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A BILL TO BE ENTITLED
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AN ACT
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relating to regulation of the secondary market in certain physician |
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and health care provider discounts; providing administrative |
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penalties. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subtitle D, Title 8, Insurance Code, is amended |
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by adding Chapter 1302 to read as follows: |
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CHAPTER 1302. REGULATION OF SECONDARY MARKET IN CERTAIN PHYSICIAN |
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AND HEALTH CARE PROVIDER DISCOUNTS |
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SUBCHAPTER A. GENERAL PROVISIONS |
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Sec. 1302.001. DEFINITIONS. In this chapter: |
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(1) "Discount broker" means any entity engaged, for |
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monetary or other consideration, in disclosing or transferring a |
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contracted discounted fee of a physician or health care provider. |
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(2) "Health care provider" means a hospital, a |
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physician-hospital organization, or an ambulatory surgical center. |
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(3) "Payor" means a fully self-insured health plan, a |
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health benefit plan, an insurer, or another entity that assumes the |
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risk for payment of claims by, or reimbursement for health care |
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services provided by, physicians and health care providers. |
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(4) "Physician" means: |
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(A) an individual licensed to practice medicine |
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in this state under the authority of Subtitle B, Title 3, |
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Occupations Code; |
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(B) a professional entity organized in |
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conformity with Title 7, Business Organizations Code, and |
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permitted to practice medicine under Subtitle B, Title 3, |
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Occupations Code; |
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(C) a partnership organized in conformity with |
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Title 4, Business Organizations Code, comprised entirely by |
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individuals licensed to practice medicine under Subtitle B, Title |
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3, Occupations Code; |
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(D) an approved nonprofit health corporation |
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certified under Chapter 162, Occupations Code; |
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(E) a medical school or medical and dental unit, |
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as defined or described by Section 61.003, 61.501, or 74.501, |
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Education Code, that employs or contracts with physicians to teach |
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or provide medical services or employs physicians and contracts |
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with physicians in a practice plan; or |
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(F) any other person wholly owned by individuals |
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licensed to practice medicine under Subtitle B, Title 3, |
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Occupations Code. |
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(5) "Transfer" means to lease, sell, aggregate, |
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assign, or otherwise convey a contracted discounted fee of a |
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physician or health care provider. |
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Sec. 1302.002. EXEMPTIONS. This chapter does not apply to: |
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(1) the activities of: |
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(A) a health maintenance organization's network |
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that are subject to Subchapter J, Chapter 843; or |
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(B) an insurer's preferred provider network that |
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are subject to Subchapters C and C-1, Chapter 1301; or |
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(2) any aspect of the administration or operation of: |
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(A) the state child health plan; or |
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(B) any medical assistance program using a |
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managed care organization or managed care principal, including the |
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state Medicaid managed care program under Chapter 533, Government |
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Code. |
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Sec. 1302.003. APPLICABILITY OF OTHER LAW. (a) Except as |
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provided by Subsection (b), with respect to payment of claims, a |
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discount broker, and any payor for whom a discount broker acts or |
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who contracts with a discount broker, shall comply with Subchapters |
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C and C-1, Chapter 1301, in the same manner as an insurer. |
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(b) This section does not apply to a payor that is a fully |
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self-insured health plan. |
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Sec. 1302.004. RETALIATION PROHIBITED. A discount broker |
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may not engage in any retaliatory action against a physician or |
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health care provider because the physician or provider has: |
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(1) filed a complaint against the discount broker; or |
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(2) appealed a decision of the discount broker. |
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[Sections 1302.005-1302.050 reserved for expansion] |
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SUBCHAPTER B. REGISTRATION; POWERS AND DUTIES OF COMMISSIONER AND |
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DEPARTMENT |
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Sec. 1302.051. REGISTRATION REQUIRED. Each discount broker |
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that does not hold a certificate of authority or license otherwise |
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issued by the department under this code must register with the |
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department in the manner prescribed by the commissioner before |
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engaging in business in this state. |
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Sec. 1302.052. RULES. The commissioner shall adopt rules |
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in the manner prescribed by Subchapter A, Chapter 36, as necessary |
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to implement and administer this chapter. |
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[Sections 1302.053-1302.100 reserved for expansion] |
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SUBCHAPTER C. PROHIBITION OF CERTAIN TRANSFERS; |
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NOTICE REQUIREMENTS |
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Sec. 1302.101. PROHIBITION OF CERTAIN TRANSFERS. (a) A |
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discount broker may not transfer a physician's or health care |
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provider's contracted discounted fee or any other contractual |
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obligation unless the transfer is authorized by a contractual |
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agreement that complies with this chapter. |
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(b) This section does not affect the authority of the |
