75R14635 PB-D                          

         By Madla                                              S.B. No. 1246

         Substitute the following for S.B. No. 1246:

         By Berlanga                                       C.S.S.B. No. 1246

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to the establishment of a statewide rural health care

 1-3     system.

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

 1-5           SECTION 1.  The Insurance Code is amended by adding Chapter

 1-6     20C to read as follows:

 1-7              CHAPTER 20C.  STATEWIDE RURAL HEALTH CARE SYSTEM

 1-8           Art. 20C.01.  SHORT TITLE.  This chapter may be cited as the

 1-9     Statewide Rural Health Care System Act.

1-10           Art. 20C.02.  DEFINITIONS.  In this chapter:

1-11                 (1)  "Board" means the board of directors of the

1-12     system.

1-13                 (2)  "Enrollee" means an individual entitled to receive

1-14     health care services through a health care plan arranged for or

1-15     provided by the system.

1-16                 (3)  "Health care services"  has the meaning assigned

1-17     by Section 2, Texas Health Maintenance Organization Act (Article

1-18     20A.02, Vernon's Texas Insurance Code).

1-19                 (4)  "Hospital provider" means a county hospital,

1-20     county hospital authority, hospital district, municipal hospital,

1-21     or municipal hospital authority.

1-22                 (5)  "Local health care provider" means:

1-23                       (A)  a person licensed, registered, or certified

1-24     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

2-26     health care system is established to arrange for or provide health

2-27     care services on a prepaid basis to enrollees who reside in rural

 3-1     areas.

 3-2           Art. 20C.04.  DESIGNATION AS SYSTEM; QUALIFICATIONS.

 3-3     (a)  The commissioner shall designate as the system one

 3-4     organization created under Article 20C.05 of this code.  Except as

 3-5     provided by Subsection (b) of this article, to be eligible for

 3-6     designation as the system, the organization must meet each

 3-7     requirement imposed by the Texas Health Maintenance Organization

 3-8     Act (Chapter 20A, Vernon's Texas Insurance Code), as if the

 3-9     organization were a person under the Act.

3-10           (b)  The system shall meet all reserve requirements required

3-11     by the commissioner.  The system may fulfill the requirements of

3-12     this subsection through the purchase of reinsurance from insurance

3-13     companies approved for that purpose by the commissioner.

3-14           Art. 20C.05.  ORGANIZATION OF SYSTEM; APPLICATION OF OTHER

3-15     LAWS.  (a)  The system must be:

3-16                 (1)  a corporation organized under the Texas Non-Profit

3-17     Corporation Act (Article 1396-1.01 et seq., Vernon's Texas Civil

3-18     Statutes); and

3-19                 (2)  composed of a combination of two or more hospital

3-20     providers that are members of the corporation and that are located

3-21     in a rural area.

3-22           (b)  The system is:

3-23                 (1)  a unit of local government that is a governmental

3-24     unit for purposes of Chapter 101, Civil Practice and Remedies Code;

3-25     and

3-26                 (2)  a local government for purposes of Chapter 102,

3-27     Civil Practice and Remedies Code.

 4-1           (c)  The system may enter into interlocal cooperation

 4-2     contracts under Chapter 791, Government Code, and is a local

 4-3     government for purposes of that chapter.

 4-4           Art. 20C.06.  BOARD.  (a)  The system is governed by a board

 4-5     of directors composed of 18 members.  Notwithstanding the  Texas

 4-6     Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's

 4-7     Texas Civil Statutes), the board of directors is selected as

 4-8     provided by this chapter.

 4-9           (b)  The participating providers shall appoint as

4-10     representatives of the participating providers six directors

4-11     selected in the manner provided by Article 20C.10 of this code.

4-12           (c)  The governor shall appoint six directors from persons

4-13     residing in the territorial jurisdictions of the participating

4-14     providers, including:

4-15                 (1)  two persons who represent employers;

4-16                 (2)  two persons who are local government officials;

4-17     and

4-18                 (3)  two persons who are consumers of health care

4-19     services.

4-20           (d)  In addition to the directors appointed under Subsection

4-21     (c) of this article, the governor shall appoint six directors from

4-22     among licensed physicians who reside and practice in the

4-23     territorial jurisdictions of the participating providers.  At least

4-24     three of the physicians appointed under this subsection must

4-25     perform as their professional practice the general practice of

4-26     medicine.

4-27           (e)  Directors appointed under Subsection (c) or (d) of this

 5-1     article shall be appointed in such a manner as to represent the

 5-2     territorial jurisdictions of all participating providers.

 5-3           Art. 20C.07.  TERMS; VACANCIES.  (a)  The members of the

 5-4     board serve staggered six-year terms, with the terms of six

 5-5     members expiring February 1 of each odd-numbered year.

 5-6           (b)  A member of the board may not serve consecutive terms.

 5-7     A person who has served as a member and has left the board at the

 5-8     expiration of the person's term is eligible for consideration for

 5-9     appointment to the board for a nonconsecutive term.

5-10           (c)  A vacancy on the board is filled for the remainder of

5-11     the unexpired term by appointment by the same entity that appointed

5-12     the director vacating the position.

