By: Harris S.B. No. 1407
A BILL TO BE ENTITLED
AN ACT
1-1 relating to contractual arrangements among health maintenance
1-2 organizations, physicians, and other providers.
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 (l), (m), and (n) and by adding Subsection (u)
1-7 to read as follows:
1-8 (l) "Person" means any natural or artificial person,
1-9 including, but not limited to, individuals, partnerships,
1-10 associations, organizations, trusts, hospital districts, limited
1-11 liability companies, limited liability partnerships, or
1-12 corporations.
1-13 (m) "Physician" means:
1-14 (1) an individual <anyone> licensed to practice
1-15 medicine in this state;
1-16 (2) a professional association organized under the
1-17 Texas Professional Association Act (Article 1528f, Vernon's Texas
1-18 Civil Statutes) or a nonprofit health corporation certified under
1-19 Section 5.01, Medical Practice Act (Article 4495b, Vernon's Texas
1-20 Civil Statutes); or
1-21 (3) another person wholly owned by physicians <the
1-22 State of Texas>.
1-23 (n) "Provider" means:
2-1 (1) any person <practitioner> other than a physician,
2-2 including <such as> a licensed doctor of chiropractic, registered
2-3 nurse, pharmacist, optometrist, pharmacy, hospital, or other
2-4 institution or organization or person that <furnishes health care
2-5 services, who> is licensed or otherwise authorized to provide a
2-6 health care service <practice> in this state;
2-7 (2) a person who is wholly owned or controlled by a
2-8 provider or by a group of providers who are licensed to provide the
2-9 same health care service; or
2-10 (3) a person who is wholly owned or controlled by one
2-11 or more hospitals and physicians, including a physician-hospital
2-12 organization.
2-13 (u) "Health maintenance organization delivery network" means
2-14 a health care delivery system in which a health maintenance
2-15 organization arranges for health care services directly or
2-16 indirectly through contracts and subcontracts with providers and
2-17 physicians.
2-18 SECTION 2. Subsection (a), Section 6, Texas Health
2-19 Maintenance Organization Act (Article 20A.06, Vernon's Texas
2-20 Insurance Code), is amended to read as follows:
2-21 (a) The powers of a health maintenance organization include,
2-22 but are not limited to, the following:
2-23 (1) the purchase, lease, construction, renovation,
2-24 operation, or maintenance of hospitals, medical facilities, or
2-25 both, and ancillary equipment and such property as may reasonably
3-1 be required for its principal office or for such other purposes as
3-2 may be necessary in the transaction of the business of the health
3-3 maintenance organization;
3-4 (2) the making of loans to a medical group, under an
3-5 independent contract with it in furtherance of its program, or
3-6 corporations under its control, for the purpose of acquiring or
3-7 constructing medical facilities and hospitals, or in the
3-8 furtherance of a program providing health care services to
3-9 enrollees;
3-10 (3) the furnishing of or arranging for medical care
3-11 services only through other health maintenance organizations or
3-12 physicians or groups of physicians who have independent contracts
3-13 with the health maintenance organizations; the furnishing of or
3-14 arranging for the delivery of health care services only through
3-15 other health maintenance organizations or providers or groups of
3-16 providers who are under contract with or employed by the health
3-17 maintenance organization or through other health maintenance
3-18 organizations or physicians or providers who have contracted for
3-19 health care services with those physicians or providers, except for
3-20 the furnishing of or authorization for emergency services, services
3-21 by referral, and services to be provided outside of the service
3-22 area as approved by the commissioner; provided, however, that a
3-23 health maintenance organization is not authorized to employ or
3-24 contract with physicians or providers in any manner which is
3-25 prohibited by any licensing law of this state under which such
4-1 physicians or providers are licensed;
4-2 (4) the contracting with any person for the
4-3 performance on its behalf of certain functions such as marketing,
4-4 enrollment, and administration;
4-5 (5) the contracting with an insurance company licensed
4-6 in this state, or with a group hospital service corporation
4-7 authorized to do business in the state, for the provision of
4-8 insurance, reinsurance, indemnity, or reimbursement against the
4-9 cost of health care and medical care services provided by the
4-10 health maintenance organization;
4-11 (6) the offering of:
4-12 (A) indemnity benefits covering out-of-area
4-13 emergency services; and
4-14 (B) indemnity benefits in addition to those
4-15 relating to out-of-area and emergency services, provided through
4-16 insurers or group hospital service corporations;
4-17 (7) receiving and accepting from government or private
4-18 agencies payments covering all or part of the cost of the services
4-19 provided or arranged for by the organization;
4-20 (8) all powers given to corporations (including
4-21 professional corporations and associations), partnerships, and
4-22 associations pursuant to their organizational documents which are
4-23 not in conflict with provisions of this Act, or other applicable
4-24 law.
