By: Patterson S.B. No. 202
A BILL TO BE ENTITLED
AN ACT
1-1 relating to the provision of certain services provided through
1-2 health maintenance organizations.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section 2, Texas Health Maintenance Organization
1-5 Act (Article 20A.02, Vernon's Texas Insurance Code), is amended by
1-6 amending Subsections (a), (e), (m), (n), and (s) and by adding
1-7 Subsections (u), (v), (w), (x), (y), (z), (aa), and (bb) to read as
1-8 follows:
1-9 (a) "Basic health care services" means health care services
1-10 which an enrolled population might reasonably require in order to
1-11 be maintained in good health, including, as a minimum, preventive
1-12 care, emergency care, inpatient and outpatient hospital and medical
1-13 services, and diagnostic laboratory and diagnostic and therapeutic
1-14 radiological <outpatient medical> services.
1-15 (e) "Evidence of coverage" means any certificate, agreement,
1-16 or contract, including a blended contract, issued to an enrollee
1-17 setting out the coverage to which the enrollee is entitled.
1-18 (m) "Physician" means:
1-19 (1) an individual <anyone> licensed to practice
1-20 medicine in this state;
1-21 (2) a professional association organized under the
1-22 Texas Professional Association Act (Article 1528f, Vernon's Texas
1-23 Civil Statutes) or a nonprofit corporation certified under Section
1-24 5.01, Medical Practice Act (Article 4495b, Vernon's Texas Civil
2-1 Statutes); or
2-2 (3) another person wholly owned by physicians <the
2-3 State of Texas>.
2-4 (n) "Provider" means:
2-5 (1) any person <practitioner> other than a physician,
2-6 including <such as> a licensed doctor of chiropractic, registered
2-7 nurse, pharmacist, optometrist, pharmacy, hospital, or other
2-8 institution or organization or person that <furnishes health care
2-9 services, who> is licensed or otherwise authorized to provide a
2-10 health care service <practice> in this state;
2-11 (2) a person who is wholly owned or controlled by a
2-12 person described by Subdivision (1) of this subsection or by a
2-13 group of those persons who are licensed to provide the same health
2-14 care service; or
2-15 (3) a person who is wholly owned or controlled by one
2-16 or more hospitals and physicians, including a physician-hospital
2-17 organization.
2-18 (s) "Single health care service plan" means a plan under
2-19 which any person undertakes to provide, arrange for, pay for, or
2-20 reimburse any part of the cost of a single health care service,
2-21 provided<,> that a part of the plan consists of arranging for or
2-22 the provision of the single health care service<,> as distinguished
2-23 from an indemnification against the cost of that service, on a
2-24 prepaid basis through insurance or otherwise and that no part of
2-25 that plan consists of arranging for the provision of more than one
2-26 health care need of a single specified nature. A plan that
2-27 provides only chemical dependency services under Article 3.51-9,
3-1 Insurance Code, or mental health services under Article 3.51-14,
3-2 Insurance Code, or both services, is a single health care service
3-3 plan.
3-4 (u) "Point of service arrangement" means an arrangement
3-5 under which:
3-6 (1) an individual may choose to obtain benefits,
3-7 services, or both benefits and services, other than emergency care
3-8 services, under either an indemnity plan or a health care plan
3-9 provided by a health maintenance organization in accordance with
3-10 specific provisions of a point of service contract; and
3-11 (2) indemnity benefits for the cost of the health care
3-12 services, other than emergency care services, are provided by an
3-13 insurer or group hospital service corporation in conjunction with
3-14 corresponding benefits arranged or provided by a health maintenance
3-15 organization, including a single service health maintenance
3-16 organization.
3-17 (v) "Blended contract" means a single document, including a
3-18 single contract, policy, certificate, or evidence of coverage, that
3-19 provides a combination of indemnity and health care plan benefits.
3-20 (w) "Capitation" means a method of compensating a physician,
3-21 group of physicians, provider, group of providers, independent
3-22 physician association, or health maintenance organization based on
3-23 a predetermined payment for an enrollee for a month, applicable to
3-24 certain enrollees in exchange for arranging for or providing, and
3-25 guaranteeing the provision of, a defined set of covered health care
3-26 services to those enrollees for a specified period of time, without
3-27 regard to the amount of services actually provided.
4-1 (x) "Capitated person" means a physician, group of
4-2 physicians, or provider or agent for a physician, group of
4-3 physicians, or provider who is compensated by capitation under this
4-4 Act.
4-5 (y) "Subscriber" means an individual whose employment or
4-6 other status, other than family dependency, is the basis for
4-7 enrollment in the health maintenance organization.
