1-1                                   AN ACT

 1-2     relating to the monitoring of community mental health and mental

 1-3     retardation centers and local mental health and mental retardation

 1-4     authorities.

 1-5           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-6           SECTION 1.  Section 533.035, Health and Safety Code, is

 1-7     amended by amending Subsection (b) and adding Subsections (e)-(h)

 1-8     to read as follows:

 1-9           (b)  The department by contract or other method of

1-10     allocation, including a case-rate or capitated arrangement, may

1-11     disburse to a local mental health and mental retardation authority

1-12     department federal and department state funds to be spent in the

1-13     local service area for:

1-14                 (1)  community mental health and mental retardation

1-15     services; and

1-16                 (2)  chemical dependency services for persons who are

1-17     dually diagnosed as having both chemical dependency and mental

1-18     illness or mental retardation.

1-19           (e)  The board shall direct the commissioner to appoint a

1-20     committee to develop a plan which recommends:

1-21                 (1)  the most efficient and effective number of local

1-22     authorities;

1-23                 (2)  the scope of responsibilities to be delegated by

1-24     the state authority to the local authority;

 2-1                 (3)  criteria by which local authorities shall be

 2-2     selected, including:

 2-3                       (A)  demonstrated ability to assure consumer and

 2-4     family member participation in service planning and service

 2-5     evaluation;

 2-6                       (B)  ability to demonstrate public accountability

 2-7     for service costs, quality, and outcomes for persons served;

 2-8                       (C)  demonstrated ability to assemble and manage

 2-9     a network of service providers, assuring consumer choice;

2-10                       (D)  demonstrated ability to coordinate and

2-11     direct a comprehensive array of mental health or mental retardation

2-12     services; and

2-13                       (E)  a requirement that local authorities comply

2-14     with Chapters 551 and 552, Government Code;

2-15                 (4)  a selection process that:

2-16                       (A)  allows all qualified and interested entities

2-17     to be fairly and objectively considered for the designation as a

2-18     local authority; and

2-19                       (B)  results in a final selection that is based

2-20     on cost-effectiveness and ultimately the best interest of consumers

2-21     and their families;

2-22                 (5)  criteria to ensure that contracting by the local

2-23     authorities with providers:

2-24                       (A)  allows all qualified providers to be

2-25     eligible to compete for contracts;

2-26                       (B)  results in the selection of the best bid,

2-27     evaluated by cost-effectiveness and quality; and

 3-1                       (C)  promotes choice by consumers among services

 3-2     and service providers;

 3-3                 (6)  a time frame for implementation; and

 3-4                 (7)  strategies to ensure that services are not

 3-5     disrupted.

 3-6           (f)  The commissioner shall assure that:

 3-7                 (1)  the committee membership includes an equal number

 3-8     of representatives of consumers, family members, existing local

 3-9     authorities, and private sector entities, including not-for-profit

3-10     and for-profit entities;

3-11                 (2)  safeguards are established to prevent any member

3-12     from participating in the adoption of specific selection or bid

3-13     criteria, any committee decision, or any other action that may

3-14     result in an unfair competitive advantage or otherwise compromise

3-15     the selection process; and

3-16                 (3)  the committee deliberations are fully accessible

3-17     to the public with ample opportunities for public input and

3-18     participation.

3-19           (g)  The plan approved by the committee shall be submitted to

3-20     the board for approval.  Prior to approval of the plan, the board

3-21     shall provide:

3-22                 (1)  public notice of its intent to consider the

3-23     proposed plan;

3-24                 (2)  an opportunity for public hearings on the proposed

3-25     plan; and

3-26                 (3)  public access to the proposed plan.

3-27           (h)  The board shall submit the approved plan to the Senate

 4-1     Health and Human Services Committee and the House Public Health

 4-2     Committee by September 1, 1998.

 4-3           SECTION 2.  Subchapter A, Chapter 534, Health and Safety

 4-4     Code, is amended by adding Section 534.036 to read as follows:

 4-5           Sec. 534.036.  FINANCIAL AUDIT.  (a)  The department shall

 4-6     prescribe procedures for financial audits of community centers.

