By Smithee H.B. No. 3019
76R6318 DB-D
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 (B) the role of the delegated network in
4-1 contracting with the health maintenance organization is limited to
4-2 performing certain delegated functions of the health maintenance
4-3 organization, using standards approved by the health maintenance
4-4 organization and subject to the health maintenance organization's
4-5 oversight and monitoring of the delegated network's performance;
4-6 and
4-7 (C) if the delegated network fails to meet
4-8 monitoring standards established to ensure that functions delegated
4-9 or assigned to the network under the delegation contract are in
4-10 full compliance with all statutory and regulatory requirements, the
4-11 health maintenance organization may cancel delegation of any
4-12 management responsibilities;
4-13 (8) a provision that requires the delegated network to
4-14 make available to the health maintenance organization samples of
4-15 contracts with physicians and providers to ensure compliance with
4-16 the contractual requirements described by Subdivisions (2) and (3)
4-17 of this subsection, except that the agreement may not require that
4-18 the delegated network make available to the health maintenance
4-19 organization contractual provisions relating to financial
4-20 arrangements with the delegated network's physicians and providers;
4-21 and
4-22 (9) a provision that requires the delegated network to
4-23 provide the health maintenance organization, in a usable format
4-24 necessary for audit purposes and at most quarterly unless otherwise
4-25 specified in the agreement, the data necessary for the health
4-26 maintenance organization to comply with the department's reporting
4-27 requirements with respect to any delegated functions performed
5-1 under the delegation agreement, including:
5-2 (A) a summary:
5-3 (i) describing the methods, including
5-4 capitation, fee-for-service, or other risk arrangements, that the
5-5 delegated network used to pay its physicians and providers; and
5-6 (ii) including the percentage of
5-7 physicians and providers paid for each payment category;
5-8 (B) the period that claims and debts owed by the
5-9 delegated network have been pending and the dollar amount of those
5-10 claims and debts;
5-11 (C) information that will enable the health
5-12 maintenance organization to file claims for reinsurance,
5-13 coordination of benefits and subrogation, if required by the health
5-14 maintenance organization's contract with the delegated network; and
5-15 (D) documentation, except for information,
5-16 documents, and deliberations related to peer review that are
5-17 confidential or privileged under Section 5.06, Medical Practice Act
5-18 (Article 4495b, Vernon's Texas Civil Statutes), that relates to:
5-19 (i) a regulatory agency's inquiry or
5-20 investigation of the delegated network or of an individual
5-21 physician or provider with whom the delegated network contracts
5-22 that relates to an enrollee of the health maintenance organization;
5-23 and
5-24 (ii) the final resolution of a regulatory
5-25 agency's inquiry or investigation.
5-26 (b) A health maintenance organization shall provide to each
5-27 delegated network with which it has a delegation agreement the
6-1 following information in standard electronic format, at least
6-2 monthly unless otherwise provided in the agreement:
6-3 (1) the names of the enrollees of the health
6-4 maintenance organization who are eligible or assigned to receive
6-5 services from the delegated network, including the number of
6-6 enrollees added and terminated since the previous reporting period;
6-7 (2) the age, sex, benefit plan, and employer industry
6-8 information for the enrollees of the health maintenance
6-9 organization who are eligible or assigned to receive services from
6-10 the delegated network;
6-11 (3) the names of each claimant and the number and
6-12 amount of claims paid by the health maintenance organization on
6-13 behalf of the delegated network during the previous reporting
6-14 period;
6-15 (4) the names of each enrollee and the number and
6-16 amount of pharmacy prescriptions paid for each enrollee for which
6-17 the delegated network has taken partial risk during the previous
6-18 reporting period;
6-19 (5) a list of the unassigned members of the health
6-20 maintenance organization;
6-21 (6) information that enables the delegated network to
6-22 file claims for reinsurance, coordination of benefits and
6-23 subrogation; and
6-24 (7) patient complaint data that relates to the
6-25 delegated network.
6-26 (c) In addition to the information required by Subsection
6-27 (b) of this section, a health maintenance organization shall
7-1 provide to a delegated network with which it has a delegation
7-2 agreement:
7-3 (1) risk-pool data, reported annually or on
7-4 settlement; and
7-5 (2) the rates required by the agreement and any known
7-6 future facility contract rates for the health maintenance
7-7 organization, if hospital or facility costs impact the delegated
7-8 network's costs, reported annually or on recontract.
