1-1                                   AN ACT
 1-2     relating to establishing the Texas Healthy Kids Corporation and
 1-3     other health benefit coverage to increase access to health care for
 1-4     children.
 1-5           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-6           SECTION 1.  Subtitle E, Title 2, Health and Safety Code, is
 1-7     amended by adding Chapter 109 to read as follows:
 1-8                CHAPTER 109.  TEXAS HEALTHY KIDS CORPORATION
 1-9                      SUBCHAPTER A.  GENERAL PROVISIONS
1-10           Sec. 109.001.  DEFINITIONS.  In this chapter:
1-11                 (1)  "Board" means the board of directors of the
1-12     corporation.
1-13                 (2)  "Child" means an individual younger than 18 years
1-14     of age.
1-15                 (3)  "Corporation" means the Texas Healthy Kids
1-16     Corporation established under this chapter.
1-17                 (4)  "Eligible coverage provider" means an entity that
1-18     meets the requirements for providing coverage under the program
1-19     established by the corporation under Section 109.061.
1-20                 (5)  "Executive director" means the executive director
1-21     of the corporation.
1-22                 (6)  "Program" means the health benefit program
1-23     provided by the corporation under this chapter.
1-24                 (7)  "Title IV-D agency" means the agency designated to
 2-1     serve as the state's Title IV-D agency in accordance with Part D,
 2-2     Subchapter IV, Social Security Act (42 U.S.C. Section 651 et seq.).
 2-3           Sec. 109.002.  TEXAS HEALTHY KIDS FUND.  (a)  The Texas
 2-4     healthy kids fund is a fund outside the state treasury held by the
 2-5     Texas Treasury Safekeeping Trust Company.  The fund is composed of
 2-6     money appropriated to the fund and of money appropriated to or
 2-7     deposited in the premium stabilization revolving account
 2-8     established under Subchapter E.  The comptroller shall transfer to
 2-9     the fund money appropriated to the fund from the state treasury.
2-10           (b)  The comptroller may invest money in the fund in the same
2-11     manner as the comptroller may invest money in the state treasury.
2-12           (c)  The board shall file with the comptroller a verified
2-13     copy of a board resolution that designates the authorized
2-14     representatives of the corporation who have authority to spend
2-15     money in the fund.
2-16           (d)  In the first fiscal year for which the fund does not
2-17     receive a direct state appropriation of state money, the
2-18     comptroller, at the request of the board, shall transfer the
2-19     balance of the fund to one or more depositories selected by the
2-20     board as depositories for the corporation.  On the date a transfer
2-21     is made under this subsection, the fund is abolished.
2-22           Sec. 109.003.  BIENNIAL REPORT.  (a)  Not later than
2-23     January 1 of each odd-numbered year, the corporation shall submit a
2-24     written report to the governor, the lieutenant governor, the
2-25     speaker of the house of representatives, and the commissioner of
2-26     insurance.
2-27           (b)  The report must state the program's status and must
 3-1     include a statement of the corporation's financial condition and an
 3-2     accounting for the corporation's administrative expenses for the
 3-3     two years preceding the date of the report.
 3-4           (c)  The reporting requirement under this section only
 3-5     applies during a period in which:
 3-6                 (1)  the corporation receives state money under a
 3-7     direct state appropriation; or
 3-8                 (2)  a person appointed by the governor, other than an
 3-9     ex officio member of the board, is serving as a member of the
3-10     board.
3-11           Sec. 109.004.  IMMUNITY FROM LIABILITY.  Chapter 84, Civil
3-12     Practice and Remedies Code, applies to the corporation and an
3-13     employee or volunteer of the corporation.
3-14              (Sections 109.005-109.030 reserved for expansion
3-15                     SUBCHAPTER B.  CORPORATE STRUCTURE
3-16           Sec. 109.031.  TEXAS HEALTHY KIDS CORPORATION; PURPOSE.
3-17     (a)  The Texas Healthy Kids Corporation is created and has the
3-18     powers that are necessary and proper to carry out its duties.  The
3-19     corporation is a nonprofit corporation and shall comply with the
3-20     Texas Non-Profit Corporation Act (Article 1396-1.01 et seq.,
3-21     Vernon's Texas Civil Statutes).
3-22           (b)  The primary purpose of the corporation is to provide
3-23     health benefits for primary and preventive health care for
3-24     children.
3-25           (c)  The corporation is not subject to the franchise tax
3-26     imposed by Chapter 171, Tax Code.
3-27           (d)  Subject to this chapter, the board shall take any step
 4-1     necessary to maintain an exemption from federal income tax under
 4-2     Section 501(a) of the Internal Revenue Code of 1986 (26 U.S.C.
 4-3     Section 501(a)) by being listed as an exempt organization under
 4-4     Section 501(c)(3) or 501(c)(4) of that code (26 U.S.C. Section
 4-5     501(c)(3) or (c)(4)) or another similar law.
 4-6           Sec. 109.032.  BOARD OF DIRECTORS; PRESIDING OFFICER.
 4-7     (a)  The corporation shall operate subject to the general
 4-8     supervision of a board of directors.  The board of directors and
 4-9     the presiding officer of the board of directors are selected as
4-10     provided by the articles of incorporation and bylaws of the
4-11     corporation, in accordance with the Texas Non-Profit Corporation
4-12     Act (Article 1396-1.01 et seq., Vernon's Texas Civil Statutes).  If
4-13     required by the bylaws of the corporation, the board of directors
4-14     may also include the following voting ex officio members:
4-15                 (1)  the commissioner of health and human services or a
4-16     person designated by the commissioner;
4-17                 (2)  the commissioner of insurance or a person
4-18     designated by the commissioner; and
4-19                 (3)  the director of the Title IV-D agency, or a person
4-20     designated by the director.
4-21           (b)  A member of the board may not serve more than two terms,
4-22     without regard to whether the terms are consecutive.
4-23           (c)  A person is not eligible to serve on the board if the
4-24     person or the person's spouse is employed by, represents in any
4-25     capacity, owns, or controls any ownership interest in a business or
4-26     organization:
4-27                 (1)  that may obtain a pecuniary or other favorable
 5-1     interest in the course of a business activity with the corporation;
 5-2     or
 5-3                 (2)  from whom the corporation receives funds.
