By Berlanga H.B. No. 3111 A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to the delivery of health care by nonprofit health 1-3 corporations. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. Subchapter E, Chapter 21, Insurance Code, is 1-6 amended by adding Article 21.52E to read as follows: 1-7 Art. 21.52E. CERTIFICATION OF CERTAIN NONPROFIT HEALTH 1-8 CORPORATIONS 1-9 Sec. 1. DEFINITIONS. In this article: 1-10 (1) "Applicant" means an approved nonprofit health 1-11 corporation that has filed an application with the commissioner for 1-12 certification under this article. 1-13 (2) "Certificate holder" means an approved nonprofit 1-14 health corporation that holds a valid certificate issued under this 1-15 article. 1-16 (3) "Approved nonprofit health corporation" means a 1-17 nonprofit health corporation certified under Section 5.01(a), 1-18 Medical Practice Act (Article 4495b, Vernon's Texas Civil 1-19 Statutes). 1-20 (4) "Deliver" means to provide or arrange to provide. 1-21 (5) "Financial reserves" means actuarially certified 1-22 and separately maintained assets held in a trust account or as 1-23 provided by rules adopted by the commissioner. 2-1 (6) "Insurance carrier" means an insurance carrier 2-2 licensed by the commissioner to write insurance in Texas. The term 2-3 includes a health maintenance organization. 2-4 Sec. 2. CERTIFICATE REQUIRED; EXCEPTIONS. (a) An approved 2-5 nonprofit health corporation may deliver health care under a 2-6 contract if the corporation obtains and maintains a valid 2-7 certificate issued by the commissioner in accordance with this 2-8 article. 2-9 (b) Except as provided by Subsection (c), this article does 2-10 not apply to an approved nonprofit health corporation that only 2-11 contracts to deliver health care: 2-12 (1) on a fee-for-service basis; or 2-13 (2) on behalf of and with primary liability remaining 2-14 with: 2-15 (A) an insurance carrier; 2-16 (B) the federal government; 2-17 (C) the state government; or 2-18 (D) a political subdivision of the state. 2-19 (c) An approved nonprofit health corporation has the powers 2-20 granted to a certificate holder under Section 9 for the purpose of 2-21 implementing contracts covered by Subsection (b)(2). 2-22 Sec. 3. QUALIFICATIONS FOR A CERTIFICATE. The commissioner 2-23 may issue a certificate only to an approved nonprofit health 2-24 corporation that: 2-25 (1) files a sworn application with the department; 3-1 (2) pays a filing fee as provided by Section 10; 3-2 (3) is accredited as provided by Section 4; 3-3 (4) demonstrates minimum net worth as provided by 3-4 Section 5; 3-5 (5) demonstrates financial security as provided by 3-6 Section 6; and 3-7 (6) demonstrates compliance with the contracting 3-8 requirements provided by Section 7. 3-9 Sec. 4. ACCREDITATION REQUIRED. (a) An applicant must 3-10 establish and a certificate holder must maintain accreditation by: 3-11 (1) the National Committee on Quality Assurance; 3-12 (2) the Joint Commission on Accreditation of 3-13 Healthcare Organization's accreditation for health care networks; 3-14 or 3-15 (3) an accrediting organization recognized by rule of 3-16 the commissioner. 3-17 (b) The commissioner shall grant a provisional certificate 3-18 to an applicant if: 3-19 (1) the applicant has applied for accreditation; 3-20 (2) the applicant is diligently pursuing 3-21 accreditation; 3-22 (3) the accrediting organization has not denied the 3-23 accreditation; and 3-24 (4) all other requirements of this article are 3-25 satisfied. 4-1 Sec. 5. MINIMUM NET WORTH REQUIRED. (a) An applicant must 4-2 demonstrate and a certificate holder must maintain minimum net 4-3 worth as provided by rules of the commissioner. 4-4 (b) The minimum net worth may not be less than $1 million 4-5 unless the applicant or certificate holder demonstrates equivalent 4-6 financial strength satisfactory to the commissioner. 4-7 (c) The commissioner shall consider the net worth of members 4-8 of an approved nonprofit health corporation if the members 4-9 guarantee the payment of the corporation's liabilities. 4-10 Sec. 6. FINANCIAL SECURITY REQUIRED. (a) An applicant must 4-11 establish and a certificate holder must maintain minimum financial 4-12 security acceptable to the commissioner. The minimum financial 4-13 security must include: 4-14 (1) excess insurance or reinsurance as provided by 4-15 rules of the commissioner; and 4-16 (2) financial reserves. 4-17 (b) In establishing the minimum financial security, the 4-18 commissioner may not consider contracts between the certificate 4-19 holder and a party listed in Section 2(b)(2) or contracts based 4-20 only on a fee-for-service basis. 4-21 (c) An excess insurance policy must be written by an 4-22 insurance carrier licensed to write excess insurance in Texas. 4-23 (d) The commissioner may not require financial reserves 4-24 greater than necessary to provide 60 days of health care under all 4-25 of the certificate holder's active contracts to deliver health 5-1 care. 5-2 (e) All contracts in which the certificate holder agrees to 5-3 deliver health care must require payment to the certificate holder 5-4 on a monthly or more frequent schedule. 