5-13           Art. 20C.08.  ADMINISTRATION BY BOARD; COMMITTEES.  (a)  The

5-14     board shall administer the system and shall adopt policies  and

5-15     procedures for the system that are consistent with the purposes of

5-16     this chapter.  The board may elect officers as it considers

5-17     appropriate.

5-18           (b)  The board may appoint an executive committee as

5-19     determined by the board to be useful in conducting the business of

5-20     the board.  The board may delegate to the executive committee any

5-21     responsibility considered reasonable by the board.

5-22           (c)  An executive committee appointed under this article must

5-23     be composed of six members, as follows:

5-24                 (1)  two representatives of the participating

5-25     providers;

5-26                 (2)  two persons who are community representatives,

5-27     including employers, local government officials, or consumers of

 6-1     health care services; and

 6-2                 (3)  two physicians who meet the requirements adopted

 6-3     under Article 20C.06(d) of this code.

 6-4           (d)  On a majority vote, the board may:

 6-5                 (1)  contract for administrative services; or

 6-6                 (2)  hire an executive director, consultants, attorneys

 6-7     and other professionals, and other staff as necessary to implement

 6-8     the duties of the system.

 6-9           (e)  If the board hires an executive director for the system,

6-10     the board shall delegate to the executive director the authority to

6-11     hire staff for the system and may delegate to the executive

6-12     director other duties determined to be appropriate by the board.

6-13           (f)  The board shall appoint an advisory committee composed

6-14     of:

6-15                 (1)  hospital administrators who represent nonprofit

6-16     and investor-owned facilities;

6-17                 (2)  representatives of hospital districts located in

6-18     urban areas;

6-19                 (3)  representatives of health care teaching

6-20     facilities;

6-21                 (4)  representatives of health care specialty

6-22     facilities;

6-23                 (5)  representatives of medical residency programs in

6-24     family practice; and

6-25                 (6)  representatives of rural health clinics, federally

6-26     qualified health centers, and ambulatory surgical centers.

6-27           (g)  In addition to the advisory committee appointed under

 7-1     Subsection (f) of this article, the board may appoint other

 7-2     advisory committees as determined to be appropriate by the board.

 7-3           (h)  A member of an advisory committee appointed under this

 7-4     article is not entitled to compensation for service on the

 7-5     committee.

 7-6           Art. 20C.09.  MEETINGS; RECORD.  (a)  The board shall adopt

 7-7     rules for the holding of regular and special meetings.

 7-8           (b)  Meetings of the board are open to the public in

 7-9     accordance with Chapter 551, Government Code.  This subsection does

7-10     not require the board to conduct an open meeting to deliberate:

7-11                 (1)  pricing or financial planning information relating

7-12     to a bid or negotiation for arranging or providing services or

7-13     product lines to another person if disclosure of the information

7-14     would give the advantage to competitors;

7-15                 (2)  information relating to a proposed new service,

7-16     product line, or marketing strategy;

7-17                 (3)  patient information made confidential under

7-18     Section 5.08, Medical Practice Act (Article 4495b, Vernon's Texas

7-19     Civil Statutes), or Subchapter G, Chapter 241, Health and Safety

7-20     Code; or

7-21                 (4)  information relating to the credentialing of

7-22     physicians or peer review made confidential under Section 5.06,

7-23     Medical Practice Act (Article 4495b, Vernon's Texas Civil

7-24     Statutes), or Subchapter G, Chapter 241, Health and Safety Code.

7-25           (c)  The board shall keep a record of its proceedings in

7-26     accordance with Chapter 551, Government Code.

7-27           Art. 20C.10.  LIMITATION ON AUTHORITY OF PARTICIPATING

 8-1     PROVIDERS; EFFECT OF SALE OR DISSOLUTION.  (a)  The powers of the

 8-2     participating providers are limited to:

 8-3                 (1)  the election, by a majority vote of the governing

 8-4     bodies of the participating providers, of the six members of the

 8-5     board of directors of the system to be appointed by the combined

 8-6     participating providers under Article 20C.06(b) of this code;

 8-7                 (2)  the authorization by a two-thirds vote of the sale

 8-8     of the system or substantially all of the assets of the system; and

 8-9                 (3)  the removal by a two-thirds vote of any member of

8-10     the board who was appointed by the participating providers.

8-11           (b)  Except as otherwise provided by law, in the event of the

8-12     sale or dissolution of the system or substantially all of the

8-13     assets of the system, the net revenue shall be redistributed on an

8-14     equal basis to the participating providers after payment of any

8-15     outstanding debts, liabilities, or other obligations incurred by

8-16     the system.

8-17           Art. 20C.11.  PROVISION OF ADMINISTRATIVE SERVICES.  (a)  The

8-18     board may adopt rules regarding the provision of  administrative

8-19     services by the system.

8-20           (b)  The system may enter into contracts or joint ventures to

8-21     provide administrative services under this chapter.

8-22           (c)  The system may enter into intergovernmental and

8-23     interlocal agreements.

8-24           (d)  The system may provide technical assistance and

8-25     management services to local health care providers as necessary to

8-26     deliver health care services.