 5-4           (d)  A person is not eligible to serve on the board if the
 5-5     person is or has been an adverse party in litigation against the
 5-6     board or corporation.
 5-7           Sec. 109.033.  POWERS AND DUTIES OF BOARD; OVERSIGHT OF
 5-8     COMMISSIONER OF INSURANCE.  (a)  Subject to Subsection (d), the
 5-9     board is the oversight and governing entity of the corporation and
5-10     has any power necessary and proper to carry out its duties under
5-11     this chapter, including the power to adopt bylaws governing the
5-12     operations of the board and the corporation.  The board has
5-13     complete fiscal control over the corporation and is responsible for
5-14     all corporate operations.
5-15           (b)  The board may request and accept grants and gifts of
5-16     money, property, or services.  Subject to Subsection (c), the
5-17     corporation may use a grant or gift for any purpose of the
5-18     corporation, including paying the corporation's business expenses
5-19     and the salaries or wages of the corporation's employees.
5-20           (c)  The corporation may use a donation made as community
5-21     benefits by a hospital or hospital system under Section 171.063(a),
5-22     Tax Code, only to purchase health benefits for children who:
5-23                 (1)  have a family income of less than 200 percent of
5-24     poverty level according to the poverty index prepared by the
5-25     federal Office of Management and Budget; and
5-26                 (2)  reside:
5-27                       (A)  in the case of a hospital, in the county in
 6-1     which the hospital is located or a county contiguous to the county;
 6-2     or
 6-3                       (B)  in the case of a hospital system, in a
 6-4     county in which the hospital system operates or any county
 6-5     contiguous to a county in which the hospital system operates.
 6-6           (d)  The initial board shall submit to the commissioner of
 6-7     insurance for approval and may not implement before receiving that
 6-8     approval:
 6-9                 (1)  the corporation's bylaws, plan of operation, and
6-10     any other standards adopted by the board; and
6-11                 (2)  the health benefit program and health benefit
6-12     plans established by the corporation under Subchapter C.
6-13           Sec. 109.034.  EXECUTIVE DIRECTOR.  (a)  The board shall
6-14     employ an executive director to help the board perform its duties.
6-15     The executive director shall act on behalf of and subject to
6-16     authorization and supervision of the board to carry out the
6-17     purposes of the corporation.
6-18           (b)  The corporation shall pay the executive director a
6-19     salary in an amount established by the board.
6-20           (c)  The executive director must make and file a surety bond
6-21     in an amount determined by the board for the faithful performance
6-22     of the executive director's duties and the proper safekeeping and
6-23     disbursement of corporate money.
6-24           Sec. 109.035.  EMPLOYEES; CONSULTANTS.  The executive
6-25     director may employ employees and retain consultants as necessary
6-26     to administer the programs of the corporation.
6-27           Sec. 109.036.  PUBLIC INPUT.  The board shall develop and
 7-1     implement policies that provide the public with a reasonable
 7-2     opportunity to appear before the board and to speak on any issue
 7-3     related to the corporation or the program.
 7-4           Sec. 109.037.  OPEN MEETINGS; OPEN RECORDS.  The board and
 7-5     the corporation are subject to the open meetings law, Chapter 551,
 7-6     Government Code, and the open records law, Chapter 552, Government
 7-7     Code, subject to Section 109.064, during a period in which:
 7-8                 (1)  the corporation receives state money under a
 7-9     direct state appropriation; or
7-10                 (2)  a person appointed by the governor, other than an
7-11     ex officio member of the board, is serving as a member of the
7-12     board.
7-13           Sec. 109.038.  COOPERATION OF AND ASSISTANCE TO STATE
7-14     AGENCIES.  (a)  A health and human services agency, as that term is
7-15     defined by Section 531.001, Government Code, the Texas Department
7-16     of Insurance, the Title IV-D agency, the board of directors of the
7-17     risk pool established under Article 3.77, Insurance Code, and the
7-18     comptroller shall cooperate with the corporation to assist the
7-19     corporation in performing its duties.
7-20           (b)  The corporation shall work with the Title IV-D agency,
7-21     the Texas Department of Human Services, and the Texas Department of
7-22     Health to facilitate the electronic exchange of information among
7-23     the corporation and the agencies that relates to individuals who:
7-24                 (1)  are covered under the program; and
7-25                 (2)  are the subject of a medical child support order
7-26     or are or may be eligible for benefits under a federally or
7-27     state-funded program administered by the Texas Department of Human
 8-1     Services or the Texas Department of Health.
 8-2           (c)  The corporation shall work with the board of directors
 8-3     of the risk pool established under Article 3.77, Insurance Code, as
 8-4     necessary to implement Section 109.067.
 8-5           (d)  Cooperation requirements in this section apply only in a
 8-6     period in which:
 8-7                 (1)  the corporation receives state money under a
 8-8     direct state appropriation; or
 8-9                 (2)  a person appointed by the governor, other than an
8-10     ex officio member of the board, is serving as a member of the
8-11     board.
8-12           Sec. 109.039.  AUDIT BY STATE AUDITOR.  (a)  The corporation
8-13     is subject to audit by the state auditor under Chapter 321,
8-14     Government Code, only during a period in which:
8-15                 (1)  the corporation receives state money under a
8-16     direct state appropriation; or
8-17                 (2)  a person appointed by the governor, other than an
8-18     ex officio member of the board, is serving as a member of the
8-19     board.
8-20           (b)  The audit may include a financial audit and an economy
8-21     and efficiency audit.
