Amend CSSB 386 by striking all below the enacting clause and
substituting the following:
SECTION 1. Title 4, Civil Practice and Remedies Code, is
amended by adding Chapter 88 to read as follows:
CHAPTER 88. HEALTH CARE LIABILITY
Sec. 88.001. DEFINITIONS. In this chapter:
(1) "Enrollee" means an individual who is enrolled in
a health care plan, including covered dependents.
(2) "Health care plan" means a plan whereby any person
or entity undertakes to provide, arrange for, pay for, or reimburse
any part of the cost of any health care service. A part of the
plan must consist of arranging for or providing health care
services as distinguished from indemnification against the cost of
those services on a prepaid basis through insurance or otherwise.
The term does not include a plan that indemnifies a person for the
cost of health care services through insurance.
(3) "Health care provider" means a person or entity as
defined in Section 1.03(a)(3), Medical Liability and Insurance
Improvement Act of Texas (Article 4590i, Vernon's Texas Civil
Statutes.)
(4) "Health insurance carrier" means a company that is
authorized to issue a policy of accident and sickness insurance
under Section 1, Chapter 397, Acts of the 54th Legislature, 1955
(Article 3.70-1, Vernon's Texas Insurance Code.)
(5) "Health maintenance organization" means an
organization licensed under the Texas Health Maintenance
Organization Act (Chapter 20A, Vernon's Texas Insurance Code) and
shall also include an approved nonprofit health corporation
licensed under Certification of Certain Nonprofit Health
Corporations (Article 21.52F, Vernon's Texas Insurance Code).
(6) "Independent review organization" means an
organization that is permitted to conduct independent reviews under
Article 21.58C, Chapter 21, Insurance Code.
(7) "Managed care entity" means any entity or person
that is authorized or otherwise permitted by law to arrange for or
provide a health care plan.
(8) "Utilization review agent" means any entity or
person licensed under the Health Care Utilization Review Agents Act
(Chapter 21.58A, Vernon's Texas Insurance Code).
Sec. 88.002. APPLICABILITY. A health insurance carrier,
health maintenance organization, managed care entity, or
utilization review agent for a health care plan is liable for
damages for harm to an insured or enrollee proximately caused by
its failure to comply with a determination of an independent review
organization consistent with the scope of benefits under the policy
or plan of the enrollee as specified in the applicable evidence of
coverage contract and that is made pursuant to Section 6, Health
Care Utilization Review Agents (Article 21.58A, Vernon's Texas
Insurance Code) unless the review was procured by corruption or
fraud, was conducted in bad faith, or otherwise involves an abuse
of discretion.
Sec. 88.003. LIMITATION ON CAUSE OF ACTION. A person must
bring suit for any relief from the failure to comply with a
determination of an independent review organization not later than
two years after the day the cause of action accrues.
SECTION 1. Section 6, Health Care Utilization Review Agents
(Article 21.58A, Vernon's Texas Insurance Code), is amended to read
as follows:
(a) A utilization review agent shall maintain and make
available a written description of procedures for appealing adverse
determinations. <an appeal procedure of an adverse determination>
(b) The procedures for appeals shall be reasonable and shall
include the following:
(1) a provision that an enrollee, a person acting on
behalf of the enrollee, or the enrollee's physician or health care
provider may appeal the adverse determination, and shall be
provided, on request, a clear and concise statement of the clinical
basis for the adverse determination;
(2) a provision that, within 5 working days from
receipt of the appeal, the utilization review agent shall send the
appealing party a letter acknowledging the date of receipt of the
appeal and include a list of the documents needed to be submitted
by the appealing party to the utilization review agent for the
appeal;
(3) a provision that appeal decisions shall be made by
a physician, provided that, if the appeal is denied and within 10
working days the health care provider sets forth in writing good
cause for having a particular type of specialty provider review the
case, the denial shall be reviewed by a health care provider in the
same or similar specialty as typically manages the medical
condition, procedure, or treatment under discussion for review of
the adverse determination;
(4) in addition to the written appeal, a method for an
expedited appeal procedure for emergency care denials and denials
of continued stays for hospitalized patients, which shall include a
health care provider who has not previously reviewed the case.
