By Smithee                                            H.B. No. 3022
         76R6898 PB-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to the regulation of health insurance, health care plans
 1-3     provided by health maintenance organizations, and other health
 1-4     benefit plans.
 1-5           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-6           SECTION 1.  Section 2, Texas Health Maintenance Organization
 1-7     Act (Article 20A.02, Vernon's Texas Insurance Code), is amended by
 1-8     adding Subsection (aa) to read as follows:
 1-9           (aa)  "Net worth" means the excess of total admitted assets
1-10     over total liabilities, excluding liability for subordinated debt
1-11     issued in compliance with Article 1.39, Insurance Code.
1-12           SECTION 2.  The Texas Health Maintenance Organization Act
1-13     (Chapter 20A, Vernon's Texas Insurance Code) is amended by  adding
1-14     Section 9A to read as follows:
1-15           Sec. 9A.  ACCESS TO OUT-OF-NETWORK PHYSICIANS AND PROVIDERS.
1-16     (a)  In this section:
1-17                 (1)  "Network physician or provider" means a physician
1-18     or provider who, under contract to a health maintenance
1-19     organization, provides health care services to  enrollees in a
1-20     health care plan.
1-21                 (2)  "Out-of-network physician or provider" means a
1-22     physician or  provider who is not under contract to a health
1-23     maintenance organization for a health  care plan.
1-24           (b)  An enrollee may select an out-of-network physician or
 2-1     provider to provide health care services to the enrollee.
 2-2           (c)  The health maintenance organization shall pay the
 2-3     out-of-network physician or provider an amount equal to the amount
 2-4     the health maintenance organization would pay to a network
 2-5     physician or provider for the same health care service. If the
 2-6     out-of-network physician or provider is providing services for
 2-7     which a network physician or provider would be compensated on a
 2-8     capitated basis, the health maintenance organization shall pay the
 2-9     out-of-network physician or provider an amount equal to the amount
2-10     the health maintenance organization would pay to a network
2-11     physician or provider for the period the out-of-network physician
2-12     or provider is providing services to the enrollee. Notwithstanding
2-13     any other law,  and except as provided by Subsection (d) of this
2-14     section,  an enrollee who selects an out-of-network physician or
2-15     provider  under Subsection (b) of this  section is responsible for
2-16     any amount charged for the health care service by that physician or
2-17     provider that exceeds the amount paid by the health  maintenance
2-18     organization, and shall pay that amount to the health maintenance
2-19     organization, to be forwarded to the out-of-network physician or
2-20     provider, plus a reasonable fee approved by the commissioner to
2-21     cover the administrative expenses incurred by the health
2-22     maintenance organization  before receiving the health care services
2-23     from the out-of-network physician or provider.
2-24           (d)  This section does not apply to health care services
2-25     provided by an out-of-network physician or provider as required
2-26     under Section 9, Texas Health Maintenance Organization Act (Chapter
2-27     20A, Vernon's Texas Insurance Code).
 3-1           (e)  The commissioner shall adopt rules to implement this
 3-2     section.
 3-3           SECTION 3.  The Texas Health Maintenance Organization Act
 3-4     (Chapter 20A, Vernon's Texas Insurance Code) is amended by adding
 3-5     Sections 13A, 13B, and 13C to read as follows:
 3-6           Sec. 13A.  MINIMUM NET WORTH.  (a)  A health maintenance
 3-7     organization authorized to provide basic health care services shall
 3-8     maintain a minimum net worth of $1.5 million.
 3-9           (b)  A health maintenance organization authorized to provide
3-10     limited health care services shall maintain a minimum net worth of
3-11     $1 million.
3-12           (c)  A health maintenance organization authorized to offer
3-13     only a single health care service plan shall maintain a minimum net
3-14     worth of $500,000.
3-15           (d)  The minimum net worth required by this section shall
3-16     consist only of the following:
3-17                 (1)  lawful money of the United States of America;
3-18                 (2)  bonds of this state;
3-19                 (3)  bonds or other evidences of indebtedness of the
3-20     United States of America or any of its agencies when such
3-21     obligations are guaranteed as to principal and interest by the
3-22     United States of America; or
3-23                 (4)  bonds or other interest-bearing evidences of
3-24     indebtedness of any counties or municipalities of this state.
3-25           Sec. 13B.  PHASE-IN PERIOD FOR MINIMUM NET WORTH.  (a)  A
3-26     health maintenance organization authorized to provide basic health
3-27     care services that was licensed before September 1, 1999, shall
 4-1     achieve and maintain a minimum net worth of:
 4-2                 (1)  $500,000 not later than December 31, 2000;
 4-3                 (2)  $1 million not later than December 31, 2001; and
 4-4                 (3)  $1.5 million not later than December 31, 2002.
 4-5           (b)  A health maintenance organization authorized to provide
 4-6     limited health care services that was licensed before September 1,
 4-7     1999, shall achieve and maintain a minimum net worth of:
 4-8                 (1)  $300,000 not later than December 31, 2000;
 4-9                 (2)  $600,000 not later than December 31, 2001; and
4-10                 (3)  $1 million not later than December 31, 2002.
