By Nelson                                             S.B. No. 1231
         76R7318 KLA-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to purchasing health care services for certain programs
 1-3     operated by health and human services agencies.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Subchapter A, Chapter 533, Government Code, is
 1-6     amended by adding Section 533.0025 to read as follows:
 1-7           Sec. 533.0025.  AWARD OF CONTRACTS.  (a)  The commission by
 1-8     rule shall implement a system of selective contracting with managed
 1-9     care  organizations for the delivery of services through the
1-10     Medicaid managed care program.  The commission may not use an
1-11     open-enrollment contracting system under which any managed care
1-12     organization that meets commission criteria is entitled to contract
1-13     with the commission.
1-14           (b)  The commission may not publish a maximum capitation rate
1-15     in the minimum access and quality criteria included in a request
1-16     for proposals  from managed care organizations.
1-17           (c)  The commission shall periodically review and update the
1-18     minimum access and quality criteria included in a request for
1-19     proposals from  managed care organizations.
1-20           SECTION 2.  Section 533.003, Government Code, is amended to
1-21     read as follows:
1-22           Sec. 533.003.  CONSIDERATIONS IN AWARDING CONTRACTS.  In
1-23     awarding contracts to managed care organizations, the commission
1-24     shall:
 2-1                 (1)  give preference to organizations that have
 2-2     significant participation in the organization's provider network
 2-3     from each health care  provider in the region who has traditionally
 2-4     provided care to Medicaid and charity care patients;
 2-5                 (2)  give extra consideration to organizations that
 2-6     agree to assure continuity of care for at least three months beyond
 2-7     the period of Medicaid eligibility for recipients; [and]
 2-8                 (3)  consider the need to use different managed care
 2-9     plans to meet the needs of different populations; and
2-10                 (4)  give preference to organizations that offer the
2-11     lowest capitation rates.
2-12           SECTION 3.  Section 533.005, Government Code, is amended to
2-13     read as follows:
2-14           Sec. 533.005.  [REQUIRED] CONTRACT PROVISIONS.  (a)  A
2-15     contract between a managed care organization and the commission for
2-16     the organization  to provide health care services to recipients
2-17     must contain:
2-18                 (1)  procedures to ensure accountability to the state
2-19     for the provision of health care services, including procedures for
2-20     financial reporting, quality assurance, utilization review, and
2-21     assurance of contract and subcontract compliance;
2-22                 (2)  capitation and provider payment rates that ensure
2-23     the cost-effective provision of quality health care;
2-24                 (3)  a requirement that the managed care organization
2-25     provide ready access to a person who assists recipients in
2-26     resolving issues relating to enrollment, plan administration,
2-27     education and training, access to services, and grievance
 3-1     procedures;
 3-2                 (4)  a requirement that the managed care organization
 3-3     provide ready access to a person who assists providers in resolving
 3-4     issues relating to payment, plan administration, education and
 3-5     training, and grievance procedures;
 3-6                 (5)  a requirement that the managed care organization
 3-7     provide information and referral about the availability of
 3-8     educational, social, and other community services that could
 3-9     benefit a recipient;
3-10                 (6)  procedures for recipient outreach and education;
3-11                 (7)  a requirement that the managed care organization
3-12     make payment to a physician or provider for health care services
3-13     rendered to a recipient under a managed care plan not later than
3-14     the 45th day after the date a claim for payment  is received with
3-15     documentation reasonably necessary for the managed care
3-16     organization to process the claim, or within a period, not to
3-17     exceed 60 days, specified by a written agreement between the
3-18     physician or provider and the managed care organization;
3-19                 (8)  a requirement that the commission, on the date of
3-20     a recipient's enrollment in a managed care plan issued by the
3-21     managed care organization, inform the organization of the
3-22     recipient's Medicaid recertification date; and
3-23                 (9)  a requirement that the managed care organization
3-24     comply with Section 533.006 as a condition of contract retention
3-25     and renewal.
3-26           (b)  A contract between a managed care organization and the
3-27     commission for the organization to provide health care services to
 4-1     recipients of medical assistance may not contain a profit-sharing
 4-2     requirement that requires the managed care organization to share a
 4-3     percentage of its profits with a health and human services agency
 4-4     or the commission.
