Bill not drafted by TLC or Senate E&E.
Line and page numbers may not match official copy.
By Smithee H.B. No. 894
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the regulation of health maintenance organizations.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section 2, Texas Health Maintenance Organization
1-5 Act (Article 20A.02, Vernon's Texas Insurance Code), is amended to
1-6 read as follows:
1-7 Sec. 2. DEFINITIONS. For the purposes of this Act:
1-8 (a) "Adverse determination" means a determination by a
1-9 health maintenance organization or a utilization review agent that
1-10 the health care services furnished to a patient or proposed to be
1-11 furnished to a patient are not medically necessary or not
1-12 appropriate in the allocation of health care resources.
1-13 (b) "Basic health care services" means health care services
1-14 which the commissioner determines an enrolled population might
1-15 reasonably require in order to be maintained in good health,
1-16 including, at [as] a minimum, services designated as basic health
1-17 services under Section 1302, Title XIII, Public Health Service Act
1-18 (42 U.S.C. Section 300e-1(1)) [emergency care, inpatient hospital
1-19 and medical services, and outpatient medical services].
1-20 [(b) "Board" means the Texas Board of Health.]
1-21 (c) "Capitation" means a method of compensation to a
1-22 physician or provider based on a predetermined payment per enrollee
1-23 for a specified period of time for certain enrollees in exchange
1-24 for arranging for or providing a defined set of covered health care
2-1 services to such enrollees for a specified period of time,
2-2 regardless of the amount of services actually provided.
2-3 (d) "Commissioner" means the commissioner of insurance.
2-4 (e) "Complainant" means an enrollee, or a physician,
2-5 provider, or other person designated to act on behalf of an
2-6 enrollee, who files a complaint.
2-7 (f) "Complaint" means any dissatisfaction expressed by a
2-8 complainant orally or in writing to the health maintenance
2-9 organization with any aspect of the health maintenance
2-10 organization's operation, including but not limited to
2-11 dissatisfaction with plan administration; appeal of an adverse
2-12 determination; the denial, reduction, or termination of a service;
2-13 the way a service is provided; or disenrollment decisions,
2-14 expressed by a complainant.
2-15 (g) "Emergency care" means health care services provided in
2-16 a hospital emergency facility to evaluate and treat medical
2-17 conditions of a recent onset and severity, including but not
2-18 limited to severe pain that would lead a prudent layperson,
2-19 possessing an average knowledge of medicine and health, to believe
2-20 that his or her condition, sickness, or injury is of such a nature
2-21 that failure to get immediate medical care could result in:
2-22 (1) placing the patient's health in serious jeopardy;
2-23 (2) serious impairment to bodily functions;
2-24 (3) serious dysfunction of any bodily organ or part;
2-25 (4) serious disfigurement; or
2-26 (5) in the case of a pregnant woman, serious jeopardy
2-27 to the health of the fetus.
2-28 (h) [(d)] "Enrollee" means an individual who is enrolled in
2-29 a health care plan, including covered dependents.
2-30 (i) [(e)] "Evidence of coverage" means any certificate,
3-1 agreement, or contract issued to an enrollee setting out the
3-2 coverage to which the enrollee is entitled.
3-3 (j) [(f)] "Group hospital service corporation" means a
3-4 nonprofit corporation organized and operating under Chapter 20 of
3-5 the Insurance Code.
3-6 (k) [(g)] "Health care" means prevention, maintenance,
3-7 rehabilitation, pharmaceutical, and chiropractic services provided
3-8 by qualified persons other than medical care.
3-9 (l) [(h)] "Health care plan" means any plan whereby any
3-10 person undertakes to provide, arrange for, pay for, or reimburse
3-11 any part of the cost of any health care services; provided,
3-12 however, a part of such plan consists of arranging for or the
3-13 provision of health care services, as distinguished from
3-14 indemnification against the cost of such service, on a prepaid
3-15 basis through insurance or otherwise.
3-16 (m) [(i)] "Health care services" means any services,
3-17 including the furnishing to any individual of pharmaceutical
3-18 services, medical, chiropractic, or dental care, or hospitalization
3-19 or incident to the furnishing of such services, care, or
3-20 hospitalization, as well as the furnishing to any person of any and
3-21 all other services for the purpose of preventing, alleviating,
3-22 curing or healing human illness or injury or a single health care
3-23 service plan.
3-24 (n) [(j)] "Health maintenance organization" means any person
3-25 who arranges for or provides a health care plan or a single health
3-26 care service plan to enrollees on a prepaid basis.
3-27 (o) [(k)] "Medical care" means furnishing those services
3-28 defined as practicing medicine under Section 1.03(8), Medical
3-29 Practice Act (Article 4495b, Vernon's Texas Civil Statutes).
3-30 (p) [(l)] "Person" means any natural or artificial person,
4-1 including, but not limited to, individuals, partnerships,
4-2 associations, organizations, trusts, hospital districts, limited
4-3 liability companies, limited liability partnerships, or
4-4 corporations.
4-5 (q) [(m)] "Physician" means:
4-6 (1) an individual licensed to practice medicine in
4-7 this state;
4-8 (2) a professional association organized under the
4-9 Texas Professional Association Act (Article 1528f, Vernon's Texas
4-10 Civil Statutes) or a nonprofit health corporation certified under
4-11 Section 5.01, Medical Practice Act (Article 4495b, Vernon's Texas
4-12 Civil Statutes); or
4-13 (3) another person wholly owned by physicians.
4-14 (r) [(n)] "Provider" means:
4-15 (1) any person other than a physician, including a
4-16 licensed doctor of chiropractic, registered nurse, pharmacist,
4-17 optometrist, pharmacy, hospital, or other institution or
4-18 organization or person that is licensed or otherwise authorized to
4-19 provide a health care service in this state;
4-20 (2) a person who is wholly owned or controlled by a
4-21 provider or by a group of providers who are licensed to provide the
4-22 same health care service; or
4-23 (3) a person who is wholly owned or controlled by one
4-24 or more hospitals and physicians, including a physician-hospital
4-25 organization.
4-26 (s) [(o)] "Sponsoring organization" means a person who
4-27 guarantees the uncovered expenses of the health maintenance
4-28 organization and who is financially capable, as determined by the
4-29 commissioner, of meeting the obligations resulting from those
4-30 guarantees.
5-1 (t) [(p)] "Uncovered expenses" means the estimated
5-2 administrative expenses and the estimated cost of health care
5-3 services that are not guaranteed, insured, or assumed by a person
5-4 other than the health maintenance organization. Health care
5-5 services may be considered covered if the physician or provider
5-6 agrees in writing that enrollees shall in no way be liable,
5-7 assessable, or in any way subject to payment for services except as
5-8 described in the evidence of coverage issued to the enrollee under
5-9 Section 9 of this Act. The amount due on loans in the next
5-10 calendar year will be considered uncovered expenses unless
5-11 specifically subordinated to uncovered medical and health care
5-12 expenses or unless guaranteed by the sponsoring organization.
5-13 (u) [(q)] "Uncovered liabilities" means obligations
5-14 resulting from unpaid uncovered expenses, the outstanding
5-15 indebtedness of loans that are not specifically subordinated to
5-16 uncovered medical and health care expenses or guaranteed by the
5-17 sponsoring organization, and all other monetary obligations that
5-18 are not similarly subordinated or guaranteed.
5-19 (v) [(r)] "Single health care service" means a health care
5-20 service that an enrolled population may reasonably require in order
5-21 to be maintained in good health with respect to a particular health
5-22 care need for the purpose of preventing, alleviating, curing, or
5-23 healing human illness or injury of a single specified nature and
5-24 that is to be provided by one or more persons each of whom is
5-25 licensed by the state to provide that specific health care service.
5-26 (w) [(s)] "Single health care service plan" means a plan
5-27 under which any person undertakes to provide, arrange for, pay for,
5-28 or reimburse any part of the cost of a single health care service,
5-29 provided, that a part of the plan consists of arranging for or the
5-30 provision of the single health care service, as distinguished from
6-1 an indemnification against the cost of that service, on a prepaid
6-2 basis through insurance or otherwise and that no part of that plan
6-3 consists of arranging for the provision of more than one health
6-4 care need of a single specified nature.
6-5 (x) [(t) "Emergency care" means bona fide emergency services
6-6 provided after the sudden onset of a medical condition manifesting
6-7 itself by acute symptoms of sufficient severity, including severe
6-8 pain, such that the absence of immediate medical attention could
6-9 reasonably be expected to result in:]
6-10 [(1) placing the patient's health in serious jeopardy;]
6-11 [(2) serious impairment to bodily functions; or]
6-12 [(3) serious dysfunction of any bodily organ or part.]
6-13 [(u)] "Health maintenance organization delivery network"
6-14 means a health care delivery system in which a health maintenance
6-15 organization arranges for health care services directly or
6-16 indirectly through contracts and subcontracts with providers and
6-17 physicians.
6-18 SECTION 2. Section 3, Texas Health Maintenance Organization
6-19 Act (Article 20A.03, Vernon's Texas Insurance Code), is amended by
6-20 adding Subsections (e), (f), and (g) to read as follows:
6-21 (e) No person or provider shall directly or indirectly
6-22 perform any of the acts of a health maintenance organization, as
6-23 defined in this Act, except as provided by and in accordance with
6-24 the specific authorization of this Act.
6-25 (f) Any person or provider who directly or indirectly
6-26 performs any of the acts of a health maintenance organization
6-27 without having first obtained a certificate of authority from the
6-28 Texas Department of Insurance shall be subject to all enforcement
6-29 processes and procedures of an authorized insurer pursuant to
6-30 Sections 3 and 3A, Article 1.14-1, Insurance Code.
7-1 (g) The commissioner shall have subpoena authority in
7-2 accordance with Article 1.19-1, Insurance Code.