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commissioner of insurance or the commissioner of workers' |
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compensation under this code or Title 5, Labor Code, to request and |
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obtain information. |
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Sec. 1302.102. IDENTIFICATION OF PAYORS; TERMINATION OF |
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CONTRACT. (a) A discount broker shall notify each physician and |
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health care provider of the identity of the payors and discount |
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brokers authorized to access a contracted discounted fee of the |
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physician or provider. The notice requirement under this |
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subsection does not apply to an employer authorized to access a |
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discounted fee through a discount broker. |
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(b) The notice required under Subsection (a) must: |
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(1) be provided, at least every 45 days, through: |
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(A) electronic mail, after provision by the |
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affected physician or health care provider of a current electronic |
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mail address; and |
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(B) posting of a list on a secure Internet |
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website; and |
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(2) include a separate prominent section that lists |
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the payors that the discount broker knows will have access to a |
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discounted fee of the physician or health care provider in the |
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succeeding 45-day period. |
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(b-1) Notwithstanding Subsection (b), and on the request of |
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the affected physician or health care provider, the notice required |
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under Subsection (a) may be provided through United States mail. |
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This subsection expires September 1, 2011. |
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(c) The identity of a payor or discount broker authorized to |
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access a contracted discounted fee of the physician or provider |
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that becomes known to the discount broker required to submit the |
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notice under Subsection (a) must be included in the subsequent |
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notice. |
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(d) If, after receipt of the notice required under |
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Subsection (a), a physician or health care provider objects to the |
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addition of a payor to access to a discounted fee, other than a |
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payor that is an employer or a discount broker listed in the notice |
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required under Subsection (a), the physician or health care |
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provider may terminate its contract by providing written notice to |
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the discount broker not later than the 30th day after the date on |
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which the physician or health care provider receives the notice |
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required under Subsection (a). Termination of a contract under |
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this subsection is subject to applicable continuity of care |
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requirements under Section 843.362 and Subchapter D, Chapter 1301. |
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[Sections 1302.103-1302.150 reserved for expansion] |
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SUBCHAPTER D. RESTRICTIONS ON TRANSFERS |
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Sec. 1302.151. RESTRICTIONS ON TRANSFERS; EXCEPTION. (a) |
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In this section, "line of business" includes noninsurance plans, |
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fully self-insured health plans, Medicare Advantage plans, and |
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personal injury protection under an automobile insurance policy. |
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(b) A contract between a discount broker and a physician or |
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health care provider may not require the physician or health care |
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provider to: |
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(1) consent to the disclosure or transfer of the |
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physician's or health care provider's name and a contracted |
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discounted fee for use with more than one line of business; |
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(2) accept all insurance products; or |
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(3) consent to the disclosure or transfer of the |
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physician's or health care provider's name and access to a |
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contracted discounted fee of the physician or provider in a chain of |
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transfers that exceeds two transfers. |
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(c) Notwithstanding Subsection (b)(2), a contract between a |
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discount broker and a physician or health care provider may require |
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the physician or health care provider to accept all insurance |
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products within a line of business covered by the contract. |
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[Sections 1302.152-1302.199 reserved for expansion] |
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SUBCHAPTER E. DISCLOSURE REQUIREMENTS |
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Sec. 1302.200. IMPLEMENTATION. (a) This subchapter takes |
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effect January 1, 2010. |
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(b) This section expires January 2, 2010. |
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Sec. 1302.201. IDENTIFICATION OF DISCOUNT BROKER. An |
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explanation of payment or remittance advice in an electronic or |
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paper format must include the identity of the discount broker |
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authorized to disclose or transfer the name and associated |
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discounts of a physician or health care provider. |
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Sec. 1302.202. IDENTIFICATION OF ENTITY ASSUMING FINANCIAL |
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RISK; DISCOUNT BROKER. A payor or representative of a payor that |
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processes claims or claims payments must clearly identify in an |
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electronic or paper format on the explanation of payment or |
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remittance advice the identity of: |
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(1) the payor that assumes the risk for payment of |
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claims or reimbursement for services; and |
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(2) the discount broker through which the payment rate |
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and any discount are claimed. |
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Sec. 1302.203. INFORMATION ON IDENTIFICATION CARDS. If a |
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discount broker or payor issues member or subscriber identification |
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cards, the identification cards must identify, in a clear and |
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legible manner, any third-party entity, including any discount |
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broker: |
