By: Madla, Harris, Nelson S.B. No. 382
Sibley, Cain
A BILL TO BE ENTITLED
AN ACT
1-1 relating to the regulation of health maintenance organizations.
1-2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-3 SECTION 1. Subsections (i) through (u), Section 2, Texas
1-4 Health Maintenance Organization Act (Article 20A.02, Vernon's Texas
1-5 Insurance Code), are amended to read as follows:
1-6 (i) "Health care services" means any services, including the
1-7 furnishing to any individual of pharmaceutical services, medical,
1-8 chiropractic, or dental care, or hospitalization or incident to the
1-9 furnishing of such services, care, or hospitalization, as well as
1-10 the furnishing to any person of any and all other services for the
1-11 purpose of preventing, alleviating, curing or healing human illness
1-12 or injury, a limited health care service plan, or a single health
1-13 care service plan.
1-14 (j) "Health maintenance organization" means any person who
1-15 arranges for or provides a health care plan, a limited health care
1-16 service plan, or a single health care service plan to enrollees on
1-17 a prepaid basis.
1-18 (k) "Limited health care services" means health care
1-19 services that include more than a single health care service, that
1-20 an enrolled population might reasonably require in order to be
1-21 maintained in good health with respect to the health care services
1-22 specified in the application and certificate of authority for the
1-23 health maintenance organization for the purpose of preventing,
2-1 alleviating, curing, or healing human illness or injury, and that
2-2 are to be provided by one or more persons each of whom are licensed
2-3 by the state to provide the particular health care service or
2-4 services. The commissioner, in the commissioner's sole discretion,
2-5 determines whether a health maintenance organization provides
2-6 basic, limited, or single health care services, and a finding that
2-7 the health maintenance organization provides limited health care
2-8 services shall be contained in the certificate of authority and
2-9 corresponding approval order of the commissioner.
2-10 (l) "Limited health care service plan" means a plan under
2-11 which any person undertakes to provide, arrange for, pay for, or
2-12 reimburse any part of the cost of limited health care services,
2-13 provided that a part of the plan consists of arranging for or the
2-14 provision of limited health care services, as distinguished from an
2-15 indemnification against the cost of those services, on a prepaid
2-16 basis through insurance or otherwise.
2-17 (m) "Medical care" means furnishing those services defined
2-18 as practicing medicine under Section 1.03(8), Medical Practice Act
2-19 (Article 4495b, Vernon's Texas Civil Statutes).
2-20 (n) [(l)] "Person" means any natural or artificial person,
2-21 including, but not limited to, individuals, partnerships,
2-22 associations, organizations, trusts, hospital districts, limited
2-23 liability companies, limited liability partnerships, or
2-24 corporations.
2-25 (o) [(m)] "Physician" means:
3-1 (1) an individual licensed to practice medicine in
3-2 this state;
3-3 (2) a professional association organized under the
3-4 Texas Professional Association Act (Article 1528f, Vernon's Texas
3-5 Civil Statutes) or a nonprofit health corporation certified under
3-6 Section 5.01, Medical Practice Act (Article 4495b, Vernon's Texas
3-7 Civil Statutes); or
3-8 (3) another person wholly owned by physicians.
3-9 (p) [(n)] "Provider" means:
3-10 (1) any person other than a physician, including a
3-11 licensed doctor of chiropractic, registered nurse, pharmacist,
3-12 optometrist, pharmacy, hospital, or other institution or
3-13 organization or person that is licensed or otherwise authorized to
3-14 provide a health care service in this state;
3-15 (2) a person who is wholly owned or controlled by a
3-16 provider or by a group of providers who are licensed to provide the
3-17 same health care service; or
3-18 (3) a person who is wholly owned or controlled by one
3-19 or more hospitals and physicians, including a physician-hospital
3-20 organization.
3-21 (q) [(o)] "Sponsoring organization" means a person who
3-22 guarantees the uncovered expenses of the health maintenance
3-23 organization and who is financially capable, as determined by the
3-24 commissioner, of meeting the obligations resulting from those
3-25 guarantees.
4-1 (r) [(p)] "Uncovered expenses" means the estimated
4-2 administrative expenses and the estimated cost of health care
4-3 services that are not guaranteed, insured, or assumed by a person
4-4 other than the health maintenance organization. Health care
4-5 services may be considered covered if the physician or provider
4-6 agrees in writing that enrollees shall in no way be liable,
4-7 assessable, or in any way subject to payment for services except as
4-8 described in the evidence of coverage issued to the enrollee under
4-9 Section 9 of this Act. The amount due on loans in the next
4-10 calendar year will be considered uncovered expenses unless
4-11 specifically subordinated to uncovered medical and health care
4-12 expenses or unless guaranteed by the sponsoring organization.
4-13 (s) [(q)] "Uncovered liabilities" means obligations
4-14 resulting from unpaid uncovered expenses, the outstanding
4-15 indebtedness of loans that are not specifically subordinated to
4-16 uncovered medical and health care expenses or guaranteed by the
4-17 sponsoring organization, and all other monetary obligations that
4-18 are not similarly subordinated or guaranteed.
4-19 (t) [(r)] "Single health care service" means a health care
4-20 service that an enrolled population may reasonably require in order
4-21 to be maintained in good health with respect to a particular health
4-22 care need for the purpose of preventing, alleviating, curing, or
4-23 healing human illness or injury of a single specified nature and
4-24 that is to be provided by one or more persons each of whom is
4-25 licensed by the state to provide that specific health care service.
5-1 (u) [(s)] "Single health care service plan" means a plan
5-2 under which any person undertakes to provide, arrange for, pay for,
5-3 or reimburse any part of the cost of a single health care service,
5-4 provided[,] that a part of the plan consists of arranging for or
5-5 the provision of the single health care service, as distinguished
5-6 from an indemnification against the cost of that service, on a
5-7 prepaid basis through insurance or otherwise and that no part of
5-8 that plan consists of arranging for the provision of more than one
5-9 health care need of a single specified nature.
