76R12166 T
By Smithee H.B. No. 3019
Substitute the following for H.B. No. 3019:
By Seaman C.S.H.B. No. 3019
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the delegation of certain functions by health
1-3 maintenance organizations.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 2, Texas Health Maintenance Organization
1-6 Act (Article 20A.02, Vernon's Texas Insurance Code), is amended by
1-7 adding Subsections (dd) and (ee) to read as follows:
1-8 (dd) "Delegation agreement" means an agreement by which a
1-9 health maintenance organization transfers the responsibility for a
1-10 function regulated under this Act.
1-11 (ee) "Delegated network" means an entity, other than a
1-12 health maintenance organization authorized to do business under
1-13 this Act or an insurer authorized to do business under Chapter 3,
1-14 Insurance Code, which by itself, or through one or more entities,
1-15 undertakes to arrange for or to provide medical care to an enrollee
1-16 in exchange for a predetermined payment for each enrollee on a
1-17 prospective basis. The term does not include an individual
1-18 physician or a group of employed physicians practicing medicine
1-19 under one federal tax identification number and whose total claims
1-20 paid to providers not employed by the group is less than 20 percent
1-21 of the total collected revenue of the group calculated on a
1-22 calendar year basis.
1-23 SECTION 2. The Texas Health Maintenance Organization Act
1-24 (Chapter 20A, Vernon's Texas Insurance Code) is amended by adding
2-1 Section 18C to read as follows:
2-2 Sec. 18C. DELEGATION OF CERTAIN FUNCTIONS TO DELEGATED
2-3 NETWORKS. (a) A health maintenance organization that enters into
2-4 a delegation agreement with a delegated network shall execute a
2-5 written agreement with the delegated network. The health
2-6 maintenance organization shall file the written agreement with the
2-7 department not later than the 30th day after the date the agreement
2-8 is executed. The written agreement must contain:
2-9 (1) a monitoring plan, which includes:
2-10 (A) a description of financial practices that
2-11 will ensure that the delegated network tracks and reports
2-12 liabilities that have been incurred but not reported;
2-13 (B) a summary of the total amount paid by the
2-14 delegated network to physicians and providers on a monthly basis;
2-15 and
2-16 (C) a summary of complaints from physicians and
2-17 providers regarding delays in payments of claims or nonpayment of
2-18 claims, including the status of each complaint, on a monthly basis;
2-19 (2) a provision that the agreement cannot be
2-20 terminated by the delegated network or the health maintenance
2-21 organization without written notice provided before the 90th day
2-22 preceding the termination date;
2-23 (3) a provision that prohibits the delegated network
2-24 and the physicians and providers with whom it has contracted from
2-25 billing or attempting to collect from an enrollee under any
2-26 circumstance, including the insolvency of the health maintenance
2-27 organization or delegated network, payments for covered services
3-1 other than authorized copayments and deductibles;
3-2 (4) a provision that the delegation agreement may not
3-3 be construed to limit in any way the health maintenance
3-4 organization's authority or responsibility to comply with all
3-5 statutory and regulatory requirements;
3-6 (5) a provision that requires a delegated network or a
3-7 third party to provide a license number and to certify that the
3-8 network or third party is licensed as a third party administrator
3-9 under Article 21.07-6, Insurance Code, if the health maintenance
3-10 organization delegates its claims payment function to the delegated
3-11 network or a third party;
3-12 (6) a provision that requires a delegated network or a
3-13 third party to provide a license number and to certify that the
3-14 network or third party is licensed as a utilization review agent
3-15 under Article 21.58A, Insurance Code, if the health maintenance
3-16 organization delegates its utilization review function to the
3-17 delegated network or a third party;
3-18 (7) an acknowledgment and agreement by the delegated
3-19 network that:
3-20 (A) the health maintenance organization is:
3-21 (i) required to establish, operate, and
3-22 maintain a health care delivery system, quality assurance system,
3-23 provider credentialing system, and other systems and programs that
3-24 meet statutory and regulatory standards; and
3-25 (ii) directly accountable for compliance
3-26 with those standards;
3-27 (iii) not precluded from contractually
4-1 requesting that the delegated network provide proof of financial
4-2 viability.
