By Smithee, Van de Putte                              H.B. No. 2766
                                 A BILL TO BE ENTITLED
    1-1                                AN ACT
    1-2  relating to fairness and choice to patients and providers under
    1-3  managed care health benefit plans; providing a penalty.
    1-4        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-5        SECTION 1.  This Act may be cited as the Patient Protection
    1-6  Act.
    1-7        SECTION 2.  The Insurance Code is amended by adding Chapter
    1-8  27 to read as follows:
    1-9        SUBCHAPTER A.  GENERAL PROVISIONS.
   1-10        Art. 27.01.  Short Title.  This chapter may be cited as the
   1-11  Patient Protection Act.
   1-12        Art. 27.02.  Definitions.  In this chapter:
   1-13              (1)  "Academic health center" means an entity that
   1-14  operates, or is affiliated with a hospital that receives payments
   1-15  under subsection (d)(5)(B) or (h) of section 1886 of the Social
   1-16  Security Act (relating to graduate medical education).
   1-17              (2)  "Centers of excellence" means health facilities,
   1-18  including children's hospitals and other pediatric facilities,
   1-19  academic health centers, teaching hospitals, and other providers of
   1-20  specialized care that are so designated by the commissioner by
   1-21  rule.
   1-22              (3)  "Commissioner" means the Commissioner of
   1-23  Insurance.
    2-1              (4)  "Qualified managed care plan" means a managed care
    2-2  plan that the Commissioner certifies, upon application to the
    2-3  program, as meeting the requirements of this section.
    2-4              (5)  "Utilization review law" means Article 21.58A,
    2-5  Insurance Code.
    2-6              (6)  "Managed care plan" means a plan operated by a
    2-7  managed care entity that provides for the financing and delivery of
    2-8  health care services to persons enrolled in such plan through
    2-9                    (A)  arrangements with selected providers to
   2-10  furnish health care services;
   2-11                    (B)  explicit standards for the selection of
   2-12  participating providers;
   2-13                    (C)  organizational arrangements for ongoing
   2-14  quality assurance, utilization review programs, and dispute
   2-15  resolution; and
   2-16                    (D)  financial incentives for persons enrolled in
   2-17  the plan to use the participating providers and procedures provided
   2-18  for by the plan.
   2-19              (7)  "Managed care entity" means a licensed insurance
   2-20  company, hospital or medical service plan, health maintenance
   2-21  organization, or a managed care contractor that operates a managed
   2-22  care plan.
   2-23              (8)  "Managed care contractor" means a person that
   2-24                    (A)  establishes, operates or maintains a network
   2-25  of participating providers;
    3-1                    (B)  conducts or arranges for utilization review
    3-2  activities; or
    3-3                    (C)  contracts with an insurance company, a
    3-4  hospital or medical service plan, or any other entity providing
    3-5  coverage for health care services to operate a managed care plan.
    3-6              (9)  "Participating provider" means a physician,
    3-7  dentist, hospital, pharmacy, laboratory, or other appropriately
    3-8  state licensed, registered, certified or otherwise state recognized
    3-9  provider of health care services or supplies, that has entered into
   3-10  an agreement with a managed care entity to provide such services or
   3-11  supplies to a patient enrolled in a managed care plan.
   3-12        Art. 27.03.  Protection of Consumer Choice.  Nothing in this
   3-13  Act shall be construed as prohibiting the following:
   3-14              (1)  An individual from purchasing any health care
   3-15  services with that individual's own funds, whether such services
   3-16  are covered within the individual's standard benefit package or
   3-17  from another health care provider or plan.
   3-18              (2)  Employers from providing any additional coverages.
   3-19        SUBCHAPTER B.  CERTIFICATION OF MANAGED CARE PLANS.
   3-20        Art. 27.11.  Certification of Managed Care Plans.
   3-21        (a)(1)  All managed care plans offering or providing services
   3-22  under this Code must be certified under the provisions of this
   3-23  chapter.