5-10 (v) [(t)] "Emergency care" means bona fide emergency
5-11 services provided after the sudden onset of a medical condition
5-12 manifesting itself by acute symptoms of sufficient severity,
5-13 including severe pain, such that the absence of immediate medical
5-14 attention could reasonably be expected to result in:
5-15 (1) placing the patient's health in serious jeopardy;
5-16 (2) serious impairment to bodily functions; or
5-17 (3) serious dysfunction of any bodily organ or part.
5-18 (w) [(u)] "Health maintenance organization delivery network"
5-19 means a health care delivery system in which a health maintenance
5-20 organization arranges for health care services directly or
5-21 indirectly through contracts and subcontracts with providers and
5-22 physicians.
5-23 SECTION 2. Subsection (a), Section 4, Texas Health
5-24 Maintenance Organization Act (Article 20A.04, Vernon's Texas
5-25 Insurance Code), is amended to read as follows:
6-1 (a) Each application for a certificate of authority shall be
6-2 on a form prescribed by rule of the commissioner and shall be
6-3 verified by the applicant, an officer, or other authorized
6-4 representative of the applicant, and shall set forth or be
6-5 accompanied by the following:
6-6 (1) a copy of the basic organizational document, if
6-7 any, of the applicant, such as the articles of incorporation,
6-8 articles of association, partnership agreement, trust agreement, or
6-9 other applicable documents, and all amendments thereto;
6-10 (2) a copy of the bylaws, rules and regulations, or
6-11 similar document, if any, regulating the conduct of the internal
6-12 affairs of the applicant;
6-13 (3) a list of the names, addresses, and official
6-14 positions of the persons who are to be responsible for the conduct
6-15 of the affairs of the applicant, including all members of the board
6-16 of directors, board of trustees, executive committee, or other
6-17 governing body or committee, the principal officer in the case of a
6-18 corporation, and the partnership or members in the case of a
6-19 partnership or association;
6-20 (4) a copy of any independent or other contract made
6-21 or to be made between any provider, physician, or persons listed in
6-22 Paragraph (3) hereof and the applicant;
6-23 (5) a copy of the form of evidence of coverage to be
6-24 issued to the enrollee;
6-25 (6) a copy of the form of the group contract, if any,
7-1 which is to be issued to employers, unions, trustees, or other
7-2 organizations;
7-3 (7) a current financial statement that includes:
7-4 (A) the sources and application of funds;
7-5 (B) projected financial statements during the
7-6 initial period of operations;
7-7 (C) a balance sheet beginning as of the date of
7-8 the expected start of operations;
7-9 (D) a statement of revenue and expenses with
7-10 expected member months; and
7-11 (E) a cash flow statement that states any
7-12 capital expenditures, purchase and sale of investments, and
7-13 deposits with the state;
7-14 (8) the schedule of charges to be used during the
7-15 first 12 months of operation;
7-16 (9) a statement acknowledging that all lawful process
7-17 in any legal action or proceeding against the health maintenance
7-18 organization on a cause of action arising in this state is valid if
7-19 served in accordance with Article 1.36, Insurance Code;
7-20 (10) a statement reasonably describing the geographic
7-21 area or areas to be served;
7-22 (11) a description of the complaint procedures to be
7-23 utilized;
7-24 (12) a description of the procedures and programs to
7-25 be implemented to meet the quality of health care requirements set
8-1 forth herein; [and]
8-2 (13) for a limited health care service plan, a
8-3 specific description of the health care services to be provided;
8-4 and
8-5 (14) such other information as the commissioner may
8-6 require to make the determinations required by this Act.
8-7 SECTION 3. Section 5, Texas Health Maintenance Organization
8-8 Act (Article 20A.05, Vernon's Texas Insurance Code), is amended by
8-9 amending Subsection (b) and adding Subsection (e) to read as
8-10 follows:
8-11 (b) The commissioner shall, after notice and hearing, issue
8-12 or deny a certificate of authority to any person filing an
8-13 application pursuant to Section 4 of this Act within 75 days of the
8-14 receipt of the certification of the board; provided, however, that
8-15 the commissioner may grant a delay of final action on the
8-16 application to an applicant. Issuance of the certificate of
8-17 authority shall be granted upon payment of the application fee
8-18 prescribed in Section 32 of this Act if:
8-19 (1) the board certifies that the health maintenance
8-20 organization's proposed plan of operation meets the requirements of
8-21 Subsection (a)(2) of this section; and
8-22 (2) the commissioner is satisfied that:
8-23 (A) the person responsible for the conduct of
8-24 the affairs of the applicant is competent, trustworthy, and
8-25 possesses a good reputation;
9-1 (B) the health care plan, limited health care
9-2 service plan, or single health care service plan constitutes an
9-3 appropriate mechanism whereby the health maintenance organization
9-4 will effectively provide or arrange for the provision of basic
9-5 health care services, limited health care services, or single
9-6 health care service on a prepaid basis, through insurance or
9-7 otherwise, except to the extent of reasonable requirements for
9-8 co-payment;
9-9 (C) the health maintenance organization is fully
9-10 responsible and may reasonably be expected to meet its obligations
9-11 to enrollees and prospective enrollees. In making this
9-12 determination, the commissioner shall consider:
9-13 (i) the financial soundness of the health
9-14 care plan's arrangement for health care services and a schedule of
9-15 charges used in connection therewith;
9-16 (ii) the adequacy of working capital;
9-17 (iii) any agreement with an insurer, group
9-18 hospital service corporation, a political subdivision of
9-19 government, or any other organization for insuring the payment of
9-20 the cost of health care services or the provision for automatic
9-21 applicability of an alternative coverage in the event of
9-22 discontinuance of plan;
9-23 (iv) any agreement which provides for the
9-24 provision of health care services; and
9-25 (v) any deposit of cash or securities
10-1 submitted in accordance with Section 13 of this Act as a guarantee
10-2 that the obligations will be duly performed;
10-3 (D) nothing in the proposed method of operation,
10-4 as shown by the information submitted pursuant to Section 4 of this
10-5 Act, or by independent investigation, is contrary to Texas law.