4-25 SECTION 3. Subsection (f), Section 26, Texas Health
5-1 Maintenance Organization Act (Article 20A.26, Vernon's Texas
5-2 Insurance Code), is amended to read as follows:
5-3 (f)(1) This Act shall not be applicable to:
5-4 (A) any physician <person licensed to practice
5-5 medicine in this state, nor to any professional association
5-6 organized under the Texas Professional Association Act, as amended
5-7 (Article 1528f, Vernon's Texas Civil Statutes), nor to any
5-8 nonprofit corporation organized and complying with Section 5.01,
5-9 Medical Practice Act (Article 4495b, Vernon's Texas Civil
5-10 Statutes)>, so long as that physician <person, professional
5-11 association, or nonprofit corporation> is engaged in the delivery
5-12 of or arranges for the delivery of <health or medical> care that is
5-13 within the definition of medical care; or
5-14 (B) any provider that furnishes or arranges for
5-15 the delivery of health care services other than medical care as
5-16 part of a health maintenance organization delivery network
5-17 <practicing medicine as defined in Section 2(k) of this Act>.
5-18 (2) Except as provided by Section 6(a)(3) of this Act
5-19 or Subdivision (5) of this subsection, any physician or provider
5-20 that employs <person, professional association, or nonprofit
5-21 corporation referred to above, which shall employ> or enters
5-22 <enter> into a contractual arrangement with a provider or group of
5-23 providers to furnish basic health care services as defined in
5-24 Section 2 of this Act is <, would be> subject to the provisions of
5-25 this Act, and shall be required to obtain a certificate of
6-1 authority from the commissioner.
6-2 (3) Notwithstanding any other law, any physician who
6-3 <person, professional association, or nonprofit corporation
6-4 referred to above, which> conducts activities permitted by law but
6-5 which do not require a certificate of authority under this Act, and
6-6 in the process contracts with one or more physicians<, professional
6-7 associations, or nonprofit corporations referred to above>, shall
6-8 not, by virtue of such contract or arrangement, be deemed to have
6-9 entered into a conspiracy in restraint of trade in violation of
6-10 Sections 15.01 through 15.34 of the Business & Commerce Code.
6-11 (4) Except for Articles 21.07-6 and 21.58A, Insurance
6-12 Code, <Notwithstanding any other law, provisions of> the insurance
6-13 laws, including <law and the provisions of> the group hospital
6-14 service corporation law, do not apply <shall not be applicable> to
6-15 physicians and providers <the above persons, professional
6-16 associations, or nonprofit corporations>.
6-17 (5) This Act and the Insurance Code may not be
6-18 construed to prohibit a physician or provider who is participating
6-19 in a health maintenance organization delivery network, whether
6-20 contracting with a health maintenance organization under Section
6-21 6(a)(3) of this Act or subcontracting with a physician or provider
6-22 in the health maintenance organization delivery network, from
6-23 entering into a contractual arrangement described under
6-24 Subdivisions (6)-(8) of this subsection if the contractual
6-25 arrangement is entered into in furtherance of the delivery of
7-1 health care services or medical care through a contractual
7-2 arrangement with a health maintenance organization.
7-3 (6) A physician may contract to provide medical care
7-4 or arrange to provide medical care through subcontracts with other
7-5 physicians. A physician may contract to provide through other
7-6 providers any services that are ancillary to the practice of
7-7 medicine, other than hospital or other institutional or inpatient
7-8 provider services.
7-9 (7) A provider may contract to provide, or arrange to
7-10 provide through subcontracts with similarly licensed providers, any
7-11 health care services that those providers are licensed to provide,
7-12 other than medical care.
7-13 (8) A provider may contract to provide, or arrange to
7-14 provide through subcontracts with other providers, a health care
7-15 service that the provider is not licensed to provide, other than
7-16 medical care, if the contracted or subcontracted services
7-17 constitute less than 15 percent of the total amount of services to
7-18 be provided by that provider or arranged to be provided for by that
7-19 provider.
7-20 (9) A contract or subcontract authorized under
7-21 Subdivision (6), (7), or (8) of this subsection may provide for
7-22 compensation based on a fee-for-service arrangement, a risk-sharing
7-23 arrangement, or a capitated risk arrangement under which a fixed
7-24 predetermined payment is made in exchange for the provision of, or
7-25 the arrangement to provide and the guaranty of the provision of, a
8-1 defined set of covered services to the covered persons for a
8-2 specified period, regardless of the amount of services actually
8-3 provided.
8-4 SECTION 4. This Act takes effect September 1, 1995, and
8-5 applies only to a contract that is entered into or renewed on or
8-6 after January 1, 1996. A contract that is entered into or renewed
8-7 before January 1, 1996, is governed by the law as it existed
8-8 immediately before the effective date of this Act, and that law is
8-9 continued in effect for that purpose.
8-10 SECTION 5. The importance of this legislation and the
8-11 crowded condition of the calendars in both houses create an
8-12 emergency and an imperative public necessity that the
8-13 constitutional rule requiring bills to be read on three several
8-14 days in each house be suspended, and this rule is hereby suspended.