By Smithee, Van de Putte, Kamel H.B. No. 2766
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to providing fairness and choice to patients and providers
1-3 under managed care health benefit plans.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Chapter 21, Insurance Code, is amended by adding
1-6 Subchapter G to read as follows:
1-7 SUBCHAPTER G. PATIENT PROTECTION ACT
1-8 Art. 21.101. SHORT TITLE. This subchapter may be cited as
1-9 the Patient Protection Act.
1-10 Art. 21.102. DEFINITIONS. In this subchapter:
1-11 (1) "Commissioner" means the Commissioner of
1-12 Insurance.
1-13 (2) "Emergency care services" means medical services
1-14 provided for an emergency medical condition.
1-15 (3) "Emergency medical condition" means:
1-16 (A) a medical condition manifesting itself by
1-17 acute symptoms of sufficient severity, including severe pain, so
1-18 that the absence of immediate medical attention could reasonably be
1-19 expected to result in:
1-20 (i) placing the health of the individual
1-21 or, if the individual is a pregnant woman, the health of the woman
1-22 or her unborn child, in serious jeopardy;
1-23 (ii) serious impairment to a bodily
2-1 function; or
2-2 (iii) serious dysfunction of an organ or
2-3 part of the body; or
2-4 (B) with respect to a pregnant woman who is
2-5 having contractions:
2-6 (i) that there is inadequate time to
2-7 effect a safe transfer to another hospital before delivery; or
2-8 (ii) that transfer to another hospital may
2-9 pose a threat to the health or safety of the woman or the unborn
2-10 child.
2-11 (4) "Managed care entity" means an insurance company
2-12 authorized to do business in this state, a group hospital service
2-13 corporation licensed under Chapter 20 of this code, an approved
2-14 nonprofit health corporation that holds a certificate of authority
2-15 under Article 21.52F, Insurance Code, or a health maintenance
2-16 organization licensed under the Texas Health Maintenance
2-17 Organization Act (Chapter 20A, Vernon's Texas Insurance Code).
2-18 (5) "Managed care plan" means a plan operated by a
2-19 managed care entity that provides for the financing and delivery of
2-20 health care services to persons enrolled in the plan through:
2-21 (A) arrangements with selected providers to
2-22 furnish health care services;
2-23 (B) explicit standards for the selection of
2-24 participating providers;
2-25 (C) organizational arrangements for ongoing
3-1 quality assurance, utilization review, and dispute resolution; or
3-2 (D) differential coverage or payments or
3-3 financial incentives for a person enrolled in the plan to use the
3-4 participating providers and procedures provided by the plan.
3-5 The term "managed care plan" or "plan" does not include
3-6 accident-only, specified disease, individual hospital indemnity,
3-7 credit dental-only, vision only, Medicare supplement, long-term
3-8 care, or disability income insurance coverage issued as a
3-9 supplement liability insurance, CHAMPUS, workers' compensation, or
3-10 similar insurance or automobile payment insurance.
3-11 (6) "Managed care plan" as defined in Subdivision (5)
3-12 of this section does not include a "group model health
3-13 organization" that is a state-certified health maintenance
3-14 organization that provides the majority of its professional
3-15 services through a single group medical practice that is formally
3-16 affiliated with the medical school component of a Texas
3-17 state-supported public college or university, and received its
3-18 certification as a health maintenance organization prior to
3-19 November 1, 1981.
3-20 (7) "Prospective enrollee" means an individual
3-21 eligible for enrollment in a managed care plan offered by that
3-22 individual's employer.
3-23 (8) "Participating provider" means a podiatrist,
3-24 pharmacist, optometrist, psychologist, clinical social worker,
3-25 advanced nurse practitioner, and chiropractor.
4-1 Art. 21.103. APPLICABILITY. This subchapter does not apply
4-2 to:
4-3 (1) a managed care plan that provides for dental care
4-4 benefits under a health insurance policy;
4-5 (2) a Medicare select policy or certificate;
4-6 (3) a managed care plan that provides for financing
4-7 and delivery of health care services to persons under a Medicare
4-8 supplement policy or certificate that includes restricted network
4-9 provisions; or
4-10 (4) a managed care plan for inmates operated under a
4-11 contract entered into under Section 501.059(j), Government Code, as
4-12 added by Chapter 238, Acts of the 73rd Legislature, Regular
4-13 Session, 1993.
