By Harris S.B. No. 890 76R6814 AJA-F 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. The Texas Health Maintenance Organization Act 1-6 (Chapter 20A, Vernon's Texas Insurance Code) is amended by adding 1-7 Section 18B to read as follows: 1-8 Sec. 18B. DELEGATION OF CERTAIN FUNCTIONS. (a) In this 1-9 section: 1-10 (1) "Delegation agreement" means an agreement through 1-11 which a health maintenance organization transfers responsibility 1-12 for one or more functions regulated under this Act. 1-13 (2) "Delegated network" means an entity, other than a 1-14 health maintenance organization authorized to do business under 1-15 this Act or an insurer authorized to do business under Chapter 3, 1-16 Insurance Code, that by itself or through one or more entities 1-17 undertakes to arrange for or provide medical care to the health 1-18 maintenance organization's enrollees in exchange for a 1-19 predetermined payment per enrollee on a prepaid basis. The term 1-20 does not include an individual physician or a group of employed 1-21 physicians who practice medicine under one federal tax 1-22 identification number and whose total claims paid to providers not 1-23 employed by the group is less than 20 percent of the total 1-24 collected revenue of the group computed on a calendar-year basis. 2-1 (b) A health maintenance organization may enter into a 2-2 delegation agreement with a delegated network by executing a 2-3 written agreement with the network and filing the agreement with 2-4 the department not later than the 30th day after the date on which 2-5 the agreement is executed. The agreement must contain: 2-6 (1) a monitoring plan that requires: 2-7 (A) specified financial practices to ensure that 2-8 the network tracks and reports all liabilities that have been 2-9 incurred but not reported; 2-10 (B) a monthly summary of the total amount paid 2-11 by the network to physicians and providers; and 2-12 (C) a monthly summary of complaints from 2-13 physicians and providers regarding delays in payments of claims or 2-14 nonpayment of claims, including the status of each complaint; 2-15 (2) a provision that the agreement cannot be 2-16 terminated by the network or the health maintenance organization 2-17 without at least 90 days' written notice; 2-18 (3) a provision prohibiting the network and the 2-19 physicians and providers with whom it has contracted from billing 2-20 or attempting to collect payment from an enrollee for a covered 2-21 service, other than an authorized copayment or deductible, under 2-22 any circumstance, including the insolvency of the health 2-23 maintenance organization or the network; 2-24 (4) a provision stating that nothing in the agreement 2-25 may be construed to limit in any way the health maintenance 2-26 organization's authority or responsibility to comply with all 2-27 statutory and regulatory requirements; 3-1 (5) if the claims payment function has been delegated 3-2 by the health maintenance organization to the network or a third 3-3 party, an affirmation by the network or third party that: 3-4 (A) states that the network or third party is 3-5 certified as a third party administrator under Article 21.07-6, 3-6 Insurance Code; and 3-7 (B) includes the certificate number of the 3-8 network or third party; 3-9 (6) if the utilization review function has been 3-10 delegated by the health maintenance organization to the network or 3-11 a third party, an affirmation by the network or the third party 3-12 that: 3-13 (A) states that the network or third party is 3-14 certified as a utilization review agent under Article 21.58A, 3-15 Insurance Code; and 3-16 (B) includes the certificate number of the 3-17 network or third party; 3-18 (7) an acknowledgment and agreement by the network 3-19 that: 3-20 (A) the health maintenance organization is 3-21 required to establish, operate, and maintain a health care delivery 3-22 system, quality assurance system, provider-credentialing system, 3-23 and other systems and programs that meet statutory and regulatory 3-24 standards and is directly accountable for compliance with those 3-25 standards; 3-26 (B) the role of the network in contracting with 3-27 the health maintenance organization is limited to performing 4-1 certain delegated functions of the health maintenance organization, 4-2 using standards approved by the health maintenance organization and 4-3 subject to the health maintenance organization's oversight and 4-4 monitoring of the network's performance; and 4-5 (C) if the network fails to meet monitoring 4-6 