8-27           Art. 20C.12.  PROVISION OF HEALTH CARE SERVICES.  (a)  The

 9-1     board may adopt rules to regulate the provision of health  care

 9-2     services by the system.

 9-3           (b)  The system shall contract with or otherwise arrange for

 9-4     local health care providers to deliver health care services to

 9-5     enrollees residing in the rural areas of the territorial

 9-6     jurisdiction of the participants.  If those local health care

 9-7     providers are unable to provide the type and quality of services

 9-8     needed by the enrollees, the system may contract with health care

 9-9     practitioners who are not local health care providers.

9-10           (c)  In contracting with or otherwise arranging for local

9-11     health care providers to deliver health care services to rural

9-12     enrollees, the system may contract only with local health care

9-13     provider networks that are composed of not more than 19 counties.

9-14           Art. 20C.13.  GIFTS AND GRANTS.  The system may accept gifts

9-15     and grants of money, personal property, and real property to use in

9-16     the provision of the system's programs and services.

9-17           Art. 20C.14.  MANDATED PROVIDER; EXCEPTION.  (a)  The state

9-18     shall award to the system at least one of any state managed  care

9-19     contracts awarded to provide health care services to beneficiaries

9-20     of the Texas Medical Assistance Program under Chapter 32, Human

9-21     Resources Code, in the rural areas within the territorial

9-22     jurisdiction of the participating providers.

9-23           (b)  This article does not apply to a contract that expands

9-24     coverage of the Texas Medical Assistance Program under Chapter 32,

9-25     Human Resources Code, to certain children that is implemented

9-26     during the 1997-1998 state fiscal biennium.

9-27           (c)  As a requirement of participation in any state contract,

 10-1    the system must satisfactorily address the qualifications for

 10-2    arranging to provide health care services to beneficiaries of

 10-3    certain governmental health care programs as delineated in the

 10-4    contractor's request for proposal, including:

 10-5                (1)  readiness reviews and adequacy of credentialing,

 10-6    medical management, quality assurance, claims payment, information

 10-7    management, provider and patient education, and complaint and

 10-8    grievance procedures; and

 10-9                (2)  adequacy of physician and provider networks,

10-10    including such factors as diversity, geographic accessibility,

10-11    inclusion of physicians and other providers that have furnished a

10-12    significant amount of Medicaid or charity care to beneficiaries,

10-13    and tertiary and subspecialty services.

10-14          (d)  The system shall be reimbursed by the Medicaid

10-15    contracting agency at the state-defined capitation rate for each

10-16    service area in which the system operates.

10-17          (e)  It is not a condition of participation for the system to

10-18    accept from the Medicaid contracting agency a capitation rate which

10-19    is lower than the state-defined capitation rate for each service

10-20    area in which the system operates.

10-21          Art. 20C.15.  RULES.  The commissioner shall adopt rules as

10-22    necessary to implement this chapter.

10-23          SECTION 2.  Subsection (l), Section 2, Texas Health

10-24    Maintenance Organization Act (Article 20A.02, Vernon's Texas

10-25    Insurance Code), is amended to read as follows:

10-26          (l)  "Person" means any natural or artificial person,

10-27    including, but not limited to, individuals, partnerships,

 11-1    associations, organizations, trusts, hospital districts, limited

 11-2    liability companies, limited liability partnerships, [or]

 11-3    corporations, or the rural community health care system under

 11-4    Chapter 20C,  Insurance Code.

 11-5          SECTION 3.  In appointing the initial members of the board of

 11-6    directors of the statewide rural health care system established

 11-7    under Chapter 20C, Insurance Code, as added by this Act:

 11-8                (1)  the participating providers shall designate two

 11-9    members for terms expiring February 1, 1999, two members for terms

11-10    expiring February 1, 2001, and two members for terms expiring

11-11    February 1, 2003; and

11-12                (2)  of the members appointed under Subsection (c) or

11-13    (d), Article 20C.06, Insurance Code, as added by this Act, the

11-14    governor shall designate two for terms expiring February 1, 1999,

11-15    two for terms expiring February 1, 2001, and two for terms expiring

11-16    February 1, 2003.

11-17          SECTION 4.  (a)  Except as provided by Subsections (b) and

11-18    (c) of this section, this Act takes effect September 1, 1997.

11-19          (b)  The Commissioner of Insurance shall adopt rules as

11-20    necessary to implement Chapter 20C, Insurance Code, as added by

11-21    this Act, not later than January 1, 1998.

11-22          (c)  The statewide rural health care system established under

11-23    Chapter 20C, Insurance Code, as added by this Act, shall begin

11-24    offering health care services under that chapter not later than

11-25    March 1, 1998, unless the system determines that it is not prepared

11-26    to fulfill its regulatory or contractual obligations by that date.

11-27          SECTION 5.  The importance of this legislation and the

 12-1    crowded condition of the calendars in both houses create an

 12-2    emergency and an imperative public necessity that the

 12-3    constitutional rule requiring bills to be read on three several

 12-4    days in each house be suspended, and this rule is hereby suspended.