BG S.B. 276 75(R)BILL ANALYSIS


PUBLIC HEALTH
S.B. 276
By: Patterson, Jerry (Coleman)
5-14-97
Committee Report (Amended)

BACKGROUND 
 
Community MHMR centers are effective alternatives to treatment in a large
residential facility. 
They provide services for persons who are mentally ill or mentally
retarded and may provide requested services to persons with a chemical
dependency problem. The Texas Department of Mental Health and Mental
Retardation is responsible for approving the creation of centers and the
majority of center funds flow from the Department via a performance
contract. There are 37 centers statewide, with approximately $650 million
in budget:  state, federal, local and third party. Centers also receive
funds from the Texas Department of Criminal Justice, the Texas
Rehabilitation Commission and the Texas Commission on Alcohol and Drug
Abuse.  

By statute, community MHMR centers have been allowed to self insure.  A
statewide "risk pool" is administered on their behalf for liability,
workers' compensation, property and health insurance. This pool was
successfully capitalized by the centers. Capitation is a desirable
contracting mode for much of health and mental health care, but current
law does not permit it except for HMO's and HMO-like organizations. This
bill authorizes a government entity (centers) to form a private, nonprofit
HMO for MHMR services. The focus is the public business, as private
corporations that provide mental health and mental retardation services
can already create HMO's or 501(a)'s.  

PURPOSE

S.B. 276 allows Community MHMR Centers to enter into capitated and other
at-risk agreements to provide state plan approved services through the
creation and/or operation of a non-profit corporation having a certificate
of authority as a health maintenance organization. 

RULEMAKING AUTHORITY

It is the committee's opinion that this bill expressly grants additional
rulemaking authority to the Texas Department of Insurance in SECTION 2 and
requires that those rules be adopted by September 1, 1997.  In addition,
the rulemaking authority of the Texas Department of Insurance is
referenced in  Sections 534.102 and 534.103, Chapter 534C, Health and
Safety Code. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Chapter 534, Health and Safety Code, by adding
Subchapter C, as follows: 

 SUBCHAPTER C. HEALTH MAINTENANCE ORGANIZATIONS

Sec. 534.101. HEALTH MAINTENANCE ORGANIZATION CERTIFICATE OF AUTHORITY.
Authorizes one or more community centers to create and operate a
non-profit corporation pursuant to the laws of this state for purposes as
specified.  Requires a non-profit corporation to obtain the appropriate
certificate of authority from the Texas Department of Insurance to operate
as a health maintenance organization pursuant to the Texas Health
Maintenance Organization Act, before the nonprofit corporation accepts or
enters into any capitated or other at-risk payment arrangement for
services designated in a plan approved by the Texas Department of Mental
Health and Mental Retardation (department) as specified. Requires a
nonprofit corporation operating under this subchapter to disclose in
writing to the department certain provided services, prior to submitting
any bids.  Requires the department to verify that the services provided
under any capitated or other at-risk payment arrangement are within the
scope of services approved by the department in each center's plan
required  under Chapter 534A.  Sets forth the requirements to be provided
by the board and the nonprofit corporation.  Sets forth the requirements
of a nonprofit corporation operating under this chapter. 

Sec. 534.102. LAW AND RULES.  Authorizes certain nonprofit corporations to
exercise the powers and authority and to be subject to the conditions and
limitations provided by this subchapter, the Texas Health Maintenance
Organization Act, the Texas Non-Profit Corporation Act, and rules of the
Texas Department of Insurance. 

Sec. 534.103. APPLICATION OF LAWS AND RULES.  Requires a health
maintenance organization created and operating under this subchapter to be
governed as and is subject to the same laws and rules of the Texas
Department of Insurance as any other health maintenance organization of
the same type. 

Sec. 534.104. APPLICATION OF SPECIFIC LAWS.  Provides that a health
maintenance organization created and operating under this subchapter is a
governmental unit and a unit of local government, as defined by Chapters
101 and 102, Civil Practices and Remedies Code, and a local government as
defined by Section 791.003, Government Code.  Provides that nothing in
this subchapter precludes one or more community centers from forming a
nonprofit organization under Section 5.01, Article 4495b, Vernon's Texas
Civil Statutes, (Medical Practices Act) to provide services on a
risk-sharing or capitated basis as permitted under Article 21.52F,
Insurance Code. 

SECTION 2. Requires the Department of Insurance to adopt rules by
September 1, 1997, which describe the procedures an entity must follow and
the standards an entity shall meet in obtaining a certificate of authority
as a single health care service plan providing behavioral health care
services 

SECTION 3. Effective date: September 1, 1997.

SECTION 4. Emergency clause.   

EXPLANATION OF AMENDMENTS

The committee amendment adds Section 534.105, which requires the
department's equal consideration of bids, to the newly created Subchapter
C of Chapter 534, Health and Safety Code.