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.