Such appeal must be completed no later than one working day
following the appeal, including all information necessary to
complete the appeal, is made to the utilization review agent; and
(5) written notification to the appealing party of the
determination of the appeal, as soon as practical, but no later
than 30 days after receiving all the required documentation of the
appeal. If the appeal is denied, the written notification shall
include a clear and concise statement of the clinical basis for the
appeal's denial, <and> the specialty of the physician making the
denial, and notice of appealing party's right to seek medical
review of such denial by an independent review organization and
procedures for doing so.
(c) A utilization review agent shall:
(1) contract with one or more independent review
organizations designated in accordance with Art. 21.58C, Insurance
Code, to review the agent's denials of appeals of adverse
determinations.
(2) permit any party whose appeal of an adverse
determination is denied by the agent to seek review of such
determination by an independent review organization if the party
has exhausted all procedures for appealing adverse determinations
available from the agent and the enrollee's treating physician
certifies that the items and services for which medical review is
sought are medically necessary and an appropriate treatment option
provided that such review is requested within two years from the
date such remedies available from the agent are exhausted;
(3) provide to the appropriate independent review
organization within 5 working days of the agent's receipt of a
request for review:
(A) A copy of any medical records of the
enrollee that are relevant to such review;
(B) A copy of any documents used by the agent in
making the determination to be reviewed by the organization;
(C) A copy of the statement referred to in
subsection (b)(5); and
(D) A copy of any documentation and written
information submitted to the plan in support of the appeal;
(4) include in such contract with an independent
review organization a requirement that such organization will make
a determination to affirm or reverse such denial:
(A) within 30 days of receipt by the
organization of the request for review, or
(B) in the case of denials of appeals for urgent
and emergency care and continued stays for hospitalized patients,
within 72 hours of receipt by the organization of the request for
review;
(5) comply with any determination of the organization
with respect to the medical necessity or appropriateness of health
care items and services for an enrollee consistent with the scope
of benefits under the policy or plan of the enrollee as specified
in the applicable evidence of coverage contract; and
(6) be responsible for the cost of the independent
review.
(d) A utilization review agent who complies with subsection
(c) of this article, and any employer, payor, or administrator for
whom the utilization review in question is conducted shall be held
harmless for that determination and shall not be liable for any
cause of action arising from that determination or from the
determination of the independent review organization except a cause
of action brought pursuant to Chapter 88, Texas Civil Practice and
Remedies Code.
SECTION 2. Section 2, Texas Health Maintenance Organization
Act (Article 20A, Vernon's Texas Insurance Code), is amended to
read as follows:
(a) "Adverse determination" means a determination by a
health maintenance organization that the health care services
furnished or proposed to be furnished to a patient are not
medically necessary or not appropriate in the allocation of health
care resources.
(b) <(a)> "Basic health care services" means health care
services which an enrolled population might reasonably require in
order to be maintained in good health, including, as a minimum,
emergency care, inpatient hospital and medical services, and
outpatient medical services.
(c) <(b)> "Board" means the Texas Board of Health.
(d) <(c)> "Commissioner" means the commissioner of
insurance.
(e) <(d)> "Enrollee" means an individual who is enrolled in
a health care plan, including covered dependents.
(f) <(e)> "Evidence of coverage" means any certificate,
agreement, or contract issued to an enrollee setting out the
coverage to which the enrollee is entitled.
(g) <(f)> "Group hospital service corporation" means a
nonprofit corporation organized and operating under Chapter 20 of
the Insurance Code.
(h) <(g)> "Health care" means prevention, maintenance,
rehabilitation, pharmaceutical, and chiropractic services provided
by qualified persons other than medical care.
(i) <(h)> "Health care plan" means any plan whereby any
person undertakes to provide, arrange for, pay for, or reimburse
any part of the cost of any health care services; provided,
however, a part of such plan consists of arranging for or the
provision of health care services, as distinguished from
indemnification against the cost of such service, on a prepaid
basis through insurance or otherwise.
(j) <(i)> "Health care services" means any services,
including the furnishing to any individual of pharmaceutical
services, medical, chiropractic, or dental care, or hospitalization
or incident to the furnishing of such services, care, or
hospitalization, as well as the furnishing to any person of any and
all other services for the purpose of preventing, alleviating,
curing or healing human illness or injury or a single health care
service plan.