   3-24              (2)  The Commissioner shall establish a process for
   3-25  certification of managed care plans meeting the requirements of
    4-1  this chapter.
    4-2              (3)  The Commissioner shall establish procedures for
    4-3  the periodic review and recertification of qualified managed care
    4-4  plans.
    4-5              (4)  The Commissioner shall terminate the certification
    4-6  of a previously qualified managed care plan if the Commissioner
    4-7  determines that such plan or program no longer meets the applicable
    4-8  requirements for certification.  Before effecting a termination,
    4-9  the Commissioner shall provide the plan notice and opportunity for
   4-10  a hearing on the proposed termination.
   4-11              (5)  If the Commissioner finds that a national
   4-12  accreditation body establishes a requirement or requirements for
   4-13  accreditation of a managed care plan that are at least equivalent
   4-14  to the requirement(s) established under this chapter the
   4-15  Commissioner may, to the extent appropriate, treat a managed care
   4-16  plan thus accredited as meeting the requirement(s) of this chapter.
   4-17              (6)  The Commissioner shall establish, administer and
   4-18  enforce certification and renewal fees under this chapter in
   4-19  amounts not greater than that necessary to cover the cost of
   4-20  administering and enforcing this chapter.
   4-21        (b)(1)  The Commissioner shall establish standards for the
   4-22  certification of qualified managed care plans that conduct business
   4-23  in this state, including standards whereby
   4-24                    (A)  Prospective enrollees in a plan must be
   4-25  provided information as to the terms and conditions of the plan so
    5-1  that they can make informed decisions about accepting a certain
    5-2  system of health care delivery.  Where the plan is described orally
    5-3  to enrollees, easily understood, truthful, and objective terms must
    5-4  be used.  All written plan descriptions must be in a readable and
    5-5  understandable format, consistent with standards developed for
    5-6  supplemental insurance coverage under Title XVII of the Social
    5-7  Security Act.  This format must be standardized so that customers
    5-8  can compare the attributes of the plans.  Specific items that must
    5-9  be included are:
   5-10                          (i)  coverage provisions, benefits,
   5-11  including prescription drug coverage, both generic and brand name
   5-12  and any exclusions by category of service, provider or physician,
   5-13  and if applicable, by specific service;
   5-14                          (ii)  any and all prior authorization or
   5-15  other review requirements including preauthorization review,
   5-16  concurrent review, post-service review, post payment review and any
   5-17  procedures that may lead the patient to be denied coverage for or
   5-18  not be provided a particular service;
   5-19                          (iii)  financial arrangements or
   5-20  contractual provisions with hospitals, review companies,
   5-21  physicians, dentists or any other provider of health care services
   5-22  that would limit the services offered, restrict referral or
   5-23  treatment options, require a drug formulary or restrict the types
   5-24  of drugs available to patients, or negatively affect the
   5-25  physician's or dentist's fiduciary responsibility to his or her
    6-1  patients, including but not limited to financial incentives not to
    6-2  provide medical, dental or other services.
    6-3                          (iv)  explanation of how plan limitations
    6-4  impact enrollees, including information on enrollee financial
    6-5  responsibility for payment for coinsurance or other non-covered or
    6-6  out-of-plan services;
    6-7                          (v)  explanation of the physician or, as
    6-8  appropriate, dental network configuration that provides for patient
    6-9  access to physicians or dentists including geographic distribution
   6-10  of physicians and dentists by specialty and the physician and, as
   6-11  appropriate, dentist to enrollee ratio by specialty;
   6-12                          (vi)  loss ratios; and
   6-13                          (vii)  enrollee satisfaction statistics
   6-14  (including percent re-enrollment and reasons for leaving plan).
