SRC-MKV C.S.S.B. 1839 77(R)BILL ANALYSIS
Senate Research CenterC.S.S.B. 1839
77R15530 AJA/DLF-FBy: Moncrief
Health & Human Services
5/24/2001(REVISED)
Committee Report (Substituted)
DIGEST AND PURPOSE
The nursing home industry is facing a crisis in this state. Liability
insurance rates are rising quickly, availability to insurance is dwindling,
and lawsuit settlements are growing. C.S.S.B. 1839 is a comprehensive
approach to addressing the nursing home crisis facing Texas. This approach
looks at the current system including quality of care, insurance rates, and
damage awards.
RULEMAKING AUTHORITY
Rulemaking authority is expressly granted to the Health and Human Services
Commission in SECTIONS 7.02 (Section 531.058, Government Code), 9.01
(Section 242.855, Health and Safety Code), and to the commissioner of
health and human services in SECTION 7.04.
SECTION BY SECTION ANALYSIS
SECTION 1.01. SHORT TITLE. Authorizes this Act to be cited as the
Long-Term Care Facility Improvement Act.
SECTION 1.02. LEGISLATIVE INTENT; PURPOSE. Sets forth the legislative
intent and purpose of this Act.
ARTICLE 2. NOTICE OF EXEMPLARY DAMAGES IN CERTAIN ACTIONS
SECTION 2.01. Amends Chapter 242B, Health and Safety Code, by adding
Section 242.051, as follows:
Sec. 242.051. NOTIFICATION OF AWARD OF EXEMPLARY DAMAGES. (a) Requires
the court to notify the Texas Department of Human Services (department) if
exemplary damages are awarded under Chapter 41, Civil Practice and Remedies
Code, against an institution or an officer, employee, or agent of an
institution.
(b) Requires the department, if the department receives notice under
Subsection (a), to maintain the information contained in the notice in the
records of the department relating to the history of the institution.
SECTION 2.02. Makes application of this article prospective.
ARTICLE 3. ADMISSIBILITY OF CERTAIN EVIDENCE IN CIVIL ACTION
SECTION 3.01. Amends Section 32.021(i) and (k), Human Resources Code, as
follows:
(i) Authorizes a record of the department, including a record of a
department survey, complaint investigation, incident investigation, or
survey report, that relates to an institution, including an intermediate
care facility for the mentally retarded, to be introduced into evidence in
certain proceedings if the record is admissible under the Texas Rules of
Evidence. Deletes exception as provided by Subsections (j) and (k).
Deletes text regarding state Medicaid program. Makes a conforming change.
(k) Authorizes a department surveyor or investigator to testify in a civil
action under certain criteria if the testimony is admissible under the
Texas Rules of Evidence. Makes conforming changes.
SECTION 3.02. Amends Chapter 242B, Health and Safety Code, by adding
Section 242.050, as follows:
Sec. 242.050. ADMISSIBILITY OF CERTAIN DOCUMENTS OR TESTIMONY. Provides
that Sections 32.021(i) and (k), Human Resources Code, govern the
admissibility in a civil action against an institution of certain items.
SECTION 3.03. Amends Chapter 252B, Health and Safety Code, by adding
Section 252.045 to make a conforming change.
SECTION 3.04. Repealer: Section 32.021(j) (relating to certain civil
actions), Human Resources Code.
SECTION 3.05. Makes application of this article prospective.
ARTICLE 4. DATA REPORTING FOR CERTAIN LIABILITY INSURANCE COVERAGE
SECTION 4.01. Amends Chapter 38, Insurance Code, by adding Subchapter F,
as follows:
SUBCHAPTER F. DATA REPORTING BY CERTAIN LIABILITY INSURERS
Sec. 38.251. INSURER DATA REPORTING. (a) Requires each insurer that
writes professional liability insurance policies for nursing institutions
licensed under Chapter 242, Health and Safety Code, including an insurer
whose rates are not regulated, to, as a condition of writing those policies
in this state, comply with a request for information from the commissioner
of insurance (commissioner) under this section.
(b) Authorizes the commissioner to require information by certain means
consistent with this code applicable to the affected insurer that the
commissioner believes will allow the commissioner to carry out certain
duties.
(c) Sets forth provisions relating to privileged and confidential
information.
Sec. 38.252. RECOMMENDATIONS TO LEGISLATURE. Requires the commissioner
to assemble information and take other appropriate measures to assess and
evaluate changes in the marketplace resulting from the implementation of
the legislation described by Section 38.251 and to report the
commissioner's findings and recommendations to the legislature.
ARTICLE 5. AVAILABILITY OF AND COVERAGE UNDER CERTAIN PROFESSIONAL
LIABILITY INSURANCE
SECTION 5.01. Amends Section 2(2), Article 5.15-1, Insurance Code, to
redefine "health care provider."
