By Smithee H.B. No. 893
75R2440 DLF-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to providing fairness and choice to patients and providers
1-3 under managed care health benefit plans.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Chapter 21, Insurance Code, is amended by adding
1-6 Subchapter G to read as follows:
1-7 SUBCHAPTER G. PATIENT PROTECTION ACT
1-8 Art. 21.101. SHORT TITLE. This subchapter may be cited as
1-9 the Patient Protection Act.
1-10 Art. 21.102. DEFINITIONS. In this subchapter:
1-11 (1) "Commissioner" means the Commissioner of
1-12 Insurance.
1-13 (2) "Dentist" means a person licensed to practice
1-14 dentistry by the State Board of Dental Examiners.
1-15 (3) "Emergency care" and "emergency medical condition"
1-16 have the meanings assigned by Section 2, Texas Health Maintenance
1-17 Organization Act (Article 20A.02, Vernon's Texas Insurance Code).
1-18 (4) "Managed care entity" means:
1-19 (A) an insurance company authorized to do
1-20 business in this state only to the extent that the insurance
1-21 company is engaged in providing a managed care plan;
1-22 (B) a group hospital service corporation
1-23 licensed under Chapter 20 of this code;
1-24 (C) an approved nonprofit health corporation
2-1 that holds a certificate of authority under Article 21.52F of this
2-2 code; or
2-3 (D) a health maintenance organization licensed
2-4 under the Texas Health Maintenance Organization Act (Chapter 20A,
2-5 Vernon's Texas Insurance Code).
2-6 (5)(A) "Managed care plan" means a plan operated by a
2-7 managed care entity that provides for the financing and delivery of
2-8 health care or dental services to persons enrolled in the plan
2-9 through:
2-10 (i) arrangements with selected providers
2-11 to furnish health care services;
2-12 (ii) explicit standards for the selection
2-13 of participating providers;
2-14 (iii) organizational arrangements for
2-15 ongoing quality assurance, utilization review, and dispute
2-16 resolution; or
2-17 (iv) differential coverage or payments or
2-18 financial incentives for a person enrolled in the plan to use the
2-19 participating providers and procedures provided by the plan.
2-20 (B) The term "managed care plan" does not
2-21 include accident-only, specified disease, individual hospital
2-22 indemnity, credit, dental-only, vision-only, Medicare supplement or
2-23 Medicare Select, long-term care, disability income, CHAMPUS
2-24 supplement, or workers' compensation insurance, insurance coverage
2-25 issued as a supplement to liability insurance or other similar
2-26 insurance, or automobile medical payment insurance.
2-27 (6) "Physician" means a person licensed as a physician
3-1 by the Texas State Board of Medical Examiners.
3-2 (7) "Prospective enrollee" means an individual
3-3 applying for enrollment in a managed care plan or eligible for
3-4 enrollment in a group managed care plan.
3-5 (8) "Provider" means a physician, dentist, podiatrist,
3-6 pharmacist, optometrist, psychologist, clinical social worker,
3-7 advanced nurse practitioner, registered optician, licensed
3-8 professional counselor, physical therapist, or chiropractor.
3-9 Art. 21.103. STANDARDS. The commissioner by rule may adopt
3-10 standards to ensure compliance with this subchapter by managed care
3-11 entities that conduct business in this state. The commissioner may
3-12 appoint an advisory committee to assist in the implementation of
3-13 this subchapter.
3-14 Art. 21.104. ENROLLEE INFORMATION. (a) A managed care
3-15 entity shall provide a prospective enrollee a written description
3-16 of the terms and conditions of the managed care plan. The written
3-17 plan description must be in a readable and understandable format
3-18 and must include:
3-19 (1) coverage provisions;
3-20 (2) benefits, including generic and brand name
3-21 prescription drug coverage;
3-22 (3) any exclusions by category of service, by
3-23 provider, and, if applicable, by specific service or types of
3-24 drugs;
3-25 (4) any required prior authorization for benefits,
3-26 including:
3-27 (A) procedures for and limitations or
4-1 restrictions on referrals to providers other than primary care
4-2 physicians or dentists; or
4-3 (B) other review requirements, including
4-4 preauthorization review, concurrent review, postservice review, and
4-5 postpayment review;
4-6 (5) an explanation of enrollee financial
4-7 responsibility for payment for coinsurance or other noncovered or
4-8 out-of-plan services;
4-9 (6) a disclosure to prospective enrollees that
4-10 includes the following language:
4-11 "YOUR RIGHTS UNDER TEXAS LAW:
4-12 "You have the right to information about the plan, including
4-13 how the plan operates, what general types of financial arrangements
4-14 exist between providers and the plan, names and locations of
4-15 providers, the numbers of enrollees and providers in the plan, the
4-16 percentage of premiums allocated for medical care, administrative
4-17 costs, and profit, and an explanation of the benefits to which
4-18 participants are entitled under the terms of the plan."; and
4-19 (7) a phone number and address for the prospective
4-20 enrollee to obtain additional information concerning the items
4-21 described by the disclosure required by this subsection.
4-22 (b) The managed care entity may provide the information
4-23 under Subsection (a)(6) of this article regarding the percentage of
4-24 premiums allocated for medical care, administrative costs, and
4-25 profit by providing the information included in the entity's annual
4-26 financial statement most recently submitted to the department.
4-27 (c) The managed care entity shall demonstrate that each
5-1 enrollee has adequate access through the entity's provider network
5-2 to all items and services contained in the package of benefits for
5-3 which coverage is provided, including access to at least one cancer
5-4 care provider certified as a "Comprehensive Cancer Center" by the
5-5 National Cancer Institute. The access must be adequate considering
5-6 the diverse needs of enrollees.
5-7 (d) Subsection (c) of this article does not require a
5-8 comprehensive cancer center to be the exclusive provider of cancer
5-9 care services for a managed care plan.
