SRC-CDH C.S.S.B. 1246 75(R)BILL ANALYSIS


Senate Research CenterC.S.S.B. 1246
By: Madla
Health & Human Services
4-17-97
Committee Report (Substituted)


DIGEST 

Currently, rural community health system legislation has been developed as
an alternative to the urban-based Medicaid health maintenance
organizations now operating in rural Texas.  The expansion of Medicaid
managed care has sparked serious concern about the impact of this
transformation on rural health care delivery.  Insufficient reimbursement,
network exclusion, and the loss of patients and health care dollars to
urban centers are all factors which threaten the long-term viability of
rural health care networks.  Rural physicians and hospitals acknowledge
the need for budget certainty within the Medicaid program, and they
support efforts to enhance Medicaid recipients' health care access and
quality.  However, consensus is growing that an alternative model,
predicated on local management and control, must be sought that can
accomplish these goals without sacrificing quality, accessibility, or
cost-effectiveness in rural Texas.   

This legislation establishes a statewide rural health care system (system)
to deliver health care services in rural communities.  The system will be
a statewide, central risk-bearing entity that contracts with locally
developed rural community health plans and assumes responsibility for
functions such as licensure, reinsurance, information management, claims
processing, and actuarial analysis.  Local community networks will
administer functions such as quality and utilization management,
credentialing, and resource allocation.  Each local community health plan
will deliver the scope of locally available health services and services
not available within the community will be externally contracted.  The
system will be awarded at least one of any state contracts awarded to
provide health care services to beneficiaries of a governmental health
program to certain rural areas, so long as it satisfies contractual and
licensure requirements, and the system will be allowed to contract with
both private and public sector insurance programs.   

PURPOSE

As proposed, C.S.S.B. 1246 establishes a statewide rural health care
system. 

RULEMAKING AUTHORITY

Rulemaking authority is granted to the board of directors of the rural
health care system in SECTION 2 (Article 20C.08(a), 20C.09(a), 20C.11(a),
and 20C.12(a), Insurance Code) and to the commissioner of insurance in
SECTION 2 (Article 20C.15, Insurance Code) of this bill.   

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Article 20A.02(l), Insurance Code, to redefine "person."

SECTION 2. Amends the Insurance Code by adding Chapter 20C, as follows:

CHAPTER 20C.  STATEWIDE RURAL HEALTH CARE SYSTEM

Art. 20C.01.  SHORT TITLE:  Statewide Rural Health Care System Act.

Art. 20C.02.  DEFINITIONS.  Defines "board," "enrollee," "health care
services," "hospital provider," "local health care provider,"
"participating provider," "person," "rural area," "system," and
"territorial jurisdiction." 

 Art. 20C.03.  ESTABLISHMENT OF SYSTEM.  Provides that the statewide rural
health care system (system) is established to arrange for or provide
health care services on a prepaid basis to enrollees who reside in rural
areas. 

Art. 20C.04.  DESIGNATION AS SYSTEM; QUALIFICATIONS.  Requires the
commissioner of insurance (commissioner) to designate as the system one
organization created under Article 20C.05 of this chapter.  Sets forth the
standards for eligibility for designation as the system.  Authorizes the
system to meet all reserve requirements required by the commissioner
through the purchase of reinsurance from certain insurance companies.  

Art. 20C.05.  ORGANIZATION OF SYSTEM; APPLICATION OF OTHER LAWS. Requires
the system to be a corporation organized under the Texas Non-Profit
Corporation Act and composed of a combination of two or more hospital
providers that are members of the corporation and located in a rural area.
Provides that the system is a unit of local government that is a
governmental unit and a local government.  Authorizes the system to enter
into interlocal cooperation contracts under the Interlocal Cooperation
Act, and provides that the system is a local government for purposes of
that Act.    

Art. 20C.06.  BOARD.  Sets forth the terms under which the system is
governed by a board of directors.   Establishes the composition of the
board and the selection of board members.  

Art. 20C.07.  TERMS; VACANCIES.  Sets forth the conditions under which
members of the board serve certain terms, and by which vacancies are
filled. 

Art. 20C.08.  ADMINISTRATION BY BOARD; COMMITTEES.  Requires the board to
administer the system and adopt policies and procedures for the system
that are consistent with the purposes of this chapter.  Sets forth the
terms by which the board is authorized to elect officers and appoint an
executive committee composed of certain members.  Establishes the
conditions under which the board, on a majority vote, is authorized to
contract for administrative services or hire an executive director,
consultants, attorneys, other professionals, and other staff.  Requires
the board, if the board hires an executive director for the system, to
delegate to the executive director certain duties.  Sets forth the terms
by which the board is required to appoint an advisory committee composed
of certain members, and is authorized to appoint other advisory
committees.  Provides that a member of an advisory committee is not
entitled to compensation for service.     

