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 and with physicians and providers.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Article 20A.02, Insurance Code, is amended to
1-5 read as follows:
1-6 Art. 20A.02. Definitions.
1-7 For the purposes of this Act:
1-8 (a) "Basic health care services" means health care services
1-9 which an enrolled population might reasonably require in order to
1-10 be maintained in good health, including, as a minimum, emergency
1-11 care, inpatient hospital and medical services, and outpatient
1-12 medical services.
1-13 (b) "Board" means the State Board of Health.
1-14 (c) "Commissioner" means the commissioner of insurance.
1-15 (d) <t> "Emergency care" means bona fide emergency services
1-16 provided after the sudden onset of a medical condition manifesting
1-17 itself by acute symptoms of sufficient severity, including severe
1-18 pain, such that the absence of immediate medical attention could
1-19 reasonably be expected to result in:
1-20 (1) placing the patient's health in serious jeopardy;
1-21 (2) serious impairment to bodily functions; or
1-22 (3) serious dysfunction of any bodily organ or part.
1-23 (e) <(d)> "Enrollee" means an individual who is enrolled in
2-1 a health care plan, including covered dependents.
2-2 (f) <(e)> "Evidence of coverage" means any certificate,
2-3 agreement, or contract issued to an enrollee setting out the
2-4 coverage to which the enrollee is entitled.
2-5 (g) <(f)> "Group hospital service corporation" means a
2-6 nonprofit corporation organized and operating under Chapter 20 of
2-7 the Insurance Code.
2-8 (h) <(g)> "Health care" means prevention, maintenance, and
2-9 rehabilitation services provided by qualified persons other than
2-10 medical care.
2-11 (i) <(h)> "Health care plan" means any plan whereby any
2-12 person undertakes to provide, arrange for, pay for, or reimburse
2-13 any part of the cost of any health care services; provided,
2-14 however, a part of such plan consists of arranging for or the
2-15 provision of health care services, as distinguished from
2-16 indemnification against the cost of such service, on a prepaid
2-17 basis through insurance or otherwise.
2-18 (j) <(i)> "Health care services" means any services,
2-19 including the furnishing to any individual of medical or dental
2-20 care, or hospitalization or incident to the furnishing of such care
2-21 or hospitalization, as well as the furnishing to any person of any
2-22 and all other services for the purpose of preventing, alleviating,
2-23 curing or healing human illness or injury.
2-24 (k) <(j)> "Health maintenance organization" means any person
2-25 who arranges for or provides a health care plan to enrollees on a
3-1 prepaid basis.
3-2 (l) "Health maintenance organization delivery network" means
3-3 any health care delivery system in which a health maintenance
3-4 organization arranges for health care services directly or
3-5 indirectly through contracts and subcontracts with providers and
3-6 physicians.
3-7 (m) <(k)> "Medical care" means furnishing those services
3-8 defined as the practice of medicine in Section 11, Chapter 426,
3-9 Acts of the 53rd Legislature, Regular Session, 1953 (Article 4510a,
3-10 Vernon's Texas Civil Statutes).
3-11 (n) <(l)> "Person" means any natural or artificial person,
3-12 including, but not limited to, individuals, partnerships,
3-13 associations, organizations, trusts, hospital districts, limited
3-14 liability company, limited liability partnership, or corporations.
3-15 (o) <(m)> "Physician" means anyone licensed to practice
3-16 medicine in the State of Texas.
3-17 (1) anyone licensed to practice medicine in the State
3-18 of Texas;
3-19 (2) a professional association or a non-profit health
3-20 corporation certified pursuant to Section 5.01, Medical Practice
3-21 Act (Article 4495b, Texas Revised Civil Statutes); or
3-22 (3) any person wholly owned by physicians.