8-22              (Sections 109.040-109.060 reserved for expansion
8-23                    SUBCHAPTER C.  HEALTH BENEFIT PROGRAM
8-24           Sec. 109.061.  HEALTH BENEFIT PROGRAM.  (a)  The corporation
8-25     shall:
8-26                 (1)  establish a program to provide, through eligible
8-27     coverage providers, health benefits for eligible children in this
 9-1     state who:
 9-2                       (A)  are not covered by insurance or another type
 9-3     of health benefit plan;
 9-4                       (B)  are not covered by insurance or another type
 9-5     of health benefit plan for a specified medical condition; or
 9-6                       (C)  are not covered by insurance or another type
 9-7     of health benefit plan that provides benefits for primary and
 9-8     preventive care;
 9-9                 (2)  develop, in accordance with the purpose of the
9-10     corporation established under Section 109.031(b), the design and
9-11     benefits structure of the health benefit program offered by the
9-12     corporation through eligible coverage providers;
9-13                 (3)  determine eligibility criteria that children and
9-14     their family members must meet before the children may participate
9-15     in the program;
9-16                 (4)  develop participation criteria, subject to Section
9-17     109.063, for authorized insurers, health service organizations,
9-18     health maintenance organizations, and other entities eligible to
9-19     provide coverage under the health benefit program;
9-20                 (5)  develop and implement a public awareness program
9-21     to educate the public about the program;
9-22                 (6)  establish participation objectives for the
9-23     program;
9-24                 (7)  negotiate premiums for coverage under the program
9-25     and applicable copayments, coinsurance, or deductibles to be paid
9-26     on behalf of a covered child; and
9-27                 (8)  contract for the provision of health benefit
 10-1    coverage under the program.
 10-2          (b)  The board may contract for or otherwise obtain
 10-3    third-party administration services for the corporation.
 10-4          (c)  In developing the program, the corporation may consult
 10-5    with the Texas Department of Health, appropriate professional
 10-6    organizations, coverage providers, other agency officials, and
 10-7    consultants.  The corporation shall consult with the Title IV-D
 10-8    agency in matters relating to coverage for children who are the
 10-9    subject of a medical child support order and for whom the agency is
10-10    providing enforcement services.
10-11          (d)  Notwithstanding Article 3.51-6, Insurance Code, the
10-12    corporation may establish group coverage plans for children under
10-13    the program in specified geographic regions of the state or based
10-14    on other criteria approved by the commissioner of insurance.
10-15          (e)  The parent, managing conservator, or guardian of a
10-16    child, or another person sponsoring coverage for the child, is
10-17    responsible for premiums for coverage under the program and for
10-18    applicable copayments, coinsurance, or deductibles, as determined
10-19    by the corporation.  The corporation may develop a premium
10-20    structure that varies according to ability to pay and may require,
10-21    in accordance with the premium structure, that the parent,
10-22    conservator, guardian, or sponsor pay the full cost of the child's
10-23    coverage.
10-24          (f)  The corporation may require that the parent, managing
10-25    conservator, or guardian of a child, or another person sponsoring
10-26    coverage for the child, pay to the corporation a reasonable
10-27    enrollment fee, in an amount set by the corporation, before the
 11-1    child is enrolled in coverage under the program.
 11-2          (g)  The health benefit coverage provided under the
 11-3    corporation's program is secondary to any other available private
 11-4    coverage covering a child.  The corporation shall ensure that
 11-5    benefits provided by the program are the payor of last resort with
 11-6    respect to private coverage covering a child.
 11-7          (h)  In developing eligibility criteria under Subsection
 11-8    (a)(3), the corporation shall consider the impact of the
 11-9    eligibility criteria on the availability of other health benefit
11-10    plan coverage for children.  The corporation shall restrict
11-11    eligibility for coverage under the program or impose a waiting
11-12    period or other appropriate restriction to minimize any adverse
11-13    impact on the availability of other health benefit plan coverage.
11-14          (i)  The board may develop a marketing plan under which each
11-15    participating eligible coverage provider is required to market the
11-16    program.  The corporation or eligible coverage providers may
11-17    publicize the corporation and the general nature of the program.
11-18    Direct sale or solicitation of a health benefit plan offered
11-19    through the program must be done in accordance with the Insurance
11-20    Code and other insurance laws of this state.
11-21          Sec. 109.062.  CORPORATE OPERATIONS; LICENSING REQUIREMENTS.
11-22    (a)  The corporation is not an insurer and may not self-insure or
11-23    self-fund the coverage provided through the program.  The board and
11-24    employees of the corporation are not agents of an insurer.  The
11-25    corporation, the board, and the employees of the corporation are
11-26    not subject to any licensing requirement imposed under the
11-27    Insurance Code or another insurance law of this state.
 12-1          (b)  The corporation shall use prudent business practices in
 12-2    the procurement of goods and services.  A law governing the
 12-3    procurement of goods or services by a state agency, including
 12-4    Chapter 2054 or 2254, Government Code, or Subtitle D, Title 10,
 12-5    Government Code, applies only during a period in which:
 12-6                (1)  the corporation receives state money under a
 12-7    direct state appropriation; or
 12-8                (2)  a person appointed by the governor, other than an
 12-9    ex officio member of the board, is serving as a member of the
12-10    board.
12-11          Sec. 109.063.  OPERATIONS OF ELIGIBLE COVERAGE PROVIDER.
12-12    (a)  An eligible coverage provider must:
12-13                (1)  hold a certificate of authority or other
12-14    appropriate license issued by the Texas Department of Insurance
12-15    that authorizes the eligible coverage provider to provide the type
12-16    of coverage to be offered through the program; and
12-17                (2)  satisfy, except as provided by this section, any
12-18    other applicable requirement of the Insurance Code or another
12-19    insurance law of this state.
12-20          (b)  A health benefit plan provider under the program is not
12-21    subject to a law that requires coverage or the offer of coverage of
12-22    a health care service or benefit.
12-23          (c)  An eligible coverage provider is not subject to the
12-24    premium tax imposed by Article 4.11, Insurance Code, or the tax on
12-25    revenues imposed under Section 33, Texas Health Maintenance
12-26    Organization Act (Article 20A.33, Vernon's Texas Insurance Code),
12-27    with respect to money received for coverage provided under this
 13-1    chapter.
 13-2          (d)  The participation criteria for authorized insurers,
 13-3    health service organizations, health maintenance organizations, and
 13-4    other entities that provide coverage under the health benefit
 13-5    program shall not allow an eligible coverage provider to establish
 13-6    a school-based clinic for the provision of covered treatment
 13-7    services, except for routine health screening and preventive
 13-8    measures including, but not limited to, immunizations,
 13-9    inoculations, or hearing and vision testing.
