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INTRODUCED
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HOUSE COMMITTEE
SUBSTITUTE
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SECTION 1. The heading to
Chapter 562, Insurance Code, is amended to read as follows:
CHAPTER 562. UNFAIR METHODS
OF COMPETITION AND UNFAIR OR DECEPTIVE ACTS OR PRACTICES REGARDING DISCOUNT
[HEALTH CARE] PROGRAMS
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No
equivalent provision.
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SECTION 2. Section 562.001,
Insurance Code, is amended to read as follows:
Sec. 562.001. PURPOSE. The
purpose of this chapter is to regulate trade practices in the business of
discount health care programs and discount drug card programs by:
(1) defining or providing
for the determination of trade practices in this state that are unfair
methods of competition or unfair or deceptive acts or practices; and
(2) prohibiting those unfair
or deceptive trade practices.
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No
equivalent provision.
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SECTION 3. Section 562.002,
Insurance Code, is amended by amending Subdivisions (5) and (8) and adding
Subdivision (1-a) to read as follows:
(1-a) "Discount drug
card program" and "discount drug card program operator" have
the meanings assigned by Section 7001.001.
(5) "Marketer"
means a person who sells or distributes, or offers to sell or distribute, a
discount health care program or a discount drug card program,
including a private label entity that places its name on and markets or
distributes a discount health care program or a discount drug card
program, but does not operate a discount health care program or a
discount drug card program.
(8) "Program
operator" means a discount health care program operator or a
discount drug card [plan] program operator.
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No
equivalent provision.
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SECTION 4. Section 562.004,
Insurance Code, is amended to read as follows:
Sec. 562.004.
APPLICABILITY. Except as otherwise provided by this chapter, a program
operator, including the operator of a freestanding discount health care program,
a freestanding discount drug card program, or a discount health care
program or discount drug card program marketed by an insurer or a
health maintenance organization, shall comply with this chapter.
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No
equivalent provision.
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SECTION 5. Sections 562.051,
562.052, 562.053, and 562.054, Insurance Code, are amended to read as
follows:
Sec. 562.051.
MISREPRESENTATION REGARDING DISCOUNT PROGRAMS [HEALTH CARE
PROGRAM]. It is an unfair method of competition or an unfair or
deceptive act or practice in the business of discount health care programs or
discount drug card programs to:
(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, if any;
(3) misrepresent the
participation of a provider in the program's network, if any;
(4) suggest that a discount
card offered through the program is a federally approved Medicare
prescription discount card;
(5) use the term
"insurance," except as:
(A) a disclaimer of any
relationship between the [discount health care] program and
insurance; or
(B) a description of an
insurance product connected with a discount health care program or
discount drug card program; or
(6) 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 coverage similar to health insurance.
Sec. 562.052. FALSE
INFORMATION AND ADVERTISING. It is an unfair method of competition or an
unfair or deceptive act or practice in the business of discount health care
programs or discount drug card programs to make, publish,
disseminate, circulate, or place before the public or directly or
indirectly cause to be made, published, disseminated, circulated, or placed
before the public an advertisement, solicitation, or marketing material
containing an untrue, deceptive, or misleading assertion, representation,
or statement regarding the [discount health care] program.
Sec. 562.053. FAILURE TO
REGISTER OR RENEW REGISTRATION; FALSE REGISTRATION OR RENEWAL STATEMENT.
(a) It is an unfair method of competition or an unfair or deceptive act or
practice in the business of discount health care programs or discount
drug card programs to:
(1) fail to register or
renew registration as required under Chapter 7001; or
(2) with intent to deceive:
(A) file with the department
a false statement in connection with an application for registration as a
program operator under Chapter 7001; or
(B) file with the department
a false statement in connection with an application for renewal of a
registration as a program operator under Chapter 7001.
(b) The commissioner may
impose on a person operating a discount health care program or discount
drug card program for the person's failure to register or renew
registration as required under Chapter 7001 any remedy that the
commissioner is authorized to impose under Chapter 101 for the unauthorized
business of insurance.
Sec. 562.054.
