1-1     By:  Berlanga, et al. (Senate Sponsor - Sibley)          H.B. No. 3

 1-2           (In the Senate - Received from the House April 3, 1997;

 1-3     April 3, 1997, read first time and referred to Committee on

 1-4     Economic Development; April 29, 1997, reported adversely, with

 1-5     favorable Committee Substitute by the following vote:  Yeas 8, Nays

 1-6     2; April 29, 1997, sent to printer.)

 1-7     COMMITTEE SUBSTITUTE FOR H.B. No. 3                     By:  Sibley

 1-8                            A BILL TO BE ENTITLED

 1-9                                   AN ACT

1-10     relating to establishing the Texas Healthy Kids Corporation and

1-11     other health benefit coverage to increase access to health care for

1-12     children.

1-13           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

1-14           SECTION 1.  Subtitle E, Title 2, Health and Safety Code, is

1-15     amended by adding Chapter 109 to read as follows:

1-16                CHAPTER 109.  TEXAS HEALTHY KIDS CORPORATION

1-17                      SUBCHAPTER A.  GENERAL PROVISIONS

1-18           Sec. 109.001.  DEFINITIONS.  In this chapter:

1-19                 (1)  "Board" means the board of directors of the

1-20     corporation.

1-21                 (2)  "Child" means an individual younger than 18 years

1-22     of age.

1-23                 (3)  "Corporation" means the Texas Healthy Kids

1-24     Corporation established under this chapter.

1-25                 (4)  "Eligible coverage provider" means an entity that

1-26     meets the requirements for providing coverage under the program

1-27     established by the corporation under Section 109.061.

1-28                 (5)  "Executive director" means the executive director

1-29     of the corporation.

1-30                 (6)  "Program" means the health benefit program

1-31     provided by the corporation under this chapter.

1-32                 (7)  "Title IV-D agency" means the agency designated to

1-33     serve as the state's Title IV-D agency in accordance with Part D,

1-34     Subchapter IV, Social Security Act (42 U.S.C. Section 651 et seq.).

1-35           Sec. 109.002.  TEXAS HEALTHY KIDS FUND.  (a)  The Texas

1-36     healthy kids fund is a fund outside the state treasury held by the

1-37     Texas Treasury Safekeeping Trust Company.  The fund is composed of

1-38     money appropriated to the fund and of money appropriated to or

1-39     deposited in the premium stabilization revolving account

1-40     established under Subchapter E.  The comptroller shall transfer to

1-41     the fund money appropriated to the fund from the state treasury.

1-42           (b)  The comptroller may invest money in the fund in the same

1-43     manner as the comptroller may invest money in the state treasury.

1-44           (c)  The board shall file with the comptroller a verified

1-45     copy of a board resolution that designates the authorized

1-46     representatives of the corporation who have authority to spend

1-47     money in the fund.

1-48           (d)  In the first fiscal year for which the fund does not

1-49     receive a direct state appropriation of state money, the

1-50     comptroller, at the request of the board, shall transfer the

1-51     balance of the fund to one or more depositories selected by the

1-52     board as depositories for the corporation.  On the date a transfer

1-53     is made under this subsection, the fund is abolished.

1-54           Sec. 109.003.  BIENNIAL REPORT.  (a)  Not later than

1-55     January 1 of each odd-numbered year, the corporation shall submit a

1-56     written report to the governor, the lieutenant governor, the

1-57     speaker of the house of representatives, and the commissioner of

1-58     insurance.

1-59           (b)  The report must state the program's status and must

1-60     include a statement of the corporation's financial condition and an

1-61     accounting for the corporation's administrative expenses for the

1-62     two years preceding the date of the report.

1-63           (c)  The reporting requirement under this section only

1-64     applies during a period in which:

 2-1                 (1)  the corporation receives state money under a

 2-2     direct state appropriation; or

 2-3                 (2)  a person appointed by the governor, other than an

 2-4     ex officio member of the board, is serving as a member of the

 2-5     board.

 2-6           Sec. 109.004.  IMMUNITY FROM LIABILITY.  Chapter 84, Civil

 2-7     Practice and Remedies Code, applies to the corporation and an

 2-8     employee or volunteer of the corporation.

 2-9              (Sections 109.005-109.030 reserved for expansion

2-10                     SUBCHAPTER B.  CORPORATE STRUCTURE

2-11           Sec. 109.031.  TEXAS HEALTHY KIDS CORPORATION; PURPOSE.

2-12     (a)  The Texas Healthy Kids Corporation is created and has the

2-13     powers that are necessary and proper to carry out its duties.  The

2-14     corporation is a nonprofit corporation and shall comply with the

2-15     Texas Non-Profit Corporation Act (Article 1396-1.01 et seq.,

2-16     Vernon's Texas Civil Statutes).

2-17           (b)  The primary purpose of the corporation is to provide

2-18     health benefits for primary and preventive health care for

2-19     children.

2-20           (c)  The corporation is not subject to the franchise tax

2-21     imposed by Chapter 171, Tax Code.

2-22           (d)  Subject to this chapter, the board shall take any step

2-23     necessary to maintain an exemption from federal income tax under

2-24     Section 501(a) of the Internal Revenue Code of 1986 (26 U.S.C.

2-25     Section 501(a)) by being listed as an exempt organization under

2-26     Section 501(c)(3) or 501(c)(4) of that code (26 U.S.C. Section

2-27     501(c)(3) or (c)(4)) or another similar law.

2-28           Sec. 109.032.  BOARD OF DIRECTORS; PRESIDING OFFICER.