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(1) who is responsible for paying claims; and |
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(2) through whom the payment rate and any discount are |
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claimed. |
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[Sections 1302.204-1302.250 reserved for expansion] |
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SUBCHAPTER F. ENFORCEMENT |
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Sec. 1302.251. PENALTIES. (a) A discount broker who holds a |
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certificate of authority or license under this code and who |
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violates this chapter: |
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(1) commits an unfair settlement practice in violation |
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of Chapter 541; |
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(2) commits an unfair claim settlement practice in |
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violation of Subchapter A, Chapter 542; and |
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(3) is subject to administrative penalties in the |
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manner prescribed by Chapters 82 and 84. |
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(b) A violation of this chapter by a discount broker who |
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does not hold a certificate of authority or license under this code |
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constitutes a violation of Subchapter E, Chapter 17, Business & |
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Commerce Code. |
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Sec. 1302.252. PRIVATE CAUSE OF ACTION. An affected |
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physician or health care provider may bring a private action for |
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damages in the manner prescribed by Subchapter D, Chapter 541, |
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against a discount broker who violates this chapter. |
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SECTION 2. Sections 1301.001(4) and (6), Insurance Code, |
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are amended to read as follows: |
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(4) "Institutional provider" means a hospital, |
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nursing home, or other medical or health-related service facility |
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that provides care for the sick or injured or other care that may be |
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covered in a health insurance policy. The term includes an |
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ambulatory surgical center. |
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(6) "Physician" means: |
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(A) an individual [a person] licensed to practice |
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medicine in this state under the authority of Title 3, Subtitle B, |
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Occupations Code; |
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(B) a professional entity organized in |
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conformity with Title 7, Business Organizations Code, and |
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permitted to practice medicine under Subtitle B, Title 3, |
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Occupations Code; |
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(C) a partnership organized in conformity with |
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Title 4, Business Organizations Code, comprised entirely by |
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individuals licensed to practice medicine under Subtitle B, Title |
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3, Occupations Code; |
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(D) an approved nonprofit health corporation |
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certified under Chapter 162, Occupations Code; |
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(E) a medical school or medical and dental unit, |
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as defined or described by Section 61.003, 61.501, or 74.501, |
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Education Code, that employs or contracts with physicians to teach |
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or provide medical services or employs physicians and contracts |
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with physicians in a practice plan; or |
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(F) any other person wholly owned by individuals |
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licensed to practice medicine under Subtitle B, Title 3, |
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Occupations Code. |
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SECTION 3. Section 1301.056, Insurance Code, is amended to |
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read as follows: |
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Sec. 1301.056. RESTRICTIONS ON PAYMENT AND REIMBURSEMENT. |
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(a) An insurer, [or] third-party administrator, or other entity may |
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not reimburse a physician or other practitioner, institutional |
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provider, or organization of physicians and health care providers |
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on a discounted fee basis for covered services that are provided to |
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an insured unless: |
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(1) the insurer, [or] third-party administrator, or |
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other entity has contracted with either: |
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(A) the physician or other practitioner, |
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institutional provider, or organization of physicians and health |
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care providers; or |
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(B) a preferred provider organization that has a |
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network of preferred providers and that has contracted with the |
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physician or other practitioner, institutional provider, or |
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organization of physicians and health care providers; |
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(2) the physician or other practitioner, |
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institutional provider, or organization of physicians and health |
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care providers has agreed to the contract and has agreed to provide |
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health care services under the terms of the contract; and |
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(3) the insurer, [or] third-party administrator, or |
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other entity has agreed to provide coverage for those health care |
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services under the health insurance policy. |
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(b) A party to a preferred provider contract, including a |
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contract with a preferred provider organization, may not sell, |
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lease, assign, aggregate, disclose, or otherwise transfer the |
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discounted fee, or any other information regarding the discount, |
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payment, or reimbursement terms of the contract without the express |
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authority of and [prior] adequate notification to the other |
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contracting parties. This subsection does not: |
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(1) prohibit a payor from disclosing any information, |
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including fees, to an insured; or |
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(2) affect the authority of the commissioner of |
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insurance or the commissioner of workers' compensation under this |
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code or Title 5, Labor Code, to request and obtain information. |
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(c) An insurer, third-party administrator, or other entity |