   6-15                    (B)  The plan must demonstrate that covered
   6-16  enrollees have reasonably prompt access through the entity's
   6-17  provider network to all items and services contained in the package
   6-18  of benefits for which coverage is provided (including access to
   6-19  emergency services on a 24-hour basis where medically necessary),
   6-20  in a manner that assures the continuity of the provision of such
   6-21  items and services.  Such access shall take into account the
   6-22  diverse needs of enrollees, including special language
   6-23  requirements, and proximity to the workplaces or residences of
   6-24  enrollees.
   6-25                    (C)  If contained within the package of benefits
    7-1  for enrollees, the plan must demonstrate access to specialized
    7-2  treatment expertise, including care for enrollees with chronic
    7-3  diseases, through contracts with centers of excellence.  Patients
    7-4  in need of specialized treatment may request to receive specialized
    7-5  care at an alternative center.  As used in this paragraph, the term
    7-6  "alternative center" means a center of excellence which is not a
    7-7  member of the provider network of the entity providing the plan.
    7-8  Such entities shall have an appeals process for patients who are
    7-9  refused coverage at an alternative center of excellence.  Each plan
   7-10  shall make available to enrollees information in an easily
   7-11  understood and useful form, that allows such enrollees to make
   7-12  valid comparisons among centers of excellence offered by the plan.
   7-13                    (D)  In its establishment of criteria for
   7-14  hospital participation, a plan shall be required to accept hospital
   7-15  licensure by the Texas Department of Health, certification by the
   7-16  Medicare program, (Title XVII of the Social Security Act (42 U.S.C.
   7-17  1395, et seq)) or accreditation by the Joint Commission on
   7-18  Accreditation of Healthcare Organizations.
   7-19                    (E)  Plans must meet financial reserve
   7-20  requirements that are established to assure proper payment for
   7-21  covered services provided.  An indemnity fund should be established
   7-22  to provide for plan failures even when a plan has met the reserve
   7-23  requirements.
   7-24                    (F)  All plans shall be required to establish a
   7-25  mechanism, with defined rights, under which physicians and dentists
    8-1  participating in the plan provide meaningful input into the plan's
    8-2  medical or, as appropriate, dental policy, (including coverage for
    8-3  new technology and procedures), the development and utilization of
    8-4  a prescription drug formulary, utilization review criteria and
    8-5  procedures, quality and credentialing criteria, and medical or
    8-6  dental management procedures.
    8-7                    (G)  All plans upon request shall make available
    8-8  and disclose the application process and qualification requirements
    8-9  for credentialing as a provider in the plan.  An applicant for
   8-10  initial credentials as a provider under the plan must be given the
   8-11  reason(s) for denial as a provider if the application for initial
   8-12  credentials is denied or otherwise not accepted.
   8-13                    (H)  All plans that accept physicians and
   8-14  dentists into their plans must credential those physicians and
   8-15  dentists.
   8-16                          (i)  Each application shall be reviewed by
   8-17  a credentialing committee with appropriate representation or input
   8-18  from the applicant's medical or, as appropriate, dental specialty.
   8-19                          (ii)  Credentialing shall be based on
   8-20  objective standards of quality with input from physicians or, as
   8-21  appropriate, dentists credentialed in the plan and such standards
   8-22  shall be available to applicants and enrollees.  When economic
   8-23  considerations are part of the decision to select or deselect a
   8-24  provider from the plan, objective criteria must be used and must be
   8-25  available to applicants, participating physicians, dentists and
    9-1  enrollees.  Any economic profiling of physicians or dentists must
    9-2  be adjusted to recognize case mix, disease, physiologic and
    9-3  behavioral severity of the disease, including comorbidities, age
    9-4  and sex risk adjustment of patients and other features of a
    9-5  physician's or dentist's practice that may account for higher than
    9-6  or lower than expected costs to assure fair comparisons are made.
    9-7  Profiles must be made available to those so profiled.  When
    9-8  graduate medical education is a consideration in credentialing,
    9-9  equal recognition will be given to training programs accredited by
   9-10  the Accrediting Council on Graduate Medical Education and by the
   9-11  American Osteopathic Association.
