AN ACT
1-1 relating to the delegation of certain functions by health
1-2 maintenance organizations.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section 2, Texas Health Maintenance Organization
1-5 Act (Article 20A.02, Vernon's Texas Insurance Code), is amended by
1-6 adding Subsections (dd) and (ee) to read as follows:
1-7 (dd) "Delegation agreement" means an agreement by which a
1-8 health maintenance organization assigns the responsibility for a
1-9 function regulated under this Act.
1-10 (ee) "Delegated network" means an entity, other than a
1-11 health maintenance organization authorized to do business under
1-12 this Act or an insurer authorized to do business under Chapter 3,
1-13 Insurance Code, which: (i) by itself, or through one or more
1-14 entities, undertakes to arrange for or to provide medical care to
1-15 an enrollee in exchange for a predetermined payment on a
1-16 prospective basis; and (ii) performs on behalf of the health
1-17 maintenance organization, any function regulated by this Act. The
1-18 term does not include an individual physician or a group of
1-19 employed physicians practicing medicine under one federal tax
1-20 identification number and whose total claims paid to providers not
1-21 employed by the group is less than 20 percent of the total
1-22 collected revenue of the group calculated on a 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,
2-17 enrollees, and providers regarding delays in payments of claims or
2-18 nonpayment of claims, including the status of each complaint, on a
2-19 monthly basis;
2-20 (2) a provision that the agreement cannot be
2-21 terminated without cause by the delegated network or the health
2-22 maintenance organization without written notice provided before the
2-23 90th day preceding the termination date;
2-24 (3) a provision that prohibits the delegated network
2-25 and the physicians and providers with whom it has contracted from
2-26 billing or attempting to collect from an enrollee under any
3-1 circumstance, including the insolvency of the health maintenance
3-2 organization or delegated network, payments for covered services
3-3 other than authorized copayments and deductibles;
3-4 (4) a provision that the delegation agreement may not
3-5 be construed to limit in any way the health maintenance
3-6 organization's authority or responsibility, including financial
3-7 responsibility, to comply with all statutory and regulatory
3-8 requirements;
3-9 (5) a provision that requires the delegated network to
3-10 comply with all statutory and regulatory requirements relating to
3-11 any function, duty, responsibility, or delegation assumed by or
3-12 carried out by the delegated network;
3-13 (6) a provision that requires a delegated network or a
3-14 third party to provide a license number and to certify that the
3-15 network or third party is licensed as a third party administrator
3-16 under Article 21.07-6, Insurance Code, if the health maintenance
3-17 organization delegates its claims payment function to the delegated
3-18 network or a third party;
3-19 (7) a provision that requires a delegated network or a
3-20 third party to provide a license number and to certify that the
3-21 network or third party is licensed as a utilization review agent
3-22 under Article 21.58A, Insurance Code, if the health maintenance
3-23 organization delegates its utilization review function to the
3-24 delegated network or a third party, and that:
3-25 (A) enrollees will receive notification at the
3-26 time of enrollment which entity has responsibility for performing
4-1 utilization review; and
4-2 (B) the delegated network or third party
4-3 performing utilization review shall do so in accordance with
4-4 Art. 21.58A, Insurance Code; and
4-5 (C) utilization review decisions made by the
4-6 delegated network or a third party shall be forwarded to the health
4-7 maintenance organization on a monthly basis;
4-8 (8) an acknowledgment and agreement by the delegated
4-9 network that:
4-10 (A) the health maintenance organization is:
4-11 (i) required to establish, operate, and
4-12 maintain a health care delivery system, quality assurance system,
4-13 provider credentialing system, and other systems and programs that
4-14 meet statutory and regulatory standards;
4-15 (ii) directly accountable for compliance
4-16 with those standards; and
4-17 (iii) not precluded from contractually
4-18 requesting that the delegated network provide proof of financial
4-19 viability;
4-20 (B) the role of the delegated network and any
4-21 entity with which it subcontracts in contracting with the health
4-22 maintenance organization is limited to performing certain delegated
4-23 functions of the health maintenance organization, using standards
4-24 approved by the health maintenance organization and which are in
4-25 compliance with applicable statutes and rules and subject to the
4-26 health maintenance organization's oversight and monitoring of the
5-1 delegated network's performance; and
5-2 (C) if the delegated network fails to meet