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may not access a discounted fee, other than through a direct |
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contract, unless notice has been provided to the contracted |
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physicians, practitioners, institutional providers, and |
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organizations of physicians and health care providers. For the |
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purposes of the notice requirements of this subsection, the term |
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"other entity" does not include an employer that contracts with an |
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insurer or third-party administrator. |
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(d) The notice required under Subsection (c) must: |
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(1) be provided, at least every 45 days, through: |
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(A) electronic mail, after provision by the |
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affected physician or health care provider of a current electronic |
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mail address; and |
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(B) posting of a list on a secure Internet |
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website; and |
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(2) include a separate prominent section that lists |
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the insurers, third-party administrators, or other entities that |
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the contracting party knows will have access to a discounted fee of |
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the physician or health care provider in the succeeding 45-day |
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period. |
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(d-1) Notwithstanding Subsection (d), and on the request of |
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the affected physician or health care provider, the notice required |
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under Subsection (c) may be provided through United States mail. |
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This subsection expires September 1, 2011. |
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(e) The identity of an insurer, third-party administrator, |
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or other entity authorized to access a contracted discounted fee of |
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the physician or provider that becomes known to the contracting |
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party required to submit the notice under Subsection (c) must be |
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included in the subsequent notice. |
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(f) If, after receipt of the notice required under |
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Subsection (c), a physician or other practitioner, institutional |
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provider, or organization of physicians and health care providers |
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objects to the addition of an insurer, third-party administrator, |
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or other entity to access to a discounted fee, the physician or |
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other practitioner, institutional provider, or organization of |
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physicians and health care providers may terminate its contract by |
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providing written notice to the contracting party not later than |
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the 30th day after the date of the receipt of the notice required |
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under Subsection (c). |
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(g) An insurer, third-party administrator, or other entity |
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that processes claims or claims payments shall clearly identify in |
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an electronic or paper format on the explanation of payment or |
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remittance advice: |
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(1) the identity of the party responsible for |
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administering the claims; and |
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(2) if the insurer, third-party administrator, or |
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other entity does not have a direct contract with the physician or |
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other practitioner, institutional provider, or organization of |
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physicians and health care providers, the identity of the preferred |
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provider organization or other contracting party that authorized a |
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discounted fee. |
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(h) If an insurer, third-party administrator, or other |
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entity issues member or insured identification cards, the |
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identification cards must include, in a clear and legible format, |
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the information required under Subsection (g). |
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(i) An insurer, [or] third-party administrator, or other |
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entity that holds a certificate of authority or license under this |
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code who violates this section: |
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(1) commits an unfair settlement practice in violation |
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of Chapter 541; |
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(2) commits an unfair claim settlement practice in |
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violation of Subchapter A, Chapter 542; and |
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(3) [(2)] is subject to administrative penalties |
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under Chapters 82 and 84. |
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(j) A violation of this section by an entity described by |
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this section who does not hold a certificate of authority or license |
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issued under this code constitutes a violation of Subchapter E, |
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Chapter 17, Business & Commerce Code. |
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(k) A physician or health care provider affected by a |
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violation of this section may bring a private action for damages in |
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the manner prescribed by Subchapter D, Chapter 541, against a |
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discount broker who violates this section. |
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SECTION 4. The change in law made by this Act applies only |
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to a cause of action that accrues on or after the effective date of |
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this Act. A cause of action that accrues before that date is |
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governed by the law as it existed immediately before the effective |
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date of this Act, and that law is continued in effect for that |
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purpose. |
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SECTION 5. The commissioner of insurance shall adopt rules |
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as necessary to implement Chapter 1302, Insurance Code, as added by |
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this Act, not later than December 1, 2009. |
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SECTION 6. This Act applies only to a contract entered into |
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or renewed on or after January 1, 2010. A contract entered into or |
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renewed before January 1, 2010, is governed by the law as it existed |
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immediately before the effective date of this Act, and that law is |
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continued in effect for that purpose. |
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SECTION 7. This Act takes effect September 1, 2009. |