By Maxey, Naishtat, Raymond                            H.B. No. 870
       74R2331 KLL-D
                                 A BILL TO BE ENTITLED
    1-1                                AN ACT
    1-2  relating to the creation, powers, and duties of the health care
    1-3  purchasing office.
    1-4        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-5        SECTION 1.  The State Purchasing and General Services Act
    1-6  (Article 601b, Vernon's Texas Civil Statutes) is amended by adding
    1-7  Article 16 to read as follows:
    1-8                 ARTICLE 16.  HEALTH CARE PURCHASING OFFICE
    1-9        Sec. 16.01.  DEFINITIONS.  In this article:
   1-10              (1)  "Drug" has the meaning assigned by Section 5,
   1-11  Texas Pharmacy Act (Article 4542a-1, Vernon's Texas Civil
   1-12  Statutes).
   1-13              (2)  "Office" means the health care purchasing office.
   1-14              (3)  "State agency" means a department, commission,
   1-15  board, office, or other agency in the executive branch of state
   1-16  government, created under the constitution or a statute, with
   1-17  statewide authority, including a university system or an
   1-18  institution of higher education as defined by Section 61.003,
   1-19  Education Code.
   1-20              (4)  "State health care program" means a program
   1-21  administered or funded by a state agency to provide health care
   1-22  services, equipment, supplies, or drugs or to pay for or reimburse
   1-23  the cost of health care services, equipment, supplies, or drugs.
   1-24        Sec. 16.02.  HEALTH CARE PURCHASING OFFICE.  (a)  The health
    2-1  care purchasing office is an office of the commission and is
    2-2  established to manage the costs of health care expenditures made by
    2-3  the state.
    2-4        (b)  The office is the central agent for developing and
    2-5  coordinating short-term and long-term plans for health care
    2-6  purchasing in state health care programs.
    2-7        Sec. 16.03.  STAFF.  (a)  The executive director of the
    2-8  commission shall employ staff for the office.
    2-9        (b)  The executive director shall employ as office staff
   2-10  persons who have:
   2-11              (1)  a thorough understanding of the health care
   2-12  industry, of state purchasing of medical goods and services, and of
   2-13  the specific needs of state health care programs; and
   2-14              (2)  extensive experience in negotiating health care
   2-15  rates and in modeling costs and benefits.
   2-16        Sec. 16.04.  COLLECTION OF INFORMATION.  (a)  A state agency
   2-17  shall collect and maintain information relating to the agency's
   2-18  expenditures under a state health care program.
   2-19        (b)  The office is entitled to access to all information
   2-20  collected and maintained under this section.
   2-21        (c)  The office may specify the type of information that a
   2-22  state agency must collect and maintain under this section and may
   2-23  prescribe standardized forms that must be used by a state agency
   2-24  for recording that information.
   2-25        (d)  Information provided to the office that is confidential
   2-26  under other law remains confidential in the possession of the
   2-27  office.
    3-1        Sec. 16.05.  UNIFORM SERVICE PROVIDER REIMBURSEMENT RATE
    3-2  STRUCTURE.  (a)  The office shall prescribe a uniform rate
    3-3  structure for reimbursing a provider of health care services under
    3-4  a state health care program for services provided on or after
    3-5  January 1, 1996.
    3-6        (b)  This section does not apply to the managed health care
    3-7  plan of the Texas Department of Criminal Justice, to the program
    3-8  provided under the Texas Employees Uniform Group Insurance Benefits
    3-9  Act, or to a medical and dental unit, as that term is defined by
   3-10  Section 61.003, Education Code, of an institution of higher
   3-11  education.
   3-12        (c)  For services provided from September 1, 1995, through
   3-13  December 31, 1995, a state agency listed in Section 19, Article
   3-14  4413(502), Revised Statutes, may not reimburse a provider of health
   3-15  care services under a state health care program in an amount that
   3-16  exceeds the amount provided by the Medicaid fee schedule for that
   3-17  service.
   3-18        Sec. 16.06.  CONSOLIDATED CONTRACTS FOR PURCHASE OF DRUGS AND
   3-19  MEDICAL EQUIPMENT AND SUPPLIES.  (a)  In order to acquire volume
   3-20  discounts, the office shall negotiate contracts for the purchase of
   3-21  drugs and medical equipment and supplies that consolidate purchases
   3-22  for all state health care programs.