   9-12                          (iii)  Plans shall be prohibited from
   9-13  discriminating against enrollees with expensive medical conditions
   9-14  requiring expensive tests and procedures to adequately diagnose and
   9-15  treat enrollees by excluding practitioners who treat such
   9-16  enrollees.
   9-17                          (iv)  All decisions shall be made on the
   9-18  record, and the applicant shall be provided with all reasons used
   9-19  if the application is denied or the contract not renewed.
   9-20                          (v)  Plans shall not be allowed to include
   9-21  clauses in physician, dentist or other provider contracts that
   9-22  allow for the plan to terminate the contract "without cause."
   9-23                          (vi)  There shall be a due process appeal
   9-24  from all adverse decisions.  The Commissioner shall establish a due
   9-25  process appeal mechanism.  The appeals process will be presumed to
   10-1  be reasonable if it complies with the appeals process set forth in
   10-2  the Health Care Quality Improvement Act of 1986, 42 U.S.C. Sec.
   10-3  11101-11151.
   10-4                          (vii)  Prior to initiation of a proceeding
   10-5  leading to termination of a contract "for cause," the physician or,
   10-6  as appropriate, dentists shall be provided notice, an opportunity
   10-7  for discussion, and an opportunity to enter into and complete a
   10-8  corrective action plan, except in cases where there is imminent
   10-9  harm to patient health or an action by a state medical or, as
  10-10  appropriate, dental board or other government agency that
  10-11  effectively impairs the physician's or dentist's ability to
  10-12  practice medicine or dentistry within the jurisdiction.
  10-13                    (I)  Procedures shall be established to ensure
  10-14  that all applicable Federal and State laws designed to protect the
  10-15  confidentiality of provider and individual medical and dental
  10-16  records are followed.
  10-17                    (J)  Plans must ensure that each enrollee is able
  10-18  to choose a primary care physician and, as appropriate, dentist
  10-19  from among participating physicians and dentists and change that
  10-20  selection as appropriate.
  10-21                    (K)  Plans must:
  10-22                          (i)  cover medically necessary emergency
  10-23  care services provided to covered individuals (including trauma
  10-24  services, such as those provided by designated trauma centers),
  10-25  without regard to whether or not the provider furnishing such
   11-1  services has a contractual (or other) arrangement with the entity
   11-2  to provide items or services to covered individuals and, in the
   11-3  case of services furnished for the treatment of an emergency
   11-4  medical condition (as defined in section 1867(e)(1) of the Social
   11-5  Security Act), without regard to prior authorizations;
   11-6                          (ii)  provide that the prior authorization
   11-7  requirement for medically necessary services or stabilizing
   11-8  treatment in the emergency room shall be deemed to be approved
   11-9  unless denied within 1 hour of a required request; and
  11-10                          (iii)  cover any screenings or evaluations
  11-11  that are required to be performed in the emergency room pursuant to
  11-12  state or federal law.
  11-13              (2)  Plans must ensure that enrollees, in plans where
  11-14  prior authorization is a condition to coverage of a service, are
  11-15  required to sign medical and dental information release consent
  11-16  forms upon enrollment for use where services requiring prior
  11-17  authorization are recommended or proposed by their physician or
  11-18  dentist;
  11-19              (3)  When prior approval for a service or other covered
  11-20  item is obtained, it shall be considered approval for all purposes,
  11-21  and the service shall be considered to be covered unless there was
  11-22  fraud or incorrect information provided at the time such prior
  11-23  approval was obtained.
  11-24              (4)  Continuity of patient care is maintained when
  11-25  physicians or dentists are deselected or otherwise are no longer
   12-1  participating providers under the plan by providing for the
   12-2  immediate reimbursement for copies of medical or dental records
   12-3  that are created, kept or maintained by a physician or dentist and
   12-4  provided by the physician or dentist for the patient or someone on
   12-5  his behalf.
   12-6              (5)  Not withstanding the provision of any other law,
   12-7  all qualified managed care programs are subject to and shall meet
   12-8  the requirements of the utilization review law.
