By: Madla S.B. No. 1483
A BILL TO BE ENTITLED
AN ACT
1-1 relating to certification of managed care organizations that
1-2 provide medical services to Medicaid clients.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Chapter 32, Human Resources Code, is amended by
1-5 adding Subchapter C to read as follows:
1-6 SUBCHAPTER C. PATIENT PROTECTION
1-7 Sec. 32.051. DEFINITIONS. In this subchapter:
1-8 (1) "Department" means the Texas Department of Human
1-9 Services.
1-10 (2) "Managed care contractor" means a person that:
1-11 (A) establishes, operates or maintains a network
1-12 of participating providers;
1-13 (B) conducts or arranges for utilization review
1-14 activities; and
1-15 (C) contracts to operate a managed care plan
1-16 with any entity that provides coverage for health care services,
1-17 including an insurance company, a hospital or medical care service
1-18 plan, an employer, or an employee organization.
1-19 (3) "Managed care entity" means a licensed insurance
1-20 company, hospital or medical service plan, health maintenance
1-21 organization, an employer or employee organization, or a managed
1-22 care contractor that operates a managed care plan.
1-23 (4) "Managed care plan" means a plan operated by a
2-1 managed care entity that finances and delivers health care services
2-2 to persons enrolled in the plan through the use of:
2-3 (A) arrangements with selected providers to
2-4 furnish health care services;
2-5 (B) explicit standards to select of
2-6 participating providers;
2-7 (C) organizational arrangements for ongoing
2-8 quality assurance, utilization review programs, and dispute
2-9 resolution; and
2-10 (D) financial incentives intended to make
2-11 persons enrolled in the plan use the participating providers and
2-12 procedures provided by the plan.
2-13 (5) "Participating provider" means a provider of
2-14 health care services or supplies licensed, certified, registered,
2-15 or otherwise officially recognized in this state that enters into
2-16 an agreement with a managed care entity to provide health care
2-17 services or supplies to a patient enrolled in a managed care plan,
2-18 including a:
2-19 (A) physician;
2-20 (B) physician's assistant;
2-21 (C) podiatrist;
2-22 (D) dentist;
2-23 (E) hospital;
2-24 (F) pharmacy; or
2-25 (G) laboratory.
3-1 (6) "Qualified managed care plan" means a managed care
3-2 plan that the department certifies as being in compliance with this
3-3 subchapter.
3-4 Sec. 32.052. CERTIFICATION REQUIRED. (a)(1) A managed care
3-5 plan may not offer or provide services under this chapter unless
3-6 the plan is certified in accordance with this subchapter.
3-7 (b) The department shall establish a certification process
3-8 and procedures for periodic review and recertification. The
3-9 process shall provide that an "eligible organization." as that
3-10 term was defined by 42 U.S.C. Section 1876(b), is considered to
3-11 meet the standards for certification prescribed by Section 32.054.
3-12 (c) If the department determines that a national
3-13 accreditation body has established requirements for accreditation
3-14 of a managed care plan that are at least as stringent as the
3-15 requirements prescribed by Section 32.054, the department may, to
3-16 the extent appropriate, determine that the plan meets the standards
3-17 for certification.
3-18 (d) The department shall terminate the certification of a
3-19 qualified managed care plan if the department determines that the
3-20 plan no longer meets the applicable standards for certification.
3-21 The department shall provide to the plan notice and an opportunity
3-22 for a hearing before terminating the certification.
3-23 Sec. 32.053. CERTIFICATION STANDARDS. (a) The department
3-24 shall establish standards in accordance with this section that a
3-25 managed care plan must meet to be certified as a qualified managed
4-1 care plan conducting business in this state.
4-2 (b) A managed care plan shall ensure that a prospective
4-3 enrollee is provided information as to the terms and conditions of
4-4 the plan so that the enrollee can make informed decisions as to
4-5 whether to accept a particular system of health care delivery. If
4-6 the plan is the plan is described orally, the person describing the
4-7 plan must use easily understandable, truthful, and objective terms.