   3-23        (b)  On or after January 1, 1996, a state agency that
   3-24  purchases drugs or medical equipment or supplies under a state
   3-25  health care program shall make those purchases under a consolidated
   3-26  contract negotiated by the office.
   3-27        (c)  This section does not apply to the managed health care
    4-1  plan of the Texas Department of Criminal Justice or to the program
    4-2  provided under the Texas Employees Uniform Group Insurance Benefits
    4-3  Act.
    4-4        (d)  The office may exempt a state health program from
    4-5  purchasing under a  consolidated contract if, based on a showing by
    4-6  the responsible agency, the office determines that purchasing by
    4-7  that agency under a separate contract is more cost-effective.
    4-8        Sec. 16.07.  UNIFORM REIMBURSEMENT RATES FOR DRUGS AND
    4-9  MEDICAL EQUIPMENT AND SUPPLIES.  (a)  The office shall prescribe
   4-10  uniform reimbursement rates for drugs and medical equipment and
   4-11  supplies purchased under a state health care program on or after
   4-12  January 1, 1996.
   4-13        (b)  The rates shall be based on the negotiated volume
   4-14  discounts obtained by the office under Section 16.06 of this
   4-15  article.
   4-16        (c)  This section does not apply to the managed health care
   4-17  plan of the Texas Department of Criminal Justice or to the program
   4-18  provided under the Texas Employees Uniform Group Insurance Benefits
   4-19  Act.
   4-20        Sec. 16.08.  UNIFORM DRUG DISPENSING FEE RATE STRUCTURE.  (a)
   4-21  The office shall prescribe a uniform rate structure for drug
   4-22  dispensing fees under a state health care program for services
   4-23  provided on or after January 1, 1996.
   4-24        (b)  The health care purchasing office shall base the rate
   4-25  structure on private sector standards for dispensing fees.
   4-26        (c)  This section does not apply to the managed health care
   4-27  plan of the Texas Department of Criminal Justice, to the program
    5-1  provided under the Texas Employees Uniform Group Insurance Benefits
    5-2  Act, or to a medical and dental unit, as that term is defined by
    5-3  Section 61.003, Education Code,  of an institution of higher
    5-4  education.
    5-5        (d)  For the fiscal biennium beginning September 1, 1995, a
    5-6  state agency listed in Section 19, Article 4413(502), Revised
    5-7  Statutes, may not pay more than $4, including profit fees and
    5-8  incentives, for each prescription dispensed under  a state health
    5-9  care program.
   5-10        Sec. 16.09.  SEPARATE BILLING RESTRICTED.  (a)  To encourage
   5-11  private providers to obtain competitive rates for medical supplies,
   5-12  the office shall adopt a list of medical supplies for which
   5-13  separate billing is permissible under a state health care program.
   5-14        (b)  On or after January 1, 1996, a provider under a state
   5-15  health care program may not bill separately for a medical supply
   5-16  that is not included in the list adopted under Subsection (a) of
   5-17  this section.
   5-18        (c)  This section does not apply to the managed health care
   5-19  plan of the Texas Department of Criminal Justice or to the program
   5-20  provided under the Texas Employees Uniform Group Insurance Benefits
   5-21  Act.
   5-22        Sec. 16.10.  CLAIMS ADMINISTRATION.  The office shall develop
   5-23  and implement a plan to incorporate the processing of claims under
   5-24  a state health care program with relatively high processing costs
   5-25  into a state health care program with lower processing costs.
   5-26        Sec. 16.11.  MEDICAID MANAGEMENT INFORMATION SYSTEM.  The
   5-27  office shall study potential cost-containment strategies for the
    6-1  Texas Medicaid Management Information System before the commission
    6-2  rebids the contract for administering the state Medicaid program.
    6-3        Sec. 16.12.  INCENTIVE PLANS.  (a)  The office shall develop
    6-4  and implement an incentive plan in which state agencies and state
    6-5  health care programs share in any savings to the general revenue
    6-6  fund that result from cost-containment strategies provided by this
    6-7  article and that exceed $34 million in a fiscal year.
    6-8        (b)  The office shall prescribe the methods to be used in
    6-9  calculating savings to the general revenue fund under this section.