4-3 (B) the role of the delegated network and any
4-4 entity with which it subcontracts in contracting with the health
4-5 maintenance organization is limited to performing certain delegated
4-6 functions of the health maintenance organization, using standards
4-7 approved by the health maintenance organization and which are in
4-8 compliance with applicable statutes and rules and subject to the
4-9 health maintenance organization's oversight and monitoring of the
4-10 delegated network's performance; and
4-11 (C) if the delegated network fails to meet
4-12 monitoring standards established to ensure that functions delegated
4-13 or assigned to the network under the delegation contract are in
4-14 full compliance with all statutory and regulatory requirements, the
4-15 health maintenance organization may cancel delegation of any
4-16 management responsibilities;
4-17 (8) a provision that requires the delegated network to
4-18 make available to the health maintenance organization samples of
4-19 contracts with physicians and providers to ensure compliance with
4-20 the contractual requirements described by Subdivisions (2) and (3)
4-21 of this subsection, except that the agreement may not require that
4-22 the delegated network make available to the health maintenance
4-23 organization contractual provisions relating to financial
4-24 arrangements with the delegated network's physicians and providers;
4-25 and
4-26 (9) a provision that requires the delegated network to
4-27 provide the health maintenance organization, in a usable format
5-1 necessary for audit purposes and at most quarterly unless otherwise
5-2 specified in the agreement, the data necessary for the health
5-3 maintenance organization to comply with the department's reporting
5-4 requirements with respect to any delegated functions performed
5-5 under the delegation agreement, including:
5-6 (A) a summary:
5-7 (i) describing the methods, including
5-8 capitation, fee-for-service, or other risk arrangements, that the
5-9 delegated network used to pay its physicians and providers; and
5-10 (ii) including the percentage of
5-11 physicians and providers paid for each payment category;
5-12 (B) the period that claims and debts for medical
5-13 services owed by the delegated network have been pending and the
5-14 aggregate dollar amount of those claims and debts;
5-15 (C) information that will enable the health
5-16 maintenance organization to file claims for reinsurance,
5-17 coordination of benefits and subrogation, if required by the health
5-18 maintenance organization's contract with the delegated network; and
5-19 (D) documentation, except for information,
5-20 documents, and deliberations related to peer review that are
5-21 confidential or privileged under Section 5.06, Medical Practice Act
5-22 (Article 4495b, Vernon's Texas Civil Statutes), that relates to:
5-23 (i) a regulatory agency's inquiry or
5-24 investigation of the delegated network or of an individual
5-25 physician or provider with whom the delegated network contracts
5-26 that relates to an enrollee of the health maintenance organization;
5-27 and
6-1 (ii) the final resolution of a regulatory
6-2 agency's inquiry or investigation.
6-3 (b) A health maintenance organization shall provide to each
6-4 delegated network with which it has a delegation agreement the
6-5 following information in standard electronic format, at least
6-6 monthly unless otherwise provided in the agreement:
6-7 (1) the names and dates of birth or social security
6-8 numbers of the enrollees of the health maintenance organization who
6-9 are eligible or assigned to receive services from the delegated
6-10 network, including the enrollees added and terminated since the
6-11 previous reporting period;
6-12 (2) the age, sex, benefit plan and any riders to that
6-13 benefit plan, and employer for the enrollees of the health
6-14 maintenance organization who are eligible or assigned to receive
6-15 services from the delegated network;
6-16 (3) if the health maintenance organization pays any
6-17 claims for the delegated network, a summary of the number and
6-18 amount of claims paid by the health maintenance organization on
6-19 behalf of the delegated network during the previous reporting
6-20 period. A delegated network is not precluded from receiving, upon
6-21 request, additional information regarding such claims;
6-22 (4) if the health maintenance organization pays any
6-23 claims for the delegated network, a summary of the number and
6-24 amount of pharmacy prescriptions paid for each enrollee for which
6-25 the delegated network has taken partial risk during the previous
6-26 reporting period. A delegated network is not precluded from
6-27 receiving, upon request, additional information regarding such
7-1 claims;
7-2 (5) information that enables the delegated network to
7-3 file claims for reinsurance, coordination of benefits and
7-4 subrogation; and
7-5 (6) patient complaint data that relates to the
7-6 delegated network.
7-7 (c) In addition to the information required by Subsection
7-8 (b) of this section, a health maintenance organization shall
7-9 provide to a delegated network with which it has a delegation
7-10 agreement:
7-11 (1) detailed risk-pool data, reported quarterly and on
7-12 settlement; and
7-13 (2) the rates required by the agreement and any known
7-14 future facility contract rates for the health maintenance
7-15 organization, if hospital or facility costs impact the delegated
7-16 network's costs, reported annually or on recontract.
7-17 (d) A health maintenance organization that receives
7-18 information through the monitoring plan required by Subsection
7-19 (a)(1) of this section that indicates the delegated network is not
7-20 operating in accordance with its written agreement or is operating
7-21 in a condition that renders the continuance of its business
7-22 hazardous to the enrollees, shall, in writing:
7-23 (1) notify the delegated network of those findings;
7-24 and
7-25 (2) request a written explanation of:
7-26 (A) the delegated network's noncompliance with
7-27 the written agreement; or
8-1 (B) the existence of the condition that renders
8-2 the continuance of the delegated network's business hazardous to
8-3 the enrollees.