   12-9              (6)  Standards shall first be established under this
  12-10  chapter by not later than 12 months after the date of the enactment
  12-11  of this chapter.
  12-12              (7)  The Commissioner shall periodically review the
  12-13  standards established under this chapter, and may revise the
  12-14  standards from time to time to assure that such standards continue
  12-15  to reflect appropriate policies and practices for the
  12-16  cost-effective and medically and dentally appropriate use of
  12-17  services within managed care plans.
  12-18        SUBCHAPTER C.  CHOICE REQUIREMENTS AND PLANS.
  12-19        Art. 27.21.  Choice Requirements for Point of Service Plans.
  12-20              (1)  Each health benefit plan that restricts access to
  12-21  providers shall offer to all eligible enrollees the opportunity to
  12-22  obtain coverage for out-of-network services through a "point of
  12-23  service" plan, as defined by subparagraph (2), at the time of
  12-24  enrollment and at least for a continuous one-month period annually
  12-25  thereafter.
   13-1              (2)  For purposes of this chapter, an "out-of-network"
   13-2  or "point of service" plan provides additional coverage and/or
   13-3  access to care provided by non-network providers to an eligible
   13-4  enrollee of a health plan that restricts access to items and
   13-5  services provided by a health care provider who is not a member of
   13-6  the plan's provider network (as defined in subparagraph (3)), or,
   13-7  that may cover any other services the enrollees seeks, whether such
   13-8  services are provided in or outside of the enrollee's plan.
   13-9              (3)  A "provider network" means, with respect to a
  13-10  health plan that restricts access, those providers who have entered
  13-11  into a contract or agreement with the plan under which such
  13-12  providers are obligated to provide items and services in the
  13-13  standard benefits package to eligible individuals enrolled in the
  13-14  plan, or have an agreement to provide services on a fee-for-service
  13-15  basis.
  13-16              (4)  Premiums.  A plan may charge an enrollee who opts
  13-17  to obtain point of service coverage an alternative premium that
  13-18  takes into account the actuarial value of such coverage.
  13-19              (5)  Co-payments.  A point of service plan may require
  13-20  payment of coinsurance for an out-of-network item or service, as
  13-21  follows:
  13-22                    (A)  The applicable coinsurance percentage shall
  13-23  not be greater than 20 percent of payment for items and services;
  13-24  and
  13-25                    (B)  The applicable coinsurance percentage may be
   14-1  applied differentially with respect to out-of-network items and
   14-2  services, subject to the requirements of section 27.11(b)(1)(K) of
   14-3  this chapter.
   14-4              (6)  Payment Disclosure Requirement.  All sponsors of
   14-5  point of service plans and physicians and dentists participating in
   14-6  such plans shall be required to disclose their fees, applicable
   14-7  payment schedules, coinsurance requirements or any other financial
   14-8  requirements that affect patient payment levels.
   14-9        SUBCHAPTER D.  ENFORCEMENT; PENALTIES.
  14-10        Art. 27.31.  Violations.
  14-11        (a)  If the Commissioner believes that a managed care entity
  14-12  or managed care contractor has violated or is violating this
  14-13  chapter, the Commissioner shall notify the managed care entity or
  14-14  managed care contractor of the alleged violation and may compel the
  14-15  production of any and all documents or other information necessary
  14-16  to determine whether or not this chapter has been or is being
  14-17  violated.
  14-18        (b)  The Commissioner may bring an injunctive action to stop
  14-19  a violation or potential violation of this chapter.
  14-20        (c)  If applicable and after notice and hearing, the
  14-21  Commissioner may for a violation of this chapter:
  14-22              (1)  impose sanctions under Section 7, Article 1.10 of
  14-23  this Code; or
  14-24              (2)  issue a cease and desist order under Article 1.10A
  14-25  of this Code.
   15-1        (d)  The Commissioner may recover reasonable costs, including
   15-2  attorneys' fees for an action brought under this subchapter.