SECTION 5.02. Amends Section 8, Article 5.15-1, Insurance Code, as follows:
Sec. 8. New heading: EXEMPLARY DAMAGES UNDER MEDICAL PROFESSIONAL
LIABILITY INSURANCE. Authorizes no policy of medical professional
liability insurance issued to or renewed for a health care provider or
physician in this state to include coverage for exemplary damages that may
be assessed against the health care provider or physician; provided,
however, that the commissioner may approve an endorsement form that
provides for coverage for punitive damages to be used on a policy of
medical professional liability insurance issued to a hospital, as the term
"hospital" is defined in this article, or to a for-profit or not-for-profit
nursing home.
SECTION 5.03. Amends Chapter 5B, Insurance Code, by adding Article 5.15-4,
as follows:
Art. 5.15-4. BEST PRACTICES FOR NURSING HOMES. (a) Requires the
commissioner to adopt best practices for risk management and loss control
that may be used by for-profit and not-for-profit nursing homes.
(b) Authorizes an insurance company or the Texas Medical Liability
Insurance Underwriting Association, in determining rates for professional
liability insurance applicable to a for-profit or not-for-profit nursing
home, to consider whether the nursing home adopts and implements the best
practices adopted by the commissioner under Subsection (a) of this article.
(c) Requires the commissioner, in developing or amending best practices
for for-profit and not-for-profit nursing homes, to consult with the Health
and Human Services Commission and a task force appointed by the
commissioner. Requires the task force to be composed of certain
representatives.
(d) Provides that the best practices for risk management and loss control
adopted under this article do not establish standards of care for nursing
homes applicable in a civil action against a nursing home.
SECTION 5.04. Amends Section 2(6), Article 21.49-3, Insurance Code, to
redefine "health care provider."
SECTION 5.05. Amends Article 21.49-3(3A), Insurance Code, by adding
Subsection (c) to provide that a for-profit or not-for-profit nursing home
not otherwise eligible under this section for coverage from the association
is eligible for coverage if the nursing home demonstrates, in accordance
with the requirements of the association, that the nursing home made a
verifiable effort to obtain coverage from authorized insurers and eligible
surplus lines insurers and was unable to obtain substantially equivalent
coverage and rates.
SECTION 5.06. Amends Article 21.49-3(4B(1)), Insurance Code, to change a
reference from "board" to "commissioner" and to add language provide that,
for the purposes of this article, rates, rating plans, rating rules, rating
classifications, territories, and policy forms for for-profit nursing homes
are subject to the requirements of Article 5.15-1 of this code to the same
extent as not-for-profit nursing homes.
SECTION 5.07. Amends Article 21.49-3(4A), Insurance Code, to read as
follows:
Sec. 4A. POLICYHOLDER'S STABILIZATION RESERVE FUND. (a) Adds language
providing that the purpose of the fund is to ensure the financial soundness
of the association. Authorizes the fund to be used only for the purposes of
this article.
(c) Deletes reference to "policyholder's."
(d) Requires collections of the stabilization reserve fund charge, except
as provided by Subsection (e) of this section, to continue only until such
time as the net balance of the stabilization reserve fund is not less than
the projected sum of premiums to be written in the year following valuation
date.
(e) Authorizes the commissioner, if in any fiscal year the incurred losses
and defense and cost-containment expenses from physicians or any single
category of health care provider result in a net underwriting loss and
exceed 25 percent of the stabilization reserve fund, as valued for that
year, by order to direct the initiation or continuation of the
stabilization reserve fund charge for physicians or that category of health
care provider until the fund recovers the amount by which those losses and
cost-containment expenses exceed 25 percent of the fund.
(f) Requires the stabilization reserve fund to be credited
with all stabilization reserve fund charges collected from policyholders
and to be charged with any deficit from the prior year's operation of the
association.
(g) Sets forth provisions relating to the stabilization reserve fund.
(h) Authorizes the stabilization fund to be terminated only by law,
notwithstanding Sections 11, 12, and 13 of this article.
(i) Requires that, notwithstanding Section 11 of this article, on
termination of the stabilization reserve fund, all assets of the fund be
transferred to the general revenue fund to be appropriated for purposes
related to ensuring the kinds of liability insurance coverage that may be
provided by the association under this article.