7-3 SECTION 3. Section 4, Texas Health Maintenance Organization
7-4 Act (Article 20A.04, Vernon's Texas Insurance Code), is amended to
7-5 read as follows:
7-6 Sec. 4. APPLICATION FOR CERTIFICATE OF AUTHORITY. (a) Each
7-7 application for a certificate of authority shall be on a form
7-8 prescribed by rule of the commissioner and shall be verified by the
7-9 applicant, an officer, or other authorized representative of the
7-10 applicant, and shall set forth or be accompanied by the following:
7-11 (1) a copy of the basic organizational document, if
7-12 any, of the applicant, such as the articles of incorporation,
7-13 articles of association, partnership agreement, trust agreement, or
7-14 other applicable documents, and all amendments thereto;
7-15 (2) a copy of the bylaws, rules and regulations, or
7-16 similar document, if any, regulating the conduct of the internal
7-17 affairs of the applicant;
7-18 (3) a list of the names, addresses, and official
7-19 positions of the persons who are to be responsible for the conduct
7-20 of the affairs of the applicant, including all members of the board
7-21 of directors, board of trustees, executive committee, or other
7-22 governing body or committee, the principal officer in the case of a
7-23 corporation, and the partnership or members in the case of a
7-24 partnership or association;
7-25 (4) a copy of any independent or other contract made
7-26 or to be made between any provider, physician, or persons listed in
7-27 Paragraph (3) hereof and the applicant;
7-28 (5) a copy of the form of evidence of coverage to be
7-29 issued to the enrollee;
7-30 (6) a copy of the form of the group contract, if any,
8-1 which is to be issued to employers, unions, trustees, or other
8-2 organizations;
8-3 (7) a current financial statement that includes:
8-4 (A) the sources and application of funds;
8-5 (B) projected financial statements during the
8-6 initial period of operations;
8-7 (C) a balance sheet beginning as of the date of
8-8 the expected start of operations;
8-9 (D) a statement of revenue and expenses with
8-10 expected member months; and
8-11 (E) a cash flow statement that states any
8-12 capital expenditures, purchase and sale of investments, and
8-13 deposits with the state;
8-14 (8) the schedule of charges to be used during the
8-15 first 12 months of operation;
8-16 (9) a statement acknowledging that all lawful process
8-17 in any legal action or proceeding against the health maintenance
8-18 organization on a cause of action arising in this state is valid if
8-19 served in accordance with Article 1.36, Insurance Code;
8-20 (10) a statement reasonably describing the geographic
8-21 area or areas to be served;
8-22 (11) a description of the complaint procedures to be
8-23 utilized;
8-24 (12) a description of the procedures and programs to
8-25 be implemented to meet the quality of health care requirements set
8-26 forth herein; [and]
8-27 (13) a written description of health care plan terms
8-28 and conditions made available to any current or prospective group
8-29 contract holder or current or prospective enrollee of the health
8-30 maintenance organization pursuant to the requirements of Section 11
9-1 of this Act;
9-2 (14) network configuration information, including an
9-3 explanation of the adequacy of the physician and other provider
9-4 network configuration; the information provided must include the
9-5 names of physicians, specialty physicians, and other providers by
9-6 zip code or zip code map and indicate whether each physician or
9-7 other provider is accepting new patients from the health
9-8 maintenance organization;
9-9 (15) a written description of the specific
9-10 compensation arrangements, such as compensation based on
9-11 fee-for-service arrangements, risk-sharing arrangements, or
9-12 capitated risk arrangements, made or to be made with physicians and
9-13 providers in exchange for the provision of or an arrangement to
9-14 provide health care services to enrollees, including any financial
9-15 incentives for physicians and providers; such compensation
9-16 arrangements shall be confidential and not subject to the open
9-17 records law, Chapter 552, Government Code;
9-18 (16) documentation demonstrating that the health
9-19 maintenance organization will pay for emergency care services
9-20 performed by nonnetwork physicians or providers at the negotiated
9-21 or usual and customary rate and that the health care plan contains,
9-22 without regard to whether the physician or provider furnishing the
9-23 services has a contractual or other arrangement with the entity to
9-24 provide items or services to covered individuals, the following
9-25 provisions and procedures for coverage of emergency care services:
9-26 (A) any medical screening examination or other
9-27 evaluation required by state or federal law that is necessary to
9-28 determine whether an emergency medical condition exists will be
9-29 provided to covered enrollees in the emergency department of a
9-30 hospital;
10-1 (B) necessary emergency care services will be
10-2 provided to covered enrollees, including the treatment and
10-3 stabilization of an emergency medical condition;
10-4 (C) services originated in a hospital emergency
10-5 department following treatment or stabilization of an emergency
10-6 medical condition will be provided to covered enrollees as approved
10-7 by the health maintenance organization, provided that the health
10-8 maintenance organization is required to approve or deny coverage of
10-9 poststabilization care as requested by a treating physician or
10-10 provider within the time appropriate to the circumstances relating
10-11 to the delivery of the services and the condition of the patient,
10-12 but in no case to exceed one hour; the health maintenance
10-13 organization must respond to inquiries from the treating physician
10-14 or provider in compliance with this provision in the health
10-15 maintenance organization's plan; and
10-16 (17) such other information as the commissioner may
10-17 require to make the determinations required by this Act.
10-18 (b) The commissioner [State Board of Insurance] may
10-19 promulgate such reasonable rules and regulations as the
10-20 commissioner [it] deems necessary to the proper administration of
10-21 this Act to require a health maintenance organization, subsequent
10-22 to receiving its certificate of authority, to submit the
10-23 modifications or amendments to the operations or documents
10-24 described in Subsection (a) of this section to the commissioner,
10-25 either for his approval or for information only, prior to the
10-26 effectuation of the modification or amendment or to require the
10-27 health maintenance organization to indicate the modifications to
10-28 [both the board and] the commissioner at the time of the next site
10-29 visit or examination. As soon as reasonably possible after any
10-30 filing for approval required by this subsection is made, the
11-1 commissioner shall in writing approve or disapprove it. Any
11-2 modification or amendment for which the commissioner's approval is
11-3 required shall be considered approved unless disapproved within 30
11-4 days; provided that the commissioner may postpone the action for
11-5 such further time, not exceeding an additional 30 days, as
11-6 necessary for proper consideration.
11-7 SECTION 4. Section 5, Texas Health Maintenance Organization
11-8 Act (Article 20A.05, Vernon's Texas Insurance Code), is amended to
11-9 read as follows:
11-10 Sec. 5. ISSUANCE OF CERTIFICATE OF AUTHORITY. (a)[(1) Upon
11-11 receipt of an application for issuance of a certificate of
11-12 authority, the commissioner shall begin consideration of the
11-13 application and forthwith transmit copies of such application and
11-14 accompanying documents to the board.]
11-15 [(2) The board shall determine whether the applicant
11-16 for a certificate of authority, with respect to health care
11-17 services to be furnished:]
11-18 [(A) has demonstrated the willingness and
11-19 potential ability to assure that such health care services will be
11-20 provided in a manner to assure both availability and accessibility
11-21 of adequate personnel and facilities, in a manner enhancing
11-22 availability, accessibility, and continuity of services;]
11-23 [(B) has arrangements, established in accordance
11-24 with rules and regulations promulgated by the board with the
11-25 concurrence of the commissioner, for an ongoing quality of health
11-26 care assurance program concerning health care processes and
11-27 outcome; and]
11-28 [(C) has a procedure, established by rules and
11-29 regulations of the board with the concurrence of the commissioner,
11-30 to develop, compile, evaluate, and report statistics relating to
12-1 the cost of operation, the pattern of utilization of its services,
12-2 availability and accessibility of its services.]
12-3 [(3) Within 45 days of receipt of the application by
12-4 the board for issuance of a certificate of authority, the board
12-5 shall certify to the commissioner whether the proposed health
12-6 maintenance organization meets the requirements of this section.
12-7 If the board certifies that the health maintenance organization
12-8 does not meet such requirements, it shall specify in what respects
12-9 it is deficient.]
12-10 [(b)] The commissioner shall, after notice and hearing,
12-11 issue or deny a certificate of authority to any person filing an
12-12 application pursuant to Section 4 of this Act, within 75 days of
12-13 the receipt of a completed application [the certification of the
12-14 board]; provided, however, that if notice and the opportunity for a
12-15 hearing is involved in a particular issuance or denial, then the
12-16 matter must be scheduled for a hearing within 75 days of the
12-17 receipt of a completed application. In any event, the commissioner
12-18 may grant a delay of final action on the application to an
12-19 applicant. Issuance of the certificate of authority shall be
12-20 granted upon payment of the application fee prescribed in Section
12-21 32 of this Act if the commissioner is satisfied that:
12-22 (1) the applicant for a certificate of authority, with
12-23 respect to health care services to be furnished:
12-24 (A) has demonstrated the willingness and
12-25 potential ability to assure that such health care services will be
12-26 provided in a manner to assure both availability and accessibility
12-27 of adequate personnel and facilities, in a manner enhancing
12-28 availability, accessibility, quality of care, and continuity of
12-29 services;
12-30 (B) has arrangements, established in accordance
13-1 with rules and regulations promulgated by the commissioner, for an
13-2 ongoing quality of health care assurance program concerning health
13-3 care processes and outcome; and
13-4 (C) has a procedure, established by rules and
13-5 regulations of the commissioner to develop, compile, evaluate, and
13-6 report statistics relating to the cost of operation, the pattern of
13-7 utilization of its services, and availability and accessibility of
13-8 its services; [board certifies that the health maintenance
13-9 organization's proposed plan of operation meets the requirements of
13-10 Subsection (a)(2) of this section; and]
13-11 (2) [the commissioner is satisfied that:]
13-12 [(A)] the person responsible for the conduct of the
13-13 affairs of the applicant is competent, trustworthy, and possesses a
13-14 good reputation;
13-15 (3) [(B)] the health care plan or single health care
13-16 service plan constitutes an appropriate mechanism whereby the
13-17 health maintenance organization will effectively provide or arrange
13-18 for the provision of basic health care services or single health
13-19 care service on a prepaid basis, through insurance or otherwise,
13-20 except to the extent of reasonable requirements for co-payment;
13-21 (4) [(C)] the health maintenance organization is fully
13-22 responsible and may reasonably be expected to meet its obligations
13-23 to enrollees and prospective enrollees. In making this
13-24 determination, the commissioner shall consider:
13-25 (A) [(i)] the financial soundness of the health
13-26 care plan's arrangement for health care services and a schedule of
13-27 charges used in connection therewith;
13-28 (B) [(ii)] the adequacy of working capital;
13-29 (C) [(iii)] any agreement with an insurer, group
13-30 hospital service corporation, a political subdivision of
14-1 government, or any other organization for insuring the payment of
14-2 the cost of health care services or the provision for automatic
14-3 applicability of an alternative coverage in the event of
14-4 discontinuance of plan;
14-5 (D) [(iv)] any agreement which provides for the
14-6 provision of health care services; and
14-7 (E) [(v)] any deposit of cash or securities
14-8 submitted in accordance with Section 13 of this Act as a guarantee
14-9 that the obligations will be duly performed; and
14-10 (5) [(D)] nothing in the proposed method of operation,
14-11 as shown by the information submitted pursuant to Section 4 of this
14-12 Act, or by independent investigation, is contrary to Texas law.
14-13 (b) [(c)] If [the board or] the commissioner[, or both,]
14-14 shall certify that the health maintenance organization's proposed
14-15 plan of operation does not meet the requirements of this section,
14-16 the commissioner shall not issue the certificate of authority. The
14-17 commissioner shall notify the applicant that it is deficient[,] and
14-18 shall specify in what respects it is deficient.
14-19 (c) [(d)] A certificate of authority shall continue in force
14-20 as long as the person to whom it is issued meets the requirements
14-21 of this Act or until suspended or revoked by the commissioner or
14-22 terminated at the request of the certificate holder. Any change in
14-23 control, as defined by Article 21.49-1 of the Insurance Code of
14-24 Texas, of the health maintenance organization, shall be subject to
14-25 the approval of the commissioner.
14-26 SECTION 5. Section 9, Texas Health Maintenance Organization
14-27 Act (Article 20A.09, Vernon's Texas Insurance Code), as amended by
14-28 Chapters 1091 and 1096, Acts of the 70th Legislature, Regular
14-29 Session, 1987, is amended to read as follows:
14-30 Sec. 9. EVIDENCE OF COVERAGE AND CHARGES. (a)(1) Every
15-1 enrollee residing in this state is entitled to evidence of coverage
15-2 under a health care plan. If the enrollee obtains coverage under a
15-3 health care plan through an insurance policy or a contract issued
15-4 by a group hospital service corporation, whether by option or
15-5 otherwise, the insurer or the group hospital service corporation
15-6 shall issue the evidence of coverage. Otherwise, the health
15-7 maintenance organization shall issue the evidence of coverage.
15-8 (2) No evidence of coverage, or amendment thereto,
15-9 shall be issued or delivered to any person in this state until a
15-10 copy of the form of evidence of coverage, or amendment thereto, has
15-11 been filed with and approved by the commissioner.
15-12 (3) An evidence of coverage shall contain:
15-13 (A) no provisions or statements which are
15-14 unjust, unfair, inequitable, misleading, deceptive, which encourage
15-15 misrepresentation, or which are untrue, misleading, or deceptive as
15-16 defined in Section 14 of this Act; [and]
15-17 (B) a clear and complete statement, if a
15-18 contract, or a reasonably complete facsimile, if a certificate, of:
15-19 (i) the medical, health care services, or
15-20 single health care service and the issuance of other benefits, if
15-21 any, to which the enrollee is entitled under the health care plan
15-22 or single health care service plan;
15-23 (ii) any limitation on the services, kinds
15-24 of services, benefits, or kinds of benefits to be provided,
15-25 including any deductible or co-payment feature;
15-26 (iii) where and in what manner information
15-27 is available as to how services may be obtained; and
15-28 (iv) a clear and understandable
15-29 description of the health maintenance organization's methods for
15-30 resolving enrollee complaints. Any subsequent changes may be
16-1 evidenced in a separate document issued to the enrollee;
16-2 (C) a provision that, if medically necessary
16-3 covered services are not available through network physicians or
16-4 providers, the health maintenance organization must, on the request
16-5 of a network physician or provider, within a reasonable time period
16-6 allow referral to a nonnetwork physician or provider and shall
16-7 fully reimburse the nonnetwork physician or provider at the usual
16-8 and customary or an agreed rate; each contract must further provide
16-9 for a review by a specialist of the same, or a similar, specialty
16-10 as the type of physician or provider to whom a referral is
16-11 requested before the health maintenance organization may deny a
16-12 referral;
16-13 (D) a provision to allow enrollees with chronic,
16-14 disabling, or life-threatening illnesses to apply to the health
16-15 maintenance organization's medical director to utilize a nonprimary
16-16 care physician specialist as a primary care physician, provided
16-17 that:
16-18 (i) the request includes information
16-19 specified by the health maintenance organization, including but not
16-20 limited to certification of medical need, and is signed by the
16-21 enrollee and the nonprimary care physician specialist interested in
16-22 serving as the primary care physician;
16-23 (ii) the nonprimary care physician
16-24 specialist meets the health maintenance organization's requirements
16-25 for primary care physician participation; and
16-26 (iii) the nonprimary care physician
16-27 specialist is willing to accept the coordination of all of the
16-28 enrollee's health care needs;
16-29 (E) a provision that if the request for special
16-30 consideration specified in Paragraph D of this subdivision is
17-1 denied, an enrollee may appeal the decision through the health
17-2 maintenance organization's established complaint and appeals
17-3 process; and
17-4 (F) a provision that the effective date of the
17-5 new designation of a nonprimary care physician specialist as set
17-6 out in Paragraph D of this subdivision shall not be retroactive;
17-7 the health maintenance organization may not reduce the amount of
17-8 compensation owed to the original primary care physician beyond the
17-9 date of the new designation.