   15-3        SECTION 3.  Art. 21.58A, Sections (4) and (14), Insurance
   15-4  Code are amended to read as follows:
   15-5        Sec. 4.  Standards for utilization review.  (a)  As a
   15-6  condition of certification or renewal thereof, a utilization review
   15-7  agent shall be required to maintain compliance with the provisions
   15-8  of this section.
   15-9        (b)  The utilization review plan, including reconsideration
  15-10  and appeal requirements, shall be reviewed by a physician and
  15-11  conducted in accordance with standards developed with input from
  15-12  appropriate health care providers and approved by a physician.
  15-13        (c)(1)  Personnel employed by or under contract with the
  15-14  utilization review agent to perform utilization review shall be
  15-15  appropriately trained and qualified.  Personnel who obtain
  15-16  information directly from the physician or health care provider,
  15-17  either orally or in writing, and who are not physicians shall be
  15-18  nurses, physician assistants, registered records administrators, or
  15-19  accredited records technicians, who are either licensed or
  15-20  certified, or shall be individuals who have received formal
  15-21  orientation and training in accordance with policies and procedures
  15-22  established by the utilization review agent to assure compliance
  15-23  with this section, and a description of such policies and
  15-24  procedures shall be filed with the commissioner.  This provision
  15-25  shall not be interpreted to require such qualifications for
   16-1  personnel who perform clerical or administrative tasks.
   16-2              (2)  Upon request, physicians or as appropriate,
   16-3  dentists, will be provided the names and credentials of all
   16-4  individuals conducting utilization review, subject to reasonable
   16-5  safeguards and standards.
   16-6        (d)  A utilization review agent shall not set or impose any
   16-7  notice or other review procedures contrary to the requirements of
   16-8  the health insurance policy or health benefit plan.
   16-9        (e)  Unless approved for an individual patient by the
  16-10  provider of record or modified by contract, a utilization review
  16-11  agent shall be prohibited from observing, participating in, or
  16-12  otherwise being present during a patient's examination, treatment,
  16-13  procedure, or therapy.  In no event shall this section otherwise be
  16-14  construed to limit or deny contact with a patient for purposes of
  16-15  conducting utilization review unless otherwise specifically
  16-16  prohibited by law.
  16-17        (f)  A utilization review agent may not permit or provide
  16-18  compensation or any thing of value to its employees or agents,
  16-19  condition employment of its employee or agent evaluations, or set
  16-20  its employee or agent performance standards, based on the amount of
  16-21  volume of adverse determinations, reductions or limitations on
  16-22  lengths of stay, benefits, services, or charges or on the number of
  16-23  frequency of telephone calls or other contacts with health care
  16-24  providers or patients, which are inconsistent with the provisions
  16-25  of this article.
   17-1        (g)  A health care provider may designate one or more
   17-2  individuals as the initial contact or contacts for utilization
   17-3  review agents seeking routine information or data.  In no event
   17-4  shall the designation of such an individual or individuals preclude
   17-5  a utilization review agent or medical advisor from contacting a
   17-6  health care provider or others in his or her employ where a review
   17-7  might otherwise be unreasonably delayed or where the designated
   17-8  individual is unable to provide the necessary information or data
   17-9  requested by the utilization review agent.
  17-10        (h)  Utilization review conducted by a utilization review
  17-11  agent shall be under the direction of a physician licensed to
  17-12  practice medicine by the Texas State Board of Medical Examiners <a
  17-13  state licensing agency in the United States.> or, as appropriate, a
  17-14  dentist licensed to practice dentistry by the State Board of Dental
  17-15  Examiners.