2-29     (a)  The corporation shall operate subject to the general

2-30     supervision of a board of directors.  The board of directors and

2-31     the presiding officer of the board of directors are selected as

2-32     provided by the articles of incorporation and bylaws of the

2-33     corporation, in accordance with the Texas Non-Profit Corporation

2-34     Act (Article 1396-1.01 et seq., Vernon's Texas Civil Statutes).  If

2-35     required by the bylaws of the corporation, the board of directors

2-36     may also include the following voting ex officio members:

2-37                 (1)  the commissioner of health and human services or a

2-38     person designated by the commissioner;

2-39                 (2)  the commissioner of insurance or a person

2-40     designated by the commissioner; and

2-41                 (3)  the director of the Title IV-D agency, or a person

2-42     designated by the director.

2-43           (b)  A member of the board may not serve more than two terms,

2-44     without regard to whether the terms are consecutive.

2-45           (c)  A person is not eligible to serve on the board if the

2-46     person or the person's spouse is employed by, represents in any

2-47     capacity, owns, or controls any ownership interest in a business or

2-48     organization:

2-49                 (1)  that may obtain a pecuniary or other favorable

2-50     interest in the course of a business activity with the corporation;

2-51     or

2-52                 (2)  from whom the corporation receives funds.

2-53           (d)  A person is not eligible to serve on the board if the

2-54     person is or has been an adverse party in litigation against the

2-55     board or corporation.

2-56           Sec. 109.033.  POWERS AND DUTIES OF BOARD; OVERSIGHT OF

2-57     COMMISSIONER OF INSURANCE.  (a)  Subject to Subsection (d), the

2-58     board is the oversight and governing entity of the corporation and

2-59     has any power necessary and proper to carry out its duties under

2-60     this chapter, including the power to adopt bylaws governing the

2-61     operations of the board and the corporation.  The board has

2-62     complete fiscal control over the corporation and is responsible for

2-63     all corporate operations.

2-64           (b)  The board may request and accept grants and gifts of

2-65     money, property, or services.  Subject to Subsection (c), the

2-66     corporation may use a grant or gift for any purpose of the

2-67     corporation, including paying the corporation's business expenses

2-68     and the salaries or wages of the corporation's employees.

2-69           (c)  The corporation may use a donation made as community

 3-1     benefits by a hospital or hospital system under Section 171.063(a),

 3-2     Tax Code, only to purchase health benefits for children who:

 3-3                 (1)  have a family income of less than 200 percent of

 3-4     poverty level according to the poverty index prepared by the

 3-5     federal Office of Management and Budget; and

 3-6                 (2)  reside:

 3-7                       (A)  in the case of a hospital, in the county in

 3-8     which the hospital is located or a county contiguous to the county;

 3-9     or

3-10                       (B)  in the case of a hospital system, in a

3-11     county in which the hospital system operates or any county

3-12     contiguous to a county in which the hospital system operates.

3-13           (d)  The initial board shall submit to the commissioner of

3-14     insurance for approval and may not implement before receiving that

3-15     approval:

3-16                 (1)  the corporation's bylaws, plan of operation, and

3-17     any other standards adopted by the board; and

3-18                 (2)  the health benefit program and health benefit

3-19     plans established by the corporation under Subchapter C.

3-20           Sec. 109.034.  EXECUTIVE DIRECTOR.  (a)  The board shall

3-21     employ an executive director to help the board perform its duties.

3-22     The executive director shall act on behalf of and subject to

3-23     authorization and supervision of the board to carry out the

3-24     purposes of the corporation.

3-25           (b)  The corporation shall pay the executive director a

3-26     salary in an amount established by the board.

3-27           (c)  The executive director must make and file a surety bond

3-28     in an amount determined by the board for the faithful performance

3-29     of the executive director's duties and the proper safekeeping and

3-30     disbursement of corporate money.

3-31           Sec. 109.035.  EMPLOYEES; CONSULTANTS.  The executive

3-32     director may employ employees and retain consultants as necessary

3-33     to administer the programs of the corporation.

3-34           Sec. 109.036.  PUBLIC INPUT.  The board shall develop and

3-35     implement policies that provide the public with a reasonable

3-36     opportunity to appear before the board and to speak on any issue

3-37     related to the corporation or the program.

3-38           Sec. 109.037.  OPEN MEETINGS; OPEN RECORDS.  The board and

3-39     the corporation are subject to the open meetings law, Chapter 551,

3-40     Government Code, and the open records law, Chapter 552, Government

3-41     Code, subject to Section 109.064, during a period in which:

3-42                 (1)  the corporation receives state money under a

3-43     direct state appropriation; or

3-44                 (2)  a person appointed by the governor, other than an

3-45     ex officio member of the board, is serving as a member of the

3-46     board.

3-47           Sec. 109.038.  COOPERATION OF AN ASSISTANCE TO STATE

3-48     AGENCIES.  (a)  A health and human services agency, as that term is

3-49     defined by Section 531.001, Government Code, the Texas Department

3-50     of Insurance, the Title IV-D agency, the board of directors of the

3-51     risk pool established under Article 3.77, Insurance Code, and the

3-52     comptroller shall cooperate with the corporation to assist the

3-53     corporation in performing its duties.

3-54           (b)  The corporation shall work with the Title IV-D agency,

3-55     the Texas Department of Human Services, and the Texas Department of

3-56     Health to facilitate the electronic exchange of information among

3-57     the corporation and the agencies that relates to individuals who:

3-58                 (1)  are covered under the program; and

3-59                 (2)  are the subject of a medical child support order

3-60     or are or may be eligible for benefits under a federally or

3-61     state-funded program administered by the Texas Department of Human

3-62     Services or the Texas Department of Health.

3-63           (c)  The corporation shall work with the board of directors

3-64     of the risk pool established under Article 3.77, Insurance Code, as

3-65     necessary to implement Section 109.067.

3-66           Sec. 109.039.  AUDIT BY STATE AUDITOR.  (a)  The corporation

3-67     is subject to audit by the state auditor under Chapter 321,

3-68     Government Code, only during a period in which:

3-69                 (1)  the corporation receives state money under a

 4-1     direct state appropriation; or

 4-2                 (2)  a person appointed by the governor, other than an

 4-3     ex officio member of the board, is serving as a member of the

 4-4     board.

