S.B. No. 1407
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 other health maintenance
3-20 organizations or physicians or providers, except for the furnishing
3-21 of or authorization for emergency services, services by referral,
3-22 and services to be provided outside of the service area as approved
3-23 by the commissioner; provided, however, that a health maintenance
3-24 organization is not authorized to employ or contract with other
3-25 health maintenance organizations or physicians or providers in any
4-1 manner which is prohibited by any licensing law of this state under
4-2 which such health maintenance organizations or physicians or
4-3 providers are licensed;
4-4 (4) the contracting with any person for the
4-5 performance on its behalf of certain functions such as marketing,
4-6 enrollment, and administration;
4-7 (5) the contracting with an insurance company licensed
4-8 in this state, or with a group hospital service corporation
4-9 authorized to do business in the state, for the provision of
4-10 insurance, reinsurance, indemnity, or reimbursement against the
4-11 cost of health care and medical care services provided by the
4-12 health maintenance organization;
4-13 (6) the offering of:
4-14 (A) indemnity benefits covering out-of-area
4-15 emergency services; and
4-16 (B) indemnity benefits in addition to those
4-17 relating to out-of-area and emergency services, provided through
4-18 insurers or group hospital service corporations;
4-19 (7) receiving and accepting from government or private
4-20 agencies payments covering all or part of the cost of the services
4-21 provided or arranged for by the organization;
4-22 (8) all powers given to corporations (including
4-23 professional corporations and associations), partnerships, and
4-24 associations pursuant to their organizational documents which are
4-25 not in conflict with provisions of this Act, or other applicable
5-1 law.
5-2 SECTION 3. Subsection (f), Section 26, Texas Health
5-3 Maintenance Organization Act (Article 20A.26, Vernon's Texas
5-4 Insurance Code), is amended to read as follows:
5-5 (f)(1) This Act shall not be applicable to:
5-6 (A) any physician <person licensed to practice
5-7 medicine in this state, nor to any professional association
5-8 organized under the Texas Professional Association Act, as amended
5-9 (Article 1528f, Vernon's Texas Civil Statutes), nor to any
5-10 nonprofit corporation organized and complying with Section 5.01,
5-11 Medical Practice Act (Article 4495b, Vernon's Texas Civil
5-12 Statutes)>, so long as that physician <person, professional
5-13 association, or nonprofit corporation> is engaged in the delivery
5-14 of <health or medical> care that is within the definition of
5-15 medical care; or
5-16 (B) any provider that is engaged in the delivery
5-17 of health care services other than medical care as part of a health
5-18 maintenance organization delivery network <practicing medicine as
5-19 defined in Section 2(k) of this Act>.
5-20 (2) Except as provided by Section 6(a)(3) of this Act
5-21 or Subdivision (5) of this subsection, any physician or provider
5-22 that employs <person, professional association, or nonprofit
5-23 corporation referred to above, which shall employ> or enters
5-24 <enter> into a contractual arrangement with a provider or group of
5-25 providers to furnish basic health care services as defined in
6-1 Section 2 of this Act is<, would be> subject to the provisions of
6-2 this Act, and shall be required to obtain a certificate of
6-3 authority from the commissioner.
6-4 (3) Notwithstanding any other law, any physician who
6-5 <person, professional association, or nonprofit corporation
6-6 referred to above, which> conducts activities permitted by law but
6-7 which do not require a certificate of authority under this Act, and
6-8 in the process contracts with one or more physicians<, professional
6-9 associations, or nonprofit corporations referred to above>, shall
6-10 not, by virtue of such contract or arrangement, be deemed to have
6-11 entered into a conspiracy in restraint of trade in violation of
6-12 Sections 15.01 through 15.34 of the Business & Commerce Code.
6-13 (4) Except for Articles 21.07-6 and 21.58A, Insurance
6-14 Code, <Notwithstanding any other law, provisions of> the insurance
6-15 laws, including <law and the provisions of> the group hospital
6-16 service corporation law, do not apply <shall not be applicable> to
6-17 physicians and providers; provided that Article 21.58A shall not
6-18 apply to utilization review undertaken by a physician or provider
6-19 in the ordinary course of treatment of patients by a physician or
6-20 provider pursuant to a joint or delegated review agreement or
6-21 agreements with a health maintenance organization on services
6-22 rendered by the physician or provider <the above persons,
6-23 professional associations, or nonprofit corporations>.
6-24 (5) This Act and the Insurance Code may not be
6-25 construed to prohibit a physician or provider who is participating
7-1 in a health maintenance organization delivery network, whether
7-2 contracting with a health maintenance organization under Section
7-3 6(a)(3) of this Act or subcontracting with a physician or provider
7-4 in the health maintenance organization delivery network, from
7-5 entering into a contractual arrangement within a health maintenance
7-6 organization delivery network described under Subdivisions (6)-(9)
7-7 of this subsection.
7-8 (6) A physician may contract to provide medical care
7-9 or arrange to provide medical care through subcontracts with other
7-10 physicians. A physician may contract to provide through other
7-11 providers any services that are ancillary to the practice of
7-12 medicine, other than hospital or other institutional or inpatient
7-13 provider services.
7-14 (7) A provider may contract to provide, or arrange to
7-15 provide through subcontracts with similarly licensed providers, any
7-16 health care services that those providers are licensed to provide,
7-17 other than medical care.
7-18 (8) A provider may contract to provide, or arrange to
7-19 provide through subcontracts with other providers, a health care
7-20 service that the provider is not licensed to provide, other than
7-21 medical care, if the contracted or subcontracted services
7-22 constitute less than 15 percent of the total amount of services to
7-23 be provided by that provider or arranged to be provided for by that
7-24 provider.
7-25 (9) A contract or subcontract authorized under
8-1 Subdivision (6), (7), or (8) of this subsection may provide for
8-2 compensation based on a fee-for-service arrangement, a risk-sharing
8-3 arrangement, or a capitated risk arrangement under which a fixed
8-4 predetermined payment is made in exchange for the provision of, or
8-5 the arrangement to provide and the guaranty of the provision of, a
8-6 defined set of covered services to the covered persons for a
8-7 specified period, regardless of the amount of services actually
8-8 provided.
8-9 SECTION 4. This Act takes effect September 1, 1995, and
8-10 applies only to a contract that is entered into or renewed on or
8-11 after January 1, 1996. A contract that is entered into or renewed
8-12 before January 1, 1996, is governed by the law as it existed
8-13 immediately before the effective date of this Act, and that law is
8-14 continued in effect for that purpose.
8-15 SECTION 5. 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.