1-1                                   AN ACT

 1-2     relating to the administration and allocation of Medicaid and other

 1-3     funds used to pay for graduate medical education.

 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-5           SECTION 1.  Subchapter B, Chapter 32, Human Resources Code,

 1-6     is amended by adding Section 32.0315 to read as follows:

 1-7           Sec. 32.0315.  FUNDS FOR GRADUATE MEDICAL EDUCATION.

 1-8     (a)  The department shall establish procedures and formulas for the

 1-9     allocation of federal medical assistance funds that are directed to

1-10     be used to support graduate medical education in connection with

1-11     the medical assistance program.

1-12           (b)  The department shall allocate the funds in the manner

1-13     the department determines most effectively and equitably achieves

1-14     the purposes for which those federal funds are received, consistent

1-15     with the needs of this state for graduate medical education and the

1-16     training of resident physicians in accredited residency programs in

1-17     appropriate fields and specialties, taking into account other money

1-18     available to support graduate medical education.  In determining

1-19     the needs of this state for graduate medical education, the

1-20     department shall give emphasis to graduate medical education in

1-21     primary care specialties.

1-22           (c)  The department shall consult with the Texas Higher

1-23     Education Coordinating Board before adopting or revising a formula

1-24     under this section.  At the request of the department, the

 2-1     coordinating board shall provide the department with any

 2-2     information the board possesses to assist the department in

 2-3     administering this section.

 2-4           (d)  The department shall reimburse each teaching hospital

 2-5     under this section using the following formula:

 2-6                           R = GME/P x WNP x MD/TD

 2-7     where:

 2-8           "R" is the annual amount to be reimbursed;

 2-9           "GME" is the hospital's annual cost of training resident

2-10     physicians for the fiscal year;

2-11           "P" is the number of resident physicians for the fiscal year;

2-12           "WNP" is the weighted number of full-time equivalent resident

2-13     physicians trained by the hospital during the fiscal year and

2-14     reported on its Medicaid cost report, adjusted to count each

2-15     full-time equivalent resident in primary care as 1.2 residents and

2-16     each other full-time equivalent resident as 1.0 residents;

2-17           "MD" means the number of patient days for the hospital for

2-18     the fiscal year that are attributable to Medicaid patients; and

2-19           "TD" means the total number of patient days for the hospital

2-20     for the fiscal year.

2-21           (d-1)  For purposes of the calculation under Subsection (d)

2-22     made to determine the amount of reimbursement for a teaching

2-23     hospital for the state fiscal year ending August 31, 1998, WNP

2-24     shall be calculated counting each full-time equivalent resident in

2-25     primary care as 1.0 residents and each other full-time equivalent

2-26     resident as 1.0 residents, and a teaching hospital's average annual

2-27     cost for training residents shall be determined using current cost

 3-1     reports for the hospital.  This subsection expires January 1, 1999.

 3-2           (e)  To determine a teaching hospital's average annual cost

 3-3     for training residents for purposes of this section, the department

 3-4     may use the most recent Medicaid cost report submitted to the

 3-5     department by the hospital, or may establish alternative procedures

 3-6     to determine that cost.

 3-7           (f)  The department shall make payments under this section in

 3-8     equal monthly installments, except that the department may make

 3-9     adjustments in any payment or make additional payments as necessary

3-10     to ensure that each teaching hospital or other entity receives the

3-11     appropriate annual amount under this section.

3-12           (g)  For purposes of this section, primary care means a field

3-13     or specialty described by Section 58.008(a), Education Code.

3-14           (h)  Notwithstanding Subsections (d) and (e), each teaching

3-15     hospital that received federal medical assistance funds for

3-16     training residents in the state fiscal year ending August 31, 1995,

3-17     shall receive an amount under this section that is:

3-18                 (1)  for the state fiscal year ending August 31, 1999,

3-19     not less than 90 percent of the amount of those funds the hospital

3-20     would have received in that fiscal year under the formulas used to

3-21     determine the amount of federal medical assistance funds for

3-22     training residents the hospital received in that 1995 fiscal year;

3-23                 (2)  for the state fiscal year ending August 31, 2000,

3-24     not less than 85 percent of the amount of those funds the hospital

3-25     would have received in that fiscal year under the formulas used to

3-26     determine the amount of federal medical assistance funds for

3-27     training residents the hospital received in that 1995 fiscal year;

 4-1                 (3)  for the state fiscal year ending August 31, 2001,

 4-2     not less than 80 percent of the amount of those funds the hospital

 4-3     would have received in that fiscal year under the formulas used to

 4-4     determine the amount of federal medical assistance funds for

 4-5     training residents the hospital received in that 1995 fiscal year;

 4-6     and

 4-7                 (4)  for the state fiscal year ending August 31, 2002,

 4-8     not less than 75 percent of the amount of those funds the hospital

 4-9     would have received in that fiscal year under the formulas used to

4-10     determine the amount of federal medical assistance funds for

4-11     training residents the hospital received in that 1995 fiscal year.

4-12           SECTION 2.  Subchapter C, Chapter 61, Education Code, is

4-13     amended by adding Section 61.0594 to read as follows:

4-14           Sec. 61.0594.  COORDINATED FUNDING OF GRADUATE MEDICAL

4-15     EDUCATION.  (a)  The board shall administer a program to support

4-16     graduate medical education programs in this state consistent with

4-17     the needs of this state for graduate medical education and the

4-18     training of resident physicians in accredited residency programs in

4-19     appropriate fields and specialties, including primary care

4-20     specialties described by Section 58.008(a).