4-14 Art. 21.104. STANDARDS. The commissioner may adopt rules
4-15 regarding standards ensuring compliance with this subchapter by
4-16 managed care entities that conduct business in this state.
4-17 Art. 21.105. ENROLLEE INFORMATION. (a) A managed care
4-18 entity shall provide a prospective enrollee a written plan
4-19 description of the terms and conditions of the plan. The written
4-20 plan description must be in a readable and understandable format
4-21 and must include:
4-22 (1) coverage provisions;
4-23 (2) benefits, including prescription drug coverage,
4-24 both generic and brand name;
4-25 (3) any exclusions by category of service, provider,
5-1 or physician and, if applicable, by specific service or types of
5-2 drugs;
5-3 (4) any prior authorization or other review
5-4 requirements, including preauthorization review, concurrent review,
5-5 postservice review, and postpayment review;
5-6 (5) an explanation of enrollee financial
5-7 responsibility for payment for coinsurance or other noncovered or
5-8 out-of-plan services;
5-9 (6) a disclosure to enrollees that includes the
5-10 following language:
5-11 YOUR RIGHTS UNDER TEXAS LAW:
5-12 "As a participant in this medical plan, you have the right to
5-13 information about the plan, including how the plan operates, what
5-14 general types of financial arrangements exist between providers and
5-15 the plan, names and locations of providers, the numbers of
5-16 enrollees and providers in the plan, the percentage of premiums
5-17 allocated for medical care, administrative costs and profit, and an
5-18 explanation of the benefits to which participants are entitled
5-19 under the terms of the plan."; and
5-20 (7) a phone number and address for the prospective
5-21 enrollee to obtain additional information concerning the items
5-22 described by Subdivision (6) of this subsection.
5-23 (b) The managed care entity may provide the information
5-24 under Subsection (a)(6) of this article regarding the percentage of
5-25 premiums allocated for medical care, administrative costs, and
6-1 profit by providing the information in the entity's annual
6-2 financial statement most recently submitted to the department.
6-3 (c) The managed care entity shall demonstrate that each
6-4 covered enrollee has adequate access through the entity's provider
6-5 network to all items and services contained in the package of
6-6 benefits for which coverage is provided, including access to
6-7 medically necessary emergency services on a 24-hour basis. The
6-8 access must be adequate considering the diverse needs of enrollees.
6-9 (d) If the managed care plan uses a capitation method of
6-10 compensation, the plan must establish and follow procedures that
6-11 ensure that:
6-12 (1) each plan application form includes a space in
6-13 which each enrollee selects a primary care doctor or dentist;
6-14 (2) each enrollee who fails to select a primary care
6-15 doctor or dentist and is assigned a provider is notified of the
6-16 name and location of that provider; and
6-17 (3) a provider to whom an enrollee is assigned is
6-18 physically located within a reasonable travel distance, as
6-19 established by rule adopted by the commissioner, from the residence
6-20 or place of employment of the enrollee.
6-21 Art. 21.106. NETWORK CONFIGURATION. The managed care entity
6-22 shall make available to an enrollee on request, and at the expense
6-23 of the enrollee, an explanation of the targeted physician, other
6-24 participating provider, or dental network configuration, as
6-25 appropriate, including geographic distribution of physicians, other
7-1 participating providers, and dentists by specialty and by targeted
7-2 specialist-to-enrollee ratios. The information required by this
7-3 subsection shall be updated at least annually and:
7-4 (1) on establishment of a new managed care plan;
7-5 (2) on expansion of a service area; and
7-6 (3) when the network configuration targets are
7-7 significantly modified.
7-8 Art. 21.107. HOSPITAL PARTICIPATION. In determining the
7-9 criteria for hospital participation, the managed care plan shall
7-10 accept certification under the Medicare program under Title XVIII
7-11 of the Social Security Act (42 U.S.C. Section 1395 et seq.) or
7-12 accreditation by the Joint Commission on Accreditation of
7-13 Healthcare Organizations. This article does not prohibit a managed
7-14 care plan from establishing additional criteria for hospital
7-15 participation.
7-16 Art. 21.108. FINANCIAL INCENTIVE PROGRAMS. A managed care
7-17 plan may not use a financial incentive program that limits
7-18 medically necessary and appropriate services.
