BILL ANALYSIS
C.S.H.B. 2644
By: Hilderbran
04-24-95
Committee Report (Substituted)
BACKGROUND
Long-term care services in Texas for many years consisted of
services delivered primarily in nursing facilities. In FY 1994,
almost 68,000 elderly Texans and people of all ages with
disabilities received medical care and rehabilitative services in
nursing facilities provided through the state's Medicaid program.
DHS reimburses nursing facilities based on the level of care
required, with FY 1994 Medicaid nursing facility payments amounting
to about $1.1 billion.
Prior to 1993, regulation of long-term care facilities had
been split between two agencies, the Texas Dept. of Health,
responsible for licensure, and the Texas Dept. of Human Services
(DHS), responsible for certification of nursing facilities for
participation in the Medicaid program. House Bill 7, enacted in
1991, consolidated these responsibilities at the Dept. of Human
Services and on Sept. 1, 1993, DHS assumed the duties of regulating
approximately 1,200 Medicaid-certified nursing facilities. Under
authority delegated in both the Human Resources Code and the Health
and Safety Code, DHS licenses, surveys, and certifies facilities,
and in 1994 investigated over 11,700 complaints.
Since 1987, Congress has implemented sweeping nursing facility
reforms, establishing comprehensive standards that nursing
facilities must meet in order to participate in the Medicaid
program. Most states have adopted these standards directly in
their regulation of Medicaid nursing facilities. Texas has chosen
to impose more stringent standards in certain areas, such as
patient discharge and trusteeships.
In reviewing the state's regulatory system in 1993, the State
Auditor noted that nursing facility staff and regulators were
"overwhelmed by a maze of confusing and complex federal, state and
local laws. Staying current on the regulations is difficult; their
complexity makes them harder to interpret and enforce. Monetary
penalties are difficult to administer. Without effective
regulation and enforcement, nursing home patient care may be
compromised." As a result, the State Auditor recommended that the
agency streamline its rules.
At the time of the transfer of the program from the Dept. of
Health to DHS, the Board of Human Services merely adopted TDH's
rules governing the program. Over the last year, DHS has rewritten
its regulations in order to facilitate compliance by nursing
facilities. Additionally, newly revised federal rules have caused
the agency to reconsider its own regulatory scheme and promulgate
new enforcement rules this summer. To enforce standards, federal
regulations require that institutions have the opportunity to
dispute the regulatory agency's findings.
PURPOSE
H.B. 2644 attempts to assist the Department of Human Services'
own attempts to streamline and simplify its regulatory functions
with regard to nursing facilities participating in the Medicaid
program. The bill would also set up an objective due process
system for disputed cases in nursing facility regulation,
permitting an informal review and creating a binding arbitration
process.
RULEMAKING AUTHORITY
It is the committee's opinion that H.B. 2644 delegates
rulemaking authority to the Dept. of Human Services in its
regulatory role over services delivered in nursing facilities.
Rules would be established in Section 1 in Sec. 32.021(d)(2), (h)
and (i) relating to the resolution of disputes between facilities
and the Department.
Additionally, rulemaking authority is granted to the chief
administrative law judge of the State Office of Administrative
Hearings (SOAH) in Section 5 in Sec. 242.253(b), in order to set up
the arbitration process.
SECTION BY SECTION ANALYSIS
SECTION 1: Amends Sec. 32.021, Human Resources Code, by amending
subsection (d) and adding four new subsections (h), (i), (j) and
(k) as follows:
(d) Permits the Department of Human Services (DHS), in contracts
with Medicaid-paid nursing facilities, to include provisions
relating to monetary penalties, if DHS develops rules adjudicating
claims in contested cases in accordance with Subsection (i) below.
Deletes verbiage relating to administrative appeals conforming to
the Administrative Procedures Act, as those provisions are moved to
(i)(2) below.
(h) Except for rules necessary to implement rights granted to
elderly individuals, requires DHS to adopt rules for certification
of nursing facilities participating in the Medicaid program which
are the same as the federal standards. However, allows DHS to use
authorized civil, administrative or criminal remedies for
violations of certification or licensing requirements.
(i) Requires rules in contested cases to include the following:
(1) Informal dispute resolution process adjudicated by
a disinterested person in agency regional offices and the
central office;
(2) Administrative appeals process under Chapter 2001,
Govt. Code.; and
(3) Arbitration described under subsection (k).
