AN ACT

 1-1     relating to the health care provider network of the state Medicaid

 1-2     program health care delivery system.

 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-4                                  ARTICLE 1

 1-5           SECTION 1.01.  Subsection (a), Section 16A, Article

 1-6     4413(502), Vernon's Texas Civil Statutes, as added by Chapter 444,

 1-7     Acts of the 74th Legislature, 1995, is amended to read as follows:

 1-8           (a)  The commission shall develop a health care delivery

 1-9     system that restructures the delivery of health care services

1-10     provided under the state Medicaid program.  The commission shall

1-11     develop the health care delivery system only if the commission

1-12     obtains a waiver or other authorization from all necessary federal

1-13     agencies to implement the system.  In developing the health care

1-14     delivery system, the commission shall:

1-15                 (1)  to the extent possible, design the system in a

1-16     manner that will:

1-17                       (A)  improve the health of Texans by:

1-18                             (i)  emphasizing prevention;

1-19                             (ii)  promoting continuity of care; and

1-20                             (iii)  providing a medical home for

1-21     Medicaid recipients; and

1-22                       (B)  ensure that each recipient can receive high

1-23     quality, comprehensive health care services in the recipient's

 2-1     local community;

 2-2                 (2)  design the system in a manner that will enable the

 2-3     state and the local governmental entities that make resources and

 2-4     other funds available for matching to the commission under this

 2-5     section to control the costs associated with the state Medicaid

 2-6     program and, to the extent possible, will result in cost savings to

 2-7     the state and those local governmental entities through health care

 2-8     service delivery based on managed care;

 2-9                 (3)  to the extent it is cost-effective to the state

2-10     and local governments, maximize the financing of the state Medicaid

2-11     program by obtaining federal matching funds for all resources and

2-12     other funds available for matching and expand Medicaid eligibility

2-13     to include persons who were eligible to receive indigent health

2-14     care services through the use of those resources or other funds

2-15     available for matching before expansion of eligibility, provided

2-16     that the commission shall give priority to expanding eligibility to

2-17     include children and their families;

2-18                 (4)  to the extent possible, develop a plan to expand

2-19     Medicaid eligibility to include children and other persons, other

2-20     than those persons described by Subdivision (3) of this subsection,

2-21     that is funded by using:

2-22                       (A)  appropriations that have previously been

2-23     made to other agencies or other programs to provide related health

2-24     care services to those children and other persons;

2-25                       (B)  earned federal funds;

 3-1                       (C)  contributions by those children or other

 3-2     persons or their families; or

 3-3                       (D)  resources or other funds available for

 3-4     matching;

 3-5                 (5)  design the system to ensure that if the system

 3-6     includes a method to finance the state Medicaid program by

 3-7     obtaining federal matching funds for resources and other funds

 3-8     available for matching, each entity listed in Subsection (d)(1),

 3-9     (2), (3), (7), (8), or (9) or Subsection (e) of this section that

3-10     makes those resources and other funds available receives funds to

3-11     provide health care services to persons who are eligible for

3-12     Medicaid under the expanded eligibility criteria developed under

3-13     Subdivision (3) or (4) of this subsection in an amount that is at

3-14     least equal to the amount of resources or other funds available for

3-15     matching provided by that entity under this section;

3-16                 (6)  to the extent possible, provide for the entities

3-17     that make resources and other funds available for matching under

3-18     this section an option to operate the health care delivery system

3-19     within their regions including appropriate portions of the

3-20     eligibility determination process, subject to the standards of and

3-21     oversight by the commission;

3-22                 (7)  design the system to:

3-23                       (A)  include methods for ensuring accountability

3-24     to the state for the provision of health care services under the

3-25     state Medicaid program, including methods for financial reporting,

 4-1     quality assurance, and utilization review;

 4-2                       (B)  provide a single point of accountability for

 4-3     collection of uniform data to assess, compile, and analyze outcome

 4-4     quality and cost efficiency;