7-19 Art. 21.109. PARTICIPATING PROVIDERS. (a) Each managed
7-20 care plan shall establish a mechanism under which physicians and
7-21 other participating providers or dentists participating in the plan
7-22 comment on the plan's medical or dental policy, as appropriate,
7-23 including coverage of new technology and procedures, the
7-24 development and use of a prescription drug formulary, utilization
7-25 review criteria and procedures, quality and credentialing criteria,
8-1 and medical or dental management procedures. Each managed care
8-2 plan on request shall make available and disclose to providers the
8-3 application process and qualification requirements for
8-4 participation as a provider in the plan. The plan must give a
8-5 physician, other participating provider, or dentist not selected on
8-6 initial application each reason the initial application was denied.
8-7 (b) When a managed care plan accepts a physician, other
8-8 participating provider, or dentist, the plan shall credential the
8-9 physician, other participating provider, or dentist.
8-10 (c) Each physician or dentist under consideration for
8-11 inclusion in a managed care plan shall be reviewed by a
8-12 credentialing committee composed of network participating
8-13 physicians or dentists. Other providers may be credentialed as
8-14 appropriate as determined by the plan. When a provider, other than
8-15 a physician or dentist, is credentialed by the plan, the
8-16 credentialing committee shall include providers with the same
8-17 license.
8-18 (d) Credentialing of participating physicians, other
8-19 participating providers, or dentists shall be based on identified
8-20 standards developed after consultation with physicians, other
8-21 participating providers, or dentists credentialed in the plan. The
8-22 managed care plan shall make the credentialing standards available
8-23 to applicants.
8-24 (e) If economic considerations are part of the decision to
8-25 select a provider or terminate a contract with a provider,
9-1 identified criteria shall be used and shall be available to
9-2 applicants and participating providers. If the plan uses an
9-3 economic profile of a physician, other participating provider, or
9-4 dentist, the plan must adjust the profile to recognize the
9-5 characteristics of a physician's, other participating provider's,
9-6 or dentist's practice that may account for variations from expected
9-7 costs.
9-8 (f) A managed care plan that conducts or uses economic
9-9 profiling of physicians, other participating providers, or dentists
9-10 within the plan shall, on a periodic basis, make the profile
9-11 available to the physician, other participating provider, or
9-12 dentist profiled.
9-13 (g) A managed care plan is not required to disclose
9-14 proprietary information regarding marketplace strategies.
9-15 (h) A managed care plan may not exclude a physician, other
9-16 participating provider, or dentist solely because of the
9-17 physician's, other participating provider's, or dentist's specialty
9-18 practice or the anticipated characteristics of the patients of that
9-19 physician, other participating provider, or dentist.
9-20 (i) Before terminating a contract with a provider, the
9-21 managed care plan shall provide a written explanation of the
9-22 reasons for termination, an opportunity for discussion, and an
9-23 opportunity to enter into and complete a 1corrective action plan,
9-24 if appropriate, as determined by the plan. Except in cases in
9-25 which there is imminent harm to patient health or an action by a
10-1 state medical, dental, or other participating provider licensing
10-2 board or other government agency that effectively impairs the
10-3 physician's, dentist's, or other participating provider's ability
10-4 to practice medicine, dentistry, or another health care profession
10-5 or in cases of fraud or malfeasance, on request and before the
10-6 effective date of the termination, the physician, other
10-7 participating provider, or dentist is entitled to a review of the
10-8 plan's proposed action by a plan advisory panel. For a physician
10-9 or a dentist, the plan advisory panel must include the physician's
10-10 or dentist's peers. If the review involves another type of
10-11 participating provider, the plan advisory panel must include
10-12 providers with the same license.
10-13 (j) If the action that is under consideration is of a type
10-14 that must be reported to the National Practitioner Data Bank or a
10-15 state medical board under federal or state law, the physician's
10-16 procedural rights must meet the standards set forth in the federal
10-17 Health Care Quality Improvement Act of 1986 (42 U.S.C. Section
10-18 11101 et seq.). For purposes of this subsection, a managed care
10-19 entity shall be considered a health care entity as defined by
10-20 Section 1.03, Medical Practice Act (Article 4495b, Vernon's Texas
10-21 Civil Statutes).
10-22 (k) The managed care plan shall establish reasonable
10-23 procedures for assuring a transition of enrollees of the plan to
10-24 new physicians, other participating providers, or dentists.