4-8 A written plan must be in a standard, readable, and easily
4-9 understandable format that is consistent with the standards
4-10 developed for supplemental insurance coverage under Title XVIII,
4-11 federal Social Security Act. The department shall ensure that the
4-12 standard format will allow a prospective enrollee to compare the
4-13 attributes of different plans. Each plan must provide information
4-14 relating to:
4-15 (1) coverage provisions, benefits, and any exclusions
4-16 by category of service, provider, or physician, and if applicable,
4-17 by specific service;
4-18 (2) any and all prior authorization or other review
4-19 requirement, including preauthorization review, concurrent review,
4-20 postservice review, postpayment review, or any procedure that may
4-21 cause the patient to be denied coverage for or not be provided a
4-22 particular service;
4-23 (3) any financial arrangements or contractual
4-24 provision with a hospital, review company, physician, dentist, or
4-25 any other provider of health care services that will limit the
5-1 services offered, restrict referral or treatment options, or
5-2 negatively affect the physician's or dentist's fiduciary
5-3 responsibility to his or her patients, including financial
5-4 incentives not to provide medical, dental, or other services;
5-5 (4) how plan limitations affect enrollees, including
5-6 enrollee's financial responsibility for payment for coinsurance or
5-7 other non-covered or out-of-plan services;
5-8 (5) the configuration of the physician network that
5-9 provides for patient access to physicians, including geographic
5-10 distribution of physicians or dentists by specialty and the
5-11 physician-to-enrollee and, as appropriate, dentist-to-enrollee
5-12 ratio by specialty;
5-13 (6) loss ratios; and
5-14 (7) enrollee satisfaction statistics, including
5-15 percentage of re-enrollment and reasons for leaving plan.
5-16 (c) A plan must demonstrate that an enrollee will have
5-17 reasonably prompt access through the provider network to each item
5-18 and service contained in the package of benefits for which coverage
5-19 is provided, including access to emergency services on a 24-hour
5-20 basis where medically necessary, in a manner that ensures the
5-21 continuity of provision of those items and services. The access
5-22 provided must consider the diverse needs of enrollees, including
5-23 special language requirements, and proximity to the workplaces or
5-24 residences.
5-25 (d) In determining criteria for participation by a hospital,
6-1 a plan shall accept hospital licensure by the Texas department of
6-2 Health, certification by the Medicare program, (Title XVIII of the
6-3 Social Security Act (42 U.S.C. Section 1395, et seq.)), or
6-4 accreditation by the Joint Commission on Accreditation of
6-5 Healthcare Organizations.
6-6 (e) A plan must comply with any financial reserve
6-7 requirement established to ensure proper payment for covered
6-8 services provided. The department may require a plan to establish
6-9 an indemnity fund in addition to the reserve requirement to provide
6-10 for plan failures.
6-11 (f) A plan must establish a mechanism, with defined rights,
6-12 under which a participating physician or dentist may have
6-13 meaningful input into the plan's medical or, as appropriate, dental
6-14 policy, including coverage of new technology and procedures,
6-15 utilization review criteria and procedures, quality and
6-16 credentialing criteria, and medical or dental management
6-17 procedures.
6-18 (g) A plan shall credential each participating physician and
6-19 dentist and allow each physician and dentist within the plan's
6-20 geographic service area to apply for credentials. At least
6-21 annually, the plan shall notify each physician and dentists of the
6-22 opportunity to apply for credential. The plan shall begin the
6-23 credential process when a physician applies to the plan for
6-24 inclusion. The plan shall provide that each application is
6-25 reviewed by a credentialing committee that has appropriate
7-1 representative from the applicant's medical specialty.
7-2 (h) A decision whether to credential a physician or dentist
7-3 must be based on objective standards of quality with input from
7-4 physicians or, as appropriate, dentists credentialed in the plan.
