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:
1-24 (1) any person <practitioner> other than a physician,
2-1 including <such as> a licensed doctor of chiropractic, registered
2-2 nurse, pharmacist, optometrist, pharmacy, hospital, or other
2-3 institution or organization or person that <furnishes health care
2-4 services, who> is licensed or otherwise authorized to provide a
2-5 health care service <practice> in this state;
2-6 (2) a person who is wholly owned or controlled by a
2-7 provider or by a group of providers who are licensed to provide the
2-8 same health care service; or
2-9 (3) a person who is wholly owned or controlled by one
2-10 or more hospitals and physicians, including a physician-hospital
2-11 organization.
2-12 (u) "Health maintenance organization delivery network" means
2-13 a health care delivery system in which a health maintenance
2-14 organization arranges for health care services directly or
2-15 indirectly through contracts and subcontracts with providers and
2-16 physicians.
2-17 SECTION 2. Subsection (a), Section 6, Texas Health
2-18 Maintenance Organization Act (Article 20A.06, Vernon's Texas
2-19 Insurance Code), is amended to read as follows:
2-20 (a) The powers of a health maintenance organization include,
2-21 but are not limited to, the following:
2-22 (1) the purchase, lease, construction, renovation,
2-23 operation, or maintenance of hospitals, medical facilities, or
2-24 both, and ancillary equipment and such property as may reasonably
2-25 be required for its principal office or for such other purposes as
2-26 may be necessary in the transaction of the business of the health
2-27 maintenance organization;
3-1 (2) the making of loans to a medical group, under an
3-2 independent contract with it in furtherance of its program, or
3-3 corporations under its control, for the purpose of acquiring or
3-4 constructing medical facilities and hospitals, or in the
3-5 furtherance of a program providing health care services to
3-6 enrollees;
3-7 (3) the furnishing of or arranging for medical care
3-8 services only through other health maintenance organizations or
3-9 physicians or groups of physicians who have independent contracts
3-10 with the health maintenance organizations; the furnishing of or
3-11 arranging for the delivery of health care services only through
3-12 other health maintenance organizations or providers or groups of
3-13 providers who are under contract with or employed by the health
3-14 maintenance organization or through other health maintenance
3-15 organizations or physicians or providers who have contracted for
3-16 health care services with those physicians or providers, except for
3-17 the furnishing of or authorization for emergency services, services
3-18 by referral, and services to be provided outside of the service
3-19 area as approved by the commissioner; provided, however, that a
3-20 health maintenance organization is not authorized to employ or
3-21 contract with physicians or providers in any manner which is
3-22 prohibited by any licensing law of this state under which such
3-23 physicians or providers are licensed;
3-24 (4) the contracting with any person for the
3-25 performance on its behalf of certain functions such as marketing,
3-26 enrollment, and administration;
3-27 (5) the contracting with an insurance company licensed
4-1 in this state, or with a group hospital service corporation
4-2 authorized to do business in the state, for the provision of
4-3 insurance, reinsurance, indemnity, or reimbursement against the
4-4 cost of health care and medical care services provided by the
4-5 health maintenance organization;
4-6 (6) the offering of:
4-7 (A) indemnity benefits covering out-of-area
4-8 emergency services; and
4-9 (B) indemnity benefits in addition to those
4-10 relating to out-of-area and emergency services, provided through
4-11 insurers or group hospital service corporations;
4-12 (7) receiving and accepting from government or private
4-13 agencies payments covering all or part of the cost of the services
4-14 provided or arranged for by the organization;
4-15 (8) all powers given to corporations (including
4-16 professional corporations and associations), partnerships, and
4-17 associations pursuant to their organizational documents which are
4-18 not in conflict with provisions of this Act, or other applicable
4-19 law.
4-20 SECTION 3. Subsection (f), Section 26, Texas Health
4-21 Maintenance Organization Act (Article 20A.26, Vernon's Texas
4-22 Insurance Code), is amended to read as follows:
4-23 (f)(1) This Act shall not be applicable to:
4-24 (A) any physician <person licensed to practice
4-25 medicine in this state, nor to any professional association
4-26 organized under the Texas Professional Association Act, as amended
4-27 (Article 1528f, Vernon's Texas Civil Statutes), nor to any
5-1 nonprofit corporation organized and complying with Section 5.01,
5-2 Medical Practice Act (Article 4495b, Vernon's Texas Civil
5-3 Statutes)>, so long as that physician <person, professional
5-4 association, or nonprofit corporation> is engaged in the delivery
5-5 of or arranges for the delivery of <health or medical> care that is
5-6 within the definition of medical care; or
5-7 (B) any provider that furnishes or arranges for
5-8 the delivery of health care services other than medical care as
5-9 part of a health maintenance organization delivery network
5-10 <practicing medicine as defined in Section 2(k) of this Act>.
5-11 (2) Except as provided by Section 6(a)(3) of this Act
5-12 or Subdivision (5) of this subsection, any physician or provider
5-13 that employs <person, professional association, or nonprofit
5-14 corporation referred to above, which shall employ> or enters
5-15 <enter> into a contractual arrangement with a provider or group of
5-16 providers to furnish basic health care services as defined in
5-17 Section 2 of this Act is <, would be> subject to the provisions of
5-18 this Act, and shall be required to obtain a certificate of
5-19 authority from the commissioner.