10-25 (l) If a contract with a provider is terminated by a managed
11-1 care plan, the plan shall reimburse the provider the reasonable
11-2 cost for copies of medical or dental records that are created,
11-3 kept, or maintained by the provider and requested by the patient to
11-4 be provided by the provider to another provider. If a provider
11-5 terminates the contract with the plan, the provider shall bear the
11-6 reasonable cost of providing copies of medical or dental records
11-7 that are created, kept, or maintained by the provider and provided
11-8 on request from the patient by the provider to a provider
11-9 designated by the patient.
11-10 (m) This subchapter does not prohibit a managed care plan
11-11 from rejecting an application for a participating provider based on
11-12 the determination that the plan has sufficient qualified providers.
11-13 (n) A managed care plan may charge to a provider, other than
11-14 a physician or dentist:
11-15 (1) a reasonable application fee to cover the cost of
11-16 processing applications and informing the provider of selection or
11-17 nonselection under the plan;
11-18 (2) a reasonable credentialing fee to cover the cost
11-19 of the credentialing process; and
11-20 (3) a reasonable fee for providing to a provider a
11-21 copy of credentialing standards, identified criteria for selection,
11-22 and economic profiles requested by the provider.
11-23 Art. 21.110. EMERGENCY SERVICES. A managed care plan shall:
11-24 (1) cover emergency care services provided to covered
11-25 individuals, without regard to whether the provider furnishing the
12-1 services has a contractual or other arrangement with the entity to
12-2 provide items or services to covered individuals, including the
12-3 treatment and stabilization of an emergency medical condition;
12-4 (2) provide that the prior authorization requirement
12-5 for medically necessary services provided or originating in a
12-6 hospital emergency room following treatment or stabilization of an
12-7 emergency medical condition are approved unless denied in the time
12-8 appropriate to the circumstances relating to the delivery of the
12-9 services and the condition of the patient, as determined by the
12-10 treating physician and communicated to the plan; and
12-11 (3) cover any medical screening examination to
12-12 determine whether an emergency medical condition exists or other
12-13 evaluation required by state or federal law to be provided in the
12-14 emergency room of a hospital.
12-15 Art. 21.111. PRIOR AUTHORIZATION; CONSENT. A plan for which
12-16 prior authorization is a condition to coverage of a service must
12-17 ensure that enrollees are required to sign medical and dental
12-18 information release consent forms on enrollment.
12-19 Art. 21.112. UTILIZATION REVIEW. A managed care plan is
12-20 subject to and shall meet the requirements of Article 21.58A of
12-21 this code.
12-22 Art. 21.113. PRIVATE CAUSE OF ACTION. This subchapter and
12-23 rules adopted under this subchapter do not:
12-24 (1) provide a private cause of action for damages or
12-25 create a standard of care, obligation, or duty that provides a
13-1 basis for a private cause of action for damages; or
13-2 (2) abrogate a statutory or common law cause of
13-3 action, administrative remedy, or defense otherwise available and
13-4 existing before June 1, 1996.
13-5 Art. 21.114. ANNUAL PERFORMANCE REPORT. (a) The office of
13-6 public insurance counsel shall issue an annual report to consumers
13-7 on the performance of managed care entities.
13-8 (b) The office of public insurance counsel shall have access
13-9 to:
13-10 (1) information provided to enrollees under Article
13-11 21.106 of this code;
13-12 (2) information contained in complaints relating to
13-13 managed care entities made to the department or to the Texas
13-14 Department of Health, provided that the office shall maintain as
13-15 confidential any information in the complaint that relates to a
13-16 patient and that is made confidential by another law; and
13-17 (3) any statistical information relating to
13-18 utilization, quality assurance, and complaints that a health
13-19 maintenance organization is required to maintain under rules
13-20 adopted by the commissioner or the Texas Department of Health.
13-21 (c) The office of public insurance counsel shall provide a
13-22 copy of the report to a person on request on payment of a
13-23 reasonable fee. The public insurance counsel shall set the fee in
13-24 the amount necessary to defray the cost of producing the report.
13-25 SECTION 2. Sections 14(g) and (h), Article 21.58A, Insurance
14-1 Code, are amended to read as follows:
14-2 (g) This <A health maintenance organization is not subject
14-3 to this article except as expressly provided in this subsection and
14-4 Subsection (i) of this section. If such health maintenance
14-5 organization performs utilization review as defined herein, it
14-6 shall, as a condition of licensure:>
14-7 <(1) comply with Sections 4(b), (c), (e), (f), (h),
14-8 (i), and (l) of this article, and the board shall promulgate rules
14-9 for appropriate verification and enforcement of compliance.
