BILL ANALYSIS
C.S.H.B. 2766
By: Smithee
04-20-95
Committee Report (Substituted)
BACKGROUND
Managed care has become a growing part of health care delivery
in Texas. Many Texans are covered by managed care plans. While
managed care has been successful in reducing some costs, various
problems have arisen, such as consumer confusion over coverage,
interruption of longstanding doctor-patient relationship, and
denial of needed and appropriate medical care.
PURPOSE
As proposed, House Bill 2766 would amend the Insurance Code by
adding Chapter 21 to create the Patient Protection Act establishing
a set standards for managed care organizations.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does grant
additional rulemaking authority to Insurance Commissioner under the
following sections of the bill. SECTION 1 adds Article 21.03,
(a)(1), Insurance Code, by requiring the Commissioner to promulgate
rules for managed care entities that conduct business in this
state, including standards ensuring compliance with this
subsection. SECTION 2 amends Section 14, Article 21.58A, (h),
Insurance Code, by requiring the board to promulgate rules for
appropriate verification and enforcement of compliance if a health
maintenance organization preforms utilization review.
SECTION BY SECTION ANALYSIS
SECTION 1.
The Insurance Code is amended by Adding Subchapter G to Chapter 21.
SUBCHAPTER G. PATIENT PROTECTION ACT
Article 21.101:
Short Title. This chapter may be cited as The Patient
Protection Act.
Article 21.102: Defines the following terms in this
subchapter:
(1) Commissioner (5) Managed Care Plan
(2) Emergency Care Services (6) Prospective Enrollee
(3) Emergency Medical Condition (7) Utilization Review Law
(4) Managed Care Entity
Article 21.103: STANDARDS
(a)(1) Delegates rulemaking authority to the Insurance
Commissioner.
(2) Prospective enrollees in managed care plans must be provided
information as to the terms and conditions of the plan. All
written plan description must be in a readable and understandable format. Specific items that must be included are:
Article 21.103: (continued)
(A) Coverage provisions, benefits, including prescription drugs,
and any exclusions of service.
(B) Prior authorization or other review requirements including
pre-authorization review, concurrent review, post-service
review, and post-payment review
(C) An explanation of enrollee financial responsibility for
payment for coinsurance or other non-covered or out-of-plan
services
(D) Disclosure to enrollees establishing "YOUR RIGHTS UNDER TEXAS
LAW:" This subsection provides for specific language.
(E) Requires the plan to provide a phone number and address to
obtain additional information outlined in subsection D
(F) The plan may comply with subsection D by providing the
information in its latest annual financial statement submitted to
the Texas Department of Insurance.
(3) Covered enrollees must have adequate access through the
entity's provider network to all items and services contained in
the benefit package, including 24-hour emergency services. Access
shall take into account the diverse needs of the enrollees.
(4) The plan shall provide the following information to the
Commissioner: explanation of the targeted physician, dental
network configuration, geographic distribution of physicians and dentists by specialty, the physician and dentist to
enrollee ratio by specialty. Information shall be filed no
less than annually upon the establishment of a new plan, expansion of a service area, or when network configuration targets
are significantly modified.
(5) If a hospital is certified by the Medicare program or
accredited by the Joint Commission on Accreditation of
HealthCare Organizations, the managed care plan shall accept such certification or accreditation.
(6) Financial incentive programs shall not limit medically
necessary and appropriate services.
(7) Requires a plan to establish a consult and advice mechanism on
the plan's medical or dental policy to include new technology
and procedures, the development and utilization of a prescription
drug formulary, utilization review criteria and procedure, quality
and credentialing criteria, and medical or dental management
procedures.
(8) Requires the disclosure to providers the application and
qualification requirements for each plan. Each physician or
dentist not selected shall be given the reason or reasons for non-selection.
(9)(A) A plan must credential accepted physicians or dentists.
(B) Each application shall be reviewed by a credentialing
committee composed of network participating physicians or
dentists.
(C) Requires credentialing to be based on identified standards
with consultation from credentialed physicians or dentists in the
plan. If economic consideration are part of the decision to
select or deselect an applicant, an identified criteria must be
used and available to an applicant, participating physician or
dentist. An economic profile of a physician or dentist must be
adjusted to characteristics of a physician's or dentist's practice
that may account for variations from expected costs.
(D) Plans that conduct or utilize economic profiling of physicians
or dentists on a periodic basis shall make the economic
profiles available to the participating provider.
