By Zaffirini S.B. No. 406
74R2435 KLL-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the creation, powers, and duties of the health care
1-3 purchasing office.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Title 70, Revised Statutes, is amended by adding
1-6 Article 4413(504) to read as follows:
1-7 Art. 4413(504). HEALTH CARE PURCHASING OFFICE
1-8 Sec. 1. DEFINITIONS. In this article:
1-9 (1) "Commission" means the Health and Human Services
1-10 Commission.
1-11 (2) "Drug" has the meaning assigned by Section 5,
1-12 Texas Pharmacy Act (Article 4542a-1, Vernon's Texas Civil
1-13 Statutes).
1-14 (3) "Office" means the health care purchasing office.
1-15 (4) "State agency" means a department, commission,
1-16 board, office, or other agency in the executive branch of state
1-17 government, created under the constitution or a statute, with
1-18 statewide authority, including a university system or an
1-19 institution of higher education as defined by Section 61.003,
1-20 Education Code.
1-21 (5) "State health care program" means a program
1-22 administered or funded by a state agency to provide health care
1-23 services, equipment, supplies, or drugs or to pay for or reimburse
1-24 the cost of health care services, equipment, supplies, or drugs.
2-1 Sec. 2. HEALTH CARE PURCHASING OFFICE. (a) The health care
2-2 purchasing office is an office of the commission and is established
2-3 to manage the costs of health care expenditures made by the state.
2-4 (b) The office is the central agent for developing and
2-5 coordinating short-term and long-term plans for health care
2-6 purchasing in state health care programs.
2-7 Sec. 3. STAFF. (a) The commissioner of health and human
2-8 services shall employ staff for the office.
2-9 (b) The commissioner shall employ as office staff persons
2-10 who have:
2-11 (1) a thorough understanding of the health care
2-12 industry, of state purchasing of medical goods and services, and of
2-13 the specific needs of state health care programs; and
2-14 (2) extensive experience in negotiating health care
2-15 rates and in modeling costs and benefits.
2-16 Sec. 4. COLLECTION OF INFORMATION. (a) A state agency
2-17 shall collect and maintain information relating to the agency's
2-18 expenditures under a state health care program.
2-19 (b) The office is entitled to access to all information
2-20 collected and maintained under this section.
2-21 (c) The office may specify the type of information that a
2-22 state agency must collect and maintain under this section and may
2-23 prescribe standardized forms that must be used by a state agency
2-24 for recording that information.
2-25 (d) Information provided to the office that is confidential
2-26 under other law remains confidential in the possession of the
2-27 office.
3-1 Sec. 5. UNIFORM SERVICE PROVIDER REIMBURSEMENT RATE
3-2 STRUCTURE. (a) The office shall prescribe a uniform rate
3-3 structure for reimbursing a provider of health care services under
3-4 a state health care program for services provided on or after
3-5 January 1, 1996.
3-6 (b) This section does not apply to the managed health care
3-7 plan of the Texas Department of Criminal Justice, to the program
3-8 provided under the Texas Employees Uniform Group Insurance Benefits
3-9 Act, or to a medical and dental unit, as that term is defined by
3-10 Section 61.003, Education Code, of an institution of higher
3-11 education.
3-12 (c) For services provided from September 1, 1995, through
3-13 December 31, 1995, a state agency listed in Section 19, Article
3-14 4413(502), Revised Statutes, may not reimburse a provider of health
3-15 care services under a state health care program in an amount that
3-16 exceeds the amount provided by the Medicaid fee schedule for that
3-17 service.
3-18 Sec. 6. CONSOLIDATED CONTRACTS FOR PURCHASE OF DRUGS AND
3-19 MEDICAL EQUIPMENT AND SUPPLIES. (a) In order to acquire volume
3-20 discounts, the office shall negotiate contracts for the purchase of
3-21 drugs and medical equipment and supplies that consolidate purchases
3-22 for all state health care programs.
