BILL ANALYSIS


                                                     C.S.S.B. 600
                                                    By: Zaffirini
                                        Health and Human Services
                                                          3-16-95
                                   Committee Report (Substituted)
BACKGROUND

The Texas Medicaid program has grown from a total budget of $7.5
billion in the 1990-91 biennium to an appropriation of $18.7
billion for the current 1994-95 biennium, including $6.8 billion in
general revenue and $11.9 billion in federal funds.  This growth is
due to federal mandates regarding eligibility expansions, mandatory
services, and provider reimbursement rules.  Although caseload
growth in the program slowed recently, the demand for new state
funds for Medicaid in the 1996-97 biennium will be approximately
$2.2 billion.

Lt. Gov. Bob Bullock charged the Senate Committee on Health and
Human Services with the challenging task of developing
recommendations for wholesale reform.  In response the committee
began an intensive investigation that included a public hearing on
May 31-June 1, 1994; on-site visits to Medicaid managed care pilot
projects in Texas, to a facility for persons with mental
retardation, to special homes for children, to a rural health
clinic, and to a rehabilitation center; and a second hearing on
November 29-30, 1994.  The committee heard public testimony with
the House Committees on Public Health and on Human Services and
then adopted the recommendations that are the basis of this
legislation.

PURPOSE

As proposed, C.S.S.B. 600 requires the Texas Department of Health,
the Department of Mental Health and Mental Retardation, and the
Texas Department of Insurance to set forth requirements for
performance, operation, and financial standards for managed care
organizations that serve Medicaid clients.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not grant any
additional rulemaking authority to a state officer, institution, or
agency.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Chapter 12B, Health and Safety Code, by adding
Section 12.017, as follows:

     Sec. 12.017.  MANAGED CARE ORGANIZATIONS:  MEDICAID PROGRAM. 
     (a) Requires the Texas Department of Health (department) to
     develop for managed care organizations that serve Medicaid
     clients performance, operation, quality of care, marketing,
     financial standards, and standards relating to children's
     access to quality health care services (standards), with an
     exception.
     
     (b) Requires the department to ensure that each Medicaid
       client can receive quality health care services in the
       client's local community in establishing standards.
SECTION 2. Amends Chapter 533B, Health and Safety Code, by adding
Section 533.045, as follows:

     Sec. 533.045.  MANAGED CARE ORGANIZATIONS:  MEDICAID PROGRAM. 
     Requires the Texas Department of Mental Health and Mental
     Retardation to develop standards for the provision by managed
     care organizations of mental health and mental retardation
     services to Medicaid clients.
SECTION 3. Amends Chapter 1, Insurance Code, by adding Article
1.61, as follows:

     Art. 1.61.  MEDICAID MANAGED CARE ORGANIZATION:  FISCAL
     SOLVENCY AND COMPLAINT SYSTEM GUIDELINES.  Requires the Texas
     Department of Insurance, in conjunction with the department,
     to establish fiscal solvency standards for managed care
     organizations that serve Medicaid patients.
SECTION 4. Effective date: September 1, 1995.

SECTION 5. Emergency clause.