17-10 (4) Any form of the evidence of coverage or group
17-11 contract to be used in this state, and any amendments thereto, are
17-12 subject to the filing and approval requirements of Subsection (c)
17-13 of this section, unless it is subject to the jurisdiction of the
17-14 commissioner under the laws governing health insurance or group
17-15 hospital service corporations, in which event the filing and
17-16 approval provisions of such law shall apply. To the extent,
17-17 however, that such provisions do not apply to the requirements of
17-18 Subdivision (3), Subsection (a) of this section, the requirements
17-19 of Subdivision (3) shall be applicable.
17-20 (b) The formula or method for calculating the schedule of
17-21 charges for enrollee coverage for medical services or health care
17-22 services must be filed with the commissioner before it is used in
17-23 conjunction with any health care plan. The formula or method must
17-24 be established in accordance with actuarial principles for the
17-25 various categories of enrollees. The charges resulting from the
17-26 application of the formula or method may not be altered for an
17-27 individual enrollee based on the status of that enrollee's health.
17-28 The formula or method must produce charges that are not excessive,
17-29 inadequate, or unfairly discriminatory, and benefits must be
17-30 reasonable with respect to the rates produced by the formula or
18-1 method. A statement by a qualified actuary that certifies the
18-2 appropriateness of the formula or method must accompany the filing
18-3 together with supporting information considered adequate by the
18-4 commissioner.
18-5 (c) The commissioner shall, within a reasonable period,
18-6 approve any form of the evidence of coverage or group contract, or
18-7 amendment thereto, if the requirements of this section are met.
18-8 After notice and opportunity for hearing, the commissioner may
18-9 withdraw previous approval of any form, if the commissioner
18-10 determines that it violates or does not comply with this Act or a
18-11 rule adopted by the commissioner [State Board of Insurance]. It
18-12 shall be unlawful to issue such form until approved. If the
18-13 commissioner disapproves such form, the commissioner shall notify
18-14 the filer. In the notice, the commissioner shall specify the
18-15 reason for the disapproval. A hearing shall be granted within 30
18-16 days after a request in writing by the person filing. If the
18-17 commissioner does not disapprove any form within 30 days after the
18-18 filing of such form it shall be considered approved; provided that
18-19 the commissioner may by written notice extend the period for
18-20 approval or disapproval of any filing for such further time, not
18-21 exceeding an additional 30 days, as necessary for proper
18-22 consideration of the filing.
18-23 (d) The commissioner may require the submission of whatever
18-24 relevant information he or she deems necessary in determining
18-25 whether to approve or disapprove a filing made pursuant to this
18-26 section.
18-27 (e) Article 3.74 of the Texas Insurance Code applies to
18-28 health maintenance organizations other than those health
18-29 maintenance organizations offering only a single health care
18-30 service plan.
19-1 (f) Article 3.51-9 of the Texas Insurance Code applies to
19-2 health maintenance organizations other than those health
19-3 maintenance organizations offering only a single health care
19-4 service plan.
19-5 (g) Evidence of coverage does not constitute a health
19-6 insurance policy as that term is defined by the Insurance Code.
19-7 (h) Article 3.70-1(F)(5) of the Insurance Code applies to
19-8 health maintenance organizations other than those health
19-9 maintenance organizations offering only a single health care
19-10 service plan.
19-11 (i) [(h)] Article 3.72 of the Insurance Code applies to
19-12 health maintenance organizations to the extent that such article is
19-13 not in conflict with this Act and to the extent that the
19-14 residential treatment center or crisis stabilization unit is
19-15 located within the service area of the health maintenance
19-16 organization and subject to such inspection and review as required
19-17 by this Act or the rules hereunder.
19-18 (j) [(i)] A health maintenance organization shall comply
19-19 with Article 21.55 of the Insurance Code with respect to prompt
19-20 payment to enrollees [this code applies to out-of-area or emergency
19-21 claims for which benefits are not assigned or payment is not made
19-22 directly to the physician or provider]. A health maintenance
19-23 organization shall make payment to a physician or provider for
19-24 covered services rendered to enrollees of the health maintenance
19-25 organization not later than the 45th day after the date a claim for
19-26 payment is received with documentation reasonably necessary for the
19-27 health maintenance organization to process the claim or within the
19-28 time period specified by written agreement, whichever time period
19-29 is shorter. For purposes of this subsection, "covered services"
19-30 means health care services and benefits to which enrollees are
20-1 entitled under the terms of an applicable evidence of coverage.
20-2 (k) [(j)] A health maintenance organization may provide
20-3 benefits under a health care plan to a dependent grandchild of an
20-4 enrollee when the dependent grandchild is less than 21 years old
20-5 and living with and in the household of the enrollee.
20-6 (l) A health maintenance organization that offers a basic
20-7 health care plan shall provide or arrange for the provision of
20-8 basic health care services to its enrollees as needed and without
20-9 limitations as to time and cost other than limitations prescribed
20-10 by rule of the commissioner.
20-11 (m) The commissioner may adopt minimum standards relating to
20-12 basic health care services.
20-13 SECTION 6. Section 11, Texas Health Maintenance Organization
20-14 Act (Article 20A.11, Vernon's Texas Insurance Code), is amended to
20-15 read as follows:
20-16 Sec. 11. INFORMATION TO PROSPECTIVE AND CURRENT GROUP
20-17 CONTRACT HOLDERS AND ENROLLEES. (a) Each plan application form
20-18 shall prominently include a space in which the enrollee at the time
20-19 of application or enrollment shall make a selection of a primary
20-20 care physician or primary care provider. An enrollee shall at all
20-21 times have the right to select or change a primary care physician
20-22 or primary care provider within the health maintenance organization
20-23 network of available primary care physicians and primary care
20-24 providers. However, a health maintenance organization may limit
20-25 an enrollee's request to change physicians or providers to no more
20-26 than four changes in any 12-month period.
20-27 (b) A health maintenance organization shall provide on
20-28 request an accurate written description of health care plan terms
20-29 and conditions, as referenced in Section 4(a)(13) of this Act and
20-30 28 T.A.C. Section 11.301(5)(I) (relating to Filing Requirements),
21-1 to allow any current or prospective group contract holder and
21-2 current or prospective enrollee eligible for enrollment in a health
21-3 care plan to make comparisons and informed decisions before
21-4 selecting among health care plans. The written description must be
21-5 in a readable and understandable format as prescribed by the
21-6 commissioner and shall include a current list of physicians and
21-7 providers. The health maintenance organization may provide its
21-8 handbook to satisfy this requirement provided the handbook's
21-9 content is substantially similar to and achieves the same level of
21-10 disclosure as the written description prescribed by the
21-11 commissioner and the current list of physicians and providers is
21-12 also provided.
21-13 (c) A health maintenance organization shall notify enrollees
21-14 within 30 days of any substantive changes to the payment
21-15 arrangements between the health maintenance organization and health
21-16 care physicians or providers.
21-17 (d) No health maintenance organization, or representative
21-18 thereof, may cause or knowingly permit the use or distribution of
21-19 prospective enrollee information which is untrue or misleading.
21-20 (e) Every health maintenance organization shall provide to
21-21 its enrollees reasonable notice of any material adverse change in
21-22 the operation of the organization that will affect them directly.
21-23 SECTION 7. Section 12, Texas Health Maintenance Organization
21-24 Act (Article 20A.12, Vernon's Texas Insurance Code), is amended to
21-25 read as follows:
21-26 Sec. 12. COMPLAINT SYSTEM. (a) Every health maintenance
21-27 organization shall establish and maintain an internal system for
21-28 the resolution of complaints including a process for the notice and
21-29 appeal of any dissatisfaction expressed by a complainant orally or
21-30 in writing to the health maintenance organization with any aspect
22-1 of the health maintenance organization's operation, including but
22-2 not limited to dissatisfaction with plan administration; appeal of
22-3 an adverse determination; the denial, reduction, or termination of
22-4 a service; the way a service is provided; or disenrollment
22-5 decisions, expressed by a complainant. Such complaint procedure
22-6 shall include provisions to meet the following requirements:
22-7 (1) If a complainant notifies the health maintenance
22-8 organization orally or in writing of a complaint, the health
22-9 maintenance organization shall, not later than the fifth business
22-10 day after the date of the receipt of the complaint, send to the
22-11 complainant a letter acknowledging the date of the health
22-12 maintenance organization's receipt of the complaint. The
22-13 acknowledgment letter shall include a description of the complaint
22-14 procedures and time frames. If the health maintenance organization
22-15 is responding to oral complaints, the health maintenance
22-16 organization shall also enclose a one page complaint form.
22-17 (2) The health maintenance organization shall
22-18 investigate each oral and written complaint received in accordance
22-19 with its own policies and in compliance with this Act.
22-20 (3) The total time for acknowledgment, investigation,
22-21 and resolution of the complaint by the health maintenance
22-22 organization shall not exceed 30 calendar days after the date the
22-23 health maintenance organization receives the complaint from the
22-24 complainant.
22-25 (4) Subdivisions (1) and (3) of this subsection do not
22-26 apply to complaints concerning emergencies or denials of continued
22-27 stays for hospitalization. Investigation and resolution of
22-28 complaints concerning emergencies or denials of continued stays for
22-29 hospitalization shall be concluded in accordance with the medical
22-30 or dental immediacy of the case and shall not exceed one working
23-1 day from receipt of the complaint.
23-2 (5) After the health maintenance organization has
23-3 investigated a complaint, the health maintenance organization shall
23-4 issue a response letter to the complainant explaining the health
23-5 maintenance organization's resolution of the complaint within the
23-6 time frames set forth in Subdivision (3) of this subsection. The
23-7 letter shall include a statement of the specific medical and
23-8 contractual reasons for the resolution and the specialization of
23-9 any physician or other provider consulted. If the resolution is to
23-10 deny services based on an adverse determination of medical
23-11 necessity, the clinical basis used to reach that decision shall be
23-12 enclosed. The response letter shall contain a full description of
23-13 the process for appeal, including the time frames for the appeals
23-14 process and the time frames for the final decision on the appeal.
23-15 (6) In the event the complaint is not resolved to the
23-16 satisfaction of the complainant, the health maintenance
23-17 organization shall provide an appeal process which shall include
23-18 the right of the complainant either to appear in person before a
23-19 complaint appeal panel where the enrollee normally receives health
23-20 care services, unless another site is agreed to by the complainant,
23-21 or to address a written appeal to the complaint appeal panel. The
23-22 health maintenance organization shall complete the following
23-23 appeals process within 30 calendar days after the request for the
23-24 appeal.
23-25 (7) The health maintenance organization shall send an
23-26 acknowledgment letter to the complainant within five working days
23-27 after the receipt of the request for appeal.
23-28 (8) The health maintenance organization shall appoint
23-29 members to the complaint appeal panel which shall advise the health
23-30 maintenance organization on the resolution of the dispute. The
24-1 complaint appeal panel shall be composed of equal numbers of health
24-2 maintenance organization staff, physicians or other providers, and
24-3 enrollees. No member of the appeal panel shall have been
24-4 previously involved in the disputed decision. The physicians or
24-5 other providers shall have experience in the area of care that is
24-6 in dispute and must be independent of the physician or physicians
24-7 or provider or providers who made the prior determination or
24-8 determinations. If specialty care is in dispute, the appeal panel
24-9 must include an additional person who is a specialist in the field
24-10 of care to which the appeal relates. The enrollees shall not be
24-11 employees of the health maintenance organization.
