BILL ANALYSIS C.S.H.B. 3111 By: Berlanga (Sibley) Economic Development 05-23-95 Senate Committee Report (Substituted) BACKGROUND Section 5.01(a), Art. 4495b, V.T.C.S. (Medical Practice Act) authorizes certain nonprofit health corporations to provide health care to the public on a fee-for-services basis. However, if the corporations are paid on a capitated or prepaid fee basis, they are acting as health maintenance corporations and should be licensed and regulated by the Texas Department of Insurance. PURPOSE As proposed, C.S.H.B. 3111 requires certain nonprofit health corporations to obtain a certificate of authority from the commissioner of insurance before contracting to deliver health care. RULEMAKING AUTHORITY It is the committee's opinion that rulemaking authority is granted to the Texas State Board of Medical Examiners in SECTION 1 (Section 5(b), Article 21.52F, Insurance Code), and to the commissioner of insurance under SECTION 1 (Sec. 7, Insurance Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Chapter 21E, Insurance Code, by adding Article 21.52F, as follows: Art. 21.52F. CERTIFICATION OF CERTAIN NONPROFIT HEALTH CORPORATIONS Sec. 1. DEFINITIONS. Defines "applicant," "approved nonprofit health corporation," "certificate holder," "health care plan," and "health maintenance organization." Sec. 2. CERTIFICATE OF AUTHORITY REQUIRED; EXCEPTIONS. (a) Authorizes an approved nonprofit health corporation to arrange for or provide a health care plan to enrollees on a prepaid basis only if the corporation obtains and maintains a certificate of authority issued by the department under this article. (b) Provides that this article does not apply to an approved nonprofit health corporation that contracts to arrange for or provide health care services on a fee-for-service basis; contracts entered into by a certificate holder to arrange for or provide health care services on a fee-for-service basis; or an activity exempt from regulation under Section 26(f), Chapter 20A, V.T.I.C. (Texas Health Maintenance Organization Act). (c) Authorizes an approved nonprofit health corporation to arrange for or provide health care services on a risk-sharing or capitated risk arrangement on behalf of a health maintenance organization. Provides that an approved nonprofit health corporation is not required to obtain a certificate of authority under this article or under Chapter 20A, V.T.I.C. Sec. 3. QUALIFICATIONS FOR CERTIFICATE OF AUTHORITY. Authorizes the commissioner of insurance (commissioner) to issue a certificate of authority only to an approved nonprofit health corporation that meets certain qualifications. Sec. 4. ACCREDITATION REQUIRED. (a) Requires an applicant to establish and a certificate holder to maintain accreditation by the National Committee on Quality Assurance; the Joint Commission on Accreditation of Healthcare Organization's accreditation for health care networks; or an accrediting organization recognized by rule of the commissioner. (b) Requires the commissioner to grant a provisional certificate of authority to an applicant if the applicant meets certain requirements. Sec. 5. UNFAIR COMPETITION. (a) Prohibits a certificate holder from engaging in unfair and disruptive provider hiring or contracting practices, the purpose of which is to limit competition from traditional community providers. (b) Requires the Texas State Board of Medical Examiners to adopt rules to implement this section. Sec. 6. POWERS AND DUTIES OF CERTIFICATE HOLDER. Provides that a certificate holder has all the powers granted to and duties imposed on a health maintenance organization under Chapter 20A, V.T.I.C. (Texas Health Maintenance Organization Act) and the insurance laws of this state, and is subject to regulation and regulatory enforcement under those laws in the same manner as a health maintenance organization. Sec. 7. RULES. Requires the commissioner, except as provided by Section 5(b), to adopt rules to implement this article. SECTION 2. (a) Requires the commissioner, no later than September 16, 1995, to establish an advisory committee composed of: (1) five members representing nonprofit health corporations certified under Section 5.01(a), Article 4495b, V.T.C.S. (Medical Practice Act); and (2) four members representing the public, two of whom are employers. (b) Requires the advisory committee, no later than October 16, 1995, to recommend to the commissioner rules necessary to implement Article 21.52F, Insurance Code, as added by this Act. (c) Requires the commissioner to publish proposed rules necessary to implement Article 21.52F, Insurance Code, as added by this Act, no later than January 1, 1996. Requires the commissioner, in developing the rules, to consider the recommendations of the advisory committee. SECTION 3. Prohibits the Texas Department of Insurance from issuing a certificate of authority to an approved nonprofit health corporation under Article 21.52F, Insurance Code, as added by this Act, before April 1, 1996. SECTION 4. Effective date: September 1, 1995. SECTION 5. Emergency clause.