BILL ANALYSIS
C.S.S.B. 1407
By: Harris
Economic Development
04-12-95
Committee Report (Substituted)
BACKGROUND
Currently, a health care provider who arranges for or agrees to
provide health care services to enrollees of a health care plan on
a prepaid basis comes within the definition of a health maintenance
organization (HMO) and must be licensed as an HMO by the Texas
Department of Insurance. Health care providers and HMOs in the
state desire to enter into capitated payment arrangements for the
delivery of services to enrollees; however, these arrangements are
not legal unless the provider is also licensed as an HMO. Current
law prohibits one HMO from contracting with another HMO.
An informal working group was formed by the staff of the Texas
Department of Insurance last summer to address some of the existing
problems with the HMO Act which precluded health care providers and
HMOs from entering into new contractual relationships, including
capitated risk contracts. This working group included
representatives of physicians, hospitals, HMOs, and business.
PURPOSE
As proposed, C.S.S.B. 1407 provides for contractual arrangements
among health maintenance organizations and with physicians and
providers.
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 Section 2, Article 20A.02, V.T.I.C. (Texas Health
Maintenance Organization Act), as follows:
(l) Redefines "person" to include limited liability companies
and limited liability partnerships.
(m) Redefines "physician" to include an individual licensed to
practice medicine in this state; a professional association
organized under Article 1528f, V.T.C.S. (Texas Professional
Association Act) or a nonprofit health corporation certified
under Section 5.01, Article 4495b, V.T.C.S. (Medical Practice
Act); or another person wholly owned by physicians.
(n) Redefines "provider" as any person other than a physician,
including a licensed doctor of chiropractic, registered nurse,
pharmacist, optometrist, pharmacy, hospital or other
institution or organization or person that is licensed or
otherwise authorized to provide a health care service in this
state; a person who is wholly owned or controlled by a
provider or by a group of providers who are licensed to
provide the same health care service; or a person who is
wholly owned or controlled by one or more hospitals and
physicians, including a physician-hospital organization.
(u) Defines "health maintenance organization delivery
network."
SECTION 2. Amends Section 6(a), Article 20A.06, V.T.I.C., to
include the use of other health maintenance organizations (HMOs) in
the provisions of the powers of an HMO. Makes conforming changes.
SECTION 3. Amends Section 26(f), Article 20A.26, V.T.I.C., as
follows:
(f)(1) Prohibits this Act from being applicable to any
physician, rather than a licensed practitioner, a professional
association, or a nonprofit corporation, so long as that
physician is engaged in the delivery of or arranges for the
delivery of care that is within the definition of medical
care; or any provider that furnishes or arranges for the
delivery of health care services other than medical care as a
part of an HMO delivery network.
(2)-(3) Make nonsubstantive and conforming changes.
(4) Prohibits, except for Articles 21.07-6 and 21.58A,
Insurance Code, provisions of the insurance laws including
the group hospital service corporation law from applying to
physicians and providers. Makes conforming changes.
(5) Prohibits this Act and the Insurance Code from being
construed to prohibit a physician or provider participating
in an HMO delivery network, whether contracting with the HMO
under Section 6(a)(3) of this Act or subcontracting with a
physician or provider in the HMO delivery network, from
entering into a contractual arrangement described under
Subdivisions (6)-(8) of this subsection if the contractual
arrangement is entered into in furtherance of the delivery
of health care services or medical care through a
contractual arrangement with an HMO.
(6) Authorizes a physician to contract to provide medical
care or arrange to provide medical care through subcontracts
with other physicians and any services through other
providers that are ancillary to the practice of medicine,
other than hospital or any other institutional or inpatient
provider services.
(7) Authorizes a provider to contract to provide or arrange
to provide through subcontracts with other similarly
licensed providers, any health care services that those
providers are licensed to provide, other than medical care.
(8) Authorizes a provider to contract to provide, or arrange
to provide through subcontracts with other providers, a
health care service that the provider is not licensed to
provide, other than medical care, if the contracted or
subcontracted services constitute less than 15 percent of
the total amount of services to be provided by that provider
or arranged to be provided by that provider.
(9) Authorizes a contract or subcontract authorized under
Subdivision (6), (7), or (8), of this subsection to provide
for compensation based on a fee-for-service arrangement, a
risk-sharing arrangement, or capitated risk arrangement
under which a fixed predetermined payment is made in
exchange for the provision of, or the arrangement to provide
and the guaranty of the provision of, a defined set of
covered services to the covered persons for a specified
period, regardless of the amount of services actually
provided.
SECTION 4. Effective date: September 1, 1995.
Makes application of this Act prospective beginning
January 1, 1996.
SECTION 5. Emergency clause.