4-11           (c)  A health maintenance organization authorized to offer
4-12     only a single health care service plan that was licensed before
4-13     September 1, 1999, shall achieve and maintain a minimum net worth
4-14     of:
4-15                 (1)  $150,000 not later than December 31, 2000;
4-16                 (2)  $300,000 not later than December 31, 2001; and
4-17                 (3)  $500,000 not later than December 31, 2002.
4-18           (d)  This section expires January 1, 2003.
4-19           Sec. 13C.  PROTECTION AGAINST INSOLVENCY: NET WORTH.
4-20     (a)  The commissioner may adopt rules or by rule establish
4-21     guidelines requiring any health maintenance organization that holds
4-22     a certificate of authority under this Act to maintain a specified
4-23     net worth based on:
4-24                 (1)  the nature and type of risks the health
4-25     maintenance organization underwrites or reinsures;
4-26                 (2)  the premium volume of risks the health maintenance
4-27     organization underwrites or reinsures;
 5-1                 (3)  the composition, quality, duration, or liquidity
 5-2     of the health maintenance organization's investment portfolio;
 5-3                 (4)  fluctuations in the market value of securities the
 5-4     health maintenance organization holds;
 5-5                 (5)  the adequacy of the health maintenance
 5-6     organization's reserves;
 5-7                 (6)  the number of individuals enrolled by the health
 5-8     maintenance organization; or
 5-9                 (7)  other business risks.
5-10           (b)  Rules adopted or guidelines established under Subsection
5-11     (a) of this section must be designed to ensure the financial
5-12     solvency of health maintenance organizations for the protection of
5-13     enrollees.  The rules and guidelines may provide for a health
5-14     maintenance organization to comply with a risk-based net worth
5-15     requirement established under Subsection (a) of this section in
5-16     stages over a two-year period.
5-17           SECTION 4.  Subchapter E, Chapter 21, Insurance Code, is
5-18     amended by adding Article 21.53T to read as follows:
5-19           Art. 21.53T.  COVERAGE FOR WELL BABY AND WELL CHILD CARE
5-20           Sec. 1.  DEFINITIONS.  In this article:
5-21                 (1)  "Enrollee" means an individual enrolled in a
5-22     health benefit plan.
5-23                 (2)  "Health benefit plan" means a plan described by
5-24     Section 2(a) of this article.
5-25                 (3)  "Well baby and well child care"  means health care
5-26     services for a child from birth through the date the child is 18
5-27     years of age, as defined by rules adopted by the Texas Board of
 6-1     Health.
 6-2           Sec. 2.  SCOPE OF ARTICLE.  (a)  This article applies only to
 6-3     a health benefit plan that provides benefits for medical or
 6-4     surgical expenses incurred as a result of a health condition,
 6-5     accident, or sickness, including an individual, group, blanket, or
 6-6     franchise insurance policy or insurance agreement, a group hospital
 6-7     service contract, or an individual or group evidence of coverage or
 6-8     similar coverage document that is offered by:
 6-9                 (1)  an insurance company;
6-10                 (2)  a group hospital service corporation operating
6-11     under Chapter 20 of this code;
6-12                 (3)  a fraternal benefit society operating under
6-13     Chapter 10 of this code;
6-14                 (4)  a stipulated premium insurance company operating
6-15     under Chapter 22 of this code;
6-16                 (5)  a reciprocal exchange operating under Chapter 19
6-17     of this code;
6-18                 (6)  a health maintenance organization operating under
6-19     the Texas Health Maintenance Organization Act (Chapter 20A,
6-20     Vernon's Texas Insurance Code);
6-21                 (7)  a multiple employer welfare arrangement that holds
6-22     a certificate of authority under Article 3.95-2 of this code; or
6-23                 (8)  an approved nonprofit health corporation that
6-24     holds a certificate of authority issued by the commissioner under
6-25     Article 21.52F of this code.
6-26           (b)  This article does not apply to:
6-27                 (1)  a plan that provides coverage:
 7-1                       (A)  only for a specified disease or other
 7-2     limited benefit;
 7-3                       (B)  only for accidental death or dismemberment;
 7-4                       (C)  for wages or payments in lieu of wages for a
 7-5     period during which an employee is absent from work because of
 7-6     sickness or injury;
 7-7                       (D)  as a supplement to liability insurance;
 7-8                       (E)  for credit insurance;
 7-9                       (F)  only for dental or vision care;
7-10                       (G)  only for hospital expenses; or
7-11                       (H)  only for indemnity for hospital confinement;
7-12                 (2)  a small employer health benefit plan written under
7-13     Chapter 26 of this code;
7-14                 (3)  a Medicare supplemental policy as defined by
7-15     Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss),
7-16     and its subsequent amendments;
7-17                 (4)  workers' compensation insurance coverage;
7-18                 (5)  medical payment insurance coverage issued as part
7-19     of a motor vehicle insurance policy; or
7-20                 (6)  a long-term care policy, including a nursing home
7-21     fixed indemnity policy, unless the commissioner determines that the
7-22     policy provides benefit coverage so comprehensive that the policy
7-23     is a health benefit plan as described by Subsection (a)  of this
7-24     section.