13-10          Sec. 109.064.  ACCESS TO RECORDS; CONFIDENTIALITY.
13-11    (a)  Notwithstanding any other law, the corporation may obtain the
13-12    medical records of and other information relating to a child
13-13    covered by the program or applying to be covered by the program on
13-14    receipt of the informed written consent of the child's parent,
13-15    managing conservator, or guardian.
13-16          (b)  Information in the possession of the corporation that
13-17    identifies an individual, including medical records and family
13-18    financial information, is confidential and exempt from disclosure
13-19    and discovery in a civil action.  Subject to Section 109.038(b) and
13-20    any requirement of federal law, the corporation or an employee or
13-21    agent of the corporation may not release confidential information
13-22    to any person, including a state or federal agency, without the
13-23    written consent of a parent, managing conservator, or guardian of
13-24    the participating child.
13-25          Sec. 109.065.  GRIEVANCES AND APPEALS.  The corporation shall
13-26    develop a plan for the receipt and consideration of complaints
13-27    regarding participating eligible coverage providers to ensure
 14-1    appropriate delivery of health care services to participating
 14-2    children and to ensure that eligible coverage providers comply with
 14-3    any applicable complaint procedure imposed by law or the
 14-4    requirements of the corporation.
 14-5          Sec. 109.066.  TEXAS DEPARTMENT OF HEALTH PROGRAMS.  (a)  The
 14-6    department may use appropriated funds, in accordance with the
 14-7    General Appropriations Act, to purchase coverage under a health
 14-8    benefit plan provided through the program for children who are
 14-9    eligible for coverage for the program if:
14-10                (1)  the children receive health care benefits under
14-11    the chronically ill and disabled children's program or another
14-12    federally funded or state-funded program, other than the state
14-13    Medicaid program, that is administered by the department;
14-14                (2)  provision of the benefits through a health benefit
14-15    plan provided through the program is a more cost-effective means of
14-16    providing some or all of the benefits described by Subdivision (1);
14-17    and
14-18                (3)  no benefit or service provided to the children is
14-19    eliminated or adversely affected as a result of the provision of
14-20    the benefits through the program.
14-21          (b)  Services provided to children under a federally funded
14-22    or state-funded program administered by the department, including
14-23    the chronically ill and disabled children's program, may not be
14-24    reduced or eliminated because some or all of the services are
14-25    provided through the program or otherwise provided because of the
14-26    establishment of the corporation or the program.
14-27          Sec. 109.067.  AVAILABILITY OF RISK POOL COVERAGE.  The
 15-1    corporation shall notify the parent, managing conservator, or
 15-2    guardian of a child who applies for coverage through the program of
 15-3    the availability of coverage from the risk pool established under
 15-4    Article 3.77, Insurance Code.
 15-5          Sec. 109.068.  PROGRAM NOT AN ENTITLEMENT.  This chapter does
 15-6    not establish an entitlement to health benefits provided through
 15-7    the corporation or any other entitlement.
 15-8             (Sections 109.069-109.100 reserved for expansion
 15-9              SUBCHAPTER D.  COVERAGE UNDER ORDER OF MEDICAL
15-10                             SUPPORT FOR CHILD
15-11          Sec. 109.101.  APPLICATION.  A party ordered under Chapter
15-12    154, Family Code, to apply for coverage for a child under the
15-13    program shall provide to the corporation:
15-14                (1)  a copy of the order rendered under Chapter 154;
15-15    and
15-16                (2)  the name and address of the obligor's employer.
15-17          Sec. 109.102.  DUTIES OF CORPORATION OR DESIGNEE OF
15-18    CORPORATION.  (a)  The corporation or the designee of the
15-19    corporation shall review an application and, if the corporation or
15-20    designee finds that the child is eligible for coverage under the
15-21    program, shall:
15-22                (1)  issue coverage to the child in accordance with the
15-23    program; and
15-24                (2)  notify the obligor's employer in accordance with
15-25    Subsection (b).
15-26          (b)  The notice provided under Subsection (a)(2) must:
15-27                (1)  explain the employer's obligations under Section
 16-1    109.103;
 16-2                (2)  state:
 16-3                      (A)  the amount to be paid for coverage of the
 16-4    child, including the amount of the premium and the premium
 16-5    stabilization revolving account fee imposed under Subchapter E;
 16-6                      (B)  whether the amount is to be paid to the
 16-7    corporation or the corporation's designee; and
 16-8                      (C)  the address to which the payment is to be
 16-9    sent; and
16-10                (3)  include a copy of the medical child support order
16-11    rendered under Chapter 154, Family Code.
16-12          (c)  The corporation or the corporation's designee shall
16-13    notify the employer of an obligor of any increase in the amount to
16-14    be paid for coverage of the child under the program.
16-15          Sec. 109.103.  DUTY OF EMPLOYER.  (a)  An employer who
16-16    receives notice under Section 109.102 shall withhold an appropriate
16-17    amount from the obligor's earnings for the required payment and
16-18    remit the amount as instructed on the notice.
16-19          (b)  An employer who fails to withhold or remit payments as
16-20    required by this section or who discriminates in hiring or
16-21    employment on the basis of a medical support order is subject to
16-22    the penalties and fines imposed under Subchapter C, Chapter 158,
16-23    Family Code.
16-24             (Sections 109.104-109.150 reserved for expansion
16-25              SUBCHAPTER E.  ELIGIBILITY OF CERTAIN CHILDREN;
16-26                            STABILIZATION FUND
16-27          Sec. 109.151.  TERMINATION FOR FAILURE TO PAY PREMIUMS.
 17-1    Except as provided by this subchapter, the corporation shall
 17-2    terminate the coverage of a child for failure to pay a premium as
 17-3    required under Section 109.061(e).
 17-4          Sec. 109.152.  PREMIUM STABILIZATION REVOLVING ACCOUNT.
 17-5    (a)  The premium stabilization revolving account is an account
 17-6    within the Texas healthy kids fund.
