AN ACT
1-1 relating to the establishment of a statewide rural health care
1-2 system.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. The Insurance Code is amended by adding Chapter
1-5 20C to read as follows:
1-6 CHAPTER 20C. STATEWIDE RURAL HEALTH CARE SYSTEM
1-7 Art. 20C.01. SHORT TITLE. This chapter may be cited as the
1-8 Statewide Rural Health Care System Act.
1-9 Art. 20C.02. DEFINITIONS. In this chapter:
1-10 (1) "Board" means the board of directors of the
1-11 system.
1-12 (2) "Enrollee" means an individual entitled to receive
1-13 health care services through a health care plan arranged for or
1-14 provided by the system.
1-15 (3) "Health care services" has the meaning assigned
1-16 by Section 2, Texas Health Maintenance Organization Act (Article
1-17 20A.02, Vernon's Texas Insurance Code).
1-18 (4) "Hospital provider" means a county hospital,
1-19 county hospital authority, hospital district, municipal hospital,
1-20 or municipal hospital authority.
1-21 (5) "Local health care provider" means:
1-22 (A) a person licensed, registered, or certified
1-23 as a health care practitioner in this state who resides in or
2-1 practices in a rural area in which the person provides health care
2-2 services; or
2-3 (B) a general or specialty hospital that is not
2-4 a hospital provider under this chapter.
2-5 (6) "Participating provider" means a hospital provider
2-6 that participates in the system.
2-7 (7) "Person" means an individual, professional
2-8 association, professional corporation, partnership, limited
2-9 liability corporation, limited liability partnership, or nonprofit
2-10 corporation, including a nonprofit corporation created under
2-11 Section 5.01(a), Medical Practice Act (Article 4495b, Vernon's
2-12 Texas Civil Statutes).
2-13 (8) "Rural area" means:
2-14 (A) a county with a population of 50,000 or
2-15 less;
2-16 (B) an area that is not delineated as an
2-17 urbanized area by the federal census bureau; or
2-18 (C) any other area designated as rural by rules
2-19 adopted by the commissioner.
2-20 (9) "System" means the statewide rural health care
2-21 system established by this chapter.
2-22 (10) "Territorial jurisdiction" means the geographical
2-23 area in which a participating provider is obligated by law to
2-24 provide health care services.
2-25 Art. 20C.03. ESTABLISHMENT OF SYSTEM. The statewide rural
3-1 health care system is established to arrange for or provide health
3-2 care services on a prepaid basis to enrollees who reside in rural
3-3 areas.
3-4 Art. 20C.04. DESIGNATION AS SYSTEM; QUALIFICATIONS.
3-5 (a) The commissioner shall designate as the system one
3-6 organization created under Article 20C.05 of this code. Except as
3-7 provided by Subsection (b) of this article, to be eligible for
3-8 designation as the system, the organization must meet each
3-9 requirement imposed by the Texas Health Maintenance Organization
3-10 Act (Chapter 20A, Vernon's Texas Insurance Code), as if the
3-11 organization were a person under the Act.
3-12 (b) The system shall meet all reserve requirements required
3-13 by the commissioner. The system may fulfill the requirements of
3-14 this subsection through the purchase of reinsurance from insurance
3-15 companies approved for that purpose by the commissioner.
3-16 Art. 20C.05. ORGANIZATION OF SYSTEM; APPLICATION OF OTHER
3-17 LAWS. (a) The system must be:
3-18 (1) a corporation organized under the Texas Non-Profit
3-19 Corporation Act (Article 1396-1.01 et seq., Vernon's Texas Civil
3-20 Statutes); and
3-21 (2) composed of a combination of two or more hospital
3-22 providers that are members of the corporation and that are located
3-23 in a rural area.
3-24 (b) The system is:
3-25 (1) a unit of local government that is a governmental
4-1 unit for purposes of Chapter 101, Civil Practice and Remedies Code;
4-2 and
4-3 (2) a local government for purposes of Chapter 102,
4-4 Civil Practice and Remedies Code.
4-5 (c) The system may enter into interlocal cooperation
4-6 contracts under Chapter 791, Government Code, and is a local
4-7 government for purposes of that chapter.
