By: Sibley, Nelson, Harris S.B. No. 385
Madla, Cain
97S0230/1
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. Section 2, Texas Health Maintenance Organization
1-4 Act (Article 20A.02, Vernon's Texas Insurance Code), is amended to
1-5 read as follows:
1-6 Sec. 2. DEFINITIONS. For the purposes of this Act:
1-7 (a) "Adverse determination" means a determination by a
1-8 health maintenance organization or a utilization review agent that
1-9 the health care services furnished to a patient or proposed to be
1-10 furnished to a patient are not medically necessary or not
1-11 appropriate in the allocation of health care resources.
1-12 (b) "Basic health care services" means health care services
1-13 which the commissioner determines an enrolled population might
1-14 reasonably require in order to be maintained in good health,
1-15 including, at [as] a minimum, services designated as basic health
1-16 services under Section 1302, Title XIII, Public Health Service Act
1-17 (42 U.S.C. Section 300e-1(1)) [emergency care, inpatient hospital
1-18 and medical services, and outpatient medical services].
1-19 [(b) "Board" means the Texas Board of Health.]
1-20 (c) "Capitation" means a method of compensation to a
1-21 physician or provider based on a predetermined payment per enrollee
1-22 for a specified period of time for certain enrollees in exchange
1-23 for arranging for or providing a defined set of covered health care
2-1 services to such enrollees for a specified period of time,
2-2 regardless of the amount of services actually provided.
2-3 (d) "Commissioner" means the commissioner of insurance.
2-4 (e) "Complainant" means an enrollee, or a physician,
2-5 provider, or other person designated to act on behalf of an
2-6 enrollee, who files a complaint.
2-7 (f) "Complaint" means any dissatisfaction expressed by a
2-8 complainant orally or in writing to the health maintenance
2-9 organization with any aspect of the health maintenance
2-10 organization's operation, including but not limited to
2-11 dissatisfaction with plan administration; appeal of an adverse
2-12 determination; the denial, reduction, or termination of a service;
2-13 the way a service is provided; or disenrollment decisions,
2-14 expressed by a complainant.
2-15 (g) "Emergency care" means health care services provided in
2-16 a hospital emergency facility to evaluate and treat medical
2-17 conditions of a recent onset and severity, including but not
2-18 limited to severe pain that would lead a prudent layperson,
2-19 possessing an average knowledge of medicine and health, to believe
2-20 that his or her condition, sickness, or injury is of such a nature
2-21 that failure to get immediate medical care could result in:
2-22 (1) placing the patient's health in serious jeopardy;
2-23 (2) serious impairment to bodily functions;
2-24 (3) serious dysfunction of any bodily organ or part;
2-25 (4) serious disfigurement; or
3-1 (5) in the case of a pregnant woman, serious jeopardy
3-2 to the health of the fetus.
3-3 (h) [(d)] "Enrollee" means an individual who is enrolled in
3-4 a health care plan, including covered dependents.
3-5 (i) [(e)] "Evidence of coverage" means any certificate,
3-6 agreement, or contract issued to an enrollee setting out the
3-7 coverage to which the enrollee is entitled.
3-8 (j) [(f)] "Group hospital service corporation" means a
3-9 nonprofit corporation organized and operating under Chapter 20 of
3-10 the Insurance Code.
3-11 (k) [(g)] "Health care" means prevention, maintenance,
3-12 rehabilitation, pharmaceutical, and chiropractic services provided
3-13 by qualified persons other than medical care.
3-14 (l) [(h)] "Health care plan" means any plan whereby any
3-15 person undertakes to provide, arrange for, pay for, or reimburse
3-16 any part of the cost of any health care services; provided,
3-17 however, a part of such plan consists of arranging for or the
3-18 provision of health care services, as distinguished from
3-19 indemnification against the cost of such service, on a prepaid
3-20 basis through insurance or otherwise.
3-21 (m) [(i)] "Health care services" means any services,
3-22 including the furnishing to any individual of pharmaceutical
3-23 services, medical, chiropractic, or dental care, or hospitalization
3-24 or incident to the furnishing of such services, care, or
3-25 hospitalization, as well as the furnishing to any person of any and
4-1 all other services for the purpose of preventing, alleviating,
4-2 curing or healing human illness or injury or a single health care
4-3 service plan.
4-4 (n) [(j)] "Health maintenance organization" means any person
4-5 who arranges for or provides a health care plan or a single health
4-6 care service plan to enrollees on a prepaid basis.
4-7 (o) [(k)] "Medical care" means furnishing those services
4-8 defined as practicing medicine under Section 1.03(8), Medical
4-9 Practice Act (Article 4495b, Vernon's Texas Civil Statutes).
4-10 (p) [(l)] "Person" means any natural or artificial person,
4-11 including, but not limited to, individuals, partnerships,
4-12 associations, organizations, trusts, hospital districts, limited
4-13 liability companies, limited liability partnerships, or
4-14 corporations.
4-15 (q) [(m)] "Physician" means:
4-16 (1) an individual licensed to practice medicine in
4-17 this state;
4-18 (2) a professional association organized under the
4-19 Texas Professional Association Act (Article 1528f, Vernon's Texas
4-20 Civil Statutes) or a nonprofit health corporation certified under
4-21 Section 5.01, Medical Practice Act (Article 4495b, Vernon's Texas
4-22 Civil Statutes); or
4-23 (3) another person wholly owned by physicians.
4-24 (r) [(n)] "Provider" means:
4-25 (1) any person other than a physician, including a
5-1 licensed doctor of chiropractic, registered nurse, pharmacist,
5-2 optometrist, pharmacy, hospital, or other institution or
5-3 organization or person that is licensed or otherwise authorized to
5-4 provide a health care service in this state;
5-5 (2) a person who is wholly owned or controlled by a
5-6 provider or by a group of providers who are licensed to provide the
5-7 same health care service; or
5-8 (3) a person who is wholly owned or controlled by one
5-9 or more hospitals and physicians, including a physician-hospital
5-10 organization.
5-11 (s) [(o)] "Sponsoring organization" means a person who
5-12 guarantees the uncovered expenses of the health maintenance
5-13 organization and who is financially capable, as determined by the
5-14 commissioner, of meeting the obligations resulting from those
5-15 guarantees.
5-16 (t) [(p)] "Uncovered expenses" means the estimated
5-17 administrative expenses and the estimated cost of health care
5-18 services that are not guaranteed, insured, or assumed by a person
5-19 other than the health maintenance organization. Health care
5-20 services may be considered covered if the physician or provider
5-21 agrees in writing that enrollees shall in no way be liable,
5-22 assessable, or in any way subject to payment for services except as
5-23 described in the evidence of coverage issued to the enrollee under
5-24 Section 9 of this Act. The amount due on loans in the next
5-25 calendar year will be considered uncovered expenses unless
6-1 specifically subordinated to uncovered medical and health care
6-2 expenses or unless guaranteed by the sponsoring organization.
6-3 (u) [(q)] "Uncovered liabilities" means obligations
6-4 resulting from unpaid uncovered expenses, the outstanding
6-5 indebtedness of loans that are not specifically subordinated to
6-6 uncovered medical and health care expenses or guaranteed by the
6-7 sponsoring organization, and all other monetary obligations that
6-8 are not similarly subordinated or guaranteed.
6-9 (v) [(r)] "Single health care service" means a health care
6-10 service that an enrolled population may reasonably require in order
6-11 to be maintained in good health with respect to a particular health
6-12 care need for the purpose of preventing, alleviating, curing, or
6-13 healing human illness or injury of a single specified nature and
6-14 that is to be provided by one or more persons each of whom is
6-15 licensed by the state to provide that specific health care service.
6-16 (w) [(s)] "Single health care service plan" means a plan
6-17 under which any person undertakes to provide, arrange for, pay for,
6-18 or reimburse any part of the cost of a single health care service,
6-19 provided, that a part of the plan consists of arranging for or the
6-20 provision of the single health care service, as distinguished from
6-21 an indemnification against the cost of that service, on a prepaid
6-22 basis through insurance or otherwise and that no part of that plan
6-23 consists of arranging for the provision of more than one health
6-24 care need of a single specified nature.
6-25 (x) [(t) "Emergency care" means bona fide emergency services
7-1 provided after the sudden onset of a medical condition manifesting
7-2 itself by acute symptoms of sufficient severity, including severe
7-3 pain, such that the absence of immediate medical attention could
7-4 reasonably be expected to result in:]
7-5 [(1) placing the patient's health in serious jeopardy;]
7-6 [(2) serious impairment to bodily functions; or]
7-7 [(3) serious dysfunction of any bodily organ or part.]
7-8 [(u)] "Health maintenance organization delivery network"
7-9 means a health care delivery system in which a health maintenance
7-10 organization arranges for health care services directly or
7-11 indirectly through contracts and subcontracts with providers and
7-12 physicians.
7-13 SECTION 2. Section 3, Texas Health Maintenance Organization
7-14 Act (Article 20A.03, Vernon's Texas Insurance Code), is amended by
7-15 adding Subsections (e), (f), and (g) to read as follows:
7-16 (e) No person or provider shall directly or indirectly
7-17 perform any of the acts of a health maintenance organization, as
7-18 defined in this Act, except as provided by and in accordance with
7-19 the specific authorization of this Act.
7-20 (f) Any person or provider who directly or indirectly
7-21 performs any of the acts of a health maintenance organization
7-22 without having first obtained a certificate of authority from the
7-23 Texas Department of Insurance shall be subject to all enforcement
7-24 processes and procedures of an authorized insurer pursuant to
7-25 Sections 3 and 3A, Article 1.14-1, Insurance Code.
8-1 (g) The commissioner shall have subpoena authority in
8-2 accordance with Article 1.19-1, Insurance Code.
8-3 SECTION 3. Section 4, Texas Health Maintenance Organization
8-4 Act (Article 20A.04, Vernon's Texas Insurance Code), is amended to
8-5 read as follows:
8-6 Sec. 4. APPLICATION FOR CERTIFICATE OF AUTHORITY. (a) Each
8-7 application for a certificate of authority shall be on a form
8-8 prescribed by rule of the commissioner and shall be verified by the
8-9 applicant, an officer, or other authorized representative of the
8-10 applicant, and shall set forth or be accompanied by the following:
8-11 (1) a copy of the basic organizational document, if
8-12 any, of the applicant, such as the articles of incorporation,
8-13 articles of association, partnership agreement, trust agreement, or
8-14 other applicable documents, and all amendments thereto;
8-15 (2) a copy of the bylaws, rules and regulations, or
8-16 similar document, if any, regulating the conduct of the internal
8-17 affairs of the applicant;
8-18 (3) a list of the names, addresses, and official
8-19 positions of the persons who are to be responsible for the conduct
8-20 of the affairs of the applicant, including all members of the board
8-21 of directors, board of trustees, executive committee, or other
8-22 governing body or committee, the principal officer in the case of a
8-23 corporation, and the partnership or members in the case of a
8-24 partnership or association;
8-25 (4) a copy of any independent or other contract made
9-1 or to be made between any provider, physician, or persons listed in
9-2 Paragraph (3) hereof and the applicant;
9-3 (5) a copy of the form of evidence of coverage to be
9-4 issued to the enrollee;
9-5 (6) a copy of the form of the group contract, if any,
9-6 which is to be issued to employers, unions, trustees, or other
9-7 organizations;
9-8 (7) a current financial statement that includes:
9-9 (A) the sources and application of funds;
9-10 (B) projected financial statements during the
9-11 initial period of operations;
9-12 (C) a balance sheet beginning as of the date of
9-13 the expected start of operations;
9-14 (D) a statement of revenue and expenses with
9-15 expected member months; and
9-16 (E) a cash flow statement that states any
9-17 capital expenditures, purchase and sale of investments, and
9-18 deposits with the state;
9-19 (8) the schedule of charges to be used during the
9-20 first 12 months of operation;
9-21 (9) a statement acknowledging that all lawful process
9-22 in any legal action or proceeding against the health maintenance
9-23 organization on a cause of action arising in this state is valid if
9-24 served in accordance with Article 1.36, Insurance Code;
9-25 (10) a statement reasonably describing the geographic
10-1 area or areas to be served;
10-2 (11) a description of the complaint procedures to be
10-3 utilized;
10-4 (12) a description of the procedures and programs to
10-5 be implemented to meet the quality of health care requirements set
10-6 forth herein; [and]
10-7 (13) a written description of health care plan terms
10-8 and conditions made available to any current or prospective group
10-9 contract holder or current or prospective enrollee of the health
10-10 maintenance organization pursuant to the requirements of Section 11
10-11 of this Act;
10-12 (14) network configuration information, including an
10-13 explanation of the adequacy of the physician and other provider
10-14 network configuration; the information provided must include the
10-15 names of physicians, specialty physicians, and other providers by
10-16 zip code or zip code map and indicate whether each physician or
10-17 other provider is accepting new patients from the health
10-18 maintenance organization;
10-19 (15) a written description of the specific
10-20 compensation arrangements, such as compensation based on
10-21 fee-for-service arrangements, risk-sharing arrangements, or
10-22 capitated risk arrangements, made or to be made with physicians and
10-23 providers in exchange for the provision of or an arrangement to
10-24 provide health care services to enrollees, including any financial
10-25 incentives for physicians and providers; such compensation
11-1 arrangements shall be confidential and not subject to the open
11-2 records law, Chapter 552, Government Code;
11-3 (16) documentation demonstrating that the health
11-4 maintenance organization will pay for emergency care services
11-5 performed by nonnetwork physicians or providers at the negotiated
11-6 or usual and customary rate and that the health care plan contains,
11-7 without regard to whether the physician or provider furnishing the
11-8 services has a contractual or other arrangement with the entity to
11-9 provide items or services to covered individuals, the following
11-10 provisions and procedures for coverage of emergency care services:
11-11 (A) any medical screening examination or other
11-12 evaluation required by state or federal law that is necessary to
11-13 determine whether an emergency medical condition exists will be
11-14 provided to covered enrollees in the emergency department of a
11-15 hospital;
11-16 (B) necessary emergency care services will be
11-17 provided to covered enrollees, including the treatment and
11-18 stabilization of an emergency medical condition;
11-19 (C) services originated in a hospital emergency
11-20 department following treatment or stabilization of an emergency
11-21 medical condition will be provided to covered enrollees as approved
11-22 by the health maintenance organization, provided that the health
11-23 maintenance organization is required to approve or deny coverage of
11-24 poststabilization care as requested by a treating physician or
11-25 provider within the time appropriate to the circumstances relating
12-1 to the delivery of the services and the condition of the patient,
12-2 but in no case to exceed one hour; the health maintenance
12-3 organization must respond to inquiries from the treating physician
12-4 or provider in compliance with this provision in the health
12-5 maintenance organization's plan; and
12-6 (17) such other information as the commissioner may
12-7 require to make the determinations required by this Act.
