1-1                                   AN ACT
 1-2     relating to the operation of a statewide rural health care system.
 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-4           SECTION 1.  (a)  GOALS OF SYSTEM.  The statewide rural health
 1-5     care system established under Chapter 20C, Insurance Code, is
 1-6     designed to incorporate consumer-oriented attributes considered
 1-7     important to a successful health care organization.  These
 1-8     attributes include consideration of patient rights, preservation of
 1-9     patient rights, preservation of the physician-patient relationship,
1-10     emphasis on prevention and wellness, an appropriate credentialing
1-11     and peer review program, and emphasis on quality improvement,
1-12     including obtaining accreditation.
1-13           (b)  PATIENT RIGHTS POLICIES.  The statewide rural health
1-14     care system is intended to incorporate patient-focused
1-15     considerations that include:
1-16                 (1)  open communication;
1-17                 (2)  informed consent;
1-18                 (3)  protection of confidentiality and privacy;
1-19                 (4)  full disclosure of program policies and procedures
1-20     to patients and providers;
1-21                 (5)  coverage of emergency care;
1-22                 (6)  disclosure of compensation arrangements with
1-23     providers; and
1-24                 (7)  efficient appeal of coverage decisions.
 2-1           (c)  PATIENT-PHYSICIAN RELATIONSHIP.  The statewide rural
 2-2     health care system is intended to preserve significant traditional
 2-3     and ethical relationships between a patient and the patient's
 2-4     health care provider by ensuring that:
 2-5                 (1)  medical management does not intrude on the
 2-6     delivery of quality patient care;
 2-7                 (2)  the process of making health care decisions
 2-8     remains a matter between a patient and the patient's health care
 2-9     provider; and
2-10                 (3)  nothing in the system will place a health care
2-11     provider in an adverse relationship with a patient.
2-12           (d)  PUBLIC HEALTH AND PREVENTION.  The statewide rural
2-13     health care system is intended to use incentives to promote healthy
2-14     communities and individuals by using a public health model that
2-15     focuses on health promotion, illness prevention, patient self-care
2-16     education, and incentives that encourage positive health behavior.
2-17           (e)  CREDENTIALS AND PEER REVIEW.  To ensure that enrollees
2-18     will receive quality health care, the statewide rural health care
2-19     system is intended to focus on processes for obtaining credentials
2-20     and performing peer review that take into consideration the unique
2-21     nature of rural communities and that track processes required under
2-22     federal and state law.  Local physicians and hospitals are intended
2-23     to retain responsibility for these processes.  These processes are
2-24     not intended to exclude otherwise qualified practitioners from
2-25     participating in the system.
2-26           (f)  QUALITY IMPROVEMENT AND MANAGEMENT.  The statewide rural
2-27     health care system is intended to utilize standard guidelines
 3-1     established by the National Committee on Quality Assurance and
 3-2     other recognized accrediting organizations to ensure that the
 3-3     program achieves its objectives of providing quality patient care
 3-4     and to emphasize establishing benchmarks to measure program
 3-5     outcomes that will be made available to the public through proper
 3-6     reporting procedures.
 3-7           SECTION 2.  Article 20C.02, Insurance Code, is amended to
 3-8     read as follows:
 3-9           Art. 20C.02.  DEFINITIONS.  (a)  In this chapter:
3-10                 (1)  "Board" means the board of directors of the
3-11     system.
3-12                 (2)  "Enrollee" means an individual entitled to receive
3-13     health care services through a health care plan arranged for or
3-14     provided by the system.
3-15                 (3)  "Health care services" has the meaning assigned by
3-16     Section 2, Texas Health Maintenance Organization Act (Article
3-17     20A.02, Vernon's Texas Insurance Code).
3-18                 (4)  "Hospital provider" means a county hospital,
3-19     county hospital authority, hospital district, municipal hospital,
3-20     or municipal hospital authority.
3-21                 (5)  "Local health care provider" means:
3-22                       (A)  a person licensed, registered, or certified
3-23     as a health care practitioner in this state who resides in or
3-24     practices in a rural area in which the person provides health care
3-25     services; or
3-26                       (B)  a general or specialty hospital that is not
3-27     a hospital provider under this chapter.
 4-1                 (6)  "Participating provider" means a hospital provider
 4-2     that participates in the system.
 4-3                 (7)  "Person" means an individual, professional
 4-4     association, professional corporation, partnership, limited
 4-5     liability corporation, limited liability partnership, or nonprofit
 4-6     corporation, including a nonprofit corporation created under
 4-7     Section 5.01(a), Medical Practice Act (Article 4495b, Vernon's
 4-8     Texas Civil Statutes).
