1-1 By: Berlanga, et al. (Senate Sponsor - Zaffirini) H.B. No. 2913 1-2 (In the Senate - Received from the House May 15, 1997; 1-3 May 16, 1997, read first time and referred to Committee on Health 1-4 and Human Services; May 18, 1997, reported adversely, with 1-5 favorable Committee Substitute by the following vote: Yeas 11, 1-6 Nays 0; May 18, 1997, sent to printer.) 1-7 COMMITTEE SUBSTITUTE FOR H.B. No. 2913 By: Zaffirini 1-8 A BILL TO BE ENTITLED 1-9 AN ACT 1-10 relating to the authority of the Health and Human Services 1-11 Commission to administer and operate the Medicaid managed care 1-12 program. 1-13 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-14 SECTION 1. Section 531.021, Government Code, is amended to 1-15 read as follows: 1-16 Sec. 531.021. ADMINISTRATION OF MEDICAID PROGRAM. (a) The 1-17 commission is the state agency designated to administer federal 1-18 medical assistance funds. 1-19 (b) The commission is responsible for adopting reasonable 1-20 rules and standards governing the determination of fees, charges, 1-21 and rates for medical assistance payments under Chapter 32, Human 1-22 Resources Code. 1-23 (c) In discharging its duties relating to the Medicaid 1-24 managed care program, the commission shall consult with and 1-25 consider input from the advisory committee created under Section 1-26 531.047 and from each health and human services agency that 1-27 operates part of the Medicaid program. 1-28 SECTION 2. Subchapter B, Chapter 531, Government Code, is 1-29 amended by adding Section 531.047 to read as follows: 1-30 Sec. 531.047. MEDICAID MANAGED CARE INTERAGENCY ADVISORY 1-31 COMMITTEE. (a) An interagency advisory committee is created to 1-32 provide assistance and recommendations to the commission relating 1-33 to the policy, administration, evaluation, and operation of the 1-34 Medicaid managed care program. The advisory committee consists of: 1-35 (1) the commissioner or, if designated under 1-36 Subsection (b), the person acting as the state Medicaid director; 1-37 (2) a representative of the Texas Department of 1-38 Health, designated by the commissioner of public health; 1-39 (3) a representative of the Texas Department of Mental 1-40 Health and Mental Retardation, designated by the commissioner of 1-41 mental health and mental retardation; 1-42 (4) a representative of the Texas Department of Human 1-43 Services, designated by the commissioner of human services; and 1-44 (5) if considered appropriate by the commissioner, a 1-45 representative of any other state agency with duties relating to 1-46 the Medicaid managed care program, designated by the chief 1-47 administrative officer of that agency. 1-48 (b) The commissioner may designate the person acting as the 1-49 state Medicaid director to serve on the advisory committee on 1-50 behalf of the commissioner. 1-51 (c) A member of the advisory committee serves at the will of 1-52 the designating agency. 1-53 (d) The commissioner or the person acting as the state 1-54 Medicaid director, as applicable, serves as presiding officer of 1-55 the advisory committee, and members of the committee may elect 1-56 other necessary officers. 1-57 (e) The advisory committee shall meet at the call of the 1-58 presiding officer. The presiding officer shall call a meeting of 1-59 the committee at least once every two months. 1-60 (f) The designating agency is responsible for the expenses 1-61 of a member's service on the advisory committee. A member of the 1-62 advisory committee receives no additional compensation for serving 1-63 on the committee. 1-64 (g) The advisory committee is not subject to Article 2-1 6252-33, Revised Statutes. 2-2 SECTION 3. (a) Subtitle I, Title 4, Government Code, is 2-3 amended by adding Chapter 533 to read as follows: 2-4 CHAPTER 533. IMPLEMENTATION OF MEDICAID 2-5 MANAGED CARE PROGRAM 2-6 SUBCHAPTER A. GENERAL PROVISIONS 2-7 Sec. 533.001. DEFINITIONS. In this chapter: 2-8 (1) "Commission" means the Health and Human Services 2-9 Commission or an agency operating part of the state Medicaid 2-10 managed care program, as appropriate. 2-11 (2) "Commissioner" means the commissioner of health 2-12 and human services. 2-13 (3) "Health and human services agencies" has the 2-14 meaning assigned by Section 531.001. 2-15 (4) "Managed care organization" means a person who is 2-16 authorized or otherwise permitted by law to arrange for or provide 2-17 a managed care plan. 2-18 (5) "Managed care plan" means a plan under which a 2-19 person undertakes to provide, arrange for, pay for, or reimburse 2-20 any part of the cost of any health care services. A part of the 2-21 plan must consist of arranging for or providing health care 2-22 services as distinguished from indemnification against the cost of 2-23 those services on a prepaid basis through insurance or otherwise. 2-24 The term includes a primary care case management provider network. 