24-12 (9) Not less than five working days before the meeting
24-13 of the panel, the health maintenance organization shall provide to
24-14 the complainant or the complainant's designated representative any
24-15 documentation to be presented to the panel by the health
24-16 maintenance organization staff, the specialization of any
24-17 physicians or providers consulted during the investigation, and the
24-18 name and affiliation of all health maintenance organization
24-19 representatives on the panel.
24-20 (10) The complainant and a person acting on behalf of
24-21 the complainant shall have the right to appear in person before the
24-22 complaint appeal panel, to present alternative expert testimony,
24-23 and to request the presence of and question the person or persons
24-24 responsible for making the prior determination which resulted in
24-25 the appeal.
24-26 (11) Investigation and resolution of appeals relating
24-27 to ongoing emergencies or denials of continued stays for
24-28 hospitalization shall be concluded in accordance with the medical
24-29 or dental immediacy of the case but in no event to exceed one
24-30 working day after the complainant's request for appeal. Due to the
25-1 ongoing emergency or continued hospital stay and at the
25-2 complainant's request, the health maintenance organization shall in
25-3 lieu of a complaint appeal panel provide a review by a physician or
25-4 provider who has not previously reviewed the case and is of the
25-5 same or similar speciality as typically manages the medical
25-6 condition, procedure, or treatment under discussion for review of
25-7 the appeal. The physician or provider reviewer may interview the
25-8 patient or the patient's representative and shall render a decision
25-9 on the appeal. Initial notice of the decision may be delivered
25-10 orally if followed by written notice of the determination within
25-11 three days. Investigation and resolution of appeals after
25-12 emergency care has been provided shall be conducted in accordance
25-13 with the process set out in this subsection, including the right to
25-14 a review by an appeal panel.
25-15 (12) Notice of the final decision of the health
25-16 maintenance organization on the appeal shall include a statement of
25-17 the specific medical determination, clinical basis, and contractual
25-18 criteria used to reach the final decision. The notice shall also
25-19 include the toll-free telephone number and address of the Texas
25-20 Department of Insurance.
25-21 (13) The health maintenance organization shall
25-22 maintain a record of all complaints and any complaint proceedings
25-23 for three years. The complainant has a right to a copy of the
25-24 record.
25-25 (14) The health maintenance organization shall
25-26 maintain a complaint and appeal log of each complaint.
25-27 (15) The health maintenance organization shall
25-28 maintain documentation for all complaints and action taken for a
25-29 period of three years from the date of the receipt of the
25-30 complaint, and the Texas Department of Insurance must be able to
26-1 review such documentation during any examination [a complaint
26-2 system to provide reasonable procedures for the resolution of
26-3 written complaints initiated by enrollees concerning health care
26-4 services].
26-5 (b) The commissioner [or board] may examine such complaint
26-6 system for compliance with this Act and require the health
26-7 maintenance organization to make corrections as deemed necessary by
26-8 the commissioner.
26-9 SECTION 8. The Texas Health Maintenance Organization Act
26-10 (Article 20A.01 et seq., Vernon's Texas Insurance Code), is amended
26-11 to adding Section 12A to read as follows:
26-12 Sec. 12A. FILING COMPLAINTS WITH THE TEXAS DEPARTMENT OF
26-13 INSURANCE. (a) Any person, including persons who have attempted
26-14 to resolve complaints through the health maintenance organization's
26-15 complaint system process who are dissatisfied with the resolution,
26-16 may report an alleged violation of this Act to the Texas Department
26-17 of Insurance.
26-18 (b) The commissioner shall investigate a complaint against a
26-19 health maintenance organization to determine compliance with this
26-20 Act within 60 days after the Texas Department of Insurance's
26-21 receipt of the complaint and all information necessary for the
26-22 department to determine compliance. The commissioner may extend
26-23 the time necessary to complete an investigation in the event any of
26-24 the following circumstances occur:
26-25 (1) additional information is needed;
26-26 (2) an on-site review is necessary;
26-27 (3) the health maintenance organization, the physician
26-28 or provider, or the complainant does not provide all documentation
26-29 necessary to complete the investigation; or
26-30 (4) other circumstances beyond the control of the
27-1 department occur.
27-2 SECTION 9. Subsections (a), (b), (c), (f), (g), and (h),
27-3 Section 13, Texas Health Maintenance Organization Act (Article
27-4 20A.13, Vernon's Texas Insurance Code), are amended to read as
27-5 follows:
27-6 (a) Unless otherwise provided by this section, each health
27-7 maintenance organization shall deposit with the comptroller [State
27-8 Treasurer] cash or securities, or any combination of these or other
27-9 guarantees that are acceptable to the commissioner [State Board of
27-10 Insurance], in an amount as set forth in this section.
27-11 (b) For a health maintenance organization which has not
27-12 received a certificate of authority from the State Board of
27-13 Insurance or the commissioner prior to September 1, 1987:
27-14 (1) the amount of the initial deposit or other
27-15 guarantee shall be $100,000 for an organization offering basic
27-16 health care services and $50,000 for an organization offering a
27-17 single health care service plan;
27-18 (2) on or before March 15 of the year following the
27-19 year in which the health maintenance organization receives a
27-20 certificate of authority, it shall deposit with the comptroller
27-21 [State Treasurer] an amount equal to the difference between the
27-22 initial deposit and 100 percent of its estimated uncovered health
27-23 care expenses for the first 12 months of operation;
27-24 (3) on or before March 15 of each subsequent year, it
27-25 shall deposit the difference between its total uncovered health
27-26 care expenses based on its annual statement from the previous year
27-27 and the total amount previously deposited and not withdrawn from
27-28 the State Treasury; and
27-29 (4) in any year in which the amount determined in
27-30 accordance with Subdivision (3) of this subsection is zero or less
28-1 than zero, the commissioner [State Board of Insurance] may not
28-2 require the health maintenance organization to make any additional
28-3 deposit under this subsection.
28-4 (c) For a health maintenance organization which has received
28-5 a certificate of authority from the State Board of Insurance prior
28-6 to September 1, 1987:
28-7 (1) on or before March 15, 1988, the organization
28-8 shall deposit an amount equal to the sum of:
28-9 (A) $100,000 for an organization offering basic
28-10 health care services or $50,000 for an organization offering a
28-11 single health care service plan; and
28-12 (B) 100 percent of the uncovered health care
28-13 expenses for the preceding 12 months of operation;
28-14 (2) on or before March 15 of each subsequent year, the
28-15 organization shall make additional deposits of the difference
28-16 between its total uncovered health care expenses based on its
28-17 annual statement from the previous year and the total amount
28-18 previously deposited and not withdrawn from the State Treasury; and
28-19 (3) in any year in which the amount determined in
28-20 accordance with Subdivision (2) of this subsection is zero or less
28-21 than zero, the commissioner [State Board of Insurance] may not
28-22 require the health maintenance organization to make any additional
28-23 deposit under this subsection.
28-24 (f) Upon application by a health maintenance organization
28-25 operating for more than one year under a certificate of authority
28-26 issued by the State Board of Insurance or the commissioner, the
28-27 commissioner [State Board of Insurance] may waive some or all of
28-28 the requirements of Subsection (b) or (c) of this section for any
28-29 period of time it shall deem proper whenever it finds that one or
28-30 more of the following conditions justifies such waiver:
29-1 (1) the total amount of the deposit or other guarantee
29-2 is equal to 25 percent of the health maintenance organization's
29-3 estimated uncovered expenses for the next calendar year;
29-4 (2) the health maintenance organization's net worth is
29-5 equal to at least 25 percent of its estimated uncovered expenses
29-6 for the next calendar year; or
29-7 (3) either the health maintenance organization has a
29-8 net worth of $5,000,000 or its sponsoring organization has a net
29-9 worth of at least $5,000,000 for each health maintenance
29-10 organization whose uncovered expenses it guarantees.
29-11 (g) If one or more of the requirements is waived, any amount
29-12 previously deposited shall remain on deposit until released in
29-13 whole or in part by the comptroller [State Treasurer] upon order of
29-14 the commissioner [State Board of Insurance] pursuant to Subsection
29-15 (f) of this section.
29-16 (h) A health maintenance organization that has made a
29-17 deposit with the comptroller [State Treasurer] may, at its option,
29-18 withdraw the deposit or any part thereof, first having deposited
29-19 with the comptroller [State Treasurer], in lieu thereof, a deposit
29-20 of cash or securities of equal amount and value to that withdrawn.
29-21 Any securities shall be approved by the commissioner [State Board
29-22 of Insurance] before being substituted.
29-23 SECTION 10. Section 14, Texas Health Maintenance
29-24 Organization Act (Article 20A.14, Vernon's Texas Insurance Code),
29-25 is amended by adding Subsections (i) through (l) to read as
29-26 follows:
29-27 (i)(1) A health maintenance organization shall not, as a
29-28 condition of a contract with a physician or provider or in any
29-29 other manner, prohibit, attempt to prohibit, or discourage a
29-30 physician or provider from:
30-1 (A) discussing with or communicating to a
30-2 current, prospective, or former patient, or a party designated by a
30-3 patient, information or opinions regarding the patient's health
30-4 care, including but not limited to the patient's medical condition,
30-5 treatment options, or other health care services; or
30-6 (B) discussing with or communicating in good
30-7 faith to a current, prospective, or former patient, or a party
30-8 designated by a patient, information or opinions regarding the
30-9 provisions, terms, requirements, or services of the health care
30-10 plan as they relate to the medical needs of the patient.
30-11 (2) A health maintenance organization shall not in any
30-12 way penalize, terminate, or refuse to compensate, for covered
30-13 services, a physician or provider for discussing or communicating
30-14 with a current, prospective, or former patient, or a party
30-15 designated by a patient, pursuant to this section.
30-16 (j) A health maintenance organization shall not engage in
30-17 any retaliatory action, including refusal to renew or cancellation
30-18 of coverage, against a group contract holder or enrollee because
30-19 the group, enrollee, or person acting on behalf of the group or
30-20 enrollee has filed a complaint against the health maintenance
30-21 organization or appealed a decision of the health maintenance
30-22 organization.
30-23 (k) A health maintenance organization shall not engage in
30-24 any retaliatory action, including termination of or refusal to
30-25 renew a contract, against a physician or provider because the
30-26 physician or provider has, on behalf of an enrollee, reasonably
30-27 filed a complaint against the health maintenance organization or
30-28 has appealed a decision of the health maintenance organization.
30-29 (l) A health maintenance organization may not use any
30-30 financial incentive or make payment to a physician or provider
31-1 which acts directly or indirectly as an inducement to limit
31-2 medically necessary services.
31-3 SECTION 11. Section 15, Texas Health Maintenance
31-4 Organization Act (Article 20A.15, Vernon's Texas Insurance Code),
31-5 is amended to read as follows:
31-6 Sec. 15. REGULATION OF AGENTS [AGENT FOR SINGLE HEALTH CARE
31-7 SERVICE PLANS]. (a) A health maintenance organization agent is
31-8 anyone who represents any health maintenance organization in the
31-9 solicitation, negotiation, procurement, or effectuation of health
31-10 maintenance organization membership or holds himself or herself out
31-11 as such. No person or other legal entity may perform the acts of a
31-12 health maintenance organization agent within this state unless such
31-13 person or legal entity has a valid health maintenance organization
31-14 agent's license issued pursuant to this Act. The term "health
31-15 maintenance organization agent" shall not include:
31-16 (1) any regular salaried officer or employee of a
31-17 health maintenance organization or of a licensed health maintenance
31-18 organization agent, who devotes substantially all of his or her
31-19 time to activities other than the solicitation of applications for
31-20 health maintenance organization membership and receives no
31-21 commission or other compensation directly dependent upon the
31-22 business obtained and who does not solicit or accept from the
31-23 public applications for health maintenance organization membership;
31-24 (2) employers or their officers or employees or the
31-25 trustees of any employee benefit plan to the extent that such
31-26 employers, officers, employees, or trustees are engaged in the
31-27 administration or operation of any program of employee benefits
31-28 involving the use of membership in a health maintenance
31-29 organization; provided that such employers, officers, employees, or
31-30 trustees are not in any manner compensated directly or indirectly
32-1 by the health maintenance organization issuing such health
32-2 maintenance organization membership;
32-3 (3) banks or their officers and employees to the
32-4 extent that such banks, officers, and employees collect and remit
32-5 charges by charging same against accounts of depositors on the
32-6 orders of such depositors; or
32-7 (4) any person or the employee of any person who has
32-8 contracted to provide administrative, management, or health care
32-9 services to a health maintenance organization and who is
32-10 compensated for those services by the payment of an amount
32-11 calculated as a percentage of the revenues, net income, or profit
32-12 of the health maintenance organization, if that method of
32-13 compensation is the sole basis for subjecting that person or the
32-14 employee of the person to this section.