10-6 (e) By applying for and receiving a certificate of authority
10-7 to do business in this state, the health maintenance organization
10-8 agrees and admits that it is not subject to the United States
10-9 Bankruptcy Code and is not eligible to proceed under the United
10-10 States Bankruptcy Code.
10-11 SECTION 4. Subsection (a), Section 9, Texas Health
10-12 Maintenance Organization Act (Article 20A.09, Vernon's Texas
10-13 Insurance Code), is amended to read as follows:
10-14 (a)(1) Every enrollee residing in this state is entitled to
10-15 evidence of coverage under a health care plan. If the enrollee
10-16 obtains coverage under a health care plan through an insurance
10-17 policy or a contract issued by a group hospital service
10-18 corporation, whether by option or otherwise, the insurer or the
10-19 group hospital service corporation shall issue the evidence of
10-20 coverage. Otherwise, the health maintenance organization shall
10-21 issue the evidence of coverage.
10-22 (2) No evidence of coverage, or amendment thereto,
10-23 shall be issued or delivered to any person in this state until a
10-24 copy of the form of evidence of coverage, or amendment thereto, has
10-25 been filed with and approved by the commissioner.
11-1 (3) An evidence of coverage shall contain:
11-2 (A) no provisions or statements which are
11-3 unjust, unfair, inequitable, misleading, deceptive, which encourage
11-4 misrepresentation, or which are untrue, misleading, or deceptive as
11-5 defined in Section 14 of this Act; and
11-6 (B) a clear and complete statement, if a
11-7 contract, or a reasonably complete facsimile, if a certificate, of:
11-8 (i) the medical, health care services,
11-9 limited health care services, or single health care service and the
11-10 issuance of other benefits, if any, to which the enrollee is
11-11 entitled under the health care plan, limited health care service
11-12 plan, or single health care service plan;
11-13 (ii) any limitation on the services, kinds
11-14 of services, benefits, or kinds of benefits to be provided,
11-15 including any deductible or co-payment feature;
11-16 (iii) where and in what manner information
11-17 is available as to how services may be obtained; and
11-18 (iv) a clear and understandable
11-19 description of the health maintenance organization's methods for
11-20 resolving enrollee complaints. Any subsequent changes may be
11-21 evidenced in a separate document issued to the enrollee.
11-22 (4) Any form of the evidence of coverage or group
11-23 contract to be used in this state, and any amendments thereto, are
11-24 subject to the filing and approval requirements of Subsection (c)
11-25 of this section, unless it is subject to the jurisdiction of the
12-1 commissioner under the laws governing health insurance or group
12-2 hospital service corporations, in which event the filing and
12-3 approval provisions of such law shall apply. To the extent,
12-4 however, that such provisions do not apply to the requirements of
12-5 Subdivision (3)[, Subsection (a)] of this subsection [section], the
12-6 requirements of Subdivision (3) shall be applicable.
12-7 SECTION 5. Section 13, Texas Health Maintenance Organization
12-8 Act (Article 20A.13, Vernon's Texas Insurance Code), is amended to
12-9 read as follows:
12-10 Sec. 13. Protection Against Insolvency. (a) Unless
12-11 otherwise provided by this section, each health maintenance
12-12 organization shall deposit with the comptroller [State Treasurer]
12-13 cash or securities, or any combination of these or other guarantees
12-14 that are acceptable to the commissioner [State Board of Insurance],
12-15 in an amount as set forth in this section.
12-16 (b) For a health maintenance organization which has not
12-17 received a certificate of authority from the State Board of
12-18 Insurance or the commissioner prior to September 1, 1987:
12-19 (1) the amount of the initial deposit or other
12-20 guarantee shall be $100,000 for an organization offering basic
12-21 health care services, $75,000 for an organization offering limited
12-22 health care services, and $50,000 for an organization offering a
12-23 single health care service plan;
12-24 (2) on or before March 15 of the year following the
12-25 year in which the health maintenance organization receives a
13-1 certificate of authority, it shall deposit with the comptroller
13-2 [State Treasurer] an amount equal to the difference between the
13-3 initial deposit and 100 percent of its estimated uncovered health
13-4 care expenses for the first 12 months of operation;
13-5 (3) on or before March 15 of each subsequent year, it
13-6 shall deposit the difference between its total uncovered health
13-7 care expenses based on its annual statement from the previous year
13-8 and the total amount previously deposited and not withdrawn from
13-9 the State Treasury; and
13-10 (4) in any year in which the amount determined in
13-11 accordance with Subdivision (3) of this subsection is zero or less
13-12 than zero, the commissioner [State Board of Insurance] may not
13-13 require the health maintenance organization to make any additional
13-14 deposit under this subsection.
13-15 (c) For a health maintenance organization which has received
13-16 a certificate of authority from the State Board of Insurance prior
13-17 to September 1, 1987:
13-18 (1) on or before March 15, 1988, the organization
13-19 shall deposit an amount equal to the sum of:
13-20 (A) $100,000 for an organization offering basic
13-21 health care services or $50,000 for an organization offering a
13-22 single health care service plan; and
13-23 (B) 100 percent of the uncovered health care
13-24 expenses for the preceding 12 months of operation;
13-25 (2) on or before March 15 of each subsequent year, the
14-1 organization shall make additional deposits of the difference
14-2 between its total uncovered health care expenses based on its
14-3 annual statement from the previous year and the total amount
14-4 previously deposited and not withdrawn from the State Treasury; and
14-5 (3) in any year in which the amount determined in
14-6 accordance with Subdivision (2) of this subsection is zero or less
14-7 than zero, the commissioner [State Board of Insurance] may not
14-8 require the health maintenance organization to make any additional
14-9 deposit under this subsection.
