By: Truitt H.B. No. 4341
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the regulation of discount health care programs by the
  Texas Department of Insurance; providing penalties.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  The Insurance Code is amended by adding Title 21
  to read as follows:
  TITLE 21. DISCOUNT HEALTH CARE PROGRAMS
  CHAPTER 7001. REGISTRATION AND REGULATION OF
  DISCOUNT HEALTH CARE PROGRAMS
  SUBCHAPTER A. GENERAL PROVISIONS
         Sec. 7001.001.  DEFINITIONS. In this chapter:
               (1)  "Discount health care program" means a business
  arrangement or contract in which an entity, in exchange for fees,
  dues, charges, or other consideration, offers its members access to
  discounts on health care services provided by health care
  providers. The term does not include an insurance policy, a
  certificate of coverage, or a self-funded or self-insured employee
  benefit plan.
               (2)  "Discount health care program operator" means a
  person who, in exchange for fees, dues, charges, or other
  consideration, operates a discount health care program and
  contracts with providers, provider networks, or other discount
  health care program operators to offer access to health care
  services at a discount and determines the charge to members.
               (3)  "Health care services" includes physician care,
  inpatient care, hospital surgical services, emergency services,
  ambulance services, laboratory services, audiology services,
  dental services, vision services, mental health services,
  substance abuse services, chiropractic services, and podiatry
  services, and medical equipment and supplies.
               (4)  "Marketer" means a person who sells or
  distributes, or offers to sell or distribute, a discount health
  care program, including a private label entity that places its name
  on and markets or distributes a discount health care program, but
  does not operate a discount health care program.
               (5)  "Member" means a person who pays fees, dues,
  charges, or other consideration for the right to participate in a
  discount health care program.
               (6)  "Program operator" means a discount health plan
  program operator.
               (7)  "Provider" means a person who is licensed or
  otherwise authorized to provide health care services in this state.
         Sec. 7001.002.  APPLICABILITY OF OTHER LAW. In addition to
  the requirements of this chapter, a program operator or marketer is
  subject to the applicable consumer protection laws under Chapter
  17, Business & Commerce Code.
         Sec. 7001.003.  RULES. The commissioner shall adopt the
  rules necessary to implement this chapter.
  [Sections 7001.004-7001.050 reserved for expansion]
  SUBCHAPTER B. PROGRAM REQUIREMENTS
         Sec. 7001.051.  PROGRAM OPERATOR. Except as otherwise
  provided by this chapter, a program operator, including the
  operator of a freestanding discount health care program or a
  discount health care program marketed by an insurer or a health
  maintenance organization, shall comply with this chapter.
         Sec. 7001.052.  PROHIBITED ADVERTISEMENT, SOLICITATION, AND
  MARKETING. (a) Advertisements, solicitations, or marketing
  materials of a discount health care program may not contain false,
  misleading, or deceptive statements, including statements that:
               (1)  misrepresent the price range of discounts offered
  by the discount health care program;
               (2)  misrepresent the size or location of the program's
  network of providers;
               (3)  knowingly misrepresent the participation of a
  provider in the program's network; or
               (4)  suggest that a discount card offered through the
  program is a federally approved Medicare prescription discount
  card.
         (b)  Each advertisement, solicitation, or marketing material
  of a discount health care program must clearly and conspicuously
  state that the discount health care program is not insurance.
         (c)  Advertisements, solicitations, or marketing materials
  of a discount health care program may not use the term "insurance,"
  except as a disclaimer of any relationship between the discount
  health care program and insurance, or as a description of an
  insurance product connected with a discount health care program.
         (d)  Advertisements, solicitations, or marketing materials
  of a discount health care program may not use the term "health
  plan," "coverage," "copay," "copayments," "deductible,"
  "preexisting conditions," "guaranteed issue," "premium," "PPO," or
  "preferred provider organization," or another similar term, in a
  manner that could reasonably mislead an individual into believing
  that the discount health care program is health insurance or
  provides similar coverage.