   6-10        Sec. 16.13.  INTERIM STUDY  COMMITTEE.  During the fiscal
   6-11  biennium beginning September 1, 1995, the office shall periodically
   6-12  report to an interim study committee composed of a representative
   6-13  from:
   6-14              (1)  the governor's office;
   6-15              (2)  the lieutenant governor's office;
   6-16              (3)  the office of the speaker of the house of
   6-17  representatives;
   6-18              (4)  the comptroller's office;
   6-19              (5)  the Texas Department of Insurance;
   6-20              (6)  the Health and Human Services Commission;
   6-21              (7)  the Texas Department of Health;
   6-22              (8)  the Texas Department of Mental Health and Mental
   6-23  Retardation;
   6-24              (9)  the Texas Department of Criminal Justice;
   6-25              (10)  The University of Texas System; and
   6-26              (11)  The Texas A&M University System.
   6-27        Sec. 16.14.  STUDY OF MANAGED HEALTH CARE PLAN OF TEXAS
    7-1  DEPARTMENT OF CRIMINAL JUSTICE.  (a)  The office shall study the
    7-2  managed health care plan of the Texas Department of Criminal
    7-3  Justice.
    7-4        (b)  In conducting the study, the  office shall work with the
    7-5  Managed Health Care Advisory Committee to identify health care
    7-6  purchases for inmates that could be consolidated with other state
    7-7  health care purchases to achieve savings.
    7-8        (c)  The office shall examine capitation rates and payments
    7-9  for care not covered under the capitation rates using cost and
   7-10  usage data from the managed health care plan and other treatment
   7-11  programs.
   7-12        (d)  The office shall report its findings under this section
   7-13  to the 75th Legislature not later than February 1, 1997.
   7-14        Sec. 16.15.  REPORT TO LEGISLATURE.  The office shall report
   7-15  to the 75th Legislature not later than February 1, 1997, and shall
   7-16  identify savings to state health care programs that occurred from
   7-17  the implementation of this article and from any other
   7-18  cost-containment strategies.
   7-19        Sec. 16.16.  COLLABORATION BETWEEN AGENCIES; ANALYSIS OF
   7-20  REIMBURSEMENT METHODS.  Not later than January 1, 1996, the health
   7-21  care purchasing office shall:
   7-22              (1)  initiate formal collaboration between programs and
   7-23  agencies for coordination and cost-containment purposes; and
   7-24              (2)  analyze reimbursement policies and methods used by
   7-25  state health care programs to identify methods that can be applied
   7-26  across all or a majority of programs to contain costs and minimize
   7-27  cost-shifting.
    8-1        Sec. 16.17.  EVALUATION OF MEDICAID PROGRAM; LONG-TERM
    8-2  STRATEGIC PLAN; CENTRAL DATABASE OF HEALTH CARE PURCHASES.  Not
    8-3  later than December 1, 1996, the health care purchasing office
    8-4  shall:
    8-5              (1)  evaluate the state's Medicaid programs,
    8-6  particularly cost-containment potential and response to managed
    8-7  care initiatives;
    8-8              (2)  develop a long-term strategic plan for the
    8-9  administration, purchase, and delivery of health care services; and
   8-10              (3)  develop a central database of health care
   8-11  purchases for use in policy formulation, reimbursement analysis,
   8-12  and contract negotiation with the provider community.
   8-13        Sec. 16.18.  REDUCTION OF ADMINISTRATIVE BURDEN; STRATEGIES
   8-14  FOR LOCAL GOVERNMENT PARTICIPATION.  Not later than September 1,
   8-15  1997, the health care purchasing office shall:
   8-16              (1)  implement measures to reduce the administrative
   8-17  burden on providers that participate in multiple state health care
   8-18  programs through improved automation and coordination between
   8-19  programs and agencies; and
   8-20              (2)  develop strategies to allow local governments to
   8-21  participate in state health care cost-control initiatives.
   8-22        SECTION 2.  Sections 16.13-16.18, State Purchasing and
   8-23  General Services Act (Article 601b, Vernon's Texas Civil Statutes),
   8-24  as added by this Act, expire  September 2, 1997.
   8-25        SECTION 3.  The importance of this legislation and the
   8-26  crowded condition of the calendars in both houses create an
   8-27  emergency and an imperative public necessity that the
    9-1  constitutional rule requiring bills to be read on three several
    9-2  days in each house be suspended, and this rule is hereby suspended,
    9-3  and that this Act take effect and be in force from and after its
    9-4  passage, and it is so enacted.