5-10 (e) Subsection (c) of this article may not be interpreted to
5-11 circumvent the managed care plan's normal referral and
5-12 authorization processes.
5-13 (f) If the managed care plan uses a capitation method of
5-14 compensation, the plan must establish and follow procedures that
5-15 ensure that:
5-16 (1) each plan application form includes a space in
5-17 which each enrollee selects a primary care physician or dentist;
5-18 (2) each enrollee who fails to select a primary care
5-19 physician or dentist and is assigned a physician or dentist is
5-20 notified of the name and location of that physician or dentist; and
5-21 (3) a primary care physician or dentist to whom an
5-22 enrollee is assigned is physically located within a reasonable
5-23 travel distance, as established by rules adopted by the
5-24 commissioner, from the residence or place of employment of the
5-25 enrollee.
5-26 Art. 21.105. NETWORK CONFIGURATION. (a) The managed care
5-27 entity shall provide to the commissioner, for information, an
6-1 explanation of the targeted physician, dentist, and, as
6-2 appropriate, other provider network configuration, including
6-3 geographic distribution of physicians and dentists by specialty,
6-4 and other providers, as appropriate. The information required by
6-5 this subsection shall be updated at least annually and:
6-6 (1) on establishment of a new managed care plan;
6-7 (2) on expansion of a service area; or
6-8 (3) when the network configuration targets are
6-9 significantly modified.
6-10 (b) This subchapter does not require a particular ratio for
6-11 any type of provider.
6-12 (c) The department shall make the information provided to
6-13 the commissioner under Subsection (a) of this article available to
6-14 the public on request. The department may charge a reasonable fee
6-15 for providing the information.
6-16 Art. 21.106. HOSPITAL PARTICIPATION. (a) In the
6-17 development of the plan's criteria for hospital participation, if a
6-18 hospital is certified by the Medicare program under Title XVIII,
6-19 Social Security Act, as amended (42 U.S.C. Section 1395 et seq.),
6-20 or accredited by the Joint Commission on Accreditation of Health
6-21 Care Organizations, the managed care plan shall accept that
6-22 certification or accreditation.
6-23 (b) This article does not prohibit a managed care plan from
6-24 establishing additional criteria for hospital participation.
6-25 Art. 21.107. PROHIBITED INCENTIVES. (a) A managed care
6-26 entity may not pay a physician or provider, or use another
6-27 financial incentive, to directly or indirectly induce the physician
7-1 or provider to limit medically necessary services.
7-2 (b) The commissioner may adopt rules to implement this
7-3 article.
7-4 Art. 21.108. PARTICIPATING PROVIDERS. (a) Each managed
7-5 care plan shall establish a mechanism under which:
7-6 (1) physicians or dentists participating in the plan
7-7 provide consultation and advice on the plan's medical or dental
7-8 policy, including coverage of new technology and procedures, the
7-9 development and use of a prescription drug formulary, utilization
7-10 review criteria and procedures, quality and credentialing criteria,
7-11 and medical or dental management procedures; and
7-12 (2) other participating providers may comment on the
7-13 plan's policies affecting their services.
7-14 (b) Each managed care plan on request shall make available
7-15 and disclose to providers the application process and qualification
7-16 requirements for participation in the plan. The plan must give a
7-17 provider who is not selected on initial application each reason the
7-18 initial application was denied.
7-19 (c) Each physician or dentist under consideration for
7-20 inclusion in a managed care plan shall be reviewed by a
7-21 credentialing committee composed primarily of network participating
7-22 physicians or dentists selected by the medical director of the
7-23 managed care entity. If there are no credentialed physicians or
7-24 dentists in a newly created plan, the committee shall be primarily
7-25 composed of physicians or dentists practicing in the same or
7-26 similar settings. Other providers may be credentialed, if
7-27 appropriate, as determined by the plan. If a provider, other than
8-1 a physician or dentist, is credentialed by the plan, the
8-2 credentialing committee shall include providers who hold the same
8-3 license.
8-4 (d) Credentialing of providers shall be based on identified
8-5 standards developed after consultation with providers credentialed
8-6 in the plan. If there are no credentialed providers in a newly
8-7 created plan, the plan shall develop credentialing standards after
8-8 consulting with area providers. The managed care plan shall make
8-9 the credentialing standards available to applicants.
8-10 (e) If economic considerations are part of a managed care
8-11 plan's decision to select a provider or terminate a contract with a
8-12 provider, the plan shall use identified criteria. The criteria
8-13 must be available to applicants and participating providers. If
8-14 the plan uses an economic profile of a provider, the plan must
8-15 adjust the profile to recognize the characteristics of a provider's
8-16 practice that may account for variations from expected costs.
8-17 (f) A managed care plan that conducts or uses economic
8-18 profiling of providers within the plan shall, on a periodic basis,
8-19 make the profile available to the provider profiled.
8-20 (g) Unless specifically required by this subchapter, a
8-21 managed care plan is not required to disclose proprietary
8-22 information regarding marketplace strategies.
8-23 (h) A managed care plan may not exclude a provider solely
8-24 because of the anticipated characteristics of the patients of that
8-25 provider.
8-26 (i) Before terminating a contract with a provider, the
8-27 managed care plan shall provide a written explanation of the
9-1 reasons for termination, an opportunity for discussion, and an
9-2 opportunity to enter into and complete a corrective action plan, if
9-3 appropriate, as determined by the managed care plan. The provider
9-4 is entitled, on request and before the effective date of the
9-5 termination, to a review of the plan's proposed action by a plan
9-6 advisory panel, except in cases:
9-7 (1) in which there is imminent harm to patient health;
9-8 (2) in which an action by a state medical, dental, or
9-9 other provider licensing board or other government agency
9-10 effectively impairs the provider's ability to practice medicine,
9-11 dentistry, or another health care profession; or
9-12 (3) of fraud or malfeasance.