32-15 (b) The commissioner [Commissioner of Insurance] shall
32-16 collect in advance from health maintenance organization agent
32-17 applicants a nonrefundable license fee in an amount not to exceed
32-18 $50 as determined by the commissioner [board]. Unless the
32-19 commissioner [State Board of Insurance] accepts a qualifying
32-20 examination administered by a testing service, as provided under
32-21 Article 21.01-1, Insurance Code, as amended, the commissioner
32-22 [Commissioner of Insurance] shall also collect from such applicants
32-23 an examination fee in an amount not to exceed $20 as determined by
32-24 the commissioner [board]. A new examination fee shall be paid for
32-25 each examination. The examination fee shall not be returned under
32-26 any circumstances other than for failure to appear and take the
32-27 examination after the applicant has given at least 24 hours notice
32-28 of an emergency situation to the commissioner [Commissioner of
32-29 Insurance] and received the commissioner's approval.
32-30 (c) Except as may be provided by a staggered renewal system
33-1 adopted under Article 21.01-2, Insurance Code, and its subsequent
33-2 amendments, each license issued to a health maintenance
33-3 organization agent shall expire two years following the date of
33-4 issue, unless prior thereto it is suspended or revoked by the
33-5 commissioner or the authority of the agent to act for the health
33-6 maintenance organization is terminated.
33-7 (d) Licenses which have not expired or been suspended or
33-8 revoked may be renewed by filing with the commissioner [State Board
33-9 of Insurance] a completed renewal application and by paying a
33-10 nonrefundable renewal fee in an amount not to exceed $50 as
33-11 determined by the commissioner [board] on or before the expiration
33-12 of the license.
33-13 (e) Any agent licensed under this section may represent and
33-14 act as an agent for more than one health maintenance organization
33-15 at any time while the agent's license is in force. Any such agent
33-16 and the health maintenance organization involved must give notice
33-17 to the commissioner [State Board of Insurance] of any additional
33-18 appointment or appointments authorizing the agent to act as agent
33-19 for an additional health maintenance organization or health
33-20 maintenance organizations. Such notice must be accompanied by a
33-21 certificate from each health maintenance organization to be named
33-22 in each additional appointment that said health maintenance
33-23 organization desires to appoint the applicant as its agent. This
33-24 notice shall contain such other information as the commissioner
33-25 [State Board of Insurance] may require. The agent shall be
33-26 required to pay a nonrefundable fee in an amount not to exceed $16
33-27 as determined by the commissioner [board] for each additional
33-28 appointment applied for, which fee shall accompany the notice. If
33-29 approval of the additional appointment is not received from the
33-30 commissioner [State Board of Insurance] before the eighth day after
34-1 the date on which the completed notice and fee were received by the
34-2 commissioner [board], the agent and the health maintenance
34-3 organization, in the absence of notice of disapproval, may assume
34-4 that the board approves the application, and the agent may act for
34-5 the health maintenance organization. The commissioner [State Board
34-6 of Insurance] shall suspend the license of an agent during any
34-7 period in which the agent does not have an outstanding valid
34-8 appointment to represent a health maintenance organization. The
34-9 suspension shall be lifted on receipt by the commissioner [board]
34-10 of acceptable notice of valid appointment.
34-11 (f) It shall be the duty of the commissioner to collect from
34-12 every agent of any health maintenance organization in the State of
34-13 Texas under the provisions of this section a licensing fee and an
34-14 initial appointment fee for each appointment by a health
34-15 maintenance organization. All fees collected under this section
34-16 shall be used by the commissioner [State Board of Insurance] to
34-17 administer the provisions of this [the Texas Health Maintenance
34-18 Organization] Act and all laws of this state governing and
34-19 regulating agents for such health maintenance organizations. All
34-20 of such funds shall be paid into the State Treasury to the credit
34-21 of the Texas Department [State Board] of Insurance operating fund
34-22 and shall be paid out for salaries, traveling expenses, office
34-23 expenses, and other incidental expenses incurred and approved by
34-24 the commissioner [State Board of Insurance].
34-25 (g) The commissioner [State Board of Insurance] may, after
34-26 notice and hearings, promulgate such reasonable rules and
34-27 regulations as are necessary to provide for the licensing of
34-28 agents.
34-29 (h) [(m) Duplicate License; Fee.] The commissioner
34-30 [Commissioner of Insurance] shall collect in advance from agents
35-1 requesting duplicate licenses a fee not to exceed $20. The
35-2 commissioner [State Board of Insurance] shall determine the amount
35-3 of the fee.
35-4 (i) [(n)] The commissioner [State Board of Insurance] shall
35-5 issue a license to a corporation if it finds that:
35-6 (1) the corporation is organized or existing under the
35-7 Texas Business Corporation Act, has its principal place of business
35-8 in this state, and has as one of its purposes the authority to act
35-9 as an agent under this section; and
35-10 (2) each officer, director, and shareholder of the
35-11 corporation is individually licensed under this section.
35-12 (j) [(o)] This section may not be construed to permit any
35-13 employee, agent, or corporation to perform any act of an agent
35-14 under this section without obtaining a license.
35-15 (k) [(p)] If, at any time, a corporation that holds an
35-16 agent's license does not maintain the qualifications necessary to
35-17 obtain a license, the commissioner [State Board of Insurance] shall
35-18 cancel or revoke the license of that corporation to act as an
35-19 agent. If a person who is not a licensed agent under this section
35-20 acquires shares in such a corporation by devise or descent, that
35-21 person must either obtain a license or dispose of the shares to a
35-22 person licensed under this section not later than the 90th day
35-23 after the date on which the person acquires the shares.
35-24 (l) [(q)] If an unlicensed person acquires shares in a
35-25 corporation and does not dispose of the shares within the 90-day
35-26 period, the shares must be purchased by the corporation for the
35-27 value of the shares as reflected by the regular books and records
35-28 of the corporation as of the date of the acquisition of the shares
35-29 by the unlicensed person. If the corporation fails or refuses to
35-30 purchase the shares, the commissioner [State Board of Insurance]
36-1 shall cancel its license.
36-2 (m) [(r)] A corporation may redeem the shares of any
36-3 shareholder or the shares of a deceased shareholder on terms agreed
36-4 to by the board of directors and the shareholder or the
36-5 shareholder's personal representative or at a price and on terms
36-6 provided in the articles of incorporation, the bylaws of the
36-7 corporation, or an existing contract entered into by the
36-8 shareholders of the corporation.
36-9 (n) [(s)] With the application for a license or a license
36-10 renewal, each corporation licensed as an agent under this section
36-11 must file a sworn statement listing the names and addresses of all
36-12 of its officers, directors, and shareholders.
36-13 (o) [(t)] Each corporation shall notify the commissioner
36-14 [State Board of Insurance] of any change in its officers,
36-15 directors, or shareholders not later than the 30th day after the
36-16 date on which the change takes effect.
36-17 (p) [(u)] Another corporation may not own an interest in a
36-18 corporation licensed under this section. Each owner of an interest
36-19 in a corporation licensed under this section must be a natural
36-20 person who holds a valid license issued under this section.
36-21 SECTION 12. Section 15A, Texas Health Maintenance
36-22 Organization Act (Article 20A.15A, Vernon's Texas Insurance Code),
36-23 is amended to read as follows:
36-24 Sec. 15A. AGENTS FOR SINGLE HEALTH CARE SERVICE PLANS.
36-25 (a) A person acting as an agent for a health maintenance
36-26 organization offering only a single health care service plan who is
36-27 licensed by examination under Article 21.07, Insurance Code, or
36-28 Chapter 213, Acts of the 54th Legislature, Regular Session, 1955
36-29 (Article 21.07-1, Vernon's Texas Insurance Code), is subject to the
36-30 licensing requirements provided by this section, and except as
37-1 specifically provided by this Act or some other law, no other agent
37-2 licensing requirements apply.
37-3 (b) The commissioner shall collect in advance from
37-4 applicants for licensure as health maintenance organization agents
37-5 under this section a nonrefundable license fee in an amount not to
37-6 exceed $70 as determined by the commissioner [State Board of
37-7 Insurance].
37-8 (c) Except as may be provided by a staggered renewal system
37-9 adopted under Article 21.01-2, Insurance Code, and its subsequent
37-10 amendments, each license issued to a health maintenance
37-11 organization agent under this section shall expire two years
37-12 following the date of issuance, unless before that time the license
37-13 is suspended or revoked by the commissioner or the authority of the
37-14 agent to act for the health maintenance organization is terminated.
37-15 (d) Licenses issued under this section that have not expired
37-16 or been suspended or revoked may be renewed by filing a completed
37-17 application and paying to the commissioner [board] the required
37-18 nonrefundable renewal fee in an amount not to exceed $50 as
37-19 determined by the commissioner [board].
37-20 (e) An agent licensed under this section may represent and
37-21 act as an agent for more than one health maintenance organization
37-22 offering only a single health care service plan at any time while
37-23 that agent's license is in force. The agent and the health
37-24 maintenance organization offering only a single health care service
37-25 plan involved must give notice to the commissioner [State Board of
37-26 Insurance] of any additional appointment authorizing the agent to
37-27 act as agent for an additional health maintenance organization
37-28 offering only a single health care service plan. The notice must
37-29 be accompanied by a certificate from each health maintenance
37-30 organization to be named in each additional appointment stating
38-1 that the health maintenance organization offers only a single
38-2 health care service plan and desires to appoint the applicant as
38-3 its agent. The notice must include other information required by
38-4 the commissioner [State Board of Insurance]. The agent shall pay a
38-5 nonrefundable fee in an amount not to exceed $70 as determined by
38-6 the commissioner [State Board of Insurance] for each additional
38-7 appointment applied for. The fee must accompany the notice. If
38-8 approval of the additional appointment is not received from the
38-9 commissioner [State Board of Insurance] before the eighth day after
38-10 the date on which the completed notice and fee were received by the
38-11 commissioner [board], the agent and the health maintenance
38-12 organization, in the absence of notice of disapproval, may assume
38-13 that the commissioner [board] approves the application, and the
38-14 agent may act for the health maintenance organization offering a
38-15 single health care service plan. The commissioner [State Board of
38-16 Insurance] shall suspend the license of an agent during any period
38-17 in which the agent does not have an outstanding valid appointment
38-18 to represent a health maintenance organization offering a single
38-19 health care service plan. The suspension shall be lifted on
38-20 receipt by the commissioner [board] of acceptable notice of valid
38-21 appointment.
38-22 (f) The commissioner shall collect from each agent for any
38-23 health maintenance organization offering only a single health care
38-24 service plan a license fee and an appointment fee for each
38-25 additional appointment.
38-26 (g) Fees collected under this section shall be used by the
38-27 commissioner [State Board of Insurance] to administer this Act and
38-28 laws governing and regulating agents for health maintenance
38-29 organizations. The funds shall be deposited in the state treasury
38-30 to the credit of the Texas Department [State Board] of Insurance
39-1 operating fund and shall be paid out for salaries, traveling
39-2 expenses, office expenses, and other incidental expenses incurred
39-3 and approved by the commissioner [State Board of Insurance].
39-4 (h) The commissioner [State Board of Insurance] may, after
39-5 notice and hearing, adopt reasonable rules that are necessary to
39-6 provide for the licensing of agents under this section.
39-7 (i) A licensee may renew an unexpired license issued under
39-8 this section by filing the required renewal application and paying
39-9 a nonrefundable fee with the commissioner [State Board of
39-10 Insurance] on or before the expiration date of the license.