12-8 (b) The commissioner [State Board of Insurance] may
12-9 promulgate such reasonable rules and regulations as the
12-10 commissioner [it] deems necessary to the proper administration of
12-11 this Act to require a health maintenance organization, subsequent
12-12 to receiving its certificate of authority, to submit the
12-13 modifications or amendments to the operations or documents
12-14 described in Subsection (a) of this section to the commissioner,
12-15 either for his approval or for information only, prior to the
12-16 effectuation of the modification or amendment or to require the
12-17 health maintenance organization to indicate the modifications to
12-18 [both the board and] the commissioner at the time of the next site
12-19 visit or examination. As soon as reasonably possible after any
12-20 filing for approval required by this subsection is made, the
12-21 commissioner shall in writing approve or disapprove it. Any
12-22 modification or amendment for which the commissioner's approval is
12-23 required shall be considered approved unless disapproved within 30
12-24 days; provided that the commissioner may postpone the action for
12-25 such further time, not exceeding an additional 30 days, as
13-1 necessary for proper consideration.
13-2 SECTION 4. Section 5, Texas Health Maintenance Organization
13-3 Act (Article 20A.05, Vernon's Texas Insurance Code), is amended to
13-4 read as follows:
13-5 Sec. 5. ISSUANCE OF CERTIFICATE OF AUTHORITY. (a)[(1) Upon
13-6 receipt of an application for issuance of a certificate of
13-7 authority, the commissioner shall begin consideration of the
13-8 application and forthwith transmit copies of such application and
13-9 accompanying documents to the board.]
13-10 [(2) The board shall determine whether the applicant
13-11 for a certificate of authority, with respect to health care
13-12 services to be furnished:]
13-13 [(A) has demonstrated the willingness and
13-14 potential ability to assure that such health care services will be
13-15 provided in a manner to assure both availability and accessibility
13-16 of adequate personnel and facilities, in a manner enhancing
13-17 availability, accessibility, and continuity of services;]
13-18 [(B) has arrangements, established in accordance
13-19 with rules and regulations promulgated by the board with the
13-20 concurrence of the commissioner, for an ongoing quality of health
13-21 care assurance program concerning health care processes and
13-22 outcome; and]
13-23 [(C) has a procedure, established by rules and
13-24 regulations of the board with the concurrence of the commissioner,
13-25 to develop, compile, evaluate, and report statistics relating to
14-1 the cost of operation, the pattern of utilization of its services,
14-2 availability and accessibility of its services.]
14-3 [(3) Within 45 days of receipt of the application by
14-4 the board for issuance of a certificate of authority, the board
14-5 shall certify to the commissioner whether the proposed health
14-6 maintenance organization meets the requirements of this section.
14-7 If the board certifies that the health maintenance organization
14-8 does not meet such requirements, it shall specify in what respects
14-9 it is deficient.]
14-10 [(b)] The commissioner shall, after notice and hearing,
14-11 issue or deny a certificate of authority to any person filing an
14-12 application pursuant to Section 4 of this Act, within 75 days of
14-13 the receipt of a completed application [the certification of the
14-14 board]; provided, however, that if notice and the opportunity for a
14-15 hearing is involved in a particular issuance or denial, then the
14-16 matter must be scheduled for a hearing within 75 days of the
14-17 receipt of a completed application. In any event, the commissioner
14-18 may grant a delay of final action on the application to an
14-19 applicant. Issuance of the certificate of authority shall be
14-20 granted upon payment of the application fee prescribed in Section
14-21 32 of this Act if the commissioner is satisfied that:
14-22 (1) the applicant for a certificate of authority, with
14-23 respect to health care services to be furnished:
14-24 (A) has demonstrated the willingness and
14-25 potential ability to assure that such health care services will be
15-1 provided in a manner to assure both availability and accessibility
15-2 of adequate personnel and facilities, in a manner enhancing
15-3 availability, accessibility, quality of care, and continuity of
15-4 services;
15-5 (B) has arrangements, established in accordance
15-6 with rules and regulations promulgated by the commissioner, for an
15-7 ongoing quality of health care assurance program concerning health
15-8 care processes and outcome; and
15-9 (C) has a procedure, established by rules and
15-10 regulations of the commissioner to develop, compile, evaluate, and
15-11 report statistics relating to the cost of operation, the pattern of
15-12 utilization of its services, and availability and accessibility of
15-13 its services; [board certifies that the health maintenance
15-14 organization's proposed plan of operation meets the requirements of
15-15 Subsection (a)(2) of this section; and]
15-16 (2) [the commissioner is satisfied that:]
15-17 [(A)] the person responsible for the conduct of the
15-18 affairs of the applicant is competent, trustworthy, and possesses a
15-19 good reputation;
15-20 (3) [(B)] the health care plan or single health care
15-21 service plan constitutes an appropriate mechanism whereby the
15-22 health maintenance organization will effectively provide or arrange
15-23 for the provision of basic health care services or single health
15-24 care service on a prepaid basis, through insurance or otherwise,
15-25 except to the extent of reasonable requirements for co-payment;
16-1 (4) [(C)] the health maintenance organization is fully
16-2 responsible and may reasonably be expected to meet its obligations
16-3 to enrollees and prospective enrollees. In making this
16-4 determination, the commissioner shall consider:
16-5 (A) [(i)] the financial soundness of the health
16-6 care plan's arrangement for health care services and a schedule of
16-7 charges used in connection therewith;
16-8 (B) [(ii)] the adequacy of working capital;
16-9 (C) [(iii)] any agreement with an insurer, group
16-10 hospital service corporation, a political subdivision of
16-11 government, or any other organization for insuring the payment of
16-12 the cost of health care services or the provision for automatic
16-13 applicability of an alternative coverage in the event of
16-14 discontinuance of plan;
16-15 (D) [(iv)] any agreement which provides for the
16-16 provision of health care services; and
16-17 (E) [(v)] any deposit of cash or securities
16-18 submitted in accordance with Section 13 of this Act as a guarantee
16-19 that the obligations will be duly performed; and
16-20 (5) [(D)] nothing in the proposed method of operation,
16-21 as shown by the information submitted pursuant to Section 4 of this
16-22 Act, or by independent investigation, is contrary to Texas law.
16-23 (b) [(c)] If [the board or] the commissioner[, or both,]
16-24 shall certify that the health maintenance organization's proposed
16-25 plan of operation does not meet the requirements of this section,
17-1 the commissioner shall not issue the certificate of authority. The
17-2 commissioner shall notify the applicant that it is deficient[,] and
17-3 shall specify in what respects it is deficient.
17-4 (c) [(d)] A certificate of authority shall continue in force
17-5 as long as the person to whom it is issued meets the requirements
17-6 of this Act or until suspended or revoked by the commissioner or
17-7 terminated at the request of the certificate holder. Any change in
17-8 control, as defined by Article 21.49-1 of the Insurance Code of
17-9 Texas, of the health maintenance organization, shall be subject to
17-10 the approval of the commissioner.
17-11 SECTION 5. Section 9, Texas Health Maintenance Organization
17-12 Act (Article 20A.09, Vernon's Texas Insurance Code), as amended by
17-13 Chapters 1091 and 1096, Acts of the 70th Legislature, Regular
17-14 Session, 1987, is amended to read as follows:
17-15 Sec. 9. EVIDENCE OF COVERAGE AND CHARGES. (a)(1) Every
17-16 enrollee residing in this state is entitled to evidence of coverage
17-17 under a health care plan. If the enrollee obtains coverage under a
17-18 health care plan through an insurance policy or a contract issued
17-19 by a group hospital service corporation, whether by option or
17-20 otherwise, the insurer or the group hospital service corporation
17-21 shall issue the evidence of coverage. Otherwise, the health
17-22 maintenance organization shall issue the evidence of coverage.
17-23 (2) No evidence of coverage, or amendment thereto,
17-24 shall be issued or delivered to any person in this state until a
17-25 copy of the form of evidence of coverage, or amendment thereto, has
18-1 been filed with and approved by the commissioner.
18-2 (3) An evidence of coverage shall contain:
18-3 (A) no provisions or statements which are
18-4 unjust, unfair, inequitable, misleading, deceptive, which encourage
18-5 misrepresentation, or which are untrue, misleading, or deceptive as
18-6 defined in Section 14 of this Act; [and]
18-7 (B) a clear and complete statement, if a
18-8 contract, or a reasonably complete facsimile, if a certificate, of:
18-9 (i) the medical, health care services, or
18-10 single health care service and the issuance of other benefits, if
18-11 any, to which the enrollee is entitled under the health care plan
18-12 or single health care service plan;
18-13 (ii) any limitation on the services, kinds
18-14 of services, benefits, or kinds of benefits to be provided,
18-15 including any deductible or co-payment feature;
18-16 (iii) where and in what manner information
18-17 is available as to how services may be obtained; and
18-18 (iv) a clear and understandable
18-19 description of the health maintenance organization's methods for
18-20 resolving enrollee complaints. Any subsequent changes may be
18-21 evidenced in a separate document issued to the enrollee;
18-22 (C) a provision that, if medically necessary
18-23 covered services are not available through network physicians or
18-24 providers, the health maintenance organization must, on the request
18-25 of a network physician or provider, within a reasonable time period
19-1 allow referral to a nonnetwork physician or provider and shall
19-2 fully reimburse the nonnetwork physician or provider at the usual
19-3 and customary or an agreed rate; each contract must further provide
19-4 for a review by a specialist of the same, or a similar, specialty
19-5 as the type of physician or provider to whom a referral is
19-6 requested before the health maintenance organization may deny a
19-7 referral;
19-8 (D) a provision to allow enrollees with chronic,
19-9 disabling, or life-threatening illnesses to apply to the health
19-10 maintenance organization's medical director to utilize a nonprimary
19-11 care physician specialist as a primary care physician, provided
19-12 that:
19-13 (i) the request includes information
19-14 specified by the health maintenance organization, including but not
19-15 limited to certification of medical need, and is signed by the
19-16 enrollee and the nonprimary care physician specialist interested in
19-17 serving as the primary care physician;
19-18 (ii) the nonprimary care physician
19-19 specialist meets the health maintenance organization's requirements
19-20 for primary care physician participation; and
19-21 (iii) the nonprimary care physician
19-22 specialist is willing to accept the coordination of all of the
19-23 enrollee's health care needs;
19-24 (E) a provision that if the request for special
19-25 consideration specified in Paragraph D of this subdivision is
20-1 denied, an enrollee may appeal the decision through the health
20-2 maintenance organization's established complaint and appeals
20-3 process; and
20-4 (F) a provision that the effective date of the
20-5 new designation of a nonprimary care physician specialist as set
20-6 out in Paragraph D of this subdivision shall not be retroactive;
20-7 the health maintenance organization may not reduce the amount of
20-8 compensation owed to the original primary care physician beyond the
20-9 date of the new designation.