         (e)  Advertisements, solicitations, or marketing materials
  of a discount health care program may not use the term "free," "no
  obligation," "discounted," or "reduced," or another similar term,
  without disclosing clearly and conspicuously, and in close
  proximity to the use of the term, any and all conditions,
  limitations, and restrictions on the ability of the member or
  prospective member to obtain or use the good or service to which the
  term applies.
         (f)  A program operator may not offer a "free" trial
  membership in a discount health care program without disclosing
  clearly and conspicuously, and in close proximity to the offer:
               (1)  any obligation of the member or prospective member
  associated with accepting the offered trial membership, including:
                     (A)  an obligation to purchase other goods and
  services;
                     (B)  an obligation to cancel membership or take
  other affirmative action to avoid incurring payment obligations;
  and
                     (C)  the manner in which a cancellation request
  may be submitted;
               (2)  the number of payments and the amount of each
  payment that are or may be required and the circumstances under
  which additional payments may be required; and
               (3)  the conditions, limitations, and restrictions on
  the ability of the member or prospective member to use or cancel the
  offered trial membership.
         Sec. 7001.053.  DISCLOSURE MATERIALS REQUIRED. (a) A
  program operator, before enrollment or with the written materials
  describing the terms and conditions of the program that are
  provided not later than the 15th day after the date of enrollment,
  shall provide each prospective or new member disclosure materials
  containing the following information:
               (1)  a general description of the services and products
  offered through the discount health care program and the types of
  providers available;
               (2)  a toll-free telephone number and an Internet
  website address through which a person may:
                     (A)  obtain information about the discount health
  care program; and
                     (B)  confirm or find a provider currently
  participating in that program;
               (3)  a clear and conspicuous statement that:
                     (A)  the discount health care program is not
  insurance, with the word "not" capitalized; and
                     (B)  the member is required to pay the entire
  amount of the discounted rate;
               (4)  a statement that a member who cancels the
  membership not later than the 30th day after the date the member
  joins the discount health care program is entitled to a refund of
  all periodic membership charges paid to the discount health care
  program and the amount of any one-time enrollment fee that exceeds
  $50;
               (5)  a statement that the discount health care program
  does not guarantee the quality of the services or products offered
  by individual providers;
               (6)  a statement that a member may file a complaint
  under the discount health care program's complaint resolution
  procedure regarding the availability of contracted discounts or
  services or other matters relating to the contractual obligations
  of the program to its members; and
               (7)  information that, if the member remains
  dissatisfied after completing the discount health care program's
  complaint system, the member may contact the department.
         (b)  A marketer shall use disclosure materials that comply
  with Subsection (a).
         Sec. 7001.054.  PROGRAM OPERATOR DUTIES. A program operator
  shall:
               (1)  provide a toll-free telephone number and Internet
  website for members to obtain information about the discount health
  care program and confirm or find providers currently participating
  in the program;
               (2)  remove a provider from the discount health care
  program not later than the 30th day after the date the operator
  learns that the provider has lost the authority to provide services
  or products, including the suspension or revocation of the
  provider's license;
               (3)  issue at least one membership card to serve as
  proof of membership in the discount health care program that must:
                     (A)  contain a clear and conspicuous statement
  that the discount health care program is not insurance; and
                     (B)  if the discount health care program includes
  discount prescription drug benefits, include:
                           (i)  the name or logo of the entity
  administering the prescription drug benefits;
                           (ii)  the international identification
  number assigned by the American National Standards Institute for
  the entity administering the prescription drug benefits;
                           (iii)  the group number applicable to the
  member; and
                           (iv)  a telephone number to be used to
  contact an appropriate person to obtain information relating to the
  prescription drug benefits provided under the program;
               (4)  issue at least one set of disclosure materials to
  each household in which a person is a member;
               (5)  ensure that an application form or other
  membership agreement:
                     (A)  clearly and conspicuously discloses the
  duration of membership and the amount of payments the member is
  obligated to make for the membership; and
                     (B)  contains a clear and conspicuous statement
  that the discount health care program is not insurance;
               (6)  allow any member who cancels a membership in the
  discount health care program not later than the 30th day after the
  date the person becomes a member to receive a refund, not later than
  the 30th day after the date the operator receives a valid
  cancellation notice and returned membership card, of all periodic
  membership charges paid by that member to the program operator and
  the amount of any one-time enrollment fee that exceeds $50;
               (7)  maintain a surety bond, payable to the department
  for the use and benefit of members in a manner prescribed by the
  department, in the principal amount of $50,000, except that a
  program operator that is an insurer that holds a certificate of
  authority under Title 6 is not required to maintain the surety bond;
               (8)  maintain an agent for service of process in this
  state; and
               (9)  establish and operate a fair and efficient
  procedure for resolution of complaints regarding the availability
  of contracted discounts or services or other matters relating to
  the contractual obligations of the discount health care program to
  its members.
