81R9707 ALB-F
 
  By: Coleman H.B. No. 3473
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to charity care.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  The legislature finds that:
               (1)  uninsured or underinsured individuals in this
  state usually seek health care services at a health care facility
  when the individuals are vulnerable and in an unfair bargaining
  position;
               (2)  uninsured and underinsured individuals in this
  state are often charged two to four times the reimbursement rate
  sought by health care facilities from third party payors for the
  same or similar health care services;
               (3)  medical debt is considered one of the leading
  causes of personal bankruptcy and harms the commerce of this state;
  and
               (4)  charging uninsured and underinsured individuals
  disproportionately higher reimbursement rates than the rates
  charged to third party payors for the same or similar health care
  services is unconscionable, fosters bankruptcy, and is contrary to
  this state's public policy of promoting fair business practices and
  a healthy economy.
         SECTION 2.  Subchapter A, Chapter 311, Health and Safety
  Code, is amended by adding Sections 311.0011 and 311.0012 to read as
  follows:
         Sec. 311.0011. DISCRIMINATION PROHIBITED. (a) In this
  section:
               (1)  "Contractual allowances" has the meaning assigned
  by Section 311.031.
               (2)  "Discount" means the contractual allowance
  expressed as a percentage of the health care facility's established
  rates.
               (3)  "Hospital" has the meaning assigned by Section
  311.031.
               (4)  "Medically necessary health care services" means
  an inpatient or outpatient hospital service, including
  pharmaceuticals or supplies provided by a hospital to a patient,
  that are covered under Medicare for beneficiaries with the same
  clinical presentation as the uninsured or underinsured patient.  
  The term does not include:
                     (A)  nonmedical services such as social and
  vocational services; and
                     (B)  elective cosmetic surgery, but not including
  plastic surgery designed to correct disfigurement caused by injury,
  illness, or congenital defect or deformity.
               (5)  "Underinsured individual" means an individual
  seeking health care services who has third party coverage under a
  public or private health insurance plan and whose out-of-pocket
  expenses for health care services are estimated by a health care
  facility to equal five percent or more of the applicant's after-tax
  income.
               (6)  "Uninsured individual" means an individual
  seeking health care services who lacks third party coverage from a
  health insurer, a health care service plan, Medicare, or Medicaid
  and whose injury is not compensable for purposes of workers'
  compensation, automobile insurance, or other insurance as
  determined and documented by a health care facility.
         (b)  A hospital may not deny medically necessary health care
  services to an otherwise eligible individual based on the
  individual's status as an uninsured or underinsured individual.
         (c)  A hospital may not discriminate against an uninsured or
  underinsured individual for health care services through the
  hospital's pricing policies, including discounts provided and
  actual reimbursement rates charged. The price charged by a
  hospital to an uninsured or underinsured individual for a medically
  necessary health care service may not exceed the greater of:
               (1)  125 percent of the hospital's Medicare
  reimbursement rate for that service; or
               (2)  a reimbursement rate based on a discount that is
  not less than 90 percent of the hospital's weighted average
  contract allowance.
         (d)  The Department of State Health Services shall enforce
  this section. The department may audit a hospital for
  noncompliance and bring an enforcement action against the hospital.
  The department shall investigate complaints made under this chapter
  by members of the public.
         (e)  A person who files a complaint has a right to a hearing
  under Chapter 2001, Government Code, including the right to
  judicial review of the department's decision under the substantial
  evidence rule.
         (f)  The executive commissioner of the Health and Human
  Services Commission shall be a named defendant in a proceeding for
  judicial review.
         (g)  An uninsured or underinsured individual may bring a
  private cause of action for a violation of this section and has the
  right to recover attorney's fees as part of the damages awarded.
         (h)  The attorney general may bring suit for injunctive
  relief against any hospital that violates this section and may
  recover refunds from the hospital on behalf of uninsured and
  underinsured individuals charged prices in violation of this
  section.
         (i)  The executive commissioner of the Health and Human
  Services Commission may adopt rules to enforce this section.
         Sec. 311.0012.  INSTALLMENT PAYMENTS FOR QUALIFIED
  PATIENTS. (a)  In this section:
               (1)  "Family income" means the sum of a family's annual
  earnings and cash benefits from all sources before taxes.