3-23 (p) <(n)> "Provider" means:
3-24 (1) any <practitioner> person other than a physician,
3-25 <such as> including but not limited to a licensed doctor of
4-1 chiropractic, registered nurse, pharmacist, optometrist, pharmacy,
4-2 hospital, or other institution or organization or person that
4-3 <furnishes health care services, who> is licensed or otherwise
4-4 authorized to <practice in this state.> provide a health care
4-5 service in this state; or
4-6 (2) any person that is wholly owned or controlled by a
4-7 provider or providers that are licensed to provide the same
4-8 service. "Provider" shall include any person wholly owned or
4-9 controlled by one or more hospitals and physicians, including a
4-10 physician-hospital organization.
4-11 (q) <(r)> "Single health care service" means a health care
4-12 service that an enrolled population may reasonably require in order
4-13 to be maintained in good health with respect to a particular health
4-14 care need for the purpose of preventing, alleviating, curing, or
4-15 healing human illness or injury of a single specified nature and
4-16 that is to be provided by one or more persons each of whom is
4-17 licensed by the state to provide that specific health care service.
4-18 (r) <(s)> "Single health care service plan" means a plan
4-19 under which any person undertakes to provide, arrange for, pay for,
4-20 or reimburse any part of the cost of a single health care service,
4-21 provided, that a part of the plan consists of arranging for or the
4-22 provision of the single health care service, as distinguished from
4-23 an indemnification against the cost of that service, on a prepaid
4-24 basis through insurance or otherwise and that no part of that plan
4-25 consists of arranging for the provision of more than one health
5-1 care need of a single specified nature.
5-2 (s) <(o)> "Sponsoring organization" means a person who
5-3 guarantees the uncovered expenses of the health maintenance
5-4 organization and who is financially capable, as determined by the
5-5 commissioner, of meeting the obligations resulting from those
5-6 guarantees.
5-7 (t) <(p)> "Uncovered expenses" means the estimated
5-8 administrative expenses and the estimated cost of health care
5-9 services that are not guaranteed, insured, or assumed by a person
5-10 other than the health maintenance organization. Health care
5-11 services may be considered covered if the physician or provider
5-12 agrees in writing that enrollees shall in no way be liable,
5-13 assessable, or in any way subject to payment for services except as
5-14 described in the evidence of coverage issued to the enrollee under
5-15 Section 9 of this Act. The amount due on loans in the next
5-16 calendar year will be considered uncovered expenses unless
5-17 specifically subordinated to uncovered medical and health care
5-18 expenses or unless guaranteed by the sponsoring organization.
5-19 (u) <(q)> "Uncovered liabilities" means obligations
5-20 resulting from unpaid uncovered expenses, the outstanding
5-21 indebtedness of loans that are not specifically subordinated to
5-22 uncovered medical and health care expenses or guaranteed by the
5-23 sponsoring organization, and all other monetary obligations that
5-24 are not similarly subordinated or guaranteed.
5-25 SECTION 2. Article 20A.06(a)(3), Insurance Code is amended
6-1 to read as follows:
6-2 (3) the furnishing of or arranging for medical care
6-3 services only through other health maintenance organizations, or
6-4 physicians or groups of physicians who have independent contracts
6-5 with the health maintenance organizations; the furnishing of or
6-6 arranging for the delivery of health care services only through
6-7 other health maintenance organizations, or providers or groups of
6-8 providers who are under contract with or employed by the health
6-9 organization maintenance organization or through other health
6-10 maintenance organizations, or physicians or providers who have
6-11 contracted for health care services with those physicians or
6-12 providers, except for the furnishing of or authorization for
6-13 emergency services, services by referral, and services to be
6-14 provided outside of the service area as approved by the
6-15 commissioner; provided, however, that a health maintenance
6-16 organization is not authorized to employ or contract with
6-17 physicians or providers in any manner which is prohibited by any
6-18 licensing law of this state under which such physicians or
6-19 providers are licensed;
6-20 SECTION 3. Article 20A.26(f) is amended to read as follows:
6-21 (f)(1) This Act shall not be applicable to:
6-22 (A) any person licensed to practice medicine in
6-23 this state, nor to any professional association organized under the
6-24 Texas Professional Association Act, as amended (Article 1528f,
6-25 Vernon's Texas Civil Statutes), nor to any nonprofit corporation
7-1 organized and complying with Section 5.01, Medical Practice Act
7-2 (Article 4495b, Vernon's Texas Civil Statutes), so long as that
7-3 person, professional association, or nonprofit corporation is
7-4 engaged in the delivery of or arranges for the delivery of health
7-5 or medical care that is within the definition of practicing
7-6 medicine as defined in Section 2<(k)> of this Act; or
7-7 (B) any provider that furnishes or arranges for
7-8 the delivery of health care services other than the practice of
7-9 medicine, as defined in Section 2<(k)> of this Act, as a part of a
7-10 health maintenance organization delivery network.