  17-16        (i)  Each utilization review agent shall utilize written
  17-17  medically acceptable screening criteria and review procedures which
  17-18  are established and periodically evaluated and updated with
  17-19  appropriate involvement from physicians, including practicing
  17-20  physicians, and other health care providers.  Such written
  17-21  screening criteria and review procedures shall be available for
  17-22  review and inspection by the commissioner and copying as necessary
  17-23  for the commissioner to carry out his or her lawful duties under
  17-24  this code, provided, however, that any information obtained or
  17-25  acquired under the authority of this subsection and article is
   18-1  confidential and privileged and not subject to the open records law
   18-2  or subpoena except to the extent necessary for the board of
   18-3  commissioner to enforce this article.
   18-4        (j)  A utilization review agent may not engage in unnecessary
   18-5  or unreasonable repetitive contacts with the health care provider
   18-6  or patient and shall base the frequency of contacts or reviews on
   18-7  the severity or complexity of the patient's condition or on
   18-8  necessary treatment and discharge planning activity.
   18-9        (k)  Subject to the notice requirements of Section 5 of this
  18-10  article, in any instance where the utilization review agent is
  18-11  questioning the medical necessity or appropriateness of health care
  18-12  services, the health care provider who ordered the services shall
  18-13  be afforded a reasonable opportunity to discuss the plan of
  18-14  treatment for the patient and the clinical basis for the
  18-15  utilization review agent's decision with a physician or, in the
  18-16  case of a dental plan with a dentist, prior to issuance of an
  18-17  adverse determination.
  18-18        (l)  <Unless precluded or modified by contract, a> A
  18-19  utilization review agent shall reimburse health care providers for
  18-20  the reasonable costs for providing medical information in writing,
  18-21  including copying and transmitting any requested patient records or
  18-22  other documents.  A health care provider's charges for providing
  18-23  medical information to a utilization review agent shall not exceed
  18-24  the cost of copying set by rule of the Texas Workers' Compensation
  18-25  Commission for records and may not include any costs that are
   19-1  otherwise recouped as a part of the charge for health care.
   19-2        (m)  A utilization review agent shall establish and maintain
   19-3  a complaint system that provides reasonable procedures for the
   19-4  resolution of written complaints initiated by enrollees, patients,
   19-5  or health care providers concerning the utilization review and
   19-6  shall maintain records of such written complaints for two years
   19-7  from the time the complaints are filed.  The complaint procedure
   19-8  shall include a written response to the complainant by the agent
   19-9  within 60 days.  The utilization review agent shall submit to the
  19-10  commissioner a summary report of all complaints at such times and
  19-11  in such forms as the board may require and shall permit the
  19-12  commissioner to examine the complaints and all relevant documents
  19-13  at any time.
  19-14        (n)  The utilization review agent may delegate utilization
  19-15  review to qualified personnel in the hospital or health care
  19-16  facility where the health care services were or are to be provided.
  19-17        Sec. 14(a) This article shall not apply to a person who
  19-18  provides information to enrollees about scope of coverage or
  19-19  benefits provided under a health insurance policy or health benefit
  19-20  plan and who does not determine whether particular health care
  19-21  services provided or to be provided to an enrollee are medically
  19-22  necessary or appropriate.
  19-23        (b)(1)  This article shall not apply to any contract with the
  19-24  federal government for utilization review of patients eligible for
  19-25  services under Title XVIII or XIX of the Social Security Act (42
   20-1  U.S.C. Section 1395 et seq. or Section 1396 et seq.).
   20-2        (b)(2)  This article shall not apply to <the Texas Medicaid
   20-3  Program,> the chronically ill and disabled children's services
   20-4  program created pursuant to Chapter 35, Health and Safety Code,
   20-5  <any program administered under Title 2, Human Resources Code> any
   20-6  program of the Texas Department of Mental Health and Mental
   20-7  Retardation, or any program of the Texas Department of Criminal
   20-8  Justice.
   20-9        (c)  This article shall not apply to utilization review of
  20-10  health care services provided to patients under the authority of
  20-11  the Texas Workers' Compensation Act (Article 8308-1.01 et seq.,
  20-12  Vernon's Texas Civil Statutes).
