By Coleman, Naishtat                                  H.B. No. 3258

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to the implementation of the Medicaid managed care

 1-3     program.

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

 1-5           SECTION 1.  Section 531.021, Government Code, is amended to

 1-6     read as follows:

 1-7           Sec. 531.021.  ADMINISTRATION OF MEDICAID PROGRAM.  (a)  The

 1-8     commission is the state agency designated to administer federal

 1-9     medical assistance funds.

1-10           (b)  The commission is responsible for the policy,

1-11     administration, evaluation, and operation of the Medicaid managed

1-12     care program.

1-13           (c)  In discharging its duties relating to the Medicaid

1-14     managed care program, the commission shall consult with and

1-15     consider input from the advisory committee created under Section

1-16     531.047 and from each health and human services agency that

1-17     operates part of the Medicaid program.

1-18           (d)  The commissioner or a person designated by the

1-19     commissioner shall supervise employees of health and human services

1-20     agencies in the performance of Medicaid managed care duties.  The

1-21     commissioner or person designated by the commissioner may assign

1-22     duties to employees and require health and human services agencies

1-23     to assign duties to employees as necessary for the commission to

1-24     discharge its duties relating to the Medicaid managed care program.

 2-1           SECTION 2.  Subchapter B, Chapter 531, Government Code, is

 2-2     amended by adding Section 531.047 to read as follows:

 2-3           Sec. 531.047.  MEDICAID MANAGED CARE INTERAGENCY ADVISORY

 2-4     COMMITTEE.  (a)  An interagency advisory committee is created to

 2-5     provide assistance and recommendations to the commission relating

 2-6     to the policy, administration, evaluation, and operation of the

 2-7     Medicaid managed care program.  The advisory committee consists of:

 2-8                 (1)  the commissioner or, if designated under

 2-9     Subsection (b), the person acting as the state Medicaid director;

2-10                 (2)  a representative of the Texas Department of

2-11     Health, designated by the commissioner of public health;

2-12                 (3)  a representative of the Texas Department of Mental

2-13     Health and Mental Retardation, designated by the commissioner of

2-14     mental health and mental retardation;

2-15                 (4)  a representative of the Texas Department of Human

2-16     Services, designated by the commissioner of human services; and

2-17                 (5)  if considered appropriate by the commissioner, a

2-18     representative of any other state agency with duties relating to

2-19     the Medicaid managed care program, designated by the chief

2-20     administrative officer of that agency.

2-21           (b)  The commissioner may designate the person acting as the

2-22     state Medicaid director to serve on the advisory committee on

2-23     behalf of the commissioner.

2-24           (c)  A member of the advisory committee serves at the will of

2-25     the designating agency.

2-26           (d)  The commissioner or the person acting as the state

2-27     Medicaid director, as applicable, serves as presiding officer of

 3-1     the advisory committee, and members of the committee may elect

 3-2     other necessary officers.

 3-3           (e)  The advisory committee shall meet at the call of the

 3-4     presiding officer.  The presiding officer shall call a meeting of

 3-5     the committee at least once every two months.

 3-6           (f)  The designating agency is responsible for the expenses

 3-7     of a member's service on the advisory committee.  A member of the

 3-8     advisory committee receives no additional compensation for serving

 3-9     on the committee.

3-10           (g)  The advisory committee is not subject to Article

3-11     6252-33, Revised Statutes.

3-12           SECTION 3.  Subtitle I, Title 4, Government Code, is amended

3-13     by adding Chapter 533 to read as follows:

3-14                  CHAPTER 533.  IMPLEMENTATION OF MEDICAID

3-15                            MANAGED CARE PROGRAM

3-16                      SUBCHAPTER A.  GENERAL PROVISIONS

3-17           Sec. 533.001.  DEFINITIONS.  In this chapter:

3-18                 (1)  "Commission" means the Health and Human Services

3-19     Commission or an agency operating part of the state Medicaid

3-20     managed care program, as appropriate.

3-21                 (2)  "Commissioner" means the commissioner of health

3-22     and human services.

3-23                 (3)  "Health and human services agencies" has the

3-24     meaning assigned by Section 531.001.

3-25                 (4)  "Managed care organization" means a person who is

3-26     authorized or otherwise permitted by law to arrange for or provide

3-27     a managed care plan.

 4-1                 (5)  "Managed care plan" means a plan under which a

 4-2     person undertakes to provide, arrange for, pay for, or reimburse

 4-3     any part of the cost of any health care services.  A part of the

 4-4     plan must consist of arranging for or providing health care

 4-5     services as distinguished from indemnification against the cost of

 4-6     those services on a prepaid basis through insurance or otherwise.