4-8 (z) "Independent physician association" means an organized
4-9 prepaid health care system that contracts directly with one or more
4-10 of the following entities:
4-11 (1) physicians in independent practice;
4-12 (2) one or more associations of physicians in
4-13 independent practice; or
4-14 (3) one or more specialty group practices.
4-15 (aa) "Single service health maintenance organization" means
4-16 a health maintenance organization that arranges for or provides a
4-17 single health care service plan.
4-18 (bb) "Health maintenance organization delivery network"
4-19 means a health care delivery system in which a health maintenance
4-20 organization arranges for health care services directly or
4-21 indirectly through contracts and subcontracts with providers and
4-22 physicians.
4-23 SECTION 2. Subsection (a), Section 6, Texas Health
4-24 Maintenance Organization Act (Article 20A.06, Vernon's Texas
4-25 Insurance Code), is amended to read as follows:
4-26 (a) The powers of a health maintenance organization include,
4-27 but are not limited to, the following:
5-1 (1) the purchase, lease, construction, renovation,
5-2 operation, or maintenance of hospitals, medical facilities, or
5-3 both, and ancillary equipment and such property as may reasonably
5-4 be required for its principal office or for such other purposes as
5-5 may be necessary in the transaction of the business of the health
5-6 maintenance organization;
5-7 (2) the making of loans to a medical group, under an
5-8 independent contract with it in furtherance of its program, or
5-9 corporations under its control, for the purpose of acquiring or
5-10 constructing medical facilities and hospitals, or in the
5-11 furtherance of a program providing health care services to
5-12 enrollees;
5-13 (3) the furnishing of or arranging for medical care
5-14 services only through other health maintenance organizations or
5-15 physicians or groups of physicians who have independent contracts
5-16 with a <the> health maintenance organization <organizations>; the
5-17 furnishing of or arranging for the delivery of health care services
5-18 only through other health maintenance organizations or providers or
5-19 groups of providers who are under contract with or employed by a
5-20 <the> health maintenance organization or through other health
5-21 maintenance organizations or physicians or providers who have
5-22 contracted for health care services with those other health
5-23 maintenance organizations or physicians or providers, except for
5-24 the furnishing of or authorization for emergency services, services
5-25 by referral, and services to be provided outside of the service
5-26 area as approved by the commissioner; provided, however, that a
5-27 health maintenance organization is not authorized to employ or
6-1 contract with other health maintenance organizations or physicians
6-2 or providers in any manner which is prohibited by any licensing law
6-3 of this state under which such health maintenance organizations or
6-4 physicians or providers are licensed;
6-5 (4) the contracting with any person for the
6-6 performance on its behalf of certain functions such as marketing,
6-7 enrollment, and administration;
6-8 (5) the contracting with an insurance company licensed
6-9 in this state, or with a group hospital service corporation
6-10 authorized to do business in the state, for the provision of
6-11 insurance, reinsurance, indemnity, or reimbursement against the
6-12 cost of health care and medical care services provided by the
6-13 health maintenance organization;
6-14 (6) the offering of:
6-15 (A) indemnity benefits covering out-of-area
6-16 emergency services; <and>
6-17 (B) indemnity benefits in addition to those
6-18 relating to out-of-area and emergency services, provided through
6-19 insurers or group hospital service corporations;
6-20 (C) a point of service arrangement by
6-21 contracting with an insurer or group hospital service corporation
6-22 to provide indemnity benefits, including optional coverages for
6-23 out-of-area services or out-of-network care;
6-24 (D) a blended contract to an enrollee; and
6-25 (E) an evidence of coverage, as a single
6-26 document, that provides for coverage under one or more health care
6-27 plans or single health care service plans;
7-1 (7) receiving and accepting from government or private
7-2 agencies payments covering all or part of the cost of the services
7-3 provided or arranged for by the organization;
7-4 (8) the paying of compensation to a physician,
7-5 independent physician association, provider, or other health
7-6 maintenance organization based on a fee-for-service arrangement, a
7-7 risk-sharing arrangement, or a capitation arrangement;
7-8 (9) the furnishing of or arranging for mental health
7-9 services under Article 3.51-14, Insurance Code, or chemical
7-10 dependency services under Article 3.51-9, Insurance Code, through a
7-11 contract with a single service health maintenance organization; and
7-12 (10) all powers given to corporations (including
7-13 professional corporations and associations), partnerships, and
7-14 associations pursuant to their organizational documents which are
7-15 not in conflict with provisions of this Act, or other applicable
7-16 law.