               (2)  "Hospital" has the meaning assigned by Section
  311.031.
               (3)  "Medically necessary health care services" has the
  meaning assigned by Section 311.0011.
         (b)  This section applies only to an individual whose family
  income is not more than 600 percent of the federal poverty level and
  whose estimated or actual charges for medically necessary health
  care services provided by a hospital under this chapter exceed 20
  percent of the individual's income after taxes.
         (c)  A hospital may not collect an amount equal to more than
  20 percent of an individual's family income during a 12-month
  period for medically necessary health care services provided by the
  hospital to an individual described by Subsection (b). The
  12-month period begins on the first day an individual is determined
  to be covered by this section and receives medically necessary
  health care services from the hospital.
         (d)  A hospital may adopt policies to exclude an individual
  from the application of Subsection (c) if the individual owns
  assets that exceed 200 percent of the greater of the estimated
  charges for medically necessary health care services that have been
  and will be provided to the individual or the incurred charges that
  have been provided. The policies must provide that the hospital may
  not count the following assets:
               (1)  the individual's homestead;
               (2)  personal property exempt from a creditor's claims
  under Chapter 42, Property Code; or
               (3)  any amounts held in a pension or retirement plan,
  except that distributions and payments from pension or retirement
  plans may be included as income for the purposes of this section.
         (e)  This section does not apply to a hospital that does not
  charge for services.
         (f)  The attorney general shall ensure compliance with this
  section. The attorney general may audit a hospital's books and
  records, may conduct any investigation considered necessary
  regarding possible violations of this section by a hospital, may
  bring suit against the hospital for violations of this section, and
  may seek relief, including an injunction.
         (g)  Subsection (f) does not preclude the application of any
  other compliance and enforcement provisions permitted under this
  chapter.
         SECTION 3.  Sections 311.031(2) and (16), Health and Safety
  Code, are amended to read as follows:
               (2)  "Charity care" means the unreimbursed cost, not
  including bad debt expense, to a hospital of:
                     (A)  providing, funding, or otherwise financially
  supporting health care services on an inpatient or outpatient basis
  to a person classified by the hospital as "financially indigent" or
  "medically indigent"; and/or
                     (B)  providing, funding, or otherwise financially
  supporting health care services provided to financially indigent
  persons through other nonprofit or public outpatient clinics,
  hospitals, or health care organizations.
               (16)  "Unreimbursed costs" means the costs a hospital
  incurs for providing services after subtracting payments received
  from any source for such services including but not limited to the
  following: third-party insurance payments; Medicare payments;
  Medicaid payments; Medicare education reimbursements; state
  reimbursements for education; payments from drug companies to
  pursue research; grant funds for research; and disproportionate
  share payments. For purposes of this definition, the term "costs"
  shall be calculated by applying the hospital's Medicare cost ratio
  [to charge ratios derived in accordance with generally accepted
  accounting principles for hospitals] to billed charges. The
  executive commissioner of the Health and Human Services Commission
  by rule may supplement the Medicare cost ratio with additional
  expenses and revenues that are reasonable and medically necessary
  and subject to third-party insurer reimbursement. The calculation
  of the cost to charge ratios shall be based on the most recently
  completed and audited prior fiscal year of the hospital or hospital
  system. Prior to January 1, 1996, for purposes of this definition,
  charitable contributions and grants to a hospital, including
  transfers from endowment or other funds controlled by the hospital
  or its nonprofit supporting entities, shall not be subtracted from
  the costs of providing services for purposes of determining
  unreimbursed costs. After January 1, 1996, for purposes of this
  definition, charitable contributions and grants to a hospital,
  including transfers from endowment or other funds controlled by the
  hospital or its nonprofit supporting entities, shall not be
  subtracted from the costs of providing services for purposes of
  determining the unreimbursed costs of charity care and
  government-sponsored indigent health care.