 4-7     The term includes a primary care case management provider network.

 4-8     The term does not include a plan that indemnifies a person for the

 4-9     cost of health care services through insurance.

4-10                 (6)  "Recipient" means a recipient of medical

4-11     assistance under Chapter 32, Human Resources Code.

4-12           Sec. 533.002.  PURPOSE.  The commission shall implement the

4-13     Medicaid managed care program as part of the health care delivery

4-14     system developed under Chapter 532 by contracting with managed care

4-15     organizations in a manner that, to the extent possible:

4-16                 (1)  improves the health of Texans by:

4-17                       (A)  emphasizing prevention;

4-18                       (B)  promoting continuity of care; and

4-19                       (C)  providing a medical home for recipients;

4-20                 (2)  ensures that each recipient receives high quality,

4-21     comprehensive health care services in the recipient's local

4-22     community;

4-23                 (3)  encourages the training of and access to primary

4-24     care physicians and providers;

4-25                 (4)  maximizes cooperation with existing public health

4-26     entities, including local departments of health;

4-27                 (5)  provides incentives to managed care organizations,

 5-1     other than managed care organizations created by political

 5-2     subdivisions with constitutional or statutory obligations to

 5-3     provide health care to indigent patients, to improve the quality of

 5-4     health care services for recipients by providing value-added

 5-5     services; and

 5-6                 (6)  reduces administrative and other nonfinancial

 5-7     barriers for recipients in obtaining health care services.

 5-8           Sec. 533.003.  CONSIDERATIONS IN AWARDING CONTRACTS.  In

 5-9     awarding contracts to managed care organizations, the commission

5-10     shall:

5-11                 (1)  give extra consideration to organizations that

5-12     agree to assure continuity of care for at least three months beyond

5-13     the period of Medicaid eligibility for recipients; and

5-14                 (2)  consider the need to use different managed care

5-15     plans to meet the needs of different populations.

5-16           Sec. 533.004.  MANDATORY CONTRACTS.  (a)  In implementing

5-17     Medicaid managed care in a health care service region, the

5-18     commission shall contract with at least one managed care

5-19     organization in that region that:

5-20                 (1)  is created by:

5-21                       (A)  a political subdivision with a

5-22     constitutional or statutory obligation to provide health care to

5-23     indigent patients; or

5-24                       (B)  a nonprofit corporation that has a contract,

5-25     agreement, or other arrangement with a political subdivision

5-26     described by Paragraph (A) under which the nonprofit corporation

5-27     assumes that political subdivision's obligation to provide health

 6-1     care to indigent patients and leases, manages, or operates a

 6-2     hospital facility owned by that political subdivision;

 6-3                 (2)  is licensed to provide health care in that region;

 6-4     and

 6-5                 (3)  demonstrates its ability to meet the contractual

 6-6     obligations delineated in the commission's request for applications

 6-7     to enter into a contract with the commission to provide health care

 6-8     to recipients in that region.

 6-9           (b)  A contract with a managed care organization described in

6-10     Subsection (a)  must contain the same requirements and capitation

6-11     rate as contracts with other managed care organizations to provide

6-12     health care services to recipients in that region.

6-13           (c)  If a political subdivision described in Subsection

6-14     (a)(1)(A) has entered into an agreement with the state to provide

6-15     funds for the expansion of Medicaid for children as authorized by

6-16     Chapter 444, Acts of the 74th Legislature, Regular Session, 1995,

6-17     the commission may not contract with a managed care organization

6-18     described by Subsection (a)(1) unless the political subdivision

6-19     fulfills its obligation under the agreement to provide those funds.

6-20     The commission shall make the provision of those funds under the

6-21     agreement a condition of the continuation of the contract with the

6-22     managed care organization for the organization to provide health

6-23     care services to recipients.

6-24           (d)  Subsection (c) does not apply if:

6-25                 (1)  the commission does not expand Medicaid for

6-26     children as authorized by Chapter 444, Acts of the 74th

6-27     Legislature, Regular Session, 1995; or

 7-1                 (2)  a waiver from a federal agency necessary for the

 7-2     expansion is not granted.