39-11 (j) [(l)] A health maintenance organization offering only a
39-12 single health care service plan that desires to appoint an agent
39-13 under this section shall provide to its prospective agents a
39-14 written manual, a copy of which shall be filed with the
39-15 commissioner [State Board of Insurance], outlining and describing
39-16 the single health care service offered by the health maintenance
39-17 organization, outlining this Act, and the rules of the [State Board
39-18 of Insurance and] commissioner adopted under this Act. The health
39-19 maintenance organization shall certify to the commissioner [State
39-20 Board of Insurance] that it has provided the written manual
39-21 required by this subsection to its prospective agents and has
39-22 provided, under the supervision of a licensed health maintenance
39-23 organization agent, a minimum of four hours of training in its
39-24 single health care service, this Act, and the rules of the [State
39-25 Board of Insurance and the] commissioner adopted under this Act.
39-26 (k) [(n)] Any regular salaried officer or employee of a
39-27 health maintenance organization offering only a single health care
39-28 service plan who solicits applications on behalf of that health
39-29 maintenance organization must be licensed as a health maintenance
39-30 organization agent under this section and must take any examination
40-1 and pay any fee provided by Subsection [Subsections] (b) [and (j)]
40-2 of Section 15 of this Act.
40-3 (l) [(o)] The commissioner shall collect in advance from
40-4 agents requesting duplicate licenses a fee not to exceed $20. The
40-5 commissioner [State Board of Insurance] shall determine the amount
40-6 of the fee.
40-7 SECTION 13. Section 17, Texas Health Maintenance
40-8 Organization Act (Article 20A.17, Vernon's Texas Insurance Code),
40-9 is amended to read as follows:
40-10 Sec. 17. EXAMINATIONS. (a) The commissioner may make an
40-11 examination concerning the quality of health care services and of
40-12 the affairs of any applicant for a certificate of authority or any
40-13 health maintenance organization as often as the commissioner deems
40-14 [it is deemed] necessary, but not less frequently than once every
40-15 three years.
40-16 (b) [The board may make an examination concerning the
40-17 quality of health care services of any health maintenance
40-18 organization as often as it deems it necessary, but not less
40-19 frequently than once every three years.]
40-20 [(c)] (1) Every health maintenance organization shall make
40-21 its books and records relating to its operation available for such
40-22 examinations and in every way facilitate the examinations. Every
40-23 physician and provider with whom a health maintenance organization
40-24 has a contract, agreement, or other arrangement need only make
40-25 available for examination that portion of its books and records
40-26 relevant to its relationship with the health maintenance
40-27 organization.
40-28 (2) Medical, hospital, and health records of enrollees
40-29 and records of physicians and providers providing service under
40-30 independent contract with a health maintenance organization shall
41-1 only be subject to such examination as is necessary for an ongoing
41-2 quality of health assurance program concerning health care
41-3 procedures and outcome in accordance with an approved plan as
41-4 provided for in this Act. Said plan shall provide for adequate
41-5 protection of confidentiality of medical information and shall only
41-6 be disclosed in accordance with applicable law and this Act and
41-7 shall only be subject to subpoena upon a showing of good cause.
41-8 (3) For the purpose of examinations, the commissioner
41-9 [and board] may administer oaths to and examine the officers and
41-10 agents of the health maintenance organization and the principals of
41-11 such physicians and providers concerning their business.
41-12 (c) [(d)] Articles 1.04A, 1.15, 1.16, and 1.19, as amended,
41-13 of the Insurance Code shall be construed to apply to health
41-14 maintenance organizations, except to the extent that the
41-15 commissioner determines that the nature of the examination of a
41-16 health maintenance organization renders such clearly inappropriate.
41-17 (d) [(e)] Articles 1.12, 1.24, and 1.30, and Section 7 of
41-18 Article 1.10, Insurance Code, apply to health maintenance
41-19 organizations.
41-20 SECTION 14. Subsections (d) and (f), Section 18, Texas
41-21 Health Maintenance Organization Act (Article 20A.18, Vernon's Texas
41-22 Insurance Code), are amended to read as follows:
41-23 (d) Except as otherwise provided by this subsection, the
41-24 bond required under Subsection (c) of this section must be issued
41-25 by an insurance company that holds a certificate of authority in
41-26 this state. If, after notice and hearing, the commissioner [State
41-27 Board of Insurance] determines that the fidelity bond required by
41-28 this section is not available from an insurance company that holds
41-29 a certificate of authority in this state, a fidelity bond procured
41-30 by a licensed Texas surplus lines agent resident in this state in
42-1 compliance with Article 1.14-2, Insurance Code, satisfies the
42-2 requirements of this section.
42-3 (f) Instead of a bond, the management contractor may deposit
42-4 with the comptroller [State Treasurer] cash or securities
42-5 acceptable to the commissioner [State Board of Insurance]. Such a
42-6 deposit must be maintained in the amount and subject to the same
42-7 conditions as required for a bond under this section.
42-8 SECTION 15. The Texas Health Maintenance Organization Act
42-9 (Article 20A.01 et seq., Vernon's Texas Insurance Code), is amended
42-10 by adding Section 18A to read as follows:
42-11 Sec. 18A. PHYSICIAN AND PROVIDER CONTRACTS. (a) A health
42-12 maintenance organization shall, on request, make available and
42-13 disclose to physicians and providers written application procedures
42-14 and qualification requirements for contracting with the health
42-15 maintenance organization. Each physician and provider who
42-16 initially applies to contract with a health maintenance
42-17 organization for the provision of health care services on behalf
42-18 of the health maintenance organization and who is denied a
42-19 contract with the health maintenance organization must be provided
42-20 written notice of the reasons the initial application was denied.
42-21 Unless otherwise limited by Article 21.52B, Insurance Code, this
42-22 subsection does not prohibit a health maintenance organization plan
42-23 from rejecting an application from a physician or provider based on
42-24 the determination that the plan has sufficient qualified physicians
42-25 or providers.
42-26 (b) Before terminating a contract with a physician or
42-27 provider, the health maintenance organization shall provide a
42-28 written explanation to the physician or provider of the reasons for
42-29 termination. On request and before the effective date of the
42-30 termination, a physician or provider shall be entitled to a review
43-1 of the health maintenance organization's proposed termination by an
43-2 advisory review panel, except in cases in which there is imminent
43-3 harm to patient health or an action by a state medical or dental or
43-4 other medical or dental licensing board, or other licensing board
43-5 or other government agency, that effectively impairs the
43-6 physician's or provider's ability to practice medicine, dentistry,
43-7 or other profession, or in cases of fraud or malfeasance. The
43-8 advisory review panel shall be composed of physicians and
43-9 providers, including at least one representative in the physician's
43-10 or provider's specialty or a similar specialty, if available,
43-11 appointed to serve on the standing quality assurance committee or
43-12 utilization review committee of the health maintenance
43-13 organization. The decision of the advisory review panel must be
43-14 considered but is not binding on the health maintenance
43-15 organization. The health maintenance organization shall provide to
43-16 the affected physician or provider, on request, a copy of the
43-17 recommendation of the advisory review panel and the health
43-18 maintenance organization's determination.
43-19 (c) Each contract between a health maintenance organization
43-20 and a physician or provider of health care services must provide
43-21 that reasonable advance notice be given to an enrollee of the
43-22 impending termination from the plan of a physician or provider who
43-23 is currently treating the enrollee. Each contract must also
43-24 provide that the termination of the physician or provider contract,
43-25 except for reason of medical competence or professional behavior,
43-26 does not release the health maintenance organization from the
43-27 obligation to reimburse the physician or provider who is treating
43-28 an enrollee of special circumstance, such as a person who has a
43-29 disability, acute condition, or life-threatening illness or is past
43-30 the twenty-fourth week of pregnancy, at no less than the contract
44-1 rate for that enrollee's care in exchange for continuity of ongoing
44-2 treatment of an enrollee then receiving medically necessary
44-3 treatment in accordance with the dictates of medical prudence. For
44-4 purposes of this subsection, "special circumstance" means a
44-5 condition such that the treating physician or provider reasonably
44-6 believes that discontinuing care by the treating physician or
44-7 provider could cause harm to the patient. The special circumstance
44-8 shall be identified by the treating physician or provider, who must
44-9 request that the enrollee be permitted to continue treatment under
44-10 the physician's or provider's care and agree not to seek payment
44-11 from the patient of any amounts for which the enrollee would not be
44-12 responsible if the physician or provider were still on the health
44-13 maintenance organization network. Contracts between a health
44-14 maintenance organization and physicians or providers shall provide
44-15 procedures for resolving disputes regarding the necessity for
44-16 continued treatment by a physician or provider. This section does
44-17 not extend the obligation of the health maintenance organization to
44-18 reimburse the terminated physician or provider for ongoing
44-19 treatment of an enrollee beyond the 90th day after the effective
44-20 date of the termination.
44-21 (d) A physician or provider who is terminated or deselected
44-22 shall be entitled to an expedited review process by the health
44-23 maintenance organization on request by the physician or provider.
44-24 If the physician or provider is deselected for reasons other than
44-25 at the physician's or provider's request, the health maintenance
44-26 organization may not notify patients of the physician's or
44-27 provider's deselection until the effective date of the termination
44-28 or the time a review panel makes a formal recommendation, whichever
44-29 is later. If a physician or provider is deselected for reasons
44-30 related to imminent harm, the health maintenance organization may
45-1 notify patients immediately.
45-2 (e) The following applies to any health maintenance
45-3 organization that to any extent uses capitation as a method of
45-4 compensation:
45-5 (1) The health maintenance organization shall begin
45-6 payment of capitated amounts to the enrollee's primary care
45-7 physician or primary care provider, calculated from the date of
45-8 enrollment, no later than the 90th day following the date an
45-9 enrollee has selected or has been assigned a primary care physician
45-10 or primary care provider. If selection or assignment does not
45-11 occur at the time of enrollment, capitation which would otherwise
45-12 have been paid to a selected primary care physician or primary care
45-13 provider had a selection been made shall be reserved as a
45-14 capitation payable until such time as an enrollee makes a selection
45-15 or the plan assigns a primary care physician or primary care
45-16 provider.
45-17 (2) If an enrollee does not select a primary care
45-18 physician or primary care provider at the time of application or
45-19 enrollment, a health maintenance organization may assign an
45-20 enrollee to a primary care physician or primary care provider. If
45-21 a health maintenance organization elects to assign an enrollee to a
45-22 primary care physician or primary care provider, the assignment
45-23 shall be made to a primary care physician or primary care provider
45-24 located within the zip code nearest the enrollee's residence or
45-25 place of employment and, to the extent practicable given the zip
45-26 code limitation, shall be done in a manner that results in a fair
45-27 and equal distribution of enrollees among the plan's primary care
45-28 physicians or primary care providers. An enrollee shall have the
45-29 right at any time to reject the physician or provider assigned and
45-30 to select another physician or provider from the list of primary
46-1 care physicians or primary care providers for the health
46-2 maintenance organization network. An election by an enrollee to
46-3 reject an assigned physician or provider shall not be counted as a
46-4 change in providers for purposes of the limitation described in
46-5 Section 11(a) of this Act.
46-6 (3) A health maintenance organization shall notify a
46-7 physician or provider of the selection of the physician or provider
46-8 as a primary care physician or primary care provider by an enrollee
46-9 within five working days of the selection or assignment of an
46-10 enrollee to that physician or provider by the health maintenance
46-11 organization.
46-12 (4) As an alternative to the provisions of
46-13 Subdivisions (1), (2), and (3) of this subsection, a health
46-14 maintenance organization may seek approval from the Texas
46-15 Department of Insurance of a different capitation payment scheme
46-16 that assures:
46-17 (A) immediate availability and accessibility of
46-18 a primary care physician or primary care provider; and
46-19 (B) payment to the primary care physician or
46-20 primary care provider of a capitation amount certified by a
46-21 qualified actuary to be actuarially sufficient to compensate the
46-22 primary care physician or primary care provider for the risk being
46-23 assumed.
46-24 (f) A contract between a health maintenance organization and
46-25 a physician or provider may not contain any clause purporting to
46-26 indemnify the health maintenance organization for any tort
46-27 liability resulting from acts or omissions of the health
46-28 maintenance organization.