9-13 (j) For a physician or a dentist, the plan advisory panel
9-14 required under Subsection (i) of this article must be primarily
9-15 composed of the physician's or dentist's peers. If the review
9-16 involves another type of provider, the plan advisory panel must
9-17 include providers with the same license. The review may include a
9-18 review of the appropriateness and requirements of a corrective
9-19 action plan. The decision of the advisory panel must be considered
9-20 but is not binding on the managed care plan.
9-21 (k) If an action that is under consideration by a managed
9-22 care entity is of a type that must be reported to the National
9-23 Practitioner Data Bank or a state medical or dental board under
9-24 federal or state law, the physician's or dentist's procedural
9-25 rights must meet the standards set forth in the federal Health Care
9-26 Quality Improvement Act of 1986 (42 U.S.C. Section 11101 et seq.).
9-27 For purposes of this subsection, a managed care entity shall be
10-1 considered a health care entity as defined by Section 1.03, Medical
10-2 Practice Act (Article 4495b, Vernon's Texas Civil Statutes).
10-3 (l) A communication relating to the subject matter provided
10-4 for under Subsections (a), (b), and (i) of this article may not be
10-5 the basis for a cause of action for libel or slander except for
10-6 disclosures or communications with parties other than the managed
10-7 care plan or provider.
10-8 (m) The managed care plan shall establish reasonable
10-9 procedures for assuring a transition of enrollees of the plan to
10-10 new providers.
10-11 (n) If a contract with a provider is terminated by a managed
10-12 care plan, the plan shall reimburse the provider the reasonable
10-13 cost for copies of medical or dental records that are furnished to
10-14 another provider at the patient's request. If a provider
10-15 terminates the contract with the plan, the provider shall bear the
10-16 reasonable cost of providing copies of medical or dental records
10-17 that are furnished to another provider at the patient's request.
10-18 (o) This subchapter does not prohibit a managed care plan
10-19 from rejecting an application from a provider based on the
10-20 determination that the plan has sufficient qualified providers.
10-21 (p) A managed care plan may charge to a provider, other than
10-22 a physician or dentist:
10-23 (1) a reasonable application fee to cover the cost of
10-24 processing applications and informing the provider of selection or
10-25 nonselection under the plan;
10-26 (2) a reasonable credentialing fee to cover the cost
10-27 of the credentialing process; and
11-1 (3) a reasonable fee for providing to a provider a
11-2 copy of credentialing standards, identified criteria for selection,
11-3 and economic profiles requested by the provider.
11-4 (q) For purposes of this article, "managed care plan" does
11-5 not include:
11-6 (1) a group model health maintenance organization that
11-7 is a state-certified health maintenance organization that provides
11-8 the majority of its professional services through a single group
11-9 medical practice that educates medical students or resident
11-10 physicians through a contract with the medical school component of
11-11 a Texas state-supported college or university accredited by the
11-12 Accrediting Council on Graduate Medical Education or the American
11-13 Osteopathic Association; or
11-14 (2) a state-certified health maintenance organization
11-15 that:
11-16 (A) implements all credentialing, quality
11-17 assurance, utilization review, and peer review policies through a
11-18 physician network board of directors composed exclusively of
11-19 persons actively engaged in the practice of medicine as defined by
11-20 the Texas State Board of Medical Examiners; and
11-21 (B) educates medical students or resident
11-22 physicians through a contract with the medical school component of
11-23 a Texas state-supported college or university accredited by the
11-24 Accrediting Council on Graduate Medical Education or the American
11-25 Osteopathic Association.
11-26 (r) Subsections (a), (b), (d), (e), (f), (h), (i), (n), and
11-27 (o) of this article apply to a hospital, hospice, or home health
12-1 agency as if it were a provider.
12-2 Art. 21.109. EMERGENCY CARE. A managed care plan shall:
12-3 (1) cover emergency care provided to covered
12-4 individuals, without regard to whether the provider furnishing the
12-5 care has a contractual or other arrangement with the entity to
12-6 provide items or services to enrollees, including the treatment and
12-7 stabilization of an emergency medical condition;
12-8 (2) provide that the prior authorization requirement
12-9 for medically necessary services provided or originating in a
12-10 hospital emergency department following treatment or stabilization
12-11 of an emergency medical condition are approved unless denied in the
12-12 time appropriate to the circumstances relating to the delivery of
12-13 the services and the condition of the patient, as determined by the
12-14 treating provider and communicated to the plan; and
12-15 (3) cover any medical screening examination to
12-16 determine whether an emergency medical condition exists or other
12-17 evaluation required by state or federal law to be provided in the
12-18 emergency department of a hospital.
12-19 Art. 21.110. PRIOR AUTHORIZATION; CONSENT. A plan for which
12-20 prior authorization is a condition to coverage of a service must
12-21 ensure that enrollees are required to sign medical and dental
12-22 information release consent forms on enrollment.
12-23 Art. 21.111. UTILIZATION REVIEW. A managed care plan is
12-24 subject to and shall meet the requirements of Article 21.58A of
12-25 this code.
12-26 Art. 21.112. POINT-OF-SERVICE OFFERING. (a) If a health
12-27 maintenance organization offers a point-of-service plan in its
13-1 service area and is the only entity providing services under a
13-2 group health benefit plan, it must offer to all eligible enrollees
13-3 the opportunity to obtain coverage for out-of-network services
13-4 through the point-of-service plan at the time of enrollment and at
13-5 least annually.
13-6 (b) The premium for the point-of-service plan must be based
13-7 on the actuarial value of that coverage.
13-8 (c) Any additional costs for the point-of-service plan are
13-9 the responsibility of the enrollee, and the holder of the group
13-10 contract may impose a reasonable administrative cost for providing
13-11 the point-of-service option.