7-25           Sec. 3.  COVERAGE REQUIRED.  A health benefit plan that
7-26     provides benefits for a child of an enrollee must provide coverage
7-27     for each covered child of the enrollee for well baby and well child
 8-1     care, including newborn testing and screening for genetic and
 8-2     metabolic disorders.
 8-3           Sec. 4.  DEDUCTIBLE, COINSURANCE, AND COPAYMENT REQUIREMENTS.
 8-4     The benefits required under this article may not be made subject to
 8-5     a deductible, coinsurance, or copayment requirement that exceeds
 8-6     the deductible, coinsurance, or copayment requirements applicable
 8-7     to other similar benefits provided under the health benefit plan.
 8-8           Sec. 5.  RULES.  (a)  The Texas Board of Health shall adopt
 8-9     rules defining the scope of well baby and well child care.  In
8-10     adopting the rules, that board shall consider the guidelines and
8-11     recommendations of the American Academy of Pediatrics and the
8-12     American Academy of Family  Physicians or their successor
8-13     organizations or of other nationally recognized medical
8-14     organizations specializing in pediatric issues.  The board shall
8-15     provide the commissioner with the rules and any subsequent
8-16     amendments to those rules in a timely manner.
8-17           (b)  The commissioner may adopt rules as necessary to
8-18     administer this article.
8-19           SECTION 5.  Chapter 26, Insurance Code, is amended by adding
8-20     Subchapter I to read as follows:
8-21            SUBCHAPTER I.  AVAILABILITY OF CERTAIN HEALTH BENEFIT
8-22                           PLANS TO OTHER PERSONS
8-23           Art. 26.99.  AVAILABILITY OF CATASTROPHIC CARE AND BASIC
8-24     COVERAGE BENEFIT PLANS.  The commissioner by order may make
8-25     available to any individual or group the catastrophic care benefit
8-26     plan and the basic coverage benefit plan established under
8-27     Subchapter E of this chapter.
 9-1           SECTION 6.  Sections 13(i), (j), (k), and (l), Texas Health
 9-2     Maintenance Organization Act (Article 20A.13, Vernon's Texas
 9-3     Insurance Code), are repealed.
 9-4           SECTION 7.  (a)  In this section, "health benefit plan" has
 9-5     the meaning assigned by Article 21.53T, Insurance Code, as added by
 9-6     this Act.
 9-7           (b)  The Texas Department of Insurance shall conduct a study
 9-8     of health benefit plans in this state and shall, not later than
 9-9     January 15, 2001, make recommendations to the 77th Legislature for
9-10     legislation relating to:
9-11                 (1)  the regulation of health benefit plan issuers and
9-12     the rights and obligations of those issuers;
9-13                 (2)  the adequacy of coverage and services provided to,
9-14     and the fairness of rates for, persons receiving benefits under
9-15     health benefit plans, including persons covered under small and
9-16     large employer plans and plans for state employees and employees of
9-17     political subdivisions of the state;
9-18                 (3)  the rights and obligations of persons receiving
9-19     benefits under health benefit plans, including persons covered
9-20     under small and large employer plans and plans for state employees
9-21     and employees of political subdivisions of the state;
9-22                 (4)  the fairness of rates of compensation for
9-23     physicians and other health care providers under health benefit
9-24     plans and the rights and obligations of physicians and other health
9-25     care providers who provide services for which benefits are provided
9-26     under health benefit plans; and
9-27                 (5)  any other appropriate matter identified by the
 10-1    commissioner of insurance that relates to:
 10-2                      (A)  health benefit plans;
 10-3                      (B)  issuers of health benefit plans;
 10-4                      (C)  persons entitled to benefits under health
 10-5    benefit plans; and
 10-6                      (D)  physicians and other health care providers
 10-7    who provide services under health benefit plans.
 10-8          SECTION 8.  The Texas Department of Health shall adopt the
 10-9    rules required by Article 21.53T, Insurance Code, as added by this
10-10    Act, not later than November 1, 1999.
10-11          SECTION 9.  The change in law made by Sections 2, 4, and 6 of
10-12    this Act applies only to a health benefit plan that is delivered,
10-13    issued for delivery, or renewed on or after January 1, 2000.  A
10-14    health benefit plan that is delivered, issued for delivery, or
10-15    renewed before January 1, 2000,  is governed by the law as it
10-16    existed immediately before the effective date of this Act, and that
10-17    law is continued in effect for this purpose.
10-18          SECTION 10.  This Act takes effect September 1, 1999.
10-19          SECTION 11.  The importance of this legislation and the
10-20    crowded condition of the calendars in both houses create an
10-21    emergency and an imperative public necessity that the
10-22    constitutional rule requiring bills to be read on three several
10-23    days in each house be suspended, and this rule is hereby suspended.