         Sec. 7001.055.  MARKETING OF PROGRAM. (a) A program
  operator may market directly or contract with marketers for the
  distribution of the operator's discount health care programs.
         (b)  A program operator shall enter into a written contract
  with a marketer before the marketer begins marketing, promoting,
  selling, or distributing the program operator's discount health
  care program. The contract must prohibit the marketer from using
  advertising, solicitations, or other marketing materials, or
  discount cards that have not been approved in advance and in writing
  by the program operator.
         (c)  A program operator must approve in writing all
  advertisements, solicitations, or other marketing materials, and
  discount cards used by marketers to market, promote, sell, or
  distribute the discount health care program before their use.
         Sec. 7001.056.  CONTRACT REQUIREMENTS. (a) A program
  operator shall contract, directly or indirectly, with a provider
  offering discounted health care services or products under the
  discount health care program. The written contract must contain
  all of the following provisions:
               (1)  a description of the discounts to be provided to a
  member;
               (2)  a provision prohibiting the provider from charging
  a member more than the discounted rate agreed to in the written
  agreement with the provider; and
               (3)  a provision requiring the provider to promptly
  notify the program operator if the provider loses the authority to
  provide services or products, including by suspension or revocation
  of the provider's license.
         (b)  The program operator may not charge or receive from a
  provider any fee or other compensation for entering into the
  agreement.
         (c)  If the program operator contracts with a network of
  providers, the program operator shall obtain written assurance from
  the network that:
               (1)  the network has a written agreement with each
  network provider that includes a discounted rate that is applicable
  to a program operator's discount health care program and contains
  all of the terms described in Subsection (a); and
               (2)  the network is authorized to obligate the network
  providers to provide services to members of the discount health
  care program.
         (d)  The program operator shall require the network to:
               (1)  maintain and provide the program operator on a
  monthly basis an up-to-date list of providers in the network; and
               (2)  promptly remove a provider from its network if the
  provider loses the authority to provide services or products.
         (e)  The program operator shall maintain a copy of each
  written agreement the program operator has with a provider or a
  network for at least two years following termination of the
  agreement.
  [Sections 7001.057-7001.100 reserved for expansion]
  SUBCHAPTER C. REGISTRATION
         Sec. 7001.101.  REGISTRATION REQUIRED; FEES. (a) A program
  operator may not offer a discount health care program in this state
  unless the operator is registered with the department.
         (b)  An applicant for registration under this chapter or an
  applicant for renewal of registration under this chapter whose
  information has changed must submit:
               (1)  a registration form indicating the program
  operator's name, physical address, mailing address, and its agent
  for service of process;
               (2)  a list of names, addresses, official positions,
  and biographical information of:
                     (A)  the individuals responsible for conducting
  the program operator's affairs, including:
                           (i)  each member of the board of directors,
  board of trustees, executive committee, or other governing board or
  committee;
                           (ii)  the officers of the program operator;
  and
                           (iii)  any contracted management company
  personnel; and
                     (B)  any person owning or having the right to
  acquire 10 percent or more of the voting securities of the program
  operator;
               (3)  a statement generally describing the applicant,
  its facilities and personnel, and the health care services or
  products for which a discount will be made available under its
  discount health care programs;
               (4)  a list of the marketers authorized to sell or
  distribute the program operator's programs under the program
  operator's name and a list of the marketing entities authorized to
  private label the program operator's programs; and
               (5)  a copy of the form of all contracts made or to be
  made between the program operator and any providers or provider
  networks regarding the provision of health care services or
  products to members.