SECTION 5.08. Amends Article 21.49-3, Insurance Code, by adding Section
4B, as follows:
Sec. 4B. LIABILITY FOR EXEMPLARY DAMAGES; EXPIRATION. (a) Provides that
the association is not liable for exemplary damages under a professional
liability insurance policy that covers a for-profit or not-for-profit
nursing home and that excludes coverage for exemplary damages awarded in
relation to a covered claim award under Chapter 41, Civil Practice and
Remedies Code, or any other law. Provides that this subsection applies
without regard to the application of the common law theory or recovery
known in Texas as the "Stowers Doctrine." Provides that this subsection
does not affect the application of that doctrine to the liability of the
association for compensatory damages.
(b) Provides that this section does not affect the contractual duties
imposed under an insurance policy.
(c) Provides that this section does not prohibit a for-profit or
not-for-profit nursing home from purchasing a policy to cover exemplary
damages.
(d) Provides that this section only applies to the liability of the
association for exemplary damages under an insurance policy delivered,
issued for delivery, or renewed by the association to a for-profit or
not-for-profit nursing home on or after January 1, 2002, and applies only
to coverage provided under the policy for any portion of the term of the
policy that occurs before January 1, 2006. Provides that this section
applies only to the liability of the association for exemplary damages with
respect to a claim for which a notice of loss or notice of occurrence was
made, or should have been made, in accordance with the terms of the policy,
on or after January 1, 2002, but before January 1, 2006.
(e) Provides that this section expires January 1, 2007.
SECTION 5.09. Amends Chapter 21E, Insurance Code, by adding Article
21.49-3d, to read as follows:
Art. 21.49-3d. REVENUE BOND PROGRAM AND PROCEDURES FOR CERTAIN LIABILITY
INSURANCE
Sec. 1. LEGISLATIVE FINDING; PURPOSE. Sets forth provisions regarding
legislative finding and purpose.
Sec. 2. DEFINITION. Defines "association," "bond resolution," "board," and
"insurer."
Sec. 3. BONDS AUTHORIZED; APPLICATION OF TEXAS PUBLIC FINANCE AUTHORITY
ACT. (a) Requires the Texas Public Finance Authority, on behalf of the
fund, to issue revenue bonds to meet certain criteria.
(b) Provides that, to the extent not inconsistent with this article,
Chapter 1232, Government Code, applies to bonds issued under this article.
Provides that in the event of a conflict, this article controls.
Sec. 4. APPLICABILITY OF OTHER STATUTES. Provides that certain laws apply
to bonds issued under this article to the extent consistent with this
article.
Sec. 5. LIMITS. Authorizes the Texas Public Finance Authority to issue,
on behalf of the association, bonds in a total amount not to exceed $75
million.
Sec. 6. CONDITIONS. (a) Authorizes bonds to be issued at public or
private sale.
(b) Authorizes bonds to mature not more than 10 years after the date
issued.
(c) Requires bonds to be issued in the name of the association.
Sec. 7. ADDITIONAL COVENANTS. Authorizes the board, in a bond resolution,
to make additional covenants with respect to the bonds and the designated
income and receipts of the association pledged to their payment and to
provide for the flow of funds and the establishment, maintenance, and
investment of funds and accounts with respect to the bonds.
Sec. 8. SPECIAL ACCOUNTS. (a) Authorizes a bond resolution to establish
special accounts, including an interest and sinking fund account, reserve
account, and other accounts.
(b) Requires the association to administer the accounts in accordance with
Article 21.49-3 of this code.
Sec. 9. SECURITY. (a) Provides that bonds are payable only from the
maintenance tax surcharge established in Section 10 of this article or
other sources the fund is authorized to levy, charge, and collect in
connection with paying any portion of the bonds.
(b) Provides that bonds are obligations solely of the association.
Provides that bonds do not create a pledging, giving, or lending of the
faith, credit, or taxing authority of this state.
(c) Requires each bond to include a statement that the state is not
obligated to pay any amount on the bond and that the faith, credit, and
taxing authority of this state are not pledged, given, or lent to those
payments.
(d) Requires each bond issued under this article to state on its face that
the bond is payable solely from the revenues pledged for that purpose and
that the bond does not and may not constitute a legal or moral obligation
of the state.
Sec. 10. MAINTENANCE TAX SURCHARGE. (a) Provides that a maintenance tax
surcharge is assessed against certain entities.
(b) Requires the maintenance tax surcharge to be set in an amount
sufficient to pay all debt service on the bonds. Provides that the
maintenance tax surcharge is set by the commissioner in the same time and
is required to be collected by the comptroller on behalf of the association
in the same manner as applicable maintenance taxes are collected under
Article 5.24 of this code.