(k) <(j)> "Health maintenance organization" means any person
who arranges for or provides a health care plan or a single health
care service plan to enrollees on a prepaid basis.
(l) <(k)> "Medical care" means furnishing those services
defined as practicing medicine under Section 1.03(8), Medical
Practice Act (Article 4495b, Vernon's Texas Civil Statutes).
(m) <(l)> "Person" means any natural or artificial person,
including, but not limited to, individuals, partnerships,
associations, organizations, trusts, hospital districts, limited
liability companies, limited liability partnerships, or
corporations.
(n) <(m)> "Physician" means:
(1) an individual licensed to practice medicine in
this state;
(2) a professional association organized under the
Texas Professional Association Act (Article 1528f, Vernon's Texas
Civil Statutes) or a nonprofit health corporation certified under
Section 5.01, Medical Practice Act (Article 4495b, Vernon's Texas
Civil Statutes); or
(3) another person wholly owned by physicians.
(o) <(n)> "Provider" means:
(1) any person other than a physician, including a
licensed doctor of chiropractic, registered nurse, pharmacist,
optometrist, pharmacy, hospital, or other institution or
organization or person that is licensed or otherwise authorized to
provide a health care service in this state;
(2) a person who is wholly owned or controlled by a
provider or by a group of providers who are licensed to provide the
same health care service; or
(3) a person who is wholly owned or controlled by one
or more hospitals and physicians, including a physician-hospital
organization.
(p) <(o)> "Sponsoring organization" means a person who
guarantees the uncovered expenses of the health maintenance
organization and who is financially capable, as determined by the
commissioner, of meeting the obligations resulting from those
guarantees.
(q) <(p)> "Uncovered expenses" means the estimated
administrative expenses and the estimated cost of health care
services that are not guaranteed, insured, or assumed by a person
other than the health maintenance organization. Health care
services may be considered covered if the physician or provider
agrees in writing that enrollees shall in no way be liable,
assessable, or in any way subject to payment for services except as
described in the evidence of coverage issued to the enrollee under
Section 9 of this Act. The amount due on loans in the next
calendar year will be considered uncovered expenses unless
specifically subordinated to uncovered medical and health care
expenses or unless guaranteed by the sponsoring organization.
(r) <(q)> "Uncovered liabilities" means obligations
resulting from unpaid uncovered expenses, the outstanding
indebtedness of loans that are not specifically subordinated to
uncovered medical and health care expenses or guaranteed by the
sponsoring organization, and all other monetary obligations that
are not similarly subordinated or guaranteed.
(s) <(r)> "Single health care service" means a health care
service that an enrolled population may reasonably require in order
to be maintained in good health with respect to a particular health
care need for the purpose of preventing, alleviating, curing, or
healing human illness or injury of a single specified nature and
that is to be provided by one or more persons each of whom is
licensed by the state to provide that specific health care service.
(t) <(s)> "Single health care service plan" means a plan
under which any person undertakes to provide, arrange for, pay for,
or reimburse any part of the cost of a single health care service,
provided, that a part of the plan consists of arranging for or the
provision of the single health care service, as distinguished from
an indemnification against the cost of that service, on a prepaid
basis through insurance or otherwise and that no part of that plan
consists of arranging for the provision of more than one health
care need of a single specified nature.
(u) <(t)> "Emergency care" means bona fide emergency
services provided after the sudden onset of a medical condition
manifesting itself by acute symptoms of sufficient severity,
including severe pain, such that the absence of immediate medical
attention could reasonably be expected to result in:
(1) placing the patient's health in serious jeopardy;
(2) serious impairment to bodily functions; or
(3) serious dysfunction of any bodily organ or part.
(v) <(u)> "Health maintenance organization delivery network"
means a health care delivery system in which a health maintenance
organization arranges for health care services directly or
indirectly through contracts and subcontracts with providers and
physicians.
SECTION 3. Section 9, Subsection (a)(3)(B)(iv), Texas Health
Maintenance Organization Act (Article 20A, Vernon's Texas Insurance
Code), is amended to read as follows:
(iv) a clear and understandable
description of the health maintenance organization's methods for
resolving enrollee complaints, including the enrollee's right to
appeal denials of adverse determinations to an independent review
organization and the process for doing so. Any subsequent changes
may be evidenced in a separate document issued to the enrollee.
