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.