         SECTION 4.  Section 311.032(a), Health and Safety Code, is
  amended to read as follows:
         (a)  The department shall establish a uniform and
  transparent reporting and collection system for hospital financial
  and utilization data and for nonprofit hospital reporting of the
  hospital's duties as required by Subchapter D. The department may
  rely on the Internal Revenue Service Form 990, Schedule H, as
  adopted in 2008, for the nonprofit hospital's reporting of data to
  the extent not inconsistent with the requirements prescribed by
  this chapter.
         SECTION 5.  Section 311.042(2), Health and Safety Code, is
  amended to read as follows:
               (2)  "Community benefits" means the unreimbursed cost
  to a hospital of providing charity care and [,]
  government-sponsored indigent health care, and to the extent not
  otherwise included in this subdivision, donations, education,
  government-sponsored program services, research, and subsidized
  health services provided in response to community health needs and
  not for marketing purposes. "Community benefits" does not include
  the cost to the hospital of paying any taxes or other governmental
  assessments.
         SECTION 6.  Section 311.044, Health and Safety Code, is
  amended by amending Subsections (a) and (c) and adding Subsection
  (f) to read as follows:
         (a)  A nonprofit hospital shall develop:
               (1)  an organizational mission statement that
  identifies the hospital's commitment to serving the health care
  needs of the community; and
               (2)  a community benefits plan defined as an
  operational plan for serving the community's health care needs in
  coordination with local governmental and public health care
  planning that sets out goals and objectives for providing community
  benefits that include charity care and government-sponsored
  indigent health care, as the terms community benefits, charity
  care, and government-sponsored indigent health care are defined by
  Sections 311.031 and 311.042, and that identifies the populations
  and communities served by the hospital.
         (c)  The hospital shall include at least the following
  elements in the community benefits plan:
               (1)  mechanisms to evaluate the plan's effectiveness,
  including but not limited to a method for soliciting the views of
  the communities served by the hospital;
               (2)  measurable objectives to be achieved within a
  specified time frame; [and]
               (3)  a budget for the plan; and
               (4)  a list of the goals and objectives chosen by the
  hospital, including a description of the process used to choose the
  goals and objectives and an explanation of how the goals and
  objectives are consistent with local governmental and public health
  care planning.
         (f)  Before adopting a community benefits plan, the hospital
  must hold at least one public hearing to provide for public input
  into the community benefits planning process.
         SECTION 7.  Section 311.045(b), Health and Safety Code, is
  amended to read as follows:
         (b)(1)  A nonprofit hospital or hospital system may elect to
  provide community benefits, which include charity care and
  government-sponsored indigent health care, according to any of the
  following standards:
                     (A)  [charity care and government-sponsored
  indigent health care are provided at a level which is reasonable in
  relation to the community needs, as determined through the
  community needs assessment, the available resources of the hospital
  or hospital system, and the tax-exempt benefits received by the
  hospital or hospital system;
                     [(B)]  charity care and government-sponsored
  indigent health care are provided in an amount equal to at least 100
  percent of the hospital's or hospital system's tax-exempt
  benefits[, excluding federal income tax]; or
                     (B) [(C)]  charity care and community benefits
  are provided in a combined amount equal to at least five percent of
  the hospital's or hospital system's net patient revenue, provided
  that charity care and government-sponsored indigent health care are
  provided in an amount equal to at least four percent of net patient
  revenue.
               (2)  For purposes of satisfying Subdivision (1)(B)
  [(1)(C)], a hospital or hospital system may not change its existing
  fiscal year unless the hospital or hospital system changes its
  ownership or corporate structure as a result of a sale or merger.
               [(3)     A nonprofit hospital that has been designated as
  a disproportionate share hospital under the state Medicaid program
  in the current fiscal year or in either of the previous two fiscal
  years shall be considered to have provided a reasonable amount of
  charity care and government-sponsored indigent health care and
  shall be deemed in compliance with the standards in this
  subsection.]
         SECTION 8.  Section 311.046, Health and Safety Code, is
  amended by adding Subsections (d-1) and (f) to read as follows:
         (d-1)  The hospital shall include in the first bill sent to a
  patient by the hospital a notice that includes a hospital contact
  name and telephone number. The notice must be on the first page of
  the bill or in an insert, must be written in at least 12-point type,
  and shall inform the patient that:
               (1)  the hospital has a charity care program for
  low-income patients;
               (2)  the patient may qualify; and
               (3)  the patient may contact the hospital for more
  information or to apply for the program.
