|
|
|
A BILL TO BE ENTITLED
|
|
AN ACT
|
|
relating to regulation of discount drug card program operators; |
|
authorizing administrative and civil penalties; authorizing fees; |
|
expanding a registration requirement. |
|
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
|
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 |
|
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. |
|
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. |
|
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. |
|
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. |
|
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. |
|
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. |
|
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. |
|
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. |
|
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. |
|
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. |
|
SECTION 12. The heading to Title 21, Insurance Code, is |
|
amended to read as follows: |
|
TITLE 21. DISCOUNT [HEALTH CARE] PROGRAMS |
|
SECTION 13. The heading to Chapter 7001, Insurance Code, is |
|
amended to read as follows: |
|
CHAPTER 7001. REGISTRATION OF DISCOUNT [HEALTH CARE] PROGRAM |
|
OPERATORS |
|
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 |
|
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. |
|
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. |
|
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. |
|
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. |
|
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. |
|
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. |
|
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. |
|
(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. |
|
(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. |
|
(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 |
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January 1, 2016. |
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SECTION 22. This Act takes effect September 1, 2015. |