(c) Requires the department, on determining the rate of assessment, to
increase the maintenance tax rate applicable to correctly reported gross
premiums for liability insurance to a rate sufficient to pay all debt
service on the bonds, subject to the maximum maintenance tax rate
applicable to the insurer under Article 5.24 of this code. Authorizes the
department, if the resulting tax rate is insufficient to pay all debt
service on the bonds, to assess an additional surcharge not to exceed one
percent of correctly reported gross premiums for liability insurance to
cover all debt service on the bonds. Provides that in this code, the
maintenance tax surcharge includes the additional maintenance tax assessed
under this subsection and the surcharge assessed under this subsection to
pay all debt service of the bonds.
(d) Authorizes the association and each insurer to pass through the
maintenance tax surcharge to each of its policyholders.
(e) Provides that as a condition of engaging in the business of insurance
in this state, an insurer agrees that if the company leaves the market for
liability insurance in this state the insurer remains obligated to pay,
until the bonds are retired, the insurer's share of the maintenance tax
surcharge assessed under this section in an amount proportionate to that
insurer's share of the market for liability insurance in this state as of
the last complete reporting period before the date on which the insurer
ceases to engage in that insurance business in this state. Requires the
proportion assessed against the insurer to be based on the insurer's gross
premiums for liability insurance for the insurer's last reporting period.
Provides, however, that an insurer is not required to pay the proportionate
amount in any year in which the surcharge assessed against insurers
continuing to write liability insurance in this state is sufficient to
service the bond obligation.
Sec. 11. TAX EXEMPT. Provides that the bonds issued under this article,
and any interest from the bonds, and all assets pledged to secure the
payment of the bonds are free from taxation by the state or a political
subdivision of this state.
Sec. 12. AUTHORIZED INVESTMENTS. Provides that the bonds issued under
this article constitute authorized investments under Article 2.10 and
Subpart A, Part I, Article 3.39 of this code.
Sec. 13. STATE PLEDGE. Provides that the state pledges to and agrees with
the owners of any bonds issued in accordance with this article that the
state will not limit or alter the rights vested in the association to
fulfill the terms of any agreements made with the owners of the bonds or in
any way impair the rights and remedies of those owners until the bonds, any
premium or interest, and all costs and expenses in connection with any
action or proceeding by or on behalf of those owners are fully met and
discharged. Authorizes the association to include this pledge and
agreement of the state in any agreement with the owners of the bonds.
Sec. 14. ENFORCEMENT BY MANDAMUS. Provides that a writ of mandamus and
all other legal and equitable remedies are available to any party at
interest to require the association and any other party to carry out
agreements and to perform functions and duties under this article, the
Texas Constitution, or a bond resolution.
SECTION 5.10. Requires the commissioner of insurance, not later than
December 1, 2001, to adopt the initial best practices for for-profit and
not-for-profit nursing homes adopted as required by Article 5.15-4,
Insurance Code, as added by this article.
SECTION 5.11. Provides that Section 11, Article 5.15-1, Insurance Code, as
added by this article, and Sections 2, 3A, and 4, Article 21.49-3,
Insurance Code, as amended by this article, apply only to an insurance
policy delivered, issued for delivery, or renewed on or after January 1,
2002. Provides that a policy delivered, issued for delivery, or renewed
before January 1, 2002, is governed by the law as it existed immediately
before the effective date of this Act, and that law is continued in effect
for that purpose.
ARTICLE 6. MANDATORY LIABILITY INSURANCE FOR
NURSING INSTITUTIONS
SECTION 6.01. Amends Chapter 242B, Health and Safety Code, by adding
Section 242.0372, as follows:
Sec. 242.0372. LIABILITY INSURANCE COVERAGE. (a) Provides that in this
section, "health care liability claim" has the meaning assigned by the
Medical Liability and Insurance Improvement Act of Texas (Article 4590i,
V.T.C.S.).
(b) Requires an institution, to hold a license under this chapter, to
maintain professional liability insurance coverage against the liability of
the institution for a health care liability claim.
(c) Requires the insurance coverage maintained by an institution under
this section to meet certain criteria.
(d) Provides that to the extent permitted by federal law and applicable
state and federal rules, the cost of insurance coverage required to be
maintained under this section is an allowable cost for reimbursement under
the state Medicaid program.
SECTION 6.02. (a) Provides that notwithstanding Section 242.0372, Health
and Safety Code, as added by this article, and subject to Subsection (b) of
this section, an institution licensed under Chapter 242, Health and Safety
Code, is not required to maintain professional liability insurance as
required by that section before September 1, 2002.
(b) Prohibits the Texas Department of Human Services, before September 1,
2003, from taking any enforcement action, including an action to suspend or
revoke a license, because an institution fails to maintain professional
liability insurance as required by Section 242.0372, Health and Safety
Code, as added by this article, if the department determines, considering
the totality of the circumstances, that the institution does not have the
financial ability to obtain the insurance without jeopardizing the quality
of care to residents.