20-10 (4) Any form of the evidence of coverage or group
20-11 contract to be used in this state, and any amendments thereto, are
20-12 subject to the filing and approval requirements of Subsection (c)
20-13 of this section, unless it is subject to the jurisdiction of the
20-14 commissioner under the laws governing health insurance or group
20-15 hospital service corporations, in which event the filing and
20-16 approval provisions of such law shall apply. To the extent,
20-17 however, that such provisions do not apply to the requirements of
20-18 Subdivision (3), Subsection (a) of this section, the requirements
20-19 of Subdivision (3) shall be applicable.
20-20 (b) The formula or method for calculating the schedule of
20-21 charges for enrollee coverage for medical services or health care
20-22 services must be filed with the commissioner before it is used in
20-23 conjunction with any health care plan. The formula or method must
20-24 be established in accordance with actuarial principles for the
20-25 various categories of enrollees. The charges resulting from the
21-1 application of the formula or method may not be altered for an
21-2 individual enrollee based on the status of that enrollee's health.
21-3 The formula or method must produce charges that are not excessive,
21-4 inadequate, or unfairly discriminatory, and benefits must be
21-5 reasonable with respect to the rates produced by the formula or
21-6 method. A statement by a qualified actuary that certifies the
21-7 appropriateness of the formula or method must accompany the filing
21-8 together with supporting information considered adequate by the
21-9 commissioner.
21-10 (c) The commissioner shall, within a reasonable period,
21-11 approve any form of the evidence of coverage or group contract, or
21-12 amendment thereto, if the requirements of this section are met.
21-13 After notice and opportunity for hearing, the commissioner may
21-14 withdraw previous approval of any form, if the commissioner
21-15 determines that it violates or does not comply with this Act or a
21-16 rule adopted by the commissioner [State Board of Insurance]. It
21-17 shall be unlawful to issue such form until approved. If the
21-18 commissioner disapproves such form, the commissioner shall notify
21-19 the filer. In the notice, the commissioner shall specify the
21-20 reason for the disapproval. A hearing shall be granted within 30
21-21 days after a request in writing by the person filing. If the
21-22 commissioner does not disapprove any form within 30 days after the
21-23 filing of such form it shall be considered approved; provided that
21-24 the commissioner may by written notice extend the period for
21-25 approval or disapproval of any filing for such further time, not
22-1 exceeding an additional 30 days, as necessary for proper
22-2 consideration of the filing.
22-3 (d) The commissioner may require the submission of whatever
22-4 relevant information he or she deems necessary in determining
22-5 whether to approve or disapprove a filing made pursuant to this
22-6 section.
22-7 (e) Article 3.74 of the Texas Insurance Code applies to
22-8 health maintenance organizations other than those health
22-9 maintenance organizations offering only a single health care
22-10 service plan.
22-11 (f) Article 3.51-9 of the Texas Insurance Code applies to
22-12 health maintenance organizations other than those health
22-13 maintenance organizations offering only a single health care
22-14 service plan.
22-15 (g) Evidence of coverage does not constitute a health
22-16 insurance policy as that term is defined by the Insurance Code.
22-17 (h) Article 3.70-1(F)(5) of the Insurance Code applies to
22-18 health maintenance organizations other than those health
22-19 maintenance organizations offering only a single health care
22-20 service plan.
22-21 (i) [(h)] Article 3.72 of the Insurance Code applies to
22-22 health maintenance organizations to the extent that such article is
22-23 not in conflict with this Act and to the extent that the
22-24 residential treatment center or crisis stabilization unit is
22-25 located within the service area of the health maintenance
23-1 organization and subject to such inspection and review as required
23-2 by this Act or the rules hereunder.
23-3 (j) [(i)] A health maintenance organization shall comply
23-4 with Article 21.55 of the Insurance Code with respect to prompt
23-5 payment to enrollees [this code applies to out-of-area or emergency
23-6 claims for which benefits are not assigned or payment is not made
23-7 directly to the physician or provider]. A health maintenance
23-8 organization shall make payment to a physician or provider for
23-9 covered services rendered to enrollees of the health maintenance
23-10 organization not later than the 45th day after the date a claim for
23-11 payment is received with documentation reasonably necessary for the
23-12 health maintenance organization to process the claim or within the
23-13 time period specified by written agreement, whichever time period
23-14 is shorter. For purposes of this subsection, "covered services"
23-15 means health care services and benefits to which enrollees are
23-16 entitled under the terms of an applicable evidence of coverage.
23-17 (k) [(j)] A health maintenance organization may provide
23-18 benefits under a health care plan to a dependent grandchild of an
23-19 enrollee when the dependent grandchild is less than 21 years old
23-20 and living with and in the household of the enrollee.
23-21 (l) A health maintenance organization that offers a basic
23-22 health care plan shall provide or arrange for the provision of
23-23 basic health care services to its enrollees as needed and without
23-24 limitations as to time and cost other than limitations prescribed
23-25 by rule of the commissioner.
24-1 (m) The commissioner may adopt minimum standards relating to
24-2 basic health care services.
24-3 SECTION 6. Section 11, Texas Health Maintenance Organization
24-4 Act (Article 20A.11, Vernon's Texas Insurance Code), is amended to
24-5 read as follows:
24-6 Sec. 11. INFORMATION TO PROSPECTIVE AND CURRENT GROUP
24-7 CONTRACT HOLDERS AND ENROLLEES. (a) Each plan application form
24-8 shall prominently include a space in which the enrollee at the time
24-9 of application or enrollment shall make a selection of a primary
24-10 care physician or primary care provider. An enrollee shall at all
24-11 times have the right to select or change a primary care physician
24-12 or primary care provider within the health maintenance organization
24-13 network of available primary care physicians and primary care
24-14 providers. However, a health maintenance organization may limit
24-15 an enrollee's request to change physicians or providers to no more
24-16 than four changes in any 12-month period.
24-17 (b) A health maintenance organization shall provide on
24-18 request an accurate written description of health care plan terms
24-19 and conditions, as referenced in Section 4(a)(13) of this Act and
24-20 28 T.A.C. Section 11.301(5)(I) (relating to Filing Requirements),
24-21 to allow any current or prospective group contract holder and
24-22 current or prospective enrollee eligible for enrollment in a health
24-23 care plan to make comparisons and informed decisions before
24-24 selecting among health care plans. The written description must be
24-25 in a readable and understandable format as prescribed by the
25-1 commissioner and shall include a current list of physicians and
25-2 providers. The health maintenance organization may provide its
25-3 handbook to satisfy this requirement provided the handbook's
25-4 content is substantially similar to and achieves the same level of
25-5 disclosure as the written description prescribed by the
25-6 commissioner and the current list of physicians and providers is
25-7 also provided.
25-8 (c) A health maintenance organization shall notify enrollees
25-9 within 30 days of any substantive changes to the payment
25-10 arrangements between the health maintenance organization and health
25-11 care physicians or providers.
25-12 (d) No health maintenance organization, or representative
25-13 thereof, may cause or knowingly permit the use or distribution of
25-14 prospective enrollee information which is untrue or misleading.
25-15 (e) Every health maintenance organization shall provide to
25-16 its enrollees reasonable notice of any material adverse change in
25-17 the operation of the organization that will affect them directly.
25-18 SECTION 7. Section 12, Texas Health Maintenance Organization
25-19 Act (Article 20A.12, Vernon's Texas Insurance Code), is amended to
25-20 read as follows:
25-21 Sec. 12. COMPLAINT SYSTEM. (a) Every health maintenance
25-22 organization shall establish and maintain an internal system for
25-23 the resolution of complaints including a process for the notice and
25-24 appeal of any dissatisfaction expressed by a complainant orally or
25-25 in writing to the health maintenance organization with any aspect
26-1 of the health maintenance organization's operation, including but
26-2 not limited to dissatisfaction with plan administration; appeal of
26-3 an adverse determination; the denial, reduction, or termination of
26-4 a service; the way a service is provided; or disenrollment
26-5 decisions, expressed by a complainant. Such complaint procedure
26-6 shall include provisions to meet the following requirements:
26-7 (1) If a complainant notifies the health maintenance
26-8 organization orally or in writing of a complaint, the health
26-9 maintenance organization shall, not later than the fifth business
26-10 day after the date of the receipt of the complaint, send to the
26-11 complainant a letter acknowledging the date of the health
26-12 maintenance organization's receipt of the complaint. The
26-13 acknowledgment letter shall include a description of the complaint
26-14 procedures and time frames. If the health maintenance organization
26-15 is responding to oral complaints, the health maintenance
26-16 organization shall also enclose a one page complaint form.
26-17 (2) The health maintenance organization shall
26-18 investigate each oral and written complaint received in accordance
26-19 with its own policies and in compliance with this Act.
26-20 (3) The total time for acknowledgment, investigation,
26-21 and resolution of the complaint by the health maintenance
26-22 organization shall not exceed 30 calendar days after the date the
26-23 health maintenance organization receives the complaint from the
26-24 complainant.
26-25 (4) Subdivisions (1) and (3) of this subsection do not
27-1 apply to complaints concerning emergencies or denials of continued
27-2 stays for hospitalization. Investigation and resolution of
27-3 complaints concerning emergencies or denials of continued stays for
27-4 hospitalization shall be concluded in accordance with the medical
27-5 or dental immediacy of the case and shall not exceed one working
27-6 day from receipt of the complaint.
27-7 (5) After the health maintenance organization has
27-8 investigated a complaint, the health maintenance organization shall
27-9 issue a response letter to the complainant explaining the health
27-10 maintenance organization's resolution of the complaint within the
27-11 time frames set forth in Subdivision (3) of this subsection. The
27-12 letter shall include a statement of the specific medical and
27-13 contractual reasons for the resolution and the specialization of
27-14 any physician or other provider consulted. If the resolution is to
27-15 deny services based on an adverse determination of medical
27-16 necessity, the clinical basis used to reach that decision shall be
27-17 enclosed. The response letter shall contain a full description of
27-18 the process for appeal, including the time frames for the appeals
27-19 process and the time frames for the final decision on the appeal.
27-20 (6) In the event the complaint is not resolved to the
27-21 satisfaction of the complainant, the health maintenance
27-22 organization shall provide an appeal process which shall include
27-23 the right of the complainant either to appear in person before a
27-24 complaint appeal panel where the enrollee normally receives health
27-25 care services, unless another site is agreed to by the complainant,
28-1 or to address a written appeal to the complaint appeal panel. The
28-2 health maintenance organization shall complete the following
28-3 appeals process within 30 calendar days after the request for the
28-4 appeal.
28-5 (7) The health maintenance organization shall send an
28-6 acknowledgment letter to the complainant within five working days
28-7 after the receipt of the request for appeal.
28-8 (8) The health maintenance organization shall appoint
28-9 members to the complaint appeal panel which shall advise the health
28-10 maintenance organization on the resolution of the dispute. The
28-11 complaint appeal panel shall be composed of equal numbers of health
28-12 maintenance organization staff, physicians or other providers, and
28-13 enrollees. No member of the appeal panel shall have been
28-14 previously involved in the disputed decision. The physicians or
28-15 other providers shall have experience in the area of care that is
28-16 in dispute and must be independent of the physician or physicians
28-17 or provider or providers who made the prior determination or
28-18 determinations. If specialty care is in dispute, the appeal panel
28-19 must include an additional person who is a specialist in the field
28-20 of care to which the appeal relates. The enrollees shall not be
28-21 employees of the health maintenance organization.