         (c)  After the initial registration, if the form of a
  contract described by Subsection (b)(5) changes, the program
  operator must file the modified contract form with the department
  before it may be used.
         (d)  As part of the registration required under Subsection
  (b), and annually thereafter, the program operator shall certify to
  the department that its programs comply with the requirements of
  this chapter.
         (e)  A discount health care program operator shall pay the
  department an initial registration fee of $1,000 and an annual
  renewal fee not to exceed $500.
         (f)  The department may conduct a criminal background check
  on the individuals responsible for conducting the program
  operator's affairs, each member of the board of directors, board of
  trustees, executive committee, or other governing board or
  committee, the officers of the program operator, any contracted
  management company personnel, and any person owning or having the
  right to acquire 10 percent or more of the voting securities of the
  program operator.
         (g)  This section does not apply to a program operator that
  is an insurer that holds a certificate of authority under Title 6.
  [Sections 7001.102-7001.150 reserved for expansion]
  SUBCHAPTER D. ENFORCEMENT
         Sec. 7001.151.  INVESTIGATION. If the commissioner
  reasonably believes that a program operator or marketer is not
  operating in compliance with this chapter, the program operator or
  marketer must submit to the commissioner any advertising,
  solicitations, marketing materials, disclosure materials, discount
  cards, agreements, or other documents requested by the
  commissioner.
         Sec. 7001.152.  CIVIL PENALTY. (a)  The attorney general may
  bring an action for a civil penalty against a person who violates
  this chapter or a rule adopted under this chapter.
         (b)  A civil penalty assessed under this section may not be
  less than $2,500 for each violation.
         (c)  A civil penalty authorized by this section is in
  addition to any other civil, administrative, or criminal action
  provided by law.
         Sec. 7001.152.  CRIMINAL PENALTIES. (a) A person who
  willfully operates as, or aids and abets another operating as, a
  discount health care program operator in violation of Section
  7001.101 commits insurance fraud and is subject to Chapter 35,
  Penal Code, as if the unregistered discount health care program
  operator were an unauthorized insurer, and the fees, dues, charges,
  or other consideration collected from the members by the
  unregistered discount health care program operator or marketer were
  insurance premiums.
         (b)  A person that collects fees for purported membership in
  a discount health care program, but purposefully fails to provide
  the promised benefits commits an offense of theft and is subject to
  Chapter 31, Penal Code. On conviction, the court shall order the
  person to pay restitution to persons aggrieved by the violation of
  this chapter. The restitution is in addition to a fine or
  imprisonment.
         Sec. 7001.153.  INJUNCTIONS. (a) In addition to the
  penalties and other enforcement provisions of this chapter, the
  commissioner may seek both temporary and permanent injunctive
  relief if:
               (1)  a discount health care program is being operated
  by a person or entity that is not registered under this chapter; or
               (2)  a person, entity, or program operator has engaged
  in any activity prohibited by this chapter or a rule adopted under
  this chapter.
         (b)  An action for injunctive relief must be brought in a
  Travis County district court.
         (b)  The commissioner's authority to seek injunctive relief
  is not conditioned on having conducted any proceeding required
  under Chapter 2001, Government Code.
         SECTION 2.  Chapter 76, Health & Safety Code, is repealed.
         SECTION 3.  Not later than January 1, 2010, the Commissioner
  of Insurance shall adopt the rules and procedures necessary to
  implement Chapter 7001, Insurance Code, as added by this Act.
         SECTION 4.  (a)  Notwithstanding Section 7001.101,
  Insurance Code, as added by this Act, a person is not required to
  register under that section before April 1, 2010, except as
  provided by Subsection (b).
         (b)  A program operator that is registered with the
  Department of Licensing and Regulation on January 1, 2010, as
  required by Chapter 76, Health and Safety Code, shall file an
  application for renewal of registration with the Texas Department
  of Insurance under Chapter 7001, Insurance Code, not later than
  April 1, 2010.
         SECTION 5.  (a) Except as provided by Subsections (b) and
  (c), this Act takes effect September 1, 2009.
         (b)  Section 2 of this Act takes effect April 1, 2010.
         (c)  Subchapter D, Chapter 7001, Insurance Code, takes
  effect April 1, 2010.