 4-5                       (C)  conduct comparative analyses of compiled

 4-6     data to assess the relative value of alternative health care

 4-7     delivery systems and report to the governor, lieutenant governor,

 4-8     and speaker of the house of representatives;

 4-9                       (D)  oversee the methodology for setting

4-10     capitation and provider payment rates to ensure the cost-effective

4-11     provision of quality health care;

4-12                       (E)  ensure that both private and public health

4-13     care providers and managed care organizations, including a hospital

4-14     that has been designated as a disproportionate share hospital under

4-15     the state Medicaid program, will have an opportunity to participate

4-16     in the system;

4-17                       (F)  ensure, in adopting rules implementing the

4-18     system, that in developing the provider network for the system, the

4-19     commission, each intergovernmental initiative, and each managed

4-20     care organization, as applicable, give extra consideration to a

4-21     health care provider who has traditionally provided care to

4-22     Medicaid and charity care patients;

4-23                       (G)  give extra consideration to providers who

4-24     agree to assure continuity of care for Medicaid clients for 12

4-25     months beyond the period of eligibility; and

 5-1                       (H)  require that the commission, each

 5-2     intergovernmental initiative, and each managed care organization,

 5-3     as applicable, include in its provider network, for not less than

 5-4     three years after the date of implementation of managed care in a

 5-5     service area for the current Medicaid population, each health care

 5-6     provider in that area who:

 5-7                             (i)  [previously] provided care to Medicaid

 5-8     and charity care patients at a significant level, as prescribed by

 5-9     the commission, during the 12 months preceding the date of

5-10     implementation;

5-11                             (ii)  agrees to accept the standard

5-12     provider reimbursement rate of the commission, the

5-13     intergovernmental initiative, or the managed care organization, as

5-14     applicable;

5-15                             (iii)  meets the credentialing requirements

5-16     under the system of the commission, the intergovernmental

5-17     initiative, or the managed care organization, as applicable,

5-18     provided that lack of board certification or accreditation by the

5-19     Joint Commission on Accreditation of Healthcare Organizations may

5-20     not be the sole grounds for exclusion from the provider network;

5-21     and

5-22                             (iv)  agrees to comply and does comply with

5-23     all of the terms and conditions of the standard provider agreement

5-24     of the commission, intergovernmental initiative, or managed care

5-25     organization, as applicable;

 6-1                 (8)  design the system in a manner that, to the extent

 6-2     possible, enables the state to manage care to lower the cost of

 6-3     providing Medicaid services through the use of health care delivery

 6-4     systems such as a primary care case management system, partially

 6-5     capitated system, or fully capitated system or a combination of one

 6-6     or more of those systems and use, where possible, multiple,

 6-7     competing managed care organizations within those systems;

 6-8                 (9)  design the system in a manner that enables the

 6-9     state to:

6-10                       (A)  use different types of health care delivery

6-11     systems to meet the needs of different populations, including the

6-12     establishment of pilot programs to deliver health care services to

6-13     children with special health care needs;

6-14                       (B)  recognize the unique role of rural

6-15     hospitals, physicians, home and community support services

6-16     agencies, and other rural health care providers in providing access

6-17     to health care services for rural Texans; and

6-18                       (C)  review data from existing or new pilot

6-19     programs that cover all prescription drugs that are medically

6-20     indicated for a person by a licensed health care provider in

6-21     primary and preventive care and implement any changes in the state

6-22     Medicaid program that as a result of the review are determined to

6-23     be cost-effective and cost-neutral;

6-24                 (10)  establish geographic health care service regions

6-25     after consulting with local governmental entities that provide

 7-1     resources or other funds available for matching under this section

 7-2     and emphasize regional coordination in the provision of indigent

 7-3     health care;

 7-4                 (11)  simplify eligibility criteria and streamline

 7-5     eligibility determination processes;