28-22 (9) Not less than five working days before the meeting
28-23 of the panel, the health maintenance organization shall provide to
28-24 the complainant or the complainant's designated representative any
28-25 documentation to be presented to the panel by the health
29-1 maintenance organization staff, the specialization of any
29-2 physicians or providers consulted during the investigation, and the
29-3 name and affiliation of all health maintenance organization
29-4 representatives on the panel.
29-5 (10) The complainant and a person acting on behalf of
29-6 the complainant shall have the right to appear in person before the
29-7 complaint appeal panel, to present alternative expert testimony,
29-8 and to request the presence of and question the person or persons
29-9 responsible for making the prior determination which resulted in
29-10 the appeal.
29-11 (11) Investigation and resolution of appeals relating
29-12 to ongoing emergencies or denials of continued stays for
29-13 hospitalization shall be concluded in accordance with the medical
29-14 or dental immediacy of the case but in no event to exceed one
29-15 working day after the complainant's request for appeal. Due to the
29-16 ongoing emergency or continued hospital stay and at the
29-17 complainant's request, the health maintenance organization shall in
29-18 lieu of a complaint appeal panel provide a review by a physician or
29-19 provider who has not previously reviewed the case and is of the
29-20 same or similar speciality as typically manages the medical
29-21 condition, procedure, or treatment under discussion for review of
29-22 the appeal. The physician or provider reviewer may interview the
29-23 patient or the patient's representative and shall render a decision
29-24 on the appeal. Initial notice of the decision may be delivered
29-25 orally if followed by written notice of the determination within
30-1 three days. Investigation and resolution of appeals after
30-2 emergency care has been provided shall be conducted in accordance
30-3 with the process set out in this subsection, including the right to
30-4 a review by an appeal panel.
30-5 (12) Notice of the final decision of the health
30-6 maintenance organization on the appeal shall include a statement of
30-7 the specific medical determination, clinical basis, and contractual
30-8 criteria used to reach the final decision. The notice shall also
30-9 include the toll-free telephone number and address of the Texas
30-10 Department of Insurance.
30-11 (13) The health maintenance organization shall
30-12 maintain a record of all complaints and any complaint proceedings
30-13 for three years. The complainant has a right to a copy of the
30-14 record.
30-15 (14) The health maintenance organization shall
30-16 maintain a complaint and appeal log of each complaint.
30-17 (15) The health maintenance organization shall
30-18 maintain documentation for all complaints and action taken for a
30-19 period of three years from the date of the receipt of the
30-20 complaint, and the Texas Department of Insurance must be able to
30-21 review such documentation during any examination [a complaint
30-22 system to provide reasonable procedures for the resolution of
30-23 written complaints initiated by enrollees concerning health care
30-24 services].
30-25 (b) The commissioner [or board] may examine such complaint
31-1 system for compliance with this Act and require the health
31-2 maintenance organization to make corrections as deemed necessary by
31-3 the commissioner.
31-4 SECTION 8. The Texas Health Maintenance Organization Act
31-5 (Article 20A.01 et seq., Vernon's Texas Insurance Code), is amended
31-6 to adding Section 12A to read as follows:
31-7 Sec. 12A. FILING COMPLAINTS WITH THE TEXAS DEPARTMENT OF
31-8 INSURANCE. (a) Any person, including persons who have attempted
31-9 to resolve complaints through the health maintenance organization's
31-10 complaint system process who are dissatisfied with the resolution,
31-11 may report an alleged violation of this Act to the Texas Department
31-12 of Insurance.
31-13 (b) The commissioner shall investigate a complaint against a
31-14 health maintenance organization to determine compliance with this
31-15 Act within 60 days after the Texas Department of Insurance's
31-16 receipt of the complaint and all information necessary for the
31-17 department to determine compliance. The commissioner may extend
31-18 the time necessary to complete an investigation in the event any of
31-19 the following circumstances occur:
31-20 (1) additional information is needed;
31-21 (2) an on-site review is necessary;
31-22 (3) the health maintenance organization, the physician
31-23 or provider, or the complainant does not provide all documentation
31-24 necessary to complete the investigation; or
31-25 (4) other circumstances beyond the control of the
32-1 department occur.
32-2 SECTION 9. Subsections (a), (b), (c), (f), (g), and (h),
32-3 Section 13, Texas Health Maintenance Organization Act (Article
32-4 20A.13, Vernon's Texas Insurance Code), are amended to read as
32-5 follows:
32-6 (a) Unless otherwise provided by this section, each health
32-7 maintenance organization shall deposit with the comptroller [State
32-8 Treasurer] cash or securities, or any combination of these or other
32-9 guarantees that are acceptable to the commissioner [State Board of
32-10 Insurance], in an amount as set forth in this section.
32-11 (b) For a health maintenance organization which has not
32-12 received a certificate of authority from the State Board of
32-13 Insurance or the commissioner prior to September 1, 1987:
32-14 (1) the amount of the initial deposit or other
32-15 guarantee shall be $100,000 for an organization offering basic
32-16 health care services and $50,000 for an organization offering a
32-17 single health care service plan;
32-18 (2) on or before March 15 of the year following the
32-19 year in which the health maintenance organization receives a
32-20 certificate of authority, it shall deposit with the comptroller
32-21 [State Treasurer] an amount equal to the difference between the
32-22 initial deposit and 100 percent of its estimated uncovered health
32-23 care expenses for the first 12 months of operation;
32-24 (3) on or before March 15 of each subsequent year, it
32-25 shall deposit the difference between its total uncovered health
33-1 care expenses based on its annual statement from the previous year
33-2 and the total amount previously deposited and not withdrawn from
33-3 the State Treasury; and
33-4 (4) in any year in which the amount determined in
33-5 accordance with Subdivision (3) of this subsection is zero or less
33-6 than zero, the commissioner [State Board of Insurance] may not
33-7 require the health maintenance organization to make any additional
33-8 deposit under this subsection.
33-9 (c) For a health maintenance organization which has received
33-10 a certificate of authority from the State Board of Insurance prior
33-11 to September 1, 1987:
33-12 (1) on or before March 15, 1988, the organization
33-13 shall deposit an amount equal to the sum of:
33-14 (A) $100,000 for an organization offering basic
33-15 health care services or $50,000 for an organization offering a
33-16 single health care service plan; and
33-17 (B) 100 percent of the uncovered health care
33-18 expenses for the preceding 12 months of operation;
33-19 (2) on or before March 15 of each subsequent year, the
33-20 organization shall make additional deposits of the difference
33-21 between its total uncovered health care expenses based on its
33-22 annual statement from the previous year and the total amount
33-23 previously deposited and not withdrawn from the State Treasury; and
33-24 (3) in any year in which the amount determined in
33-25 accordance with Subdivision (2) of this subsection is zero or less
34-1 than zero, the commissioner [State Board of Insurance] may not
34-2 require the health maintenance organization to make any additional
34-3 deposit under this subsection.
34-4 (f) Upon application by a health maintenance organization
34-5 operating for more than one year under a certificate of authority
34-6 issued by the State Board of Insurance or the commissioner, the
34-7 commissioner [State Board of Insurance] may waive some or all of
34-8 the requirements of Subsection (b) or (c) of this section for any
34-9 period of time it shall deem proper whenever it finds that one or
34-10 more of the following conditions justifies such waiver:
34-11 (1) the total amount of the deposit or other guarantee
34-12 is equal to 25 percent of the health maintenance organization's
34-13 estimated uncovered expenses for the next calendar year;
34-14 (2) the health maintenance organization's net worth is
34-15 equal to at least 25 percent of its estimated uncovered expenses
34-16 for the next calendar year; or
34-17 (3) either the health maintenance organization has a
34-18 net worth of $5,000,000 or its sponsoring organization has a net
34-19 worth of at least $5,000,000 for each health maintenance
34-20 organization whose uncovered expenses it guarantees.
34-21 (g) If one or more of the requirements is waived, any amount
34-22 previously deposited shall remain on deposit until released in
34-23 whole or in part by the comptroller [State Treasurer] upon order of
34-24 the commissioner [State Board of Insurance] pursuant to Subsection
34-25 (f) of this section.
35-1 (h) A health maintenance organization that has made a
35-2 deposit with the comptroller [State Treasurer] may, at its option,
35-3 withdraw the deposit or any part thereof, first having deposited
35-4 with the comptroller [State Treasurer], in lieu thereof, a deposit
35-5 of cash or securities of equal amount and value to that withdrawn.
35-6 Any securities shall be approved by the commissioner [State Board
35-7 of Insurance] before being substituted.
35-8 SECTION 10. Section 14, Texas Health Maintenance
35-9 Organization Act (Article 20A.14, Vernon's Texas Insurance Code),
35-10 is amended by adding Subsections (i) through (l) to read as
35-11 follows:
35-12 (i)(1) A health maintenance organization shall not, as a
35-13 condition of a contract with a physician or provider or in any
35-14 other manner, prohibit, attempt to prohibit, or discourage a
35-15 physician or provider from:
35-16 (A) discussing with or communicating to a
35-17 current, prospective, or former patient, or a party designated by a
35-18 patient, information or opinions regarding the patient's health
35-19 care, including but not limited to the patient's medical condition,
35-20 treatment options, or other health care services; or
35-21 (B) discussing with or communicating in good
35-22 faith to a current, prospective, or former patient, or a party
35-23 designated by a patient, information or opinions regarding the
35-24 provisions, terms, requirements, or services of the health care
35-25 plan as they relate to the medical needs of the patient.
36-1 (2) A health maintenance organization shall not in any
36-2 way penalize, terminate, or refuse to compensate, for covered
36-3 services, a physician or provider for discussing or communicating
36-4 with a current, prospective, or former patient, or a party
36-5 designated by a patient, pursuant to this section.
36-6 (j) A health maintenance organization shall not engage in
36-7 any retaliatory action, including refusal to renew or cancellation
36-8 of coverage, against a group contract holder or enrollee because
36-9 the group, enrollee, or person acting on behalf of the group or
36-10 enrollee has filed a complaint against the health maintenance
36-11 organization or appealed a decision of the health maintenance
36-12 organization.
36-13 (k) A health maintenance organization shall not engage in
36-14 any retaliatory action, including termination of or refusal to
36-15 renew a contract, against a physician or provider because the
36-16 physician or provider has, on behalf of an enrollee, reasonably
36-17 filed a complaint against the health maintenance organization or
36-18 has appealed a decision of the health maintenance organization.
36-19 (l) A health maintenance organization may not use any
36-20 financial incentive or make payment to a physician or provider
36-21 which acts directly or indirectly as an inducement to limit
36-22 medically necessary services.
36-23 SECTION 11. Section 15, Texas Health Maintenance
36-24 Organization Act (Article 20A.15, Vernon's Texas Insurance Code),
36-25 is amended to read as follows:
37-1 Sec. 15. REGULATION OF AGENTS [AGENT FOR SINGLE HEALTH CARE
37-2 SERVICE PLANS]. (a) A health maintenance organization agent is
37-3 anyone who represents any health maintenance organization in the
37-4 solicitation, negotiation, procurement, or effectuation of health
37-5 maintenance organization membership or holds himself or herself out
37-6 as such. No person or other legal entity may perform the acts of a
37-7 health maintenance organization agent within this state unless such
37-8 person or legal entity has a valid health maintenance organization
37-9 agent's license issued pursuant to this Act. The term "health
37-10 maintenance organization agent" shall not include:
37-11 (1) any regular salaried officer or employee of a
37-12 health maintenance organization or of a licensed health maintenance
37-13 organization agent, who devotes substantially all of his or her
37-14 time to activities other than the solicitation of applications for
37-15 health maintenance organization membership and receives no
37-16 commission or other compensation directly dependent upon the
37-17 business obtained and who does not solicit or accept from the
37-18 public applications for health maintenance organization membership;
37-19 (2) employers or their officers or employees or the
37-20 trustees of any employee benefit plan to the extent that such
37-21 employers, officers, employees, or trustees are engaged in the
37-22 administration or operation of any program of employee benefits
37-23 involving the use of membership in a health maintenance
37-24 organization; provided that such employers, officers, employees, or
37-25 trustees are not in any manner compensated directly or indirectly
38-1 by the health maintenance organization issuing such health
38-2 maintenance organization membership;
38-3 (3) banks or their officers and employees to the
38-4 extent that such banks, officers, and employees collect and remit
38-5 charges by charging same against accounts of depositors on the
38-6 orders of such depositors; or
38-7 (4) any person or the employee of any person who has
38-8 contracted to provide administrative, management, or health care
38-9 services to a health maintenance organization and who is
38-10 compensated for those services by the payment of an amount
38-11 calculated as a percentage of the revenues, net income, or profit
38-12 of the health maintenance organization, if that method of
38-13 compensation is the sole basis for subjecting that person or the
38-14 employee of the person to this section.