 4-9                 (8)  "Rural area" means:
4-10                       (A)  a county with a population of 50,000 or
4-11     less;
4-12                       (B)  an area that is not delineated as an
4-13     urbanized area by the federal census bureau; or
4-14                       (C)  any other area designated as rural by rules
4-15     adopted by the commissioner, subject to Subsection (b) of this
4-16     article.
4-17                 (9)  "System" means the statewide rural health care
4-18     system established by this chapter.
4-19                 (10)  "Territorial jurisdiction" means the geographical
4-20     area in which a participating provider is obligated by law to
4-21     provide health care services.
4-22           (b)  In designating rural areas under Subsection (a)(8) of
4-23     this article, the commissioner shall consider any area that is
4-24     delineated as an urbanized area by the federal census bureau and:
4-25                 (1)  is contiguous with and not more than 10 miles away
4-26     from a rural area described by Subsection (a)(8)(A) or (B) of this
4-27     section;
 5-1                 (2)  is sparsely populated, compared to areas within a
 5-2     10-mile radius that are delineated as urbanized areas by the
 5-3     federal census bureau;
 5-4                 (3)  has not increased in population in any single
 5-5     calendar year in the seven years before the commissioner makes the
 5-6     designation; and
 5-7                 (4)  in which emergency or primary care services are
 5-8     limited or unavailable in accordance with network access standards
 5-9     imposed by the commissioner under the Texas Health Maintenance
5-10     Organization Act (Chapter 20A, Vernon's Texas Insurance Code) and
5-11     in which those services would be made materially more accessible by
5-12     allowing access to care in a contiguous area that is eligible to
5-13     participate in the system.
5-14           SECTION 3.  Article 20C.03, Insurance Code, is amended to
5-15     read as follows:
5-16           Art. 20C.03.  ESTABLISHMENT OF SYSTEM.  The statewide rural
5-17     health care system is established to arrange for or provide health
5-18     care services [on a prepaid basis] to enrollees who reside in rural
5-19     areas.
5-20           SECTION 4.  Article 20C.04, Insurance Code, is amended to
5-21     read as follows:
5-22           Art. 20C.04.  DESIGNATION AS SYSTEM; QUALIFICATIONS.
5-23     (a)  The commissioner shall designate as the system one
5-24     organization created under Article 20C.05 of this code.
5-25           (b)  Except as provided by Subsection (c) [(b)] of this
5-26     article, if the system arranges for or provides health care
5-27     services to enrollees in exchange for a predetermined payment per
 6-1     enrollee on a prepaid basis, the system must obtain a certificate
 6-2     of authority under, and [to be eligible for designation as the
 6-3     system, the organization must] meet each requirement imposed by,
 6-4     the Texas Health Maintenance Organization Act (Chapter 20A,
 6-5     Vernon's Texas Insurance Code), as if the organization were a
 6-6     person under the Act.
 6-7           (c)  If the system seeks a certificate of authority under the
 6-8     Texas Health Maintenance Organization Act (Chapter 20A, Vernon's
 6-9     Texas Insurance Code), the commissioner by rule may provide
6-10     exceptions to the application of provisions of the Texas Health
6-11     Maintenance Organization Act (Chapter 20A, Vernon's Texas Insurance
6-12     Code) relating to mileage, distance, and network adequacy and
6-13     scope.
6-14           (d)  If the system seeks a certificate of authority under the
6-15     Texas Health Maintenance Organization Act (Chapter 20A, Vernon's
6-16     Texas Insurance Code), the [(b)  The] system shall meet all reserve
6-17     requirements required by the commissioner under the Texas Health
6-18     Maintenance Organization Act (Chapter 20A, Vernon's Texas Insurance
6-19     Code).  The system may fulfill the requirements of this  subsection
6-20     through the purchase of reinsurance from insurance companies
6-21     approved for that purpose by the commissioner.
6-22           SECTION 5.  Article 20C.07(a), Insurance Code, is amended to
6-23     read as follows:
6-24           (a)  The members of the board serve staggered six-year terms,
6-25     with the terms of six members expiring December 1 of each
6-26     even-numbered year [February 1 of each odd-numbered year].
6-27           SECTION 6.  Article 20C.08(f), Insurance Code, is amended to
 7-1     read as follows:
 7-2           (f)  The board may [shall] appoint an advisory committee to
 7-3     represent health care services, including representatives of rural,
 7-4     urban, and educational groups and organizations.  The advisory
 7-5     committee shall meet at the will of the board and advise the board
 7-6     on any matters as directed by the board [composed of:]
 7-7                 [(1)  hospital administrators who represent nonprofit
 7-8     and investor-owned facilities;]
 7-9                 [(2)  representatives of hospital districts located in
7-10     urban areas;]
7-11                 [(3)  representatives of health care teaching
7-12     facilities;]
7-13                 [(4)  representatives of health care specialty
7-14     facilities;]
7-15                 [(5)  representatives of medical residency programs in
7-16     family practice; and]
7-17                 [(6)  representatives of rural health clinics,
7-18     federally qualified health centers, and ambulatory surgical
7-19     centers].