 7-3           Sec. 533.005.  REQUIRED CONTRACT PROVISIONS.  A contract

 7-4     between a managed care organization and the commission for the

 7-5     organization to provide health care services to recipients must

 7-6     contain:

 7-7                 (1)  procedures to ensure accountability to the state

 7-8     for the provision of health care services, including procedures for

 7-9     financial reporting, quality assurance, utilization review, and

7-10     assurance of contract and subcontract compliance;

7-11                 (2)  capitation and provider payment rates that ensure

7-12     the cost-effective provision of high quality health care;

7-13                 (3)  a requirement that the managed care organization

7-14     provide ready access to a person who assists recipients in

7-15     resolving issues relating to enrollment, plan administration,

7-16     education and training, access to services, and grievance

7-17     procedures;

7-18                 (4)  a requirement that the managed care organization

7-19     provide ready access to a person who assists providers in resolving

7-20     issues relating to payment, plan administration, education and

7-21     training, and grievance procedures;

7-22                 (5)  a requirement that the managed care organization

7-23     provide information and referral about the availability of

7-24     educational, social, and other community services that could

7-25     benefit a recipient;

7-26                 (6)  procedures for recipient outreach and education;

7-27     and

 8-1                 (7)  a requirement that the managed care organization

 8-2     make payment to a physician or provider for health care services

 8-3     rendered to a recipient under a managed care plan not later than

 8-4     the 45th day after the date a claim for payment is received with

 8-5     documentation reasonably necessary for the managed care

 8-6     organization to process the claim, or within a period, not to

 8-7     exceed 60 days, specified by a written agreement between the

 8-8     physician or provider and the managed care organization.

 8-9           Sec. 533.006.  PROVIDER NETWORKS.  (a)  The commission shall

8-10     require that each managed care organization that contracts with the

8-11     commission to provide health care services to recipients in a

8-12     region:

8-13                 (1)  seek participation in the organization's provider

8-14     network from:

8-15                       (A)  each health care provider in the region who

8-16     has traditionally provided care to Medicaid and charity care

8-17     recipients; and

8-18                       (B)  each hospital in the region that has been

8-19     designated as a disproportionate share hospital under the state

8-20     Medicaid program; and

8-21                 (2)  include in its provider network for not less than

8-22     three years:

8-23                       (A)  each health care provider in the region who:

8-24                             (i)  previously provided care to Medicaid

8-25     and charity care recipients at a significant level as prescribed by

8-26     the commission;

8-27                             (ii)  agrees to accept the prevailing

 9-1     provider contract rate of the managed care organization; and

 9-2                             (iii)  has the credentials required by the

 9-3     managed care organization, provided that lack of board

 9-4     certification or accreditation by the Joint Commission on

 9-5     Accreditation of Healthcare Organizations may not be the sole

 9-6     ground for exclusion from the provider network;

 9-7                       (B)  each accredited primary care residency

 9-8     program in the region; and

 9-9                       (C)  each disproportionate share hospital

9-10     designated by the commission as a statewide significant traditional

9-11     provider.

9-12           (b)  A contract between a managed care organization and the

9-13     commission for the organization to provide health care services to

9-14     recipients in a health care service region that includes a rural

9-15     area must require that the organization include in its provider

9-16     network rural hospitals, physicians, home and community support

9-17     services agencies, and other rural health care providers who:

9-18                 (1)  are sole community providers;

9-19                 (2)  provide care to Medicaid and charity care

9-20     recipients at a significant level as prescribed by the commission;

9-21                 (3)  agree to accept the prevailing provider contract

9-22     rate of the managed care organization; and

9-23                 (4)  have the credentials required by the managed care

9-24     organization, provided that lack of board certification or

9-25     accreditation by the Joint Commission on Accreditation of

9-26     Healthcare Organizations may not be the sole ground for exclusion

9-27     from the provider network.

 10-1          Sec. 533.007.  CONTRACT COMPLIANCE.  (a)  The commission

 10-2    shall review each managed care organization that contracts with the

 10-3    commission to provide health care services to recipients through a

 10-4    managed care plan issued by the organization to determine whether

 10-5    the organization is prepared to meet its contractual obligations.

 10-6          (b)  Each managed care organization that contracts with the

 10-7    commission to provide health care services to recipients in a

 10-8    health care service region shall submit an implementation plan not

 10-9    later than the 90th day before the date on which the commission

10-10    plans to begin to provide health care services to recipients in

10-11    that region through managed care.  The implementation plan must

10-12    include:

10-13                (1)  specific staffing patterns by function for all

10-14    operations, including enrollment, information systems, member

10-15    services, quality improvement, claims management, case management,

10-16    and provider and recipient training; and

10-17                (2)  specific time frames for demonstrating

10-18    preparedness for implementation before the date on which the

10-19    commission plans to begin to provide health care services to

10-20    recipients in that region through managed care.

10-21          (c)  The commission shall respond to an implementation plan

10-22    not later than the fifth day after the date a managed care

10-23    organization submits the plan if the plan does not adequately meet

10-24    preparedness guidelines.