(j) Provides that findings by DHS that nursing facilities violated
Medicaid standards, and assessment or payment of a penalty in this
section does not constitute admissible evidence in a
civil action, but applies to administrative actions by a state
agency or political subdivision that is party to the action.
(k) Permits use of arbitration to resolve an assessment of
monetary penalties under this section.
SECTION 2: Amends Chapter 242.037, Health & Safety Code, by
labeling current provisions as (a) and adding a new subsection (b)
to read as follows:
(b) Instructs DHS not to require certified nursing facilities
complying with each standard of participation in the Medicaid
program to meet additional state standards, if the subject matter
of the standards is the same.
SECTION 3: Amends Sec. 242.069, Health and Safety Code, by adding
new subsection (g) to read as follows:
(g) Requires monies collected as administrative penalties to be
deposited to the credit of the special fund for use by trustees for
emergency assistance in eliminating an immediate threat to the
health or safety of residents.
SECTION 4: Amends Chapter 242, Health and Safety Code, by adding
new Sec. 242.070 to read as follows:
Sec. 242.070. APPLICATION OF OTHER LAW. Prohibits DHS from
assessing a penalty against a nursing facility for violations
arising out of the same act or failure to act.
SECTION 5: Amends Chapter 242, Health & Safety Code, by adding
Subchapter H as follows:
SUBCHAPTER H. ARBITRATION OF CERTAIN DISPUTES.
Sec. 242.251. SCOPE OF SUBCHAPTER. Permits use of arbitration in
disputes between nursing facilities and DHS in five types of cases:
license renewal; license suspension or revocation; assessment of
civil, monetary and certain other penalties, specified herein.
Sec. 242.252. ELECTION OF ARBITRATION. (a) Permits a nursing
facility to elect binding arbitration as an alternative to a
contested case hearing or to a judicial proceeding.
(b) Requires nursing facilities to choose the arbitration
procedure not later than the 10th day after notice of hearing is
received by the institution;
(c) Permits DHS to elect arbitration by the same deadline as in
(b) above;
(d) Declares an election to engage in arbitration irrevocable and
binding on both parties.
Sec. 242.253. ARBITRATION PROCEDURES. (a) Requires arbitration
to be conducted by a panel of three arbitrators.
(b) Requires arbitration and the appointment of the panel to be
conducted according to rules adopted by the chief administrative
judge of the State Office of Administrative Hearings (SOAH).
Before adopting rules, the judge must consult with DHS and must
consider rules of nationally recognized arbitration associations.
(c) Requires DHS to pay the cost of arbitration when the agency
selects the procedure; requires costs to be shared equally when the
nursing facility selects the procedure.
(d) Permits SOAH to designate and contract with a nationally
recognized arbitration association to conduct arbitrations.
Sec. 242.254. ARBITRATOR; QUALIFICATIONS. Requires arbitrators to
be listed with a nationally recognized arbitration association or
be otherwise qualified.
Sec. 242.255. ARBITRATORS; SELECTION. Requires arbitrators to be
appointed according to rules in Sec. 242.053(b) above.
Sec. 242.256. DUTIES OF PANEL. Requires arbitration panel to:
(1) protect the interests of DHS and nursing facilities;
(2) ensure that all relevant evidence has been
disclosed; and
(3) render an order consistent with this chapter and
adopted rules.
Sec. 242.257. SCHEDULING OF ARBITRATION. (a) Requires conducting
panel toe schedule arbitration not later than 90 days after the
date the panel is selected and notify the parties.
(b) Permits the panel to grant a continuance at the request of
either party. A reasonable request may not be denied.
Sec. 242.258. EXCHANGE AND FILING OF INFORMATION. Not later than
the 7th day before the first day of arbitration, requires the
parties to exchange and file with the panel:
(1) all documentary evidence not previously exchanged
and filed that is relevant; and
(2) information relating to a proposed resolution of the
dispute.
Sec. 242.259. ATTENDANCE REQUIRED. (a) Permits the panel to
proceed in the absence of any party who fails to be present or
obtain a postponement.
(b) Prohibits a panel from making an order solely on the default
of a party and requires parties present to submit evidence before
making an award.
Sec. 242.260. TESTIMONY; RECORD. (a) Permits panels to require
witnesses to testify under oath, and requires testimony if
requested by the parties.
(b) Requires DHS to make an electronic recording of the
proceeding.
