured health plan, the
  physician or health care provider may terminate its contract by
  providing written notice to the contracting agent not later than
  the 30th day after the date on which the physician or health care
  provider receives the notice required under Subsection (a).  
  Termination of a contract under this subsection is subject to
  applicable continuity of care requirements under Section 843.362
  and Subchapter D, Chapter 1301.
  [Sections 1302.103-1302.150 reserved for expansion]
  SUBCHAPTER D. RESTRICTIONS ON TRANSFERS
         Sec. 1302.151.  RESTRICTIONS ON TRANSFERS; EXCEPTION.  (a)
  In this section, "line of business" includes noninsurance plans,
  fully self-insured health plans, Medicare Advantage plans, and
  personal injury protection under an automobile insurance policy.
         (b)  Except as provided by Subsection (d), a contract between
  a contracting agent and a physician or health care provider may not
  require the physician or health care provider to:
               (1)  consent to the disclosure or transfer of the
  physician's or health care provider's name and a contracted
  discounted fee for use with more than one line of business;
               (2)  accept all insurance products; or
               (3)  consent to the disclosure or transfer of the
  physician's or health care provider's name and access to a
  contracted discounted fee of the physician or provider in a chain of
  transfers that exceeds two transfers.
         (c)  A contract between a contracting agent and a physician
  or health care provider must require that any third party who
  accesses the physician's or health care provider's health care
  contract is obligated to comply with all of the applicable terms and
  conditions of the contract, including the lines of business for
  which the physician or health care provider has agreed to provide
  services.
         (d)  Notwithstanding Subsection (b)(1):
               (1)  a contracting agent may offer, but may not
  require, a contract containing more than one line of business if:
                     (A)  the physician's or health care provider's
  assent is invited via a separate signature line for each line of
  business;
                     (B)  a fee schedule for each line of business is
  presented in a separate section of the contract or in an appendix to
  the contract, including applicable Current Procedural Terminology
  (CPT) codes, Healthcare Common Procedure Coding System (HCPCS)
  codes, International Classification of Diseases, Ninth Revision,
  Clinical Modification (ICD-9-CM) codes, and modifiers:
                           (i)  by which all claims for services
  submitted by or on behalf of the physician or health care provider
  will be computed and paid; or
                           (ii)  that relates to the range of health
  care services reasonably expected to be delivered under the
  contract by that physician or health care provider on a routine
  basis; and
                     (C)  the fee schedule described by Paragraph (B)
  is accompanied by a toll-free telephone number or electronic
  address through which the physician may request the fee schedules,
  applicable coding methodologies, and bundling processes applicable
  for any services that the physician intends to provide; and
               (2)  a contract that uses a single fee schedule for all
  lines of business may contain a single appendix that is prominently
  referenced with the signature line for each line of business.
         (e)  Notwithstanding Subsection (b)(2), a contract between a
  contracting agent and a physician or health care provider may
  require the physician or health care provider to accept all
  insurance products within a line of business covered by the
  contract.
  [Sections 1302.152-1302.200 reserved for expansion]
  SUBCHAPTER E. DISCLOSURE REQUIREMENTS
         Sec. 1302.201.  IDENTIFICATION OF CONTRACTING AGENT. An
  explanation of payment or remittance advice in an electronic or
  paper format must include the identity of the contracting agent
  authorized to disclose or transfer the name and associated
  discounts of a physician or health care provider.
         Sec. 1302.202.  IDENTIFICATION OF ENTITY ASSUMING FINANCIAL
  RISK; CONTRACTING AGENT. A payor or representative of a payor that
  processes claims or claims payments must clearly identify in an
  electronic or paper format on the explanation of payment or
  remittance advice the identity of:
               (1)  the payor that assumes the risk for payment of
  claims or reimbursement for services; and
               (2)  the contracting agent through which the payment
  rate and any discount are claimed.
         Sec. 1302.203.  INFORMATION ON IDENTIFICATION CARDS. If a
  contracting agent or payor 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; and
               (2)  through whom the payment rate and any discount are
  claimed.