38-15 (b) The commissioner [Commissioner of Insurance] shall
38-16 collect in advance from health maintenance organization agent
38-17 applicants a nonrefundable license fee in an amount not to exceed
38-18 $50 as determined by the commissioner [board]. Unless the
38-19 commissioner [State Board of Insurance] accepts a qualifying
38-20 examination administered by a testing service, as provided under
38-21 Article 21.01-1, Insurance Code, as amended, the commissioner
38-22 [Commissioner of Insurance] shall also collect from such applicants
38-23 an examination fee in an amount not to exceed $20 as determined by
38-24 the commissioner [board]. A new examination fee shall be paid for
38-25 each examination. The examination fee shall not be returned under
39-1 any circumstances other than for failure to appear and take the
39-2 examination after the applicant has given at least 24 hours notice
39-3 of an emergency situation to the commissioner [Commissioner of
39-4 Insurance] and received the commissioner's approval.
39-5 (c) Except as may be provided by a staggered renewal system
39-6 adopted under Article 21.01-2, Insurance Code, and its subsequent
39-7 amendments, each license issued to a health maintenance
39-8 organization agent shall expire two years following the date of
39-9 issue, unless prior thereto it is suspended or revoked by the
39-10 commissioner or the authority of the agent to act for the health
39-11 maintenance organization is terminated.
39-12 (d) Licenses which have not expired or been suspended or
39-13 revoked may be renewed by filing with the commissioner [State Board
39-14 of Insurance] a completed renewal application and by paying a
39-15 nonrefundable renewal fee in an amount not to exceed $50 as
39-16 determined by the commissioner [board] on or before the expiration
39-17 of the license.
39-18 (e) Any agent licensed under this section may represent and
39-19 act as an agent for more than one health maintenance organization
39-20 at any time while the agent's license is in force. Any such agent
39-21 and the health maintenance organization involved must give notice
39-22 to the commissioner [State Board of Insurance] of any additional
39-23 appointment or appointments authorizing the agent to act as agent
39-24 for an additional health maintenance organization or health
39-25 maintenance organizations. Such notice must be accompanied by a
40-1 certificate from each health maintenance organization to be named
40-2 in each additional appointment that said health maintenance
40-3 organization desires to appoint the applicant as its agent. This
40-4 notice shall contain such other information as the commissioner
40-5 [State Board of Insurance] may require. The agent shall be
40-6 required to pay a nonrefundable fee in an amount not to exceed $16
40-7 as determined by the commissioner [board] for each additional
40-8 appointment applied for, which fee shall accompany the notice. If
40-9 approval of the additional appointment is not received from the
40-10 commissioner [State Board of Insurance] before the eighth day after
40-11 the date on which the completed notice and fee were received by the
40-12 commissioner [board], the agent and the health maintenance
40-13 organization, in the absence of notice of disapproval, may assume
40-14 that the board approves the application, and the agent may act for
40-15 the health maintenance organization. The commissioner [State Board
40-16 of Insurance] shall suspend the license of an agent during any
40-17 period in which the agent does not have an outstanding valid
40-18 appointment to represent a health maintenance organization. The
40-19 suspension shall be lifted on receipt by the commissioner [board]
40-20 of acceptable notice of valid appointment.
40-21 (f) It shall be the duty of the commissioner to collect from
40-22 every agent of any health maintenance organization in the State of
40-23 Texas under the provisions of this section a licensing fee and an
40-24 initial appointment fee for each appointment by a health
40-25 maintenance organization. All fees collected under this section
41-1 shall be used by the commissioner [State Board of Insurance] to
41-2 administer the provisions of this [the Texas Health Maintenance
41-3 Organization] Act and all laws of this state governing and
41-4 regulating agents for such health maintenance organizations. All
41-5 of such funds shall be paid into the State Treasury to the credit
41-6 of the Texas Department [State Board] of Insurance operating fund
41-7 and shall be paid out for salaries, traveling expenses, office
41-8 expenses, and other incidental expenses incurred and approved by
41-9 the commissioner [State Board of Insurance].
41-10 (g) The commissioner [State Board of Insurance] may, after
41-11 notice and hearings, promulgate such reasonable rules and
41-12 regulations as are necessary to provide for the licensing of
41-13 agents.
41-14 (h) [(m) Duplicate License; Fee.] The commissioner
41-15 [Commissioner of Insurance] shall collect in advance from agents
41-16 requesting duplicate licenses a fee not to exceed $20. The
41-17 commissioner [State Board of Insurance] shall determine the amount
41-18 of the fee.
41-19 (i) [(n)] The commissioner [State Board of Insurance] shall
41-20 issue a license to a corporation if it finds that:
41-21 (1) the corporation is organized or existing under the
41-22 Texas Business Corporation Act, has its principal place of business
41-23 in this state, and has as one of its purposes the authority to act
41-24 as an agent under this section; and
41-25 (2) each officer, director, and shareholder of the
42-1 corporation is individually licensed under this section.
42-2 (j) [(o)] This section may not be construed to permit any
42-3 employee, agent, or corporation to perform any act of an agent
42-4 under this section without obtaining a license.
42-5 (k) [(p)] If, at any time, a corporation that holds an
42-6 agent's license does not maintain the qualifications necessary to
42-7 obtain a license, the commissioner [State Board of Insurance] shall
42-8 cancel or revoke the license of that corporation to act as an
42-9 agent. If a person who is not a licensed agent under this section
42-10 acquires shares in such a corporation by devise or descent, that
42-11 person must either obtain a license or dispose of the shares to a
42-12 person licensed under this section not later than the 90th day
42-13 after the date on which the person acquires the shares.
42-14 (l) [(q)] If an unlicensed person acquires shares in a
42-15 corporation and does not dispose of the shares within the 90-day
42-16 period, the shares must be purchased by the corporation for the
42-17 value of the shares as reflected by the regular books and records
42-18 of the corporation as of the date of the acquisition of the shares
42-19 by the unlicensed person. If the corporation fails or refuses to
42-20 purchase the shares, the commissioner [State Board of Insurance]
42-21 shall cancel its license.
42-22 (m) [(r)] A corporation may redeem the shares of any
42-23 shareholder or the shares of a deceased shareholder on terms agreed
42-24 to by the board of directors and the shareholder or the
42-25 shareholder's personal representative or at a price and on terms
43-1 provided in the articles of incorporation, the bylaws of the
43-2 corporation, or an existing contract entered into by the
43-3 shareholders of the corporation.
43-4 (n) [(s)] With the application for a license or a license
43-5 renewal, each corporation licensed as an agent under this section
43-6 must file a sworn statement listing the names and addresses of all
43-7 of its officers, directors, and shareholders.
43-8 (o) [(t)] Each corporation shall notify the commissioner
43-9 [State Board of Insurance] of any change in its officers,
43-10 directors, or shareholders not later than the 30th day after the
43-11 date on which the change takes effect.
43-12 (p) [(u)] Another corporation may not own an interest in a
43-13 corporation licensed under this section. Each owner of an interest
43-14 in a corporation licensed under this section must be a natural
43-15 person who holds a valid license issued under this section.
43-16 SECTION 12. Section 15A, Texas Health Maintenance
43-17 Organization Act (Article 20A.15A, Vernon's Texas Insurance Code),
43-18 is amended to read as follows:
43-19 Sec. 15A. AGENTS FOR SINGLE HEALTH CARE SERVICE PLANS.
43-20 (a) A person acting as an agent for a health maintenance
43-21 organization offering only a single health care service plan who is
43-22 licensed by examination under Article 21.07, Insurance Code, or
43-23 Chapter 213, Acts of the 54th Legislature, Regular Session, 1955
43-24 (Article 21.07-1, Vernon's Texas Insurance Code), is subject to the
43-25 licensing requirements provided by this section, and except as
44-1 specifically provided by this Act or some other law, no other agent
44-2 licensing requirements apply.
44-3 (b) The commissioner shall collect in advance from
44-4 applicants for licensure as health maintenance organization agents
44-5 under this section a nonrefundable license fee in an amount not to
44-6 exceed $70 as determined by the commissioner [State Board of
44-7 Insurance].
44-8 (c) Except as may be provided by a staggered renewal system
44-9 adopted under Article 21.01-2, Insurance Code, and its subsequent
44-10 amendments, each license issued to a health maintenance
44-11 organization agent under this section shall expire two years
44-12 following the date of issuance, unless before that time the license
44-13 is suspended or revoked by the commissioner or the authority of the
44-14 agent to act for the health maintenance organization is terminated.
44-15 (d) Licenses issued under this section that have not expired
44-16 or been suspended or revoked may be renewed by filing a completed
44-17 application and paying to the commissioner [board] the required
44-18 nonrefundable renewal fee in an amount not to exceed $50 as
44-19 determined by the commissioner [board].
44-20 (e) An agent licensed under this section may represent and
44-21 act as an agent for more than one health maintenance organization
44-22 offering only a single health care service plan at any time while
44-23 that agent's license is in force. The agent and the health
44-24 maintenance organization offering only a single health care service
44-25 plan involved must give notice to the commissioner [State Board of
45-1 Insurance] of any additional appointment authorizing the agent to
45-2 act as agent for an additional health maintenance organization
45-3 offering only a single health care service plan. The notice must
45-4 be accompanied by a certificate from each health maintenance
45-5 organization to be named in each additional appointment stating
45-6 that the health maintenance organization offers only a single
45-7 health care service plan and desires to appoint the applicant as
45-8 its agent. The notice must include other information required by
45-9 the commissioner [State Board of Insurance]. The agent shall pay a
45-10 nonrefundable fee in an amount not to exceed $70 as determined by
45-11 the commissioner [State Board of Insurance] for each additional
45-12 appointment applied for. The fee must accompany the notice. If
45-13 approval of the additional appointment is not received from the
45-14 commissioner [State Board of Insurance] before the eighth day after
45-15 the date on which the completed notice and fee were received by the
45-16 commissioner [board], the agent and the health maintenance
45-17 organization, in the absence of notice of disapproval, may assume
45-18 that the commissioner [board] approves the application, and the
45-19 agent may act for the health maintenance organization offering a
45-20 single health care service plan. The commissioner [State Board of
45-21 Insurance] shall suspend the license of an agent during any period
45-22 in which the agent does not have an outstanding valid appointment
45-23 to represent a health maintenance organization offering a single
45-24 health care service plan. The suspension shall be lifted on
45-25 receipt by the commissioner [board] of acceptable notice of valid
46-1 appointment.
46-2 (f) The commissioner shall collect from each agent for any
46-3 health maintenance organization offering only a single health care
46-4 service plan a license fee and an appointment fee for each
46-5 additional appointment.
46-6 (g) Fees collected under this section shall be used by the
46-7 commissioner [State Board of Insurance] to administer this Act and
46-8 laws governing and regulating agents for health maintenance
46-9 organizations. The funds shall be deposited in the state treasury
46-10 to the credit of the Texas Department [State Board] of Insurance
46-11 operating fund and shall be paid out for salaries, traveling
46-12 expenses, office expenses, and other incidental expenses incurred
46-13 and approved by the commissioner [State Board of Insurance].
46-14 (h) The commissioner [State Board of Insurance] may, after
46-15 notice and hearing, adopt reasonable rules that are necessary to
46-16 provide for the licensing of agents under this section.
46-17 (i) A licensee may renew an unexpired license issued under
46-18 this section by filing the required renewal application and paying
46-19 a nonrefundable fee with the commissioner [State Board of
46-20 Insurance] on or before the expiration date of the license.