7-17 SECTION 3. Section 9, Texas Health Maintenance Organization
7-18 Act (Article 20A.09, Vernon's Texas Insurance Code), is amended by
7-19 amending Subsections (b) and (f) and by adding Subsection (k) to
7-20 read as follows:
7-21 (b) The formula or method for calculating the schedule of
7-22 charges for enrollee coverage for medical services or health care
7-23 services must be filed with the commissioner before it is used in
7-24 conjunction with any health care plan. The formula or method must
7-25 be established in accordance with actuarial principles for the
7-26 various categories of enrollees. The charges resulting from the
7-27 application of the formula or method may not be altered for an
8-1 individual enrollee based on the status of that enrollee's health,
8-2 except that the charges may be based on the age and gender of an
8-3 individual enrollee and the enrollee's dependents for an individual
8-4 contract. The formula or method must produce charges that are not
8-5 excessive, inadequate, or unfairly discriminatory, and benefits
8-6 must be reasonable with respect to the rates produced by the
8-7 formula or method. A statement by a qualified actuary that
8-8 certifies the appropriateness of the formula or method must
8-9 accompany the filing together with supporting information
8-10 considered adequate by the commissioner.
8-11 (f) Article 3.51-9, <of the Texas> Insurance Code, applies
8-12 to health maintenance organizations offering basic health care
8-13 services and to single service <other than those> health
8-14 maintenance organizations offering chemical dependency services
8-15 <only a single health care service plan>.
8-16 (k) A health maintenance organization shall offer and make
8-17 available to each enrollee, on termination of coverage, a standard
8-18 continuation and conversion policy, as determined by the plan, the
8-19 benefits of which meet or exceed the minimum benefit requirements
8-20 provided by 42 C.F.R. Section 417.101.
8-21 SECTION 4. Section 22, Texas Health Maintenance Organization
8-22 Act (Article 20A.22, Vernon's Texas Insurance Code), is amended by
8-23 adding Subsections (c) and (d) to read as follows:
8-24 (c) The commissioner may adopt rules concerning the
8-25 development of minimum benefit levels, not to exceed the minimum
8-26 requirements provided by 42 C.F.R. Section 417.101, for coverage
8-27 offered by a health maintenance organization, including
9-1 continuation, conversion, and individual coverage.
9-2 (d) The rulemaking authority granted by Subsection (c) of
9-3 this section does not limit the rulemaking authority granted under
9-4 Subsection (a) of this section.
9-5 SECTION 5. Article 3.51-14, Insurance Code, is amended by
9-6 adding Section 4 to read as follows:
9-7 Sec. 4. SINGLE SERVICE HEALTH MAINTENANCE ORGANIZATIONS;
9-8 EXCEPTION. (a) In this section, "basic health care services" and
9-9 "single service health maintenance organization" have the meanings
9-10 assigned by Section 2, Texas Health Maintenance Organization Act
9-11 (Article 20A.02, Vernon's Texas Insurance Code).
9-12 (b) An entity subject to Section 2 of this article may
9-13 satisfy the requirements of this article by offering and making
9-14 available the coverage required under this article through a
9-15 contract with a single service health maintenance organization. A
9-16 single service health maintenance organization shall offer and make
9-17 available the same level of coverage under Section 3 of this
9-18 article as is required of a health maintenance organization
9-19 offering basic health care services.
9-20 (c) A single service health maintenance organization that
9-21 provides only mental health services or chemical dependency
9-22 services, or both, is subject to this article and shall offer and
9-23 make available the same level of coverage under Section 3 of this
9-24 article as is required of a health maintenance organization
9-25 offering basic health care services.
9-26 (d) A single service health maintenance organization may
9-27 also offer and make available different levels of coverage for
10-1 mental health services in addition to the level of coverage
10-2 required under Section 3 of this article, but the coverage must be
10-3 at least as favorable as the minimum requirements provided by 42
10-4 C.F.R. Section 417.101(a)(4) for qualification of health
10-5 maintenance organizations.
10-6 SECTION 6. Section 2A, Article 3.51-9, Insurance Code, is
10-7 amended by amending Subsection (e) and by adding Subsection (f) to
10-8 read as follows:
10-9 (e) In <For purposes of> this section:
10-10 (1) "Chemical<, the term "chemical> dependency
10-11 treatment center" means a facility which provides a program for the
10-12 treatment of chemical dependency pursuant to a written treatment
10-13 plan approved and monitored by a physician and which facility is
10-14 also:
10-15 (A) <(1)> affiliated with a hospital under a
10-16 contractual agreement with an established system for patient
10-17 referral; <or>
10-18 (B) <(2)> accredited as such a facility by the
10-19 Joint Commission on Accreditation of Hospitals; <or>
10-20 (C) <(3)> licensed as a chemical dependency
10-21 treatment program by the Texas Commission on Alcohol and Drug
10-22 Abuse; or
10-23 (D) <(4)> licensed, certified, or approved as a
10-24 chemical dependency treatment program or center by any other state
10-25 agency having legal authority to so license, certify, or approve.