13-12 (d) If five percent or less of the group's eligible
13-13 enrollees elect to purchase the point-of-service option, the plan
13-14 is not required to offer the point-of-service option during
13-15 subsequent open enrollment periods.
13-16 (e) This article does not apply to a small employer as
13-17 defined in Article 26.02 of this code.
13-18 (f) In this article, "point-of-service plan" means a plan
13-19 provided through a contractual arrangement under which indemnity
13-20 benefits for the cost of health care services, other than emergency
13-21 care, are provided by an insurer or group hospital service
13-22 corporation in conjunction with corresponding benefits arranged or
13-23 provided by a health maintenance organization, including a single
13-24 service health maintenance organization. An individual may choose
13-25 to obtain benefits or services under either the indemnity plan or
13-26 the health maintenance organization plan in accordance with
13-27 specific provisions of a point-of-service contract.
14-1 Art. 21.113. PRIVATE CAUSE OF ACTION. This subchapter and
14-2 rules adopted under this subchapter do not:
14-3 (1) provide a private cause of action for damages or
14-4 create a standard of care, obligation, or duty that provides a
14-5 basis for a private cause of action for damages; or
14-6 (2) abrogate a statutory or common law cause of
14-7 action, administrative remedy, or defense otherwise available and
14-8 existing before June 1, 1998.
14-9 Art. 21.114. ANNUAL PERFORMANCE REPORT. (a) The office of
14-10 public insurance counsel shall issue an annual report to consumers
14-11 on the performance of managed care entities.
14-12 (b) The office of public insurance counsel shall have access
14-13 to:
14-14 (1) information provided under Article 21.105 of this
14-15 code;
14-16 (2) information contained in complaints relating to
14-17 managed care entities made to the department or to the Texas
14-18 Department of Health, provided that the office shall maintain as
14-19 confidential any information in the complaint that relates to a
14-20 patient or that is made confidential by another law; and
14-21 (3) any statistical information relating to
14-22 utilization, quality assurance, and complaints that a health
14-23 maintenance organization is required to maintain under rules
14-24 adopted by the commissioner or the Texas Department of Health.
14-25 (c) The office of public insurance counsel shall provide a
14-26 copy of the report to a person on request on payment of a
14-27 reasonable fee. The public insurance counsel shall set the fee in
15-1 the amount necessary to defray the cost of producing the report.
15-2 Art. 21.115. RETALIATION PROHIBITED. A managed care plan
15-3 may not take any retaliatory action, including cancellation or
15-4 refusal to renew a policy, against the holder of a group policy or
15-5 contract or an enrollee solely because the policy or contract
15-6 holder or an enrollee has filed a complaint with the plan or
15-7 appealed a decision of the plan.
15-8 SECTION 2. (a) Section 2, Texas Health Maintenance
15-9 Organization Act (Article 20A.02, Vernon's Texas Insurance Code),
15-10 is amended by amending Subsection (t) and adding Subsections (v)
15-11 and (w) to read as follows:
15-12 (t) "Emergency care" means health care services provided in
15-13 a hospital emergency facility to evaluate and treat an emergency
15-14 medical condition [bona fide emergency services provided after the
15-15 sudden onset of a medical condition manifesting itself by acute
15-16 symptoms of sufficient severity, including severe pain, such that
15-17 the absence of immediate medical attention could reasonably be
15-18 expected to result in:]
15-19 [(1) placing the patient's health in serious jeopardy;]
15-20 [(2) serious impairment to bodily functions; or]
15-21 [(3) serious dysfunction of any bodily organ or part].
15-22 (v) "Emergency medical condition" means a medical condition,
15-23 sickness, or injury of recent onset and severity, including severe
15-24 pain, that would lead a prudent layperson possessing an average
15-25 knowledge of medicine and health to believe that failure to get
15-26 immediate medical care could result in:
15-27 (1) placing the patient's health in serious jeopardy;
16-1 (2) serious impairment to bodily functions;
16-2 (3) serious dysfunction of any bodily organ or part;
16-3 (4) serious disfigurement; or
16-4 (5) in the case of a pregnant woman, serious jeopardy
16-5 to the health of the fetus.
16-6 (w) "Network physician or provider" means a physician or
16-7 provider who is participating in a health maintenance organization
16-8 delivery network.