2-25 The term does not include a plan that indemnifies a person for the 2-26 cost of health care services through insurance. 2-27 (6) "Recipient" means a recipient of medical 2-28 assistance under Chapter 32, Human Resources Code. 2-29 Sec. 533.002. PURPOSE. The commission shall implement the 2-30 Medicaid managed care program as part of the health care delivery 2-31 system developed under Chapter 532 by contracting with managed care 2-32 organizations in a manner that, to the extent possible: 2-33 (1) improves the health of Texans by: 2-34 (A) emphasizing prevention; 2-35 (B) promoting continuity of care; and 2-36 (C) providing a medical home for recipients; 2-37 (2) ensures that each recipient receives high quality, 2-38 comprehensive health care services in the recipient's local 2-39 community; 2-40 (3) encourages the training of and access to primary 2-41 care physicians and providers; 2-42 (4) maximizes cooperation with existing public health 2-43 entities, including local departments of health; 2-44 (5) provides incentives to managed care organizations, 2-45 other than managed care organizations created by political 2-46 subdivisions with constitutional or statutory obligations to 2-47 provide health care to indigent patients, to improve the quality of 2-48 health care services for recipients by providing value-added 2-49 services; and 2-50 (6) reduces administrative and other nonfinancial 2-51 barriers for recipients in obtaining health care services. 2-52 Sec. 533.003. CONSIDERATIONS IN AWARDING CONTRACTS. In 2-53 awarding contracts to managed care organizations, the commission 2-54 shall: 2-55 (1) give extra consideration to organizations that 2-56 agree to assure continuity of care for at least three months beyond 2-57 the period of Medicaid eligibility for recipients; and 2-58 (2) consider the need to use different managed care 2-59 plans to meet the needs of different populations. 2-60 Sec. 533.004. MANDATORY CONTRACTS. (a) In providing health 2-61 care services through Medicaid managed care to recipients in a 2-62 health care service region, the commission shall contract with at 2-63 least one managed care organization in that region that: 2-64 (1) is created by: 2-65 (A) a political subdivision with a 2-66 constitutional or statutory obligation to provide health care to 2-67 indigent patients; or 2-68 (B) a nonprofit corporation that has a contract, 2-69 agreement, or other arrangement with a political subdivision 3-1 described by Paragraph (A) under which the nonprofit corporation 3-2 assumes that political subdivision's obligation to provide health 3-3 care to indigent patients and leases, manages, or operates a 3-4 hospital facility owned by that political subdivision; 3-5 (2) is licensed to provide health care in that region; 3-6 and 3-7 (3) demonstrates its ability to meet the contractual 3-8 obligations delineated in the commission's request for applications 3-9 to enter into a contract with the commission to provide health care 3-10 to recipients in that region. 3-11 (b) A contract with a managed care organization described in 3-12 Subsection (a) must contain the same requirements and capitation 3-13 rate as contracts with other managed care organizations to provide 3-14 health care services to recipients in that region. 3-15 (c) If a political subdivision described in Subsection 3-16 (a)(1)(A) has entered into an agreement with the state to provide 3-17 funds for the expansion of Medicaid for children as authorized by 3-18 Chapter 444, Acts of the 74th Legislature, Regular Session, 1995, 3-19 the commission may not contract with a managed care organization 3-20 described by Subsection (a)(1) unless the political subdivision 3-21 fulfills its obligation under the agreement to provide those funds. 3-22 The commission shall make the provision of those funds under the 3-23 agreement a condition of the continuation of the contract with the 3-24 managed care organization for the organization to provide health 3-25 care services to recipients. 3-26 (d) The commission shall comply with this section in 3-27 awarding and renewing contracts to provide health care services 3-28 through Medicaid managed care to recipients in a region. 3-29 (e) Subsection (c) does not apply if: 3-30 (1) the commission does not expand Medicaid for 3-31 children as authorized by Chapter 444, Acts of the 74th 3-32 Legislature, Regular Session, 1995; or 3-33 (2) a waiver from a federal agency necessary for the 3-34 expansion is not granted. 