7-9 (d) A health maintenance organization that receives
7-10 information through the monitoring plan required by Subsection
7-11 (a)(1) of this section that indicates the delegated network is not
7-12 operating in accordance with its written agreement or is operating
7-13 in a condition that renders the continuance of its business
7-14 hazardous to the enrollees, shall, in writing:
7-15 (1) notify the delegated network of those findings;
7-16 and
7-17 (2) request a written explanation of:
7-18 (A) the delegated network's noncompliance with
7-19 the written agreement; or
7-20 (B) the existence of the condition that renders
7-21 the continuance of the delegated network's business hazardous to
7-22 the enrollees.
7-23 (e) A delegated network shall respond to a request from a
7-24 health maintenance organization under Subsection (d) of this
7-25 section in writing not later than the 30th day after the date the
7-26 request is received.
7-27 (f) The health maintenance organization shall cooperate with
8-1 the delegated network to correct any failure by the delegated
8-2 network to comply with the regulatory requirements of the
8-3 department relating to any matters:
8-4 (1) delegated to the delegated network by the health
8-5 maintenance organization; or
8-6 (2) necessary for the health maintenance organization
8-7 to ensure compliance with statutory or regulatory requirements.
8-8 (g) The health maintenance organization shall notify the
8-9 department and request intervention if:
8-10 (1) the health maintenance organization does not
8-11 receive a timely response from the delegated network as required by
8-12 Subsection (e) of this section; or
8-13 (2) the health maintenance organization receives a
8-14 timely response from the delegated network as required by
8-15 Subsection (e) of this section, but the health maintenance
8-16 organization and the delegated network are unable to reach an
8-17 agreement as to whether the delegated network:
8-18 (A) is complying with the written agreement; or
8-19 (B) has corrected any problem regarding a
8-20 practice that is hazardous to an enrollee of the health maintenance
8-21 organization.
8-22 (h) On receipt of a request for intervention under
8-23 Subsection (g) of this section, the department may:
8-24 (1) request financial and operational documents from
8-25 the delegated network to further investigate deficiencies indicated
8-26 by the monitoring plan;
8-27 (2) conduct an on-site audit of the delegated network
9-1 if the department determines that the delegated network is not
9-2 complying with the monitoring standards required under Subsection
9-3 (a)(1) of this section; or
9-4 (3) notwithstanding any other provisions, suspend or
9-5 revoke the third party administrator license or utilization review
9-6 agent license of:
9-7 (A) the delegated network; or
9-8 (B) a third party with which the delegated
9-9 network has contracted.
9-10 (i) The department shall report to the delegated network the
9-11 results of its review not later than the 60th day after the date of
9-12 the department's initial request for documentation.
9-13 (j) The delegated network shall respond to the department's
9-14 report and submit a corrective plan not later than the 30th day
9-15 after the date the delegated network receives the department's
9-16 report.
9-17 (k) Information required under Subsections (h), (i), or (j)
9-18 of this section is confidential and is not subject to the open
9-19 records law, Chapter 552, Government Code. The information is not
9-20 subject to court or department subpoena, except:
9-21 (1) as required by the constitution of this state or
9-22 the United States; or
9-23 (2) as necessary for the commissioner to enforce this
9-24 section.
9-25 (l) The department may request that a delegated network take
9-26 corrective action to comply with the department's statutory and
9-27 regulatory requirements that:
10-1 (1) relate to any matters delegated by the health
10-2 maintenance organization to the delegated network; or
10-3 (2) are necessary to ensure the health maintenance
10-4 organization's compliance with statutory and regulatory
10-5 requirements.
10-6 (m) If a delegated network does not comply with the
10-7 department's request for corrective action, the department may
10-8 order the health maintenance organization to:
10-9 (1) temporarily or permanently cease assignment of new
10-10 enrollees to the delegated network;
10-11 (2) temporarily or permanently transfer enrollees to
10-12 alternative delivery systems to receive services; or
10-13 (3) modify or terminate its contract with the
10-14 delegated network.
10-15 SECTION 3. This Act takes effect September 1, 1999.
10-16 SECTION 4. The importance of this legislation and the
10-17 crowded condition of the calendars in both houses create an
10-18 emergency and an imperative public necessity that the
10-19 constitutional rule requiring bills to be read on three several
10-20 days in each house be suspended, and this rule is hereby suspended.