 4-7     The department shall develop the procedures with the assistance of

 4-8     the state agencies and departments that contract with community

 4-9     centers.  The department shall coordinate with each of those state

4-10     agencies and departments to incorporate each agency's financial and

4-11     compliance requirements for a community center into a single audit

4-12     that meets the requirements of Section 534.068.  Before prescribing

4-13     or amending the procedures, the department shall set a deadline for

4-14     those state agencies and departments to submit to the department

4-15     proposals relating to the financial audit procedures.  The

4-16     procedures must be consistent with any requirements connected with

4-17     federal funding received by the community center.  The department

4-18     may not implement the procedures without the approval of the Health

4-19     and Human Services Commission.

4-20           (b)  Each state agency or department that contracts with a

4-21     community center shall comply with the procedures developed under

4-22     this section.

4-23           (c)  The department shall develop protocols for a state

4-24     agency or department to conduct additional financial audit

4-25     activities of a community center.  A state agency or department may

4-26     not conduct additional financial audit activities of a community

4-27     center without the approval of the Health and Human Services

 5-1     Commission.

 5-2           (d)  The department shall evaluate the fiscal impact of

 5-3     financial audit procedures developed under this section.  The

 5-4     department shall complete the evaluation and submit a report to

 5-5     each house of the legislature not later than December 1, 1998.

 5-6     This subsection expires January 1, 1999.

 5-7           SECTION 3.  Subchapter A, Chapter 534, Health and Safety

 5-8     Code, is amended by adding Section 534.037 to read as follows:

 5-9           Sec. 534.037.  PROGRAM AUDIT.  (a)  The department shall

5-10     coordinate with each state agency or department that contracts with

5-11     a community center to prescribe procedures based on risk assessment

5-12     for coordinated program audits of the activities of a community

5-13     center.  The department may not implement the procedures without

5-14     the approval of the Health and Human Services Commission.  The

5-15     procedures must be consistent with any requirements connected with

5-16     federal funding received by the community center.

5-17           (b)  A program audit of a community center must be performed

5-18     in accordance with procedures developed under this section.

5-19           (c)  This section does not prohibit a state agency or

5-20     department or an entity providing funding to a community center

5-21     from investigating a complaint against or performing additional

5-22     contract monitoring of a community center.

5-23           (d)  A program audit under this section must evaluate:

5-24                 (1)  the extent to which the community center is

5-25     achieving the desired results or benefits established by the

5-26     legislature or by a state agency or department;

5-27                 (2)  the effectiveness of the community center's

 6-1     organizations, programs, activities, or functions; and

 6-2                 (3)  whether the community center is in compliance with

 6-3     applicable laws.

 6-4           (e)  The department shall evaluate the fiscal impact of the

 6-5     program audit procedures developed under this section.  The

 6-6     department shall complete the evaluation and submit a report to

 6-7     each house of the legislature not later than December 1, 1998.

 6-8     This subsection expires January 1, 1999.

 6-9           SECTION 4.  Section 534.060(b), Health and Safety Code, is

6-10     amended to read as follows:

6-11           (b)  The department shall review the program quality and

6-12     program performance results of each local mental health or mental

6-13     retardation authority in accordance with a risk assessment and

6-14     evaluation system appropriate to contract requirements [at least

6-15     once each fiscal year].  The department may determine the scope of

6-16     each review.

6-17           SECTION 5.   Sections 534.034 and 534.054(b) and (d), Health

6-18     and Safety Code, are repealed.

6-19           SECTION 6.  (a)  This Act takes effect September 1, 1997.

6-20           (b)  The Texas Department of Mental Health and Mental

6-21     Retardation shall prescribe and receive approval of the Health and

6-22     Human Services Commission for procedures for audits under Sections

6-23     534.036 and 534.037, Health and Safety Code, as added by this Act,

6-24     not later than January 1, 1998.  The commission shall make a ruling

6-25     on the procedures not later than 30 days after the date the

6-26     department prescribed the procedures.

6-27           SECTION 7.  The importance of this legislation and the

 7-1     crowded condition of the calendars in both houses create an

 7-2     emergency and an imperative public necessity that the

 7-3     constitutional rule requiring bills to be read on three several

 7-4     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. 1734 was passed by the House on May

         7, 1997, by a non-record vote; and that the House concurred in

         Senate amendments to H.B. No. 1734 on May 24, 1997, by a non-record

         vote.

                                             _______________________________

                                                 Chief Clerk of the House

               I certify that H.B. No. 1734 was passed by the Senate, with

         amendments, on May 22, 1997, by a viva-voce vote.

                                             _______________________________

                                                 Secretary of the Senate

         APPROVED:  _____________________

                            Date

                    _____________________

                          Governor