 4-5           SECTION 4.  Section 533.0075, Government Code, is amended to
 4-6     read as follows:
 4-7           Sec. 533.0075.  RECIPIENT ENROLLMENT.  (a)  The commission
 4-8     shall:
 4-9                 (1)  encourage recipients to choose appropriate managed
4-10     care plans and primary health care providers by:
4-11                       (A)  providing initial information to recipients
4-12     and providers in a region about the need for recipients to choose
4-13     plans and providers not later than the 90th day before the date on
4-14     which the commission plans to begin to provide health care services
4-15     to recipients in that region through managed care;
4-16                       (B)  providing follow-up information before
4-17     assignment of plans and providers and after assignment, if
4-18     necessary, to recipients who delay in choosing plans and providers;
4-19     and
4-20                       (C)  allowing plans and providers to provide
4-21     information to recipients or engage in marketing activities under
4-22     marketing guidelines established by the commission under Section
4-23     533.008 after the commission approves the information or
4-24     activities;
4-25                 (2)  except as provided by Subsection (b), assign
4-26     recipients who fail to choose plans and providers to a [consider
4-27     the following factors  in assigning] managed care plan [plans] and
 5-1     primary health care provider that offers the lowest capitation rate
 5-2     available to the commission  in  the health care service region
 5-3     [providers to recipients who fail to choose plans and providers:]
 5-4                       [(A)  the importance of maintaining existing
 5-5     provider-patient and physician-patient relationships, including
 5-6     relationships with specialists, public health clinics, and
 5-7     community health centers;]
 5-8                       [(B)  to the extent possible, the need to assign
 5-9     family members to the same providers and plans; and]
5-10                       [(C)  geographic convenience of plans and
5-11     providers for recipients];  and
5-12                 (3)  retain responsibility for enrollment and
5-13     disenrollment of recipients in managed care plans, except that the
5-14     commission may delegate the responsibility to an independent
5-15     contractor who receives no form of payment from, and has no
5-16     financial ties to, any managed care organization.
5-17           (b)  The commission may consider other relevant factors in
5-18     assigning a recipient under Subsection (a)(2) to a managed care
5-19     plan and primary health care provider, including whether a family
5-20     member of the recipient is enrolled in a managed care plan other
5-21     than the plan in which the recipient would be enrolled under
5-22     Subsection(a)(2).
5-23           SECTION 5.  Subchapter A, Chapter 533, Government Code, is
5-24     amended by adding Section 533.0095 to read as follows:
5-25           Sec. 533.0095.  CASE MANAGEMENT SERVICES FOR CERTAIN
5-26     RECIPIENTS.  The commission and the board of regents of The
5-27     University of Texas System by rule shall adopt a memorandum of
 6-1     understanding under which The University of Texas M. D. Anderson
 6-2     Cancer Center shall provide case management services to recipients
 6-3     with advanced forms of cancer.
 6-4           SECTION 6.  Subchapter A, Chapter 533, Government Code, is
 6-5     amended by adding Section 533.012 to read as follows:
 6-6           Sec. 533.012.  INFORMATION CLEARINGHOUSE.  (a)  The
 6-7     commission shall establish and maintain an information
 6-8     clearinghouse regarding the purchase of health care services
 6-9     through managed care organizations, including:
6-10                 (1)  capitation rates offered by managed care
6-11     organizations; and
6-12                 (2)  benefits plans offered by managed care
6-13     organizations.
6-14           (b)  The information clearinghouse must contain data
6-15     regarding managed care organizations that contract with:
6-16                 (1)  the commission; and
6-17                 (2)  the Employees Retirement System of Texas.
6-18           (c)  The information clearinghouse may contain data regarding
6-19     managed care organizations that contract with:
6-20                 (1)  The University of Texas System;
6-21                 (2)  local governments; and
6-22                 (3)  private employers in this state.
6-23           (d)  The Employees Retirement System of Texas shall cooperate
6-24     with the commission to provide the information required under
6-25     Subsection (b).
6-26           SECTION 7.  Subchapter B, Chapter 32, Human Resources Code,
6-27     is amended by adding Section 32.0275 to read as follows:
 7-1           Sec. 32.0275.  CONTRACTS FOR CERTAIN SERVICES.
 7-2     Notwithstanding Section 32.027, the department by rule shall
 7-3     develop and implement a system of selective contracting for the
 7-4     provision of laboratory services, home health services, eyeglass
 7-5     services, and medical supplies under the medical assistance
 7-6     program.  The department may not use an open-enrollment contracting
 7-7     system under which any person who meets department criteria is
 7-8     entitled to contract with the department.
 7-9           SECTION 8.  Subchapter B, Chapter 32, Human Resources Code,
7-10     is amended by adding Section 32.052 to read as follows:
7-11           Sec. 32.052.  COMPREHENSIVE CASE MANAGEMENT.  (a)  The
7-12     department by rule shall develop and implement a comprehensive case
7-13     management system to:
7-14                 (1)  provide oversight for the health care and
7-15     treatment plan of a recipient of medical assistance who has a
7-16     catastrophic illness or injury; and
7-17                 (2)  maximize the efficient use of department resources
7-18     while achieving the optimal patient outcome for the recipient.
7-19           (b)  The comprehensive case management system may include:
7-20                 (1)  monitoring claims submitted by health care
7-21     providers for reimbursement for inpatient hospital services
7-22     provided to a recipient of medical assistance to identify a
7-23     recipient who has a catastrophic illness or injury; and
7-24                 (2)  developing a long-term plan of care for a
7-25     recipient identified under Subdivision (1) in cooperation with the
7-26     recipient and the recipient's health care providers and family.
7-27           SECTION 9.  Subchapter E, Chapter 12, Health and Safety Code,
 8-1     is amended by adding Section 12.057 to read as follows:
 8-2           Sec. 12.057.  CONTRACTS FOR CERTAIN HEALTH CARE SERVICES.