MISREPRESENTATION OF DISCOUNT [HEALTH CARE] PROGRAMS. It is an
unfair method of competition or an unfair or deceptive act or practice in
the business of discount health care programs or discount drug card
programs to misrepresent a discount health care program or a
discount drug card program by:
(1) making an untrue
statement of material fact;
(2) failing to state a
material fact necessary to make other statements made not misleading,
considering the circumstances under which the statements were made;
(3) making a statement in a
manner that would mislead a reasonably prudent person to a false conclusion
of a material fact;
(4) making a material
misstatement of law; or
(5) failing to disclose a
matter required by law to be disclosed, including failing to make an
applicable disclosure required by this code.
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No
equivalent provision.
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SECTION 6. Sections 562.101,
562.102, 562.103, and 562.104, Insurance Code, are amended to read as
follows:
Sec. 562.101. UNFAIR METHODS
OF COMPETITION AND UNFAIR OR DECEPTIVE ACTS OR PRACTICES PROHIBITED. A
person may not engage in this state in a trade practice that is defined in
this chapter as or determined under this chapter to be an unfair method of
competition or an unfair or deceptive act or practice in the business of
discount health care programs or discount drug card programs.
Sec. 562.102. PROHIBITED
CONTENT OF CERTAIN DISCOUNT [HEALTH CARE] PROGRAM ADVERTISING,
SOLICITATION, OR MARKETING. Notwithstanding any other provision of this
code, it is unlawful for a program operator or marketer to advertise,
solicit, or market a discount health care program or discount drug card
program containing the words "approved by the Texas Department of
Insurance" or words with a similar meaning.
Sec. 562.103. PROGRAM
OPERATOR DUTIES. (a) A program operator shall:
(1) provide a toll-free
telephone number and Internet website for members or cardholders to
obtain information about the [discount health care] program and
confirm or find providers currently participating in the program; and
(2) remove a provider from
the [discount health care] program not later than the 30th day after
the date the program operator learns that the provider is no longer
participating in the program or has lost the authority to provide services,
drugs, or other products.
(b) A discount health
care program operator shall issue at least one membership card to serve
as proof of membership in the discount health care program that must:
(1) contain a clear and
conspicuous statement that the discount health care program is not
insurance; and
(2) if the discount health
care program includes discount prescription drug benefits, include:
(A) the name or logo of the
entity administering the prescription drug benefits;
(B) the international
identification number assigned by the American National Standards Institute
for the entity administering the prescription drug benefits;
(C) the group number
applicable to the member; and
(D) a telephone number to be
used to contact an appropriate person to obtain information relating to the
prescription drug benefits provided under the program.
(b-1) A discount drug card
issued by a discount drug card program operator must contain a clear and
conspicuous statement that:
(1) the discount drug
card program is not insurance and does not guarantee the quality of the
services or products offered by individual providers; and
(2) if an individual
remains dissatisfied after completing the discount drug card program's
complaint system, the cardholder may contact the cardholder's state
insurance department.
(c) Not later than the 15th
day after the date of enrollment, a discount health care program
operator shall issue at least one set of disclosure materials describing
the terms and conditions of the discount health care program to each
household in which a person is a member, including a statement that:
(1) the discount health care
program is not insurance, with the word "not" capitalized;
(2) the member is required
to pay the entire amount of the discounted rate;
(3) the discount health care
program does not guarantee the quality of the services or products offered
by individual providers; and
(4) if the member remains
dissatisfied after completing the discount health care program's complaint
system, the member may contact the member's state insurance department.
(d) A discount health
care program operator shall ensure that an application form or other
membership agreement:
(1) clearly and
conspicuously discloses the duration of membership and the amount of
payments the member is obligated to make for the membership; and
(2) contains a clear and
conspicuous statement that the discount health care program is not
insurance.
(e) A discount health
care program operator shall 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 program 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.
(f) A program operator
shall:
(1) maintain a surety bond,
payable to the department for the use and benefit of members or
cardholders 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;
(2) maintain an agent for
service of process in this state; and
(3) 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 or duties of the discount drug card program to cardholders in
the discount drug card program.
Sec. 562.104. MARKETING OF
PROGRAM. (a) A program operator may market directly or contract with
marketers for the distribution of the program operator's discount health
care programs or discount drug card 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 an advertisement, solicitation, or other marketing material or a
discount card that has not been approved in advance and in writing by the
program operator.