14-10 (d) If, on application made not more than once in each
14-11 calendar year by a health maintenance organization under this
14-12 subsection, the commissioner determines that the amount previously
14-13 deposited by the organization under this section has exceeded the
14-14 amount required under this section by more than $50,000 for a
14-15 continuous 12-month period, the commissioner shall allow the
14-16 organization to withdraw the portion of the deposit that exceeds by
14-17 more than $50,000 the amount required to be on deposit for that
14-18 organization, unless the commissioner considers that the release of
14-19 a portion of the deposit could be hazardous to enrollees,
14-20 creditors, or the general public.
14-21 (e) On application made not sooner than the 24th month after
14-22 the effective date of this subsection, if the commissioner
14-23 determines that the amount previously deposited by an organization
14-24 under this section continues to exceed the amount required under
14-25 this section, the commissioner shall allow the organization to
15-1 withdraw the portion of the deposit that exceeds the amount
15-2 required to be on deposit for that organization, unless the
15-3 commissioner considers that the release of the deposit could be
15-4 hazardous to enrollees, creditors, or the general public.
15-5 (f) Upon application by a health maintenance organization
15-6 operating for more than one year under a certificate of authority
15-7 issued by the State Board of Insurance or the commissioner, the
15-8 commissioner [State Board of Insurance] may waive some or all of
15-9 the requirements of Subsection (b) or (c) of this section for any
15-10 period of time it shall deem proper whenever it finds that one or
15-11 more of the following conditions justifies such waiver:
15-12 (1) the total amount of the deposit or other guarantee
15-13 is equal to 25 percent of the health maintenance organization's
15-14 estimated uncovered expenses for the next calendar year;
15-15 (2) the health maintenance organization's net worth is
15-16 equal to at least 25 percent of its estimated uncovered expenses
15-17 for the next calendar year; or
15-18 (3) either the health maintenance organization has a
15-19 net worth of $5,000,000 or its sponsoring organization has a net
15-20 worth of at least $5,000,000 for each health maintenance
15-21 organization whose uncovered expenses it guarantees.
15-22 (g) If one or more of the requirements is waived, any amount
15-23 previously deposited shall remain on deposit until released in
15-24 whole or in part by the comptroller [State Treasurer] upon order of
15-25 the commissioner [State Board of Insurance] pursuant to Subsection
16-1 (f) of this section.
16-2 (h) A health maintenance organization that has made a
16-3 deposit with the comptroller [State Treasurer] may, at its option,
16-4 withdraw the deposit or any part thereof, first having deposited
16-5 with the comptroller [State Treasurer], in lieu thereof, a deposit
16-6 of cash or securities of equal amount and value to that withdrawn.
16-7 Any securities shall be approved by the commissioner [State Board
16-8 of Insurance] before being substituted.
16-9 (i) Subject to the phase-in provisions of Subsections (j),
16-10 (k), and (l) of this section, a [Each] health maintenance
16-11 organization offering basic health care services shall maintain a
16-12 minimum surplus of not less than $1,500,000 [$500,000], net of
16-13 accrued uncovered liabilities, a health maintenance organization
16-14 offering limited health care services shall maintain a minimum
16-15 surplus of not less than $1,000,000, net of accrued uncovered
16-16 liabilities, and a[. Each] health maintenance organization
16-17 offering only a single care service shall maintain a minimum
16-18 surplus of not less than $500,000 [$125,000], net of accrued
16-19 uncovered liabilities. The minimum surplus shall consist only of
16-20 cash, bonds of the United States, bonds of this state, or a
16-21 combination of these. If a health maintenance organization fails
16-22 to comply with the surplus requirements [requirement of this
16-23 subsection or Subsection (j)] of this section, the commissioner is
16-24 authorized to take appropriate action to assure that the continued
16-25 operation of the health maintenance organization will not be
17-1 hazardous to its enrollees.
17-2 (j) Notwithstanding any other provision of this section, the
17-3 [The] minimum surplus for a health maintenance organization
17-4 authorized to provide basic health care services [operate on the
17-5 effective date of Subsection (i) of this section] and having a
17-6 surplus of less than $1,500,000 [$500,000] shall be as follows:
17-7 (1) $700,000 [$200,000] by December 31, 1998 [1987];
17-8 (2) $900,000 [$250,000] by December 31, 1999 [1988];
17-9 (3) $1,100,000 [$300,000] by December 31, 2000 [1989];
17-10 (4) $1,300,000 [$350,000] by December 31, 2001 [1990];
17-11 and
17-12 (5) $1,500,000 [$400,000] by December 31, 2002 [1991];
17-13 [(6) $450,000 by December 31, 1992; and]
17-14 [(7) $500,000 by December 31, 1993].
17-15 (k) Notwithstanding any other provision of this section
17-16 [article], a health maintenance organization providing limited
17-17 health care services [authorized to offer only a single health care
17-18 service plan authorized to operate on September 1, 1987,] and
17-19 having a surplus of less than $1,000,000 must possess a minimum
17-20 surplus [$125,000 shall be] as follows:
17-21 (1) $600,000 [$50,000] by December 31, 1998 [1987];
17-22 (2) $700,000 [$62,500] by December 31, 1999 [1988];
17-23 (3) $800,000 [$75,000] by December 31, 2000 [1989];
17-24 (4) $900,000 [$87,500] by December 31, 2001 [1990];
17-25 and
18-1 (5) $1,000,000 [$100,000] by December 31, 2002 [1991;]
18-2 [(6) $112,500 by December 31, 1992; and]
18-3 [(7) $125,000 by December 31, 1993].
18-4 (l) Notwithstanding any other provision of this section, a
18-5 health maintenance organization authorized to offer only a single
18-6 health care service plan and having a surplus of less than $500,000
18-7 shall be as follows:
18-8 (1) $200,000 by December 31, 1998;
18-9 (2) $275,000 by December 31, 1999;
18-10 (3) $350,000 by December 31, 2000;
18-11 (4) $425,000 by December 31, 2001; and
18-12 (5) $500,000 by December 31, 2002.