5-3 monitoring standards established to ensure that functions delegated
5-4 or assigned to the network under the delegation contract are in
5-5 full compliance with all statutory and regulatory requirements, the
5-6 health maintenance organization may cancel delegation of any or all
5-7 delegated functions;
5-8 (9) a provision that requires the delegated network to
5-9 make available to the health maintenance organization samples of
5-10 contracts with physicians and providers to ensure compliance with
5-11 the contractual requirements described by Subdivisions (2) and (3)
5-12 of this subsection, except that the agreement may not require that
5-13 the delegated network make available to the health maintenance
5-14 organization contractual provisions relating to financial
5-15 arrangements with the delegated network's physicians and providers;
5-16 (10) a provision that requires the delegated network
5-17 to provide the health maintenance organization, in a usable format
5-18 necessary for audit purposes and at most quarterly unless otherwise
5-19 specified in the agreement, the data necessary for the health
5-20 maintenance organization to comply with the department's reporting
5-21 requirements with respect to any delegated functions performed
5-22 under the delegation agreement, including:
5-23 (A) a summary:
5-24 (i) describing the methods, including
5-25 capitation, fee-for-service, or other risk arrangements, that the
5-26 delegated network used to pay its physicians and providers; and
6-1 (ii) including the percentage of
6-2 physicians and providers paid for each payment category;
6-3 (B) the period that claims and debts for medical
6-4 services owed by the delegated network have been pending and the
6-5 aggregate dollar amount of those claims and debts;
6-6 (C) information that will enable the health
6-7 maintenance organization to file claims for reinsurance,
6-8 coordination of benefits, and subrogation, if required by the
6-9 health maintenance organization's contract with the delegated
6-10 network; and
6-11 (D) documentation, except for information,
6-12 documents, and deliberations related to peer review that are
6-13 confidential or privileged under Section 5.06, Medical Practice Act
6-14 (Article 4495b, Vernon's Texas Civil Statutes), that relates to:
6-15 (i) a regulatory agency's inquiry or
6-16 investigation of the delegated network or of an individual
6-17 physician or provider with whom the delegated network contracts
6-18 that relates to an enrollee of the health maintenance organization;
6-19 and
6-20 (ii) the final resolution of a regulatory
6-21 agency's inquiry or investigation; and
6-22 (11) a provision relating to enrollee complaints that
6-23 requires the delegated network to ensure that upon receipt of a
6-24 complaint, as defined by this Act, the delegated network shall
6-25 report the complaint to the health maintenance organization within
6-26 two business days, except in the case of a complaint involving
7-1 emergency care as defined in this Act. In the case of a complaint
7-2 involving emergency care, the delegated network shall forward the
7-3 complaint immediately to the health maintenance organization.
7-4 Nothing herein shall prohibit the delegated network from attempting
7-5 to resolve a complaint.
7-6 (b) A health maintenance organization shall provide to each
7-7 delegated network with which it has a delegation agreement the
7-8 following information in standard electronic format, at least
7-9 monthly unless otherwise provided in the agreement:
7-10 (1) the names and dates of birth or social security
7-11 numbers of the enrollees of the health maintenance organization who
7-12 are eligible or assigned to receive services from the delegated
7-13 network, including the enrollees added and terminated since the
7-14 previous reporting period;
7-15 (2) the age, sex, benefit plan and any riders to that
7-16 benefit plan, and employer for the enrollees of the health
7-17 maintenance organization who are eligible or assigned to receive
7-18 services from the delegated network;
7-19 (3) if the health maintenance organization pays any
7-20 claims for the delegated network, a summary of the number and
7-21 amount of claims paid by the health maintenance organization on
7-22 behalf of the delegated network during the previous reporting
7-23 period. A delegated network is not precluded from receiving, upon
7-24 request, additional nonproprietary information regarding such
7-25 claims;
7-26 (4) if the health maintenance organization pays any
8-1 claims for the delegated network, a summary of the number and
8-2 amount of pharmacy prescriptions paid for each enrollee for which
8-3 the delegated network has taken partial risk during the previous
8-4 reporting period. A delegated network is not precluded from
8-5 receiving, upon request, additional nonproprietary information
8-6 regarding such claims;
8-7 (5) information that enables the delegated network to
8-8 file claims for reinsurance, coordination of benefits, and
8-9 subrogation; and
8-10 (6) patient complaint data that relates to the
8-11 delegated network.