 7-6                 (12)  to the extent possible, provide a one-stop

 7-7     approach for client information and referral for managed care

 7-8     services;

 7-9                 (13)  to the extent possible, design the system in a

7-10     manner that encourages the training of and access to primary care

7-11     physicians;

7-12                 (14)  develop and prepare, after consulting with the

7-13     following entities, the waiver or other documents necessary to

7-14     obtain federal authorization for the system:

7-15                       (A)  governmental entities that provide health

7-16     care services and assistance to indigent persons in this state;

7-17                       (B)  consumer representatives;

7-18                       (C)  managed care organizations; and

7-19                       (D)  health care providers;

7-20                 (15)  design the system to ensure that if the system

7-21     includes a method to finance the state Medicaid program by

7-22     obtaining federal matching funds for resources and other funds

7-23     available for matching, an amount not to exceed $20 million a year

7-24     must be dedicated under the system as prescribed in the waiver for

7-25     special payments to rural hospitals that:

 8-1                       (A)  are sole community providers and provide a

 8-2     significant amount of care to Medicaid and charity care patients as

 8-3     prescribed by the commission; and

 8-4                       (B)  are located in a county in which the county

 8-5     or another entity located in the county and described by Subsection

 8-6     (d) or (e) of this section:

 8-7                             (i)  has executed a matching funds

 8-8     agreement with the commission under this section; and

 8-9                             (ii)  participates in an intergovernmental

8-10     initiative under Section 16B of this article with a county that is

8-11     contiguous to the county in which the rural hospital is located or

8-12     with another entity described by Subsection (d) or (e) of this

8-13     section that is located in the contiguous county if the contiguous

8-14     county or the entity located in the contiguous county is one of the

8-15     entities that forms an intergovernmental initiative under Section

8-16     16B of this article;

8-17                 (16)  if necessary to ensure that all resources or

8-18     other funds available for matching are maximized in accordance with

8-19     Subdivision (3) of this subsection, design the system to ensure

8-20     that an amount determined by the commission is dedicated under the

8-21     system as prescribed in the waiver for special payments to

8-22     hospitals that provide at least 14,000 low-income patient days as

8-23     determined by the commission under the methodology used for

8-24     calculating eligibility for the Medicaid disproportionate share

8-25     program;

 9-1                 (17)  design a cost-neutral system to provide for a

 9-2     sliding scale copayment system for individuals who are above 100

 9-3     percent of the federal poverty level;

 9-4                 (18)  to the extent possible and subject to the

 9-5     availability of funds, design a cost-neutral system to allow the

 9-6     development of a buy-in program with sliding scale premiums for

 9-7     Medicaid recipients who are leaving the program and have incomes

 9-8     between 150 percent and 250 percent of the federal poverty level;

 9-9                 (19)  design the system in a manner that, to the extent

9-10     possible, will maintain administrative costs at a level not to

9-11     exceed five percent of the cost of the state Medicaid program; and

9-12                 (20)  develop and implement, in consultation with any

9-13     professional association representing 51 percent or more of the

9-14     licensed dentists in the state, a pilot program for child and adult

9-15     dental care and design the pilot program in a manner that enables:

9-16                       (A)  the program to be prevention-based;

9-17                       (B)  the choice of dentists to be at the

9-18     discretion of the eligible recipient, who will choose from a list

9-19     of qualified and participating providers or dental managed care

9-20     organizations; and

9-21                       (C)  the exploration of the use of local funds

9-22     currently spent on dental health care as a method for financing the

9-23     state share of the pilot program.