10-26 (2) "Single service health maintenance organization"
10-27 has the meaning assigned by Section 2, Texas Health Maintenance
11-1 Organization Act (Article 20A.02, Vernon's Texas Insurance Code).
11-2 (f) An entity subject to this section may provide the
11-3 coverage required under this article through a contract with a
11-4 single service health maintenance organization. A single service
11-5 health maintenance organization shall provide the same level of
11-6 coverage under this section as is required of a health maintenance
11-7 organization offering basic health care services.
11-8 SECTION 7. Subchapter F, Chapter 3, Insurance Code, is
11-9 amended by adding Article 3.64 to read as follows:
11-10 Art. 3.64. INSURERS CONTRACTING WITH HEALTH MAINTENANCE
11-11 ORGANIZATIONS. (a) In this article:
11-12 (1) "Insurance carrier" means an insurance company,
11-13 group hospital service corporation, association, or organization
11-14 authorized to do business in this state under this chapter or
11-15 Chapter 8, 10, 11, 12, 13, 14, 15, 18, 19, 20, or 22 of this code.
11-16 (2) "Health maintenance organization" has the meaning
11-17 assigned by Section 2, Texas Health Maintenance Organization Act
11-18 (Article 20A.02, Vernon's Texas Insurance Code).
11-19 (3) "Point of service arrangement" means an
11-20 arrangement under which:
11-21 (A) an individual may choose to obtain benefits,
11-22 services, or both benefits and services, other than emergency care
11-23 services, under either an indemnity plan or a health care plan
11-24 provided by a health maintenance organization in accordance with
11-25 specific provisions of a point of service contract; and
11-26 (B) indemnity benefits for the cost of the
11-27 health care services, other than emergency care services, are
12-1 provided by an insurer or group hospital service corporation in
12-2 conjunction with corresponding benefits arranged or provided by a
12-3 health maintenance organization, including a single service health
12-4 maintenance organization.
12-5 (4) "Blended contract" means a single document,
12-6 including a single contract, policy, certificate, or evidence of
12-7 coverage, that provides a combination of indemnity and health care
12-8 plan benefits provided by a health maintenance organization.
12-9 (b) An insurance carrier may contract with a health
12-10 maintenance organization to provide a point of service arrangement,
12-11 including optional coverages for out-of-area services or
12-12 out-of-network care.
12-13 (c) An insurance carrier and a health maintenance
12-14 organization may offer a blended contract if indemnity benefits are
12-15 combined with health care plan benefits offered by the health
12-16 maintenance organization. The use of a blended contract is limited
12-17 to point of service arrangements between an insurance carrier and a
12-18 health maintenance organization, and to point of service and
12-19 contracting arrangements between an insurance carrier and a single
12-20 service health maintenance organization as approved by the
12-21 commissioner. An insurance carrier may not use a blended contract
12-22 for a purpose other than as provided by this article.
12-23 (d) A blended contract delivered, issued, or used in this
12-24 state is subject to and must be filed with the department for
12-25 approval as provided by Article 3.42 of this code and Section 9,
12-26 Texas Health Maintenance Organization Act (Article 20A.09, Vernon's
12-27 Texas Insurance Code).
13-1 (e) The commissioner may adopt rules to implement this
13-2 article.
13-3 SECTION 8. (a) An existing organization that provides only
13-4 mental health services and substance abuse services that is
13-5 required by the Texas Health Maintenance Organization Act (Chapter
13-6 20A, Vernon's Texas Insurance Code) to apply for a certificate of
13-7 authority to operate as a health maintenance organization shall
13-8 submit an application as provided by the Texas Health Maintenance
13-9 Organization Act (Chapter 20A, Vernon's Texas Insurance Code). The
13-10 application must be postmarked not later than 5 p.m. on December
13-11 31, 1995. An applicant may continue to operate until the
13-12 Commissioner of Insurance acts on the application. If an
13-13 application is denied, the applicant shall be treated as a health
13-14 maintenance organization whose certificate of authority has been
13-15 revoked.
13-16 (b) This Act takes effect September 1, 1995, and applies
13-17 only to an insurance policy, contract, or self-funded or
13-18 self-insured plan, program, or arrangement that is delivered,
13-19 issued for delivery, or renewed on or after January 1, 1996. An
13-20 insurance policy, contract, or self-funded or self-insured plan,
13-21 program, or arrangement that is delivered, issued for delivery, or
13-22 renewed before January 1, 1996, is governed by the law as it
13-23 existed immediately before the effective date of this Act, and
13-24 that law is continued in effect for that purpose.
13-25 SECTION 9. The importance of this legislation and the
13-26 crowded condition of the calendars in both houses create an
13-27 emergency and an imperative public necessity that the
14-1 constitutional rule requiring bills to be read on three several
14-2 days in each house be suspended, and this rule is hereby suspended.