8-4 (e) A delegated network shall respond to a request from a
8-5 health maintenance organization under Subsection (d) of this
8-6 section in writing not later than the 30th day after the date the
8-7 request is received.
8-8 (f) The health maintenance organization shall cooperate with
8-9 the delegated network to correct any failure by the delegated
8-10 network to comply with the regulatory requirements of the
8-11 department relating to any matters:
8-12 (1) delegated to the delegated network by the health
8-13 maintenance organization; or
8-14 (2) necessary for the health maintenance organization
8-15 to ensure compliance with statutory or regulatory requirements.
8-16 (g) The health maintenance organization shall notify the
8-17 department and request intervention if:
8-18 (1) the health maintenance organization does not
8-19 receive a timely response from the delegated network as required by
8-20 Subsection (e) of this section; or
8-21 (2) the health maintenance organization receives a
8-22 timely response from the delegated network as required by
8-23 Subsection (e) of this section, but the health maintenance
8-24 organization and the delegated network are unable to reach an
8-25 agreement as to whether the delegated network:
8-26 (A) is complying with the written agreement; or
8-27 (B) has corrected any problem regarding a
9-1 practice that is hazardous to an enrollee of the health maintenance
9-2 organization.
9-3 (h) On receipt of a request for intervention under
9-4 Subsection (g) of this section, the department may:
9-5 (1) request financial and operational documents from
9-6 the delegated network to further investigate deficiencies indicated
9-7 by the monitoring plan;
9-8 (2) conduct an on-site audit of the delegated network
9-9 if the department determines that the delegated network is not
9-10 complying with the monitoring standards required under Subsection
9-11 (a)(1) of this section; or
9-12 (3) notwithstanding any other provisions, upon
9-13 violation of a monitoring plan, suspend or revoke the third party
9-14 administrator license or utilization review agent license of:
9-15 (A) the delegated network; or
9-16 (B) a third party with which the delegated
9-17 network has contracted.
9-18 (i) The department shall report to the delegated network and
9-19 the health maintenance organization the results of its review not
9-20 later than the 60th day after the date of the department's initial
9-21 request for documentation; provided, however, the department shall
9-22 not report to the health maintenance organization any information
9-23 regarding prices, cost of care, or other information not relevant
9-24 to the monitoring plan.
9-25 (j) The delegated network shall respond to the department's
9-26 report and submit a corrective plan to the department and to the
9-27 health maintenance organization not later than the 30th day after
10-1 the date the delegated network receives the department's report.
10-2 The delegated network may withhold information regarding prices,
10-3 cost of care, or other information not relevant to the monitoring
10-4 plan.
10-5 (k) Information required under Subsections (h), (i), or (j)
10-6 of this section is confidential and is not subject to the open
10-7 records law, Chapter 552, Government Code. The information is not
10-8 subject to court or department subpoena, except:
10-9 (1) as required by the constitution of this state or
10-10 the United States; or
10-11 (2) as necessary for the commissioner to enforce this
10-12 section.
10-13 (l) The department may request that a delegated network take
10-14 corrective action to comply with the department's statutory and
10-15 regulatory requirements that:
10-16 (1) relate to any matters delegated by the health
10-17 maintenance organization to the delegated network; or
10-18 (2) are necessary to ensure the health maintenance
10-19 organization's compliance with statutory and regulatory
10-20 requirements.
10-21 (m) If a delegated network does not comply with the
10-22 department's request for corrective action, the department may
10-23 order the health maintenance organization to:
10-24 (1) temporarily or permanently cease assignment of new
10-25 enrollees to the delegated network;
10-26 (2) temporarily or permanently transfer enrollees to
10-27 alternative delivery systems to receive services; or
11-1 (3) modify or terminate its contract with the
11-2 delegated network.
11-3 SECTION 3. This Act takes effect September 1, 1999.
11-4 SECTION 4. Articles 20A.02 (dd) and (ee) and 20A.18C,
11-5 Insurance Code, as added by this Act, expire September 2, 2003
11-6 unless continued in existence by the Legislature by that date.
11-7 SECTION 5. The Legislature shall conduct a bicameral interim
11-8 study to evaluate and make recommendations, if any, concerning the
11-9 regulation of delegated networks, including financial standards for
11-10 such networks and financial incentive arrangements between health
11-11 maintenance organizations and delegated networks. The interim
11-12 study shall be conducted by a Committee that shall consist of
11-13 members from both the House and the Senate. The committee shall
11-14 report back to the Lieutenant Governor, the Speaker of the House
11-15 and the Governor's Office no later than December 31, 2000.
11-16 SECTION 6. The importance of this legislation and the
11-17 crowded condition of the calendars in both houses create an
11-18 emergency and an imperative public necessity that the
11-19 constitutional rule requiring bills to be read on three several
11-20 days in each house be suspended, and this rule is hereby suspended.