 10-1                                 ARTICLE 2

 10-2          SECTION 2.01.  Subsection (a), Section 532.102, Government

 10-3    Code, as added by the Act of the 75th Legislature, Regular Session,

 10-4    1997, relating to nonsubstantive additions to and corrections in

 10-5    enacted codes, is amended to read as follows:

 10-6          (a)  In developing the health care delivery system under this

 10-7    chapter, the commission shall:

 10-8                (1)  to the extent possible, design the system in a

 10-9    manner that:

10-10                      (A)  improves the health of the people of this

10-11    state by:

10-12                            (i)  emphasizing prevention;

10-13                            (ii)  promoting continuity of care; and

10-14                            (iii)  providing a medical home for

10-15    Medicaid recipients; and

10-16                      (B)  ensures that each recipient can receive

10-17    high-quality, comprehensive health care services in the recipient's

10-18    local community;

10-19                (2)  design the system in a manner that enables this

10-20    state and the local governmental entities that make resources and

10-21    other funds available for matching to the commission under this

10-22    subchapter to control the costs associated with the state Medicaid

10-23    program and that, to the extent possible, results in cost savings

10-24    to this state and those local governmental entities through health

10-25    care service delivery based on managed care;

 11-1                (3)  to the extent that it is cost-effective to this

 11-2    state and local governments:

 11-3                      (A)  maximize the financing of the state Medicaid

 11-4    program by obtaining federal matching funds for all resources and

 11-5    other funds available for matching; and

 11-6                      (B)  expand Medicaid eligibility to include

 11-7    persons who were eligible to receive indigent health care services

 11-8    through the use of those resources or other funds available for

 11-9    matching before expansion of eligibility, with priority to

11-10    expanding eligibility to children and their families;

11-11                (4)  to the extent possible, develop a plan to expand

11-12    Medicaid eligibility to include children and other persons, other

11-13    than those persons described by Subdivision (3), that is funded by

11-14    using:

11-15                      (A)  appropriations that have previously been

11-16    made to other agencies or other programs to provide related health

11-17    care services to those children and other persons;

11-18                      (B)  earned federal funds;

11-19                      (C)  contributions by those children or other

11-20    persons or their families; or

11-21                      (D)  resources or other funds available for

11-22    matching;

11-23                (5)  design the system to ensure that if the system

11-24    includes a method to finance the state Medicaid program by

11-25    obtaining federal matching funds for resources and other funds

 12-1    available for matching, each entity listed in Section

 12-2    532.104(a)(1), (2), (3), (7), (8), or (9) or Section 532.104(b)

 12-3    that makes those resources and other funds available receives funds

 12-4    to provide health care services to persons who are eligible for

 12-5    Medicaid under the expanded eligibility criteria developed under

 12-6    Subdivision (3) or (4) in an amount that is at least equal to the

 12-7    amount of resources or other funds available for matching provided

 12-8    by that entity under this chapter;

 12-9                (6)  to the extent possible, provide for each entity

12-10    that makes resources and other funds available for matching under

12-11    this subchapter an option to operate the health care delivery

12-12    system in its region, including appropriate portions of the

12-13    eligibility determination process, subject to the standards of and

12-14    oversight by the commission;

12-15                (7)  design the system to:

12-16                      (A)  include methods for ensuring accountability

12-17    to this state for the provision of health care services under the

12-18    state Medicaid program, including methods for financial reporting,

12-19    quality assurance, and utilization review;

12-20                      (B)  provide a single point of accountability for

12-21    collection of uniform data to assess, compile, and analyze outcome

12-22    quality and cost efficiency;

12-23                      (C)  conduct comparative analyses of compiled

12-24    data to assess the relative value of alternative health care

12-25    delivery systems and report to the governor, lieutenant governor,

 13-1    and speaker of the house of representatives;

 13-2                      (D)  oversee the procedures for setting

 13-3    capitation and provider payment rates to ensure the cost-effective

 13-4    provision of quality health care;

 13-5                      (E)  ensure that both private and public health

 13-6    care providers and managed care organizations, including a hospital

 13-7    that has been designated as a disproportionate share hospital under

 13-8    the state Medicaid program, have an opportunity to participate in

 13-9    the system;