4-8 Art. 20C.06. BOARD. (a) The system is governed by a board
4-9 of directors composed of 18 members. Notwithstanding the Texas
4-10 Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's
4-11 Texas Civil Statutes), the board of directors is selected as
4-12 provided by this chapter.
4-13 (b) The participating providers shall appoint as
4-14 representatives of the participating providers six directors
4-15 selected in the manner provided by Article 20C.10 of this code.
4-16 (c) The governor shall appoint six directors from persons
4-17 residing in the territorial jurisdictions of the participating
4-18 providers, including:
4-19 (1) two persons who represent employers;
4-20 (2) two persons who are local government officials;
4-21 and
4-22 (3) two persons who are consumers of health care
4-23 services.
4-24 (d) In addition to the directors appointed under Subsection
4-25 (c) of this article, the governor shall appoint six directors from
5-1 among licensed physicians who reside and practice in the
5-2 territorial jurisdictions of the participating providers. At least
5-3 three of the physicians appointed under this subsection must
5-4 perform as their professional practice the general practice of
5-5 medicine.
5-6 (e) Directors appointed under Subsection (c) or (d) of this
5-7 article shall be appointed in such a manner as to represent the
5-8 territorial jurisdictions of all participating providers.
5-9 Art. 20C.07. TERMS; VACANCIES. (a) The members of the
5-10 board serve staggered six-year terms, with the terms of six members
5-11 expiring February 1 of each odd-numbered year.
5-12 (b) A member of the board may not serve consecutive terms.
5-13 A person who has served as a member and has left the board at the
5-14 expiration of the person's term is eligible for consideration for
5-15 appointment to the board for a nonconsecutive term.
5-16 (c) A vacancy on the board is filled for the remainder of
5-17 the unexpired term by appointment by the same entity that appointed
5-18 the director vacating the position.
5-19 Art. 20C.08. ADMINISTRATION BY BOARD; COMMITTEES. (a) The
5-20 board shall administer the system and shall adopt policies and
5-21 procedures for the system that are consistent with the purposes of
5-22 this chapter. The board may elect officers as it considers
5-23 appropriate.
5-24 (b) The board may appoint an executive committee as
5-25 determined by the board to be useful in conducting the business of
6-1 the board. The board may delegate to the executive committee any
6-2 responsibility considered reasonable by the board.
6-3 (c) An executive committee appointed under this article must
6-4 be composed of six members, as follows:
6-5 (1) two representatives of the participating
6-6 providers;
6-7 (2) two persons who are community representatives,
6-8 including employers, local government officials, or consumers of
6-9 health care services; and
6-10 (3) two physicians who meet the requirements adopted
6-11 under Article 20C.06(d) of this code.
6-12 (d) On a majority vote, the board may:
6-13 (1) contract for administrative services; or
6-14 (2) hire an executive director, consultants, attorneys
6-15 and other professionals, and other staff as necessary to implement
6-16 the duties of the system.
6-17 (e) If the board hires an executive director for the system,
6-18 the board shall delegate to the executive director the authority to
6-19 hire staff for the system and may delegate to the executive
6-20 director other duties determined to be appropriate by the board.
6-21 (f) The board shall appoint an advisory committee composed
6-22 of:
6-23 (1) hospital administrators who represent nonprofit
6-24 and investor-owned facilities;
6-25 (2) representatives of hospital districts located in
7-1 urban areas;
7-2 (3) representatives of health care teaching
7-3 facilities;
7-4 (4) representatives of health care specialty
7-5 facilities;
7-6 (5) representatives of medical residency programs in
7-7 family practice; and
7-8 (6) representatives of rural health clinics, federally
7-9 qualified health centers, and ambulatory surgical centers.
7-10 (g) In addition to the advisory committee appointed under
7-11 Subsection (f) of this article, the board may appoint other
7-12 advisory committees as determined to be appropriate by the board.
7-13 (h) A member of an advisory committee appointed under this
7-14 article is not entitled to compensation for service on the
7-15 committee.
7-16 Art. 20C.09. MEETINGS; RECORD. (a) The board shall adopt
7-17 rules for the holding of regular and special meetings.