 4-5           (b)  The audit may include a financial audit and an economy

 4-6     and efficiency audit.

 4-7              (Sections 109.040-109.060 reserved for expansion

 4-8                    SUBCHAPTER C.  HEALTH BENEFIT PROGRAM

 4-9           Sec. 109.061.  HEALTH BENEFIT PROGRAM.  (a)  The corporation

4-10     shall:

4-11                 (1)  establish a program to provide, through eligible

4-12     coverage providers, health benefits for eligible children in this

4-13     state who:

4-14                       (A)  are not covered by insurance or another type

4-15     of health benefit plan;

4-16                       (B)  are not covered by insurance or another type

4-17     of health benefit plan for a specified medical condition; or

4-18                       (C)  are not covered by insurance or another type

4-19     of health benefit plan that provides benefits for primary and

4-20     preventive care;

4-21                 (2)  develop, in accordance with the purpose of the

4-22     corporation established under Section 109.031(b), the design and

4-23     benefits structure of the health benefit program offered by the

4-24     corporation through eligible coverage providers;

4-25                 (3)  determine eligibility criteria that children and

4-26     their family members must meet before the children may participate

4-27     in the program;

4-28                 (4)  develop participation criteria, subject to Section

4-29     109.063, for authorized insurers, health service organizations,

4-30     health maintenance organizations, and other entities eligible to

4-31     provide coverage under the health benefit program;

4-32                 (5)  develop and implement a public awareness program

4-33     to educate the public about the program;

4-34                 (6)  establish participation objectives for the

4-35     program;

4-36                 (7)  negotiate premiums for coverage under the program

4-37     and applicable copayments, coinsurance, or deductibles to be paid

4-38     on behalf of a covered child; and

4-39                 (8)  contract for the provision of health benefit

4-40     coverage under the program.

4-41           (b)  The board may contract for or otherwise obtain

4-42     third-party administration services for the corporation.

4-43           (c)  In developing the program, the corporation may consult

4-44     with the Texas Department of Health, appropriate professional

4-45     organizations, coverage providers, other agency officials, and

4-46     consultants.  The corporation shall consult with the Title IV-D

4-47     agency in matters relating to coverage for children who are the

4-48     subject of a medical child support order and for whom the agency is

4-49     providing enforcement services.

4-50           (d)  Notwithstanding Article 3.51-6, Insurance Code, the

4-51     corporation may establish group coverage plans for children under

4-52     the program in specified geographic regions of the state or based

4-53     on other criteria approved by the commissioner of insurance.

4-54           (e)  The parent, managing conservator, or guardian of a

4-55     child, or another person sponsoring coverage for the child, is

4-56     responsible for premiums for coverage under the program and for

4-57     applicable copayments, coinsurance, or deductibles, as determined

4-58     by the corporation.  The corporation may develop a premium

4-59     structure that varies according to ability to pay and may require,

4-60     in accordance with the premium structure, that the parent,

4-61     conservator, guardian, or sponsor pay the full cost of the child's

4-62     coverage.

4-63           (f)  The corporation may require that the parent, managing

4-64     conservator, or guardian of a child, or another person sponsoring

4-65     coverage for the child, pay to the corporation a reasonable

4-66     enrollment fee, in an amount set by the corporation, before the

4-67     child is enrolled in coverage under the program.

4-68           (g)  The health benefit coverage provided under the

4-69     corporation's program is secondary to any other available private

 5-1     coverage covering a child.  The corporation shall ensure that

 5-2     benefits provided by the program are the payor of last resort with

 5-3     respect to private coverage covering a child.

 5-4           (h)  In developing eligibility criteria under Subsection

 5-5     (a)(3), the corporation shall consider the impact of the

 5-6     eligibility criteria on the availability of other health benefit

 5-7     plan coverage for children.  The corporation shall restrict

 5-8     eligibility for coverage under the program or impose a waiting

 5-9     period or other appropriate restriction to minimize any adverse

5-10     impact on the availability of other health benefit plan coverage.

5-11           (i)  The board may develop a marketing plan under which each

5-12     participating eligible coverage provider is required to market the

5-13     program.  The corporation or eligible coverage providers may

5-14     publicize the corporation and the general nature of the program.

5-15     Direct sale or solicitation of a health benefit plan offered

5-16     through the program must be done in accordance with the Insurance

5-17     Code and other insurance laws of this state.

5-18           Sec. 109.062.  CORPORATE OPERATIONS; LICENSING REQUIREMENTS.

5-19           (a)  The corporation is not an insurer and may not

5-20     self-insure or self-fund the coverage provided through the program.

5-21     The board and employees of the corporation are not agents of an

5-22     insurer.  The corporation, the board, and the employees of the

5-23     corporation are not subject to any licensing requirement imposed

5-24     under the Insurance Code or another insurance law of this state.

5-25           (b)  The corporation shall use prudent business practices in

5-26     the procurement of goods and services.  A law governing the

5-27     procurement of goods or services by a state agency, including

5-28     Chapter 2054 or 2254, Government Code, or Subtitle D, Title 10,

5-29     Government Code, applies only during a period in which:

5-30                 (1)  the corporation receives state money under a

5-31     direct state appropriation; or

5-32                 (2)  a person appointed by the governor, other than an

5-33     ex officio member of the board, is serving as a member of the

5-34     board.

5-35           Sec. 109.063.  OPERATIONS OF ELIGIBLE COVERAGE PROVIDER.

5-36           (a)  An eligible coverage provider must:

5-37                 (1)  hold a certificate of authority or other

5-38     appropriate license issued by the Texas Department of Insurance

5-39     that authorizes the eligible coverage provider to provide the type

5-40     of coverage to be offered through the program; and

5-41                 (2)  satisfy, except as provided by this section, any

5-42     other applicable requirement of the Insurance Code or another

5-43     insurance law of this state.