5-5 Sec. 7. LIMITATIONS ON CONTRACTS FOR HEALTH CARE. A 5-6 contract between a certificate holder and a health care provider 5-7 for the health care provider to provide health care shall: 5-8 (1) require 90 days or more written notice to all 5-9 parties to the contract before termination of the contract without 5-10 cause; and 5-11 (2) prohibit the health care provider from collecting 5-12 from a patient any fees not specifically established in the 5-13 contract. 5-14 Sec. 8. REPORTS REQUIRED. (a) Each certificate holder must 5-15 file: 5-16 (1) an annual report; 5-17 (2) quarterly reports; and 5-18 (3) monthly reports, if required by the commissioner 5-19 under Section 10. 5-20 (b) Reports must be filed with the department on the form 5-21 and in the manner prescribed by rules of the commissioner. 5-22 Sec. 9. POWERS OF A CERTIFICATE HOLDER. A certificate 5-23 holder may subcontract with any licensed health care provider to 5-24 deliver health care. Any contract to deliver health care to the 5-25 public and any subcontracts may provide for: 6-1 (1) fee-for-service; 6-2 (2) fixed compensation; 6-3 (3) capitated fees; or 6-4 (4) risk sharing. 6-5 Sec. 10. AUTHORITY AND DUTIES OF COMMISSIONER. (a) The 6-6 commissioner may: 6-7 (1) adopt rules necessary to implement this article; 6-8 (2) establish fees for application and renewal of a 6-9 certificate, provided that the fees may not exceed the actual cost 6-10 of processing the application or renewal and may not exceed $1,000; 6-11 (3) order a certificate holder to file a copy of any 6-12 contracts with the commissioner; 6-13 (4) order a certificate holder to file monthly 6-14 financial reports if the commissioner has reason to believe that 6-15 the certificate holder may not possess adequate financial security 6-16 to meet its obligations; or 6-17 (5) adopt rules preventing a contract to deliver 6-18 health care between a certificate holder and an employer from 6-19 excluding any eligible employee or dependent who would otherwise be 6-20 covered under the contract. 6-21 (b) The commissioner must approve or deny an application for 6-22 a certificate under this article no later than 60 days after 6-23 receipt of a completed application. 6-24 Sec. 11. ADMINISTRATIVE VIOLATION; PENALTY. An approved 6-25 nonprofit health corporation commits a violation if the corporation 7-1 or an authorized representative of the corporation knowingly and 7-2 intentionally: 7-3 (1) contracts to deliver health care in violation of 7-4 this article. 7-5 (2) files a false or misleading application for 7-6 certification or renewal; 7-7 (3) fails to respond timely to an order from the 7-8 commissioner for copies of a contract; or 7-9 (4) identifies the corporation to the public in a 7-10 manner that would reasonably imply to the public that the 7-11 corporation is an insurance carrier unless the corporation is 7-12 licensed in Texas as an insurance carrier. 7-13 Sec. 12. APPLICABILITY OF OTHER STATUTES. A contract 7-14 between a certificate holder and a health care provider is not 7-15 considered an unlawful business practice under Chapter 15, Business 7-16 & Commerce Code (Texas Free Enterprise and Antitrust Act of 1983). 7-17 SECTION 2. (a) No later than 15 days after the effective 7-18 date of this Act, the commissioner of insurance shall establish an 7-19 advisory committee composed of: 7-20 (1) five members representing nonprofit health 7-21 corporations certified under Subsection (a), Section 5.01, Medical 7-22 Practice Act (Article 4495b, Vernon's Texas Civil Statutes); and 7-23 (2) four members representing the public, two of whom 7-24 must be employers. 7-25 (b) No later than 45 days after the effective date of this 8-1 Act, the advisory committee shall recommend to the commissioner of 8-2 insurance rules necessary to implement this Act. 8-3 (c) No later than 120 days after the effective date of this 8-4 Act, the commissioner of insurance shall adopt rules necessary to 8-5 implement this Act. The commissioner of insurance shall take into 8-6 consideration the recommendations of the advisory committee. 8-7 SECTION 3. (a) Except as provided by this section, this Act 8-8 takes effect April 1, 1996. 8-9 (b) Section 1 of this Act takes effect September 1, 1995, 8-10 for the sole purpose of adoption of the rules and establishment of 8-11 the forms and fees necessary to implement this Act by the 8-12 commissioner of insurance. 8-13 (c) Section 2 of this Act and this section take effect 8-14 September 1, 1995. 8-15 SECTION 4. The importance of this legislation and the 8-16 crowded condition of the calendars in both houses create an 8-17 emergency and an imperative public necessity that the 8-18 constitutional rule requiring bills to be read on three several 8-19 days in each house be suspended, and this rule is hereby suspended.