7-5 The plan must provide to applicants and enrollees the standards
7-6 used by the plan. If the plan considers economic considerations in
7-7 making a decision, the plan must use objective criteria and must
7-8 make that criteria available to each applicant, participating
7-9 physician and dentist, and enrollee. If the plan uses an economic
7-10 profile of a physician or dentist, the plan must adjust the profile
7-11 to recognize case mix, disease, physiologic and behavioral severity
7-12 of the disease, including comorbidities, age and sex risk
7-13 adjustment of patients and other features of a physician's or
7-14 dentist's practice that may account for higher than or lower than
7-15 expected costs to ensure that fair comparisons are made. The plan
7-16 must make the profiles available to the person to whom the profile
7-17 is applied. If the plan considers graduate medical education in
7-18 credentialing, the plan must give equal recognition to training
7-19 programs accredited by the Accrediting Council on Graduate Medical
7-20 Education and by the American Osteopathic Association.
7-21 (i) A plan may not discriminate against enrollees who have
7-22 expensive medical conditions that require expensive tests and
7-23 procedures to adequately diagnose and treat by excluding
7-24 practitioners who treat those enrollees.
7-25 (j) A plan must enter each credentialing decision on the
8-1 record and provide the applicant with each reason used to deny an
8-2 application or to not renew a contract.
8-3 (k) A plan may not include a clause in a physician, dentist,
8-4 or other provider contracts that allows for the plan to terminate
8-5 the contract without cause.
8-6 (l) The department shall establish a reasonable due process
8-7 appeal mechanism for all adverse decisions made by a plan. An
8-8 appeals process is presumed to be reasonable if it complies with
8-9 the appeals process prescribed by the Health Care Quality
8-10 Improvement Act of 1986, 42 U.S.C. Sections 11101-11151.
8-11 (m) A plan shall use the provisions of this section
8-12 applicable to an application for credentials in a situation in
8-13 which the plan wants to reduce or withdraw those credentials.
8-14 Before beginning a proceeding that might lead to termination of a
8-15 contract for cause, the plan shall provide to the physician or
8-16 dentist, an opportunity for discussion, and an opportunity to enter
8-17 into and complete a corrective action plan. The plan is not
8-18 required to provide notice, opportunity for discussion, or
8-19 opportunity for a corrective action plan if there is the
8-20 possibility of imminent harm to patient health or if an action by a
8-21 state medical or, as appropriate, dental board or other government
8-22 agency has effectively impaired the physician's or dentist's
8-23 ability to practice within the jurisdiction.
8-24 (n) A plan shall establish procedures to ensure that each
8-25 applicable federal and state law designed to protect the
9-1 confidentiality of provider and individual medical and dental
9-2 records is followed.
9-3 (o) A plan must ensure that each enrollee can choose a
9-4 primary care physician and, as appropriate, dentist from among
9-5 participating physicians and dentists and change that selection as
9-6 appropriate.
9-7 (p) A plan must:
9-8 (1) cover medically necessary emergency care services
9-9 provided to covered individuals, including trauma services such as
9-10 those provided by designated trauma centers without regard to
9-11 whether the provider furnishing that service has a contractual or
9-12 other arrangement with the entity to provide items or services to
9-13 covered individuals and, if the services are furnished for the
9-14 treatment of an emergency medical condition, as that term was
9-15 defined by 42 U.S.C. Section 1867(e)(1), without necessity of a
9-16 prior authorization; and
9-17 (2) provide that the prior authorization requirement
9-18 for medically necessary services or stabilizing treatment in an
9-19 emergency room is considered to be provided unless authorization is
9-20 denied not later than two hours after the required request is made.
9-21 (q) A plan must ensure that if prior authorization is a
9-22 condition for coverage of a service, each enrollee is required to
9-23 sign a medical and dental information release consent form on
9-24 enrollment for use when a physician or dentist recommends or
9-25 proposes a service for which the authorization is necessary.
10-1 (r) A plan must provide that prior approval for a service or
10-2 other covered item is considered approval for all purposes, and the
10-3 service is considered to be covered unless there was fraud or
10-4 incorrect information was provided when the prior approval was
10-5 obtained.
