1-1 By: Harris S.B. No. 1407
1-2 (In the Senate - Filed March 13, 1995; March 20, 1995, read
1-3 first time and referred to Committee on Economic Development;
1-4 April 12, 1995, reported adversely, with favorable Committee
1-5 Substitute by the following vote: Yeas 9, Nays 0; April 12, 1995,
1-6 sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 1407 By: Harris
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to contractual arrangements among health maintenance
1-11 organizations, physicians, and other providers.
1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13 SECTION 1. Section 2, Texas Health Maintenance Organization
1-14 Act (Article 20A.02, Vernon's Texas Insurance Code), is amended by
1-15 amending Subsections (l), (m), and (n) and by adding Subsection (u)
1-16 to read as follows:
1-17 (l) "Person" means any natural or artificial person,
1-18 including, but not limited to, individuals, partnerships,
1-19 associations, organizations, trusts, hospital districts, limited
1-20 liability companies, limited liability partnerships, or
1-21 corporations.
1-22 (m) "Physician" means:
1-23 (1) an individual <anyone> licensed to practice
1-24 medicine in this state;
1-25 (2) a professional association organized under the
1-26 Texas Professional Association Act (Article 1528f, Vernon's Texas
1-27 Civil Statutes) or a nonprofit health corporation certified under
1-28 Section 5.01, Medical Practice Act (Article 4495b, Vernon's Texas
1-29 Civil Statutes); or
1-30 (3) another person wholly owned by physicians <the
1-31 State of Texas>.
1-32 (n) "Provider" means:
1-33 (1) any person <practitioner> other than a physician,
1-34 including <such as> a licensed doctor of chiropractic, registered
1-35 nurse, pharmacist, optometrist, pharmacy, hospital, or other
1-36 institution or organization or person that <furnishes health care
1-37 services, who> is licensed or otherwise authorized to provide a
1-38 health care service <practice> in this state;
1-39 (2) a person who is wholly owned or controlled by a
1-40 provider or by a group of providers who are licensed to provide the
1-41 same health care service; or
1-42 (3) a person who is wholly owned or controlled by one
1-43 or more hospitals and physicians, including a physician-hospital
1-44 organization.
1-45 (u) "Health maintenance organization delivery network" means
1-46 a health care delivery system in which a health maintenance
1-47 organization arranges for health care services directly or
1-48 indirectly through contracts and subcontracts with providers and
1-49 physicians.
1-50 SECTION 2. Subsection (a), Section 6, Texas Health
1-51 Maintenance Organization Act (Article 20A.06, Vernon's Texas
1-52 Insurance Code), is amended to read as follows:
1-53 (a) The powers of a health maintenance organization include,
1-54 but are not limited to, the following:
1-55 (1) the purchase, lease, construction, renovation,
1-56 operation, or maintenance of hospitals, medical facilities, or
1-57 both, and ancillary equipment and such property as may reasonably
1-58 be required for its principal office or for such other purposes as
1-59 may be necessary in the transaction of the business of the health
1-60 maintenance organization;
1-61 (2) the making of loans to a medical group, under an
1-62 independent contract with it in furtherance of its program, or
1-63 corporations under its control, for the purpose of acquiring or
1-64 constructing medical facilities and hospitals, or in the
1-65 furtherance of a program providing health care services to
1-66 enrollees;
1-67 (3) the furnishing of or arranging for medical care
1-68 services only through other health maintenance organizations or
2-1 physicians or groups of physicians who have independent contracts
2-2 with the health maintenance organizations; the furnishing of or
2-3 arranging for the delivery of health care services only through
2-4 other health maintenance organizations or providers or groups of
2-5 providers who are under contract with or employed by the health
2-6 maintenance organization or through other health maintenance
2-7 organizations or physicians or providers who have contracted for
2-8 health care services with those physicians or providers, except for
2-9 the furnishing of or authorization for emergency services, services
2-10 by referral, and services to be provided outside of the service
2-11 area as approved by the commissioner; provided, however, that a
2-12 health maintenance organization is not authorized to employ or
2-13 contract with physicians or providers in any manner which is
2-14 prohibited by any licensing law of this state under which such
2-15 physicians or providers are licensed;
2-16 (4) the contracting with any person for the
2-17 performance on its behalf of certain functions such as marketing,
2-18 enrollment, and administration;
2-19 (5) the contracting with an insurance company licensed
2-20 in this state, or with a group hospital service corporation
2-21 authorized to do business in the state, for the provision of
2-22 insurance, reinsurance, indemnity, or reimbursement against the
2-23 cost of health care and medical care services provided by the
2-24 health maintenance organization;
2-25 (6) the offering of:
2-26 (A) indemnity benefits covering out-of-area
2-27 emergency services; and
2-28 (B) indemnity benefits in addition to those
2-29 relating to out-of-area and emergency services, provided through
2-30 insurers or group hospital service corporations;
2-31 (7) receiving and accepting from government or private
2-32 agencies payments covering all or part of the cost of the services
2-33 provided or arranged for by the organization;
2-34 (8) all powers given to corporations (including
2-35 professional corporations and associations), partnerships, and
2-36 associations pursuant to their organizational documents which are
2-37 not in conflict with provisions of this Act, or other applicable
2-38 law.