10-25          (d)  Each managed care organization that contracts with the

10-26    commission to provide health care services to recipients in a

10-27    region shall submit status reports on the implementation plan not

 11-1    later than the 60th day and the 30th day before the date on which

 11-2    the commission plans to begin to provide health care services to

 11-3    recipients in that region through managed care and every 30th day

 11-4    after that date until the 180th day after that date.

 11-5          (e)  The commission shall conduct a compliance and readiness

 11-6    review of each managed care organization that contracts with the

 11-7    commission not later than the 15th day before the date on which the

 11-8    commission plans to begin the enrollment process in a region and

 11-9    again not later than the 15th day before the date on which the

11-10    commission plans to begin to provide health care services to

11-11    recipients in that region through managed care.  The review must

11-12    include an on-site inspection and tests of service authorization

11-13    and claims payment systems, complaint processing systems, and any

11-14    other process or system required by the contract.

11-15          (f)  The commission may delay enrollment of recipients in a

11-16    managed care plan issued by a managed care organization if the

11-17    review reveals that the managed care organization is not prepared

11-18    to meet its contractual obligations.  The commission shall notify a

11-19    managed care organization of a decision to delay enrollment in a

11-20    plan issued by that organization.

11-21          Sec. 533.008.  MARKETING GUIDELINES.  The commission shall

11-22    establish marketing guidelines for managed care organizations that

11-23    contract with the commission to provide health care services to

11-24    recipients, including guidelines that prohibit:

11-25                (1)  door-to-door marketing to recipients by managed

11-26    care organizations or agents of those organizations;

11-27                (2)  the use of marketing materials with inaccurate or

 12-1    misleading information;

 12-2                (3)  misrepresentations to recipients or providers;

 12-3                (4)  offering recipients material or financial

 12-4    incentives to choose a managed care plan other than nominal gifts

 12-5    or free health screenings approved by the commission that the

 12-6    managed care organization offers to all recipients regardless of

 12-7    whether the recipients enroll in the managed care plan;

 12-8                (5)  marketing at public assistance offices; and

 12-9                (6)  the use of marketing agents who are paid solely by

12-10    commission.

12-11          Sec. 533.009.  SPECIAL DISEASE MANAGEMENT.  (a)  The

12-12    commission shall, to the extent possible, ensure that managed care

12-13    organizations under contract with the commission to provide health

12-14    care services to recipients develop special disease management

12-15    programs to address chronic health conditions, including asthma and

12-16    diabetes.

12-17          (b)  The commission may study, in conjunction with an

12-18    academic center, the benefits and costs of applying disease

12-19    management principles in the delivery of Medicaid managed care.

12-20          Sec. 533.010.  SPECIAL PROTOCOLS.  In conjunction with an

12-21    academic center, the commission may study the treatment of indigent

12-22    populations to develop special protocols for managed care

12-23    organizations to use in providing health care services to

12-24    recipients.

12-25             (Sections 533.011-533.020 reserved for expansion

12-26                SUBCHAPTER B.  REGIONAL ADVISORY COMMITTEES

12-27          Sec. 533.021.  APPOINTMENT.  Not later than the 180th day

 13-1    before the date the commission plans to begin to provide health

 13-2    care services to recipients in a health care service region through

 13-3    managed care, the commission, in consultation with health and human

 13-4    services agencies, shall appoint a Medicaid managed care advisory

 13-5    committee for that region.

 13-6          Sec. 533.022.  COMPOSITION.  A committee consists of

 13-7    representatives from entities and communities in the region as

 13-8    considered necessary by the commission to ensure representation of

 13-9    interested persons, including representatives of:

13-10                (1)  hospitals;

13-11                (2)  managed care organizations;

13-12                (3)  primary care providers;

13-13                (4)  state agencies;

13-14                (5)  consumer advocates;

13-15                (6)  recipients; and

13-16                (7)  rural providers.

13-17          Sec. 533.023.  PRESIDING OFFICER; SUBCOMMITTEES.  The

13-18    commissioner or the commissioner's designated representative serves

13-19    as the presiding officer of a committee.  The presiding officer may

13-20    appoint subcommittees as necessary.

13-21          Sec. 533.024.  MEETINGS.  (a)  A committee shall meet at

13-22    least quarterly for the first year after appointment of the

13-23    committee and at least annually after that time.

13-24          (b)  A committee is subject to Chapter 551, Government Code.