  [Sections 1302.204-1302.250 reserved for expansion]
  SUBCHAPTER F. ENFORCEMENT
         Sec. 1302.251.  PENALTIES. (a) A contracting agent who
  holds a certificate of authority or license under this code and who
  violates this chapter is subject to administrative penalties in the
  manner prescribed by Chapters 82 and 84.
         (b)  A violation of this chapter by a contracting agent who
  does not hold a certificate of authority or license under this code
  constitutes a violation of Subchapter E, Chapter 17, Business &
  Commerce Code.
         SECTION 6.002.  Sections 1301.001(4) and (6), Insurance
  Code, are amended to read as follows:
               (4)  "Institutional provider" means a hospital,
  nursing home, or other medical or health-related service facility
  that provides care for the sick or injured or other care that may be
  covered in a health insurance policy. The term includes an
  ambulatory surgical center.
               (6)  "Physician" means:
                     (A)  an individual [a person] licensed to practice
  medicine in this state under the authority of Title 3, Subtitle B,
  Occupations Code;
                     (B)  a professional entity organized in
  conformity with Title 7, Business Organizations Code,  and
  permitted  to practice medicine under Subtitle B, Title 3,
  Occupations Code;
                     (C)  a partnership organized in conformity with
  Title 4, Business Organizations Code, comprised entirely by
  individuals licensed to practice medicine under Subtitle B, Title
  3, Occupations Code;
                     (D)  an approved nonprofit health corporation
  certified under Chapter 162, Occupations Code;
                     (E)  a medical school or medical and dental unit,
  as defined or described by Section 61.003, 61.501, or 74.501,
  Education Code, that employs or contracts with physicians to teach
  or provide medical services or employs physicians and contracts
  with physicians in a practice plan; or
                     (F)  any other person wholly owned by individuals
  licensed to practice medicine under Subtitle B, Title 3,
  Occupations Code.
         SECTION 6.003.  Section 1301.056, Insurance Code, is amended
  to read as follows:
         Sec. 1301.056.  RESTRICTIONS ON PAYMENT AND REIMBURSEMENT.
  (a) An insurer, [or] third-party administrator, or other entity may
  not reimburse a physician or other practitioner, institutional
  provider, or organization of physicians and health care providers
  on a discounted fee basis for covered services that are provided to
  an insured unless:
               (1)  the insurer, [or] third-party administrator, or
  other entity has contracted with either:
                     (A)  the physician or other practitioner,
  institutional provider, or organization of physicians and health
  care providers; or
                     (B)  a preferred provider organization that has a
  network of preferred providers and that has contracted with the
  physician or other practitioner, institutional provider, or
  organization of physicians and health care providers;
               (2)  the physician or other practitioner,
  institutional provider, or organization of physicians and health
  care providers has agreed to the contract and has agreed to provide
  health care services under the terms of the contract; and
               (3)  the insurer, [or] third-party administrator, or
  other entity has agreed to provide coverage for those health care
  services under the health insurance policy.
         (b)  A party to a preferred provider contract, including a
  contract with a preferred provider organization, may not sell,
  lease, assign, aggregate, disclose, or otherwise transfer the
  discounted fee, or any other information regarding the discount,
  payment, or reimbursement terms of the contract without the express
  authority of and [prior] adequate notification to the other
  contracting parties. This subsection does not:
               (1)  prohibit a payor from disclosing any information,
  including fees, to an insured; or
               (2)  affect the authority of the commissioner of
  insurance or the commissioner of workers' compensation under this
  code or Title 5, Labor Code, to request and obtain information.
         (c)  An insurer, third-party administrator, or other entity
  may not access a discounted fee, other than through a direct
  contract, unless notice has been provided to the contracted
  physicians, practitioners, institutional providers, and
  organizations of physicians and health care providers. For the
  purposes of the notice requirements of this subsection, the term
  "other entity" does not include an employer that contracts with an
  insurer or third-party administrator.
         (d)  The notice required under Subsection (c) must:
               (1)  be provided, at least every calendar quarter,
  through:
                     (A)  electronic mail, after provision by the
  affected physician or health care provider of a current electronic
  mail address; and
                     (B)  posting of a list on a secure Internet
  website; and
               (2)  include a separate prominent section that lists:
                     (A)  the insurers, third-party administrators, or
  other entities that the contracting party knows will have access to
  a discounted fee of the physician or health care provider in the
  succeeding calendar quarter; and
                     (B)  the effective date of any applicable contract
  and the termination date of the contract.
