BILL ANALYSIS
C.S.S.B. 202
By: Patterson
Economic Development
4-29-95
Committee Report (Substituted)
BACKGROUND
Many behavioral health care companies are contracting with
employers, insurance companies, and HMOs to provide mental health
and substance abuse treatment services on a capitated basis. These
companies wish to obtain a certificate of authority to operate as
a single service HMO or single health care service plan. Current
law makes the issuance of these types of certificates difficult if
not impossible.
PURPOSE
As proposed, C.S.S.B. 202 provides for certain services through
health maintenance organizations.
RULEMAKING AUTHORITY
It is the committee's opinion that rulemaking authority is granted
to the commissioner of insurance under SECTION 3 (Section 9(k),
Article 20A.09, V.T.I.C.) SECTION 4 (Section 22(c), Article 20A.22,
V.T.I.C.) and SECTION 9 (Article 3.64(e), Insurance Code) of this
bill.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Section 2, Article 20A.02, V.T.I.C. (Texas Health
Maintenance Organization Act), by amending Subsections (a), (e),
(m), (n), and (s), and adding Subsections (u), (v), (w), (x), (y),
(z), (aa) and (bb), as follows:
(a) Redefines "basic health care services."
(e) Redefines "evidence of coverage."
(m) Redefines "physician."
(n) Redefines "provider."
(s) Redefines "single health care service plan."
(u) Defines "point of service arrangement."
(v) Defines "blended contract."
(w) Defines "capitation."
(x) Defines "capitated person."
(y) Defines "subscriber."
(z) Defines "independent physician association."
(aa) Defines "single service health maintenance organization."
(bb) Defines "health maintenance organization delivery
network."
SECTION 2. Amends Section 6(a), Article 20A.06, V.T.I.C., to
provide that the powers of a health maintenance organization (HMO)
include:
(a)(3) the furnishing of or arranging for medical care
services through other HMOs or physicians or groups of
physicians who have independent contracts with a HMO. Makes
conforming changes.
(6) the offering of:
(C) a point of service arrangement by contracting with an
insurer or group hospital service corporation to provide
indemnity benefits, including optional coverages for out-of-area services or out-of-network care;
(D) a blended contract to an enrollee; and
(E) an evidence of coverage, as a single document, that
provides for coverage under one or more health care plans or
single health care service plans;
(8) the paying of compensation to a physician, independent
physician association, provider, or other HMO based on a fee-for-service arrangement, a risk-sharing arrangement, or a
capitation arrangement;
(9) the furnishing of or arranging for mental health services
under Article 3.51-14, Insurance Code, or chemical dependency
services under Article 3.51-9, Insurance Code, through a
contract with a single service HMO.
(10) Redesignates existing Subdivision (8).
SECTION 3. Amends Section 9, Article 20A.09, V.T.I.C., by amending
Subsections (b) and (f), and adding Subsection (k), as follows:
(b) Prohibits the charges resulting from the application of
the formula or method from being altered for an individual
enrollee based on the status of that enrollee's health, except
that the charges may be based on the age and gender of an
individual enrollee and the enrollee's dependents for an
individual contract.
(f) Provides that Article 3.51-9, Insurance Code, applies to
HMOs offering basic health care services and to single service
HMOs offering chemical dependency services, rather than to
HMOs other than those offering only a single health care
service plan.
(k) Requires an HMO to offer and make available to each
enrollee, on termination of coverage, a privilege to continue
with group coverage or to convert to coverage with at least
two standard benefit plans established, by rule, adopted by
the commissioner of insurance (commissioner). Requires
coverage under this subsection to be provided without evidence
of insurability; or a new preexisting condition, limitation,
or exclusion.
SECTION 4. Amends Section 22, Article 20A.22, V.T.I.C., by adding
Subsections (c) and (d), as follows:
(c) Authorizes the commissioner to adopt rules as the
commissioner considers to be appropriate concerning:
(1) standardization of benefits for coverage offered by an
HMO, including conversion, continuation, and individual
coverage; and
(2) formulas and methods for calculating the schedule of
charges for enrollee coverage issued on a group and an
individual basis.