4-21           (b)  From money available to the program, the board may make

4-22     grants or formula distributions to:

4-23                 (1)  support appropriate graduate medical education

4-24     programs and activities for which adequate funds are not otherwise

4-25     available; or

4-26                 (2)  foster new or expanded graduate medical education

4-27     programs or activities that the board determines will address the

 5-1     state's needs for graduate medical education.

 5-2           (c)  To be eligible to receive a grant or distribution under

 5-3     this section, an institution or other entity must incur the costs

 5-4     of faculty supervision and education or the stipend costs of

 5-5     resident physicians in accredited clinical residency programs in

 5-6     this state. In making grants and distributions under this section,

 5-7     the board shall give consideration to the costs incurred by medical

 5-8     schools or other entities to support faculty responsible for the

 5-9     education or supervision of resident physicians in accredited

5-10     graduate medical education programs, including programs in

5-11     osteopathic medical education.

5-12           (d)  The program is funded by appropriations, by gifts,

5-13     grants, and donations made to support the program, and by any other

5-14     funds the board obtains, including federal funds, for the program.

5-15     From program funds, the comptroller of public accounts shall issue

5-16     warrants to each institution or other entity determined by the

5-17     board as eligible to receive a grant or distribution from the

5-18     program in the amount certified by the board.  An amount granted to

5-19     an institution or other entity under the program may be used only

5-20     to cover expenses of training residents of the particular program

5-21     or activity for which the award is made in accordance with any

5-22     conditions imposed by the board and may not otherwise be expended

5-23     for the general support of the institution or entity.

5-24           (e)  The board shall appoint an advisory committee to advise

5-25     the board regarding the development and administration of the

5-26     program, including considering requests for program grants and

5-27     establishing formulas for distribution of money under the program.

 6-1     The advisory committee shall consist of:

 6-2                 (1)  the executive director of the Texas State Board of

 6-3     Medical Examiners or the executive director's designee;

 6-4                 (2)  the chair of the Family Practice Residency

 6-5     Advisory Committee or the chair's designee;

 6-6                 (3)  the chair of the Primary Care Residency Advisory

 6-7     Committee or the chair's designee;

 6-8                 (4)  the commissioner of the Health and Human Services

 6-9     Commission or the commissioner's designee; and

6-10                 (5)  the following members appointed by the board:

6-11                       (A)  one representative of a teaching hospital

6-12     affiliated with a Texas medical school;

6-13                       (B)  one representative of a teaching hospital

6-14     not affiliated with a Texas medical school;

6-15                       (C)  three representatives of medical schools, at

6-16     least one representing a medical school in The University of Texas

6-17     System, and at least one representing a medical school not in The

6-18     University of Texas System;

6-19                       (D)  two physicians active in private practice,

6-20     one of whom must be a generalist;

6-21                       (E)  one doctor of osteopathic medicine active in

6-22     private practice;

6-23                       (F)  one representative of an entity providing

6-24     managed health care;

6-25                       (G)  three clinical faculty members, at least one

6-26     of whom must be a generalist;

6-27                       (H)  one resident physician, who is a nonvoting

 7-1     member; and

 7-2                       (I)  one medical student, who is a nonvoting

 7-3     member.

 7-4           (f)  The appointed advisory committee members serve staggered

 7-5     three-year terms.  The board shall make the initial committee

 7-6     appointments to terms of one, two, and three years as necessary so

 7-7     that one-third of the appointed members' terms expire each year, as

 7-8     nearly as practicable.  The committee shall elect one of its

 7-9     members as presiding officer for a term of one year.  The committee

7-10     shall meet at least once each year at the times requested by the

7-11     board or set by the presiding officer of the committee.  A member

7-12     of the advisory committee may not be compensated for service on the

7-13     committee but is entitled to be reimbursed by the board for actual

7-14     expenses incurred in the performance of the member's duties as a

7-15     committee member.

7-16           (g)  The advisory committee shall:

7-17                 (1)  review applications for funding of graduate

7-18     medical education programs under this section and make

7-19     recommendations for approval or disapproval of those applications;

7-20                 (2)  make recommendations relating to the standards and

7-21     criteria used for consideration and approval of grants or for the

7-22     development of formulas for distribution of funding under this

7-23     section;

7-24                 (3)  recommend to the board an allocation of funds

7-25     among medical schools, teaching hospitals, and other entities that

7-26     may receive funds under this section; and

7-27                 (4)  perform other duties assigned by the board.

 8-1           SECTION 3.  (a)  This Act takes effect September 1, 1997.

 8-2           (b)  Section 32.0315, Human Resources Code, as added by this

 8-3     Act, applies to the distribution of federal medical assistance

 8-4     funds for the support of graduate medical education received on or

 8-5     after the effective date of this Act, and to any such federal funds

 8-6     received before the effective date of this Act that have not been

 8-7     promised, obligated, or otherwise identified for distribution to

 8-8     specific entities before the effective date.

 8-9           SECTION 4.  The importance of this legislation and the

8-10     crowded condition of the calendars in both houses create an

8-11     emergency and an imperative public necessity that the

8-12     constitutional rule requiring bills to be read on three several

8-13     days in each house be suspended, and this rule is hereby suspended.

         _______________________________     _______________________________

             President of the Senate              Speaker of the House

               I certify that H.B. No. 1511 was passed by the House on April

         11, 1997, by a non-record vote.

                                             _______________________________

                                                 Chief Clerk of the House

               I certify that H.B. No. 1511 was passed by the Senate on May

         12, 1997, by the following vote:  Yeas 31, Nays 0.

                                             _______________________________

                                                 Secretary of the Senate

         APPROVED:  _____________________

                            Date

                    _____________________

                          Governor