 17-7          (b)  The premium stabilization revolving account is composed
 17-8    of money contributed to the account under this subchapter, any
 17-9    money appropriated to the account by the legislature, and any gift
17-10    of money accepted by the board for the purposes of the account.
17-11          Sec. 109.153.  FEE; DEPOSIT TO ACCOUNT.  (a)  The corporation
17-12    shall charge for each child covered under the program a reasonable
17-13    premium stabilization revolving account fee, not to exceed $5 each
17-14    month.
17-15          (b)  The corporation shall remit money collected under this
17-16    section to the comptroller, in accordance with rules adopted by the
17-17    comptroller, for deposit to the credit of the premium stabilization
17-18    revolving account.
17-19          Sec. 109.154.  USE OF MONEY IN ACCOUNT.  (a)  Money in the
17-20    premium stabilization revolving account may be used by the
17-21    corporation only to pay a premium for coverage provided through the
17-22    program for a child for whom a premium is not paid in accordance
17-23    with Section 109.061(e).
17-24          (b)  A premium may not be paid for a child who is covered by
17-25    a health benefit plan other than the plan offered by the
17-26    corporation.
17-27          (c)  The corporation shall determine the period for which
 18-1    premiums may be paid from the fund and the circumstances under
 18-2    which the premiums may be paid.
 18-3          (d)  The parent, managing conservator, or guardian of a child
 18-4    for whom a premium is paid from the premium stabilization revolving
 18-5    account, or another person sponsoring coverage for the child,
 18-6    remains responsible for reimbursing the account for the premium
 18-7    paid.  The coverage for the child is subject to termination, in
 18-8    accordance with criteria adopted by the board, if the parent,
 18-9    managing conservator, guardian, or sponsor fails to reimburse the
18-10    account as required by this subsection.  The corporation shall
18-11    remit money collected under this subsection to the comptroller for
18-12    deposit to the credit of the account.
18-13          SECTION 2.  Section 154.182, Family Code, is amended by
18-14    amending Subsection (b) and adding Subsection (c) to read as
18-15    follows:
18-16          (b)  Except as provided for by Subdivision (6), in [In]
18-17    determining the manner in which health insurance for the child is
18-18    to be ordered, the  court shall render its order in accordance with
18-19    the following priorities, unless a party shows good cause why a
18-20    particular order would not be in the best interest of the child:
18-21                (1)  if health insurance is available for the child
18-22    through the obligor's employment or membership in a union, trade
18-23    association, or other organization, the court shall order the
18-24    obligor to include the child in the obligor's health insurance;
18-25                (2)  if health insurance is not available for the child
18-26    through the obligor's employment but is available for the child
18-27    through the obligee's employment or membership in a union, trade
 19-1    association, or other organization, the court may order the obligee
 19-2    to provide health insurance for the child, and, in such event,
 19-3    shall order the obligor to pay additional child support to be
 19-4    withheld from earnings under Chapter 158 to the obligee for the
 19-5    actual cost of the health insurance for the child;  [or]
 19-6                (3)  if health insurance is not available for the child
 19-7    under Subdivision (1) or (2), the court shall order the obligor to
 19-8    provide health insurance for the child if the court finds that
 19-9    health insurance is available for the child from another source and
19-10    that the obligor is financially able to provide it;
19-11                (4)  if health insurance is not available for the child
19-12    under Subdivision (1), (2), or (3), the court shall order the
19-13    obligor to apply for coverage through the Texas Healthy Kids
19-14    Corporation established under Chapter 109, Health and Safety Code;
19-15                (5)  if health coverage is not available for the child
19-16    under Subdivision (1), (2), (3), or (4), the court shall order the
19-17    obligor to pay the obligee, in addition to any amount ordered under
19-18    the guidelines for child support, a reasonable amount each month as
19-19    medical support for the child to be withheld from earnings under
19-20    Chapter 158; or
19-21                (6)  notwithstanding Subdivisions (1) through (3), an
19-22    obligor whose employer, union, trade association, or other
19-23    organization does not offer a child/children coverage option in
19-24    lieu of a spouse/child/children option of health insurance coverage
19-25    may elect to apply for coverage through the Texas Healthy Kids
19-26    Corporation.  An obligor required to pay additional child support
19-27    to an obligee for health insurance coverage may elect to apply for
 20-1    coverage through the Texas Healthy Kids Corporation if the
 20-2    obligee's employer, union, trade association, or other organization
 20-3    does not offer a child/children coverage option in lieu of a
 20-4    spouse/child/children option of health insurance coverage.
 20-5          (c)  In establishing the amount of additional medical child
 20-6    support under Subsection (b)(5), the court shall presume that $38
 20-7    each month is a reasonable amount for a child but may order a
 20-8    greater or lesser amount as appropriate under the circumstances.
 20-9    The Health and Human Services Commission may promulgate guidelines
20-10    for the dollar amounts of medical child support that the court may
20-11    presumptively apply in circumstances in which the obligor is
20-12    responsible for medical child support for more than one child.