18-13 (m) In the event of the insolvency of a health maintenance
18-14 organization and on order of the commissioner, the commissioner
18-15 shall allocate equitably the insolvent health maintenance
18-16 organization's group contracts among all health maintenance
18-17 organizations which operate within a portion of the insolvent
18-18 health maintenance organization's service area, taking into
18-19 consideration the resources of each health maintenance
18-20 organization. Each health maintenance organization to which a
18-21 group or groups are allocated shall offer such group or groups the
18-22 health maintenance organization's coverage at rates determined in
18-23 accordance with the successor health maintenance organization's
18-24 existing methodology or as adjusted by the commissioner. In
18-25 addition, the commissioner shall allocate equitably among all
19-1 health maintenance organizations which operate within a portion of
19-2 the insolvent health maintenance organization's service area the
19-3 insolvent health maintenance organization's nongroup enrollees,
19-4 taking into consideration the resources of each such health
19-5 maintenance organization. Each health maintenance organization to
19-6 which nongroup enrollees are allocated shall offer each such
19-7 nongroup enrollee that health maintenance organization's existing
19-8 coverage for individual or conversion coverage as determined by the
19-9 nongroup enrollee's type of coverage in the insolvent health
19-10 maintenance organization at rates determined in accordance with the
19-11 successor health maintenance organization's existing rating
19-12 methodology or as adjusted by the commissioner. The successor
19-13 health maintenance organizations which do not offer direct nongroup
19-14 enrollment shall provide coverage at rates that reflect the average
19-15 group rate of the successor health maintenance organization.
19-16 SECTION 6. Subsections (b), (c), and (h), Section 14, Texas
19-17 Health Maintenance Organization Act (Article 20A.14, Vernon's Texas
19-18 Insurance Code), are amended to read as follows:
19-19 (b) Articles 21.21, 21.21A, 21.21-2, 21.21-3, and 21.21-6,
19-20 Insurance Code, and Chapter 122, Acts of the 57th Legislature,
19-21 Regular Session, 1961 (Article 21.21-1, Vernon's Texas Insurance
19-22 Code), apply to health maintenance organizations that offer [both]
19-23 basic, limited, and single health care coverages and to basic,
19-24 limited, and single health care plans and the evidence of coverage
19-25 under those plans, except to the extent that the commissioner
20-1 determines that the nature of health maintenance organizations and
20-2 health care plans and evidence of coverage renders any provision of
20-3 those articles clearly inappropriate.
20-4 (c) An enrollee may not be canceled [cancelled] or not
20-5 renewed except for the failure to pay the charges for such
20-6 coverage, or for such other reason as may be promulgated by rule of
20-7 the commissioner.
20-8 (h) A health maintenance organization that provides coverage
20-9 for health care services or medical care through one or more
20-10 providers or physicians who are not partners or employees of the
20-11 health maintenance organization or one or more providers or
20-12 physicians that are not owned or operated by the health maintenance
20-13 organization shall provide a (20) twenty calendar day period each
20-14 calendar year during which any provider or physician in the
20-15 geographic service area may apply to participate in providing
20-16 health care services or medical care under the terms and conditions
20-17 established by the health maintenance organization for the
20-18 provision of such services and the designation of such providers
20-19 and physicians. A health maintenance organization will notify, in
20-20 writing, such provider or physician of the reason for
20-21 non-acceptance [nonacceptance] to participate in providing health
20-22 care services or medical care. This section may not be construed
20-23 to (1) require that a health maintenance organization utilize a
20-24 particular type of provider or physician in its operation;
20-25 (2) require that a health maintenance organization accept a
21-1 provider or physician of a category or type that does not meet the
21-2 practice standards and qualifications established by the health
21-3 maintenance organizations; or (3) require that a health maintenance
21-4 organization contract directly with such providers or physicians.
21-5 SECTION 7. Subsection (a), Section 20, Texas Health
21-6 Maintenance Organization Act (Article 20A.20, Vernon's Texas
21-7 Insurance Code), is amended to read as follows:
21-8 (a) The commissioner may suspend or revoke any certificate
21-9 of authority issued to a health maintenance organization under this
21-10 Act if the commissioner finds that any of the following conditions
21-11 exist:
21-12 (1) The health maintenance organization is operating
21-13 significantly in contravention of its basic organizational
21-14 documents, or its health care plan, or in a manner contrary to that
21-15 described in and reasonably inferred from any other information
21-16 submitted under Section 4 of this Act.
21-17 (2) The health maintenance organization issues
21-18 evidence of coverage or uses a schedule of charges for health care
21-19 services which does not comply with the requirements of Section 9
21-20 of this Act.
21-21 (3) The health care plan does not provide or arrange
21-22 for basic health care services, the limited health care service
21-23 plan does not provide or arrange for its limited health care
21-24 services, or the single health care service plan does not provide
21-25 or arrange for a single health care service.
22-1 (4) The board certifies to the commissioner that:
22-2 (A) the health maintenance organization does not
22-3 meet the requirements of Section 5(a)(2) of this Act; or
22-4 (B) the health maintenance organization is
22-5 unable to fulfill its obligation to furnish health care services as
22-6 required under its health care plan, to furnish the limited health
22-7 care services as required under its limited health care service
22-8 plan, or to furnish a single health care service as required under
22-9 its single health care service plan.
22-10 (5) The health maintenance organization is no longer
22-11 financially responsible and may be reasonably expected to be unable
22-12 to meet its obligations to enrollees or prospective enrollees.
22-13 (6) The health maintenance organization has failed to
22-14 implement the complaint system required by Section 12 of this Act
22-15 in a manner to resolve reasonably valid complaints.
22-16 (7) The health maintenance organization, or any person
22-17 on its behalf, has advertised or merchandised its services in an
22-18 untrue, misrepresentative, misleading, deceptive, or unfair manner.
22-19 (8) The continued operation of the health maintenance
22-20 organization would be hazardous to its enrollees.
22-21 (9) The health maintenance organization has otherwise
22-22 failed to comply substantially with this Act, and any rule and
22-23 regulation thereunder.