10-6 (s) A plan must ensure that continuity of patient care is
10-7 maintained when a physician or dentist is removed from the plan or
10-8 otherwise is no longer a participating provider by providing
10-9 immediate reimbursement for copies of medical records or dental
10-10 records that are created, kept, or maintained by the physician or
10-11 dentist and provided by the physician or dentist to the patient or
10-12 to someone on the patient's behalf.
10-13 Sec. 32.054. UTILIZATION REVIEW. Notwithstanding another
10-14 provision of law, a qualified managed care program is subject to
10-15 and shall meet the requirements of Article 21.58A, Insurance Code.
10-16 Sec. 32.055. REVIEW OF STANDARDS. The department shall
10-17 periodically review the standards established under Section 32.054
10-18 and may revise the standards to ensure that the standards continue
10-19 to reflect appropriate policies and practices for the
10-20 cost-effective and medically appropriate use of services within
10-21 managed care plans.
10-22 Sec. 32.056. CHOICE OF PLAN. If more than one qualified
10-23 managed care plan is offered and available in the same service
10-24 area, each eligible enrollee shall have the opportunity to select
10-25 the plan in which that enrollee will participate.
11-1 SECTION 2. Article 21.58A, Sections (4) and (14), Insurance
11-2 Code are amended to read as follows:
11-3 Sec. 4. Standards for utilization review.
11-4 (a) As a condition of certification or renewal thereof, a
11-5 utilization review agent shall be required to maintain compliance
11-6 with the provisions of this section.
11-7 (b) The utilization review plan, including reconsideration
11-8 and appeal requirements, shall be reviewed by a physician and
11-9 conducted in accordance with standards developed with input from
11-10 appropriate health care providers and approved by a physician.
11-11 (c)(1) Personnel employed by or under contract with the
11-12 utilization review agent to perform utilization review shall be
11-13 appropriately trained and qualified. Personnel who obtain
11-14 information directly from the physician or health care provider,
11-15 either orally or in writing, and who are not physicians shall be
11-16 nurses, physician assistants, registered records administrators, or
11-17 accredited records technicians, who are either licensed or
11-18 certified, or shall be individuals who have received formal
11-19 orientation and training in accordance with policies and procedures
11-20 established by the utilization review agent to assure compliance
11-21 with this section, and a description of such policies and
11-22 procedures shall be filed with the commissioner. This provision
11-23 shall not be interpreted to require such qualifications for
11-24 personnel who perform clerical or administrative tasks.
11-25 (2) Upon request, physicians or as appropriate,
12-1 dentists, will be provided the names and credentials of all
12-2 individuals conducting utilization review, subject to reasonable
12-3 safeguards and standards.
12-4 (d) A utilization review agent shall not set or impose any
12-5 notice or other review procedures contrary to the requirements of
12-6 the health insurance policy or health benefit plan.
12-7 (e) Unless approved for an individual patient by the
12-8 provider of record or modified by contract, a utilization review
12-9 agent shall be prohibited from observing, participating in, or
12-10 otherwise being present during a patient's examination, treatment,
12-11 procedure, or therapy. In no event shall this section otherwise be
12-12 construed to limit or deny contact with a patient for purposes of
12-13 conducting utilization review unless otherwise specifically
12-14 prohibited by law.
12-15 (f) A utilization review agent may not permit or provide
12-16 compensation or any thing of value to its employees or agents,
12-17 condition employment of its employee or agent evaluations, or set
12-18 its employee or agent performance standards, based on the amount of
12-19 volume of adverse determinations, reductions or limitations on
12-20 lengths of stay, benefits, services, or charges or on the number of
12-21 frequency of telephone calls or other contacts with health care
12-22 providers or patients, which are inconsistent with the provisions
12-23 of this article.
12-24 (g) A health care provider may designate one or more
12-25 individuals as the initial contact or contacts for utilization
13-1 review agents seeking routine information or data. In no event
13-2 shall the designation of such an individual or individuals preclude
13-3 a utilization review agent or medical advisor from contacting a
13-4 health care provider or others in his or her employ where a review
13-5 might otherwise be unreasonably delayed or where the designated
13-6 individual is unable to provide the necessary information or data
13-7 requested by the utilization review agent.