46-29 (g) All contracts or other agreements between a health
46-30 maintenance organization and a physician or provider shall specify
47-1 that the provider will hold an enrollee harmless for payment of the
47-2 cost of covered health care services in the event the health
47-3 maintenance organization fails to pay the provider for health care
47-4 services.
47-5 (h) A health maintenance organization that conducts or uses
47-6 economic profiling of physicians or providers within the health
47-7 maintenance organization shall make available to a network
47-8 physician or provider on request the economic profile of that
47-9 physician or provider, including the standards by which the
47-10 physician or provider is measured. The use of an economic profile
47-11 must recognize the characteristics of a physician's or provider's
47-12 practice that may account for variations from expected costs.
47-13 (i)(1) A contract between a health maintenance organization
47-14 and a physician or provider may not, directly or indirectly,
47-15 prohibit or attempt to prohibit:
47-16 (A) the physician or provider with whom the
47-17 health maintenance organization has contracted or proposes to
47-18 contract from contracting with other health maintenance
47-19 organizations, insurers, or other health care benefit plans; or
47-20 (B) the health maintenance organization with
47-21 which the physician or provider has contracted or proposes to
47-22 contract from contracting with other physicians or providers.
47-23 (2) This section shall not apply to contracts between
47-24 physicians or providers and a group model health maintenance
47-25 organization as defined in Section 6A of this Act.
47-26 SECTION 16. Section 19, Texas Health Maintenance
47-27 Organization Act (Article 20A.19, Vernon's Texas Insurance Code),
47-28 is amended to read as follows:
47-29 Sec. 19. HAZARDOUS FINANCIAL CONDITION. (a) Whenever the
47-30 financial condition of any health maintenance organization
48-1 indicates a condition such that the continued operation of the
48-2 health maintenance organization might be hazardous to its
48-3 enrollees, creditors, or the general public, then the commissioner
48-4 [of insurance] may, after notice and opportunity for hearing, order
48-5 the health maintenance organization to take such action as may be
48-6 reasonably necessary to rectify the existing condition, including
48-7 but not necessarily limited to one or more of the following steps:
48-8 (1) to reduce the total amount of present and
48-9 potential liability for benefits by reinsurance;
48-10 (2) to reduce the volume of new business being
48-11 accepted;
48-12 (3) to reduce expenses by specified methods;
48-13 (4) to suspend or limit the writing of new business
48-14 for a period of time;
48-15 (5) to increase the health maintenance organization's
48-16 capital and surplus by contribution; or
48-17 (6) to suspend or revoke the certificate of authority.
48-18 (b) The commissioner [State Board of Insurance] is
48-19 authorized, by rules and regulations, to fix uniform standards and
48-20 criteria for early warning that the continued operation of any
48-21 health maintenance organization might be hazardous to its
48-22 enrollees, creditors, or the general public, and to fix standards
48-23 for evaluating the financial condition of any health maintenance
48-24 organization, which standards shall be consistent with the purposes
48-25 expressed in Subsection (a) of this section.
48-26 SECTION 17. Subsection (a), Section 20, Texas Health
48-27 Maintenance Organization Act (Article 20A.20, Vernon's Texas
48-28 Insurance Code), is amended to read as follows:
48-29 (a) The commissioner may after notice and opportunity for
48-30 hearing (i) suspend or revoke any certificate of authority issued
49-1 to a health maintenance organization under this Act; (ii) impose
49-2 sanctions under Section 7, Article 1.10, Insurance Code;
49-3 (iii) impose administrative penalties under Article 1.10E,
49-4 Insurance Code; or (iv) issue a cease and desist order under
49-5 Article 1.10A, Insurance Code, if the commissioner finds that any
49-6 of the following conditions exist:
49-7 (1) The health maintenance organization is operating
49-8 significantly in contravention of its basic organizational
49-9 documents, or its health care plan, or in a manner contrary to that
49-10 described in and reasonably inferred from any other information
49-11 submitted under Section 4 of this Act.
49-12 (2) The health maintenance organization issues
49-13 evidence of coverage or uses a schedule of charges for health care
49-14 services which does not comply with the requirements of Section 9
49-15 of this Act.
49-16 (3) The health care plan does not provide or arrange
49-17 for basic health care services or the single health care service
49-18 plan does not provide or arrange for a single health care service.
49-19 (4) The [board certifies to the commissioner that:]
49-20 [(A) the] health maintenance organization does not
49-21 meet the requirements of Section 5(a)(1) [5(a)(2)] of this Act.[;
49-22 or]
49-23 (5) The [(B) the] health maintenance organization is
49-24 unable to fulfill its obligation to furnish health care services as
49-25 required under its health care plan or to furnish a single health
49-26 care service as required under its single health care service plan.
49-27 (6) [(5)] The health maintenance organization is no
49-28 longer financially responsible and may be reasonably expected to be
49-29 unable to meet its obligations to enrollees or prospective
49-30 enrollees.
50-1 (7) [(6)] The health maintenance organization has
50-2 failed to implement the complaint system required by Section 12 of
50-3 this Act in a manner to resolve reasonably valid complaints.
50-4 (8) [(7)] The health maintenance organization, or any
50-5 person on its behalf, has advertised or merchandised its services
50-6 in an untrue, misrepresentative, misleading, deceptive, or unfair
50-7 manner.
50-8 (9) [(8)] The continued operation of the health
50-9 maintenance organization would be hazardous to its enrollees.
50-10 (10) [(9)] The health maintenance organization has
50-11 otherwise failed to comply substantially with this Act, and any
50-12 rule and regulation thereunder.
50-13 (11) The health maintenance organization has failed to
50-14 carry out corrective action the commissioner considers necessary to
50-15 correct a failure to comply with this Act, any applicable provision
50-16 of the Insurance Code, or any applicable rule or order of the
50-17 commissioner within 30 days after the date of notice of a
50-18 deficiency or within any longer period of time that the
50-19 commissioner determines to be reasonable and specifies in the
50-20 notice.
50-21 SECTION 18. Section 22, Texas Health Maintenance
50-22 Organization Act (Article 20A.22, Vernon's Texas Insurance Code),
50-23 is amended to read as follows:
50-24 Sec. 22. RULES AND REGULATIONS. (a) The commissioner
50-25 [State Board of Insurance] may promulgate such reasonable rules and
50-26 regulations as are necessary and proper to carry out the provisions
50-27 of this Act.
50-28 (b) The commissioner [State Board of Insurance] is
50-29 specifically authorized to promulgate rules to prescribe
50-30 [prescribing] authorized investments for health maintenance
51-1 organizations for all investments for which provision is not
51-2 otherwise made in this Act; to ensure that enrollees have adequate
51-3 access to health care services; and to establish minimum
51-4 physician/patient ratios, mileage requirements for primary and
51-5 specialty care, maximum travel time, and maximum waiting times for
51-6 obtaining appointments. The rulemaking authority provided by this
51-7 subsection does not limit in any manner the rulemaking authority
51-8 granted to the commissioner [State Board of Insurance] under
51-9 Subsection (a) of this section.
51-10 (c) The commissioner may promulgate such reasonable rules
51-11 and regulations as are necessary and proper to meet the
51-12 requirements of federal law and regulations.
51-13 SECTION 19. Section 23, Texas Health Maintenance
51-14 Organization Act (Article 20A.23, Vernon's Texas Insurance Code),
51-15 is amended to read as follows:
51-16 Sec. 23. APPEALS. (a) Any person who is affected by any
51-17 rule, ruling, or decision of the Texas Department of Insurance or
51-18 the commissioner [or board] shall have the right to have such rule,
51-19 ruling, or decision reviewed by the commissioner [State Board of
51-20 Insurance] by making an application to the commissioner [State
51-21 Board of Insurance]. Such application shall state the identities
51-22 of the person, the rule, ruling, or decision complained of, the
51-23 interest of the person in such rule, ruling, or decision, the
51-24 grounds of such objection, the action sought of the commissioner
51-25 [State Board of Insurance], and the reasons and grounds for such
51-26 action by the commissioner [State Board of Insurance]. The
51-27 original shall be filed with the chief clerk of the Texas
51-28 Department [State Board] of Insurance together with a certification
51-29 that a true and correct copy of such application has been filed
51-30 with the commissioner. Within 30 days after the application is
52-1 filed, and after 10 days' written notice to all parties of record,
52-2 the commissioner [State Board of Insurance] shall review the action
52-3 complained of in a public hearing and render its decision at the
52-4 earliest possible date thereafter. The commissioner [State Board
52-5 of Insurance] shall make such other rules and regulations with
52-6 respect to such applications and their consideration as it
52-7 considers to be advisable, not inconsistent with this Act. Said
52-8 application shall have precedence over all other business of a
52-9 different nature pending before said commissioner [State Board of
52-10 Insurance].
52-11 (b) In the public hearing, any and all evidence and matters
52-12 pertinent to the appeal may be submitted to the commissioner [State
52-13 Board of Insurance] whether included in the application or not.
52-14 (c) If any person who is affected by any rule, ruling, or
52-15 decision of the commissioner [State Board of Insurance] be
52-16 dissatisfied with any rule, ruling, or decision adopted by the
52-17 commissioner, [board, or State Board of Insurance,] that person,
52-18 after failing to get relief from the commissioner [State Board of
52-19 Insurance], may file a petition seeking review of the rule, ruling,
52-20 or decision and setting forth the particular objection to such
52-21 rule, ruling, or decision, or either or all of them, in a district
52-22 court of Travis County, Texas, and not elsewhere, against the
52-23 commissioner [State Board of Insurance] as defendant. The action
52-24 shall have precedence over all other causes on the docket of a
52-25 different nature. The proceedings on appeal shall be tried and
52-26 determined as provided by Article 1.04, Insurance Code. Either
52-27 party to the action may appeal to the apellate court having
52-28 jurisdiction of the cause and the appeal shall at once be
52-29 returnable to the apellate court having jurisdiction of the cause
52-30 and the action so appealed shall have precedence in the appellate
53-1 court over all causes of a different character therein pending.
53-2 The commissioner [State Board of Insurance] is not required to give
53-3 any appeal bond in any cause arising hereunder.
53-4 SECTION 20. Subdivision (4), Subsection (f), Section 26,
53-5 Texas Health Maintenance Organization Act (Article 20A.26, Vernon's
53-6 Texas Insurance Code), is amended to read as follows:
53-7 (4) Except for Articles 21.07-6 and 21.58A, Insurance
53-8 Code, the insurance laws, including the group hospital service
53-9 corporation law, do not apply to physicians and providers; however,
53-10 [provided that Article 21.58A shall not apply to utilization review
53-11 undertaken by] a physician or provider who conducts utilization
53-12 review during [in] the ordinary course of treatment of patients [by
53-13 a physician or provider] pursuant to a joint or delegated review
53-14 agreement or agreements with a health maintenance organization on
53-15 services rendered by the physician or provider shall not be
53-16 required to obtain certification under Section 3, Article 21.58A,
53-17 Insurance Code.
53-18 SECTION 21. Section 28, Texas Health Maintenance
53-19 Organization Act (Article 20A.28, Vernon's Texas Insurance Code),
53-20 is amended to read as follows:
53-21 Sec. 28. AUTHORITY TO CONTRACT. The commissioner [or
53-22 board], in carrying out the commissioner's [their] obligations
53-23 under this Act, may contract with other state agencies or[, after
53-24 notice and hearing,] with other qualified persons to make
53-25 recommendations concerning the determinations to be made by the
53-26 commissioner [or board].
