By Driver H.B. No. 3158
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the regulation of Health Maintenance Organizations.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Article 20A.02, Insurance Code is amended to read
1-5 as follows:
1-6 Art. 20A.02. þNDefinitionsää. For purposes of this Act:
1-7 (a) "Basic health care services" means health care services
1-8 which an enrolled population might reasonably require in order to
1-9 be maintained in good health, including, as a minimum, emergency
1-10 care, inpatient hospital and medical services, and outpatient
1-11 medical services.
1-12 (b) "Board" means the Texas Board of Health.
1-13 (c) "Capitation" means a method of compensation to a
1-14 physician, group of physicians, provider group of providers,
1-15 independent physician association or health maintenance
1-16 organization based on a predetermined payment for certain enrollees
1-17 in exchange for arranging for or providing, and guaranteeing the
1-18 provision of, a defined set of covered health care services to such
1-19 enrollees for a specified period of time, regardless of the amount
1-20 of services actually provided.
1-21 (d) "Capitated person" means a physician, group of
1-22 physicians, provider, group of providers, independent physician
1-23 association or health maintenance organization who receive
2-1 capitation in accordance with this Act.
2-2 (e) <(c)> "Commissioner" means the commissioner of insurance.
2-3 (f) <(d)> "Enrollee" means an individual who is enrolled in a
2-4 health care plan, including covered dependents.
2-5 (g) <(e)> "Evidence of coverage" means any certificate,
2-6 agreement, or contract issued to an enrollee setting out the
2-7 coverage to which the enrollee is entitled.
2-8 (h) <(f)> "Group hospital service corporation" means a
2-9 nonprofit corporation organized and operating under Chapter 20 of
2-10 the Insurance Code.
2-11 (i) <(g)> "Health care" means prevention, maintenance,
2-12 rehabilitation, pharmaceutical, and chiropractic services provided
2-13 by qualified persons other than medical care.
2-14 (j) <(h)> "Health care plan" means any plan whereby any person
2-15 undertakes to provide, arrange for, pay for, or reimburse any part
2-16 of the cost of any health care services; provided, however, a part
2-17 of such plan consists of arranging for or the provision of health
2-18 care services, as distinguished from indemnification against the
2-19 cost of such service, on a prepaid basis through insurance or
2-20 otherwise.
2-21 (k) <(i)> "Health care services" means any services, including
2-22 the furnishing to any individual of pharmaceutical services,
2-23 medical, chiropractic, or dental care, or hospitalization or
2-24 incident to the furnishing of such services, care, or
2-25 hospitalization, as well as the furnishing to any person of any and
3-1 all other services for the purpose of preventing, alleviating,
3-2 curing or healing human illness or injury or a single health care
3-3 service plan.
3-4 (l) <(j)> "Health maintenance organization" means any person
3-5 who arranges for or provides a health care plan or a single health
3-6 care service plan to enrollees on a prepaid basis.
3-7 (m) "Health maintenance organization delivery network" means
3-8 any health care delivery system in which a health maintenance
3-9 organization manages or provides a health care plan to enrollees
3-10 through contracts or subcontracts with physicians and/or providers.
3-11 (n) <(k)> "Medical care" means furnishing those services
3-12 defined as practicing medicine under <Section 1.03(8)> Section
3-13 1.03(a)(12), Medical Practice Act (Article 4495b, Vernon's Texas
3-14 Civil Statutes).
3-15 (o) <(l)> "Persons" means any natural or artificial person,
3-16 including, <but not limited to,> individuals, partnerships,
3-17 associations, organizations, trusts, hospital districts, <or>
3-18 corporations, limited liability companies, or limited liability
3-19 partnerships.
3-20 (p) <(m)> "Physician" means any person <anyone> licensed to
3-21 practice medicine in the State of Texas<.>, any artificial person
3-22 entirely owned and/or solely controlled by physicians, or any
3-23 nonprofit corporation organized and complying with Section 5.01,
3-24 Medical Practice Act (Article 4495b, Vernon's Texas Civil Statutes.