2-39 SECTION 3. Subsection (f), Section 26, Texas Health
2-40 Maintenance Organization Act (Article 20A.26, Vernon's Texas
2-41 Insurance Code), is amended to read as follows:
2-42 (f)(1) This Act shall not be applicable to:
2-43 (A) any physician <person licensed to practice
2-44 medicine in this state, nor to any professional association
2-45 organized under the Texas Professional Association Act, as amended
2-46 (Article 1528f, Vernon's Texas Civil Statutes), nor to any
2-47 nonprofit corporation organized and complying with Section 5.01,
2-48 Medical Practice Act (Article 4495b, Vernon's Texas Civil
2-49 Statutes)>, so long as that physician <person, professional
2-50 association, or nonprofit corporation> is engaged in the delivery
2-51 of or arranges for the delivery of <health or medical> care that is
2-52 within the definition of medical care; or
2-53 (B) any provider that furnishes or arranges for
2-54 the delivery of health care services other than medical care as
2-55 part of a health maintenance organization delivery network
2-56 <practicing medicine as defined in Section 2(k) of this Act>.
2-57 (2) Except as provided by Section 6(a)(3) of this Act
2-58 or Subdivision (5) of this subsection, any physician or provider
2-59 that employs <person, professional association, or nonprofit
2-60 corporation referred to above, which shall employ> or enters
2-61 <enter> into a contractual arrangement with a provider or group of
2-62 providers to furnish basic health care services as defined in
2-63 Section 2 of this Act is <, would be> subject to the provisions of
2-64 this Act, and shall be required to obtain a certificate of
2-65 authority from the commissioner.
2-66 (3) Notwithstanding any other law, any physician who
2-67 <person, professional association, or nonprofit corporation
2-68 referred to above, which> conducts activities permitted by law but
2-69 which do not require a certificate of authority under this Act, and
2-70 in the process contracts with one or more physicians<, professional
3-1 associations, or nonprofit corporations referred to above>, shall
3-2 not, by virtue of such contract or arrangement, be deemed to have
3-3 entered into a conspiracy in restraint of trade in violation of
3-4 Sections 15.01 through 15.34 of the Business & Commerce Code.
3-5 (4) Except for Articles 21.07-6 and 21.58A, Insurance
3-6 Code, <Notwithstanding any other law, provisions of> the insurance
3-7 laws, including <law and the provisions of> the group hospital
3-8 service corporation law, do not apply <shall not be applicable> to
3-9 physicians and providers <the above persons, professional
3-10 associations, or nonprofit corporations>.
3-11 (5) This Act and the Insurance Code may not be
3-12 construed to prohibit a physician or provider who is participating
3-13 in a health maintenance organization delivery network, whether
3-14 contracting with a health maintenance organization under Section
3-15 6(a)(3) of this Act or subcontracting with a physician or provider
3-16 in the health maintenance organization delivery network, from
3-17 entering into a contractual arrangement described under
3-18 Subdivisions (6)-(8) of this subsection if the contractual
3-19 arrangement is entered into in furtherance of the delivery of
3-20 health care services or medical care through a contractual
3-21 arrangement with a health maintenance organization.
3-22 (6) A physician may contract to provide medical care
3-23 or arrange to provide medical care through subcontracts with other
3-24 physicians. A physician may contract to provide through other
3-25 providers any services that are ancillary to the practice of
3-26 medicine, other than hospital or other institutional or inpatient
3-27 provider services.
3-28 (7) A provider may contract to provide, or arrange to
3-29 provide through subcontracts with similarly licensed providers, any
3-30 health care services that those providers are licensed to provide,
3-31 other than medical care.
3-32 (8) A provider may contract to provide, or arrange to
3-33 provide through subcontracts with other providers, a health care
3-34 service that the provider is not licensed to provide, other than
3-35 medical care, if the contracted or subcontracted services
3-36 constitute less than 15 percent of the total amount of services to
3-37 be provided by that provider or arranged to be provided for by that
3-38 provider.
3-39 (9) A contract or subcontract authorized under
3-40 Subdivision (6), (7), or (8) of this subsection may provide for
3-41 compensation based on a fee-for-service arrangement, a risk-sharing
3-42 arrangement, or a capitated risk arrangement under which a fixed
3-43 predetermined payment is made in exchange for the provision of, or
3-44 the arrangement to provide and the guaranty of the provision of, a
3-45 defined set of covered services to the covered persons for a
3-46 specified period, regardless of the amount of services actually
3-47 provided.
3-48 SECTION 4. This Act takes effect September 1, 1995, and
3-49 applies only to a contract that is entered into or renewed on or
3-50 after January 1, 1996. A contract that is entered into or renewed
3-51 before January 1, 1996, is governed by the law as it existed
3-52 immediately before the effective date of this Act, and that law is
3-53 continued in effect for that purpose.
3-54 SECTION 5. The importance of this legislation and the
3-55 crowded condition of the calendars in both houses create an
3-56 emergency and an imperative public necessity that the
3-57 constitutional rule requiring bills to be read on three several
3-58 days in each house be suspended, and this rule is hereby suspended.
3-59 * * * * *