81R10259 YDB-F

By: Williams S.B. No. 2299

A BILL TO BE ENTITLED

AN ACT

relating to registration and regulation of certain discount health care programs.

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

SECTION 1. Section 76.001, Health and Safety Code, is amended by adding Subdivision (1-a) and amending Subdivision (3) to read as follows:

(1-a) "Controlling person" means an individual who:

(A) possesses the authority to set policy, direct management, and conduct the affairs of a program operator or marketer;

(B) is an officer, director, general partner, or a member of a governing board of a business entity that is a program operator or marketer;

(C) is employed, appointed, or authorized by a program operator or marketer to enter into a contract with a program operator, marketer, provider, or provider network on behalf of the program operator or marketer; or

(D) possesses direct or indirect control of 25 percent or more of the voting securities of the program operator or marketer.

(3) "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:

(A) an insurance policy, certificate of coverage, or other product regulated by the Texas Department of Insurance;

(B) [or] a self-funded or self-insured employee benefit plan; or

(C) a benefit program regulated by the federal government, including Medicare and Medicaid.

SECTION 2. Section 76.051, Health and Safety Code, is amended to read as follows:

Sec. 76.051. PROGRAM OPERATOR AND MARKETER COMPLIANCE. (a) 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.

(b) Except as otherwise provided by this chapter, a marketer, including a marketer who has a contract with another marketer to sell a discount health care program, shall comply with this chapter.

SECTION 3. The heading to Section 76.056, Health and Safety Code, is amended to read as follows:

Sec. 76.056. PROVIDER CONTRACT REQUIREMENTS.

SECTION 4. The heading to Section 76.101, Health and Safety Code, is amended to read as follows:

Sec. 76.101. PROGRAM OPERATOR REGISTRATION REQUIRED; FEES.

SECTION 5. Section 76.101, Health and Safety Code, is amended by amending Subsections (a), (b), (e), (f), and (g), and adding Subsections (h) and (i) to read as follows:

(a) A program operator may not offer a discount health care program in this state unless the operator is registered with the department. A registration is valid for one year.

(b) An applicant for registration as a program operator under this chapter or an applicant for renewal of registration as a program operator under this chapter whose information has changed must submit:

(1) a registration form indicating the program operator's name and address and its agent for service of process;

(2) a list of names, addresses, official positions, and biographical information of the program operator's controlling persons[:

[(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 the discount health care program;

(4) a list of the marketers authorized to sell or distribute the program operator's program under the program operator's name and a list of the marketing entities authorized to private label the program operator's program; 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.

(e) To register or renew a registration, a program operator must pay the appropriate fees. The commission shall set by rule the amount of the fees required by this section to cover the costs of administering this chapter. These fees must include:

(1) a registration or renewal application fee; and

(2) a fee based on the number of [A] discount health care program memberships sold or issued by the program operator and in force in this state during the preceding 12-month period [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 controlling persons [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) The department may deny or revoke a program operator's registration or renewal based on the findings of the criminal background check of the program operator's controlling persons, including a conviction or deferred adjudication of a controlling person. The commission shall establish the criteria and standards for denying or revoking a program operator's registration or renewal under this subsection.

(h) The department may deny or revoke a program operator's registration or renewal based on the information contained in the materials required to be filed with or reported to the department. The commission shall establish the criteria and standards for denying or revoking a program operator's registration or renewal under this subsection.

(i) A person or entity who is [This section does not apply to a program operator] licensed under Title 6, Insurance Code, and who operates a discount health care program in this state is not required to meet the registration requirements in Subsections (a) through (h). The person or entity must notify the department that it is operating a discount health care program in this state and provide the department with the person's or entity's name, the name of a designated contact person, and the license number issued by the Texas Department of Insurance.

SECTION 6. Subchapter C, Chapter 76, Health and Safety Code, is amended by adding Section 76.102 to read as follows:

Sec. 76.102. MARKETER REGISTRATION REQUIRED; FEES. (a) A marketer may not sell or distribute a discount health care program in this state unless the marketer is registered with the department. A registration is valid for one year.

(b) An applicant for registration as a marketer under this chapter or renewal of registration as a marketer under this chapter must submit:

(1) a registration form indicating the marketer's name and address and its agent for service of process; and

(2) a list of names, addresses, official positions, and biographical information of the marketer's controlling persons, if applicable.

(c) To register or renew a registration, a marketer must pay the appropriate fees. The commission by rule shall set the amount of the fees required by this section to cover the costs of administering this chapter.

(d) If the marketer is an individual, the department may conduct a criminal background check on the individual. If the marketer is a business entity, the department may conduct a criminal background check on the marketer's controlling persons.

(e) The department may deny or revoke a marketer's registration or renewal based on the findings of the criminal background check of the persons in Subsection (d), including a conviction or deferred adjudication of a person in Subsection (d). The commission shall establish the criteria and standards for denying or revoking a marketer's registration or renewal under this subsection.

(f) The department may deny or revoke a marketer's registration or renewal based on the information contained in the materials required to be filed with or reported to the department. The commission shall establish the criteria and standards for denying or revoking a marketer's registration or renewal under this subsection.

SECTION 7. Section 76.151, Health and Safety Code, is amended to read as follows:

Sec. 76.151. DISCIPLINARY ACTION. A program operator or marketer is subject to the denial of an application, imposition of [On a finding that a ground for disciplinary action exists under this chapter, the executive director of the department may impose] an administrative [sanction, including any administrative] penalty under Subchapter F, [as provided by] Chapter 51, Occupations Code, or imposition of an administrative sanction under Section 51.353, Occupations Code, if the program operator or marketer violates this chapter or a rule or an order of the executive director of the commission.

SECTION 8. Sections 76.152(a), (b), (c), and (d), Health and Safety Code, are amended to read as follows:

(a) The attorney general or executive director of the department may institute an action against a program operator or marketer for injunctive relief under Section 51.352, Occupations Code, to restrain a violation or a threatened violation of this chapter or an order issued or rule adopted under this chapter.

(b) In addition to the injunctive relief provided by Subsection (a), the attorney general or executive director of the department may institute an action for a civil penalty as provided by Section 51.352, Occupations Code.

(c) The amount of any civil penalty assessed under this section may not exceed $5,000 [$2,500] for each violation. Each day a violation continues is a separate violation.

(d) Advertising, selling, or distributing a discount health care program that violates this chapter is a false, misleading, or deceptive act or practice for purposes of Section 17.46, Business & Commerce Code. A public or private right or [The exclusive] remedy authorized by Chapter 17, Business & Commerce Code, may be used to bring an action for a [the] violation of Section 17.46, Business & Commerce Code[, is an action by the office of the attorney general as provided by Section 17.46(a), Business & Commerce Code].

SECTION 9. Section 76.154, Health and Safety Code, is amended to read as follows:

Sec. 76.154. APPEAL. A person affected by a ruling, order, decision, or other action of the executive director of the department or the commission [department] may appeal by filing a petition in a district court in Travis County.

SECTION 10. Not later than January 1, 2010, the Texas Commission of Licensing and Regulation shall adopt the rules and procedures necessary to implement the changes in law made by this Act.

SECTION 11. (a) Except as provided by Subsection (b) of this section, this Act takes effect September 1, 2009.

(b) Section 76.101(e), Health and Safety Code, as amended by this Act, and Section 76.102, Health and Safety Code, as added by this Act, take effect April 30, 2010.