3-23 (b) On or after January 1, 1996, a state agency that
3-24 purchases drugs or medical equipment or supplies under a state
3-25 health care program shall make those purchases under a consolidated
3-26 contract negotiated by the office.
3-27 (c) This section does not apply to the managed health care
4-1 plan of the Texas Department of Criminal Justice or to the program
4-2 provided under the Texas Employees Uniform Group Insurance Benefits
4-3 Act.
4-4 (d) The office may exempt a state health program from
4-5 purchasing under a consolidated contract if, based on a showing by
4-6 the responsible agency, the office determines that purchasing by
4-7 that agency under a separate contract is more cost-effective.
4-8 Sec. 7. UNIFORM REIMBURSEMENT RATES FOR DRUGS AND MEDICAL
4-9 EQUIPMENT AND SUPPLIES. (a) The office shall prescribe uniform
4-10 reimbursement rates for drugs and medical equipment and supplies
4-11 purchased under a state health care program on or after January 1,
4-12 1996.
4-13 (b) The rates shall be based on the negotiated volume
4-14 discounts obtained by the office under Section 6 of this article.
4-15 (c) This section does not apply to the managed health care
4-16 plan of the Texas Department of Criminal Justice or to the program
4-17 provided under the Texas Employees Uniform Group Insurance Benefits
4-18 Act.
4-19 Sec. 8. UNIFORM DRUG DISPENSING FEE RATE STRUCTURE. (a)
4-20 The office shall prescribe a uniform rate structure for drug
4-21 dispensing fees under a state health care program for services
4-22 provided on or after January 1, 1996.
4-23 (b) The health care purchasing office shall base the rate
4-24 structure on private sector standards for dispensing fees.
4-25 (c) This section does not apply to the managed health care
4-26 plan of the Texas Department of Criminal Justice, to the program
4-27 provided under the Texas Employees Uniform Group Insurance Benefits
5-1 Act, or to a medical and dental unit, as that term is defined by
5-2 Section 61.003, Education Code, of an institution of higher
5-3 education.
5-4 (d) For the fiscal biennium beginning September 1, 1995, a
5-5 state agency listed in Section 19, Article 4413(502), Revised
5-6 Statutes, may not pay more than $4, including profit fees and
5-7 incentives, for each prescription dispensed under a state health
5-8 care program.
5-9 Sec. 9. SEPARATE BILLING RESTRICTED. (a) To encourage
5-10 private providers to obtain competitive rates for medical supplies,
5-11 the office shall adopt a list of medical supplies for which
5-12 separate billing is permissible under a state health care program.
5-13 (b) On or after January 1, 1996, a provider under a state
5-14 health care program may not bill separately for a medical supply
5-15 that is not included in the list adopted under Subsection (a) of
5-16 this section.
5-17 (c) This section does not apply to the managed health care
5-18 plan of the Texas Department of Criminal Justice or to the program
5-19 provided under the Texas Employees Uniform Group Insurance Benefits
5-20 Act.
5-21 Sec. 10. CLAIMS ADMINISTRATION. The office shall develop
5-22 and implement a plan to incorporate the processing of claims under
5-23 a state health care program with relatively high processing costs
5-24 into a state health care program with lower processing costs.
5-25 Sec. 11. MEDICAID MANAGEMENT INFORMATION SYSTEM. The office
5-26 shall study potential cost-containment strategies for the Texas
5-27 Medicaid Management Information System before the commission rebids
6-1 the contract for administering the state Medicaid program.
6-2 Sec. 12. INCENTIVE PLANS. (a) The office shall develop and
6-3 implement an incentive plan in which state agencies and state
6-4 health care programs share in any savings to the general revenue
6-5 fund that result from cost-containment strategies provided by this
6-6 article and that exceed $34 million in a fiscal year.
6-7 (b) The office shall prescribe the methods to be used in
6-8 calculating savings to the general revenue fund under this section.