ARTICLE 7. SURVEYS AND RELATED PROCESSES
SECTION 7.01. Amends Chapter 22, Human Resources Code, by adding Section
22.037, to read as follows:
Sec. 22.037. TRAINING AND CONTINUING EDUCATION RELATED TO CERTAIN
LONG-TERM CARE FACILITIES. (a) Defines "long-term facility," "provider,"
and "surveyor."
(b) Requires the Texas Department of Human Services (department) to
require a surveyor to complete a basic training program before the surveyor
inspects, surveys, or investigates a long-term care facility. Requires the
training to include observation of the operations of a long-term care
facility unrelated to the survey, inspection, or investigation process for
a minimum of 10 working days within a 14-day period.
(c) Requires the department to semiannually provide training for surveyors
and providers on subjects that address at least one of the 10 most common
violations by long-term care facilities under federal or state law.
(d) Requires a surveyor who is a health care professional licensed under
the laws of this state, except as provided by Subsection (e), to receive a
minimum of 50 percent of the professional's required continuing education
credits, if any, in gerontology or care for individuals with cognitive or
physical disabilities, as appropriate.
(e) Requires a surveyor who is a pharmacist to receive a minimum of 30
percent of the pharmacist's required continuing education credits in
gerontology or care for individuals with cognitive or physical
disabilities, as appropriate.
SECTION 7.02. Amends Chapter 531B, Government Code, by adding Sections
531.056, 531.057, and 531.058, to read as follows:
Sec. 531.056. REVIEW OF SURVEY PROCESS IN CERTAIN INSTITUTIONS AND
FACILITIES. (a) Requires the Health and Human Services Commission
(commission) to adopt procedures to review certain criteria.
(b) Requires the commission to annually report to the speaker of the house
of representatives, the lieutenant governor, and the governor on the
findings of the review conducted under Subsection (a).
Sec. 531.057. QUALITY ASSURANCE EARLY WARNING SYSTEM FOR LONG-TERM CARE
FACILITIES; RAPID RESPONSE TEAMS. (a) Defines "long-term care facility"
and "quality-of-care monitor."
(b) Requires the commission to establish an early warning system to detect
conditions that could be detrimental to the health, safety, and welfare of
residents. Requires the early warning system to include analysis of
financial and quality-of-care indicators that would predict the need for
the commission to take action.
(c) Requires the commission to establish regional offices with one or more
quality-of-care monitors, based on the number of long-term care facilities
in the region, to monitor the facilities in the region on a regular,
unannounced, aperiodic basis, including nights, evenings, weekends, and
holidays.
(d) Requires priority for monitoring visits to be given to long-term care
facilities with a history of patient care deficiencies.
(e) Prohibits quality-of-care monitors from being deployed by the
commission as a part of the regional survey team in the conduct of routine,
scheduled surveys.
(f) Prohibits a quality-of-care monitor from interfering with, impeding,
or otherwise adversely affecting the performance of the duties of a
surveyor, inspector, or investigator of the Texas Department of Human
Services.
(g) Requires quality-of-care monitors to assess certain criteria.
(h) Requires the quality-of-care monitor to include in an assessment visit
to meet certain criteria.
(i) Requires the identity of a resident or a family member of a resident
interviewed by a quality-of-care monitor as provided by Subsection (h)(2)
to remain confidential and prohibits the person's identity from being
disclosed to any person under any other provision of this section.
(j) Requires the findings of a monitoring visit, both positive and
negative, to be provided orally and in writing to the long-term care
facility administrator or, in the absence of the facility administrator, to
the administrator on duty or the director of nursing.
(k) Authorizes the quality-of-care monitor to recommend to the long-term
care facility administrator procedural and policy changes and staff
training to improve the care or quality of life of facility residents.
(l) Requires conditions observed by the quality-of-care monitor that
create an immediate threat to the health or safety of a resident to be
reported immediately to the regional office supervisor for appropriate
action and, as appropriate or as required by law, to law enforcement, adult
protective services, or other responsible agencies.
(m) Requires the commission to create rapid response teams composed of
health care experts that can visit long-term care facilities identified
through the commission's early warning system.
(n) Authorizes rapid response teams to visit long-term care facilities
that request the commission's assistance. Prohibits a visit under this
subsection from occurring before the 60th day after the date of an exit
interview following an annual or follow-up survey or inspection.
(o) Prohibits the rapid response teams from being deployed for the purpose
of helping a long-term care facility prepare for a regular inspection or
survey conducted under Chapter 242, 247, or 252, Health and Safety Code, or
in accordance with Chapter 32, Human Resources Code.