8-12 (c) In addition to the information required by Subsection
8-13 (b) of this section, a health maintenance organization shall
8-14 provide to a delegated network with which it has a delegation
8-15 agreement:
8-16 (1) detailed risk-pool data, reported quarterly and on
8-17 settlement; and
8-18 (2) the percent of premium attributable to hospital or
8-19 facility costs, if hospital or facility costs impact the delegated
8-20 network's costs, reported quarterly, and, if there are changes in
8-21 hospital or facility contracts with the health maintenance
8-22 organization, the projected impact of those changes on the percent
8-23 of premium attributable to hospital and facility costs within 30
8-24 days of such changes.
8-25 (d) A health maintenance organization that receives
8-26 information through the monitoring plan required by Subsection
9-1 (a)(1) of this section that indicates the delegated network is not
9-2 operating in accordance with its written agreement or is operating
9-3 in a condition that renders the continuance of its business
9-4 hazardous to the enrollees, shall, in writing:
9-5 (1) notify the delegated network of those findings;
9-6 and
9-7 (2) request a written explanation of:
9-8 (A) the delegated network's noncompliance with
9-9 the written agreement; or
9-10 (B) the existence of the condition that renders
9-11 the continuance of the delegated network's business hazardous to
9-12 the enrollees.
9-13 (e) A delegated network shall respond to a request from a
9-14 health maintenance organization under Subsection (d) of this
9-15 section in writing not later than the 30th day after the date the
9-16 request is received.
9-17 (f) The health maintenance organization shall cooperate with
9-18 the delegated network to correct any failure by the delegated
9-19 network to comply with the regulatory requirements of the
9-20 department relating to any matters:
9-21 (1) delegated to the delegated network by the health
9-22 maintenance organization; or
9-23 (2) necessary for the health maintenance organization
9-24 to ensure compliance with statutory or regulatory requirements.
9-25 (g) The health maintenance organization shall notify the
9-26 department and request intervention if:
10-1 (1) the health maintenance organization does not
10-2 receive a timely response from the delegated network as required by
10-3 Subsection (e) of this section; or
10-4 (2) the health maintenance organization receives a
10-5 timely response from the delegated network as required by
10-6 Subsection (e) of this section, but the health maintenance
10-7 organization and the delegated network are unable to reach an
10-8 agreement as to whether the delegated network:
10-9 (A) is complying with the written agreement; or
10-10 (B) has corrected any problem regarding a
10-11 practice that is hazardous to an enrollee of the health maintenance
10-12 organization.
10-13 (h) On receipt of a request for intervention under
10-14 Subsection (g) of this section, the department may:
10-15 (1) request financial and operational documents from
10-16 the delegated network to further investigate deficiencies indicated
10-17 by the monitoring plan;
10-18 (2) conduct an on-site audit of the delegated network
10-19 if the department determines that the delegated network is not
10-20 complying with the monitoring standards required under Subsection
10-21 (a)(1) of this section; or
10-22 (3) notwithstanding any other provisions, upon
10-23 violation of a monitoring plan, suspend or revoke the third party
10-24 administrator license or utilization review agent license of:
10-25 (A) the delegated network; or
10-26 (B) a third party with which the delegated
11-1 network has contracted.
11-2 (i) The department shall report to the delegated network and
11-3 the health maintenance organization the results of its review not
11-4 later than the 60th day after the date of the department's initial
11-5 request for documentation; provided, however, the department shall
11-6 not report to the health maintenance organization any information
11-7 regarding fee schedules, prices, cost of care, or other information
11-8 not relevant to the monitoring plan.