3-35 Sec. 533.005. REQUIRED CONTRACT PROVISIONS. A contract 3-36 between a managed care organization and the commission for the 3-37 organization to provide health care services to recipients must 3-38 contain: 3-39 (1) procedures to ensure accountability to the state 3-40 for the provision of health care services, including procedures for 3-41 financial reporting, quality assurance, utilization review, and 3-42 assurance of contract and subcontract compliance; 3-43 (2) capitation and provider payment rates that ensure 3-44 the cost-effective provision of quality health care; 3-45 (3) a requirement that the managed care organization 3-46 provide ready access to a person who assists recipients in 3-47 resolving issues relating to enrollment, plan administration, 3-48 education and training, access to services, and grievance 3-49 procedures; 3-50 (4) a requirement that the managed care organization 3-51 provide ready access to a person who assists providers in resolving 3-52 issues relating to payment, plan administration, education and 3-53 training, and grievance procedures; 3-54 (5) a requirement that the managed care organization 3-55 provide information and referral about the availability of 3-56 educational, social, and other community services that could 3-57 benefit a recipient; 3-58 (6) procedures for recipient outreach and education; 3-59 and 3-60 (7) a requirement that the managed care organization 3-61 make payment to a physician or provider for health care services 3-62 rendered to a recipient under a managed care plan not later than 3-63 the 45th day after the date a claim for payment is received with 3-64 documentation reasonably necessary for the managed care 3-65 organization to process the claim, or within a period, not to 3-66 exceed 60 days, specified by a written agreement between the 3-67 physician or provider and the managed care organization. 3-68 Sec. 533.006. PROVIDER NETWORKS. (a) The commission shall 3-69 require that each managed care organization that contracts with the 4-1 commission to provide health care services to recipients in a 4-2 region: 4-3 (1) seek participation in the organization's provider 4-4 network from each hospital in the region that has been designated 4-5 as a disproportionate share hospital under the state Medicaid 4-6 program; and 4-7 (2) include in its provider network for not less than 4-8 three years: 4-9 (A) each health care provider in the region who: 4-10 (i) previously provided care to Medicaid 4-11 and charity care recipients at a significant level as prescribed by 4-12 the commission; 4-13 (ii) agrees to accept the prevailing 4-14 provider contract rate of the managed care organization; and 4-15 (iii) has the credentials required by the 4-16 managed care organization, provided that lack of board 4-17 certification or accreditation by the Joint Commission on 4-18 Accreditation of Healthcare Organizations may not be the sole 4-19 ground for exclusion from the provider network; 4-20 (B) each accredited primary care residency 4-21 program in the region; and 4-22 (C) each disproportionate share hospital 4-23 designated by the commission as a statewide significant traditional 4-24 provider. 4-25 (b) A contract between a managed care organization and the 4-26 commission for the organization to provide health care services to 4-27 recipients in a health care service region that includes a rural 4-28 area must require that the organization include in its provider 4-29 network rural hospitals, physicians, home and community support 4-30 services agencies, and other rural health care providers who: 4-31 (1) are sole community providers; 4-32 (2) provide care to Medicaid and charity care 4-33 recipients at a significant level as prescribed by the commission; 4-34 (3) agree to accept the prevailing provider contract 4-35 rate of the managed care organization; and 4-36 (4) have the credentials required by the managed care 4-37 organization, provided that lack of board certification or 4-38 accreditation by the Joint Commission on Accreditation of 4-39 Healthcare Organizations may not be the sole ground for exclusion 4-40 from the provider network. 4-41 Sec. 533.007. CONTRACT COMPLIANCE. (a) The commission 4-42 shall review each managed care organization that contracts with the 4-43 commission to provide health care services to recipients through a 4-44 managed care plan issued by the organization to determine whether 4-45 the organization is prepared to meet its contractual obligations. 4-46 (b) Each managed care organization that contracts with the 4-47 commission to provide health care services to recipients in a 4-48 health care service region shall submit an implementation plan not 4-49 later than the 90th day before the date on which the commission 4-50 plans to begin to provide health care services to recipients in 4-51 that region through managed care. The implementation plan must 4-52 include: 4-53 (1) specific staffing patterns by function for all 4-54 operations, including enrollment, information systems, member 4-55 services, quality improvement, claims management, case management, 4-56 and provider and recipient training; and 4-57 (2) specific time frames for demonstrating 4-58 preparedness for implementation before the date on which the 4-59 commission plans to begin to provide health care services to 4-60 recipients in that region through managed care. 4-61 (c) The commission shall respond to an implementation plan 4-62 not later than the 10th day after the date a managed care 4-63 organization submits the plan if the plan does not adequately meet 4-64 preparedness guidelines. 