53-27 SECTION 22. Section 32, Texas Health Maintenance
53-28 Organization Act (Article 20A.32, Vernon's Texas Insurance Code),
53-29 is amended to read as follows:
53-30 Sec. 32. FEES. (a)(1) Every organization subject to this
54-1 chapter shall pay to the commissioner the following fees:
54-2 (A) for filing and review of its original
54-3 application for a certificate of authority, a fee in an amount not
54-4 to exceed $18,000 [$15,000] as determined by the commissioner
54-5 [State Board of Insurance];
54-6 (B) for filing each annual report pursuant to
54-7 Section 10 of this Act, a fee in an amount not to exceed $500 as
54-8 determined by the commissioner [State Board of Insurance];
54-9 (C) the expenses of all examinations of health
54-10 maintenance organizations made on behalf of the State of Texas by
54-11 the commissioner [State Board of Insurance] or under the
54-12 commissioner's [its] authority in such amounts as the commissioner
54-13 shall certify to be just and reasonable;
54-14 (D) the expenses of an examination under Section
54-15 17(a) of this Act incurred by the commissioner or under the
54-16 commissioner's authority, provided that:
54-17 (i) examination expenses are the expenses
54-18 attributable directly to a specific examination including the
54-19 actual salaries and expenses of the examiners directly attributable
54-20 to that examination as determined under rules adopted by the
54-21 commissioner; and
54-22 (ii) the expenses shall be assessed by the
54-23 commissioner and paid in accordance with rules adopted by the
54-24 commissioner;
54-25 (E) the licensing, appointment, and examination
54-26 fees pursuant to Section 15 of this[, Texas Health Maintenance
54-27 Organization] Act [(Article 20A.15, Vernon's Texas Insurance
54-28 Code)];
54-29 (F) [(E)] for filing an evidence of coverage
54-30 which requires approval, a fee not to exceed $200 as determined by
55-1 the commissioner [State Board of Insurance]; and
55-2 (G) [(F)] for filings required by rule but which
55-3 do not require approval, a fee not to exceed $100 as determined by
55-4 the commissioner [State Board of Insurance].
55-5 (2) The commissioner [State Board of Insurance] shall,
55-6 within the limits fixed by this subsection, prescribe the fees to
55-7 be charged under this subsection.
55-8 (3) Fees collected under this subsection must be
55-9 deposited in the State Treasury to the credit of the Texas
55-10 Department [State Board] of Insurance operating fund.
55-11 (4) Notwithstanding Subdivision (1) of this
55-12 subsection, the comptroller shall collect the annual report filing
55-13 fee prescribed by Subdivision (1)(B) of this subsection.
55-14 (b) Except as provided by Subsection (c) of this section,
55-15 the amount paid by a health maintenance organization in each
55-16 taxable year under Subdivision (1)(D) of Subsection (a) of this
55-17 section shall be allowed as a credit on the amount of premium taxes
55-18 to be paid by the health maintenance organization for that taxable
55-19 year.
55-20 (c)[(1) Every organization subject to this chapter shall pay
55-21 to the board the following fees:]
55-22 [(A) for review of its original application for
55-23 a certificate of authority, a fee in an amount not to exceed $3,000
55-24 as determined by the board and paid pursuant to rules adopted by
55-25 the board; and]
55-26 [(B) the expenses of an examination under
55-27 Section 17(b) of this Act incurred by the board or under its
55-28 authority.]
55-29 [(2) Examination expenses are the expenses
55-30 attributable directly to a specific examination including the
56-1 actual salaries and expenses of the examiners plus the cost of
56-2 administrative departmental expenses directly attributable to that
56-3 examination as determined under rules adopted by the board. The
56-4 expenses shall be assessed by the board and paid in accordance with
56-5 rules adopted by the board.]
56-6 [(3) Except as provided by Subdivision (4) of this
56-7 subsection, the amount paid by a health maintenance organization in
56-8 each taxable year under Subdivision (1)(B) of this subsection shall
56-9 be allowed as a credit on the amount of premium taxes to be paid by
56-10 the health maintenance organization for that taxable year.]
56-11 [(4)] The amount directly attributable to an
56-12 examination of the books, records, accounts, or principal offices
56-13 of a health maintenance organization located outside this state may
56-14 not be allowed as a credit against the amount of premium taxes to
56-15 be paid by the health maintenance organization.
56-16 [(5) The funds received by the board shall be
56-17 deposited in the state treasury to the credit of the Texas
56-18 Department of Health health maintenance organization fund, and
56-19 those funds shall be appropriated to the Texas Department of Health
56-20 to carry out the statutory duties of the board under this chapter.]
56-21 SECTION 23. Subsections (a), (b), (c), (e), and (g), Section
56-22 36, Texas Health Maintenance Organization Act (Article 20A.36,
56-23 Vernon's Texas Insurance Code), are amended to read as follows:
56-24 (a) The Health Maintenance Organization Solvency
56-25 Surveillance Committee is created under the direction of the
56-26 commissioner. The committee shall perform its functions under a
56-27 plan of operation approved by the commissioner [State Board of
56-28 Insurance]. The committee is composed of nine members appointed by
56-29 the commissioner [of insurance]. No two members may be employees
56-30 or officers of the same health maintenance organization or holding
57-1 company system. The qualifications for membership, terms of
57-2 office, and reimbursement of expenses shall be as provided by the
57-3 plan of operation approved by the commissioner [State Board of
57-4 Insurance]. A "member" is a Texas licensed health maintenance
57-5 organization as defined in Section 2(n) [2(j)] of this Act or a
57-6 public representative. The commissioner of insurance shall appoint
57-7 the member along with the officer or employee of the member who
57-8 shall serve on the committee if the member is a representative of a
57-9 Texas licensed health maintenance organization or its holding
57-10 company system. Five of the members shall represent health
57-11 maintenance organizations or their holding company system. Of the
57-12 health maintenance organization members, one shall be a single
57-13 health care service plan as defined in Section 2(w) [2(s)] of this
57-14 Act. The remaining health maintenance organization members shall
57-15 be selected by the commissioner [of insurance] with due
57-16 consideration of factors deemed appropriate including, but not
57-17 limited to, the varying categories of premium income and
57-18 geographical location.
57-19 A public representative may not be:
57-20 (1) an officer, director, or employee of a health
57-21 maintenance organization, a health maintenance organization agent,
57-22 or any other business entity regulated by the commissioner [State
57-23 Board of Insurance];
57-24 (2) a person required to register with the Texas
57-25 Ethics Commission [secretary of state] under Chapter 305,
57-26 Government Code; or
57-27 (3) related to a person described by Subdivision (1)
57-28 or (2) of this subsection within the second degree of affinity or
57-29 consanguinity.
57-30 (b)(1) The committee shall assist and advise the
58-1 commissioner relating to the detection and prevention of insolvency
58-2 problems regarding health maintenance organizations. The committee
58-3 shall also assist and advise the commissioner regarding any health
58-4 maintenance organization placed in rehabilitation, liquidation,
58-5 supervision, or conservation. The method of providing this
58-6 assistance and advice shall be as contained in the plan of
58-7 operation approved by the commissioner [State Board of Insurance].
58-8 (2) Reports regarding the financial condition of Texas
58-9 licensed health maintenance organizations and regarding the
58-10 financial condition, administration, and status of health
58-11 maintenance organizations in rehabilitation, liquidation,
58-12 supervision, or conservation shall be provided to the committee
58-13 members at meetings. Committee members shall not reveal the
58-14 condition of nor any information secured in the course of any
58-15 meeting of the Solvency Surveillance Committee with regard to any
58-16 corporation, form or person examined by the committee. Committee
58-17 proceedings shall be filed with the commissioner [and reported to
58-18 the members of the State Board of Insurance].
58-19 (c) To provide funds for the administrative expenses of the
58-20 commissioner [State Board of Insurance] regarding rehabilitation,
58-21 liquidation, supervision, or conservation of an impaired health
58-22 maintenance organization in this state, the committee, at the
58-23 commissioner's direction, shall assess each health maintenance
58-24 organization licensed in this state in the proportion that the
58-25 gross premiums of that health maintenance organization written in
58-26 this state during the preceding calendar year bear to the aggregate
58-27 gross premiums written in this state by all health maintenance
58-28 organizations, as furnished to the committee by the commissioner
58-29 after review of annual statements and other reports the
58-30 commissioner considers necessary. Assessments to supplement or pay
59-1 for administrative expenses of rehabilitation, liquidation,
59-2 supervision, or conservation may be made only after the
59-3 commissioner determines that adequate assets of the health
59-4 maintenance organization are not immediately available for those
59-5 purposes or that use of those assets could be detrimental to
59-6 rehabilitation, liquidation, supervision, or conservation. The
59-7 commissioner may abate or defer the assessments, either in whole or
59-8 in part, if, in the opinion of the commissioner, payment of the
59-9 assessment would endanger the ability of a health maintenance
59-10 organization to fulfill its contractual obligations. If an
59-11 assessment is abated or deferred, either in whole or in part, the
59-12 amount by which the assessment is abated or deferred may be
59-13 assessed against the remaining licensed health maintenance
59-14 organizations in a manner consistent with the basis for assessments
59-15 provided by the plan of operation approved by the commissioner
59-16 [State Board of Insurance]. The total of all assessments on a
59-17 health maintenance organization may not exceed one-quarter of one
59-18 percent of the health maintenance organization's gross premiums in
59-19 any one calendar year.
59-20 (e) Not later than the 180th day after the date on which the
59-21 final member of the committee is appointed, the committee shall
59-22 submit to the commissioner [State Board of Insurance] a plan of
59-23 operation. The plan of operation takes effect on approval in
59-24 writing by the commissioner [State Board of Insurance]. If the
59-25 committee fails to submit a suitable plan of operation within the
59-26 period set by this subsection, or if, after the adoption of a plan,
59-27 the committee fails to submit suitable amendments to the plan, the
59-28 commissioner [State Board of Insurance] may, after notice and
59-29 hearing, adopt rules as necessary to implement this Act. Those
59-30 rules continue in effect until modified by the commissioner [State
60-1 Board of Insurance] or superseded by a plan submitted by the
60-2 committee and approved by the commissioner [State Board of
60-3 Insurance].
60-4 (g) A licensed health maintenance organization or its agents
60-5 or employees, the committee or its agents, employees, or members,
60-6 or the [State Board of Insurance, the] commissioner[,] or the
60-7 commissioner's [their] representatives are not liable in a civil
60-8 action for any act taken or not taken in good faith in the
60-9 performance of powers and duties under this section.
60-10 SECTION 24. The Texas Health Maintenance Organization Act
60-11 (Article 20A.01 et seq., Vernon's Texas Insurance Code), is amended
60-12 by adding Section 37 to read as follows:
60-13 Sec. 37. HEALTH MAINTENANCE ORGANIZATION QUALITY ASSURANCE.
60-14 (a) A health maintenance organization shall establish procedures
60-15 to assure that the health care services provided to enrollees shall
60-16 be rendered under reasonable standards of quality of care
60-17 consistent with prevailing professionally recognized standards of
60-18 medical practice. Such procedures shall include mechanisms to
60-19 assure availability, accessibility, quality, and continuity of
60-20 care.
60-21 (b) A health maintenance organization shall have an ongoing
60-22 internal quality assurance program to monitor and evaluate its
60-23 health care services, including primary and specialist physician
60-24 services, and ancillary and preventive health care services, in all
60-25 institutional and noninstitutional contexts. The commissioner by
60-26 rule may establish minimum standards and requirements for ongoing
60-27 internal quality assurance programs for health maintenance
60-28 organizations, including but not limited to standards for assuring
60-29 availability, accessibility, quality, and continuity of care.
60-30 (c) A health maintenance organization shall record formal
61-1 proceedings of quality assurance program activities and maintain
61-2 documentation in a confidential manner. Quality assurance program
61-3 minutes shall be available to the commissioner.
61-4 (d) A health maintenance organization shall establish and
61-5 maintain a physician review panel to assist in reviewing medical
61-6 guidelines or criteria and to assist in determining the
61-7 prescription drugs to be covered by the health maintenance
61-8 organization, if the health maintenance organization offers a
61-9 prescription drug benefit.
61-10 (e) A health maintenance organization shall ensure the use
61-11 and maintenance of an adequate patient record system that will
61-12 facilitate documentation and retrieval of clinical information for
61-13 the purpose of the health maintenance organization's evaluation of
61-14 continuity and coordination of patient care and assessment of the
61-15 quality of health and medical care provided to enrollees.
61-16 (f) Enrollees' clinical records shall be available to the
61-17 commissioner for examination and review to determine compliance.
61-18 Such records shall be confidential and not subject to the open
61-19 records law, Chapter 552, Government Code.
61-20 (g) A health maintenance organization shall establish a
61-21 mechanism for the periodic reporting of quality assurance program
61-22 activities to the governing body, providers, and appropriate
61-23 organization staff.
61-24 SECTION 25. This Act takes effect September 1, 1997.
61-25 SECTION 26. The importance of this legislation and the
61-26 crowded condition of the calendars in both houses create an
61-27 emergency and an imperative public necessity that the
61-28 constitutional rule requiring bills to be read on three several
61-29 days in each house be suspended, and this rule is hereby suspended.