By: Coleman H.B. No. 4502

A BILL TO BE ENTITLED

AN ACT

relating to charity care.

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

SECTION 1. 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 2. Amend Texas Government Code, Chapter 531 to add a new Subchapter Q to read as follows: Subchapter Q. Study on Hospital Billing and Collection Practices

Sec. 531.701. Study concerning hospital billing and collection practices. (a) The Texas Health and Human Services Commission shall study the effects of hospital and billing practices on the uninsured and underinsured. (b) By the use of a hospital questionnaire and such other investigative tools including sample hospital audits, interviews, public hearings and reports, the study shall address:

(i) the effects of hospital billing, including pricing and discounting. practices by public health region as designated under Texas Health & Safety Code, Section 121.007 upon the uninsured, the underinsured, insurers, governmental payors, and other third-party payors;

(ii) The effects of hospital billing, including pricing and discounting, and collection practices upon the uninsured and underinsured including any barriers to health care access and economic consequences; and

(iii) The actions other jurisdictions have taken through legislation or litigation to address hospital billing and collection practices upon the uninsured and the underinsured. (c) Any data presented in the study shall be indexed by hospital organizational structure: for profit, nonprofit, and public. (d) The study shall commence no later than November 15, 2009 and produce a report on the study to be filed with the legislature no later than December 15, 2010. At that date, the commission shall publish the report on its website in a conspicuous location. (e) The performance of the study may be delegated by the commission to one or more working groups that may include public members and representatives from the Texas Attorney General, Texas Comptroller of Public Accounts and the Texas Department of State Health Services. At least half of the public members appointed to any working group must be individuals or representatives of organizations that advocate on behalf of consumers on health care issues. (f) Public hearings shall be held throughout the state to receive public testimony for inclusion in the report. At the commission's request, a working group member may coordinate, convene, and preside at a public hearing. Among other resources, the commission may rely on donations of space, equipment, and personnel for the public hearing. (g) The commission or its delegate may retain public accountants and such other experts considered reasonably necessary to perform the study and may seek collaboration from the Texas Attorney General, the Texas Comptroller of Public Accounts and the Texas Department of State Health Services.

Sec. 531.702. Expiration of Subchaper. This Subchapter expires on January 31, 2011.

SECTION 3. 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 Subchapter on receipt of a public complaint.

(c) The attorney general may conduct any investigation considered necessary regarding possible violations of this Subchapter 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 Subchapter, 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 Subchapter. 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 Subchapter.

(f) In an action filed under this Subchapter, the attorney general may seek the recovery of court costs and legal fees.

(g) If a court grants a final order of relief against a nonprofit hospital for a violation of this Subchapter, the attorney general shall notify each taxing authority that has granted the nonprofit hospital a tax exemption about the court's decision.

(h) The attorney general shall establish a complaint process through which the public may file complaints involving violations of this Subchapter. 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 Subchapter;

(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.

(i) 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 Subchapter for the previous year.

SECTION 4. This Act takes effect September 1, 2009.