         (e)  The electronic mail notice under Subsection (d)(1)(A)
  may contain a link to a secure Internet website that contains a list
  of payors that complies with this section.
         (f)  The identity of an insurer, third-party administrator,
  or other entity authorized to access a contracted discounted fee of
  the physician or provider that becomes known to the contracting
  party required to submit the notice under Subsection (c) must be
  included in the subsequent notice.
         (g)  If, after receipt of the notice required under
  Subsection (c), a physician or other practitioner, institutional
  provider, or organization of physicians and health care providers
  objects to the addition of an insurer, third-party administrator,
  or other entity to access to a discounted fee, the physician or
  other practitioner, institutional provider, or organization of
  physicians and health care providers may terminate its contract by
  providing written notice to the contracting party not later than
  the 30th day after the date of the receipt of the notice required
  under Subsection (c).
         (h)  An insurer, third-party administrator, or other entity
  that processes claims or claims payments shall clearly identify in
  an electronic or paper format on the explanation of payment or
  remittance advice:
               (1)  the identity of the party responsible for
  administering the claims; and
               (2)  if the insurer, third-party administrator, or
  other entity does not have a direct contract with the physician or
  other practitioner, institutional provider, or organization of
  physicians and health care providers, the identity of the preferred
  provider organization or other contracting party that authorized a
  discounted fee.
         (i)  If an insurer, third-party administrator, or other
  entity issues member or insured identification cards, the
  identification cards must include, in a clear and legible format,
  the information required under Subsection (h).
         (j)  An insurer, [or] third-party administrator, or other
  entity that holds a certificate of authority or license under this
  code who violates this section:
               (1)  commits an unfair settlement practice in violation
  of Chapter 541;
               (2)  commits an unfair claim settlement practice in
  violation of Subchapter A, Chapter 542; and
               (3) [(2)]  is subject to administrative penalties
  under Chapters 82 and 84.
         (k)  A violation of this section by an entity described by
  this section who does not hold a certificate of authority or license
  issued under this code constitutes a violation of Subchapter E,
  Chapter 17, Business & Commerce Code.
         (l)  A physician or health care provider affected by a
  violation of this section may bring a private action for damages in
  the manner prescribed by Subchapter D, Chapter 541, against a
  contracting agent who violates this section.
         SECTION 6.004.  The change in law made by this article
  applies only to a cause of action that accrues on or after the
  effective date of this article. A cause of action that accrues
  before that date is governed by the law as it existed immediately
  before the effective date of this article, and that law is continued
  in effect for that purpose.
         SECTION 6.005.  The commissioner of insurance shall adopt
  rules as necessary to implement Chapter 1302, Insurance Code, as
  added by this article, not later than December 1, 2009.
         SECTION 6.006.  This article applies only to a contract
  entered into or renewed on or after January 1, 2010. A contract
  entered into or renewed before January 1, 2010, is governed by the
  law as it existed immediately before the effective date of this
  article, and that law is continued in effect for that purpose.
         SECTION 6.007.  A person is not required to register under
  Subchapter B, Chapter 1302, Insurance Code, as added by this
  article, until September 1, 2010.
         SECTION 6.008.  (a)  Except as provided by Subsections (b)
  and (c) of this section, this article takes effect September 1,
  2009.
         (b)  Subchapter E, Chapter 1302, Insurance Code, as added by
  this article, takes effect January 1, 2010.
         (c)  Subchapter F, Chapter 1302, Insurance Code, as added by
  this article, takes effect September 1, 2010.
  ARTICLE 7.  EFFECTIVE DATE
         SECTION 7.001.  Except as otherwise provided by this Act,
  this Act takes effect immediately if it receives a vote of
  two-thirds of all the members elected to each house, as provided by
  Section 39, Article III, Texas Constitution.  If this Act does not
  receive the vote necessary for immediate effect, this Act takes
  effect September 1, 2009.