7-18 (b) Meetings of the board are open to the public in
7-19 accordance with Chapter 551, Government Code. This subsection does
7-20 not require the board to conduct an open meeting to deliberate:
7-21 (1) pricing or financial planning information relating
7-22 to a bid or negotiation for arranging or providing services or
7-23 product lines to another person if disclosure of the information
7-24 would give the advantage to competitors;
7-25 (2) information relating to a proposed new service,
8-1 product line, or marketing strategy;
8-2 (3) patient information made confidential under
8-3 Section 5.08, Medical Practice Act (Article 4495b, Vernon's Texas
8-4 Civil Statutes), or Subchapter G, Chapter 241, Health and Safety
8-5 Code; or
8-6 (4) information relating to the credentialing of
8-7 physicians or peer review made confidential under Section 5.06,
8-8 Medical Practice Act (Article 4495b, Vernon's Texas Civil
8-9 Statutes), or Subchapter G, Chapter 241, Health and Safety Code.
8-10 (c) The board shall keep a record of its proceedings in
8-11 accordance with Chapter 551, Government Code.
8-12 Art. 20C.10. LIMITATION ON AUTHORITY OF PARTICIPATING
8-13 PROVIDERS; EFFECT OF SALE OR DISSOLUTION. (a) The powers of the
8-14 participating providers are limited to:
8-15 (1) the election, by a majority vote of the governing
8-16 bodies of the participating providers, of the six members of the
8-17 board of directors of the system to be appointed by the combined
8-18 participating providers under Article 20C.06(b) of this code;
8-19 (2) the authorization by a two-thirds vote of the sale
8-20 of the system or substantially all of the assets of the system; and
8-21 (3) the removal by a two-thirds vote of any member of
8-22 the board who was appointed by the participating providers.
8-23 (b) Except as otherwise provided by law, in the event of the
8-24 sale or dissolution of the system or substantially all of the
8-25 assets of the system, the net revenue shall be redistributed on an
9-1 equal basis to the participating providers after payment of any
9-2 outstanding debts, liabilities, or other obligations incurred by
9-3 the system.
9-4 Art. 20C.11. PROVISION OF ADMINISTRATIVE SERVICES. (a) The
9-5 board may adopt rules regarding the provision of administrative
9-6 services by the system.
9-7 (b) The system may enter into contracts or joint ventures to
9-8 provide administrative services under this chapter.
9-9 (c) The system may enter into intergovernmental and
9-10 interlocal agreements.
9-11 (d) The system may provide technical assistance and
9-12 management services to local health care providers as necessary to
9-13 deliver health care services.
9-14 Art. 20C.12. PROVISION OF HEALTH CARE SERVICES. (a) The
9-15 board may adopt rules to regulate the provision of health care
9-16 services by the system.
9-17 (b) The system shall contract with or otherwise arrange for
9-18 local health care providers to deliver health care services to
9-19 enrollees residing in the rural areas of the territorial
9-20 jurisdiction of the participants. If those local health care
9-21 providers are unable to provide the type and quality of services
9-22 needed by the enrollees, the system may contract with health care
9-23 practitioners who are not local health care providers.
9-24 (c) In contracting with or otherwise arranging for local
9-25 health care providers to deliver health care services to rural
10-1 enrollees, the system may contract only with local health care
10-2 provider networks that are composed of not more than 19 counties.
10-3 Art. 20C.13. GIFTS AND GRANTS. The system may accept gifts
10-4 and grants of money, personal property, and real property to use in
10-5 the provision of the system's programs and services.
10-6 Art. 20C.14. MANDATED PROVIDER; EXCEPTION. (a) To the
10-7 extent consistent with federal law, the state shall award to the
10-8 system at least one of any state managed care contracts awarded to
10-9 provide health care services to beneficiaries of the Texas Medical
10-10 Assistance Program under Chapter 32, Human Resources Code, in the
10-11 rural areas within the territorial jurisdiction of the
10-12 participating providers.
10-13 (b) This article does not apply to a contract that expands
10-14 coverage of the Texas Medical Assistance Program under Chapter 32,
10-15 Human Resources Code, to certain children that is implemented
10-16 during the 1997-1998 state fiscal biennium, except that the system
10-17 shall receive a subcontract from the funding entity to provide
10-18 services to those children if the system elects to receive a
10-19 subcontract not later than November 1, 1997, the system provides
10-20 the state share of matching funds for the entire population covered
10-21 by the subcontract, and the subcontract does not cover an area that
10-22 is included in the statutory territorial jurisdiction of a hospital
10-23 district. If the system elects not to receive a subcontract or to
10-24 provide the state share of matching funds, then any entity that is
10-25 selected by the state Medicaid contracting entity to provide health
11-1 care to those children shall use local health care providers and
11-2 hospital providers in establishing its provider network.