Sec. 531.058. INFORMAL DISPUTE RESOLUTION FOR CERTAIN LONG-TERM CARE
FACILITIES. (a) Requires the commission by rule to establish an informal
dispute resolution process in accordance with this section. Requires the
process to provide for adjudication by an appropriate disinterested person
of disputes relating to a proposed enforcement action or related proceeding
of the Texas Department of Human Services under Section 32.021(d), Human
Resources Code, or Chapter 242, 247, or 252, Health and Safety Code.
Requires the informal dispute resolution process to require certain
criteria to be met.
(b) Requires the commission to adopt rules to adjudicate claims in
contested cases.
(c) Prohibits the commission from delegating its responsibility to
administer the informal dispute resolution process established by this
section to another state agency.
SECTION 7.03. Amends Section 32.021(d), Human Resources Code, to require
the department to include in its contracts for the delivery of medical
assistance by nursing facilities provisions for monetary penalties to be
assessed for violations as required by 42 U.S.C. Section 1396r, including
without limitation the Omnibus Budget Reconciliation Act (OBRA), P.L.
100-203, Nursing Home Reform Amendments of 1987, provided that the
department is required to meet certain criteria. Deletes language relating
to requirements of the informal dispute resolution process.
SECTION 7.04. Requires the commissioner of health and human services, not
later than January 1, 2002, to adopt any rules necessary to implement
Sections 531.056, 531.057, and 531.058, Government Code, as added by this
Act.
SECTION 7.05. Requires the Texas Department of Human Services, not later
than January 1, 2002, to develop training necessary to implement Section
22.037, Human Resources Code, as added by this Act.
SECTION 7.06. (a) Provides that effective January 1, 2002, certain
criteria concerning the Texas Department of Human Services and the Health
and Human Services Commission are prospective.
(b) Prohibits the Health and Human Services Commission, in implementing
Section 531.057, Government Code, as added by this article, from
transferring to the commission employees or funding from the regulatory
functions of the Texas Department of Human Services.
ARTICLE 8. AMELIORATION OF VIOLATIONS
SECTION 8.01. Amends Section 242.071, Health and Safety Code, as follows:
Sec. 242.071. AMELIORATION OF VIOLATION. (a) Authorizes the commissioner,
in lieu of demanding, rather than ordering, payment of an administrative
penalty assessed under Section 242.066, rather than 242.069, in accordance
with this section, to allow, rather than require, the person to use, under
the supervision of the department, any portion of the penalty to ameliorate
the violation or to improve services, other than administrative services,
in the institution affected by the violation.
(b) Requires the department to offer amelioration to a person for a
charged violation if the department determines that the violation does not
constitute immediate jeopardy to the health and safety of an institution
resident.
(c) Prohibits the department from offering amelioration to a person if
certain conditions exist.
(d) Requires the department to offer amelioration to a person under this
section not later than the 10th day after the date the person receives from
the department a final notification of assessment of administrative penalty
that is sent to the person after an informal dispute resolution process but
before an administrative hearing under Section 242.068.
(e) Requires a person to whom amelioration has been offered to file a plan
for amelioration not later than the 45th day after the date the person
receives the offer of amelioration from the department. Requires the
person, in submitting the plan, to agree to waive the person's right to an
administrative hearing under Section 242.068 if the department approves the
plan.
(f) Requires a plan for amelioration, at a minimum, to meet certain
criteria.
(g) Authorizes the department to require that an amelioration plan propose
changes that would result in conditions that exceed the requirements of
this chapter or the rules adopted under this chapter.
(h) Requires the department to approve or deny an amelioration plan not
later than the 45th day after the date the department receives the plan.
Requires the department, on approval of a person's plan, to deny a pending
request for a hearing submitted by the person under Section 242.067(d).
(i) Prohibits the department from offering amelioration to certain
persons.
(j) Provides that in this section, "immediate jeopardy to health and
safety" means a situation in which there is a high probability that serious
harm or injury to a resident could occur at any time or already has
occurred and may occur again if the resident is not protected from the harm
or if the threat is not removed.
SECTION 8.02. Amends Section 252.071, Health and Safety Code, as follows:
(a) Makes conforming changes.
(b) Requires the department to offer amelioration to a person for a
charged violation if the department determines that the violation does not
constitute immediate jeopardy to the health and safety of a facility
resident.
(c) Prohibits the department from offering amelioration to a person if the
department determines that the charged violation constitutes immediate
jeopardy to the health and safety of a facility resident.
(d) Requires the department to offer amelioration to a person under this
section not later than the 10th day after the date the person receives from
the department a final notification of assessment of administrative penalty
that is sent to the person after an informal dispute resolution process but
before an administrative hearing under Section 252.067.
