HBA-NIK C.S.S.B. 130 76(R)BILL ANALYSIS Office of House Bill AnalysisC.S.S.B. 130 By: Nelson Insurance 4/16/1999 Committee Report (Substituted) BACKGROUND AND PURPOSE Currently, health care providers may contract with health insurance plans to give a discounted rate on their services in exchange for being listed as a preferred provider. An insurer or independent agent may deliberately mislead providers and doctors by claiming to belong to an exclusive preferred provider arrangement in order to receive a discount. C.S.S.B. 130 holds insurers in violation of an unfair act or deceptive practice and subject to administrative penalties under the Insurance Code if the insurers knowingly mislead a provider into giving them discounts to which they are not entitled. 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 Article 3.70-3C, Insurance Code, as added by Chapter 1024, Acts of the 75th Legislature, Regular Session, 1997, by adding Section 7A, as follows: Sec. 7A. RESTRICTIONS ON PAYMENT AND REIMBURSEMENT. (a) Prohibits an insurer or third party administrator from reimbursing a physician, practitioner, hospital, institutional provider, or organization of physicians and health care providers on a discounted fee basis for covered services that are provided to an insured unless the insurer or third party administrator has contracted with certain enumerated parties or entities. (b) Prohibits a party to a preferred provider contract, including a contract with a preferred provider organization, from selling, leasing, or otherwise transferring information regarding the payment or reimbursement terms of the contract without the express authority and prior adequate notification of the other contracting parties. Provides that this subsection does not affect the authority of the commissioner of insurance under this code to request and obtain information. (c) Provides that an insurer or third party administrator who violates this section commits an unfair act or deceptive practice in violation of Articles 21.21 Unfair Competition and Unfair Practices and 21.21-2 (Unfair Claim Settlement Practices) of this code and is also subject to administrative penalties under Articles 1.10 (Duties of the Department) and 1.10E (Administrative Penalties), of this code. SECTION 2. Emergency clause. Effective date: upon passage. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.S.B. 130 modifies the original bill in SECTION 1 ( proposed Section 7A, Article 3.70-3C, Insurance Code) by removing the exception to Subsection (a) provided by Subsection (b) of this section. The substitute authorizes an insurer or third party administrator to reimburse a health care provider if the insurer or third party administrator has contracted with in addition to prohibit an insurer or third party administrator from reimbursing a physician, practitioner, hospital, institutional provider, or organization of physicians and health care providers on a discounted fee basis for covered services that are provided to an insured unless the insurer or third party administrator has contracted with certain enumerated parties or entities. a preferred provider organization that has a network of preferred providers and such organization has contracted with the health care preferred provider. The substitute specifies that a party to contract with a preferred provider organization among the contracts that a party is prohibited from selling, leasing, or otherwise transferring information regarding payment or reimbursement terms of the contract without express authority and adequate notification of other contracting parties. The substitute provides that one who violates this section is, in addition to being in violation of Article 21.21-2 (Unfair Claim Settlement Practices) of this code, subject to administrative penalties under Articles 1.10 (Duties of the Department) and 1.10E (Administrative Penalties) of this code. C.S.S.B. 130 modifies the original bill by removing proposed SECTION 2 which was the long emergency clause.