20-13          SECTION 3.  Section 171.063(a), Tax Code, is amended to read
20-14    as follows:
20-15          (a)  The following corporations are exempt from the franchise
20-16    tax:
20-17                (1)  a nonprofit corporation exempted from the federal
20-18    income tax under Section 501(c)(3), (4), (5), (6), (7), (8), (10),
20-19    or (19), Internal Revenue Code  which in the case of a nonprofit
20-20    hospital means a hospital providing charity care and community
20-21    benefits as set forth in Paragraph (A), (B), (C), (D), (E), (F), or
20-22    (G):
20-23                      (A)  charity care and government-sponsored
20-24    indigent health care are provided at a level which is reasonable in
20-25    relation to the community needs, as determined through the
20-26    community needs assessment, the available resources of the hospital
20-27    or hospital system, and the tax-exempt benefits received by the
 21-1    hospital or hospital system;
 21-2                      (B)  charity care and government-sponsored
 21-3    indigent health care are provided in an amount equal to at least
 21-4    four percent of the hospital's or hospital system's net patient
 21-5    revenue;
 21-6                      (C)  charity care and government-sponsored
 21-7    indigent health care are provided in an amount equal to at least
 21-8    100 percent of the hospital's or hospital system's tax-exempt
 21-9    benefits, excluding federal income tax;
21-10                      (D)  for tax periods beginning before January 1,
21-11    1996, charity care and community benefits are provided in a
21-12    combined amount equal to at least five percent of the hospital's
21-13    net patient revenue, provided that charity care and
21-14    government-sponsored indigent health care are provided in an amount
21-15    equal to at least three percent of net patient revenue;
21-16                      (E)  for tax periods beginning after December 31,
21-17    1995, charity care and community benefits are provided in a
21-18    combined amount equal to at least five percent of the hospital's or
21-19    hospital system's net patient revenue, provided that charity care
21-20    and government-sponsored indigent health care are provided in an
21-21    amount equal to at least four percent of net patient revenue;
21-22                      (F)  a nonprofit hospital that has been
21-23    designated as a disproportionate share hospital under the state
21-24    Medicaid program in the current year or in either of the previous
21-25    two fiscal years is considered to have provided a reasonable amount
21-26    of charity care and government-sponsored indigent health care and
21-27    is considered in compliance with the standards provided by this
 22-1    subsection; or
 22-2                      (G)  a hospital operated on a nonprofit basis
 22-3    that is located in a county with a population of less than 50,000
 22-4    and in which the entire county or the population of the entire
 22-5    county has been designated as a health professionals shortage area
 22-6    is considered in compliance with the standards provided by this
 22-7    subsection;
 22-8                (2)  a corporation exempted under Section 501(c)(2) or
 22-9    (25), Internal Revenue Code, if the corporation or corporations for
22-10    which it holds title to property is either exempt from or not
22-11    subject to the franchise tax;
22-12                (3)  a corporation exempted from federal income tax
22-13    under Section 501(c)(16), Internal Revenue Code; and
22-14                (4)  a nonprofit corporation exempted from the federal
22-15    income tax under Section 501(c)(3), Internal Revenue Code, that
22-16    does not receive any payment for providing health care services to
22-17    inpatients or outpatients from any source including but not limited
22-18    to the patient or person legally obligated to support the patient,
22-19    third-party payors, Medicare, Medicaid, or any other state or local
22-20    indigent care program.  Payment for providing health care services
22-21    does not include charitable donations, legacies, bequests, or
22-22    grants or payments for research.
22-23          For purposes of satisfying Paragraph (E) of Subdivision (1),
22-24    a hospital or hospital system may not change its existing fiscal
22-25    year unless the hospital or hospital system changes its ownership
22-26    or corporate structure as a result of a sale or merger.
22-27          For purposes of this subsection, a hospital that satisfies
 23-1    Paragraph (A), (F), or (G) of Subdivision (1) shall be excluded in
 23-2    determining a hospital system's compliance with the standards
 23-3    provided by Paragraph (B), (C), (D), or (E) of Subdivision (1).
 23-4          For purposes of this subsection, the terms "charity care,"
 23-5    "government-sponsored indigent health care," "health care
 23-6    organization," "hospital system," "net patient revenue," "nonprofit
 23-7    hospital," and "tax-exempt benefits" have the meanings set forth in
 23-8    Sections 311.031 and 311.042, Health and Safety Code.  A
 23-9    determination of the amount of community benefits and charity care
23-10    and government-sponsored indigent health care provided by a
23-11    hospital or hospital system and the hospital's or hospital system's
23-12    compliance with the requirements of Section 311.045, Health and
23-13    Safety Code, shall be based on the most recently completed and
23-14    audited prior fiscal year of the hospital or hospital system.
23-15          A requirement that a nonprofit hospital provide charity care
23-16    and community benefits under this subsection may be satisfied by a
23-17    donation of money to the Texas Healthy Kids Corporation established
23-18    by Chapter 109, Health and Safety Code, provided that:
23-19                (1)  the money is donated to be used for a purpose
23-20    described by Section 109.033(c), Health and Safety Code; and
23-21                (2)  not more than 10 percent of the charity care
23-22    required under any provision of this subsection may be satisfied by
23-23    the donation.
23-24          The providing of charity care and government-sponsored
23-25    indigent health care in accordance with Paragraph (A) of
23-26    Subdivision (1) shall be guided by the prudent business judgment of
23-27    the hospital which will ultimately determine the appropriate level
 24-1    of charity care and government-sponsored indigent health care based
 24-2    on the community needs, the available resources of the hospital,
 24-3    the tax-exempt benefits received by the hospital, and other factors
 24-4    that may be unique to the hospital, such as the hospital's volume
 24-5    of Medicare and Medicaid patients.  These criteria shall not be
 24-6    determinative factors, but shall be guidelines contributing to the
 24-7    hospital's decision along with other factors which may be unique to
 24-8    the hospital.  The formulas contained in Paragraphs (B), (C), (D),
 24-9    and (E) of Subdivision (1) shall also not be considered
24-10    determinative of a reasonable amount of charity care and
24-11    government-sponsored indigent health care.
24-12          The requirements of this subsection shall not apply to the
24-13    extent a hospital or hospital system demonstrates that reductions
24-14    in the amount of community benefits, charity care, and
24-15    government-sponsored indigent health care are necessary to maintain
24-16    financial reserves at a level required by a bond covenant, are
24-17    necessary to prevent the hospital or hospital system from
24-18    endangering its ability to continue operations, or if the hospital,
24-19    as a result of a natural or other disaster, is required
24-20    substantially to curtail its operations.
24-21          In any fiscal year that a hospital or hospital system,
24-22    through unintended miscalculation, fails to meet any of the
24-23    standards in Subdivision (1), the hospital or hospital system shall
24-24    not lose its tax-exempt status without the opportunity to cure the
24-25    miscalculation in the fiscal year following the fiscal year the
24-26    failure is discovered by both meeting one of the standards and
24-27    providing an additional amount of charity care and
 25-1    government-sponsored indigent health care that is equal to the
 25-2    shortfall from the previous fiscal year.  A hospital or hospital
 25-3    system may apply this provision only once every five years.