(e) Requires a person to whom amelioration has been offered to file a plan
for amelioration not later than the 45th day after the date the person
receives the offer of amelioration from the department. Requires the
person, in submitting the plan, to agree to waive the person's right to an
administrative hearing under Section 252.067 if the department approves the
plan.
(f) Requires a plan for amelioration, at a minimum, to meet certain
criteria.
(g) Authorizes the department to require that an amelioration plan propose
changes that would result in conditions that exceed the requirements of
this chapter or the rules adopted under this chapter.
(h) Requires the department to approve or deny an amelioration plan not
later than the 45th day after the date the department receives the plan.
Requires the department, on approval of a person's plan, to deny a pending
request for a hearing submitted by the person under Section 252.066(b).
(i) Prohibits the department from offering amelioration to certain
persons.
(j) Provides that in this section, "immediate jeopardy to health and
safety" means a situation in which there is a high probability that serious
harm or injury to a resident could occur at any time or already has
occurred and may occur again if the resident is not protected from the harm
or if the threat is not removed.
SECTION 8.03. Makes application of this article prospective.
ARTICLE 9. QUALITY ASSURANCE FEE
SECTION 9.01. Amends Chapter 242, Health and Safety Code, by adding
Subchapter Q, as follows:
SUBCHAPTER Q. QUALITY ASSURANCE FEE
Sec. 242.851. DEFINITION. Defines "gross receipts."
Sec. 242.852. COMPUTING QUALITY ASSURANCE FEE. (a) Requires a quality
assurance fee to be imposed on each institution for which a license fee to
be paid under Section 242.034. Sets forth provisions regarding the fee.
(b) Requires the Health and Human Services Commission or the department at
the direction of the commission to set the quality assurance fee for each
day in the amount necessary to produce annual revenues equal to six percent
of the total annual gross receipts for institutions in this state. Provides
that the fee is subject to a prospective adjustment as necessary.
(c) Requires the amount of the quality assurance fee to be determined
using patient days and gross receipts reported to the department and
covering a period of at least six months.
(d) Provides that the quality assurance fee is an allowable cost for
reimbursement under the state Medicaid program.
Sec. 242.853. PATIENT DAYS. Requires an institution, for each calendar
day, to determine the number of patient days by meeting certain criteria.
Sec. 242.854. REPORTING AND COLLECTION. (a) Requires the Health and
Human Services Commission or the department at the direction of the
commission to collect the quality assurance fee.
(b) Requires each institution to meet certain criteria.
Sec. 242.855. RULES; ADMINISTRATIVE PENALTY. (a) Requires the Health and
Human Services Commission to adopt rules for the administration of this
subchapter, including rules related to the imposition and collection of the
quality assurance fee.
(b) Prohibits the Health and Human Services Commission from adopting rules
granting any exceptions from the quality assurance fee.
(c) Prohibits an administrative penalty assessed under this subchapter in
accordance with Section 242.066 from exceeding one-half of the amount of
the outstanding quality assurance fee or $20,000, whichever is greater.
Sec. 242.856. QUALITY ASSURANCE FUND. (a) Provides that the quality
assurance fund is a fund outside the state treasury held by the Texas
Treasury Safekeeping Trust Company. Requires the comptroller,
notwithstanding any other law, to deposit fees collected under this
subchapter to the credit of the fund.
(b) Provides that the fund is composed of certain monies.
(c) Provides that money deposited to the fund remains the property of the
fund and may be used only for the purposes of this subchapter.
(d) Provides that subject to legislative appropriation, quality assurance
fees collected under this chapter, combined with federal matching funds,
will support or maintain an increase in Medicaid reimbursement for
institutions.
Sec. 242.857. REIMBURSEMENT OF INSTITUTIONS. (a) Requires the Health and
Human Services Commission to use money in the quality assurance fund,
together with any federal money available to match that money, for certain
purposes.
(b) Requires the Health and Human Services Commission or the department at
the direction of the commission to devise the formula by which amounts
received under this section increase the reimbursement rates paid to
institutions under the state Medicaid program.
(c) Requires the Health and Human Services Commission to ensure that the
formula devised under Subsection (b) provides incentives for institutions
to increase direct care staffing and direct care wages and benefits.
Sec. 242.858. INVALIDITY; FEDERAL FUNDS. Requires the commission, if any
portion of this subchapter is held invalid by a final order of a court that
is not subject to appeal, or if the Health and Human Services Commission
determines that the imposition of the fee and the expenditure as prescribed
by this subchapter of amounts collected will not entitle the state to
receive additional federal funds under the Medicaid program, to stop
collection of the quality assurance fee and to return, not later than the
30th day after the date collection is stopped, any money collected, but not
spent, under this subchapter to the institutions that paid the fees in
proportion to the total amount paid by those institutions.