Art. 20C.09.  MEETINGS; RECORD.  Requires the board to adopt rules for the
holding of regular and special meetings.  Provides that meetings of the
board are open to the public in accordance with Chapter 551, Government
Code.  Provides that this subsection does not require the board to conduct
an open meeting to deliberate certain issues.  Requires the board to keep
a record of its proceedings in accordance with Chapter 551, Government
Code. 

Art. 20C.10.  LIMITATION ON AUTHORITY OF PARTICIPATING PROVIDERS. Provides
that the authority of the participating providers is limited to certain
powers.     

Art. 20C.11.  PROVISION OF ADMINISTRATIVE SERVICES.  Authorizes the board
to adopt rules regarding the provision of administrative services by the
system.  Authorizes the system to enter into contracts or joint ventures
to provide administrative services, enter into intergovernmental and
interlocal agreements, and provide technical assistance and management
services to local health care providers as necessary to deliver health
care services. 

Art. 20C.12.  PROVISION OF HEALTH CARE SERVICES.  Authorizes the board to
adopt rules to regulate the provision of health care services by the
system.  Requires the system to contract with or otherwise arrange for
local health care providers to deliver health care services to enrollees
residing in the rural areas of the territorial jurisdiction of the
participants.  Authorizes the system to contract with health care
practitioners who are not local health care providers if local providers
are unable to provide the type and quality of services needed. 
 
Art. 20C.13.  GIFTS AND GRANTS.  Authorizes the system to accept gifts and
grants of money, personal property, and real property to use in the
provision of the system's programs and services. 

Art. 20C.14.  MANDATED PROVIDER; EXCEPTION.  Requires the state to award
to the system at least one of any state contracts awarded to provide
health care services to beneficiaries of a governmental health program to
the rural areas within the territorial jurisdiction of the participating
providers.  Provides that this article does not apply to certain
contracts. 

Art. 20C.15.  RULES.  Requires the commissioner to adopt rules as
necessary to implement this chapter. 
   
SECTION 3.  Sets forth the procedure for appointing the initial members of
the board. 

SECTION 4. (a)  Effective date:  September 1, 1997, except as provided by
Subsections (b) and (c) of this section. 

(b)  Requires the commissioner to adopt rules not later than January 1,
1998. 

(c)  Requires the system to begin offering health care services not later
than March 1, 1998. 

SECTION 5. Emergency clause.
  
SUMMARY OF COMMITTEE CHANGES

Amends the relating clause to establish a statewide rural health care
system, and to delete the reference to the delivery of health care
services. 

SECTION 1.

Amends Article 20A.02(l), Insurance Code, to redefine "person."

SECTION 2.

Amends the chapter heading to read, "STATEWIDE RURAL HEALTH CARE SYSTEM."

Amends Article 20C.02 to define "board," "health care services,"
"participating provider," and "system."  Redefines "enrollee," "hospital
provider," "local health care provider," "person," "rural area," and
"territorial jurisdiction."  Deletes the definitions for "commissioner,"
"department," and "primary care physician."  

Amends Article 20C.03 to provide that the system is established to provide
health care services, rather than a health care plan, to enrollees in
rural areas on a prepaid basis. 

Redesignates former Article 20C.06 as 20C.04, and changes the heading.
Requires the organization, with certain exceptions, to meet each
requirement imposed by the Texas Health Maintenance Organization Act as if
the organization were a person under the Act, rather than requiring the
organization to meet each requirement for the issuance of a certificate of
authority as a health maintenance organization as if the organization were
a health maintenance organization.   

Redesignates former Article 20C.04 as 20C.05, and amends the terms by
which the system is a unit of local government and a local government.
Authorizes the system to enter into interlocal cooperation contracts.
Deletes the provision regarding hospital providers becoming members of the
membership corporation. 

Redesignates former Article 20C.05 as 20C.06, and amends the provisions
regarding the  composition of the board and selection of its members.  

Redesignates former Article 20C.08 as 20C.07, and amends the provisions
regarding the terms of members of the board and the filling of vacancies.

Redesignates former Article 20C.09 as 20C.08, and amends the provisions
regarding administration by the board.  Sets forth the composition of an
executive committee appointed under this article.  Requires the board to
appoint an advisory committee composed of certain members, and authorizes
the board to appoint other advisory committees.  

Redesignates former Article 20C.10 as 20C.09, changes the heading, and
makes technical changes. 

Redesignates former Article 20C.07 as 20C.10, and replaces all references
to "members of the system" with "participating providers."    


Amends Article 20C.12 to authorize the system to contract with health care
practitioners who are not local health care providers if certain
conditions exist.  

Amends Article 20C.14 to change the terms under which the state is
required to award to the system state contracts.   

Amends Article 20C.15 to require, rather than authorize, the commissioner
to adopt rules as necessary to implement this chapter.  

SECTION 3.

Sets forth the procedure for appointing initial members of the board.

SECTION 4.

Changes the effective date.  Requires the commissioner to adopt rules by a
certain date. Requires the system to begin offering services by a certain
date.