16-9 SECTION 3. Section 6(a), Texas Health Maintenance
16-10 Organization Act (Article 20A.06, Vernon's Texas Insurance Code),
16-11 is amended to read as follows:
16-12 (a) The powers of a health maintenance organization include,
16-13 but are not limited to, the following:
16-14 (1) the purchase, lease, construction, renovation,
16-15 operation, or maintenance of hospitals, medical facilities, or
16-16 both, and ancillary equipment and such property as may reasonably
16-17 be required for its principal office or for such other purposes as
16-18 may be necessary in the transaction of the business of the health
16-19 maintenance organization;
16-20 (2) the making of loans to a medical group, under an
16-21 independent contract with it in furtherance of its program, or
16-22 corporations under its control, for the purpose of acquiring or
16-23 constructing medical facilities and hospitals, or in the
16-24 furtherance of a program providing health care services to
16-25 enrollees;
16-26 (3) the furnishing of or arranging for medical care
16-27 services only through other health maintenance organizations or
17-1 physicians or groups of physicians who have independent contracts
17-2 with the health maintenance organizations; the furnishing of or
17-3 arranging for the delivery of health care services only through
17-4 other health maintenance organizations or providers or groups of
17-5 providers who are under contract with or employed by the health
17-6 maintenance organization or through other health maintenance
17-7 organizations or physicians or providers who have contracted for
17-8 health care services with those other health maintenance
17-9 organizations or physicians or providers, except for the furnishing
17-10 of or authorization for emergency care [services], services by
17-11 referral, and services to be provided outside of the service area
17-12 as approved by the commissioner; provided, however, that a health
17-13 maintenance organization is not authorized to employ or contract
17-14 with other health maintenance organizations or physicians or
17-15 providers in any manner which is prohibited by any licensing law of
17-16 this state under which such health maintenance organizations or
17-17 physicians or providers are licensed; however, if a hospital,
17-18 facility, agency, or supplier is certified by the Medicare program,
17-19 Title XVIII of the Social Security Act (42 U.S.C. Section 1395 et
17-20 seq.), or accredited by the Joint Commission on Accreditation of
17-21 Healthcare Organizations or another national accrediting body, the
17-22 health maintenance organization shall be required to accept such
17-23 certification or accreditation;
17-24 (4) the contracting with any person for the
17-25 performance on its behalf of certain functions such as marketing,
17-26 enrollment, and administration;
17-27 (5) the contracting with an insurance company licensed
18-1 in this state, or with a group hospital service corporation
18-2 authorized to do business in the state, for the provision of
18-3 insurance, reinsurance, indemnity, or reimbursement against the
18-4 cost of health care and medical care services provided by the
18-5 health maintenance organization;
18-6 (6) the offering of:
18-7 (A) indemnity benefits covering out-of-area
18-8 emergency care [services]; and
18-9 (B) indemnity benefits in addition to those
18-10 relating to out-of-area and emergency care [services], provided
18-11 through insurers or group hospital service corporations;
18-12 (7) receiving and accepting from government or private
18-13 agencies payments covering all or part of the cost of the services
18-14 provided or arranged for by the organization; and
18-15 (8) all powers given to corporations (including
18-16 professional corporations and associations), partnerships, and
18-17 associations pursuant to their organizational documents which are
18-18 not in conflict with provisions of this Act, or other applicable
18-19 law.
18-20 SECTION 4. The Texas Health Maintenance Organization Act
18-21 (Chapter 20A, Vernon's Texas Insurance Code) is amended by adding
18-22 Section 9A to read as follows:
18-23 Sec. 9A. REQUIRED CONTRACT PROVISIONS; BENEFITS FOR
18-24 OUT-OF-NETWORK SERVICES. (a) A health maintenance organization,
18-25 on the request of a network physician or provider, shall:
18-26 (1) authorize referral of an enrollee to a physician
18-27 or provider who is not a network physician or provider for
19-1 medically necessary health care services:
19-2 (A) for which benefits are provided under
19-3 the health care plan; and
19-4 (B) that are not available from a network
19-5 physician or provider; and
19-6 (2) fully reimburse the physician or provider to whom
19-7 the referral is made for the covered services at the usual and
19-8 customary rate or at a rate agreed on by the health maintenance
19-9 organization and the physician or provider.
19-10 (b) A health maintenance organization must authorize the
19-11 referral under Subsection (a)(1) of this section within a
19-12 reasonable period after receipt of the request and may not deny a
19-13 request under that subsection unless the health maintenance
19-14 organization provides for a review of the request. The request
19-15 must be reviewed by a physician or provider in the same or a
19-16 similar speciality as the physician or provider to whom the
19-17 referral is requested.
19-18 (c) Each group or individual contract issued by a health
19-19 maintenance organization must include a provision implementing the
19-20 requirements of this section.
19-21 SECTION 5. (a) Section 13(i), Texas Health Maintenance
19-22 Organization Act (Article 20A.13, Vernon's Texas Insurance Code),
19-23 is amended to read as follows:
19-24 (i) Each health maintenance organization offering basic
19-25 health care services shall maintain a minimum surplus of not less
19-26 than $1.5 million [$500,000], net of accrued uncovered liabilities.
19-27 Each health maintenance organization offering only a single care
20-1 service shall maintain a minimum surplus of not less than $500,000
20-2 [$125,000], net of accrued uncovered liabilities. The minimum
20-3 surplus shall consist only of cash, bonds of the United States,
20-4 bonds of this state, or a combination of these. If a health
20-5 maintenance organization fails to comply with the surplus
20-6 requirement of this subsection [or Subsection (j) of this section],
20-7 the commissioner is authorized to take appropriate action to assure
20-8 that the continued operation of the health maintenance organization
20-9 will not be hazardous to its enrollees.
20-10 (b) Sections 13(j) and (k), Texas Health Maintenance
20-11 Organization Act (Article 20A.13, Vernon's Texas Insurance Code),
20-12 are repealed.
20-13 SECTION 6. Section 4, Article 21.21, Insurance Code, is
20-14 amended to read as follows:
20-15 Sec. 4. UNFAIR METHODS OF COMPETITION AND UNFAIR OR
20-16 DECEPTIVE ACTS OR PRACTICES DEFINED. The following are hereby
20-17 defined as unfair methods of competition and unfair and deceptive
20-18 acts or practices in the business of insurance:
20-19 (1) Misrepresentations and False Advertising of Policy
20-20 Contracts. Making, issuing, circulating, or causing to be made,
20-21 issued or circulated, any estimate, illustration, circular or
20-22 statement misrepresenting the terms of any policy issued or to be
20-23 issued or the benefits or advantages promised thereby or the
20-24 dividends or share of the surplus to be received thereon, or making
20-25 any false or misleading statements as to the dividends or share of
20-26 surplus previously paid on similar policies, or making any
20-27 misleading representation or any misrepresentation as to the
21-1 financial condition of any insurer, or as to the legal reserve
21-2 system upon which any life insurer operates, or using any name or
21-3 title of any policy or class of policies misrepresenting the true
21-4 nature thereof, or making any misrepresentation to any policyholder
21-5 insured in any company for the purpose of inducing or tending to
21-6 induce such policyholder to lapse, forfeit, or surrender his
21-7 insurance;
21-8 (2) False Information and Advertising Generally.