(c) A program operator must
approve in writing before their use all advertisements, solicitations, or
other marketing materials and all discount cards used by marketers to
market, promote, sell, or distribute the [discount health care]
program.
(d) 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.
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No
equivalent provision.
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SECTION 7. Sections
562.105(a), (b), and (c), Insurance Code, are amended to read as follows:
(a) A program operator shall
contract, directly or indirectly, with a provider offering discounted
health care services, drugs, or other products under the
discount health care program or discount drug card program. The
written contract must contain all of the following provisions:
(1) a description of the
discounts to be provided under the program [to a member];
(2) a provision prohibiting
the provider from charging under the program [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 no
longer participates in the program or loses the authority to provide
services, drugs, or other products.
(b) The discount health
care program operator may not charge or receive from a provider any fee
or other compensation for entering into the agreement. The discount drug
card program operator may only charge or receive from a provider the fee
established by the commissioner under Section 7001.051.
(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, drugs,
or other products to members of the discount health care program or
cardholders under the discount drug card program, as applicable.
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No
equivalent provision.
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SECTION 8. Section 562.151,
Insurance Code, is amended to read as follows:
Sec. 562.151. EXAMINATION
AND INVESTIGATION. The department may examine and investigate the affairs
of a person engaged in the business of discount health care programs or
discount drug card programs in this state to determine whether the
person:
(1) has or is engaged in an
unfair method of competition or unfair or deceptive act or practice
prohibited by this chapter; or
(2) has violated Subchapter
B or C.
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No
equivalent provision.
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SECTION 9. Section
562.152(a), Insurance Code, is amended to read as follows:
(a) When the department has
reason to believe that a person engaged in the business of discount health
care programs or discount drug card programs in this state has
engaged or is engaging in this state in an unfair method of competition or
unfair or deceptive act or practice defined by Subchapter B or has violated
Subchapter B or C and that a proceeding by the department regarding the
charges is in the interest of the public, the department shall issue and
serve on the person:
(1) a statement of the
charges; and
(2) a notice of the hearing
on the charges, including the time and place for the hearing.
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No
equivalent provision.
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SECTION 10. Section
562.201(a), Insurance Code, is amended to read as follows:
(a) The attorney general may
bring an action under this section if the attorney general has reason to
believe that:
(1) a person engaged in the
business of discount health care programs or discount drug card programs
in this state is engaging in, has engaged in, or is about to engage in an
act or practice defined as unlawful under:
(A) this chapter; or
(B) Section 17.46, Business
& Commerce Code; and
(2) the action is in the
public interest.
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No
equivalent provision.
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SECTION 11. Subchapter D,
Chapter 4151, Insurance Code, is amended by adding Section 4151.154 to read
as follows:
Sec. 4151.154. DISCOUNT
DRUG CARD PROGRAMS. A pharmacy benefit manager may not require a
pharmacist or pharmacy to:
(1) accept or process a
claim under a discount drug card
program as defined by Section 7001.001 unless the pharmacist or pharmacy
agrees in writing to accept or process the claim;
(2) participate in a
specified provider network as a condition of processing a claim under a
discount drug card program; or
(3) participate in, or
process claims under, a discount drug card
program as a condition of participation in a provider network.
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SECTION 2. Subchapter D,
Chapter 4151, Insurance Code, is amended by adding Section 4151.154 to read
as follows:
Sec. 4151.154. DISCOUNT
HEALTH CARE PROGRAMS. A pharmacy benefit manager may not require a
pharmacist or pharmacy to:
(1) accept or process a
claim for prescription drugs under a
discount health care program as
defined by Section 7001.001 unless the pharmacist or pharmacy agrees in
writing to accept or process the claim;
(2) participate in a
specified provider network as a condition of processing a claim for prescription drugs under a discount health care program; or
(3) participate in, or
process claims under, a discount health
care program as a condition of participation in a provider network.
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SECTION 12. The heading to
Title 21, Insurance Code, is amended to read as follows:
TITLE 21. DISCOUNT [HEALTH
CARE] PROGRAMS
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No
equivalent provision.
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SECTION 13. The heading to
Chapter 7001, Insurance Code, is amended to read as follows:
CHAPTER 7001. REGISTRATION
OF DISCOUNT [HEALTH CARE] PROGRAM OPERATORS
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No
equivalent provision.