5-44           (b)  A health benefit plan provider under the program is not

5-45     subject to a law that requires coverage or the offer of coverage of

5-46     a health care service or benefit.

5-47           (c)  An eligible coverage provider is not subject to the

5-48     premium tax imposed by Article 4.11, Insurance Code, or the tax on

5-49     revenues imposed under Section 33, Texas Health Maintenance

5-50     Organization Act (Section 20A.33, Vernon's Texas Insurance Code),

5-51     with respect to money received for coverage provided under this

5-52     chapter.

5-53           (d)  The participation criteria for authorized insurers,

5-54     health service organizations, health maintenance organizations, and

5-55     other entities that provide coverage under the health benefit

5-56     program shall not require that an eligible coverage provider

5-57     provide benefits in a school-based clinic.

5-58           Sec. 109.064.  ACCESS TO RECORDS; CONFIDENTIALITY.

5-59     (a)  Notwithstanding any other law, the corporation may obtain the

5-60     medical records of and other information relating to a child

5-61     covered by the program or applying to be covered by the program on

5-62     receipt of the informed written consent of the child's parent,

5-63     managing conservator, or guardian.

5-64           (b)  Information in the possession of the corporation that

5-65     identifies an individual, including medical records and family

5-66     financial information, is confidential and exempt from disclosure

5-67     and discovery in a civil action.  Subject to Section 109.038(b) and

5-68     any requirement of federal law, the corporation or an employee or

5-69     agent of the corporation may not release confidential information

 6-1     to any person, including a state or federal agency, without the

 6-2     written consent of a parent, managing conservator, or guardian of

 6-3     the participating child.

 6-4           Sec. 109.065.  GRIEVANCES AND APPEALS.  The corporation shall

 6-5     develop a plan for the receipt and consideration of complaints

 6-6     regarding participating eligible coverage providers to ensure

 6-7     appropriate delivery of health care services to participating

 6-8     children and to ensure that eligible coverage providers comply with

 6-9     any applicable complaint procedure imposed by law or the

6-10     requirements of the corporation.

6-11           Sec. 109.066.  TEXAS DEPARTMENT OF HEALTH PROGRAMS.  (a)  The

6-12     department may use appropriated funds, in accordance with the

6-13     General Appropriations Act, to purchase coverage under a health

6-14     benefit plan provided through the program for children who are

6-15     eligible for coverage for the program if:

6-16                 (1)  the children receive health care benefits under

6-17     the chronically ill and disabled children's program or another

6-18     federally funded or state-funded program, other than the state

6-19     Medicaid program, that is administered by the department;

6-20                 (2)  provision of the benefits through a health benefit

6-21     plan provided through the program is a more cost-effective means of

6-22     providing some or all of the benefits described by Subdivision (1);

6-23     and

6-24                 (3)  no benefit or service provided to the children is

6-25     eliminated or adversely affected as a result of the provision of

6-26     the benefits through the program.

6-27           (b)  Services provided to children under a federally funded

6-28     or state-funded program administered by the department, including

6-29     the chronically ill and disabled children's program, may not be

6-30     reduced or eliminated because some or all of the services are

6-31     provided through the program or otherwise provided because of the

6-32     establishment of the corporation or the program.

6-33           Sec. 109.067.  AVAILABILITY OF RISK POOL COVERAGE.  The

6-34     corporation shall notify the parent, managing conservator, or

6-35     guardian of a child who applies for coverage through the program of

6-36     the availability of coverage from the risk pool established under

6-37     Article 3.77, Insurance Code.

6-38           Sec. 109.068.  PROGRAM NOT AN ENTITLEMENT.  This chapter does

6-39     not establish an entitlement to health benefits provided through

6-40     the corporation or any other entitlement.

6-41                 (Sections 109.069-109.100 reserved for expansion

6-42               SUBCHAPTER D.  COVERAGE UNDER ORDER OF MEDICAL

6-43                              SUPPORT FOR CHILD

6-44           Sec. 109.101.  APPLICATION.  A party ordered under Chapter

6-45     154, Family Code, to apply for coverage for a child under the

6-46     program shall provide to the corporation:

6-47                 (1)  a copy of the order rendered under Chapter 154;

6-48     and

6-49                 (2)  the name and address of the obligor's employer.

6-50           Sec. 109.102.  DUTIES OF CORPORATION OR DESIGNEE OF

6-51     CORPORATION.  (a)  The corporation or the designee of the

6-52     corporation shall review an application and, if the corporation or

6-53     designee finds that the child is eligible for coverage under the

6-54     program, shall:

6-55                 (1)  issue coverage to the child in accordance with the

6-56     program; and

6-57                 (2)  notify the obligor's employer in accordance with

6-58     Subsection (b).

6-59           (b)  The notice provided under Subsection (a)(2) must:

6-60                 (1)  explain the employer's obligations under Section

6-61     109.103;

6-62                 (2)  state:

6-63                       (A)  the amount to be paid for coverage of the

6-64     child, including the amount of the premium and the premium

6-65     stabilization revolving account fee imposed under Subchapter E;

6-66                       (B)  whether the amount is to be paid to the

6-67     corporation or the corporation's designee; and

6-68                       (C)  the address to which the payment is to be

6-69     sent; and

 7-1                 (3)  include a copy of the medical child support order

 7-2     rendered under Chapter 154, Family Code.

 7-3           (c)  The corporation or the corporation's designee shall

 7-4     notify the employer of an obligor of any increase in the amount to

 7-5     be paid for coverage of the child under the program.

 7-6           Sec. 109.103.  DUTY OF EMPLOYER.  (a)  An employer who

 7-7     receives notice under Section 109.102 shall withhold an appropriate

 7-8     amount from the obligor's earnings for the required payment and

 7-9     remit the amount as instructed on the notice.