3-25 (q) <(n)> "Provider" means any person <practitioner> other than
4-1 a physician, <such as a licensed doctor of chiropractic> including,
4-2 but not limited to a registered nurse, pharmacist, optometrist,
4-3 pharmacy, hospital, a physician-hospital organization, or other
4-4 institution, organization or person that furnishes health care
4-5 services who is licensed or otherwise authorized to deliver health
4-6 care in this state or any person wholly owned or controlled by a
4-7 provider or providers that are licensed to provide the same
4-8 service.
4-9 (r) "Physician-hospital organization" means any person
4-10 entirely owned and controlled by a group consisting of one or more
4-11 providers and physicians.
4-12 (s) <(o)> "Sponsoring organization: means a person who
4-13 guarantees the uncovered expenses of the health maintenance
4-14 organization and who is financially capable, as determined by the
4-15 commissioner, of meeting the obligations resulting from those
4-16 guarantees.
4-17 (t) <(p)> "Uncovered expenses" means the estimated
4-18 administrative expenses and the estimated cost of health care
4-19 services that are not guaranteed, insured, or assumed by a person
4-20 other than the health maintenance organization. Health care
4-21 services may be considered covered if the physician or provider
4-22 agrees in writing that enrollees shall in no way be liable,
4-23 assessable, or in any way subject to payment for services except as
4-24 described in the evidence of coverage issued to the enrollee under
4-25 Section 9 of this Act. The amount due on loans in the next
5-1 calendar year will be considered uncovered expenses unless
5-2 specifically subordinated to uncovered medical and health care
5-3 expenses or unless guaranteed by the sponsoring organization.
5-4 (u) <(q)> "Uncovered liabilities" means obligations resulting
5-5 from unpaid uncovered expenses, the outstanding indebtedness of
5-6 loans that are not specifically subordinated to uncovered medical
5-7 and health care expenses or guaranteed by the sponsoring
5-8 organization, and all other monetary obligations that are not
5-9 similarly subordinated or guaranteed.
5-10 (v) <(r)> "Single health care service" means a health care
5-11 service that an enrolled population may reasonably require in order
5-12 to be maintained in good health with respect to a particular health
5-13 care need for the purpose of preventing, alleviating, curing, or
5-14 healing human illness or injury of a single specified nature and
5-15 that is to be provided by one or more persons each of whom is
5-16 licensed by the state to provide that specific health care service.
5-17 (w) <(s)> "Single health care service plan" means a plan under
5-18 which any person undertakes to provide, arrange for, pay for, or
5-19 reimburse any part of the cost of a single health care service,
5-20 provided, that a part of the plan consists of arranging for or the
5-21 provision of the single health care service, as distinguished from
5-22 an indemnification against the cost of that service, on a prepaid
5-23 basis through insurance or otherwise and that no part of that plan
5-24 consists of arranging for the provision of more than one health
5-25 care need of a single specified nature.
6-1 (x) <(t)> "Emergency care" means bona fide emergency services
6-2 provided after the sudden onset of a medical condition manifesting
6-3 itself by acute symptoms or sufficient severity, including severe
6-4 pain, such that the absence of immediate medical attention could
6-5 reasonably be expected to result in:
6-6 (1) placing the patient's health in serious jeopardy;
6-7 (2) serious impairment to bodily functions; or
6-8 (3) serious dysfunction of any bodily organ or part.
6-9 SECTION 2. Art. 20A.05., Insurance Code, is amended to read
6-10 as follows:
6-11 Art. 20A.05. Issuance of Certificate of Authority.
6-12 (a)(1) Upon receipt of an application for issuance of a
6-13 certificate of authority, the commissioner shall begin
6-14 consideration of the application and forthwith transmit copies of
6-15 such application and accompanying documents to the board.