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SECTION 14. Chapter 7001,
Insurance Code, is amended by designating Sections 7001.001 through
7001.009 as Subchapter A and adding a subchapter heading to read as
follows:
SUBCHAPTER A. GENERAL
PROVISIONS; REGISTRATION
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No
equivalent provision.
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SECTION 15. Section
7001.001, Insurance Code, is amended by amending Subdivisions (1) and (6)
and adding Subdivisions (1-a) and (1-b) to read as follows:
(1) "Discount drug
card program" means a business arrangement or contract in which an
entity, in exchange for consideration paid by the entity, or a third party
administrator, health benefit plan issuer, pharmacy benefit manager, or
other business entity, directly or indirectly, provides an individual access,
without charge to the individual, to discounts on drugs provided by a
pharmacist or pharmacy, or makes, publishes, disseminates, circulates, or
places before the public, or causes to be made, published, disseminated,
circulated, or placed before the public, an advertisement, solicitation, or
offer of access without charge to discounts on drugs provided by a
pharmacist or pharmacy. The term does not include an insurance policy,
certificate of coverage, or other product otherwise regulated by the
department or a self-funded or self-insured employee benefit plan.
(1-a) "Discount drug
card program operator" means a person who operates a discount drug
card program.
(1-b) "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,
certificate of coverage, or other product otherwise regulated by the
department or a self-funded or self-insured employee benefit plan.
(6) "Program
operator" means:
(A) a discount health
care [plan] program operator; or
(B) a discount drug card
program operator.
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No
equivalent provision.
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SECTION 16. Section
7001.004, Insurance Code, is amended to read as follows:
Sec. 7001.004. REGISTRATION
REQUIRED. A [discount health care] program operator may not offer a
discount health care program or a discount drug card program in this
state unless the program operator is registered with the department.
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No
equivalent provision.
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SECTION 17. Section
7001.005(a), Insurance Code, is amended to read as follows:
(a) An applicant for
registration under this chapter or an applicant for renewal of registration
under this chapter whose information has changed shall submit:
(1) a completed registration
application on the form prescribed by the department indicating the program
operator's name, physical address, and 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, drugs, or other products for which a discount will
be made available under its discount health care programs or discount drug
card programs;
(4) a list of the marketers
authorized to sell or distribute the program operator's programs under the
program operator's name, a list of the marketing entities authorized to
private label the program operator's programs, and other information about
the marketers and marketing entities considered necessary by the
commissioner; 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, or pharmacy benefit
managers regarding the provision of health care services or products to
members or regarding discount drug cards generally.
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No
equivalent provision.
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SECTION 18. Section
7001.006, Insurance Code, is amended to read as follows:
Sec. 7001.006. FEES. A [discount
health care] program operator shall pay the department an initial
registration fee of $1,000 and an annual renewal fee in the amount set by
the commissioner not to exceed $500.
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No
equivalent provision.
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SECTION 19. Section
7001.009(a), Insurance Code, is amended to read as follows:
(a) The department may deny
a registration application or take any action authorized under Chapters 82,
83, and 84 if the department determines that the applicant or registered [discount
health care] program operator, individually or through an officer,
director, or shareholder:
(1) has wilfully violated a
provision of this code or an order or rule of the commissioner;
(2) has intentionally made a
material misstatement in the registration application;
(3) has obtained or attempted
to obtain a registration by fraud or misrepresentation;
(4) has misappropriated,
converted to the applicant's or registration holder's own use, or illegally
withheld money belonging to a member of a discount health care program;
(5) has engaged in
fraudulent or dishonest acts or practices; or
(6) has been convicted of a
felony.
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No
equivalent provision.
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SECTION 20. Chapter 7001,
Insurance Code, is amended by adding Subchapter B to read as follows:
SUBCHAPTER B. DISCOUNT
DRUG CARD PROGRAMS
Sec. 7001.051. PROGRAM
FEES. The commissioner shall establish a reasonable fee that a discount
drug card program operator may charge a pharmacist or pharmacy to process a
claim under a discount drug card program. The fee may not be computed as a
percentage of the cost of a drug provided.