46-21 (j) [(l)] A health maintenance organization offering only a
46-22 single health care service plan that desires to appoint an agent
46-23 under this section shall provide to its prospective agents a
46-24 written manual, a copy of which shall be filed with the
46-25 commissioner [State Board of Insurance], outlining and describing
47-1 the single health care service offered by the health maintenance
47-2 organization, outlining this Act, and the rules of the [State Board
47-3 of Insurance and] commissioner adopted under this Act. The health
47-4 maintenance organization shall certify to the commissioner [State
47-5 Board of Insurance] that it has provided the written manual
47-6 required by this subsection to its prospective agents and has
47-7 provided, under the supervision of a licensed health maintenance
47-8 organization agent, a minimum of four hours of training in its
47-9 single health care service, this Act, and the rules of the [State
47-10 Board of Insurance and the] commissioner adopted under this Act.
47-11 (k) [(n)] Any regular salaried officer or employee of a
47-12 health maintenance organization offering only a single health care
47-13 service plan who solicits applications on behalf of that health
47-14 maintenance organization must be licensed as a health maintenance
47-15 organization agent under this section and must take any examination
47-16 and pay any fee provided by Subsection [Subsections] (b) [and (j)]
47-17 of Section 15 of this Act.
47-18 (l) [(o)] The commissioner shall collect in advance from
47-19 agents requesting duplicate licenses a fee not to exceed $20. The
47-20 commissioner [State Board of Insurance] shall determine the amount
47-21 of the fee.
47-22 SECTION 13. Section 17, Texas Health Maintenance
47-23 Organization Act (Article 20A.17, Vernon's Texas Insurance Code),
47-24 is amended to read as follows:
47-25 Sec. 17. EXAMINATIONS. (a) The commissioner may make an
48-1 examination concerning the quality of health care services and of
48-2 the affairs of any applicant for a certificate of authority or any
48-3 health maintenance organization as often as the commissioner deems
48-4 [it is deemed] necessary, but not less frequently than once every
48-5 three years.
48-6 (b) [The board may make an examination concerning the
48-7 quality of health care services of any health maintenance
48-8 organization as often as it deems it necessary, but not less
48-9 frequently than once every three years.]
48-10 [(c)] (1) Every health maintenance organization shall make
48-11 its books and records relating to its operation available for such
48-12 examinations and in every way facilitate the examinations. Every
48-13 physician and provider with whom a health maintenance organization
48-14 has a contract, agreement, or other arrangement need only make
48-15 available for examination that portion of its books and records
48-16 relevant to its relationship with the health maintenance
48-17 organization.
48-18 (2) Medical, hospital, and health records of enrollees
48-19 and records of physicians and providers providing service under
48-20 independent contract with a health maintenance organization shall
48-21 only be subject to such examination as is necessary for an ongoing
48-22 quality of health assurance program concerning health care
48-23 procedures and outcome in accordance with an approved plan as
48-24 provided for in this Act. Said plan shall provide for adequate
48-25 protection of confidentiality of medical information and shall only
49-1 be disclosed in accordance with applicable law and this Act and
49-2 shall only be subject to subpoena upon a showing of good cause.
49-3 (3) For the purpose of examinations, the commissioner
49-4 [and board] may administer oaths to and examine the officers and
49-5 agents of the health maintenance organization and the principals of
49-6 such physicians and providers concerning their business.
49-7 (c) [(d)] Articles 1.04A, 1.15, 1.16, and 1.19, as amended,
49-8 of the Insurance Code shall be construed to apply to health
49-9 maintenance organizations, except to the extent that the
49-10 commissioner determines that the nature of the examination of a
49-11 health maintenance organization renders such clearly inappropriate.
49-12 (d) [(e)] Articles 1.12, 1.24, and 1.30, and Section 7 of
49-13 Article 1.10, Insurance Code, apply to health maintenance
49-14 organizations.
49-15 SECTION 14. Subsections (d) and (f), Section 18, Texas
49-16 Health Maintenance Organization Act (Article 20A.18, Vernon's Texas
49-17 Insurance Code), are amended to read as follows:
49-18 (d) Except as otherwise provided by this subsection, the
49-19 bond required under Subsection (c) of this section must be issued
49-20 by an insurance company that holds a certificate of authority in
49-21 this state. If, after notice and hearing, the commissioner [State
49-22 Board of Insurance] determines that the fidelity bond required by
49-23 this section is not available from an insurance company that holds
49-24 a certificate of authority in this state, a fidelity bond procured
49-25 by a licensed Texas surplus lines agent resident in this state in
50-1 compliance with Article 1.14-2, Insurance Code, satisfies the
50-2 requirements of this section.
50-3 (f) Instead of a bond, the management contractor may deposit
50-4 with the comptroller [State Treasurer] cash or securities
50-5 acceptable to the commissioner [State Board of Insurance]. Such a
50-6 deposit must be maintained in the amount and subject to the same
50-7 conditions as required for a bond under this section.
50-8 SECTION 15. The Texas Health Maintenance Organization Act
50-9 (Article 20A.01 et seq., Vernon's Texas Insurance Code), is amended
50-10 by adding Section 18A to read as follows:
50-11 Sec. 18A. PHYSICIAN AND PROVIDER CONTRACTS. (a) A health
50-12 maintenance organization shall, on request, make available and
50-13 disclose to physicians and providers written application procedures
50-14 and qualification requirements for contracting with the health
50-15 maintenance organization. Each physician and provider who
50-16 initially applies to contract with a health maintenance
50-17 organization for the provision of health care services on behalf
50-18 of the health maintenance organization and who is denied a
50-19 contract with the health maintenance organization must be provided
50-20 written notice of the reasons the initial application was denied.
50-21 Unless otherwise limited by Article 21.52B, Insurance Code, this
50-22 subsection does not prohibit a health maintenance organization plan
50-23 from rejecting an application from a physician or provider based on
50-24 the determination that the plan has sufficient qualified physicians
50-25 or providers.
51-1 (b) Before terminating a contract with a physician or
51-2 provider, the health maintenance organization shall provide a
51-3 written explanation to the physician or provider of the reasons for
51-4 termination. On request and before the effective date of the
51-5 termination, a physician or provider shall be entitled to a review
51-6 of the health maintenance organization's proposed termination by an
51-7 advisory review panel, except in cases in which there is imminent
51-8 harm to patient health or an action by a state medical or dental or
51-9 other medical or dental licensing board, or other licensing board
51-10 or other government agency, that effectively impairs the
51-11 physician's or provider's ability to practice medicine, dentistry,
51-12 or other profession, or in cases of fraud or malfeasance. The
51-13 advisory review panel shall be composed of physicians and
51-14 providers, including at least one representative in the physician's
51-15 or provider's specialty or a similar specialty, if available,
51-16 appointed to serve on the standing quality assurance committee or
51-17 utilization review committee of the health maintenance
51-18 organization. The decision of the advisory review panel must be
51-19 considered but is not binding on the health maintenance
51-20 organization. The health maintenance organization shall provide to
51-21 the affected physician or provider, on request, a copy of the
51-22 recommendation of the advisory review panel and the health
51-23 maintenance organization's determination.
51-24 (c) Each contract between a health maintenance organization
51-25 and a physician or provider of health care services must provide
52-1 that reasonable advance notice be given to an enrollee of the
52-2 impending termination from the plan of a physician or provider who
52-3 is currently treating the enrollee. Each contract must also
52-4 provide that the termination of the physician or provider contract,
52-5 except for reason of medical competence or professional behavior,
52-6 does not release the health maintenance organization from the
52-7 obligation to reimburse the physician or provider who is treating
52-8 an enrollee of special circumstance, such as a person who has a
52-9 disability, acute condition, or life-threatening illness or is past
52-10 the twenty-fourth week of pregnancy, at no less than the contract
52-11 rate for that enrollee's care in exchange for continuity of ongoing
52-12 treatment of an enrollee then receiving medically necessary
52-13 treatment in accordance with the dictates of medical prudence. For
52-14 purposes of this subsection, "special circumstance" means a
52-15 condition such that the treating physician or provider reasonably
52-16 believes that discontinuing care by the treating physician or
52-17 provider could cause harm to the patient. The special circumstance
52-18 shall be identified by the treating physician or provider, who must
52-19 request that the enrollee be permitted to continue treatment under
52-20 the physician's or provider's care and agree not to seek payment
52-21 from the patient of any amounts for which the enrollee would not be
52-22 responsible if the physician or provider were still on the health
52-23 maintenance organization network. Contracts between a health
52-24 maintenance organization and physicians or providers shall provide
52-25 procedures for resolving disputes regarding the necessity for
53-1 continued treatment by a physician or provider. This section does
53-2 not extend the obligation of the health maintenance organization to
53-3 reimburse the terminated physician or provider for ongoing
53-4 treatment of an enrollee beyond the 90th day after the effective
53-5 date of the termination.
53-6 (d) A physician or provider who is terminated or deselected
53-7 shall be entitled to an expedited review process by the health
53-8 maintenance organization on request by the physician or provider.
53-9 If the physician or provider is deselected for reasons other than
53-10 at the physician's or provider's request, the health maintenance
53-11 organization may not notify patients of the physician's or
53-12 provider's deselection until the effective date of the termination
53-13 or the time a review panel makes a formal recommendation, whichever
53-14 is later. If a physician or provider is deselected for reasons
53-15 related to imminent harm, the health maintenance organization may
53-16 notify patients immediately.
53-17 (e) The following applies to any health maintenance
53-18 organization that to any extent uses capitation as a method of
53-19 compensation:
53-20 (1) The health maintenance organization shall begin
53-21 payment of capitated amounts to the enrollee's primary care
53-22 physician or primary care provider, calculated from the date of
53-23 enrollment, no later than the 90th day following the date an
53-24 enrollee has selected or has been assigned a primary care physician
53-25 or primary care provider. If selection or assignment does not
54-1 occur at the time of enrollment, capitation which would otherwise
54-2 have been paid to a selected primary care physician or primary care
54-3 provider had a selection been made shall be reserved as a
54-4 capitation payable until such time as an enrollee makes a selection
54-5 or the plan assigns a primary care physician or primary care
54-6 provider.
54-7 (2) If an enrollee does not select a primary care
54-8 physician or primary care provider at the time of application or
54-9 enrollment, a health maintenance organization may assign an
54-10 enrollee to a primary care physician or primary care provider. If
54-11 a health maintenance organization elects to assign an enrollee to a
54-12 primary care physician or primary care provider, the assignment
54-13 shall be made to a primary care physician or primary care provider
54-14 located within the zip code nearest the enrollee's residence or
54-15 place of employment and, to the extent practicable given the zip
54-16 code limitation, shall be done in a manner that results in a fair
54-17 and equal distribution of enrollees among the plan's primary care
54-18 physicians or primary care providers. An enrollee shall have the
54-19 right at any time to reject the physician or provider assigned and
54-20 to select another physician or provider from the list of primary
54-21 care physicians or primary care providers for the health
54-22 maintenance organization network. An election by an enrollee to
54-23 reject an assigned physician or provider shall not be counted as a
54-24 change in providers for purposes of the limitation described in
54-25 Section 11(a) of this Act.
55-1 (3) A health maintenance organization shall notify a
55-2 physician or provider of the selection of the physician or provider
55-3 as a primary care physician or primary care provider by an enrollee
55-4 within five working days of the selection or assignment of an
55-5 enrollee to that physician or provider by the health maintenance
55-6 organization.
55-7 (4) As an alternative to the provisions of
55-8 Subdivisions (1), (2), and (3) of this subsection, a health
55-9 maintenance organization may seek approval from the Texas
55-10 Department of Insurance of a different capitation payment scheme
55-11 that assures:
55-12 (A) immediate availability and accessibility of
55-13 a primary care physician or primary care provider; and
55-14 (B) payment to the primary care physician or
55-15 primary care provider of a capitation amount certified by a
55-16 qualified actuary to be actuarially sufficient to compensate the
55-17 primary care physician or primary care provider for the risk being
55-18 assumed.
55-19 (f) A contract between a health maintenance organization and
55-20 a physician or provider may not contain any clause purporting to
55-21 indemnify the health maintenance organization for any tort
55-22 liability resulting from acts or omissions of the health
55-23 maintenance organization.