22-24 SECTION 8. Subsection (f), Section 26, Texas Health
22-25 Maintenance Organization Act (Article 20A.26, Vernon's Texas
23-1 Insurance Code), is amended to read as follows:
23-2 (f)(1) This Act shall not be applicable to:
23-3 (A) any physician, so long as that physician is
23-4 engaged in the delivery of care that is within the definition of
23-5 medical care; or
23-6 (B) any provider that is engaged in the delivery
23-7 of health care services other than medical care as part of a health
23-8 maintenance organization delivery network.
23-9 (2) Except as provided by Section 6(a)(3) of this Act
23-10 or Subdivision (5) of this subsection, any physician or provider
23-11 that employs or enters into a contractual arrangement with a
23-12 provider or group of providers to furnish basic, limited, or single
23-13 health care services as defined in Section 2 of this Act is subject
23-14 to the provisions of this Act[,] and shall be required to obtain a
23-15 certificate of authority from the commissioner.
23-16 (3) Notwithstanding any other law, any physician who
23-17 conducts activities permitted by law but which do not require a
23-18 certificate of authority under this Act, and in the process
23-19 contracts with one or more physicians, shall not, by virtue of such
23-20 contract or arrangement, be deemed to have entered into a
23-21 conspiracy in restraint of trade in violation of Sections 15.01
23-22 through 15.34 of the Business & Commerce Code.
23-23 (4) Except for Articles 21.07-6 and 21.58A, Insurance
23-24 Code, the insurance laws, including the group hospital service
23-25 corporation law, do not apply to physicians and providers; provided
24-1 that Article 21.58A shall not apply to utilization review
24-2 undertaken by a physician or provider in the ordinary course of
24-3 treatment of patients by a physician or provider pursuant to a
24-4 joint or delegated review agreement or agreements with a health
24-5 maintenance organization on services rendered by the physician or
24-6 provider.
24-7 (5) This Act and the Insurance Code may not be
24-8 construed to prohibit a physician or provider who is participating
24-9 in a health maintenance organization delivery network, whether
24-10 contracting with a health maintenance organization under Section
24-11 6(a)(3) of this Act or subcontracting with a physician or provider
24-12 in the health maintenance organization delivery network, from
24-13 entering into a contractual arrangement within a health maintenance
24-14 organization delivery network described under Subdivisions (6)-(9)
24-15 of this subsection.
24-16 (6) A physician may contract to provide medical care
24-17 or arrange to provide medical care through subcontracts with other
24-18 physicians. A physician may contract to provide through other
24-19 providers any services that are ancillary to the practice of
24-20 medicine, other than hospital or other institutional or inpatient
24-21 provider services.
24-22 (7) A provider may contract to provide, or arrange to
24-23 provide through subcontracts with similarly licensed providers, any
24-24 health care services that those providers are licensed to provide,
24-25 other than medical care.
25-1 (8) A provider may contract to provide, or arrange to
25-2 provide through subcontracts with other providers, a health care
25-3 service that the provider is not licensed to provide, other than
25-4 medical care, if the contracted or subcontracted services
25-5 constitute less than 15 percent of the total amount of services to
25-6 be provided by that provider or arranged to be provided for by that
25-7 provider.
25-8 (9) A contract or subcontract authorized under
25-9 Subdivision (6), (7), or (8) of this subsection may provide for
25-10 compensation based on a fee-for-service arrangement, a risk-sharing
25-11 arrangement, or a capitated risk arrangement under which a fixed
25-12 predetermined payment is made in exchange for the provision of, or
25-13 the arrangement to provide and the guaranty of the provision of, a
25-14 defined set of covered services to the covered persons for a
25-15 specified period, regardless of the amount of services actually
25-16 provided.
25-17 SECTION 9. Section 31, Texas Health Maintenance Organization
25-18 Act (Article 20A.31, Vernon's Texas Insurance Code), is amended to
25-19 read as follows:
25-20 Sec. 31. JURISDICTION FOR INJUNCTIONS AND RECEIVERSHIP AND
25-21 DELINQUENCY PROCEEDINGS. (a) When it appears to the commissioner
25-22 that a health maintenance organization or other person is violating
25-23 or has violated this Act or any rule or regulation issued pursuant
25-24 to this Act, the commissioner may bring suit in a district court of
25-25 Travis County to enjoin the violation and for such other relief as
26-1 the court may deem appropriate.
26-2 (b) In addition to all other remedies available by law, when
26-3 it appears to the commissioner that a health maintenance
26-4 organization or other person is insolvent or does not possess the
26-5 surplus required by Section 13 of this Act, the commissioner may
26-6 bring suit in a district court of Travis County to be named
26-7 receiver in accordance with Section 21 of this Act and Article
26-8 21.28, Insurance Code.
26-9 (c) A court of competent jurisdiction may find that a
26-10 receiver should take charge of the assets of a health maintenance
26-11 organization and name the commissioner as the receiver of the
26-12 health maintenance organization in accordance with Section 21 of
26-13 this Act and Article 21.28, Insurance Code.
26-14 (d) The operations and business of a health maintenance
26-15 organization represent the business of insurance for purposes of
26-16 Section 21 of this Act and Articles 21.28 and 21.28-A, Insurance
26-17 Code.
26-18 (e) Exclusive venue of receivership and delinquency
26-19 proceedings for a health maintenance organization shall be in
26-20 Travis County.
26-21 SECTION 10. Subsection (d), Section 33, Texas Health
26-22 Maintenance Organization Act (Article 20A.33, Vernon's Texas
26-23 Insurance Code), is amended to read as follows:
26-24 (d) The commissioner shall annually determine the rate of
26-25 assessment of a per capita maintenance tax to be paid on an annual
27-1 or semiannual basis, on the correctly reported gross revenues for
27-2 the issuance of health maintenance certificates or contracts
27-3 collected by all authorized health maintenance organizations
27-4 issuing such coverages in this state. The rate of assessment may
27-5 not exceed $2 for each enrollee. The rate of assessment may differ
27-6 between basic health care plans, limited health care service plans,
27-7 and single health care service plans and shall equitably reflect
27-8 any differences in regulatory resources attributable to each type
27-9 of plan. The comptroller shall collect the maintenance tax.