7-10           (b)  An employer who fails to withhold or remit payments as

7-11     required by this section or who discriminates in hiring or

7-12     employment on the basis of a medical support order is subject to

7-13     the penalties and fines imposed under Subchapter C, Chapter 158,

7-14     Family Code.

7-15                 (Sections 109.104-109.150 reserved for expansion

7-16               SUBCHAPTER E.  ELIGIBILITY OF CERTAIN CHILDREN;

7-17                             STABILIZATION FUND

7-18           Sec. 109.151.  TERMINATION FOR FAILURE TO PAY PREMIUMS.

7-19     Except as provided by this subchapter, the corporation shall

7-20     terminate the coverage of a child for failure to pay a premium as

7-21     required under Section 109.061(e).

7-22           Sec. 109.152.  PREMIUM STABILIZATION REVOLVING ACCOUNT.

7-23           (a)  The premium stabilization revolving account is an

7-24     account within the Texas healthy kids fund.

7-25           (b)  The premium stabilization revolving account is composed

7-26     of money contributed to the account under this subchapter, any

7-27     money appropriated to the account by the legislature, and any gift

7-28     of money accepted by the board for the purposes of the account.

7-29           Sec. 109.153.  FEE; DEPOSIT TO ACCOUNT.  (a)  The corporation

7-30     shall charge for each child covered under the program a reasonable

7-31     premium stabilization revolving account fee, not to exceed $5 each

7-32     month.

7-33           (b)  The corporation shall remit money collected under this

7-34     section to the comptroller, in accordance with rules adopted by the

7-35     comptroller, for deposit to the credit of the premium stabilization

7-36     revolving account.

7-37           Sec. 109.154.  USE OF MONEY IN ACCOUNT.  (a)  Money in the

7-38     premium stabilization revolving account may be used by the

7-39     corporation only to pay a premium for coverage provided through the

7-40     program for a child for whom a premium is not paid in accordance

7-41     with Section 109.061(e).

7-42           (b)  A premium may not be paid for a child who is covered by

7-43     a health benefit plan other than the plan offered by the

7-44     corporation.

7-45           (c)  The corporation shall determine the period for which

7-46     premiums may be paid from the fund and the circumstances under

7-47     which the premiums may be paid.

7-48           (d)  The parent, managing conservator, or guardian of a child

7-49     for whom a premium is paid from the premium stabilization revolving

7-50     account, or another person sponsoring coverage for the child,

7-51     remains responsible for reimbursing the account for the premium

7-52     paid.  The coverage for the child is subject to termination, in

7-53     accordance with criteria adopted by the board, if the parent,

7-54     managing conservator, guardian, or sponsor fails to reimburse the

7-55     account as required by this subsection.  The corporation shall

7-56     remit money collected under this subsection to the comptroller for

7-57     deposit to the credit of the account.

7-58           SECTION 2.  Section 154.182, Family Code, is amended by

7-59     amending Subsection (b) and adding Subsection (c) to read as

7-60     follows:

7-61           (b)  In determining the manner in which health insurance for

7-62     the child is to be ordered, the court shall render its order in

7-63     accordance with the following priorities, unless a party shows good

7-64     cause why a particular order would not be in the best interest of

7-65     the child:

7-66                 (1)  if health insurance is available for the child

7-67     through the obligor's employment or membership in a union, trade

7-68     association, or other organization, the court shall order the

7-69     obligor to include the child in the obligor's health insurance;

 8-1                 (2)  if health insurance is not available for the child

 8-2     through the obligor's employment but is available for the child

 8-3     through the obligee's employment or membership in a union, trade

 8-4     association, or other organization, the court may order the obligee

 8-5     to provide health insurance for the child, and, in such event,

 8-6     shall order the obligor to pay additional child support to be

 8-7     withheld from earnings under Chapter 158 to the obligee for the

 8-8     actual cost of the health insurance for the child; [or]

 8-9                 (3)  if health insurance is not available for the child

8-10     under Subdivision (1) or (2), the court shall order the obligor to

8-11     provide health insurance for the child if the court finds that

8-12     health insurance is available for the child from another source and

8-13     that the obligor is financially able to provide it;

8-14                 (4)  if health insurance is not available for the child

8-15     under Subdivision (1), (2), or (3), the court shall order the

8-16     obligor to apply for coverage through the Texas Healthy Kids

8-17     Corporation established under Chapter 109, Health and Safety Code;

8-18     or

8-19                 (5)  if health coverage is not available for the child

8-20     under Subdivision (1), (2), (3), or (4), the court shall order the

8-21     obligor to pay the obligee, in addition to any amount ordered under

8-22     the guidelines for child support, a reasonable amount each month as

8-23     medical support for the child to be withheld from earnings under

8-24     Chapter 158.

8-25           (c)  In establishing the amount of additional medical child

8-26     support under Subsection (b)(5), the court shall presume that $38

8-27     each month is a reasonable amount for a child but may order a

8-28     greater or lesser amount as appropriate under the circumstances.

8-29     The Health and Human Services Commission may promulgate guidelines

8-30     for the dollar amounts of medical child support that the court may

8-31     presumptively apply in circumstances in which the obligor is

8-32     responsible for medical child support for more than one child.