55-24 (g) All contracts or other agreements between a health
55-25 maintenance organization and a physician or provider shall specify
56-1 that the provider will hold an enrollee harmless for payment of the
56-2 cost of covered health care services in the event the health
56-3 maintenance organization fails to pay the provider for health care
56-4 services.
56-5 (h) A health maintenance organization that conducts or uses
56-6 economic profiling of physicians or providers within the health
56-7 maintenance organization shall make available to a network
56-8 physician or provider on request the economic profile of that
56-9 physician or provider, including the standards by which the
56-10 physician or provider is measured. The use of an economic profile
56-11 must recognize the characteristics of a physician's or provider's
56-12 practice that may account for variations from expected costs.
56-13 (i)(1) A contract between a health maintenance organization
56-14 and a physician or provider may not, directly or indirectly,
56-15 prohibit or attempt to prohibit:
56-16 (A) the physician or provider with whom the
56-17 health maintenance organization has contracted or proposes to
56-18 contract from contracting with other health maintenance
56-19 organizations, insurers, or other health care benefit plans; or
56-20 (B) the health maintenance organization with
56-21 which the physician or provider has contracted or proposes to
56-22 contract from contracting with other physicians or providers.
56-23 (2) This section shall not apply to contracts between
56-24 physicians or providers and a group model health maintenance
56-25 organization as defined in Section 6A of this Act.
57-1 SECTION 16. Section 19, Texas Health Maintenance
57-2 Organization Act (Article 20A.19, Vernon's Texas Insurance Code),
57-3 is amended to read as follows:
57-4 Sec. 19. HAZARDOUS FINANCIAL CONDITION. (a) Whenever the
57-5 financial condition of any health maintenance organization
57-6 indicates a condition such that the continued operation of the
57-7 health maintenance organization might be hazardous to its
57-8 enrollees, creditors, or the general public, then the commissioner
57-9 [of insurance] may, after notice and opportunity for hearing, order
57-10 the health maintenance organization to take such action as may be
57-11 reasonably necessary to rectify the existing condition, including
57-12 but not necessarily limited to one or more of the following steps:
57-13 (1) to reduce the total amount of present and
57-14 potential liability for benefits by reinsurance;
57-15 (2) to reduce the volume of new business being
57-16 accepted;
57-17 (3) to reduce expenses by specified methods;
57-18 (4) to suspend or limit the writing of new business
57-19 for a period of time;
57-20 (5) to increase the health maintenance organization's
57-21 capital and surplus by contribution; or
57-22 (6) to suspend or revoke the certificate of authority.
57-23 (b) The commissioner [State Board of Insurance] is
57-24 authorized, by rules and regulations, to fix uniform standards and
57-25 criteria for early warning that the continued operation of any
58-1 health maintenance organization might be hazardous to its
58-2 enrollees, creditors, or the general public, and to fix standards
58-3 for evaluating the financial condition of any health maintenance
58-4 organization, which standards shall be consistent with the purposes
58-5 expressed in Subsection (a) of this section.
58-6 SECTION 17. Subsection (a), Section 20, Texas Health
58-7 Maintenance Organization Act (Article 20A.20, Vernon's Texas
58-8 Insurance Code), is amended to read as follows:
58-9 (a) The commissioner may after notice and opportunity for
58-10 hearing (i) suspend or revoke any certificate of authority issued
58-11 to a health maintenance organization under this Act; (ii) impose
58-12 sanctions under Section 7, Article 1.10, Insurance Code;
58-13 (iii) impose administrative penalties under Article 1.10E,
58-14 Insurance Code; or (iv) issue a cease and desist order under
58-15 Article 1.10A, Insurance Code, if the commissioner finds that any
58-16 of the following conditions exist:
58-17 (1) The health maintenance organization is operating
58-18 significantly in contravention of its basic organizational
58-19 documents, or its health care plan, or in a manner contrary to that
58-20 described in and reasonably inferred from any other information
58-21 submitted under Section 4 of this Act.
58-22 (2) The health maintenance organization issues
58-23 evidence of coverage or uses a schedule of charges for health care
58-24 services which does not comply with the requirements of Section 9
58-25 of this Act.
59-1 (3) The health care plan does not provide or arrange
59-2 for basic health care services or the single health care service
59-3 plan does not provide or arrange for a single health care service.
59-4 (4) The [board certifies to the commissioner that:]
59-5 [(A) the] health maintenance organization does not
59-6 meet the requirements of Section 5(a)(1) [5(a)(2)] of this Act.[;
59-7 or]
59-8 (5) The [(B) the] health maintenance organization is
59-9 unable to fulfill its obligation to furnish health care services as
59-10 required under its health care plan or to furnish a single health
59-11 care service as required under its single health care service plan.
59-12 (6) [(5)] The health maintenance organization is no
59-13 longer financially responsible and may be reasonably expected to be
59-14 unable to meet its obligations to enrollees or prospective
59-15 enrollees.
59-16 (7) [(6)] The health maintenance organization has
59-17 failed to implement the complaint system required by Section 12 of
59-18 this Act in a manner to resolve reasonably valid complaints.
59-19 (8) [(7)] The health maintenance organization, or any
59-20 person on its behalf, has advertised or merchandised its services
59-21 in an untrue, misrepresentative, misleading, deceptive, or unfair
59-22 manner.
59-23 (9) [(8)] The continued operation of the health
59-24 maintenance organization would be hazardous to its enrollees.
59-25 (10) [(9)] The health maintenance organization has
60-1 otherwise failed to comply substantially with this Act, and any
60-2 rule and regulation thereunder.
60-3 (11) The health maintenance organization has failed to
60-4 carry out corrective action the commissioner considers necessary to
60-5 correct a failure to comply with this Act, any applicable provision
60-6 of the Insurance Code, or any applicable rule or order of the
60-7 commissioner within 30 days after the date of notice of a
60-8 deficiency or within any longer period of time that the
60-9 commissioner determines to be reasonable and specifies in the
60-10 notice.
60-11 SECTION 18. Section 22, Texas Health Maintenance
60-12 Organization Act (Article 20A.22, Vernon's Texas Insurance Code),
60-13 is amended to read as follows:
60-14 Sec. 22. RULES AND REGULATIONS. (a) The commissioner
60-15 [State Board of Insurance] may promulgate such reasonable rules and
60-16 regulations as are necessary and proper to carry out the provisions
60-17 of this Act.
60-18 (b) The commissioner [State Board of Insurance] is
60-19 specifically authorized to promulgate rules to prescribe
60-20 [prescribing] authorized investments for health maintenance
60-21 organizations for all investments for which provision is not
60-22 otherwise made in this Act; to ensure that enrollees have adequate
60-23 access to health care services; and to establish minimum
60-24 physician/patient ratios, mileage requirements for primary and
60-25 specialty care, maximum travel time, and maximum waiting times for
61-1 obtaining appointments. The rulemaking authority provided by this
61-2 subsection does not limit in any manner the rulemaking authority
61-3 granted to the commissioner [State Board of Insurance] under
61-4 Subsection (a) of this section.
61-5 (c) The commissioner may promulgate such reasonable rules
61-6 and regulations as are necessary and proper to meet the
61-7 requirements of federal law and regulations.
61-8 SECTION 19. Section 23, Texas Health Maintenance
61-9 Organization Act (Article 20A.23, Vernon's Texas Insurance Code),
61-10 is amended to read as follows:
61-11 Sec. 23. APPEALS. (a) Any person who is affected by any
61-12 rule, ruling, or decision of the Texas Department of Insurance or
61-13 the commissioner [or board] shall have the right to have such rule,
61-14 ruling, or decision reviewed by the commissioner [State Board of
61-15 Insurance] by making an application to the commissioner [State
61-16 Board of Insurance]. Such application shall state the identities
61-17 of the person, the rule, ruling, or decision complained of, the
61-18 interest of the person in such rule, ruling, or decision, the
61-19 grounds of such objection, the action sought of the commissioner
61-20 [State Board of Insurance], and the reasons and grounds for such
61-21 action by the commissioner [State Board of Insurance]. The
61-22 original shall be filed with the chief clerk of the Texas
61-23 Department [State Board] of Insurance together with a certification
61-24 that a true and correct copy of such application has been filed
61-25 with the commissioner. Within 30 days after the application is
62-1 filed, and after 10 days' written notice to all parties of record,
62-2 the commissioner [State Board of Insurance] shall review the action
62-3 complained of in a public hearing and render its decision at the
62-4 earliest possible date thereafter. The commissioner [State Board
62-5 of Insurance] shall make such other rules and regulations with
62-6 respect to such applications and their consideration as it
62-7 considers to be advisable, not inconsistent with this Act. Said
62-8 application shall have precedence over all other business of a
62-9 different nature pending before said commissioner [State Board of
62-10 Insurance].
62-11 (b) In the public hearing, any and all evidence and matters
62-12 pertinent to the appeal may be submitted to the commissioner [State
62-13 Board of Insurance] whether included in the application or not.
62-14 (c) If any person who is affected by any rule, ruling, or
62-15 decision of the commissioner [State Board of Insurance] be
62-16 dissatisfied with any rule, ruling, or decision adopted by the
62-17 commissioner, [board, or State Board of Insurance,] that person,
62-18 after failing to get relief from the commissioner [State Board of
62-19 Insurance], may file a petition seeking review of the rule, ruling,
62-20 or decision and setting forth the particular objection to such
62-21 rule, ruling, or decision, or either or all of them, in a district
62-22 court of Travis County, Texas, and not elsewhere, against the
62-23 commissioner [State Board of Insurance] as defendant. The action
62-24 shall have precedence over all other causes on the docket of a
62-25 different nature. The proceedings on appeal shall be tried and
63-1 determined as provided by Article 1.04, Insurance Code. Either
63-2 party to the action may appeal to the apellate court having
63-3 jurisdiction of the cause and the appeal shall at once be
63-4 returnable to the apellate court having jurisdiction of the cause
63-5 and the action so appealed shall have precedence in the appellate
63-6 court over all causes of a different character therein pending.
63-7 The commissioner [State Board of Insurance] is not required to give
63-8 any appeal bond in any cause arising hereunder.
63-9 SECTION 20. Subdivision (4), Subsection (f), Section 26,
63-10 Texas Health Maintenance Organization Act (Article 20A.26, Vernon's
63-11 Texas Insurance Code), is amended to read as follows:
63-12 (4) Except for Articles 21.07-6 and 21.58A, Insurance
63-13 Code, the insurance laws, including the group hospital service
63-14 corporation law, do not apply to physicians and providers; however,
63-15 [provided that Article 21.58A shall not apply to utilization review
63-16 undertaken by] a physician or provider who conducts utilization
63-17 review during [in] the ordinary course of treatment of patients [by
63-18 a physician or provider] pursuant to a joint or delegated review
63-19 agreement or agreements with a health maintenance organization on
63-20 services rendered by the physician or provider shall not be
63-21 required to obtain certification under Section 3, Article 21.58A,
63-22 Insurance Code.
63-23 SECTION 21. Section 28, Texas Health Maintenance
63-24 Organization Act (Article 20A.28, Vernon's Texas Insurance Code),
63-25 is amended to read as follows:
64-1 Sec. 28. AUTHORITY TO CONTRACT. The commissioner [or
64-2 board], in carrying out the commissioner's [their] obligations
64-3 under this Act, may contract with other state agencies or[, after
64-4 notice and hearing,] with other qualified persons to make
64-5 recommendations concerning the determinations to be made by the
64-6 commissioner [or board].