standards designed to ensure that the network performs the 4-7 functions delegated to it under the agreement in full compliance 4-8 with all statutory and regulatory requirements, the health 4-9 maintenance organization may cancel delegation of any management 4-10 responsibilities; 4-11 (8) a provision requiring the network to make 4-12 available to the health maintenance organization samples of the 4-13 network's contracts with physicians and providers, excluding any 4-14 contractual provisions relating to financial arrangements with the 4-15 physicians or providers, to ensure compliance with the contractual 4-16 requirements described under Subsections (b)(2) and (3) of this 4-17 section; and 4-18 (9) a provision requiring the network to provide the 4-19 health maintenance organization, not more often than quarterly, in 4-20 a format usable for audit purposes, the data necessary for the 4-21 health maintenance organization to comply with the department's 4-22 reporting requirements with respect to any delegated functions 4-23 performed under the agreement, including: 4-24 (A) a summary describing the methods by which 4-25 physicians and providers were paid by the network, such as 4-26 capitation, fee-for-service, or other risk arrangements, including 4-27 the percentage of physicians and providers paid for each payment 5-1 category; 5-2 (B) the period that claims and debts owed by the 5-3 network have been pending and the dollar amount of those claims and 5-4 debts; 5-5 (C) information required for the health 5-6 maintenance organization to be able to file claims for reinsurance, 5-7 coordination of benefits, and subrogation, if required by the 5-8 agreement; and 5-9 (D) documentation relating to any inquiry into 5-10 or investigation by a regulatory agency of the network or any 5-11 individual physician or provider with whom the network contracts 5-12 that is related to the enrollees of the health maintenance 5-13 organization, including documentation of the final resolution of 5-14 the inquiry or investigation. 5-15 (c) Notwithstanding Subsection (b)(9)(D) of this section, 5-16 this section does not affect a requirement adopted under Section 5-17 5.06, Medical Practice Act (Article 4495b, Vernon's Texas Civil 5-18 Statutes), that requires information, documents, and deliberations 5-19 related to medical peer review to be confidential and privileged. 5-20 (d) A health maintenance organization shall provide at least 5-21 monthly unless another period is provided by this subsection to 5-22 each delegated network with which it has a delegation agreement 5-23 data in a standard electronic format that includes: 5-24 (1) the name of each health maintenance organization 5-25 enrollee eligible or assigned to receive services from the network; 5-26 (2) the number of enrollees added and terminated 5-27 during the previous reporting period; 6-1 (3) the age, sex, benefit plan, and employer's 6-2 industry information for each enrollee eligible for or assigned to 6-3 receive services from the network; 6-4 (4) the name of each enrollee that submitted a claim 6-5 during the previous reporting period and the number and amount of 6-6 claims paid by the health maintenance organization on behalf of the 6-7 network during the previous reporting period; 6-8 (5) the name of each enrollee for whom the network is 6-9 taking partial risk and for whom a pharmacy prescription was paid 6-10 and the number and amount of pharmacy prescriptions paid for those 6-11 enrollees during the previous reporting period; 6-12 (6) risk-pool data reported annually and on 6-13 settlement; 6-14 (7) a list of unassigned enrollees of the health 6-15 maintenance organization; 6-16 (8) if hospital or facility costs affect the network's 6-17 costs, any known future facility contract rates for the health 6-18 maintenance organization, reported annually and on renewal of the 6-19 agreement; 6-20 (9) information required for the network to be able to 6-21 file claims for reinsurance, coordination of benefits, and 6-22 subrogation; and 6-23 (10) patient complaint data related to the network. 6-24 (e) If a health maintenance organization receives 6-25 information through the monitoring plan required by Subsection 6-26 (b)(1) of this section that indicates the delegated network is not 6-27 operating in accordance with the delegation agreement or is 7-1 operating in a condition that makes its continued operation 7-2 hazardous to the enrollees, the health maintenance organization 7-3 shall notify the network of its findings and request in writing an 7-4 explanation of the network's noncompliance with the agreement or 7-5 the existence of the condition that makes its continued operation 7-6 hazardous to the enrollees. 