 8-3     (a)  In this section, "center of excellence" means a health care
 8-4     facility that specializes in the diagnosis and treatment of a
 8-5     particular illness or injury, or of a series of related illnesses
 8-6     or injuries, and that has a history of providing high-quality
 8-7     health care services.
 8-8           (b)  If the department determines that a center of excellence
 8-9     can provide high-cost health care services at a comparable or lower
8-10     cost than the department would otherwise pay to another health care
8-11     provider, the department shall contract with such a center to
8-12     provide services to a person who voluntarily participates in the
8-13     program and who:
8-14                 (1)  is a recipient of medical assistance under Chapter
8-15     32, Human Resources Code;
8-16                 (2)  is eligible for kidney care services under Chapter
8-17     42; or
8-18                 (3)  is eligible for services under the Chronically Ill
8-19     and Disabled Children's Services program.
8-20           (c)  The health care services for which the department may
8-21     contract under Subsection (b) must include:
8-22                 (1)  organ transplantation services;
8-23                 (2)  neonatal intensive care services; and
8-24                 (3)  intensive cardiac care services.
8-25           (d)  The department may contract with a center of excellence
8-26     to provide other high-cost health care services as determined by
8-27     the department.
 9-1           SECTION 10.  (a)  The Health and Human Services Commission
 9-2     shall conduct a study regarding the applicability of and
 9-3     feasibility of using medical savings accounts authorized under the
 9-4     Internal Revenue Code of 1986, as amended, for the delivery of
 9-5     services to Medicaid recipients.
 9-6           (b)  The commission shall report the results of the study
 9-7     required by Subsection (a)  to the 77th Legislature.
 9-8           SECTION 11.  (a)  Not later than January 1, 2000, the Health
 9-9     and Human Services Commission shall develop and implement the
9-10     system of selective contracting required by Section 533.0025,
9-11     Government Code, as added by this Act.
9-12           (b)  Notwithstanding Section 533.0025, Government Code, as
9-13     added by this Act, the Health and Human Services Commission may
9-14     continue to use an open-enrollment contracting system with managed
9-15     care organizations for the delivery of services through the
9-16     Medicaid managed care program until the system of selective
9-17     contracting is implemented.
9-18           (c)  The change in law made by Section 533.0025, Government
9-19     Code, as added by this Act, applies only to a contract that is
9-20     entered into or renewed on or after the effective date of this Act.
9-21     A contract entered into before the effective date of this Act is
9-22     governed by the law in effect at the time the contract was entered
9-23     into, and that law is continued in effect for that purpose.
9-24           SECTION 12.  (a)  Not later than January 1, 2000, the Texas
9-25     Department of Health shall develop and implement the selective
9-26     contracting system required by Section 32.0275, Human Resources
9-27     Code, as added by this Act.  In developing the system, the
 10-1    department shall compare a cost-benefit analysis between using a
 10-2    statewide versus a regional competitive bidding process and shall
 10-3    implement the most cost-effective system.
 10-4          (b)  Notwithstanding Section 32.0275, Human Resources Code,
 10-5    as added by this Act:
 10-6                (1)  the department may continue to use an
 10-7    open-enrollment contracting system for the provision of laboratory
 10-8    services, home health services, eyeglass services, and medical
 10-9    supplies under the medical assistance program; and
10-10                (2)  a person under a contract executed before the
10-11    effective date of this Act may continue to provide services in
10-12    accordance with the contract until the contract expires or is
10-13    lawfully terminated.
10-14          (c)  The change in law made by Section 32.0275, Human
10-15    Resources Code, as added by this Act, applies only to a contract
10-16    that is entered into or renewed on or after the effective date of
10-17    this Act.  A contract entered into before the effective date of
10-18    this Act is governed by the law in effect at the time the contract
10-19    was entered into, and that law is continued in effect for that
10-20    purpose.
10-21          SECTION 13.  Not later than January 1, 2000, the Texas
10-22    Department of Health shall develop and implement the comprehensive
10-23    case management system required under Section 32.052, Human
10-24    Resources Code, as added by this Act.
10-25          SECTION 14.  The Texas Department of Health shall enter into
10-26    the contracts required by Section 12.057, Health and Safety Code,
10-27    as added by this Act, for a contract term to begin not later than
 11-1    September 1, 2001.
 11-2          SECTION 15.  If before implementing any provision of this Act
 11-3    a state agency determines that a waiver or authorization  from a
 11-4    federal agency is necessary for implementation of that provision,
 11-5    the agency affected by the provision shall request the waiver or
 11-6    authorization and may delay implementing that provision until the
 11-7    waiver or authorization is granted.
 11-8          SECTION 16.  This Act takes effect September 1, 1999.
 11-9          SECTION 17.  The importance of this legislation and the
11-10    crowded condition of the calendars in both houses create an
11-11    emergency and an imperative public necessity that the
11-12    constitutional rule requiring bills to be read on three several
11-13    days in each house be suspended, and this rule is hereby suspended.