14-10 However, nothing in this> article does not <shall be construed to>
14-11 prohibit or limit the distribution of a proportion of the savings
14-12 from the reduction or elimination of unnecessary medical services,
14-13 treatment, supplies, confinements, or days of confinement in a
14-14 health care facility through profit sharing, bonus, or withhold
14-15 arrangements to participating physicians or participating health
14-16 care providers for rendering health care services to enrollees<;>
14-17 <(2) establish and maintain a system for:>
14-18 <(A) handling and responding to complaints by
14-19 enrollees, patients, or health care providers;>
14-20 <(B) providing health care providers with notice
14-21 of medical necessity or program requirements that have not been
14-22 met, including a reasonable opportunity to discuss the plan of
14-23 treatment and clinical basis for a utilization review determination
14-24 with a physician; and>
14-25 <(C) providing the enrollee, patient, and health
15-1 care provider an opportunity to appeal the determination; and>
15-2 <(3) submit to assessment of maintenance taxes under
15-3 Article 20A.33, Texas Health Maintenance Organization Act (Article
15-4 20A.33, Vernon's Texas Insurance Code), to cover the costs of
15-5 administering compliance of health maintenance organizations under
15-6 this section>.
15-7 (h) An insurer or health maintenance organization which
15-8 delivers or issues for delivery a health insurance policy or
15-9 evidence of coverage in Texas and is subject to this code is not
15-10 subject to this article except as expressly provided in this
15-11 subsection and Subsection (i) of this section. If an insurer
15-12 performs utilization review as defined herein it shall, as a
15-13 condition of licensure, comply with Sections 4 through 8 of this
15-14 article, and the board shall promulgate rules for appropriate
15-15 verification and enforcement of compliance. If a health
15-16 maintenance organization performs utilization review as defined in
15-17 this article, it shall, as a condition of licensure, comply with
15-18 this article, and the board shall adopt rules for appropriate
15-19 verification and enforcement of compliance. Such insurers and
15-20 health maintenance organizations shall be subject to assessment of
15-21 maintenance tax under Article 4.17 of this code or Section 33,
15-22 Texas Health Maintenance Organization Act (Article 20A.33, Vernon's
15-23 Texas Insurance Code), to cover the costs of administering
15-24 compliance of insurers and health maintenance organizations under
15-25 this section.
16-1 SECTION 3. Section 161.091(f), Health and Safety Code, is
16-2 amended to read as follows:
16-3 (f) This section shall not apply to licensed insurers,
16-4 governmental entities, including intergovernmental risk pools
16-5 established under Chapter 172, Local Government Code, and
16-6 institutions as defined in the Texas State College and University
16-7 Employees Uniform Insurance Benefits Act (Article 3.50-3, Vernon's
16-8 Texas Insurance Code), group hospital service corporations,
16-9 preferred provider organizations, or health maintenance
16-10 organizations which reimburse, provide, offer to provide, or
16-11 administer hospital, medical, dental, or other health-related
16-12 benefits under a health benefits plan for which it is the payor.
16-13 SECTION 4. (a) This Act takes effect September 1, 1995.
16-14 (b) This Act applies only to coverage under a managed care
16-15 plan that is delivered, issued for delivery, or renewed on or after
16-16 June 1, 1996. Coverage under a managed care plan that is
16-17 delivered, issued for delivery, or renewed before June 1, 1996, is
16-18 governed by the law as it existed immediately before the effective
16-19 date of this Act, and that law is continued in effect for that
16-20 purpose.
16-21 (c) This Act applies only to credentialing of health care
16-22 providers under a managed care plan on or after June 1, 1996.
16-23 Credentialing of health care providers before June 1, 1996, is
16-24 governed by the law as it existed immediately before the effective
16-25 date of this Act, and that law is continued in effect for that
17-1 purpose.
17-2 SECTION 5. The importance of this legislation and the
17-3 crowded condition of the calendars in both houses create an
17-4 emergency and an imperative public necessity that the
17-5 constitutional rule requiring bills to be read on three several
17-6 days in each house be suspended, and this rule is hereby suspended.