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.