11-9 (j) The delegated network shall respond to the department's
11-10 report and submit a corrective plan to the department and to the
11-11 health maintenance organization not later than the 30th day after
11-12 the date the delegated network receives the department's report.
11-13 The delegated network may withhold information regarding fee
11-14 schedules, prices, cost of care, or other information not relevant
11-15 to the monitoring plan.
11-16 (k) Reports and corrective plans required under Subsection
11-17 (i) or (j) of this section shall be treated as public documents,
11-18 except that health care provider fee schedules, prices, costs of
11-19 care, or other information not relevant to the monitoring plan and
11-20 any other information that is considered confidential by law shall
11-21 be considered confidential.
11-22 (l) The department may request that a delegated network take
11-23 corrective action to comply with the department's statutory and
11-24 regulatory requirements that:
11-25 (1) relate to any matters delegated by the health
11-26 maintenance organization to the delegated network; or
12-1 (2) are necessary to ensure the health maintenance
12-2 organization's compliance with statutory and regulatory
12-3 requirements.
12-4 (m) If a delegated network does not comply with the
12-5 department's request for corrective action, the department may
12-6 order the health maintenance organization to:
12-7 (1) temporarily or permanently cease assignment of new
12-8 enrollees to the delegated network;
12-9 (2) temporarily or permanently transfer enrollees to
12-10 alternative delivery systems to receive services; or
12-11 (3) modify or terminate its contract with the
12-12 delegated network.
12-13 (n) The commissioner shall maintain enrollee and provider
12-14 complaints in a manner that identifies complaints made about
12-15 delegated networks.
12-16 (o) The commissioner may adopt rules as necessary to
12-17 interpret, implement, and enforce this section.
12-18 SECTION 3. Subsection (b), Section 11, Texas Health
12-19 Maintenance Organization Act (Article 20A.11, Vernon's Texas
12-20 Insurance Code), is amended to read as follows:
12-21 (b) A health maintenance organization shall provide an
12-22 accurate written description of health care plan terms and
12-23 conditions, including restrictions or limitations related to
12-24 limited provider networks or delegated networks within a health
12-25 care plan, to allow any current or prospective group contract
12-26 holder and current or prospective enrollee eligible for enrollment
13-1 in a health care plan to make comparisons and informed decisions
13-2 before selecting among health care plans. The written description
13-3 must be in a readable and understandable format as prescribed by
13-4 the commissioner and shall include a current list of physicians and
13-5 providers, including delineation of limited provider networks and
13-6 delegated networks. The health maintenance organization may
13-7 provide its handbook to satisfy this requirement provided the
13-8 handbook's content is substantially similar to and achieves the
13-9 same level of disclosure as the written description prescribed by
13-10 the commissioner and the current list of physicians and providers
13-11 is also provided.
13-12 SECTION 4. This Act takes effect September 1, 1999, except
13-13 that Section 3 takes effect for any contract entered into or
13-14 renewed on or after January 1, 2000.
13-15 SECTION 5. Subsections (dd) and (ee), Section 2, Texas
13-16 Health Maintenance Organization Act (Article 20A.02, Vernon's Texas
13-17 Insurance Code), and Section 18C, Texas Health Maintenance
13-18 Organization Act (Chapter 20A, Vernon's Texas Insurance Code), as
13-19 added by this Act, expire September 2, 2001, unless continued in
13-20 existence by the legislature by that date.
13-21 SECTION 6. The importance of this legislation and the
13-22 crowded condition of the calendars in both houses create an
13-23 emergency and an imperative public necessity that the
13-24 constitutional rule requiring bills to be read on three several
13-25 days in each house be suspended, and this rule is hereby suspended.
_______________________________ _______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 890 passed the Senate on
April 26, 1999, by a viva-voce vote; and that the Senate concurred
in House amendment on May 18, 1999, by a viva-voce vote.
_______________________________
Secretary of the Senate
I hereby certify that S.B. No. 890 passed the House, with
amendment, on May 12, 1999, by a non-record vote.
_______________________________
Chief Clerk of the House
Approved:
_______________________________
Date
_______________________________
Governor