4-65 (d) Each managed care organization that contracts with the 4-66 commission to provide health care services to recipients in a 4-67 region shall submit status reports on the implementation plan not 4-68 later than the 60th day and the 30th day before the date on which 4-69 the commission plans to begin to provide health care services to 5-1 recipients in that region through managed care and every 30th day 5-2 after that date until the 180th day after that date. 5-3 (e) The commission shall conduct a compliance and readiness 5-4 review of each managed care organization that contracts with the 5-5 commission not later than the 15th day before the date on which the 5-6 commission plans to begin the enrollment process in a region and 5-7 again not later than the 15th day before the date on which the 5-8 commission plans to begin to provide health care services to 5-9 recipients in that region through managed care. The review must 5-10 include an on-site inspection and tests of service authorization 5-11 and claims payment systems, complaint processing systems, and any 5-12 other process or system required by the contract. 5-13 (f) The commission may delay enrollment of recipients in a 5-14 managed care plan issued by a managed care organization if the 5-15 review reveals that the managed care organization is not prepared 5-16 to meet its contractual obligations. The commission shall notify a 5-17 managed care organization of a decision to delay enrollment in a 5-18 plan issued by that organization. 5-19 Sec. 533.008. MARKETING GUIDELINES. The commission shall 5-20 establish marketing guidelines for managed care organizations that 5-21 contract with the commission to provide health care services to 5-22 recipients, including guidelines that prohibit: 5-23 (1) door-to-door marketing to recipients by managed 5-24 care organizations or agents of those organizations; 5-25 (2) the use of marketing materials with inaccurate or 5-26 misleading information; 5-27 (3) misrepresentations to recipients or providers; 5-28 (4) offering recipients material or financial 5-29 incentives to choose a managed care plan other than nominal gifts 5-30 or free health screenings approved by the commission that the 5-31 managed care organization offers to all recipients regardless of 5-32 whether the recipients enroll in the managed care plan; and 5-33 (5) the use of marketing agents who are paid solely by 5-34 commission. 5-35 Sec. 533.009. SPECIAL DISEASE MANAGEMENT. (a) The 5-36 commission shall, to the extent possible, ensure that managed care 5-37 organizations under contract with the commission to provide health 5-38 care services to recipients develop special disease management 5-39 programs to address chronic health conditions, including asthma and 5-40 diabetes. 5-41 (b) The commission may study, in conjunction with an 5-42 academic center, the benefits and costs of applying disease 5-43 management principles in the delivery of Medicaid managed care. 5-44 Sec. 533.010. SPECIAL PROTOCOLS. In conjunction with an 5-45 academic center, the commission may study the treatment of indigent 5-46 populations to develop special protocols for managed care 5-47 organizations to use in providing health care services to 5-48 recipients. 5-49 (Sections 533.011-533.020 reserved for expansion 5-50 SUBCHAPTER B. REGIONAL ADVISORY COMMITTEES 5-51 Sec. 533.021. APPOINTMENT. Not later than the 180th day 5-52 before the date the commission plans to begin to provide health 5-53 care services to recipients in a health care service region through 5-54 managed care, the commission, in consultation with health and human 5-55 services agencies, shall appoint a Medicaid managed care advisory 5-56 committee for that region. 5-57 Sec. 533.022. COMPOSITION. A committee consists of 5-58 representatives from entities and communities in the region as 5-59 considered necessary by the commission to ensure representation of 5-60 interested persons, including representatives of: 5-61 (1) hospitals; 5-62 (2) managed care organizations; 5-63 (3) primary care providers; 5-64 (4) state agencies; 5-65 (5) consumer advocates; 5-66 (6) recipients; and 5-67 (7) rural providers. 5-68 Sec. 533.023. PRESIDING OFFICER; SUBCOMMITTEES. The 5-69 commissioner or the commissioner's designated representative serves 6-1 as the presiding officer of a committee. The presiding officer may 6-2 appoint subcommittees as necessary. 