13-10                      (F)  ensure, in adopting rules implementing the

13-11    system, that in developing the provider network for the system, the

13-12    commission, each intergovernmental initiative, and each managed

13-13    care organization, as applicable, give extra consideration to a

13-14    health care provider who has traditionally provided care to

13-15    Medicaid and charity care patients;

13-16                      (G)  give extra consideration to providers who

13-17    agree to ensure continuity of care for Medicaid clients for 12

13-18    months beyond the period of eligibility; and

13-19                      (H)  require that the commission, each

13-20    intergovernmental initiative, and each managed care organization,

13-21    as applicable, include in its provider network, for not less than

13-22    three years after the date of implementation of managed care in a

13-23    service area, each health care provider in that area who:

13-24                            (i)  provided care to Medicaid and charity

13-25    care patients at a significant level, as prescribed by the

 14-1    commission, during the 12 months preceding the date of

 14-2    implementation;

 14-3                            (ii)  agrees to accept the standard

 14-4    provider reimbursement rate of the commission, the

 14-5    intergovernmental initiative, or the managed care organization, as

 14-6    applicable;

 14-7                            (iii)  meets the credentialing requirements

 14-8    under the system of the commission, the intergovernmental

 14-9    initiative, or the managed care organization, as applicable,

14-10    provided that lack of board certification or accreditation by the

14-11    Joint Commission on Accreditation of Healthcare Organizations may

14-12    not be the sole grounds for exclusion from the provider network;

14-13    and

14-14                            (iv)  agrees to comply and does comply with

14-15    all of the terms of the standard provider agreement of the

14-16    commission, intergovernmental initiative, or managed care

14-17    organization, as applicable;

14-18                (8)  design the system in a manner that, to the extent

14-19    possible, enables the state to manage care to lower the cost of

14-20    providing Medicaid services through the use of health care delivery

14-21    systems such as a primary care case management system, partially

14-22    capitated system, or fully capitated system or a combination of one

14-23    or more of those systems and use, if possible, multiple, competing

14-24    managed care organizations in those systems;

14-25                (9)  design the system in a manner that enables the

 15-1    state to:

 15-2                      (A)  use different types of health care delivery

 15-3    systems to meet the needs of different populations, including the

 15-4    establishment of pilot programs to deliver health care services to

 15-5    children with special health care needs;

 15-6                      (B)  recognize the unique role of rural

 15-7    hospitals, physicians, home and community support services

 15-8    agencies, and other rural health care providers in providing access

 15-9    to health care services for persons who live in rural areas of this

15-10    state; and

15-11                      (C)  review data from existing or new pilot

15-12    programs that cover all prescription drugs that are medically

15-13    indicated for a person by a licensed health care provider in

15-14    primary and preventive care and implement any changes in the state

15-15    Medicaid program that as a result of the review are determined to

15-16    be cost-effective and cost-neutral;

15-17                (10)  establish geographic health care service regions

15-18    after consulting with local governmental entities that provide

15-19    resources or other funds available for matching under this section

15-20    and emphasize regional coordination in the provision of indigent

15-21    health care;

15-22                (11)  simplify eligibility criteria and streamline

15-23    eligibility determination processes;

15-24                (12)  to the extent possible, provide a one-stop

15-25    approach for client information and referral for managed care

 16-1    services;

 16-2                (13)  to the extent possible, design the system in a

 16-3    manner that encourages the training of and access to primary care

 16-4    physicians;

 16-5                (14)  develop and prepare, after consulting with the

 16-6    following entities, the waiver or other documents necessary to

 16-7    obtain federal authorization for the system:

 16-8                      (A)  governmental entities that provide health

 16-9    care services and assistance to indigent persons in this state;

16-10                      (B)  consumer representatives;

16-11                      (C)  managed care organizations; and

16-12                      (D)  health care providers;