(E) A plan may not exclude a physician or dentist solely on the
basis of the physician's or dentist's specialty practice or
anticipated patient characteristics. The Act does not prohibit a plan from rejecting an application based upon the plan's
decision that it has a sufficient number of qualified providers.
(F) Requires applicants to be provided with the reasons for
credentialing denial or contract non-renewal.
(G) Requires written explanation of termination of contract,
discussion opportunity, and submission of a complete corrective
action plan by a terminated physician or dentist.
Provides for case exceptions. A physician or dentist is
entitled to a review by a plan advisory panel. Any decision
rendered by the advisory panel shall be considered non- binding.
(H) Any action under and consideration required to be reported to
the National Practitioner Data Bank or a state medical board
under federal, or state law must comply with the physician's
procedural rights outlined in the federal Health Care Quality
Improvement Act of 1986, 42 U.S.C., §11101-11152. Under
subdivision (H), a managed health care entity shall be
considered a health care entity as defined in Article 4495(b)
T.R.C.S., Section 1.03(a)(5).
(I) Requires a plan establish a reasonable procedures for
transition of enrollees of the plan to a new physician or
dentist.
(J) Upon termination of a contract, the plan shall reimburse the
physician or dentist for reasonable costs for the creation and
maintenance of the patient records. If the physician or dentist
terminates the contract, the physician or dentist shall incur the
cost.
(10) A plan must:
(A) Cover emergency care services without regard to whether or not
the provider furnishing the services has a contractual or other
arrangement with the entity to items or services including
treatment and stabilization of emergency medical condition.
(B) Provide that prior authorization requirement for medically
necessary services originating in a hospital emergency
department following treatment or stabilization shall be deemed to be approved unless denied in a time appropriate to the
circumstances or determined by the treating physician.
(C) Cover any medical screening examination to determine whether
or not an emergency medical condition exists or other
evaluation required by state or federal law to be provide in the
emergency department of a hospital.
(11) If prior authorization is a condition to coverage of a service
the plan must ensure that enrollees are required to sign a
medical and dental information release consent form.
(12) All managed care plans are subject to and shall meet the
requirements of the utilization review law.
Article 21.105: VIOLATIONS
(a) If applicable and after notice and hearing, the Commissioner
may for a violation of this chapter:
(1) impose sanctions under Section 7, Article 1.10 of this
Code, or
(2) issue a cease and desist order under Article 1.10 of this
Code.
(b) The authority vested in the Commissioner under this Article
shall not in any way limit the Commissioner vested authority
under Chapter One of this Code, to administer, enforce and
carry out the provisions of this Act.
(c) Nothing in this subchapter nor promulgated rules shall:
(1) provide for a private cause of action for damages or create a
standard of care, obligation or duty which provides for a basis
for a private cause of action for damages;
(2) abrogate any statutory or common law cause of action,
administrative remedy or defense otherwise available and existing
prior to the effective date of this Act.
(d) Provides for an aggrieved health care provider to petition the
Commissioner for relief within 30 days of the action. The health
care provider must provide notice to the health care plan. The
Commissioner may:
(1) deny the petition;
(2) issue a cease and desist order; or
(3) provides for a contested case hearing in accordance with
the Administrative Hearings Act. If the Commissioner fails
to act within 90 days of the date of the petition is filed,
the petition is deemed to have been denied. If the Commissioner
conducts a contested case hearing and does not render a
decision within 180 days of the petition was filed, the
petition is deemed to have been denied.
SECTION 2.
Amends Section 14, Article 21.58A, subsections (g) and (h),
Insurance Code as follows:
(g) Deletes the language "a health maintenance organization is not
subject to this article except as expressly provided in this
subsection and Subsection (i) of this section". Deletes
applicable utilization review for a health maintenance
organization. Deletes compliance with Sections 4(b), (c), (e),
(f), (h), (i), and (j) of this article and rulemaking authority.
Deletes Subsections (g)(2) and (g)(3).
(h) A health maintenance organization which delivers or issues for
delivery a health insurance policy or coverage agreement in Texas
and is subject to this code is not subject to this article
except as expressly provided in this subsection and Subsection (i)
of this section. Requires the board to promulgate rules for
appropriate verification and enforcement of compliance if a health
maintenance organization preforms utilization review.