6-16 (2) The commissioner, with the advice of the board,
6-17 shall determine whether the applicant for a certificate of
6-18 authority, with respect to health care services to be furnished:
6-19 (A) has demonstrated the willingness and
6-20 potential ability to assure that such health care services will be
6-21 provided in a manner to assure both availability and accessibility
6-22 of adequate personnel and facilities, in a manner enhancing
6-23 availability, accessibility, and continuity of services;
6-24 (B) has arrangements, established in accordance
6-25 with rules and regulations promulgated by <the board with the
7-1 concurrence of> the commissioner, for an ongoing quality of health
7-2 care assurance program concerning health care processes and
7-3 outcome; and
7-4 (C) has a procedure, established by rules and
7-5 regulations of the <board with the concurrence of the> commissioner,
7-6 to develop, compile, evaluate, and report statistics relating to
7-7 the cost of operation, the pattern of utilization of its services,
7-8 availability and accessibility of its services.
7-9 (D) has demonstrated appropriate compensation
7-10 mechanisms for health care services will be used in order to
7-11 facilitate the provision of quality health care at reasonable cost
7-12 to the enrollees. If the applicant will use a capitation method of
7-13 compensation, the applicant shall establish and follow procedures
7-14 which assure the following:
7-15 (i) each enrollee is assigned to a
7-16 capitated person for purposes of determining capitation payments;
7-17 (ii) capitation payments on a per member
7-18 per month basis are calculated beginning from the initial date of
7-19 enrollment of the enrollee or the initial date of the most recent
7-20 change in assignment from one capitated person to another; and
7-21 (iii) a capitated person is physically
7-22 located within a reasonable travel distance as may be established
7-23 by rule, from the assigned enrollee's residence or place of
7-24 employment.
7-25 (3) Within 45 days of receipt of this application by
8-1 the commissioner <the board> for issuance of a certificate <of
8-2 authority, the board shall certify to> the commissioner shall
8-3 determine whether the proposed health maintenance organization
8-4 meets the requirements of this section. If the commissioner
8-5 determines <board certifies> that the health maintenance organization
8-6 does not meet such requirements, he <it> shall specify in what
8-7 respects it is deficient.
8-8 (b) The commissioner shall, after notice and hearing, issue
8-9 or deny a certificate of authority to any person filing an
8-10 application pursuant to Section 4 of this Act within 75 days of the
8-11 determination by the commissioner <receipt of the certification of
8-12 the board;> provided, however, that the commissioner may grant a
8-13 delay of final action on the application to an applicant. Issuance
8-14 of the certificate of authority shall be granted upon payment of
8-15 the application fee prescribed in Section 32 of this Act if:
8-16 (1) the commissioner determines <board certifies> that
8-17 the health maintenance organization's proposed plan of operation
8-18 meets the requirements of Subsection (a)(2) of this section; and
8-19 (2) the commissioner is satisfied that:
8-20 (A) the person responsible for the conduct of
8-21 the affairs of the applicant is competent, trustworthy, and
8-22 possesses a good reputation;
8-23 (B) the health care plan or single health care
8-24 service plan constitutes an appropriate mechanism whereby the
8-25 health maintenance organization will effectively provide or arrange
9-1 for the provision of basic health care services or single health
9-2 care service on a prepaid basis, through insurance or otherwise,
9-3 except to the extent of reasonable requirements for co-payment;
9-4 (C) the health maintenance organization is fully
9-5 responsible and may reasonably be expected to meet its obligations
9-6 to enrollees and prospective enrollees. In making this
9-7 determination, the commissioner shall consider:
9-8 (i) the financial soundness of the health
9-9 care plan's arrangement for health care services and a schedule of
9-10 charges used in connection therewith;
9-11 (ii) the adequacy of working capital;
9-12 (iii) any agreement with an insurer, group
9-13 hospital service corporation, a political subdivision of
9-14 government, or any other organization for insuring the payment of
9-15 the cost of health care services or the provision for automatic
9-16 applicability of an alternative coverage in the event of
9-17 discontinuance of plan;
9-18 (iv) any agreement which provides for the
9-19 provision of health care services; and
9-20 (v) any deposit of cash or securities
9-21 submitted in accordance with Section 13 of this Act as a guarantee
9-22 that the obligations will be duly performed;
9-23 (D) nothing in the proposed method of operation,
9-24 as shown by the information submitted pursuant to Section 4 of this
9-25 Act, or by independent investigation, is contrary to Texas law.