5-20 (3) Notwithstanding any other law, any physician who
5-21 <person, professional association, or nonprofit corporation
5-22 referred to above, which> conducts activities permitted by law but
5-23 which do not require a certificate of authority under this Act, and
5-24 in the process contracts with one or more physicians<, professional
5-25 associations, or nonprofit corporations referred to above>, shall
5-26 not, by virtue of such contract or arrangement, be deemed to have
5-27 entered into a conspiracy in restraint of trade in violation of
6-1 Sections 15.01 through 15.34 of the Business & Commerce Code.
6-2 (4) Except for Articles 21.07-6 and 21.58A, Insurance
6-3 Code, <Notwithstanding any other law, provisions of> the insurance
6-4 laws, including <law and the provisions of> the group hospital
6-5 service corporation law, do not apply <shall not be applicable> to
6-6 physicians and providers <the above persons, professional
6-7 associations, or nonprofit corporations>.
6-8 (5) This Act and the Insurance Code may not be
6-9 construed to prohibit a physician or provider who is participating
6-10 in a health maintenance organization delivery network, whether
6-11 contracting with a health maintenance organization under Section
6-12 6(a)(3) of this Act or subcontracting with a physician or provider
6-13 in the health maintenance organization delivery network, from
6-14 entering into a contractual arrangement described under
6-15 Subdivisions (6)-(8) of this subsection if the contractual
6-16 arrangement is entered into in furtherance of the delivery of
6-17 health care services or medical care through a contractual
6-18 arrangement with a health maintenance organization.
6-19 (6) A physician may contract to provide medical care
6-20 or arrange to provide medical care through subcontracts with other
6-21 physicians. A physician may contract to provide through other
6-22 providers any services that are ancillary to the practice of
6-23 medicine, other than hospital or other institutional or inpatient
6-24 provider services.
6-25 (7) A provider may contract to provide, or arrange to
6-26 provide through subcontracts with similarly licensed providers, any
6-27 health care services that those providers are licensed to provide,
7-1 other than medical care.
7-2 (8) A provider may contract to provide, or arrange to
7-3 provide through subcontracts with other providers, a health care
7-4 service that the provider is not licensed to provide, other than
7-5 medical care, if the contracted or subcontracted services
7-6 constitute less than 15 percent of the total amount of services to
7-7 be provided by that provider or arranged to be provided for by that
7-8 provider.
7-9 (9) A contract or subcontract authorized under
7-10 Subdivision (6), (7), or (8) of this subsection may provide for
7-11 compensation based on a fee-for-service arrangement, a risk-sharing
7-12 arrangement, or a capitated risk arrangement under which a fixed
7-13 predetermined payment is made in exchange for the provision of, or
7-14 the arrangement to provide and the guaranty of the provision of, a
7-15 defined set of covered services to the covered persons for a
7-16 specified period, regardless of the amount of services actually
7-17 provided.
7-18 SECTION 4. This Act takes effect September 1, 1995, and
7-19 applies only to a contract that is entered into or renewed on or
7-20 after January 1, 1996. A contract that is entered into or renewed
7-21 before January 1, 1996, is governed by the law as it existed
7-22 immediately before the effective date of this Act, and that law is
7-23 continued in effect for that purpose.
7-24 SECTION 5. The importance of this legislation and the
7-25 crowded condition of the calendars in both houses create an
7-26 emergency and an imperative public necessity that the
7-27 constitutional rule requiring bills to be read on three several
8-1 days in each house be suspended, and this rule is hereby suspended.
8-2 COMMITTEE AMENDMENT NO. 1
8-3 Amend SB 1407, Engrossed, as follows:
8-4 (1) On page 3, line 19, between "those" and "physicians",
8-5 insert "other health maintenance organizations or".
8-6 (2) On page 3, line 24, between "with" and "physicians",
8-7 insert "other health maintenance organizations or".
8-8 (3) On page 3, line 25, after "such", insert "health
8-9 maintenance organizations".
8-10 (4) On page 5, line 12, strike "or arranges for the delivery
8-11 of".
8-12 (5) On page 5, line 14, strike "furnishes or arranges for"
8-13 and substitute "is engaged in".
8-14 (6) On page 6, strike lines 11-16 and substitute "Except for
8-15 Articles 21.07-6 and Article 21.58A, Insurance Code,
8-16 <Notwithstanding any other law, provisions of> the insurance laws,
8-17 including <law and the provisions of> the group hospital service
8-18 corporation law, do not apply <shall not be applicable> to
8-19 physicians and providers <the above persons, professional
8-20 associations, or nonprofit corporations>; provided that Article
8-21 21.58A shall not apply to utilization review undertaken by a
8-22 physician or provider in the ordinary course of treatment of
8-23 patients by a physician or provider pursuant to a joint or
8-24 delegated review agreement or agreements with a health maintenance
8-25 organization on services rendered by the physician or provider.
8-26 (7) On page 6, line 23, after "arrangement" insert "within a
8-27 health maintenance organization delivery network".
9-1 (8) On page 6, line 24, strike "8" and substitute "9".
9-2 (9) On page 6, line 24, through page 7, line 2, strike "if
9-3 the contractual arrangement is entered into in furtherance of the
9-4 delivery of health care services or medical care through a
9-5 contractual arrangement with a health maintenance organization".
9-6 Driver