8-33           SECTION 3.  Section 171.063(a), Tax Code, is amended to read

8-34     as follows:

8-35           (a)  The following corporations are exempt from the franchise

8-36     tax:

8-37                 (1)  a nonprofit corporation exempted from the federal

8-38     income tax under Section 501(c)(3), (4), (5), (6), (7), (8), (10),

8-39     or (19), Internal Revenue Code  which in the case of a nonprofit

8-40     hospital means a hospital providing charity care and community

8-41     benefits as set forth in Paragraph (A), (B), (C), (D), (E), (F), or

8-42     (G):

8-43                       (A)  charity care and government-sponsored

8-44     indigent health care are provided at a level which is reasonable in

8-45     relation to the community needs, as determined through the

8-46     community needs assessment, the available resources of the hospital

8-47     or hospital system, and the tax-exempt benefits received by the

8-48     hospital or hospital system;

8-49                       (B)  charity care and government-sponsored

8-50     indigent health care are provided in an amount equal to at least

8-51     four percent of the hospital's or hospital system's net patient

8-52     revenue;

8-53                       (C)  charity care and government-sponsored

8-54     indigent health care are provided in an amount equal to at least

8-55     100 percent of the hospital's or hospital system's tax-exempt

8-56     benefits, excluding federal income tax;

8-57                       (D)  for tax periods beginning before January 1,

8-58     1996, charity care and community benefits are provided in a

8-59     combined amount equal to at least five percent of the hospital's

8-60     net patient revenue, provided that charity care and

8-61     government-sponsored indigent health care are provided in an amount

8-62     equal to at least three percent of net patient revenue;

8-63                       (E)  for tax periods beginning after December 31,

8-64     1995, charity care and community benefits are provided in a

8-65     combined amount equal to at least five percent of the hospital's or

8-66     hospital system's net patient revenue, provided that charity care

8-67     and government-sponsored indigent health care are provided in an

8-68     amount equal to at least four percent of net patient revenue;

8-69                       (F)  a nonprofit hospital that has been

 9-1     designated as a disproportionate share hospital under the state

 9-2     Medicaid program in the current year or in either of the previous

 9-3     two fiscal years is considered to have provided a reasonable amount

 9-4     of charity care and government-sponsored indigent health care and

 9-5     is considered in compliance with the standards provided by this

 9-6     subsection; or

 9-7                       (G)  a hospital operated on a nonprofit basis

 9-8     that is located in a county with a population of less than 50,000

 9-9     and in which the entire county or the population of the entire

9-10     county has been designated as a health professionals shortage area

9-11     is considered in compliance with the standards provided by this

9-12     subsection;

9-13                 (2)  a corporation exempted under Section 501(c)(2) or

9-14     (25), Internal Revenue Code, if the corporation or corporations for

9-15     which it holds title to property is either exempt from or not

9-16     subject to the franchise tax;

9-17                 (3)  a corporation exempted from federal income tax

9-18     under Section 501(c)(16), Internal Revenue Code; and

9-19                 (4)  a nonprofit corporation exempted from the federal

9-20     income tax under Section 501(c)(3), Internal Revenue Code, that

9-21     does not receive any payment for providing health care services to

9-22     inpatients or outpatients from any source including but not limited

9-23     to the patient or person legally obligated to support the patient,

9-24     third-party payors, Medicare, Medicaid, or any other state or local

9-25     indigent care program.  Payment for providing health care services

9-26     does not include charitable donations, legacies, bequests, or

9-27     grants or payments for research.

9-28           For purposes of satisfying Paragraph (E) of Subdivision (1),

9-29     a hospital or hospital system may not change its existing fiscal

9-30     year unless the hospital or hospital system changes its ownership

9-31     or corporate structure as a result of a sale or merger.

9-32           For purposes of this subsection, a hospital that satisfies

9-33     Paragraph (A), (F), or (G) of Subdivision (1) shall be excluded in

9-34     determining a hospital system's compliance with the standards

9-35     provided by Paragraph (B), (C), (D), or (E) of Subdivision (1).

9-36           For purposes of this subsection, the terms "charity care,"

9-37     "government-sponsored indigent health care," "health care

9-38     organization," "hospital system," "net patient revenue," "nonprofit

9-39     hospital," and "tax-exempt benefits" have the meanings set forth in

9-40     Sections 311.031 and 311.042, Health and Safety Code.  A

9-41     determination of the amount of community benefits and charity care

9-42     and government-sponsored indigent health care provided by a

9-43     hospital or hospital system and the hospital's or hospital system's

9-44     compliance with the requirements of Section 311.045, Health and

9-45     Safety Code, shall be based on the most recently completed and

9-46     audited prior fiscal year of the hospital or hospital system.

9-47           A requirement that a nonprofit hospital provide charity care

9-48     and community benefits under this subsection may be satisfied by a

9-49     donation of money to the Texas Healthy Kids Corporation established

9-50     by Chapter 109, Health and Safety Code, provided that:

9-51                 (1)  the money is donated to be used for a purpose

9-52     described by Section 109.033(c), Health and Safety Code; and

9-53                 (2)  not more than 10 percent of the charity care

9-54     required under any provision of this subsection may be satisfied by

9-55     the donation.

9-56           The providing of charity care and government-sponsored

9-57     indigent health care in accordance with Paragraph (A) of

9-58     Subdivision (1) shall be guided by the prudent business judgment of

9-59     the hospital which will ultimately determine the appropriate level

9-60     of charity care and government-sponsored indigent health care based

9-61     on the community needs, the available resources of the hospital,

9-62     the tax-exempt benefits received by the hospital, and other factors

9-63     that may be unique to the hospital, such as the hospital's volume

9-64     of Medicare and Medicaid patients.  These criteria shall not be

9-65     determinative factors, but shall be guidelines contributing to the

9-66     hospital's decision along with other factors which may be unique to

9-67     the hospital.  The formulas contained in Paragraphs (B), (C), (D),

9-68     and (E) of Subdivision (1) shall also not be considered

9-69     determinative of a reasonable amount of charity care and

 10-1    government-sponsored indigent health care.

 10-2          The requirements of this subsection shall not apply to the

 10-3    extent a hospital or hospital system demonstrates that reductions

 10-4    in the amount of community benefits, charity care, and

 10-5    government-sponsored indigent health care are necessary to maintain

 10-6    financial reserves at a level required by a bond covenant, are

 10-7    necessary to prevent the hospital or hospital system from

 10-8    endangering its ability to continue operations, or if the hospital,

 10-9    as a result of a natural or other disaster, is required

10-10    substantially to curtail its operations.