 25-4          SECTION 4.  The Insurance Code is amended by adding Chapter
 25-5    27 to read as follows:
 25-6              CHAPTER 27.  HEALTH BENEFIT PLANS FOR CHILDREN
 25-7          Art. 27.01.  DEFINITION.  In this chapter, "health benefit
 25-8    plan" means a health benefit plan described by Article 27.02 of
 25-9    this code.
25-10          Art. 27.02.  SCOPE OF CHAPTER.  This chapter applies to a
25-11    health benefit plan that:
25-12                (1)  provides benefits for medical or surgical expenses
25-13    incurred as a result of a health condition, accident, or sickness,
25-14    including:
25-15                      (A)  an individual, group, blanket, or franchise
25-16    insurance policy or insurance agreement, a group hospital service
25-17    contract, or an individual or group evidence of coverage that is
25-18    offered by:
25-19                            (i)  an insurance company;
25-20                            (ii)  a group hospital service corporation
25-21    operating under Chapter 20 of this code;
25-22                            (iii)  a fraternal benefit society
25-23    operating under Chapter 10 of this code;
25-24                            (iv)  a stipulated premium insurance
25-25    company operating under Chapter 22 of this code; or
25-26                            (v)  a health maintenance organization
25-27    operating under the Texas Health Maintenance Organization Act
 26-1    (Chapter 20A, Vernon's Texas Insurance Code); or
 26-2                      (B)  to the extent permitted by the Employee
 26-3    Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et
 26-4    seq.), a health benefit plan that is offered by:
 26-5                            (i)  a multiple employer welfare
 26-6    arrangement as defined by Section 3, Employee Retirement Income
 26-7    Security Act of 1974 (29 U.S.C. Section 1002) or another analogous
 26-8    benefit arrangement; or
 26-9                            (ii)  any other entity not licensed under
26-10    this code or another insurance law of this state that contracts
26-11    directly for health care services on a risk sharing basis,
26-12    including an entity that contracts for health care services on a
26-13    capitation basis; or
26-14                (2)  is offered by an approved nonprofit health
26-15    corporation that is certified under Section 5.01(a), Medical
26-16    Practice Act (Article 4495b, Vernon's Texas Civil Statutes), and
26-17    that holds a certificate of authority issued by the commissioner
26-18    under Article 21.52F of this code.
26-19          Art. 27.03.  CHILDREN'S HEALTH BENEFIT PLAN.  (a)  The issuer
26-20    of a health benefit plan may offer a children's health benefit plan
26-21    in accordance with this chapter.  The health benefit plan may
26-22    provide coverage only to children younger than 18 years of age.
26-23          (b)  An issuer of a health benefit plan may not offer a
26-24    children's health benefit plan under this chapter unless the plan's
26-25    structure and the benefits offered under the plan have been
26-26    approved by the commissioner.
26-27          Art. 27.04.  MANDATED BENEFIT PROVISIONS INAPPLICABLE.  A
 27-1    children's health benefit plan is not subject to a law that
 27-2    requires coverage or the offer of coverage of a health care service
 27-3    or benefit.
 27-4          Art. 27.05.  EXEMPTION FROM PREMIUM TAX.  The issuer of a
 27-5    children's health benefit plan is not subject to the premium tax
 27-6    imposed by Article 4.11 of this code or the tax on revenues imposed
 27-7    under Section 33, Texas Health Maintenance Organization Act
 27-8    (Article 20A.33, Vernon's Texas Insurance Code), with respect to
 27-9    money received for coverage provided under that plan.
27-10          Art. 27.06.  RULES.  The commissioner may adopt rules to
27-11    implement this chapter.
27-12          SECTION 5.  (a)  Notwithstanding Section 109.032, Health and
27-13    Safety Code, as added by this Act, the initial board of directors
27-14    of the Texas Healthy Kids Corporation appointed under this section
27-15    shall be composed of:
27-16                (1)  six members appointed by the governor with the
27-17    advice and consent of the senate;
27-18                (2)  the commissioner of health and human services or
27-19    the commissioner's designee, who serves as a voting ex officio
27-20    member;
27-21                (3)  the commissioner of insurance or the
27-22    commissioner's designee, who serves as a voting ex officio member;
27-23    and
27-24                (4)  the director of the Title IV-D agency, or the
27-25    director's designee, who serves as a voting ex officio member.
27-26          (b)  The governor shall appoint the members of the board of
27-27    directors appointed under Subsection (a)(1) of this section as soon
 28-1    as practical after the effective date of this Act.  The terms of
 28-2    those members expire on September 1, 1999.
 28-3          (c)  On expiration of the terms of the initial appointed
 28-4    members of the board, the governor shall appoint four members for
 28-5    terms expiring September 1, 2001, and two of the formerly appointed
 28-6    positions shall be filled as provided by the articles and bylaws of
 28-7    the corporation.
 28-8          (d)  On expiration of the terms of the four members appointed
 28-9    under Subsection (c), the governor shall appoint two members to
28-10    serve terms expiring September 1, 2003.  The two other positions of
28-11    the formerly appointed members shall be filled as provided by the
28-12    articles and bylaws of the corporation.
28-13          (e)  After September 1, 2003, all members of the board of
28-14    directors shall be selected as provided by Section 109.032, Health
28-15    and Safety Code, as added by this Act.
28-16          (f)  A person is not eligible for appointment by the governor
28-17    to the board of directors under this section if the person does not
28-18    satisfy the requirements of Section 109.032, Health and Safety
28-19    Code, as added by this Act.
28-20          (g)  The members of the board shall annually elect a member
28-21    to serve as the presiding officer of the board.
28-22          (h)  Members of the board of directors appointed by the
28-23    governor serving under this section serve without compensation, but
28-24    are entitled to reimbursement of their travel expenses as provided
28-25    for in the General Appropriations Act for state board or commission
28-26    members.  Money appropriated to the Texas Department of Insurance,
28-27    the Health and Human Services Commission, or the Title IV-D agency
 29-1    may be spent, consistent with the General Appropriations Act, in
 29-2    connection with the work or expenses of the ex officio members of
 29-3    the initial board of directors.
 29-4          (i)  This section expires September 1, 2003.
