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.