Sec. 242.859. LEGISLATIVE REVIEW; EXPIRATION. Requires the 79th
Legislature to review the operation and effectiveness of this subchapter.
Provides that unless continued in effect by the 79th Legislature, this
subchapter expires effective September 1, 2005.
SECTION 9.02. Provides that notwithstanding Section 242.852, Health and
Safety Code, as added by this article, the quality assurance fee imposed
under Subchapter Q, Chapter 242, Health and Safety Code, as added by this
article, that is effective for the first month following the effective date
of this Act is equal to $5.25 multiplied by the number of patient days as
determined under that subchapter. Provides that the quality assurance fee
established under this section remains in effect until the Health and Human
Services Commission, or the Texas Department of Human Services at the
direction of the commission, obtains the information necessary to set the
fee under Section 242.852, Health and Safety Code, as added by this Act.
SECTION 9.03. Requires the Health and Human Services Commission to adopt
rules as necessary to implement Subchapter Q, Chapter 242, Health and
Safety Code, as added by this Act.
SECTION 9.04. Requires a state agency affected by a provision of this Act
to request a waiver or authorization and authorizes the agency to delay
implementing that provision until the waiver or authorization is granted,
if the agency determines before implementing any provision of this Act that
a waiver or authorization from a federal agency is necessary.
ARTICLE 10. TEXAS DEPARTMENT OF INSURANCE STUDY AND REPORT
SECTION 10.01. DEFINITIONS. Defines "commissioner" and "department."
SECTION 10.02. STUDY. Requires the Texas Department of Insurance
(department) to study the implementation of Articles 3, 5, and 6 of this
Act and, in particular, to study certain other information.
SECTION 10.03. REPORTS. (a) Requires the commissioner, not later than
December 1, 2002, to submit an interim report on the study conducted under
Section 10.02 of this Act to the governor, lieutenant governor, and speaker
of the house of representatives.
(b) Requires the commissioner, not later than December 1, 2004, to submit
a final report on the study to the governor, lieutenant governor, and
speaker of the house of representatives.
SECTION 10.04. EXPIRATION. Provides that this article expires September
1, 2005.
ARTICLE 11. EFFECT OF ACT; EFFECTIVE DATE
SECTION 11.01. Provides that, to the extent of any conflict, this Act
prevails over any other Act of the 77th Legislature, Regular Session, 2001,
regardless of the relative dates of enactment, including an Act that has
certain intentions.
SECTION 11.02. Effective date: upon passage or September 1, 2001.
SUMMARY OF COMMITTEE CHANGES
Differs from original as follows:
SECTION 1.01. Adds a heading to the section.
SECTION 1.02. Adds a heading to the section and adds new language relating
to the legislative intent and purpose of the bill.
Deletes proposed SECTION 5.03 relating to indemnity for exemplary damages,
and renumbers subsequent sections accordingly.
SECTION 5.05. Adds language to Section 3A, Article 21.49-3, Insurance
Code, to change a reference from "bona fide effort" to "verifiable effort"
and "coverage" to "substantially equivalent coverage and rates."
SECTION 5.07. Adds language to Section 4A, Article21.49-3, Insurance Code,
to provide that the purpose of the fund is to ensure the financial
soundness of the association and to authorize the fund to be used only for
the purposes of this article. Adds new Subsections (g)-(i) relating to the
stabilization reserve fund.
Adds a new SECTION 5.08 which amends Article 21.49-3, Insurance Code, by
adding Section 4B relating to liability for exemplary damages.
SECTION 6.01. Amends proposed Section 242.0372, Health and Safety Code, to
change references from "license holder" to "institution."
SECTION 6.02. Adds new Subsection (b) to prohibit the Texas Department of
Human Services, before September 1, 2003, from taking any enforcement
action, including an action to suspend or revoke a license, because an
institution fails to maintain professional liability insurance as required
by Section 242.0372, Health and Safety Code, as added by this article, if
the department determines, considering the totality of the circumstances,
that the institution does not have the financial ability to obtain the
insurance without jeopardizing the quality of care to residents.
SECTION 9.01. Amends proposed Section 242.854, Health and Safety Code, to
change a reference from "fee" to "quality assurance fee."
SECTION 10.03. Eliminates proposed language requiring the final report to
include a recommendation as to whether the changes in law made by Articles
5 and 6 of this Act should be repealed, continued, or modified.
SECTION 11.01. Amends proposed SECTION 11.01 by adding a new heading to
the section and by adding language providing that, to the extent of any
conflict, this Act prevails over any other Act of the 77th Legislature,
Regular Session, 2001, regardless of the relative dates of enactment,
including an Act that has certain intentions.
SECTION 11.02. Adds a new SECTION 11.02 to contain the effective date.