13-25          Sec. 533.025.  POWERS AND DUTIES.  A committee shall:

13-26                (1)  comment on the implementation of Medicaid managed

13-27    care in the region;

 14-1                (2)  provide recommendations to the commission on the

 14-2    improvement of Medicaid managed care in the region not later than

 14-3    the 30th day after the date of each committee meeting; and

 14-4                (3)  seek input from the public, including public

 14-5    comment at each committee meeting.

 14-6          Sec. 533.026.  INFORMATION FROM COMMISSION.  On request, the

 14-7    commission shall provide to a committee information relating to

 14-8    recipient enrollment and disenrollment, recipient and provider

 14-9    complaints, administrative procedures, program expenditures, and

14-10    education and training procedures.

14-11          Sec. 533.027.  COMPENSATION; REIMBURSEMENT.  (a)  A member of

14-12    a committee other than a representative of a health and human

14-13    services agency is not entitled to receive compensation or

14-14    reimbursement for travel expenses.

14-15          (b)  A member of a committee who is an agency representative

14-16    is entitled to reimbursement for expenses incurred in the

14-17    performance of committee duties by the appointing agency in

14-18    accordance with the travel provisions for state employees in the

14-19    General Appropriations Act.

14-20          Sec. 533.028.  OTHER LAW.  Except as provided by this

14-21    chapter, a committee is subject to Article 6252-33, Revised

14-22    Statutes.

14-23          SECTION 4.  Not later than September 1, 1997, the Health and

14-24    Human Services Commission shall direct the Texas Department of

14-25    Health and the Texas Department of Human Services to submit to the

14-26    governor and the Legislative Budget Board a plan to realize cost

14-27    savings for the state by simplifying eligibility criteria and

 15-1    streamlining eligibility determination processes for recipients of

 15-2    financial assistance under Chapter 31, Human Resources Code,

 15-3    recipients of medical assistance under Chapter 32, Human Resources

 15-4    Code, and recipients of other public assistance.

 15-5          SECTION 5.  Not later than December 1, 1998, the Health and

 15-6    Human Services Commission shall submit a report to the governor,

 15-7    the lieutenant governor, and the speaker of the house of

 15-8    representatives on the impact of Medicaid managed care on the

 15-9    public health sector.

15-10          SECTION 6.  Not later than the first anniversary of the date

15-11    on which Medicaid recipients in a health care service region begin

15-12    to receive health care services through Medicaid managed care, the

15-13    Health and Human Services Commission, in cooperation with the

15-14    Medicaid managed care advisory committee for that region created

15-15    under Subchapter B, Chapter 533, Government Code, as added by this

15-16    Act, shall submit a report to the governor, lieutenant governor,

15-17    and speaker of the house of representatives on the implementation

15-18    of Medicaid managed care in that region.  If Medicaid recipients in

15-19    a region began to receive health care services through managed care

15-20    before September 1, 1996, the commission is required to submit a

15-21    report on the implementation of Medicaid managed care in that

15-22    region as soon as possible after the effective date of this Act.

15-23    The commission may consolidate a report with any other report

15-24    relating to the same subject that the commission is required to

15-25    submit under other law.

15-26          SECTION 7.  (a)  Section 533.007, Government Code, as added

15-27    by this Act, applies only to a contract with a managed care

 16-1    organization that the commission enters into or renews on or after

 16-2    the effective date of this Act.  A contract with a managed care

 16-3    organization that the commission enters into or renews before the

 16-4    effective date of this Act is governed by the law as it existed

 16-5    immediately before that date, and that law is continued in effect

 16-6    for that purpose.

 16-7          (b)  Section 533.004, Government Code, as added by this Act,

 16-8    does not affect the expansion of medical assistance for children

 16-9    described in H.C.R. No. 189, 75th Legislature, Regular Session,

16-10    1997.

16-11          (c)  If Medicaid recipients in a health care service region

16-12    began to receive health care services through managed care before

16-13    the effective date of this Act, the commission shall appoint a

16-14    Medicaid managed care advisory committee for that region in

16-15    accordance with Subchapter B, Chapter 533, Government Code, as

16-16    added by this Act, as soon as possible after the effective date of

16-17    this Act.

16-18          (d)  For purposes of this section, "commission" means the

16-19    Health and Human Services Commission or an agency operating part of

16-20    the state Medicaid managed care program, as appropriate.

16-21          SECTION 8.  The importance of this legislation and the

16-22    crowded condition of the calendars in both houses create an

16-23    emergency and an imperative public necessity that the

16-24    constitutional rule requiring bills to be read on three several

16-25    days in each house be suspended, and this rule is hereby suspended,

16-26    and that this Act take effect and be in force from and after its

16-27    passage, and it is so enacted.