BILL ANALYSIS
Insurance Committee
By: Berlanga
04-19-95
Committee Report (Substituted)
BACKGROUND
Section 5.01(a), Medical Practice Act (Art. 4495b, Vernon's
Texas Civil Statutes) authorizes certain nonprofit health
corporations to provide health care to the public. So long as
these corporations are paid on a fee for service basis, no other
problems arise. However, regulators at the Texas Department of
Insurance believe that under certain circumstances, if the
corporations are paid on any other basis, such as a capitated or
prepaid fee basis, the corporations are in the business of
insurance and should be licensed as an insurance carrier or health
maintenance organization. However, the Insurance Code is not clear
on this point.
PURPOSE
As substituted, H.B 3111 requires approved non-profit health
corporations to obtain a certificate from the Commissioner of
Insurance before contracting to deliver health care to the general
public on any basis other than a fee-for-service basis unless the
law provides otherwise.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does grant
additional rulemaking authority to the insurance commissioner under
Section 1 of the bill as proposed under Article 21.52F, Sec. 7,
requiring the commissioner to adopt rules to implement this
article.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Chapter 21, Insurance Code, adding a new
Article 21.52F.
Sec. 1:
Defines the terms: applicant, approved nonprofit health
corporation, certificate holder, health care plan, and insurance
carrier.
Sec. 2:
Requires an approved non-profit health corporation to obtain a
certificate from the Commissioner of Insurance before contracting
to deliver health care to the general public on a prepaid basis.
Health care provided on a fee for service basis or under a contract
with an insurance carrier are explicitly excluded from the
requirement to obtain a certificate.
Sec. 3:
Establishes the qualifications for a certificate. Specifically,
this section requires a certificate holder to a) meet the same
requirements as a health maintenance organization and b) be
accredited as provided for in Sec. 4.
Sec. 4:
Requires the applicant for a certificate to obtain accreditation by
1) the National Committee on Quality Assurance, 2) the Joint
Commission on Accreditation of Healthcare Organization's
accreditation for health care networks, or 3) an accrediting
organization recognized by rule of the Commissioner of Insurance.
The section also authorizes a provisional certificate if
accreditation is pending.
Sec. 5:
Requires that an applicant or certificate holder providing only
medical care under an ERISA plan shall be treated for purposes of
Section 13 (Protection Against Insolvency) of the HMO act (Section
20A.13 Vernon's Texas Insurance Code) as a single health care
service plan.
Sec. 6:
Grants a certificate holder all the powers of a HMO and imposes
all the duties, regulation and enforcement that an HMO is subject
to under the HMO Act (Chapter 20A,Vernon's Texas Insurance Code)
and Texas insurance laws.
Sec. 7:
Grants authority to the Commissioner of Insurance to adopt rules.,
SECTION 2.
Transition language requires the Commissioner of Insurance to
appoint an advisory committee to recommend rules necessary to
implement this Act. The section also requires the Commissioner of
Insurance to adopt rules by January 1, 1996.
SECTION 3. Effective date is April 1, 1996. except as
provided for in Section 4.
SECTION 4. Section 2 is effective September 1, 1995.
SECTION 5. Emergency clause.
COMPARISON OF ORIGINAL TO SUBSTITUTE
As substituted, House Bill 3111 requires a 5.01(a) nonprofit
healthcare corporation that wishes to contract with employers to
meet the same requirements and be subject to the same regulation as
a HMO. This replaces language in the original bill that sets out a
different regulatory scheme. The substitute also provides that a
5.01(a) seeking certification in order to only provide medical
services for ERISA employers shall be treated as a single health
care service plan HMO for meeting financial solvency requirements.
The bill also drops certain language concerning contracting with
public entities.
SUMMARY OF COMMITTEE ACTION
In accordance with House rules, H.B. 3111 was heard in a
public hearing on April 19, 1995. The Chair laid out H.B. 3111 and
a substitute to H.B. 3111 and recognized Representative Duncan to
explain the difference between the substitute to H.B. 3111 and the
filed bill.
The Chair recognized the following persons to testify in support of
H.B. 3111: Bob Glasgow, Alliance of Non-Profit Health Care
Corporations; John Holcomb M.D., representing himself; Allen Horne,
Texas Hospital Association; M. Derick Boldt M.D., Texas Alliance of
Not for Profit Health Corporations; John D. Box, Texas Alliance for
Non-Profit Health Care Corporations.
The Chair recognized the following persons to testify
neutrally on H.B. 3111: Nancy Sims, Texas Business Group on Health;
Jeff Kloster, PCA Health Plans of Texas, Inc.; Connie Barron, Texas
Medical Association.
The Chair recognized Representative Duncan who offered an
amendment to the substitute to H.B. 3111. The Chair heard no
objections and the amendment to the substitute to H.B. 3111 was
adopted. The Chair recognized Representative Duncan who moved the
Committee redraft the substitute to H.B. 3111 incorporating the
adopted amendment into a new and complete substitute of H.B. 3111.
The Chair heard no objections and the motion to redraft the
substitute of H.B. 3111 was adopted.
The Chair recognized Representative Duncan who moved the
Committee adopt the redrafted substitute to H.B. 3111. The Chair
heard no objections and the redrafted substitute to H.B. 3111 was
adopted.
The Chair recognized Representative Duncan who moved the
Committee report the redrafted substitute to H.B. 3111 to the full
House with the recommendation that it do pass and be printed.
Representative De La Garza seconded the motion and the motion
prevailed by the following vote: AYES (8); NAYES (0); ABSENT (1);
PNV (0).