HBA-ATS H.B. 3603 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 3603 By: Thompson Insurance 3/29/1999 Introduced BACKGROUND AND PURPOSE Health care fraud and abuse is a nationwide problem, draining up to $100 billion annually from the national health care system. Although many losses occur in Medicare and Medicaid, private sector health benefit programs are not immune to fraud. While health care fraud can take many forms, the most common involves billing for services not performed or billing for more expensive services than those actually provided. Other examples include providing inadequate service and dispensing outdated medication. These fraudulent activities increase the costs of medical care and endanger the welfare of patients. H.B. 3603 requires an insurer to prominently display the statement "Any person who knowingly presents a false or fraudulent claim for the payment of a loss is guilty of a crime and may be subject to fines and confinement in state prison" on a form given to a person making a claim against a policy issued by the insurer. This bill authorizes an insurer to adopt an antifraud plan and to share information with other insurers in the course of investigating insurance fraud claims. Under this bill, a health care provider violates the law if the provider intentionally or knowingly presents to a person a bill for medical treatment and knows that the treatment was not provided or was unreasonable or medically or clinically unnecessary. A violation is punishable by a civil penalty not to exceed $2,000 for each violation and constitutes cause for the revocation or suspension of the provider's license, permit, registration, certificate, or other authority or other disciplinary action against the provider. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Chapter 3, Insurance Code, by adding Subchapter K, as follows: SUBCHAPTER K. INSURER ANTIFRAUD PROGRAMS Art. 3.97-1. DEFINITIONS. Defines "health care provider" and "insurer." Art. 3.97-2. NOTICE OF PENALTY FOR FALSE OR FRAUDULENT CLAIMS; DISPLAY ON FORMS. Requires an insurer to prominently display the statement "Any person who knowingly presents a false or fraudulent claim for the payment of a loss is guilty of a crime and may be subject to fines and confinement in state prison" on a form given to a person making a claim against a policy issued by the insurer. Provides that this statement must be preceded by the words: "For your protection, Texas law requires the following to appear on this form." Art. 3.97-3. INSURER ANTIFRAUD PLANS. Authorizes an insurer to adopt an antifraud plan. Requires an insurer, if it adopts an antifraud plan, to annually file that plan with the insurance fraud unit. Provides that the plan must include a description of the insurer's procedures for detecting and investigating possible fraudulent insurance acts and a description of the insurer's procedures for reporting possible fraudulent insurance acts to the insurance fraud unit. Art. 3.97-4. IMMUNITY FOR INSURER-TO-INSURER INFORMATION SHARING. Authorizes an insurer to share information with other insurers in the course of investigating insurance fraud claims. Enumerates the types of information that may be shared. Provides that an insurer, before providing this information to another insurer, must provide a copy of the information to each health care provider that the information concerns. Prohibits an insurer from providing this information if the information is provided with malice, fraudulent intent, or bad faith. Provides that this article does not affect or modify common law or a statutory privilege or immunity. SECTION 2. Amends Chapter 6, Title 71, V.T.C.S., by adding Article 4512q, as follows: ARTICLE 4512q. UNPROFESSIONAL CONDUCT BY HEALTH CARE PROVIDER Sec. 1. DEFINITION. Defines "health care provider." Sec. 2. UNPROFESSIONAL CONDUCT. Provides that a health care provider (provider) violates this article if the provider intentionally or knowingly presents or causes to be presented to a person a bill for medical treatment and knows that the treatment was not provided or was unreasonable or medically or clinically unnecessary. Provides that such a violation constitutes cause for the revocation or suspension of the provider's license, permit, registration, certificate, or other authority or other disciplinary action against the provider. Sec. 3. CIVIL PENALTY. Sets forth that a provider that violates this article is liable to the state for a civil penalty not to exceed $2,000 for each violation. Requires the attorney general, on request of the Texas Department of Insurance or an agency that regulates the provider, to sue to collect the penalty in a district court in Travis County or in the county in which the violation occurred. Authorizes the attorney general to recover reasonable expenses incurred in obtaining the civil penalty. Requires the deposit of the civil penalty in the state treasury to the credit of the general revenue fund. Provides that a health care provider is not liable under this section for an isolated billing error. SECTION 3. Effective date: September 1, 1999. SECTION 4. Emergency clause.