Sec. 7001.052. NETWORK
REQUIREMENTS PROHIBITED. A discount drug
card program operator or an affiliate or agent of a discount drug card program operator may not require a pharmacy or pharmacist
to:
(1) participate in a
specified provider network as a condition of processing a claim in the discount drug card program; or
(2) participate in, or
process claims under, a discount drug card
program as a condition of participation in a provider network.
Sec. 7001.053. PROHIBITED
CONDUCT. (a) A discount drug card
program operator may not pay any
consideration to a health care services provider or employee of a health
care services provider:
(1) to encourage an
individual to claim a discount under a discount drug card program; or
(2) to include discount drug card program information on a
prescription for a drug or in materials accompanying the prescription.
(b) A discount drug card program operator may not, directly or indirectly:
(1) represent that a discount drug card program is a pharmacy
benefit or health insurance or provides coverage similar to health
insurance by any manner or method; or
(2) provide written
prescription forms that could reasonably mislead an individual to believe
that the discount drug card program
is health insurance or provides coverage similar to health insurance.
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SECTION 1. Subchapter B,
Chapter 562, Insurance Code, is amended by adding Sections 562.055 and
562.056 to read as follows:
No
equivalent provision.
Sec. 562.055. NETWORK
PARTICIPATION REQUIREMENTS. It is an
unfair method of competition or an unfair or deceptive act or practice in
the business of discount health care programs for a discount health care program operator or an
affiliate or agent of a discount health care
program operator to require a pharmacy or pharmacist to:
(1) participate in a
specified provider network as a condition of processing a claim for prescription drugs under the discount health care program; or
(2) participate in, or
process claims under, a discount health
care program as a condition of participation in a provider network.
Sec. 562.056. CERTAIN
METHODS OF PROMOTIONS. (a) It is an
unfair method of competition or an unfair or deceptive act or practice in
the business of discount health care programs for a discount health care program operator to pay any
consideration to a health care services provider or employee of a health
care services provider:
(1) to encourage an
individual to claim a discount for
prescription drugs under a discount health
care program; or
(2) to include discount health care program information on a
prescription for a drug or in materials accompanying the prescription.
(b) It is an unfair method of competition or an
unfair or deceptive act or practice in the business of discount health care
programs for a discount health care program operator to provide a
person with written prescription forms that could reasonably mislead an
individual to believe that the discount health
care program is health insurance or provides coverage similar to
health insurance.
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SECTION 21. (a) The changes
in law made by this Act to Chapter 562,
Insurance Code, apply only to conduct that occurs on or after the
effective date of this Act. Conduct that occurs before the effective date
of this Act is governed by the law as it existed when the conduct occurred,
and the former law is continued in effect for that purpose.
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SECTION 3. (a) Except as provided by Subsection (b) of this
section, the changes in law made by this Act apply only to conduct
that occurs on or after the effective date of this Act. Conduct that occurs
before the effective date of this Act is governed by the law as it existed
when the conduct occurred, and the former law is continued in effect for
that purpose.
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(b) Section 562.105,
Insurance Code, as amended by this Act, applies only to a contract with a
pharmacy or pharmacist signed on or after the effective date of this Act. A
contract signed before the effective date of this Act is governed by the
law as it existed immediately before the effective date of this Act, and
that law is continued in effect for that purpose.
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No
equivalent provision.
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(c) The changes in law made
by this Act apply only to a claim submitted
under a discount drug card program
on or after the effective date of this Act. A claim filed before the
effective date of this Act is governed by the law as it existed immediately
before the effective date of this Act, and that law is continued in effect
for that purpose.
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(b) The changes in law made
by this Act apply only to a claim filed
under a discount health care program
on or after the effective date of this Act. A claim filed before the
effective date of this Act is governed by the law as it existed immediately
before the effective date of this Act, and that law is continued in effect
for that purpose.
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(d) Notwithstanding Section
562.053, Insurance Code, or Section 7001.004, Insurance Code, as amended by
this Act, a person is not required to register as a discount drug card
program operator under Chapter 7001, Insurance Code, as amended by this
Act, before January 1, 2016.
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No
equivalent provision.
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SECTION 22. This Act takes
effect September 1, 2015.
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SECTION 4. Same as introduced
version.
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