SECTION 4. The Texas Health Maintenance Organization Act
(Article 20A, Vernon's Texas Insurance Code) is amended by adding
Section 12A to read as follows:
Sec. 12A. REVIEW OF ADVERSE DETERMINATIONS. (a) The
complaint system required by Section 12 of this Act (Article
20A.12, Vernon's Texas Insurance Code) shall include procedures for
appealing an adverse determination and for seeking independent
review of a denial of such an appeal. The provisions of Section 6,
Article 21.58A, relating to independent review shall apply to a
health maintenance organization under this article in the same
manner and to the same extent as they apply to a utilization review
agent under that section, except that subsection (d) of such
section shall apply to an enrollee's treating physician and the
health maintenance organization.
SECTION 5. Subchapter E, Chapter 21, Vernon's Texas
Insurance Code, is amended by adding Article 21.58C to read as
follows:
Art. 21.58C. STANDARDS FOR INDEPENDENT REVIEW ORGANIZATIONS
(a) The Commissioner shall:
(1) promulgate standards for the selection of
independent review organizations to perform the medical reviews
described in Section 6, Art. 21.58A(c);
(2) designate, annually, each organization meeting
such standards as an independent review organization; and
(3) assure that a sufficient number of such
organizations are designated to permit the expeditious medical
review of all such independent review determinations and to provide
a reasonable choice for entities that are required to contract with
such organizations for the medical review of such independent
review determinations.
(b) The standards required by subsection (a)(1) shall be
designed to assure:
(1) the independence of the organizations designated
under this section;
(2) the confidentiality of medical records transmitted
to such organizations for use in such independent reviews;
(3) the qualifications and independence of the health
care professionals making independent review determinations for
such organizations; and
(4) the fairness of the procedures of such
organizations for making such independent determinations.
(c) In order to be designated as an independent review
organization under this section, an organization shall submit to
the Commissioner (upon initial application, annually thereafter,
and upon any change occurring after the immediately preceding
submission under this subsection) the following information:
(1) In the case of a publicly held organization, the
names of all stockholders and owners of more than 5 percent of any
stock or options;
(2) The names of all holders of bonds or notes
exceeding $100,000;
(3) The names and type of business of all corporations
and organizations that the organization controls or is affiliated
with and the nature and extent of any ownership or control;
(4) The names and biographical sketches of all
directors, officers, and executives of the organization, and a
description of any relationships such individuals may have with any
health benefit plan, health maintenance organization, insurer,
utilization review agent, nonprofit health corporation, payor,
health care provider, or group representing such entities;
(5) The percentage of the organization's revenues that
is derived from such medical reviews; and
(6) A description of the areas of expertise of the
health care professionals making medical review determinations for
the organization.
(d) An independent review organization may not be a
subsidiary of, nor in any way owned or controlled by a payor, a
trade association of payors or providers, or a professional
association of physicians or other health professionals.
SECTION 6. Chapter 88, Civil Practice and Remedies Code, as
added by this Act, applies only to a cause of action that accrues
on or after the effective date of this Act. An action that accrues
before the effective date of this Act is governed by the law
applicable to the action immediately before the effective date of
this Act, and that law is continued in effect for that purpose.
SECTION 7. The change in law made by Sections 2, 3, and 5 of
this Act applies only to an adverse determination of a utilization
review agent or health maintenance organization made on or after
the effective date of this Act.
SECTION 8. The change in law made by Section 4 of this Act
to Section 9, Texas Health Maintenance Organization Act (Article
20A.09, Vernon's Texas Insurance Code), applies only to an evidence
of coverage that is delivered, issued for delivery, or renewed on
or after January 1, 1998. An evidence of coverage that is
delivered, issued for delivery, or renewed before January 1, 1998,
is governed by the law as it existed immediately before the
effective date of this Act, and that law is continued in effect for
that purpose.
SECTION 9. This Act takes effect September 1, 1997.
SECTION 10. The importance of this legislation and the
crowded condition of the calendars in both houses create an
emergency and an imperative public necessity that the
constitutional rule requiring bills to be read on three several
days in each house be suspended, and this rule is hereby suspended.