10-11          In any fiscal year that a hospital or hospital system,

10-12    through unintended miscalculation, fails to meet any of the

10-13    standards in Subdivision (1), the hospital or hospital system shall

10-14    not lose its tax-exempt status without the opportunity to cure the

10-15    miscalculation in the fiscal year following the fiscal year the

10-16    failure is discovered by both meeting one of the standards and

10-17    providing an additional amount of charity care and

10-18    government-sponsored indigent health care that is equal to the

10-19    shortfall from the previous fiscal year.  A hospital or hospital

10-20    system may apply this provision only once every five years.

10-21          SECTION 4.  The Insurance Code is amended by adding Chapter

10-22    27 to read as follows:

10-23              CHAPTER 27.  HEALTH BENEFIT PLANS FOR CHILDREN

10-24          Art. 27.01.  DEFINITION.  In this chapter, "health benefit

10-25    plan" means a health benefit plan described by Article 27.02 of

10-26    this code.

10-27          Art. 27.02.  SCOPE OF CHAPTER.  This chapter applies to a

10-28    health benefit plan that:

10-29                (1)  provides benefits for medical or surgical expenses

10-30    incurred as a result of a health condition, accident, or sickness,

10-31    including:

10-32                      (A)  an individual, group, blanket, or franchise

10-33    insurance policy or insurance agreement, a group hospital service

10-34    contract, or an individual or group evidence of coverage that is

10-35    offered by:

10-36                            (i)  an insurance company;

10-37                            (ii)  a group hospital service corporation

10-38    operating under Chapter 20 of this code;

10-39                            (iii)  a fraternal benefit society

10-40    operating under Chapter 10 of this code;

10-41                            (iv)  a stipulated premium insurance

10-42    company operating under Chapter 22 of this code; or

10-43                            (v)  a health maintenance organization

10-44    operating under the Texas Health Maintenance Organization Act

10-45    (Chapter 20A, Vernon's Texas Insurance Code); or

10-46                      (B)  to the extent permitted by the Employee

10-47    Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et

10-48    seq.), a health benefit plan that is offered by:

10-49                            (i)  a multiple employer welfare

10-50    arrangement as defined by Section 3, Employee Retirement Income

10-51    Security Act of 1974 (29 U.S.C. Section 1002) or another analogous

10-52    benefit arrangement; or

10-53                            (ii)  any other entity not licensed under

10-54    this code or another insurance law of this state that contracts

10-55    directly for health care services on a risk sharing basis,

10-56    including an entity that contracts for health care services on a

10-57    capitation basis; or

10-58                (2)  is offered by an approved nonprofit health

10-59    corporation that is certified under Section 5.01(a), Medical

10-60    Practice Act (Article 4495b, Vernon's Texas Civil Statutes), and

10-61    that holds a certificate of authority issued by the commissioner

10-62    under Article 21.52F of this code.

10-63          Art. 27.03.  CHILDREN'S HEALTH BENEFIT PLAN.  (a)  The issuer

10-64    of a health benefit plan may offer a children's health benefit plan

10-65    in accordance with this chapter.  The health benefit plan may

10-66    provide coverage only to children younger than 18 years of age.

10-67          (b)  An issuer of a health benefit plan may not offer a

10-68    children's health benefit plan under this chapter unless the plan's

10-69    structure and the benefits offered under the plan have been

 11-1    approved by the commissioner.

 11-2          Art. 27.04.  MANDATED BENEFIT PROVISIONS INAPPLICABLE.  A

 11-3    children's health benefit plan is not subject to a law that

 11-4    requires coverage or the offer of coverage of a health care service

 11-5    or benefit.

 11-6          Art. 27.05.  EXEMPTION FROM PREMIUM TAX.  The issuer of a

 11-7    children's health benefit plan is not subject to the premium tax

 11-8    imposed by Article 4.11 of this code or the tax on revenues imposed

 11-9    under Section 33, Texas Health Maintenance Organization Act

11-10    (Article 20A.33, Vernon's Texas Insurance Code), with respect to

11-11    money received for coverage provided under that plan.

11-12          Art. 27.06.  RULES.  The commissioner may adopt rules to

11-13    implement this chapter.

11-14          SECTION 5.  (a)  Notwithstanding Section 109.032, Health and

11-15    Safety Code, as added by this Act, the initial board of directors

11-16    of the Texas Healthy Kids Corporation appointed under this section

11-17    shall be composed of:

11-18                (1)  six members appointed by the governor with the

11-19    advice and consent of the senate;

11-20                (2)  the commissioner of health and human services or

11-21    the commissioner's designee, who serves as a voting ex officio

11-22    member;

11-23                (3)  the commissioner of insurance or the

11-24    commissioner's designee, who serves as a voting ex officio member;

11-25    and

11-26                (4)  the director of the Title IV-D agency, or the

11-27    director's designee, who serves as a voting ex officio member.

11-28          (b)  The governor shall appoint the members of the board of

11-29    directors appointed under Subsection (a)(1) of this section as soon

11-30    as practical after the effective date of this Act.  The terms of

11-31    those members expire on September 1, 1999.

11-32          (c)  On expiration of the terms of the initial appointed

11-33    members of the board, the governor shall appoint four members for

11-34    terms expiring September 1, 2001, and two of the formerly appointed

11-35    positions shall be filled as provided by the articles and bylaws of

11-36    the corporation.

11-37          (d)  On expiration of the terms of the four members appointed

11-38    under Subsection (c), the governor shall appoint two members to

11-39    serve terms expiring September 1, 2003.  The two other positions of

11-40    the formerly appointed members shall be filled as provided by the

11-41    articles and bylaws of the corporation.

11-42          (e)  After September 1, 2003, all members of the board of

11-43    directors shall be selected as provided by Section 109.032, Health

11-44    and Safety Code, as added by this Act.

