HBA-NMO C.S.H.B. 1194 76(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 1194 By: Turner, Bob Insurance 4/5/99 Committee Report (Substituted) BACKGROUND AND PURPOSE The 75th Texas Legislature enacted legislation creating the statewide rural health care system (system). The system provides rural communities an alternative to urban-based Health Maintenance Organizations now operating in rural Texas. However, certain changes may be necessary to improve the implementation of the system. C.S.H.B. 1194 requires the commissioner of insurance (commissioner) to consider certain criteria in designating rural areas for the purposes of the system. This bill also provides that the system, if providing services on a prepaid basis, must obtain a certificate of authority under the Texas Health Maintenance Organization Act, and makes changes regarding the board of directors of the system and the advisory committee appointed by the board. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the Commissioner of Insurance in SECTION 3 (Article 20C.04, Insurance Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Article 20C.02, Insurance Code, as follows: (a) Creates from existing text. Provides that the rules adopted by the commissioner of insurance (commissioner) used to designate rural areas are subject to Subsection (b). (b) Requires the commissioner, in designating rural areas under Subsection (a), to consider any area in which appropriate emergency, acute, specialty, or primary care services are limited or unavailable and could be made more accessible through contracting with the statewide rural health care system (system) or a participating community health network, or any area the demographics of which indicate a high population of aged, atrisk, or low-income persons, including persons with serious mental illness or serious emotional disturbance, whose needs would be better served by allowing access to care in a contiguous area that is eligible to participate in the system. SECTION 2. Amends Article 20C.03, Insurance Code, to provide that the system is established to arrange for or provide health care services, rather than health care services on a prepaid basis, to enrollees who reside in rural areas. SECTION 3. Amends Article 20C.04, Insurance Code, to provide that the system, if it arranges for or provides health care services to enrollees in exchange for a predetermined payment per enrollee on a prepaid basis, must obtain a certificate of authority under, and meet each requirement imposed by, the Texas Health Maintenance Organization Act (Chapter 20A, Insurance Code). Authorizes the commissioner, by rule, if the system seeks a certificate of authority, to provide exceptions to the application of provisions of the Texas Health Maintenance Organization Act relating to mileage, distance, and network adequacy and scope. Makes conforming changes. SECTION 4. Amends Article 20C.07(a), Insurance Code, to provide that the members of the board of the statewide rural health care system (board) serve staggered six-year terms, with the terms of six members expiring December 1 of each even-numbered year, rather than February 1 of each odd numbered year. SECTION 5. Amends Article 20C.08(f), Insurance Code, to authorize the board to appoint an advisory committee to represent health care services, including representatives of rural, urban, and educational groups and organizations. Requires the advisory committee to meet at the will of the board and advise the board on any matters as directed by the board. Deletes language referring to the required composition of the advisory committee. SECTION 6. Amends Article 20C.14, Insurance Code, as follows: Sec. 20C.14. New Title: MANDATED PROVIDER. Removes the exception to the provision requiring the state to award to the system at least one of any state managed care contracts awarded to provide health care services to beneficiaries of the Medical Assistance Program under Chapter 32, Human Resources Code, in rural areas within the territorial jurisdiction of the participating providers. Conditions the requirement that the system be reimbursed by the Medicaid contracting agency at the state-defined capitation rate on the extent to which the system operates under a certificate of authority. Makes conforming changes. SECTION 7. Effective date: September 1, 1999. Provides that the term of a member of the board of directors of the statewide rural health care system appointed before the effective date of this Act expires December 1 of the year before the year the term was to expire under Chapter 20C, Insurance Code, as that chapter existed before amendment by this Act. SECTION 8. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE The substitute differs from the original in SECTION 2 (Article 20C.03, Insurance Code) by deleting in the provision establishing the statewide rural health care system (system) the specification that health care services be arranged or provided for on a prepaid basis. The substitute differs from the original in SECTION 3 by creating a new Subsection be to providing that the system, if it arranges for or provides health care services to enrollees in exchange for a predetermined payment per enrollee on a prepaid basis, must obtain a certificate of authority under, and meet each requirement imposed by, the Texas Health Maintenance Organization Act (Chapter 20A, Insurance Code). In new Subsection (c), the substitute authorizes the commissioner of insurance, by rule, to provide exceptions to the provisions of the Texas Health Maintenance Organization Act relating to milage, distance, and network adequacy and scope; rather than to accommodate the special circumstances surrounding the system and its participating service areas designated as rural areas, as originally proposed in Subsection (b). Makes conforming changes. The substitute differs from the original in SECTION 6 by amending Article 20C.14, Insurance Code, as follows: Sec. 20C.14. New Title: MANDATED PROVIDER. Deletes "exception" in title. Removes the exception to the provision requiring the state to award to the system at least one of any state managed care contracts awarded to provide health care services to beneficiaries of the Medical Assistance Program under Chapter 32, Human Resources Code, in rural areas within the territorial jurisdiction of the participating providers. Conditions the requirement that the system be reimbursed by the Medicaid contracting agency at the state-defined capitation rate on the extent to which the system operates under a certificate of authority. Makes conforming changes. Deletes "Exception" from the title. SECTIONS 7 and 8 of the substitute are redesignated from the proposed SECTIONS 6 and 7 in the original.