         (f)  Each hospital shall maintain a copy of the hospital's
  current community benefits plan and most recently filed annual
  report of the community benefits plan for public inspection and
  copying at the hospital's admission office or other location
  readily available to the public and shall post the plan and report
  in a conspicuous and readily accessible location on the hospital's
  website.
         SECTION 9.  Subchapter D, Chapter 311, Health and Safety
  Code, is amended by adding Section 311.0462 to read as follows:
         Sec. 311.0462.  AGENCY WEBSITE PUBLICATION OF CHARITY
  CARE-RELATED REPORTS. (a) In this section, "department" means the
  Department of State Health Services.
         (b)  The department shall timely and annually post for public
  access in a conspicuous location on the department's website:
               (1)  the most recent individual nonprofit hospital
  reports concerning the nonprofit hospitals' charity care
  obligations under this subchapter; and
               (2)  annual reports required under Sections 311.035 and
  311.0455.
         (c)  The department shall:
               (1)  maintain an accessible archive of previously
  posted reports described by Subsection (b); and
               (2)  post a link to the specific web page on the
  attorney general's website that addresses nonprofit charity care.
         (d)  Reports described by:
               (1)  Subsection (b)(1) shall be indexed by hospital,
  report, and year; and
               (2)  Subsection (b)(2) shall be indexed by report and
  year.
         SECTION 10.  Subchapter D, Chapter 311, Health and Safety
  Code, is amended by adding Section 311.0471 to read as follows:
         Sec. 311.0471.  INVESTIGATION AND ENFORCEMENT. (a)  Except
  as otherwise provided, this section applies only to a hospital, as
  that term is defined by Section 311.031.
         (b)  The attorney general shall investigate whether a
  hospital has violated this chapter on receipt of a public
  complaint.
         (c)  The attorney general may conduct any investigation
  considered necessary regarding possible violations of this chapter
  by a hospital, including:
               (1)  examination of the hospital's premises;
               (2)  on written request to the chief operating officer
  of the hospital, examination of any record, book, document,
  account, or paper necessary to investigate the alleged violation;
               (3)  requiring the hospital to file a statement or
  report or answer interrogatories in writing relating to all
  information relevant to the alleged violations; and
               (4)  subpoena examination under oath of any person who
  possesses knowledge or information directly related to the alleged
  violations.
         (d)  If the attorney general has reason to believe that a
  hospital has violated this chapter, the attorney general may bring
  action on behalf of the state against the hospital to obtain
  temporary, preliminary, or permanent injunctive relief for any act,
  policy, or practice by the hospital that violates this chapter.
  Before bringing an action, the attorney general may permit the
  hospital to submit a correction plan for the attorney general's
  approval.
         (e)  The attorney general may seek a civil monetary penalty
  not to exceed $1,000 per violation per day if a hospital, by pattern
  or practice, knowingly violates this chapter. In an action filed
  under this chapter, the attorney general may seek the recovery of
  court costs and legal fees.
         (f)  If a court grants a final order of relief against a
  nonprofit hospital subject to this subchapter for a violation of
  this chapter, the attorney general shall notify each taxing
  authority that has granted the nonprofit hospital a tax exemption
  about the court's decision.
         (g)  The attorney general shall establish a complaint
  process through which the public may file complaints involving
  violations of this chapter. The complaint process at a minimum must
  include:
               (1)  a mail address, a toll-free telephone number, and
  an e-mail address for receiving complaints;
               (2)  a public education campaign concerning the
  obligations hospitals have to the public under this chapter;
               (3)  a public education campaign concerning the
  attorney general's complaint process; and
               (4)  complaint forms and instructions to aid the public
  in making complaints.
         (h)  The attorney general shall prepare and publicly
  distribute, including posting in a conspicuous location on the
  attorney general's website, an annual report that informs the
  public of the attorney general's activities under this chapter for
  the previous year.
         SECTION 11.  Sections 311.045(c) and (d), Health and Safety
  Code, are repealed.
         SECTION 12.  This Act takes effect September 1, 2009.