SECTION 3. Effective Date
SECTION 4. Emergency Clause
COMPARISON OF ORIGINAL TO SUBSTITUTE
As substituted, H.B. 2766 delete would the application to
self-funded health care entities, the certification of managed care
plans, and removes references to "center of excellence". The
substitute also omits licensure by the Texas Department of Health
as acceptance for health care plan participation.
The substitute removes the prohibition of "without cause"
termination contract provision
and it does not provide for a private cause of action for damages,
create a standard of care, or obligation. Additionally, the
substitute does not abrogate any statutory or common law cause of
action, administrative remedy or defense otherwise available and
existing prior to the effective date of this Act. The substitute
removes the point of service offering provision contained within
the filed bill
The substitute clarifies the authority vested in the
Commissioner under this Act shall not in any way limit the
authority vested in the Commissioner under Chapter One of this
Code, to administer, enforce and carry out the provisions of this
Act. The substitute establishes the disclosure of application
process and participation criteria to providers along with reason
for denial of an application. The substitute also requires health
care plans to provide information to the Insurance Commissioner on
network configuration, including geographic distribution of
physicians and dentists by specialty, and the physician and dentist
to enrollee ratio by specialty.
SUMMARY OF COMMITTEE ACTION
In accordance with House rules, H.B. 2766 was heard in a
public hearing on April 12, 1995. The Chair (Representative
Duncan) laid out H.B. 2766 and a substitute to H.B. 2766 and
recognized Representative Smithee to explain the difference between
the substitute to H.B. 2766 and the filed bill. The Chair
recognized the following persons to testify in support of H.B.
2766:
Brenda Walberg, representing herself; Lisa McGiffert, Consumers
Union; Stephen Yelenosky, Advocacy, Inc.; D. Crawford Allison M.D.,
Texas Medical Association and Texas Academy of Family Physicians;
Terry Kuhlmann M.D., Texas Association of Obstetricians &
Gynecologist
James Willmann, Texas Nurse Association; Jean Moore, representing
herself; Richard J. Hausner M.D., Texas Medical Association and
Harris County Medical Society; Mirtha T. Casimir M.D., representing
herself; Dr. John S. Findley, Texas Dental Association; David
Haymes, representing himself; Carolyn Dowden, representing herself;
Don P. Warden M.D., Texas Society of Internal Medicine; John B.
Isbell, representing himself; Thomas M. Kozak, Ph.D., Texas
Psychological Association; Albert E. Sanders, representing himself;
Greg Hoosen, Texas College of Emergency Physicians; Joe A. Dasilva,
Texas Hospital Association; Susan Speight, Texas Association
Marriage and Family Therapy; Nancy Epstein, Disability Policy
Consortium.
The Chair recognized the following persons to testify
neutrally on H.B. 2766:
Eileen M. Campbell, Marathon Oil Company; Sabrina Foster, City of
Houston; William Phillips, Texas Business Group on Health; John
Kajander, Texas Business Group on Health; John Rodrigve, Texas
Business Group on Health.
The Chair recognized the following persons to testify in
opposition to H.B. 2766:
Ted B. Roberts, Texas Association of Business & Chambers of
Commerce; Lane A. Zivley, Texas Public Employees Association; Ed
Baxter, Blue Cross Blue Shield of Texas; Kenneth Tooley, Texas
Association of Life Underwriters; Gordon Richardson, Texas
Association of Life Underwriters; Geoff Wurzel, Texas HMO
Association; Tammy Cotton, Texas Citizens for a Sound Economy; Jeff
Kloster, Texas HMO Association. The Chair left H.B. 2766 pending
before the Committee.
Pursuant to an announcement filed with the Journal Clerk and
read by the Reading Clerk, the House Committee on Insurance met in
a formal meeting on April 20, 1995 at desk #24 on the House Floor
and was called to order by the Chair, Representative John Smithee.
There being a quorum present, the following business was
transacted. The Chair laid out H.B. 2766 and a substitute to H.B.
2766. The Chair explained the difference between the substitute to
H.B. 2766 and the filed bill. The Chair recognized Representative
Dutton who moved the Committee adopt the substitute to H.B. 2766.
The Chair heard no objections and the substitute to H.B. 2766 was
adopted.
The Chair recognized Representative Dutton who moved the
Committee report H.B. 2766 as substituted to the full House with
the recommendation that it do pass and be printed. Representative
Shields seconded the motion and the motion prevailed by the
following vote:
AYES (9); NAYES (0); ABSENT (0); PNV (0).