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.