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).