16-13                (15)  design the system to ensure that if the system

16-14    includes a method to finance the state Medicaid program by

16-15    obtaining federal matching funds for resources and other funds

16-16    available for matching, an amount not to exceed $20 million a year

16-17    must be dedicated under the system as prescribed in the waiver for

16-18    special payments to rural hospitals that:

16-19                      (A)  are sole community providers and provide a

16-20    significant amount of care to Medicaid and charity care patients as

16-21    prescribed by the commission; and

16-22                      (B)  are located in a county in which the county,

16-23    or another entity located in the county and described by Section

16-24    532.104:

16-25                            (i)  has executed a matching funds

 17-1    agreement with the commission under this subchapter; and

 17-2                            (ii)  participates in an intergovernmental

 17-3    initiative under Subchapter C with a county that is contiguous to

 17-4    the county in which the rural hospital is located or with another

 17-5    entity described by Section 532.104 that is located in the

 17-6    contiguous county if the contiguous county or the entity located in

 17-7    the contiguous county is one of the entities that forms an

 17-8    intergovernmental initiative under Subchapter C;

 17-9                (16)  if necessary to ensure that all resources or

17-10    other funds available for matching are maximized in accordance with

17-11    Subdivision (3), design the system to ensure that an amount

17-12    determined by the commission is dedicated under the system as

17-13    prescribed in the waiver for special payments to hospitals that

17-14    provide at least 14,000 low-income patient days as determined by

17-15    the commission under the procedures used for determining

17-16    eligibility for the Medicaid disproportionate share program;

17-17                (17)  design a cost-neutral system to provide for a

17-18    sliding scale copayment system for individuals who are above 100

17-19    percent of the federal poverty level;

17-20                (18)  to the extent possible and subject to the

17-21    availability of funds, design a cost-neutral system to allow the

17-22    development of a buy-in program with sliding scale premiums for

17-23    Medicaid recipients who are leaving the program and have incomes

17-24    between 150 percent and 250 percent of the federal poverty level;

17-25                (19)  design the system in a manner that, to the extent

 18-1    possible, maintains administrative costs at a level not to exceed

 18-2    five percent of the cost of the state Medicaid program; and

 18-3                (20)  develop and implement, in consultation with a

 18-4    professional association representing 51 percent or more of the

 18-5    licensed dentists in this state, a pilot program for child and

 18-6    adult dental care that:

 18-7                      (A)  is prevention-based;

 18-8                      (B)  allows the choice of dentists to be at the

 18-9    discretion of the eligible recipient, who chooses from a list of

18-10    qualified and participating providers or dental managed care

18-11    organizations; and

18-12                      (C)  explores the use of local funds spent on

18-13    dental health care in the period before June 13, 1995, as a method

18-14    for financing the state share of the pilot program.

18-15                                 ARTICLE 3

18-16          SECTION 3.01.   This Act takes effect September 1, 1997.

18-17          SECTION 3.02.  Article 1 takes effect only if the Act of the

18-18    75th Legislature, Regular Session, 1997, relating to nonsubstantive

18-19    additions to and corrections in enacted codes, does not take

18-20    effect.

18-21          SECTION 3.03.  Article 2 takes effect only if the Act of the

18-22    75th Legislature, Regular Session, 1997, relating to nonsubstantive

18-23    additions to and corrections in enacted codes, takes effect.

18-24          SECTION 3.04.  The importance of this legislation and the

18-25    crowded condition of the calendars in both houses create an

 19-1    emergency and an imperative public necessity that the

 19-2    constitutional rule requiring bills to be read on three several

 19-3    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. 1574 passed the Senate on

         April 17, 1997, by a viva-voce vote.

                                             _______________________________

                                                 Secretary of the Senate

               I hereby certify that S.B. No. 1574 passed the House on

         May 16, 1997, by a non-record vote.

                                             _______________________________

                                                 Chief Clerk of the House

         Approved:

         _______________________________

                     Date

         _______________________________

                   Governor