  20-13        <(d)  This article shall not apply to utilization review of
  20-14  health care services provided under a policy or contract of
  20-15  automobile insurance promulgated by the board under Subchapter A,
  20-16  Chapter 5 of this code or issued pursuant to Article 1.14-2 of this
  20-17  code.>
  20-18        (d) <(e)>  This article shall not apply to the terms or
  20-19  benefits of employee welfare benefit plans as defined in Section
  20-20  31(I) of the Employee Retirement Income Security Act of 1974 (29
  20-21  U.S.C. Section 1002).
  20-22        (e) <(f)>  Any regulations promulgated pursuant to this
  20-23  article shall relate only to persons or entities subject to this
  20-24  article.
  20-25        <(g)  A health maintenance organization is not subject to
   21-1  this article except as expressly provided in this subsection and
   21-2  Subsection (i) of this section.  If such health maintenance
   21-3  organization performs utilization review as defined herein, it
   21-4  shall, as a condition of licensure:>
   21-5              <(1)  comply with Sections 4(b), (c), (e), (f), (h),
   21-6  (i), and (l) of this article, and the board shall promulgate rules
   21-7  for appropriate verification and enforcement of compliance.
   21-8  However, nothing in this article shall be construed to prohibit or
   21-9  limit the distribution of a proportion of the savings from the
  21-10  reduction or elimination of unnecessary medical services,
  21-11  treatment, supplies, confinements, or days of confinement, in a
  21-12  health care facility through profit sharing, bonus, or withhold
  21-13  arrangements to participating physicians or participating health
  21-14  care providers for rendering health care services to enrollees;>
  21-15              <(2)  establish and maintain a system for:>
  21-16                    <(A)  handling and responding to complaints by
  21-17  enrollees, patients, or health care providers;>
  21-18                    <(B)  providing health care providers with notice
  21-19  of medical necessity or program requirements that have not been
  21-20  met, including a reasonable opportunity to discuss the plan of
  21-21  treatment and clinical basis for a utilization review determination
  21-22  with a physician; and>
  21-23                    <(C)  providing the enrollee, patient, and health
  21-24  care provider an opportunity to appeal the determination; and>
  21-25              <(3)  submit to assessment of maintenance taxes under
   22-1  Article 20A.33, Texas Health Maintenance Organization Act (Article
   22-2  20A.33, Vernon's Texas Insurance Code), to cover the costs of
   22-3  administering compliance of health maintenance organizations under
   22-4  this section.>
   22-5        (f) <(h)>  An insurer which delivers or issues for delivery a
   22-6  health insurance policy in Texas and is subject to this code is not
   22-7  subject to this article except as expressly provided in this
   22-8  subsection and Subsection (i) of this section.  If an insurer
   22-9  performs utilization review as defined herein it shall, as a
  22-10  condition of licensure, comply with Sections 4 through 8 of this
  22-11  article, and the board shall promulgate rules for appropriate
  22-12  verification and enforcement of compliance.  Such insurers shall be
  22-13  subject to assessment of maintenance tax under Article 4.17 of this
  22-14  code to cover the costs of administering compliance of insurers
  22-15  under this section.
  22-16        (g) <(i)>  However, when an insurer subject to this code or a
  22-17  health maintenance organization performs utilization review for a
  22-18  person or entity subject to this article other than the one for
  22-19  which it is the payor, such insurer or health maintenance
  22-20  organization shall be required to obtain a certificate under
  22-21  section 3 of this article and comply with all the provisions of
  22-22  this article.
  22-23        SECTION 4.  Effective date.  Chapter 27, Insurance Code, as
  22-24  added by this section, takes effect June 1, 1996.
  22-25        SECTION 5.  Emergency.  The importance of this legislation
   23-1  and the crowded condition of the calendars in both houses create an
   23-2  emergency and an imperative public necessity that the
   23-3  constitutional rule requiring bills to be read on three several
   23-4  days in each house be suspended, and this rule is hereby suspended.