6-3 Sec. 533.024. MEETINGS. (a) A committee shall meet at 6-4 least quarterly for the first year after appointment of the 6-5 committee and at least annually after that time. 6-6 (b) A committee is subject to Chapter 551, Government Code. 6-7 Sec. 533.025. POWERS AND DUTIES. A committee shall: 6-8 (1) comment on the implementation of Medicaid managed 6-9 care in the region; 6-10 (2) provide recommendations to the commission on the 6-11 improvement of Medicaid managed care in the region not later than 6-12 the 30th day after the date of each committee meeting; and 6-13 (3) seek input from the public, including public 6-14 comment at each committee meeting. 6-15 Sec. 533.026. INFORMATION FROM COMMISSION. On request, the 6-16 commission shall provide to a committee information relating to 6-17 recipient enrollment and disenrollment, recipient and provider 6-18 complaints, administrative procedures, program expenditures, and 6-19 education and training procedures. 6-20 Sec. 533.027. COMPENSATION; REIMBURSEMENT. (a) A member of 6-21 a committee other than a representative of a health and human 6-22 services agency is not entitled to receive compensation or 6-23 reimbursement for travel expenses. 6-24 (b) A member of a committee who is an agency representative 6-25 is entitled to reimbursement for expenses incurred in the 6-26 performance of committee duties by the appointing agency in 6-27 accordance with the travel provisions for state employees in the 6-28 General Appropriations Act. 6-29 Sec. 533.028. OTHER LAW. Except as provided by this 6-30 chapter, a committee is subject to Article 6252-33, Revised 6-31 Statutes. 6-32 Sec. 533.029. FUNDING. The commission shall fund activities 6-33 under this section with money otherwise appropriated for that 6-34 purpose. 6-35 (b) Not later than December 1, 1998, the Health and Human 6-36 Services Commission shall submit a report to the governor, the 6-37 lieutenant governor, and the speaker of the house of 6-38 representatives on the impact of Medicaid managed care on the 6-39 public health sector. 6-40 (c) Not later than the first anniversary of the date on 6-41 which Medicaid recipients in a health care service region begin to 6-42 receive health care services through Medicaid managed care, the 6-43 Health and Human Services Commission, in cooperation with the 6-44 Medicaid managed care advisory committee for that region created 6-45 under Subchapter B, Chapter 533, Government Code, as added by this 6-46 Act, shall submit a report to the governor, lieutenant governor, 6-47 and speaker of the house of representatives on the implementation 6-48 of Medicaid managed care in that region. If Medicaid recipients in 6-49 a region began to receive health care services through managed care 6-50 before September 1, 1996, the commission is required to submit a 6-51 report on the implementation of Medicaid managed care in that 6-52 region as soon as possible after the effective date of this Act. 6-53 The commission may consolidate a report with any other report 6-54 relating to the same subject that the commission is required to 6-55 submit under other law. 6-56 (d) Section 533.007, Government Code, as added by this Act, 6-57 applies only to a contract with a managed care organization that 6-58 the Health and Human Services Commission or an agency operating 6-59 part of the Medicaid managed care program enters into or renews on 6-60 or after the effective date of this Act. A contract with a managed 6-61 care organization that the Health and Human Services Commission or 6-62 an agency operating part of the Medicaid managed care program 6-63 enters into or renews before the effective date of this Act is 6-64 governed by the law as it existed immediately before that date, and 6-65 that law is continued in effect for that purpose. 6-66 (e) Section 533.004, Government Code, as added by this Act, 6-67 does not affect the expansion of medical assistance for children 6-68 described in H.C.R. No. 189, 75th Legislature, Regular Session, 6-69 1997. 7-1 (f) If Medicaid recipients in a health care service region 7-2 began to receive health care services through managed care before 7-3 the effective date of this Act, the Health and Human Services 7-4 Commission or an agency operating part of the Medicaid managed care 7-5 program shall appoint a Medicaid managed care advisory committee 7-6 for that region in accordance with Subchapter B, Chapter 533, 7-7 Government Code, as added by this Act, as soon as possible after 7-8 the effective date of this Act. 7-9 (g) This section takes effect immediately. 7-10 SECTION 4. This Act takes effect September 1, 1997, except 7-11 that Section 3 of this Act takes effect immediately. 7-12 SECTION 5. The importance of this legislation and the 7-13 crowded condition of the calendars in both houses create an 7-14 emergency and an imperative public necessity that the 7-15 constitutional rule requiring bills to be read on three several 7-16 days in each house be suspended, and this rule is hereby suspended, 7-17 and that this Act take effect and be in force according to its 7-18 terms, and it is so enacted. 7-19 * * * * *