10-1 (c) If <the board> or the commissioner determines <or both
10-2 shall certify> that the health maintenance organization's proposed
10-3 plan of operation does not meet the requirements of this section,
10-4 the commissioner shall not issue the certificate of authority. The
10-5 commissioner shall notify the applicant that it is deficient, and
10-6 shall specify in what respects it is deficient.
10-7 (d) A certificate of authority shall continue in force as
10-8 long as the person to whom it is issued meets the requirements of
10-9 this Act or until suspended or revoked by the commissioner or
10-10 terminated at the request of the certificate holder. Any change in
10-11 control, as defined by Article 21.49-1 of the Insurance Code of
10-12 Texas, of the health maintenance organization, shall be subject to
10-13 the approval of the commissioner.
10-14 SECTION 3. Article 20A.06(a), Insurance Code, is amended to
10-15 read as follows:
10-16 Art. 20A.06. þNPowers of Health Maintenance Organizations.ää
10-17 (a) The powers of a health maintenance organization include<, but
10-18 are not limited to,> the following:
10-19 (1) the purchase, lease, construction, renovation,
10-20 operation, or maintenance of hospitals, medical facilities, or
10-21 both, and ancillary equipment and such property as may reasonably
10-22 be required for its principal office or for such other purposes as
10-23 may be necessary in the transaction of the business of the health
10-24 maintenance organization;
10-25 (2) the making of loans to a medical group, under an
11-1 independent contract with it in furtherance of its program, or
11-2 corporations under its control, for the purpose of acquiring or
11-3 constructing medical facilities and hospitals, or in the
11-4 furtherance of a program providing health care services to
11-5 enrollees;
11-6 (3) the furnishing of or arranging for medical care
11-7 services only through other health maintenance organization or
11-8 physicians or groups of physicians who have independent contracts
11-9 with the health maintenance organizations; the furnishing of or
11-10 arranging for the delivery of health care services only through
11-11 other health maintenance organizations or providers or groups of
11-12 providers who are under contract with or employed by the health
11-13 maintenance organization or through other health maintenance
11-14 organizations, physicians or providers who have contracted for
11-15 health care services with those physicians or providers except that
11-16 a health maintenance organization can also furnish or authorize <for
11-17 the furnishing of or authorization for> emergency services, services
11-18 by referral, and services to be provided outside of the service
11-19 area as approved by the commissioner; provided, however, that a
11-20 health maintenance organization is not authorized to employ or
11-21 contract with physicians or providers in any manner which is
11-22 prohibited by any licensing law of this state under which such
11-23 physicians or providers are licensed.
11-24 SECTION 4. Article 20A.26(f), Insurance Code, is amended to
11-25 read as follows:
12-1 (f)(1) This Act shall not be applicable to:
12-2 (A) any physician, so long as that physician is
12-3 engaged in or arranges for the delivery of health or medical care
12-4 that is within the definition of practicing medicine as defined in
12-5 Section 2 of this Act and/or the delivery of health care services
12-6 incident to said practice of medicine and is complying with the
12-7 provisions of section 26(f)(3) of this Act; or
12-8 (B) any provider that furnishes and/or arranges
12-9 for the delivery of health care services other than the practice of
12-10 medicine, as defined in Section 2 of this Act as part of a health
12-11 maintenance delivery network.
12-12 (2) Notwithstanding any other law, any person,
12-13 physician or provider referred to above, which conducts activities
12-14 permitted by law but which do not require a certificate of
12-15 authority under this Act, and in the process contracts with one or
12-16 more physicians, or providers referred to above, shall not by
12-17 virtue of such contract or arrangement, be deemed to have entered
12-18 into a conspiracy in restraint of trade in violation of Sections
12-19 15.01 through 15.34 of the Business & Commerce Code.