7-20           SECTION 7.  Article 20C.14, Insurance Code, is amended to
7-21     read as follows:
7-22           Art. 20C.14.  MANDATED PROVIDER[; EXCEPTION].  (a)  To the
7-23     extent consistent with federal law, the state shall award to the
7-24     system at least one of any state managed care contracts awarded to
7-25     provide health care services to beneficiaries of the Texas Medical
7-26     Assistance Program under Chapter 32, Human Resources Code, in the
7-27     rural areas within the territorial jurisdiction of the
 8-1     participating providers.
 8-2           (b)  [This article does not apply to a contract that expands
 8-3     coverage of the Texas Medical Assistance Program under Chapter 32,
 8-4     Human Resources Code, to certain children that is implemented
 8-5     during the 1997-1998 state fiscal biennium, except that the system
 8-6     shall receive a subcontract from the funding entity to provide
 8-7     services to those children if the system elects to receive a
 8-8     subcontract not later than November 1, 1997, the system provides
 8-9     the state share of matching funds for the entire population covered
8-10     by the subcontract, and the subcontract does not cover an area that
8-11     is included in the statutory territorial jurisdiction of a hospital
8-12     district.  If the system elects not to receive a subcontract or to
8-13     provide the state share of matching funds, then any entity that is
8-14     selected by the state Medicaid contracting entity to provide health
8-15     care to those children shall use local health care providers and
8-16     hospital providers in establishing its provider network.]
8-17           [(c)]  As a requirement of participation in any state
8-18     contract, the system must satisfactorily address the qualifications
8-19     for arranging to provide health care services to beneficiaries of
8-20     certain governmental health care programs as delineated in the
8-21     contractor's request for proposal, including:
8-22                 (1)  readiness reviews and adequacy of credentialing,
8-23     medical management, quality assurance, claims payment, information
8-24     management, provider and patient education, and complaint and
8-25     grievance procedures; and
8-26                 (2)  adequacy of physician and provider networks,
8-27     including such factors as diversity, geographic accessibility,
 9-1     inclusion of physicians and other providers that have furnished a
 9-2     significant amount of Medicaid or charity care to beneficiaries,
 9-3     and tertiary and subspecialty services.
 9-4           (c)  To the extent the system operates under a certificate of
 9-5     authority issued under the Texas Health Maintenance Organization
 9-6     Act (Chapter 20A, Vernon's Texas Insurance Code), the [(d) The]
 9-7     system shall be reimbursed by the Medicaid contracting agency at
 9-8     the state-defined capitation rate for each service area in which
 9-9     the system operates.
9-10           (d) [(e)]  It is not a condition of participation for the
9-11     system to accept from the Medicaid contracting agency a capitation
9-12     rate which is lower than the state-defined capitation rate for each
9-13     service area in which the system operates.
9-14           (e) [(f)]  The state retains the right to cancel a contract
9-15     awarded under this article if the system is sold or dissolved.
9-16           SECTION 8.  (a)  This Act takes effect September 1, 1999.
9-17           (b)  The term of a member of the board of directors of the
9-18     statewide rural health care system appointed before the effective
9-19     date of this Act expires December 1 of the year before the year the
9-20     term was to expire under Chapter 20C, Insurance Code, as that
9-21     chapter existed before amendment by this Act.
9-22           SECTION 9.  The importance of this legislation and the
9-23     crowded condition of the calendars in both houses create an
9-24     emergency and an imperative public necessity that the
9-25     constitutional rule requiring bills to be read on three several
9-26     days in each house be suspended, and this rule is hereby suspended.
         _______________________________     _______________________________
             President of the Senate              Speaker of the House
               I certify that H.B. No. 1194 was passed by the House on April
         28, 1999, by a non-record vote; and that the House concurred in
         Senate amendments to H.B. No. 1194 on May 22, 1999, by a non-record
         vote.
                                             _______________________________
                                                 Chief Clerk of the House
               I certify that H.B. No. 1194 was passed by the Senate, with
         amendments, on May 20, 1999, by a viva-voce vote.
                                             _______________________________
                                                 Secretary of the Senate
         APPROVED:  _____________________
                            Date
                    _____________________
                          Governor