(d) Provides the rulemaking authority granted by Subsection
(c) of this section does not limit the rulemaking authority
granted under Subsection (a) of this section.
SECTION 5. Amends Section 26(f), Article 20A.26, V.T.I.C., by
adding Subdivision (5), to provide that this Act does not apply to
a person to the extent that person is a physician, group of
physicians, or provider who provides or arranges to provide health
care services or medical care directly or indirectly through a
contract or subcontract with an HMO that holds a certificate of
authority under this Act.
SECTION 6. Amends Section 26(h), Article 20A.26, V.T.I.C., to
provide that the provisions of the Insurance Code are applicable to
organizations permitted under the authority of this Act.
SECTION 7. Amends Article 3.51-14, Insurance Code, by adding
Section 4, as follows:
Sec. 4. SINGLE SERVICE HEALTH MAINTENANCE ORGANIZATIONS;
EXCEPTION. (a) Defines "basic health care services" and
"single service health maintenance organization."
(b) Authorizes an entity subject to Section 2 of this
article to satisfy the requirements of this article by
offering and making available the coverage required under
this article through a contract with a single service HMO.
Requires a single service HMO to offer and make available
the same level of coverage under Section 3 of this article
as is required of an HMO offering basic health care
services.
(c) Subjects a single service HMO that provides only mental
health services or chemical dependency services, or both, to
this article and to offer and make available the same level
of coverage under Section 3 of this article as is required
of an HMO offering basic health care services.
(d) Authorizes a single service HMO to also offer and make
available different levels of coverage for mental health
services in addition to the level of coverage required under
Section 3 of this article, but the coverage must be at least
as favorable as the minimum requirements provided by 42 CFR
Section 417.101(a)(4) for qualification of HMOs.
SECTION 8. Amends Section 2A, Article 3.51-9, Insurance Code, by
amending Subsection (e), and adding Subsection (f), as follows:
(e) Defines "single service health maintenance organization."
Makes nonsubstantive changes.
(f) Authorizes an entity subject to this section to provide
the coverage required under this article through a contract
with a single service HMO. Requires a single service HMO to
provide the same level of coverage under this section as is
required of an HMO offering basic health care services.
SECTION 9. Amends Chapter 3F, Insurance Code, by adding Article
3.64, as follows:
Art. 3.64. INSURERS CONTRACTING WITH HEALTH MAINTENANCE
ORGANIZATIONS. (a) Defines "insurance carrier," "health
maintenance organization," "point of service arrangement," and
"blended contract."
(b) Authorizes an insurance carrier to contract with an HMO
to provide a point of service arrangement, including
optional coverages for out-of-area services or out-of-network care.
(c) Authorizes an insurance carrier and an HMO to offer a
blended contract if indemnity benefits are combined with
health care plan benefits offered by the HMO. Provides that
the use of a blended contract is limited to point of service
arrangements and contracting arrangements between an
insurance carrier and a single service HMO as approved by
the commissioner. Prohibits an insurance carrier from using
a blended contract for a purpose other than as provided by
this article.
(d) Provides that a blended contract delivered, issued, or
used in this state is subject to and must be filed with the
department for approval as provided by Article 3.42 of this
code and Section 9, Article 20A.09, V.T.I.C.
(e) Authorizes the commissioner to adopt rules to implement
this article.
SECTION 10. (a) Requires an existing organization that provides
only mental health services and substance abuse services that is
required by Chapter 20A, V.T.I.C., to apply for a certificate of
authority to operate as an HMO to submit an application as provided
by Chapter 20A, V.T.I.C. Requires the application to be postmarked
no later than 5 p.m. on December 31, 1995. Authorizes an applicant
to continue to operate until the commissioner of insurance acts on
the application. Requires an application, if the applicant is
denied, to be treated as an HMO whose certificate of authority has
been revoked.
(b) Effective date: September 1, 1995.
Makes application of this Act prospective beginning
January 1, 1996.
SECTION 11. Emergency clause.