12-20 <(f)(1) This Act shall not be applicable to any person
12-21 licensed to practice medicine in this state, nor to any
12-22 professional association organized under the Texas Professional
12-23 Association Act, as amended (Article 1528f, Vernon's Texas Civil
12-24 Statutes), nor to any nonprofit corporation organized and complying
12-25 with Section 5.01, Medical Practice Act (Article 4495b, Vernon's
13-1 Texas Civil Statutes), so long as that person, professional
13-2 association, or nonprofit corporation is engaged in the delivery of
13-3 health or medical care that is within the definition of practicing
13-4 medicine as defined in Section 2(k) of this Act.>
13-5 <(2) Except as provided by Section 6(a)(3) of this Act,
13-6 any person, professional association, or nonprofit corporation
13-7 referred to above, which shall employ or enter into a contractual
13-8 arrangement with a provider or group of providers to furnish basic
13-9 health care services as defined in Section 2 of this Act, would be
13-10 subject to the provisions of this Act, and shall be required to
13-11 obtain a certificate of authority from the commissioner.>
13-12 <(3) Notwithstanding any other law, any person,
13-13 professional association, or nonprofit corporation referred to
13-14 above, which conducts activities permitted by law but which do not
13-15 require a certificate of authority under this Act, and in the
13-16 process contracts with one or more physicians, professional
13-17 associations, or nonprofit corporations referred to above, shall
13-18 not, by virtue of such contract or arrangement, be deemed to have
13-19 entered into a conspiracy in restraint of trade in violation of
13-20 Sections 15.01 through 15.34 of the Business & Commerce Code.>
13-21 (3) Notwithstanding any other law, provisions of the
13-22 insurance law and the provisions of the group hospital service
13-23 corporation law shall not be applicable to the above persons,
13-24 physicians or providers.
13-25 (4) Neither this Act nor any other provision of the
14-1 Insurance Code shall be construed to prohibit any physician or
14-2 provider participating in a health maintenance organization
14-3 delivery network, whether contracting with a health maintenance
14-4 organization pursuant to Section 6(a)(3) of this Act or
14-5 subcontracting with any physician or provider in the health
14-6 maintenance organization network, from entering into any of the
14-7 following contractual arrangements;
14-8 (A) A physician may contract to provide and/or
14-9 arrange to provide through subcontracts with other physicians
14-10 medical care as defined in Section 2 of this Act and through other
14-11 providers any services that are ancillary to or within the scope of
14-12 the practice of medicine, not including hospital or any other
14-13 institutional or inpatient provider services.
14-14 (B) A provider may contract to provide and/or
14-15 arrange to provide through subcontracts with other providers any
14-16 health care services for which provider is licensed to provide, not
14-17 to include any medical care services as defined in Section 2 of
14-18 this Act.
14-19 (C) A provider may contract to provide and/or
14-20 arrange to provide through subcontracts with other providers any
14-21 health care services for which such provider is not licensed to
14-22 provide, not to include any medical services as defined in Section
14-23 2 of this Act, only if such subcontracted services constitute less
14-24 than fifteen percent of the total volume of services to be provided
14-25 and/or arranged to be provided by such provider.
15-1 (D) Any contract or subcontract permitted in
15-2 (A), (B) or (C) above may provide for compensation based on a
15-3 fee-for-service arrangement, risk sharing arrangement, and/or
15-4 capitated risk arrangement in which a fixed predetermined payment
15-5 is made in exchange for providing and/or arranging to provide, and
15-6 guaranteeing the provision of a defined set of covered services to
15-7 such covered persons for a specified period of time, regardless of
15-8 the amount of services actually provided.
15-9 SECTION 5. EMERGENCY. The importance of this legislation
15-10 and the crowded condition of the calendars in both houses create an
15-11 emergency and an imperative public necessity that the
15-12 constitutional rule requiring bills to be read on three several
15-13 days in each house be suspended, and this rule is hereby suspended,
15-14 and that this Act take effect and be in force according to its
15-15 terms, and it is so enacted.