21-9 Making, publishing, disseminating, circulating or placing before
21-10 the public, or causing, directly or indirectly, to be made,
21-11 published, disseminated, circulated, or placed before the public,
21-12 in a newspaper, magazine or other publication, or in the form of a
21-13 notice, circular, pamphlet, letter or poster, or over any radio or
21-14 television station, or in any other way, an advertisement,
21-15 announcement or statement containing any assertion, representation
21-16 or statement with respect to the business of insurance or with
21-17 respect to any person in the conduct of his insurance business,
21-18 which is untrue, deceptive or misleading;
21-19 (3) Defamation. Making, publishing, disseminating, or
21-20 circulating, directly or indirectly, or aiding, abetting or
21-21 encouraging the making, publishing, disseminating or circulating of
21-22 any oral or written statement or any pamphlet, circular, article or
21-23 literature which is false, or maliciously critical of or derogatory
21-24 to the financial condition of any insurer, and which is calculated
21-25 to injure any person engaged in the business of insurance;
21-26 (4) Boycott, Coercion and Intimidation. Entering into
21-27 any agreement to commit, or by any concerted action committing, any
22-1 act of boycott, coercion or intimidation resulting in or tending to
22-2 result in unreasonable restraint of, or monopoly in, the business
22-3 of insurance;
22-4 (5) False Financial Statements. (a) Filing with any
22-5 supervisory or other public official, or making, publishing,
22-6 disseminating, circulating or delivering to any person, or placing
22-7 before the public, or causing directly or indirectly, to be made,
22-8 published, disseminated, circulated, delivered to any person, or
22-9 placed before the public, any false statement of financial
22-10 condition of an insurer with intent to deceive;
22-11 (b) Making any false entry in any book, report
22-12 or statement of any insurer with intent to deceive any agent or
22-13 examiner lawfully appointed to examine into its condition or into
22-14 any of its affairs, or any public official to whom such insurer is
22-15 required by law to report, or who has authority by law to examine
22-16 into its condition or into any of its affairs, or, with like
22-17 intent, wilfully omitting to make a true entry of any material fact
22-18 pertaining to the business of such insurer in any book, report or
22-19 statement of such insurer;
22-20 (6) Stock Operations and Advisory Board Contracts.
22-21 Issuing or delivering or permitting agents, officers or employees
22-22 to issue or deliver, company stock or other capital stock, or
22-23 benefit certificates or shares in any corporation, or securities or
22-24 any special or advisory board contracts or other contracts of any
22-25 kind promising returns and profits as an inducement to insurance.
22-26 Provided, however, that nothing in this subsection shall be
22-27 construed as prohibiting the issuing or delivery of participating
23-1 insurance policies otherwise authorized by law.
23-2 (7) Unfair Discrimination. [(a)] Making or
23-3 permitting any unfair discrimination between individuals of the
23-4 same class and equal expectation of life in the rates charged for
23-5 any contract of life insurance or of life annuity or in the
23-6 dividends or other benefits payable thereon, or in any other of the
23-7 terms and conditions of such contract.
23-8 (8) Rebates. (a) Except as otherwise expressly
23-9 provided by law, knowingly permitting or offering to make or making
23-10 any contract of life insurance, life annuity or accident and health
23-11 insurance, or agreement as to such contract other than as plainly
23-12 expressed in the contract issued thereon, or paying or allowing, or
23-13 giving or offering to pay, allow, or give, directly or indirectly,
23-14 as inducement to such insurance, or annuity, any rebate of premiums
23-15 payable on the contract, or any special favor or advantage in the
23-16 dividends or other benefits thereon, or any valuable consideration
23-17 or inducement whatever not specified in the contract; or giving,
23-18 or selling, or purchasing or offering to give, sell, or purchase as
23-19 inducement to such insurance or annuity or in connection therewith,
23-20 any stocks, bonds, or other securities of any insurance company or
23-21 other corporation, association, or partnership, or any dividends or
23-22 profits accrued thereon, or anything of value whatsoever not
23-23 specified in the contract;
23-24 (b) Nothing in clause (7) [7] or paragraph (a)
23-25 of clause (8) [8] of this subsection shall be construed as
23-26 including within the definition of discrimination or rebates any of
23-27 the following practices:
24-1 (i) in the case of any contract of life
24-2 insurance or life annuity, paying bonuses to policyholders or
24-3 otherwise abating their premiums in whole or in part out of surplus
24-4 accumulated from non-participating insurance, provided that any
24-5 such bonuses or abatement of premiums shall be fair and equitable
24-6 to policyholders and for the best interests of the company and its
24-7 policyholders;
24-8 (ii) in the case of life insurance
24-9 policies issued on the industrial debit plan, making allowance to
24-10 policyholders who have continuously for a specified period made
24-11 premium payments directly to an office of the insurer in an amount
24-12 which fairly represents the saving in collection expenses;
24-13 (iii) readjustment of the rate of premium
24-14 for a group insurance policy based on the loss or expense
24-15 experience thereunder, at the end of the first or any subsequent
24-16 policy year of insurance thereunder, which may be made retroactive
24-17 only for such policy year.
24-18 (9) Deceptive Name, Word, Symbol, Device, or Slogan.
24-19 Using, displaying, publishing, circulating, distributing, or
24-20 causing to be used, displayed, published, circulated, or
24-21 distributed in any letter, pamphlet, circular, contract, policy,
24-22 evidence of coverage, article, poster, or other document,
24-23 literature, or public media of:
24-24 (a) a name as the corporate or business name of
24-25 a person or entity engaged in an insurance or insurance related
24-26 business in this state that is the same as, or deceptively similar
24-27 to, the name adopted and used by an insurance entity, health
25-1 maintenance organization, third party administrator, or group
25-2 hospital service company authorized to do business under the laws
25-3 of this state; or
25-4 (b) a word, symbol, device, slogan, or any
25-5 combination of these items, whether registered or not registered,
25-6 that is the same as or deceptively similar to one adopted and used
25-7 by an insurance entity, health maintenance organization, third
25-8 party administrator, or group hospital service company to
25-9 distinguish such entities, products, or service from other
25-10 entities, and includes the title, designation, character names, and
25-11 distinctive features of broadcast or other advertising.