27-10 SECTION 11. Subsections (a), (b), (c), (e), and (g), Section
27-11 36, Texas Health Maintenance Organization Act (Article 20A.36,
27-12 Vernon's Texas Insurance Code), are amended to read as follows:
27-13 (a) The Health Maintenance Organization Solvency
27-14 Surveillance Committee is created under the direction of the
27-15 commissioner. The committee shall perform its functions under a
27-16 plan of operation approved by the commissioner [State Board of
27-17 Insurance]. The committee is composed of nine members appointed by
27-18 the commissioner of insurance. No two members may be employees or
27-19 officers of the same health maintenance organization or holding
27-20 company system. The qualifications for membership, terms of
27-21 office, and reimbursement of expenses shall be as provided by the
27-22 plan of operation approved by the commissioner [State Board of
27-23 Insurance]. A "member" is a Texas licensed health maintenance
27-24 organization as defined in Section 2(j) of this Act or a public
27-25 representative. The commissioner of insurance shall appoint the
28-1 member along with the officer or employee of the member who shall
28-2 serve on the committee if the member is a representative of a Texas
28-3 licensed health maintenance organization or its holding company
28-4 system. Five of the members shall represent health maintenance
28-5 organizations or their holding company system. Of the health
28-6 maintenance organization members, one shall be a limited health
28-7 care service plan as defined in Section 2(l) of this Act, if one
28-8 exists at the time of appointment, and one shall be a single health
28-9 care service plan as defined in Section 2(u) [2(s)] of this Act.
28-10 The remaining health maintenance organization members shall be
28-11 selected by the commissioner of insurance with due consideration of
28-12 factors deemed appropriate including, but not limited to, the
28-13 varying categories of premium income and geographical location.
28-14 A public representative may not be:
28-15 (1) an officer, director, or employee of a health
28-16 maintenance organization, a health maintenance organization agent,
28-17 or any other business entity regulated by the commissioner [State
28-18 Board of Insurance];
28-19 (2) a person required to register as a lobbyist [with
28-20 the secretary of state] under Chapter 305, Government Code; or
28-21 (3) related to a person described by Subdivision (1)
28-22 or (2) of this subsection within the second degree of affinity or
28-23 consanguinity.
28-24 (b)(1) The committee shall assist and advise the
28-25 commissioner relating to the detection and prevention of insolvency
29-1 problems regarding health maintenance organizations. The committee
29-2 shall also assist and advise the commissioner regarding any health
29-3 maintenance organization placed in rehabilitation, liquidation,
29-4 supervision, or conservation. The method of providing this
29-5 assistance and advice shall be as contained in the plan of
29-6 operation approved by the commissioner [State Board of Insurance].
29-7 (2) Reports regarding the financial condition of Texas
29-8 licensed health maintenance organizations and regarding the
29-9 financial condition, administration, and status of health
29-10 maintenance organizations in rehabilitation, liquidation,
29-11 supervision, or conservation shall be provided to the committee
29-12 members at meetings. Committee members shall not reveal the
29-13 condition of nor any information secured in the course of any
29-14 meeting of the Solvency Surveillance Committee with regard to any
29-15 corporation, form or person examined by the committee. Committee
29-16 proceedings shall be filed with the commissioner [and reported to
29-17 the members of the State Board of Insurance].
29-18 (c) To provide funds for the administrative expenses of the
29-19 commissioner [State Board of Insurance] regarding rehabilitation,
29-20 liquidation, supervision, or conservation of an impaired health
29-21 maintenance organization in this state, the committee, at the
29-22 commissioner's direction, shall assess each health maintenance
29-23 organization licensed in this state in the proportion that the
29-24 gross premiums of that health maintenance organization written in
29-25 this state during the preceding calendar year bear to the aggregate
30-1 gross premiums written in this state by all health maintenance
30-2 organizations, as furnished to the committee by the commissioner
30-3 after review of annual statements and other reports the
30-4 commissioner considers necessary. Assessments to supplement or pay
30-5 for administrative expenses of rehabilitation, liquidation,
30-6 supervision, or conservation may be made only after the
30-7 commissioner determines that adequate assets of the health
30-8 maintenance organization are not immediately available for those
30-9 purposes or that use of those assets could be detrimental to
30-10 rehabilitation, liquidation, supervision, or conservation. The
30-11 commissioner may abate or defer the assessments, either in whole or
30-12 in part, if, in the opinion of the commissioner, payment of the
30-13 assessment would endanger the ability of a health maintenance
30-14 organization to fulfill its contractual obligations. If an
30-15 assessment is abated or deferred, either in whole or in part, the
30-16 amount by which the assessment is abated or deferred may be
30-17 assessed against the remaining licensed health maintenance
30-18 organizations in a manner consistent with the basis for assessments
30-19 provided by the plan of operation approved by the commissioner
30-20 [State Board of Insurance]. The total of all assessments on a
30-21 health maintenance organization may not exceed one-quarter of one
30-22 percent of the health maintenance organization's gross premiums in
30-23 any one calendar year.
30-24 (e) Not later than the 180th day after the date on which the
30-25 final member of the committee is appointed, the committee shall
31-1 submit to the commissioner [State Board of Insurance] a plan of
31-2 operation. The plan of operation takes effect on approval in
31-3 writing by the commissioner [State Board of Insurance]. If the
31-4 committee fails to submit a suitable plan of operation within the
31-5 period set by this subsection, or if, after the adoption of a plan,
31-6 the committee fails to submit suitable amendments to the plan, the
31-7 commissioner [State Board of Insurance] may, after notice and
31-8 hearing, adopt rules as necessary to implement this Act. Those
31-9 rules continue in effect until modified by the commissioner [State
31-10 Board of Insurance] or superseded by a plan submitted by the
31-11 committee and approved by the commissioner [State Board of
31-12 Insurance].