11-45          (f)  A person is not eligible for appointment by the governor

11-46    to the board of directors under this section if the person does not

11-47    satisfy the requirements of Section 109.032, Health and Safety

11-48    Code, as added by this Act.

11-49          (g)  The members of the board shall annually elect a member

11-50    to serve as the presiding officer of the board.

11-51          (h)  Members of the board of directors appointed by the

11-52    governor serving under this section serve without compensation, but

11-53    are entitled to reimbursement of their travel expenses as provided

11-54    for in the General Appropriations Act for state board or commission

11-55    members.  Money appropriated to the Texas Department of Insurance,

11-56    the Health and Human Services Commission, or the Title IV-D agency

11-57    may be spent, consistent with the General Appropriations Act, in

11-58    connection with the work or expenses of the ex officio members of

11-59    the initial board of directors.

11-60          (i)  This Section expires September 1, 2003.

11-61          SECTION 6.  (a)  Not later than the 60th day after the

11-62    effective date of this Act, the  commissioner of insurance, acting

11-63    as incorporator, shall take the steps necessary to create the Texas

11-64    Healthy Kids Corporation as a nonprofit corporation under the Texas

11-65    Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's

11-66    Texas Civil Statutes).

11-67          (b)  Not later than the 90th day after the effective date of

11-68    this Act, the commissioner of insurance, acting on behalf of the

11-69    Texas Healthy Kids Corporation, shall employ an acting executive

 12-1    director for the corporation.  The acting executive director may:

 12-2                (1)  develop a proposed business plan for the

 12-3    corporation;

 12-4                (2)  solicit alternative funding for the corporation

 12-5    and for the health benefit plan program to be established by the

 12-6    corporation; and

 12-7                (3)  develop, to the extent possible, a proposed health

 12-8    benefit plan program for the consideration of the board of

 12-9    directors of the Texas Healthy Kids Corporation.

12-10          (c)  The commissioner of insurance, on behalf of the

12-11    corporation, may accept grants and gifts of money, property, or

12-12    services to assist the acting executive director appointed under

12-13    Subsection (b) of this section in carrying out the acting executive

12-14    director's powers.  The commissioner's authority under this section

12-15    expires on the date all of the appointed members of the board of

12-16    directors of the Texas Healthy Kids Corporation have been appointed

12-17    by the governor and have qualified for office.

12-18          (d)  The acting executive director appointed under this

12-19    section serves until the earlier of:

12-20                (1)  the date the acting executive director is

12-21    dismissed by the commissioner of insurance;

12-22                (2)  the date the acting executive director is

12-23    dismissed by the board of directors of the Texas Healthy Kids

12-24    Corporation; or

12-25                (3)  the date the board of directors of the corporation

12-26    employs an executive director for the corporation.

12-27          (e)  Notwithstanding Subsection (b) of this section, the

12-28    commissioner of insurance may not employ an acting executive

12-29    director on or after the date all of the appointed members of the

12-30    board of directors of the Texas Healthy Kids Corporation have been

12-31    appointed and have qualified for office.

12-32          SECTION 7.  (a)  The Texas Healthy Kids Corporation shall

12-33    offer an initial health benefit plan under Chapter 109, Health and

12-34    Safety Code, as added by this Act, not later than the first

12-35    anniversary of the effective date of this Act.

12-36          (b)  Not later than the date the Texas Healthy Kids

12-37    Corporation first offers a health benefit plan in accordance with

12-38    Subsection (a) of this section, the board of directors of the Texas

12-39    Healthy Kids Corporation shall:

12-40                (1)  establish general administrative and accounting

12-41    procedures for the corporation;

12-42                (2)  develop the design and benefits structure of any

12-43    health benefit plan that may be offered by the corporation through

12-44    eligible coverage providers in accordance with Chapter 109, Health

12-45    and Safety Code, as added by this Act; and

12-46                (3)  develop a plan for the receipt and consideration

12-47    of complaints as required by Section 109.065, Health and Safety

12-48    Code, as added by this Act.

12-49          (c)  The board of directors of the Texas Healthy Kids

12-50    Corporation shall determine whether it is feasible, considering the

12-51    resources available, to initially offer the health benefit plan

12-52    required under Chapter 109, Health and Safety Code, as added by

12-53    this Act, in each region of the state.  If the board determines

12-54    that it is not feasible to initially offer the health benefit plan

12-55    on a statewide basis, the board shall develop and the corporation

12-56    shall implement a schedule to stagger implementation of the health

12-57    benefit program in different regions of the state.

12-58          SECTION 8.  The issuer of a health benefit plan may not offer

12-59    a children's health benefit plan under Chapter 27, Insurance Code,

12-60    as added by this Act, before January 1, 1998.

12-61          SECTION 9.  A court may not order that coverage be provided

12-62    to a child through the Texas Healthy Kids Corporation under Section

12-63    154.182, Family Code, as amended by this Act, before the date that

12-64    corporation first offers coverage under a health benefit plan in

12-65    the applicable region of the state.

12-66          SECTION 10.  As soon as practicable after the effective date

12-67    of this Act, the Title IV-D agency shall seek the modification of

12-68    child support orders that are enforced by the agency and to which

12-69    Section 154.182(b)(5), Family Code, as added by this Act, applies

 13-1    to obtain additional medical child support under that subdivision.

 13-2          SECTION 11.  (a)  Except as provided by Subsection (b) of

 13-3    this section, this Act takes effect immediately.

 13-4          (b)  Section 3 of this Act takes effect January 1, 1998, and

 13-5    applies to a report originally due on or after that date.

 13-6          SECTION 12.  The importance of this legislation and the

 13-7    crowded condition of the calendars in both houses create an

 13-8    emergency and an imperative public necessity that the

 13-9    constitutional rule requiring bills to be read on three several

13-10    days in each house be suspended, and this rule is hereby suspended,

13-11    and that this Act take effect and be in force according to its

13-12    terms, and it is so enacted.

13-13                                 * * * * *