11-3 (c) As a requirement of participation in any state contract,
11-4 the system must satisfactorily address the qualifications for
11-5 arranging to provide health care services to beneficiaries of
11-6 certain governmental health care programs as delineated in the
11-7 contractor's request for proposal, including:
11-8 (1) readiness reviews and adequacy of credentialing,
11-9 medical management, quality assurance, claims payment, information
11-10 management, provider and patient education, and complaint and
11-11 grievance procedures; and
11-12 (2) adequacy of physician and provider networks,
11-13 including such factors as diversity, geographic accessibility,
11-14 inclusion of physicians and other providers that have furnished a
11-15 significant amount of Medicaid or charity care to beneficiaries,
11-16 and tertiary and subspecialty services.
11-17 (d) The system shall be reimbursed by the Medicaid
11-18 contracting agency at the state-defined capitation rate for each
11-19 service area in which the system operates.
11-20 (e) It is not a condition of participation for the system to
11-21 accept from the Medicaid contracting agency a capitation rate which
11-22 is lower than the state-defined capitation rate for each service
11-23 area in which the system operates.
11-24 (f) The state retains the right to cancel a contract awarded
11-25 under this article if the system is sold or dissolved.
12-1 Art. 20C.15. RULES. The commissioner shall adopt rules as
12-2 necessary to implement this chapter.
12-3 SECTION 2. Subsection (l), Section 2, Texas Health
12-4 Maintenance Organization Act (Article 20A.02, Vernon's Texas
12-5 Insurance Code), is amended to read as follows:
12-6 (l) "Person" means any natural or artificial person,
12-7 including, but not limited to, individuals, partnerships,
12-8 associations, organizations, trusts, hospital districts, limited
12-9 liability companies, limited liability partnerships, [or]
12-10 corporations, or the rural community health care system under
12-11 Chapter 20C, Insurance Code.
12-12 SECTION 3. In appointing the initial members of the board of
12-13 directors of the statewide rural health care system established
12-14 under Chapter 20C, Insurance Code, as added by this Act:
12-15 (1) the participating providers shall designate two
12-16 members for terms expiring February 1, 1999, two members for terms
12-17 expiring February 1, 2001, and two members for terms expiring
12-18 February 1, 2003; and
12-19 (2) of the members appointed under Subsection (c) or
12-20 (d), Article 20C.06, Insurance Code, as added by this Act, the
12-21 governor shall designate two for terms expiring February 1, 1999,
12-22 two for terms expiring February 1, 2001, and two for terms expiring
12-23 February 1, 2003.
12-24 SECTION 4. (a) Except as provided by Subsections (b) and
12-25 (c) of this section, this Act takes effect September 1, 1997.
13-1 (b) The Commissioner of Insurance shall adopt rules as
13-2 necessary to implement Chapter 20C, Insurance Code, as added by
13-3 this Act, not later than January 1, 1998.
13-4 (c) The statewide rural health care system established under
13-5 Chapter 20C, Insurance Code, as added by this Act, shall begin
13-6 offering health care services under that chapter not later than
13-7 March 1, 1998, unless the system determines that it is not prepared
13-8 to fulfill its regulatory or contractual obligations by that date.
13-9 SECTION 5. The importance of this legislation and the
13-10 crowded condition of the calendars in both houses create an
13-11 emergency and an imperative public necessity that the
13-12 constitutional rule requiring bills to be read on three several
13-13 days in each house be suspended, and this rule is hereby suspended.
_______________________________ _______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 1246 passed the Senate on
April 28, 1997, by a viva-voce vote; and that the Senate concurred
in House amendments on May 23, 1997, by a viva-voce vote.
_______________________________
Secretary of the Senate
I hereby certify that S.B. No. 1246 passed the House, with
amendments, on May 21, 1997, by a non-record vote.
_______________________________
Chief Clerk of the House
Approved:
_______________________________
Date
_______________________________
Governor