31-13 (g) A licensed health maintenance organization or its agents
31-14 or employees, the committee or its agents, employees, or members,
31-15 or the [State Board of Insurance, the] commissioner[,] or the
31-16 commissioner's [their] representatives are not liable in a civil
31-17 action for any act taken or not taken in good faith in the
31-18 performance of powers and duties under this section.
31-19 SECTION 12. This Act takes effect September 1, 1997.
31-20 SECTION 13. The importance of this legislation and the
31-21 crowded condition of the calendars in both houses create an
31-22 emergency and an imperative public necessity that the
31-23 constitutional rule requiring bills to be read on three several
31-24 days in each house be suspended, and this rule is hereby suspended.
31-25 COMMITTEE AMENDMENT NO. 1
32-1 1. Amend SB 382, page 1, line 12 by striking after the word
32-2 "injury" and before the word "or" the commas and the words "a
32-3 limited health care service plan".
32-4 2. Amend SB 382, page 1, line 15, by striking after the word
32-5 "plan" the comma and the words "a limited health care".
32-6 Amend SB 382, page 1, line 16 by striking before the word
32-7 "or" the words "service plan".
32-8 3. Amend SB 382, page 1, by striking lines 18 through 23.
32-9 Amend SB 382, page 2, by striking lines 1 through 16 and
32-10 relettering accordingly.
32-11 4. Amend SB 382, page 8, line 1, by striking the bracketed
32-12 and struck word "[and]" and inserting the word "and".
32-13 Amend SB 382, page 8, by striking lines 2 through 4.
32-14 5. Amend SB 382, page 9, line 1, by striking after the word
32-15 "plan" the comma and the words "limited health care".
32-16 Amend SB 382, page 9, line 2, by striking before the word
32-17 "or" the comma and the words "service plan".
32-18 Amend SB 382, page 9, line 5, by striking after the first
32-19 three words "health care services" the commas and words ", limited
32-20 health care services,".
32-21 6. Amend SB 382, page 11, line 9, by striking the words
32-22 "limited health care services,".
32-23 Amend SB 382, page 11, line 11 by striking after the word
32-24 "plan" the comma and words "limited health care service".
32-25 Amend SB 382, page 11, line 12, by striking before the
33-1 word "or" the comma and word "plan".
33-2 7. Amend SB 382, page 12, line 21, by striking after the
33-3 word "services" the comma and the words "$75,000 for an
33-4 organization offering limited".
33-5 Amend SB 382, page 12, line 22, by striking before the
33-6 word "and" the comma and the words "health care services".
33-7 8. Amend SB 382, page 16, line 13, by striking after the
33-8 word "liabilities" the comma and the words "a health maintenance
33-9 organization".
33-10 Amend SB 382, page 16, by striking lines 14 and 15.
33-11 Amend SB 382, page 16, line 16, by striking in front of
33-12 the word "health" the words "liabilities, and a[. Each]" and
33-13 inserting a period and the word "Each".
33-14 9. Amend SB 382, page 17, by striking lines 15 through 25
33-15 and by adding a new subsection and relettering accordingly. The
33-16 new subsection will read as follows:
33-17 [(k) Notwithstanding any other provision of this article, a
33-18 health maintenance organization authorized to offer only a single
33-19 health care service plan authorized to operate on September 1,
33-20 1987, and having a surplus of less than $125,000 shall be as
33-21 follows:]
33-22 [(1) $50,000 by December 31, 1987;]
33-23 [(2) $62,500 by December 31, 1988;]
33-24 [(3) $75,000 by December 31, 1989;]
33-25 [(4) $87,500 by December 31, 1990;]
34-1 [(5) $100,000 by December 31, 1991;]
34-2 [(6) $112,500 by December 31, 1992; and]
34-3 [(7) $125,000 by December 31, 1993.]
34-4 10. Amend SB 382, page 19, line 23, by striking after the
34-5 word "basic" and before the word "and" the commas and word
34-6 "limited" and by striking at the end of line 7 after the word
34-7 "basic" the comma.
34-8 Amend SB 382, page 19, line 24, by striking before the
34-9 words "and single" the commas and word "limited".
34-10 11. Amend SB 382, page 21, line 22, by striking after the
34-11 word "services," the comma and the words "the limited health care
34-12 service".
34-13 Amend SB 382, page 21, by striking line 23.
34-14 Amend SB 382, page 21, line 24 by striking before the
34-15 word "or" the comma and the word "services".
34-16 12. Amend SB 382, page 22, line 6, by striking after the
34-17 word "plan" the comma and the words "to furnish the limited
34-18 health".
34-19 Amend SB 382, page 22, by striking line 7.
34-20 Amend SB 382, page 22, line 8, by striking before the
34-21 word "or" the comma and the word "plan".
34-22 13. Amend SB 382, page 23, line 12, by striking after the
34-23 word "basic" the comma and the words "limited, or single".
34-24 14. Amend SB 382, page 27, line 6, by striking after the
34-25 words "basic health care plans" the commas and the words "limited
35-1 health care service plans".
35-2 15. Amend SB 382, page 28, line 6, by striking after the
35-3 letter "a" the words "limited health".
35-4 Amend SB 382, page 28, by striking line 7.
35-5 Amend SB 382, page 28, line 8, by striking in front of
35-6 the word "single" the words "exists at the time of appointment, and
35-7 one shall be a".
35-8 Lewis of Tarrant
35-9 COMMITTEE AMENDMENT NO. 2
35-10 16. Amend SB 382, page 2, line 17, by adding a new (m) to
35-11 read as follows and reletter accordingly:
35-12 (m) "Long term care services" means medical, nursing, and
35-13 other health care related services including personal care provided
35-14 by one or more persons licensed or, in the case of personal care,
35-15 authorized by the state to provide such services.
35-16 17. Amend SB 382, page 5, line 9, by adding, after the
35-17 period, the following:
35-18 "Single health care service plan" includes the provision of long
35-19 term care services.
35-20 Lewis of Tarrant