25-12 Where two persons or entities are using a name, word,
25-13 symbol, device, slogan, or any combination of these items that are
25-14 the same or deceptively similar and are likely to cause confusion
25-15 or a mistake, the user who can demonstrate the first continuous
25-16 actual use of such name, word, symbol, device, slogan, or
25-17 combination of these items shall not have committed an unfair
25-18 method of competition or deceptive act or practice.
25-19 (10) Unfair Settlement Practices. (a) Engaging in any
25-20 of the following unfair settlement practices with respect to a
25-21 claim by an insured or beneficiary:
25-22 (i) misrepresenting to a claimant a
25-23 material fact or policy provision relating to coverage at issue;
25-24 (ii) failing to attempt in good faith to
25-25 effectuate a prompt, fair, and equitable settlement of a claim with
25-26 respect to which the insurer's liability has become reasonably
25-27 clear;
26-1 (iii) failing to attempt, in good faith,
26-2 to effectuate a prompt, fair, and equitable settlement under one
26-3 portion of a policy of a claim with respect to which the insurer's
26-4 liability has become reasonably clear in order to influence the
26-5 claimant to settle an additional claim under another portion of the
26-6 coverage, provided that this prohibition does not apply if payment
26-7 under one portion of the coverage constitutes evidence of liability
26-8 under another portion of the policy;
26-9 (iv) failing to provide promptly to a
26-10 policyholder a reasonable explanation of the basis in the policy,
26-11 in relation to the facts or applicable law, for the insurer's
26-12 denial of a claim or for the offer of a compromise settlement of a
26-13 claim;
26-14 (v) failing within a reasonable time to:
26-15 (A) affirm or deny coverage
26-16 of a claim to a policyholder; or
26-17 (B) submit a reservation of
26-18 rights to a policyholder;
26-19 (vi) refusing, failing, or unreasonably
26-20 delaying an offer of settlement under applicable first-party
26-21 coverage on the basis that other coverage may be available or that
26-22 third parties are responsible for the damages suffered, except as
26-23 may be specifically provided in the policy;
26-24 (vii) undertaking to enforce a full and
26-25 final release of a claim from a policyholder when only a partial
26-26 payment has been made, provided that this prohibition does not
26-27 apply to a compromise settlement of a doubtful or disputed claim;
27-1 (viii) refusing to pay a claim without
27-2 conducting a reasonable investigation with respect to the claim;
27-3 (ix) with respect to a Texas personal auto
27-4 policy, delaying or refusing settlement of a claim solely because
27-5 there is other insurance of a different type available to satisfy
27-6 all or any part of the loss forming the basis of that claim; or
27-7 (x) requiring a claimant, as a condition
27-8 of settling a claim, to produce the claimant's federal income tax
27-9 returns for examination or investigation by the person unless:
27-10 (A) the claimant is ordered
27-11 to produce those tax returns by a court;
27-12 (B) the claim involves a
27-13 fire loss; or
27-14 (C) the claim involves lost
27-15 profits or income.
27-16 (b) Paragraph (a) of this clause does not
27-17 provide a cause of action to a third party asserting one or more
27-18 claims against an insured covered under a liability insurance
27-19 policy.
27-20 (11) Misrepresentation of Insurance Policy.
27-21 Misrepresenting an insurance policy by:
27-22 (a) making an untrue statement of material fact;
27-23 (b) failing to state a material fact that is
27-24 necessary to make other statements made not misleading, considering
27-25 the circumstances under which the statements were made;
27-26 (c) making a statement in such manner as to
27-27 mislead a reasonably prudent person to a false conclusion of a
28-1 material fact;
28-2 (d) making a material misstatement of law; or
28-3 (e) failing to disclose any matter required by
28-4 law to be disclosed, including a failure to make disclosure in
28-5 accordance with another provision of this code.
28-6 (12) Unreasonable Denial of Treatment. In the case of
28-7 a managed care entity, as defined by Article 21.102 of this code,
28-8 the unreasonable denial of medically necessary treatment that
28-9 results in bodily injury or death to an enrollee in a managed care
28-10 plan.
28-11 SECTION 7. Section 2(7), Article 21.58A, Insurance Code, is
28-12 amended to read as follows:
28-13 (7) "Emergency care" means emergency care [bona fide
28-14 emergency services] as defined in Section 2(I), Chapter 397, Acts
28-15 of the 54th Legislature, 1955 (Article 3.70-2, Vernon's Texas
28-16 Insurance Code), and Section 2[(t)], Texas Health Maintenance
28-17 Organization Act (Article 20A.02, Vernon's Texas Insurance Code).
28-18 SECTION 8. Section 4(i), Article 21.58A, Insurance Code, is
28-19 amended to read as follows:
28-20 (i) Each utilization review agent shall utilize written
28-21 medically acceptable screening criteria and review procedures which
28-22 are established and periodically evaluated and updated with
28-23 appropriate involvement from physicians, including practicing
28-24 physicians, and other health care providers. The screening
28-25 criteria and review procedures applicable with respect to services
28-26 delivered through a health maintenance organization must include
28-27 guidelines for appeals on behalf of a person with a special
29-1 circumstance, such as a disability or life-threatening illness, if
29-2 that person is denied services as a result of established
29-3 conditions of the plan, limitations of coverage, network
29-4 configuration, or requirements for participating specialists. Such
29-5 written screening criteria and review procedures shall be available
29-6 for review and inspection by the commissioner and copying as
29-7 necessary for the commissioner to carry out his or her lawful
29-8 duties under this code, provided, however, that any information
29-9 obtained or acquired under the authority of this subsection and
29-10 article is confidential and privileged and not subject to the open
29-11 records law or subpoena except to the extent necessary for the
29-12 board or commissioner to enforce this article.