6-9 Sec. 13. INTERIM STUDY COMMITTEE. During the fiscal
6-10 biennium beginning September 1, 1995, the office shall periodically
6-11 report to an interim study committee composed of a representative
6-12 from:
6-13 (1) the governor's office;
6-14 (2) the lieutenant governor's office;
6-15 (3) the office of the speaker of the house of
6-16 representatives;
6-17 (4) the comptroller's office;
6-18 (5) the Texas Department of Insurance;
6-19 (6) the Health and Human Services Commission;
6-20 (7) the Texas Department of Health;
6-21 (8) the Texas Department of Mental Health and Mental
6-22 Retardation;
6-23 (9) the Texas Department of Criminal Justice;
6-24 (10) The University of Texas System; and
6-25 (11) The Texas A&M University System.
6-26 Sec. 14. STUDY OF MANAGED HEALTH CARE PLAN OF TEXAS
6-27 DEPARTMENT OF CRIMINAL JUSTICE. (a) The office shall study the
7-1 managed health care plan of the Texas Department of Criminal
7-2 Justice.
7-3 (b) In conducting the study, the office shall work with the
7-4 Managed Health Care Advisory Committee to identify health care
7-5 purchases for inmates that could be consolidated with other state
7-6 health care purchases to achieve savings.
7-7 (c) The office shall examine capitation rates and payments
7-8 for care not covered under the capitation rates using cost and
7-9 usage data from the managed health care plan and other treatment
7-10 programs.
7-11 (d) The office shall report its findings under this section
7-12 to the 75th Legislature not later than February 1, 1997.
7-13 Sec. 15. REPORT TO LEGISLATURE. The office shall report to
7-14 the 75th Legislature not later than February 1, 1997, and shall
7-15 identify savings to state health care programs that occurred from
7-16 the implementation of this article and from any other
7-17 cost-containment strategies.
7-18 Sec. 16. COLLABORATION BETWEEN AGENCIES; ANALYSIS OF
7-19 REIMBURSEMENT METHODS. Not later than January 1, 1996, the health
7-20 care purchasing office shall:
7-21 (1) initiate formal collaboration between programs and
7-22 agencies for coordination and cost containment purposes; and
7-23 (2) analyze reimbursement policies and methods used by
7-24 state health care programs to identify methods that can be applied
7-25 across all or a majority of programs to contain costs and minimize
7-26 cost-shifting.
7-27 Sec. 17. EVALUATION OF MEDICAID PROGRAM; LONG-TERM STRATEGIC
8-1 PLAN; CENTRAL DATABASE OF HEALTH CARE PURCHASES. Not later than
8-2 December 1, 1996, the health care purchasing office shall:
8-3 (1) evaluate the state's Medicaid programs,
8-4 particularly cost-containment potential and response to managed
8-5 care initiatives;
8-6 (2) develop a long-term strategic plan for the
8-7 administration, purchase, and delivery of health care services; and
8-8 (3) develop a central database of health care
8-9 purchases for use in policy formulation, reimbursement analysis,
8-10 and contract negotiation with the provider community.
8-11 Sec. 18. REDUCTION OF ADMINISTRATIVE BURDEN; STRATEGIES FOR
8-12 LOCAL GOVERNMENT PARTICIPATION. Not later than September 1, 1997,
8-13 the health care purchasing office shall:
8-14 (1) implement measures to reduce the administrative
8-15 burden on providers that participate in multiple state health care
8-16 programs through improved automation and coordination between
8-17 programs and agencies; and
8-18 (2) develop strategies to allow local governments to
8-19 participate in state health care cost-control initiatives.
8-20 SECTION 2. Sections 13-18, Article 4413(504), Revised
8-21 Statutes, as added by this Act, expire September 2, 1997.
8-22 SECTION 3. The importance of this legislation and the
8-23 crowded condition of the calendars in both houses create an
8-24 emergency and an imperative public necessity that the
8-25 constitutional rule requiring bills to be read on three several
8-26 days in each house be suspended, and this rule is hereby suspended,
8-27 and that this Act take effect and be in force from and after its
9-1 passage, and it is so enacted.