7-11 (2) Except as provided by Section 6(a)(3) or Section
7-12 26(f)(5) of this Act, any person, provider, professional
7-13 association, or nonprofit corporation referred to above, which
7-14 shall employ or enter into a contractual arrangement with a
7-15 provider or group of providers to furnish basic health care
7-16 services as defined in Section 2 of this Act, would be subject to
7-17 the provisions of this Act, and shall be required to obtain a
7-18 certificate of authority from the commissioner.
7-19 (3) Notwithstanding any other law, any person,
7-20 professional association, or nonprofit corporation referred to
7-21 above, which conducts activities permitted by law but which do not
7-22 require a certificate of authority under this Act, and in the
7-23 process contracts with one or more physicians, professional
7-24 associations, or nonprofit corporations referred to above, shall
7-25 not, by virtue of such contract or arrangement, be deemed to have
8-1 entered into a conspiracy in restraint of trade in violation of
8-2 Sections 15.01 through 15.34 of the Business & Commerce Code.
8-3 (4) Notwithstanding any other law, provisions of the
8-4 insurance law and provisions of the group hospital service
8-5 corporation law shall not be applicable to the above persons,
8-6 providers, professional associations, or nonprofit corporations.
8-7 (5) Neither this Act nor any other provision of the
8-8 Insurance Code shall be construed to prohibit any physician or
8-9 provider participating in a health maintenance organization
8-10 delivery network, whether contracting with a health maintenance
8-11 organization pursuant to Section 6(a)(3) of this Act or
8-12 subcontracting with any physician or provider in the health
8-13 maintenance organization network, from entering into any of the
8-14 following contractual arrangements:
8-15 (A) A physician may contract to provide or
8-16 arrange to provide through subcontracts with other physicians
8-17 medical care as defined in Section 2<(k)> of this Act and through
8-18 other providers any services that are ancillary to or within the
8-19 scope of the practice of medicine, not including hospital or any
8-20 other institutional or inpatient provider services.
8-21 (B) A provider may contract to provide or
8-22 arrange to provide through subcontracts with other similarly
8-23 licensed providers any health care services for which such
8-24 providers are licensed to provide, not to include any medical care
8-25 services as defined in Section 2<(k)> of this Act.
9-1 (C) A provider may contract to provide or
9-2 arrange to provide through subcontracts with other providers any
9-3 health care services for which such provider is not licensed to
9-4 provide, not to include any medical services as defined in Section
9-5 2<(k)> of this Act, only if such subcontracted services constitute
9-6 less than fifteen percent of the total volume of services to be
9-7 provided or arranged to be provided by such provider.
9-8 (D) Any contract or subcontract permitted in
9-9 (A), (B), or (C) above may provide for compensation based on a
9-10 fee-for-service arrangement, risk sharing arrangement, or capitated
9-11 risk arrangement in which a fixed predetermined payment is made in
9-12 exchange for providing or arranging to provide, and guaranteeing
9-13 the provision of, a defined set of covered services to such covered
9-14 persons for a specified period of time, regardless of the amount of
9-15 services actually provided.
9-16 SECTION 4. This Act takes effect September 1, 1995.
9-17 SECTION 5. The importance of this legislation and the
9-18 crowded condition of the calendars in both houses create an
9-19 emergency and an imperative public necessity that the
9-20 constitutional rule requiring bills to be read on three several
9-21 days in each house be suspended, and this rule is hereby suspended.