(c) Permits parties to make stenographic records of proceedings,
but such record is not required.
Sec. 242.261. EVIDENCE. (a) Permits the parties to offer
evidence as desired and requires them to produce additional
evidence as the panel considers necessary.
(b) Declares the panel to be the judge of relevance and
materiality of evidence offered. Strict conformity to rules of
judicial proceedings not required.
Sec. 242.262. CLOSING STATEMENTS; BRIEFS. Permits the parties to
present closing statements, if desired, but record may not remain
open for written briefs unless the panel so requests.
Sec. 242.263. EX PARTE CONTACTS PROHIBITED. (a) Except as
provided in subsection (b), the parties may not communicate with an
arbitrator except at an oral hearing, unless the parties and panel
agree otherwise.
(b) Requires oral or written communications to be directed to the
association conducting the arbitration or to SOAH, for transmittal
to the panel.
Sec. 242.264. ORDER. (a) Permits the panel to enter an order in
relation to a dispute.
(b) Requires panel to enter the order within 60 days of the last
day of the proceeding.
(c) Requires the panel to base the order on facts established at
arbitration, including stipulations of the parties, and on the law
applied to those facts.
(d) Requires the order to be in writing, signed and dated by each
arbitrator, and include a statement on the panel's decision on the
contested issues and the parties' stipulations on uncontested
issues.
(e) Requires the panel to file a copy of the order with DHS and
notify the parties of the decision in writing.
Sec. 242.265. EFFECT OF ORDER. Declares an order to be final and
binding on all parties, with no right to appeal, except as provided
by Sec. 242.267 below.
Sec. 242.266. CLERICAL ERROR. Permits the panel to retain
jurisdiction of the award for 20 days after the award in order to
correct clerical errors.
Sec. 242.267. COURT VACATING ORDER. (a) On application of the
nursing facility, requires a court to vacate a panel's order to an
arbitration conducted at the election of DHS upon a finding that:
(1) the order was procured by corruption, fraud or
misrepresentation;
(2) the decision was arbitrary or capricious and against
the wright of the evidence; or
(3) the order exceeded the panel's jurisdiction.
(b) If vacated, remands the dispute to DHS for another arbitration
proceeding.
(c) Requires suit to vacate to be filed within 30 days after the
date of the award or the date the nursing facility knew or should
have known of a basis for suit, but no later than the 1st
anniversary of the date of the order.
(d) Places venue in the county where arbitration was conducted.
SECTION 6: (a) Effective date, September 1, 1995.
(b) Arbitration procedure applicable to disputes in which formal
proceedings are commenced on or after January 1, 1996.
SECTION 7: Emergency clause.
COMPARISON OF ORIGINAL TO SUBSTITUTE
The committee substitute clarified that DHS may adopt more
stringent standards for Medicaid nursing facilities in the area of
patient rights and permitted informal hearings to be held at the
agency's regional as well as central offices. The substitute also
added a new procedure for resolution of disputes, binding
arbitration.
SUMMARY OF COMMITTEE ACTION
In a public hearing on April 10, 1995, the Chairman of the
Human Services Committee laid out H.B. 2644 by Rep. Hilderbran and
explained the bills. The following witnesses testified for H.B.
2644: Sara Speights, Texas Health Care Ass'n; Delta Sue Best,
representing herself and nursing home owners; Cheryl L. Killian,
Arlington; Keith Rayl, Temple; Chet Brooks, representing himself
and Chartwell Health Care Inc.; Lindsay Pow Thorpe, Chartwell
Healthcare Group of Companies; and David Latimer, Texas Ass'n of
Homes and Services for the Aging. Mr. Latimer also testified as
neutral on H.B. 2644. No one testified against H.B. 2644.
The Chairman closed on the bill and H.B. 2644 was left pending.
The Committee convened in a public hearing on April 24, 1995,
and took up H.B. 2644 which had been pending. The Chairman offered
a committee substitute and explained the differences. The Chairman
recognized Rep. Maxey who moved adoption of the substitute.
Hearing no objection, the committee substitute for H.B. 2644 was
adopted.
The Chairman recognized Rep. Maxey who moved that the
committee report H.B. 2644 favorably as substituted; Rep.
Wohlgemuth seconded the motion. The motion prevailed by a record
vote of 8 Ayes, 0 Nays, 0 PNV and 1 Absent.