13-8 (h) Utilization review conducted by a utilization review
13-9 agent shall be under the direction of a physician licensed to
13-10 practice medicine by the Texas State Board of Medical Examiners <a
13-11 state licensing agency in the United States.>
13-12 (i) Each utilization review agent shall utilize written
13-13 medically acceptable screening criteria and review procedures which
13-14 are established and periodically evaluated and updated with
13-15 appropriate involvement from physicians, including practicing
13-16 physicians, and other health care providers. Such written
13-17 screening criteria and review procedures shall be available for
13-18 review and inspection by the commissioner and copying as necessary
13-19 for the commissioner to carry out his or her lawful duties under
13-20 this code, provided, however, that any information obtained or
13-21 acquired under the authority of this subsection and article is
13-22 confidential and privileged and not subject to the open records law
13-23 or subpoena except to the extent necessary for the board or
13-24 commissioner to enforce this article.
13-25 (j) A utilization review agent may not engage in unnecessary
14-1 or unreasonable repetitive contacts with the health care provider
14-2 or patient and shall base the frequency of contacts or reviews on
14-3 the severity or complexity of the patient's condition or on
14-4 necessary treatment and discharge planning activity.
14-5 (k) Subject to the notice requirements of Section 5 of this
14-6 article, in any instance where the utilization review agent is
14-7 questioning the medical necessity or appropriateness of health care
14-8 services, the health care provider who ordered the services shall
14-9 be afforded a reasonable opportunity to discuss the plan of
14-10 treatment for the patient and the clinical basis for the
14-11 utilization review agent's decision with a physician or, in the
14-12 case of a dental plan with a dentist, prior to issuance of an
14-13 adverse determination.
14-14 (l) <Unless precluded or modified by contract, a> A
14-15 utilization review agent shall reimburse health care providers for
14-16 the reasonable costs for providing medical information in writing,
14-17 including copying and transmitting any requested patient records or
14-18 other documents. A health care provider's charges for providing
14-19 medical information to a utilization review agent shall not exceed
14-20 the cost of copying set by rule of the Texas Workers' Compensation
14-21 Commission for records and may not include any costs that are
14-22 otherwise recouped as a part of the charge for health care.
14-23 (m) A utilization review agent shall establish and maintain
14-24 a complaint system that provides reasonable procedures for the
14-25 resolution of written complaints initiated by enrollees, patients,
15-1 or health care providers concerning the utilization review and
15-2 shall maintain records of such written complaints for two years
15-3 from the time the complaints are filed. The complaint procedure
15-4 shall include a written response to the complainant by the agent
15-5 within 60 days. The utilization review agent shall submit to the
15-6 commissioner a summary report of all complaints at such times and
15-7 in such forms as the board may require and shall permit the
15-8 commissioner to examine the complaints and all relevant documents
15-9 at any time.
15-10 (n) The utilization review agent may delegate utilization
15-11 review to qualified personnel in the hospital or health care
15-12 facility where the health care services were or are to be provided.
15-13 Sec. 14. (a) This article shall not apply to a person who
15-14 provides information to enrollees about scope of coverage or
15-15 benefits provided under a health insurance policy or health benefit
15-16 plan and who does not determine whether particular health care
15-17 services provided or to be provided to an enrollee are medically
15-18 necessary or appropriate.
15-19 (b)(1) This article shall not apply to any contract with the
15-20 federal government for utilization review of patients eligible for
15-21 services under Title XVIII or XIX of the Social Security Act (42
15-22 U.S.C. Section 1395 et seq. or Section 1396 et seq.).
15-23 (b)(2) This article shall not apply to <the Texas Medicaid
15-24 Program,> the chronically ill and disabled children's services
15-25 program created pursuant to Chapter 35, Health and Safety Code,
16-1 <any program administered under Title 2, Human Resources Code> any
16-2 program of the Texas Department of Mental Health and Mental
16-3 Retardation, or any program of the Texas Department of Criminal
16-4 Justice.