 29-5          SECTION 6.  (a)  Not later than the 60th day after the
 29-6    effective date of this Act, the  commissioner of insurance, acting
 29-7    as incorporator, shall take the steps necessary to create the Texas
 29-8    Healthy Kids Corporation as a nonprofit corporation under the Texas
 29-9    Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's
29-10    Texas Civil Statutes).
29-11          (b)  Not later than the 90th day after the effective date of
29-12    this Act, the commissioner of insurance, acting on behalf of the
29-13    Texas Healthy Kids Corporation, shall employ an acting executive
29-14    director for the corporation.  The acting executive director may:
29-15                (1)  develop a proposed business plan for the
29-16    corporation;
29-17                (2)  solicit alternative funding for the corporation
29-18    and for the health benefit plan program to be established by the
29-19    corporation; and
29-20                (3)  develop, to the extent possible, a proposed health
29-21    benefit plan program for the consideration of the board of
29-22    directors of the Texas Healthy Kids Corporation.
29-23          (c)  The commissioner of insurance, on behalf of the
29-24    corporation, may accept grants and gifts of money, property, or
29-25    services to assist the acting executive director appointed under
29-26    Subsection (b) of this section in carrying out the acting executive
29-27    director's powers.  The commissioner's authority under this section
 30-1    expires on the date all of the appointed members of the board of
 30-2    directors of the Texas Healthy Kids Corporation have been appointed
 30-3    by the governor and have qualified for office.
 30-4          (d)  The acting executive director appointed under this
 30-5    section serves until the earlier of:
 30-6                (1)  the date the acting executive director is
 30-7    dismissed by the commissioner of insurance;
 30-8                (2)  the date the acting executive director is
 30-9    dismissed by the board of directors of the Texas Healthy Kids
30-10    Corporation; or
30-11                (3)  the date the board of directors of the corporation
30-12    employs an executive director for the corporation.
30-13          (e)  Notwithstanding Subsection (b) of this section, the
30-14    commissioner of insurance may not employ an acting executive
30-15    director on or after the date all of the appointed members of the
30-16    board of directors of the Texas Healthy Kids Corporation have been
30-17    appointed and have qualified for office.
30-18          SECTION 7.  (a)  The Texas Healthy Kids Corporation shall
30-19    offer an initial health benefit plan under Chapter 109, Health and
30-20    Safety Code, as added by this Act, not later than the first
30-21    anniversary of the effective date of this Act.
30-22          (b)  Not later than the date the Texas Healthy Kids
30-23    Corporation first offers a health benefit plan in accordance with
30-24    Subsection (a) of this section, the board of directors of the Texas
30-25    Healthy Kids Corporation shall:
30-26                (1)  establish general administrative and accounting
30-27    procedures for the corporation;
 31-1                (2)  develop the design and benefits structure of any
 31-2    health benefit plan that may be offered by the corporation through
 31-3    eligible coverage providers in accordance with Chapter 109, Health
 31-4    and Safety Code, as added by this Act; and
 31-5                (3)  develop a plan for the receipt and consideration
 31-6    of complaints as required by Section 109.065, Health and Safety
 31-7    Code, as added by this Act.
 31-8          (c)  The board of directors of the Texas Healthy Kids
 31-9    Corporation shall determine whether it is feasible, considering the
31-10    resources available, to initially offer the health benefit plan
31-11    required under Chapter 109, Health and Safety Code, as added by
31-12    this Act, in each region of the state.  If the board determines
31-13    that it is not feasible to initially offer the health benefit plan
31-14    on a statewide basis, the board shall develop and the corporation
31-15    shall implement a schedule to stagger implementation of the health
31-16    benefit program in different regions of the state.
31-17          SECTION 8.  The issuer of a health benefit plan may not offer
31-18    a children's health benefit plan under Chapter 27, Insurance Code,
31-19    as added by this Act, before January 1, 1998.
31-20          SECTION 9.  A court may not order that coverage be provided
31-21    to a child through the Texas Healthy Kids Corporation under Section
31-22    154.182, Family Code, as amended by this Act, before the date that
31-23    corporation first offers coverage under a health benefit plan in
31-24    the applicable region of the state.
31-25          SECTION 10.  As soon as practicable after the effective date
31-26    of this Act, the Title IV-D agency shall seek the modification of
31-27    child support orders that are enforced by the agency and to which
 32-1    Section 154.182(b)(5), Family Code, as added by this Act, applies
 32-2    to obtain additional medical child support under that subdivision.
 32-3          SECTION 11.  (a)  Except as provided by Subsection (b) of
 32-4    this section, this Act takes effect immediately.
 32-5          (b)  Section 3 of this Act takes effect January 1, 1998, and
 32-6    applies to a report originally due on or after that date.
 32-7          SECTION 12.  The importance of this legislation and the
 32-8    crowded condition of the calendars in both houses create an
 32-9    emergency and an imperative public necessity that the
32-10    constitutional rule requiring bills to be read on three several
32-11    days in each house be suspended, and this rule is hereby suspended,
32-12    and that this Act take effect and be in force according to its
32-13    terms, and it is so enacted.
         _______________________________     _______________________________
             President of the Senate              Speaker of the House
               I certify that H.B. No. 3 was passed by the House on April 2,
         1997, by the following vote:  Yeas 113, Nays 26, 3 present, not
         voting; and that the House concurred in Senate amendments to H.B.
         No. 3 on May 12, 1997, by the following vote:  Yeas 105, Nays 30, 1
         present, not voting; and that the House adopted H.C.R. No. 273
         authorizing certain corrections in H.B. No. 3 on May 16, 1997, by a
         non-record vote.
                                             _______________________________
                                                 Chief Clerk of the House
               I certify that H.B. No. 3 was passed by the Senate, with
         amendments, on May 8, 1997, by the following vote:  Yeas 25, Nays
         5; and that the Senate adopted H.C.R. No. 273 authorizing certain
         corrections in H.B. No. 3 on May 19, 1997, by a viva-voce vote.
                                             _______________________________
                                                 Secretary of the Senate
         APPROVED:  _____________________
                            Date
                    _____________________
                          Governor