64-7 SECTION 22. Section 32, Texas Health Maintenance
64-8 Organization Act (Article 20A.32, Vernon's Texas Insurance Code),
64-9 is amended to read as follows:
64-10 Sec. 32. FEES. (a)(1) Every organization subject to this
64-11 chapter shall pay to the commissioner the following fees:
64-12 (A) for filing and review of its original
64-13 application for a certificate of authority, a fee in an amount not
64-14 to exceed $18,000 [$15,000] as determined by the commissioner
64-15 [State Board of Insurance];
64-16 (B) for filing each annual report pursuant to
64-17 Section 10 of this Act, a fee in an amount not to exceed $500 as
64-18 determined by the commissioner [State Board of Insurance];
64-19 (C) the expenses of all examinations of health
64-20 maintenance organizations made on behalf of the State of Texas by
64-21 the commissioner [State Board of Insurance] or under the
64-22 commissioner's [its] authority in such amounts as the commissioner
64-23 shall certify to be just and reasonable;
64-24 (D) the expenses of an examination under Section
64-25 17(a) of this Act incurred by the commissioner or under the
65-1 commissioner's authority, provided that:
65-2 (i) examination expenses are the expenses
65-3 attributable directly to a specific examination including the
65-4 actual salaries and expenses of the examiners directly attributable
65-5 to that examination as determined under rules adopted by the
65-6 commissioner; and
65-7 (ii) the expenses shall be assessed by the
65-8 commissioner and paid in accordance with rules adopted by the
65-9 commissioner;
65-10 (E) the licensing, appointment, and examination
65-11 fees pursuant to Section 15 of this[, Texas Health Maintenance
65-12 Organization] Act [(Article 20A.15, Vernon's Texas Insurance
65-13 Code)];
65-14 (F) [(E)] for filing an evidence of coverage
65-15 which requires approval, a fee not to exceed $200 as determined by
65-16 the commissioner [State Board of Insurance]; and
65-17 (G) [(F)] for filings required by rule but which
65-18 do not require approval, a fee not to exceed $100 as determined by
65-19 the commissioner [State Board of Insurance].
65-20 (2) The commissioner [State Board of Insurance] shall,
65-21 within the limits fixed by this subsection, prescribe the fees to
65-22 be charged under this subsection.
65-23 (3) Fees collected under this subsection must be
65-24 deposited in the State Treasury to the credit of the Texas
65-25 Department [State Board] of Insurance operating fund.
66-1 (4) Notwithstanding Subdivision (1) of this
66-2 subsection, the comptroller shall collect the annual report filing
66-3 fee prescribed by Subdivision (1)(B) of this subsection.
66-4 (b) Except as provided by Subsection (c) of this section,
66-5 the amount paid by a health maintenance organization in each
66-6 taxable year under Subdivision (1)(D) of Subsection (a) of this
66-7 section shall be allowed as a credit on the amount of premium taxes
66-8 to be paid by the health maintenance organization for that taxable
66-9 year.
66-10 (c)[(1) Every organization subject to this chapter shall pay
66-11 to the board the following fees:]
66-12 [(A) for review of its original application for
66-13 a certificate of authority, a fee in an amount not to exceed $3,000
66-14 as determined by the board and paid pursuant to rules adopted by
66-15 the board; and]
66-16 [(B) the expenses of an examination under
66-17 Section 17(b) of this Act incurred by the board or under its
66-18 authority.]
66-19 [(2) Examination expenses are the expenses
66-20 attributable directly to a specific examination including the
66-21 actual salaries and expenses of the examiners plus the cost of
66-22 administrative departmental expenses directly attributable to that
66-23 examination as determined under rules adopted by the board. The
66-24 expenses shall be assessed by the board and paid in accordance with
66-25 rules adopted by the board.]
67-1 [(3) Except as provided by Subdivision (4) of this
67-2 subsection, the amount paid by a health maintenance organization in
67-3 each taxable year under Subdivision (1)(B) of this subsection shall
67-4 be allowed as a credit on the amount of premium taxes to be paid by
67-5 the health maintenance organization for that taxable year.]
67-6 [(4)] The amount directly attributable to an
67-7 examination of the books, records, accounts, or principal offices
67-8 of a health maintenance organization located outside this state may
67-9 not be allowed as a credit against the amount of premium taxes to
67-10 be paid by the health maintenance organization.
67-11 [(5) The funds received by the board shall be
67-12 deposited in the state treasury to the credit of the Texas
67-13 Department of Health health maintenance organization fund, and
67-14 those funds shall be appropriated to the Texas Department of Health
67-15 to carry out the statutory duties of the board under this chapter.]
67-16 SECTION 23. Subsections (a), (b), (c), (e), and (g), Section
67-17 36, Texas Health Maintenance Organization Act (Article 20A.36,
67-18 Vernon's Texas Insurance Code), are amended to read as follows:
67-19 (a) The Health Maintenance Organization Solvency
67-20 Surveillance Committee is created under the direction of the
67-21 commissioner. The committee shall perform its functions under a
67-22 plan of operation approved by the commissioner [State Board of
67-23 Insurance]. The committee is composed of nine members appointed by
67-24 the commissioner [of insurance]. No two members may be employees
67-25 or officers of the same health maintenance organization or holding
68-1 company system. The qualifications for membership, terms of
68-2 office, and reimbursement of expenses shall be as provided by the
68-3 plan of operation approved by the commissioner [State Board of
68-4 Insurance]. A "member" is a Texas licensed health maintenance
68-5 organization as defined in Section 2(n) [2(j)] of this Act or a
68-6 public representative. The commissioner of insurance shall appoint
68-7 the member along with the officer or employee of the member who
68-8 shall serve on the committee if the member is a representative of a
68-9 Texas licensed health maintenance organization or its holding
68-10 company system. Five of the members shall represent health
68-11 maintenance organizations or their holding company system. Of the
68-12 health maintenance organization members, one shall be a single
68-13 health care service plan as defined in Section 2(w) [2(s)] of this
68-14 Act. The remaining health maintenance organization members shall
68-15 be selected by the commissioner [of insurance] with due
68-16 consideration of factors deemed appropriate including, but not
68-17 limited to, the varying categories of premium income and
68-18 geographical location.
68-19 A public representative may not be:
68-20 (1) an officer, director, or employee of a health
68-21 maintenance organization, a health maintenance organization agent,
68-22 or any other business entity regulated by the commissioner [State
68-23 Board of Insurance];
68-24 (2) a person required to register with the Texas
68-25 Ethics Commission [secretary of state] under Chapter 305,
69-1 Government Code; or
69-2 (3) related to a person described by Subdivision (1)
69-3 or (2) of this subsection within the second degree of affinity or
69-4 consanguinity.
69-5 (b)(1) The committee shall assist and advise the
69-6 commissioner relating to the detection and prevention of insolvency
69-7 problems regarding health maintenance organizations. The committee
69-8 shall also assist and advise the commissioner regarding any health
69-9 maintenance organization placed in rehabilitation, liquidation,
69-10 supervision, or conservation. The method of providing this
69-11 assistance and advice shall be as contained in the plan of
69-12 operation approved by the commissioner [State Board of Insurance].
69-13 (2) Reports regarding the financial condition of Texas
69-14 licensed health maintenance organizations and regarding the
69-15 financial condition, administration, and status of health
69-16 maintenance organizations in rehabilitation, liquidation,
69-17 supervision, or conservation shall be provided to the committee
69-18 members at meetings. Committee members shall not reveal the
69-19 condition of nor any information secured in the course of any
69-20 meeting of the Solvency Surveillance Committee with regard to any
69-21 corporation, form or person examined by the committee. Committee
69-22 proceedings shall be filed with the commissioner [and reported to
69-23 the members of the State Board of Insurance].
69-24 (c) To provide funds for the administrative expenses of the
69-25 commissioner [State Board of Insurance] regarding rehabilitation,
70-1 liquidation, supervision, or conservation of an impaired health
70-2 maintenance organization in this state, the committee, at the
70-3 commissioner's direction, shall assess each health maintenance
70-4 organization licensed in this state in the proportion that the
70-5 gross premiums of that health maintenance organization written in
70-6 this state during the preceding calendar year bear to the aggregate
70-7 gross premiums written in this state by all health maintenance
70-8 organizations, as furnished to the committee by the commissioner
70-9 after review of annual statements and other reports the
70-10 commissioner considers necessary. Assessments to supplement or pay
70-11 for administrative expenses of rehabilitation, liquidation,
70-12 supervision, or conservation may be made only after the
70-13 commissioner determines that adequate assets of the health
70-14 maintenance organization are not immediately available for those
70-15 purposes or that use of those assets could be detrimental to
70-16 rehabilitation, liquidation, supervision, or conservation. The
70-17 commissioner may abate or defer the assessments, either in whole or
70-18 in part, if, in the opinion of the commissioner, payment of the
70-19 assessment would endanger the ability of a health maintenance
70-20 organization to fulfill its contractual obligations. If an
70-21 assessment is abated or deferred, either in whole or in part, the
70-22 amount by which the assessment is abated or deferred may be
70-23 assessed against the remaining licensed health maintenance
70-24 organizations in a manner consistent with the basis for assessments
70-25 provided by the plan of operation approved by the commissioner
71-1 [State Board of Insurance]. The total of all assessments on a
71-2 health maintenance organization may not exceed one-quarter of one
71-3 percent of the health maintenance organization's gross premiums in
71-4 any one calendar year.
71-5 (e) Not later than the 180th day after the date on which the
71-6 final member of the committee is appointed, the committee shall
71-7 submit to the commissioner [State Board of Insurance] a plan of
71-8 operation. The plan of operation takes effect on approval in
71-9 writing by the commissioner [State Board of Insurance]. If the
71-10 committee fails to submit a suitable plan of operation within the
71-11 period set by this subsection, or if, after the adoption of a plan,
71-12 the committee fails to submit suitable amendments to the plan, the
71-13 commissioner [State Board of Insurance] may, after notice and
71-14 hearing, adopt rules as necessary to implement this Act. Those
71-15 rules continue in effect until modified by the commissioner [State
71-16 Board of Insurance] or superseded by a plan submitted by the
71-17 committee and approved by the commissioner [State Board of
71-18 Insurance].
71-19 (g) A licensed health maintenance organization or its agents
71-20 or employees, the committee or its agents, employees, or members,
71-21 or the [State Board of Insurance, the] commissioner[,] or the
71-22 commissioner's [their] representatives are not liable in a civil
71-23 action for any act taken or not taken in good faith in the
71-24 performance of powers and duties under this section.
71-25 SECTION 24. The Texas Health Maintenance Organization Act
72-1 (Article 20A.01 et seq., Vernon's Texas Insurance Code), is amended
72-2 by adding Section 37 to read as follows:
72-3 Sec. 37. HEALTH MAINTENANCE ORGANIZATION QUALITY ASSURANCE.
72-4 (a) A health maintenance organization shall establish procedures
72-5 to assure that the health care services provided to enrollees shall
72-6 be rendered under reasonable standards of quality of care
72-7 consistent with prevailing professionally recognized standards of
72-8 medical practice. Such procedures shall include mechanisms to
72-9 assure availability, accessibility, quality, and continuity of
72-10 care.
72-11 (b) A health maintenance organization shall have an ongoing
72-12 internal quality assurance program to monitor and evaluate its
72-13 health care services, including primary and specialist physician
72-14 services, and ancillary and preventive health care services, in all
72-15 institutional and noninstitutional contexts. The commissioner by
72-16 rule may establish minimum standards and requirements for ongoing
72-17 internal quality assurance programs for health maintenance
72-18 organizations, including but not limited to standards for assuring
72-19 availability, accessibility, quality, and continuity of care.
72-20 (c) A health maintenance organization shall record formal
72-21 proceedings of quality assurance program activities and maintain
72-22 documentation in a confidential manner. Quality assurance program
72-23 minutes shall be available to the commissioner.
72-24 (d) A health maintenance organization shall establish and
72-25 maintain a physician review panel to assist in reviewing medical
73-1 guidelines or criteria and to assist in determining the
73-2 prescription drugs to be covered by the health maintenance
73-3 organization, if the health maintenance organization offers a
73-4 prescription drug benefit.
73-5 (e) A health maintenance organization shall ensure the use
73-6 and maintenance of an adequate patient record system that will
73-7 facilitate documentation and retrieval of clinical information for
73-8 the purpose of the health maintenance organization's evaluation of
73-9 continuity and coordination of patient care and assessment of the
73-10 quality of health and medical care provided to enrollees.
73-11 (f) Enrollees' clinical records shall be available to the
73-12 commissioner for examination and review to determine compliance.
73-13 Such records shall be confidential and not subject to the open
73-14 records law, Chapter 552, Government Code.
73-15 (g) A health maintenance organization shall establish a
73-16 mechanism for the periodic reporting of quality assurance program
73-17 activities to the governing body, providers, and appropriate
73-18 organization staff.
73-19 SECTION 25. This Act takes effect September 1, 1997.
73-20 SECTION 26. The importance of this legislation and the
73-21 crowded condition of the calendars in both houses create an
73-22 emergency and an imperative public necessity that the
73-23 constitutional rule requiring bills to be read on three several
73-24 days in each house be suspended, and this rule is hereby suspended.