RS C.S.S.B. 976 75(R) BILL ANALYSIS INSURANCE C.S.S.B. 976 By: Madla (Smithee) 5-14-97 Committee Report (Substituted) BACKGROUND Currently, managed care organizations which issue managed care plans under Medicare risk-sharing contracts are not regulated under the Insurance Code. Medicare beneficiaries and providers may be confused regarding these plans, because Medicare beneficiaries may not be aware of the consequences of switching from traditional Medicare coverage to a Medicare risk plan. This bill requires managed care organizations to provide notice to providers and a sticker to attach to the enrollee's Medicare I.D. card that indicates enrollment. Additionally, this bill requires the Department of Insurance to provide an ombudsman to assist Medicare recipients enrolled in managed care plans. PURPOSE As proposed, C.S.S.B. 976 requires managed care organizations to provide disclosures to prospective enrollees; requires the Department of Insurance to provide an ombudsman to assist Medicare recipients enrolled in managed care plans, and ensure that managed care organizations are in compliance with the law. RULEMAKING AUTHORITY Rulemaking authority is granted to the commissioner of insurance in SECTION 1 (Section 9, Article 21.52G, Insurance Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Chapter 21E, Insurance Code, by adding Article 21.52G, as follows: Art. 21.52G. REQUIREMENTS FOR MANAGED CARE ORGANIZATIONS UNDER MEDICARE RISK-SHARING CONTRACTS Sec. 1. DEFINITIONS. Defines "managed care organization," "managed care plan," "enrollee," "participating provider," "Medicare," and "risk-sharing contract." Sec. 2. SCOPE OF ARTICLE. Provides that this article applies only to enrollment of a Medicare recipient in a managed care plan issued by a managed care organization that enters into a risk-sharing contract to provide certain health care services to Medicare recipients through that managed care plan. Sec. 3. PRE-ENROLLMENT REQUIREMENTS. (a) Within 10 days of the date a managed care organization receives an application for enrollment, the organization shall provide the following to an applicant: A description of the plan's procedure for selection of a primary care provider, and other providers in the plan, description of the referral requirements for specialists, a list of all health care providers including hospitals which are involved in the plan. (b) A prospective enrollee may not be added until the enrollee signs a statement described by Subsection (c) of this section, then returns it to the organization. The managed care organization shall attach a prepared statement and shall provide an additional copy of the document under subsection (a). (c) Sets requirements for the form and content of the statement under subsection (b). (d) A managed care provider that violates this section shall reimburse a health care provider for all services provided to an enrollee regardless of whether the provider is a participating provider. Sec. 4. DUTIES TO ENROLLEES. Requires a managed care organization to provide to a prospective applicant, a sticker to attach to their Medicare identification card that indicates possible enrollment in the managed care plan. Requires the sticker to include the name of the plan and the plan's telephone number. Requires a managed care organization to ensure continuity of care for all plan enrollees by ensuring the enrollee's timely selection of a primary health care provider who is a participating provider. Requires a managed care organization that fails to provide for the timely selection of a primary health care provider by an enrollee to reimburse a health care provider for all health care services provided to the enrollee before the enrollee selects a primary health care provider, regardless of whether the provider who provides those services is a participating provider. Sec. 5. OMBUDSMAN. Requires the Department of Insurance to provide an ombudsman to assist Medicare recipients enrolled in managed care plans and to ensure that managed care organizations subject to this article comply with this article. Sec. 6. MANAGED CARE PLAN FORMS. Prohibits a managed care organization from using a printed form for enrollment in a managed care plan unless the organization files a copy of the form with the commissioner by the 60th day before the date on which the organization proposes to use the form. Authorizes the organization to use the form unless the commissioner notifies the organization of the commissioner's disapproval of the form by the 15th day before the date of proposed use of the form. Sec. 7. ADVERTISING. Prohibits a managed care organization from advertising the availability of its managed care plan for Medicare recipients unless the organization files a copy of the advertisement with the commissioner by the 60th day before the date the organization proposes to use the advertisement. Provides that the organization may use the advertisement unless the commissioner notifies the organization of the commissioner's disapproval of the advertisement by the 15th day before the date of proposed use of the advertisement. Sec. 8. ADMINISTRATIVE PENALTY. Provides that a managed care organization that violates this article is subject to administrative penalties under Article 1.10E of this code. Sec. 9. RULES. Requires the commissioner to adopt rules to implement this article. SECTION 2. Requires the commissioner to adopt rules as required by Section 9, Article 21.52G. Insurance Code, by January 1, 1998. SECTION 3. (a) Effective date: September 1, 1997. (b) and (c) Makes application of this Act prospective to January 1, 1998. SECTION 4. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE SECTION 1: Removes old Section three of the original relating to "Notice to Providers." Adds new section 3 doing the following: Changes section from notice to providers to "Pre-Enrollment Requirements." New section specifies that the provider shall provide to a potential applicant a document stating a description of the plan's procedure for selection of a primary care provider, and other providers in the plan, a description of the referral requirements for specialists, and a list of all health care providers including hospitals which are involved in the plan, within 10 days of receipt of the application. Also includes requirements for enrolling an applicant after they sign and return a required statement. Sets requirements for the form and content of the statement under section 3(b). Also includes statement for reimbursement of a managed care organization violates this section. Sec. 4. Changes language from providing a sticker to an enrollee, to providing a sticker to a prospective enrollee who has submitted an application. The sticker now would reflect the possible enrollment into the managed care plan. SECTION 2. - Changes section requiring the commissioner to adopt rules as from section 10 to section 9.