16-5 (c) This article shall not apply to utilization review of
16-6 health care services provided to patients under the authority of
16-7 the Texas Workers' Compensation Act (Article 8308-1.01 et seq.,
16-8 Vernon's Texas Civil Statutes).
16-9 <(d) This article shall not apply to utilization review of
16-10 health care services provided under a policy or contract of
16-11 automobile insurance promulgated by the board under Subchapter A,
16-12 Chapter 5 of this code or issued pursuant to Article 1.14-2 of this
16-13 code.>
16-14 (d) <(e)> This article shall not apply to the terms or
16-15 benefits of employee welfare benefit plans as defined in Section
16-16 31(I) of the Employee Retirement Income Security Act of 1974 (29
16-17 U.S.C. Section 1002).
16-18 (e) <(f)> Any regulations promulgated pursuant to this
16-19 article shall relate only to persons or entities subject to this
16-20 article.
16-21 <(g) A health maintenance organization is not subject to
16-22 this article except as expressly provided in this subsection and
16-23 Subsection (i) of this section. If such health maintenance
16-24 organization performs utilization review as defined herein, it
16-25 shall, as a condition of licensure:>
17-1 <(1) comply with Sections 4(b), (c), (e), (f), (h),
17-2 (i), and (l) of this article, and the board shall promulgate rules
17-3 for appropriate verification and enforcement of compliance.
17-4 However, nothing in this article shall be construed to prohibit or
17-5 limit the distribution of a proportion of the savings from the
17-6 reduction or elimination of unnecessary medical services,
17-7 treatment, supplies, confinements, or days of confinement in a
17-8 health care facility through profit sharing, bonus, or withhold
17-9 arrangements to participating physicians or participating health
17-10 care providers for rendering health care services to enrollees;>
17-11 <(2) establish and maintain a system for:>
17-12 <(A) handling and responding to complaints by
17-13 enrollees, patients, or health care providers;>
17-14 <(B) providing health care providers with notice
17-15 of medical necessity or program requirements that have not been
17-16 met, including a reasonable opportunity to discuss the plan of
17-17 treatment and clinical basis for a utilization review determination
17-18 with a physician; and>
17-19 <(C) providing the enrollee, patient, and health
17-20 care provider an opportunity to appeal the determination; and>
17-21 <(3) submit to assessment of maintenance taxes under
17-22 Article 20A.33, Texas Health Maintenance Organization Act (Article
17-23 20A.33, Vernon's Texas Insurance Code), to cover the costs of
17-24 administering compliance of health maintenance organizations under
17-25 this section.>
18-1 (f) <(h)> An insurer which delivers or issues for delivery a
18-2 health insurance policy in Texas and is subject to this code is not
18-3 subject to this article except as expressly provided in this
18-4 subsection and Subsection (i) of this section. If an insurer
18-5 performs utilization review as defined herein it shall, as a
18-6 condition of licensure, comply with Sections 4 through 8 of this
18-7 article, and the board shall promulgate rules for appropriate
18-8 verification and enforcement of compliance. Such insurers shall be
18-9 subject to assessment of maintenance tax under Article 4.17 of this
18-10 code to cover the costs of administering compliance of insurers
18-11 under this section.
18-12 (g) <(i)> However, when an insurer subject to this code <or
18-13 a health maintenance organization> performs utilization review for
18-14 a person or entity subject to this article other than the one for
18-15 which it is the payor, such insurer <or health maintenance
18-16 organization> shall be required to obtain a certificate under
18-17 Section 3 of this article and comply with all the provisions of
18-18 this article.
18-19 SECTION 3. (a) This Act takes effect September 1, 1995.
18-20 (b) The Texas Department of Human Services shall adopt the
18-21 standards required by Section 32.054, Human Services Code, as added
18-22 by this Act, not later than September 1, 1996.
18-23 SECTION 4. The importance of this legislation and the
18-24 crowded condition of the calendars in both houses create an
18-25 emergency and an imperative public necessity that the
19-1 constitutional rule requiring bills to be read on three several
19-2 days in each house be suspended, and this rule is hereby suspended.