7-7 (f) The delegated network shall respond in writing to a 7-8 request by the health maintenance organization under Subsection (e) 7-9 of this section not later than the 30th day after the date the 7-10 network receives the request. 7-11 (g) The health maintenance organization shall take 7-12 appropriate action to work with the delegated network to correct 7-13 any failure by the network to comply with regulatory requirements 7-14 relating to a function delegated to the network by the health 7-15 maintenance organization that are necessary to ensure compliance by 7-16 the health maintenance organization with regulatory requirements. 7-17 (h) The health maintenance organization shall notify the 7-18 department and request the department's intervention if: 7-19 (1) no response is received from a delegated network 7-20 to a request made under Subsection (e) of this section; or 7-21 (2) a response is received, but no agreement can be 7-22 reached between the health maintenance organization and the network 7-23 as to whether the network is complying with the delegation 7-24 agreement or has corrected a condition making its continued 7-25 operation hazardous to the enrollees. 7-26 (i) If a request is received by the department for 7-27 intervention, the department may: 8-1 (1) request financial and operational documents from a 8-2 delegated network to further investigate deficiencies indicated by 8-3 the monitoring plan; 8-4 (2) conduct an on-site audit of a network if the 8-5 department finds that the network is not complying with the 8-6 monitoring standards required under Subsection (b)(1) of this 8-7 section; and 8-8 (3) notwithstanding any other provision of this 8-9 section, and in accordance with applicable laws and department 8-10 rules, suspend or revoke a third party administrator or utilization 8-11 review agent certificate of a network or the third party with which 8-12 the network has contracted. 8-13 (j) Documents provided under Subsection (i) of this section 8-14 are confidential and privileged and are not subject to the open 8-15 records law, Chapter 552, Government Code, or to subpoena except as 8-16 necessary for the commissioner to enforce this Act. 8-17 (k) The department shall report to a delegated network the 8-18 results of a review performed under Subsection (i) of this section 8-19 not later than the 60th day after the date of the department's 8-20 initial request for documentation. The report is confidential and 8-21 privileged and is not subject to the open records law, Chapter 552, 8-22 Government Code, or to subpoena except as necessary for the 8-23 commissioner to enforce this Act. 8-24 (l) A delegated network shall respond and submit a 8-25 corrective plan not later than the 30th day after the date of 8-26 receipt of a report by the department made under Subsection (k) of 8-27 this section. The response and corrective plan are confidential 9-1 and privileged and are not subject to the open records law, Chapter 9-2 552, Government Code, or to subpoena except as necessary for the 9-3 commissioner to enforce this Act. 9-4 (m) The department may request that a delegated network take 9-5 corrective action to comply with the department's statutory and 9-6 regulatory requirements relating to any matter delegated by a 9-7 health maintenance organization to the network or that is necessary 9-8 to ensure the health maintenance organization's compliance with 9-9 statutory and regulatory requirements. If the network fails to 9-10 comply with the department's request for corrective action, the 9-11 department may order the health maintenance organization to: 9-12 (1) temporarily or permanently cease assignment of new 9-13 enrollees to the network; 9-14 (2) temporarily or permanently transfer patients to 9-15 alternative delivery systems to receive services; or 9-16 (3) modify or terminate its contract with the network. 9-17 SECTION 2. This Act takes effect September 1, 1999, and 9-18 applies only to a delegation agreement entered into on or after 9-19 that date. 9-20 SECTION 3. The importance of this legislation and the 9-21 crowded condition of the calendars in both houses create an 9-22 emergency and an imperative public necessity that the 9-23 constitutional rule requiring bills to be read on three several 9-24 days in each house be suspended, and this rule is hereby suspended.