29-13 SECTION 9. Sections 14(g) and (h), Article 21.58A, Insurance
29-14 Code, are amended to read as follows:
29-15 (g) This [A health maintenance organization is not subject
29-16 to this article except as expressly provided in this subsection and
29-17 Subsection (i) of this section. If such health maintenance
29-18 organization performs utilization review as defined herein, it
29-19 shall, as a condition of licensure:]
29-20 [(1) comply with Sections 4(b), (c), (e), (f), (h),
29-21 (i), and (l) of this article, and the board shall promulgate rules
29-22 for appropriate verification and enforcement of compliance.
29-23 However, nothing in this] article does not [shall be construed to]
29-24 prohibit or limit the distribution of a proportion of the savings
29-25 from the reduction or elimination of unnecessary medical services,
29-26 treatment, supplies, confinements, or days of confinement in a
29-27 health care facility through profit sharing, bonus, or withhold
30-1 arrangements to participating physicians or participating health
30-2 care providers for rendering health care services to enrollees[;]
30-3 [(2) establish and maintain a system for:]
30-4 [(A) handling and responding to complaints by
30-5 enrollees, patients, or health care providers;]
30-6 [(B) providing health care providers with notice
30-7 of medical necessity or program requirements that have not been
30-8 met, including a reasonable opportunity to discuss the plan of
30-9 treatment and clinical basis for a utilization review determination
30-10 with a physician; and]
30-11 [(C) providing the enrollee, patient, and health
30-12 care provider an opportunity to appeal the determination; and]
30-13 [(3) submit to assessment of maintenance taxes under
30-14 Article 20A.33, Texas Health Maintenance Organization Act (Article
30-15 20A.33, Vernon's Texas Insurance Code), to cover the costs of
30-16 administering compliance of health maintenance organizations under
30-17 this section].
30-18 (h) An insurer or health maintenance organization that
30-19 [which] delivers or issues for delivery a health insurance policy
30-20 or evidence of coverage in Texas and is subject to this code is not
30-21 subject to this article except as expressly provided in this
30-22 subsection and Subsection (i) of this section. If an insurer
30-23 performs utilization review as defined herein it shall, as a
30-24 condition of licensure, comply with Sections 4 through 8 of this
30-25 article, and the board shall promulgate rules for appropriate
30-26 verification and enforcement of compliance. If a health
30-27 maintenance organization performs utilization review as defined in
31-1 this article, it shall, as a condition of licensure, comply with
31-2 this article, and the board shall adopt rules for appropriate
31-3 verification and enforcement of compliance. Such insurers and
31-4 health maintenance organizations are [shall be] subject to
31-5 assessment of maintenance tax under Article 4.17 of this code or
31-6 Section 33, Texas Health Maintenance Organization Act (Article
31-7 20A.33, Vernon's Texas Insurance Code), to cover the costs of
31-8 administering compliance of insurers and health maintenance
31-9 organizations under this section.
31-10 SECTION 10. Section 161.091(f), Health and Safety Code, is
31-11 amended to read as follows:
31-12 (f) This section shall not apply to licensed insurers,
31-13 governmental entities, including intergovernmental risk pools
31-14 established under Chapter 172, Local Government Code, and
31-15 institutions as defined in the Texas State College and University
31-16 Employees Uniform Insurance Benefits Act (Article 3.50-3, Vernon's
31-17 Texas Insurance Code), group hospital service corporations,
31-18 preferred provider organizations, or health maintenance
31-19 organizations which reimburse, provide, offer to provide, or
31-20 administer hospital, medical, dental, or other health-related
31-21 benefits under a health benefits plan for which it is the payor.
31-22 SECTION 11. (a) This Act takes effect September 1, 1997.
31-23 (b) This Act applies only to coverage under a managed care
31-24 plan or health care plan issued by a health maintenance
31-25 organization, as applicable, that is delivered, issued for
31-26 delivery, or renewed on or after June 1, 1998. Coverage under a
31-27 plan that is delivered, issued for delivery, or renewed before June
32-1 1, 1998, is governed by the law as it existed immediately before
32-2 the effective date of this Act, and that law is continued in effect
32-3 for that purpose.
32-4 (c) This Act applies only to credentialing of health care
32-5 providers under a managed care plan on or after June 1, 1998.
32-6 Credentialing of health care providers before June 1, 1998, is
32-7 governed by the law as it existed immediately before the effective
32-8 date of this Act, and that law is continued in effect for that
32-9 purpose.
32-10 (d) The commissioner of insurance by rule shall adopt a
32-11 schedule for implementation of Section 13(i), Texas Health
32-12 Maintenance Organization Act (Article 20A.13, Vernon's Texas
32-13 Insurance Code), as amended by this Act. A health maintenance
32-14 organization, including a health maintenance organization offering
32-15 only a single care service, is not required to satisfy the
32-16 requirements of that subsection before the date established in the
32-17 schedule adopted by the commissioner.
32-18 (e) The commissioner of insurance shall conduct a study of
32-19 the costs of compliance by managed care entities with, and the
32-20 economic impact on employees in this state, both public and
32-21 private, of, Subchapter G of Chapter 21, Insurance Code, as added
32-22 by this Act. The commissioner may direct Texas Department of
32-23 Insurance personnel to assist the committee that conducts the
32-24 study. The commissioner shall issue a report on the results of the
32-25 study to the 76th Legislature not later than January 31, 1999.
32-26 SECTION 12. The importance of this legislation and the
32-27 crowded condition of the calendars in both houses create an
33-1 emergency and an imperative public necessity that the
33-2 constitutional rule requiring bills to be read on three several
33-3 days in each house be suspended, and this rule is hereby suspended.