By Smithee H.B. No. 2828
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the delegation of certain functions by a health
1-3 maintenance organization; providing penalties.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 2, Texas Health Maintenance Organization
1-6 Act (Article 20A.02, Vernon's Texas Insurance Code), is amended by
1-7 amending Subsection (ee) and adding Subsections (ff), (gg), and
1-8 (hh) to read as follows:
1-9 (ee) "Delegated entity [network]" means an entity, other
1-10 than a health maintenance organization authorized to do business
1-11 under this Act [or an insurer authorized to do business under
1-12 Chapter 3, Insurance Code], that [which: (i)] by itself, or
1-13 through subcontracts with one or more entities, undertakes to
1-14 arrange for or to provide medical care or health care to an
1-15 enrollee in exchange for a predetermined payment on a prospective
1-16 basis [;] and that accepts responsibility to perform [(ii)
1-17 performs] on behalf of the health maintenance organization [,] any
1-18 function regulated by this Act. The term does not include an
1-19 individual physician or a group of employed physicians practicing
1-20 medicine under one federal tax identification number and whose
1-21 total claims paid to providers not employed by the group is less
1-22 than 20 percent of the total collected revenue of the group
1-23 calculated on a calendar year basis.
1-24 (ff) "Delegated network" means any delegated entity that
2-1 assumes total financial risk for more than one of the following
2-2 categories of health care services: medical care, hospital or other
2-3 institutional services, or prescription drugs, as defined by
2-4 Section 551.003, Occupations Code. The term does not include a
2-5 delegated entity that shares risk for a category of services with a
2-6 health maintenance organization.
2-7 (gg) "Delegated third party" means a third party other than
2-8 a delegated entity that contracts with a delegated entity, either
2-9 directly or through another third party, to:
2-10 (1) accept responsibility to perform any function
2-11 regulated by this Act; or
2-12 (2) receive, handle, or administer funds, if the
2-13 receipt, handling, or administration of the funds is directly or
2-14 indirectly related to a function regulated by this Act.
2-15 (hh) "Limited provider network" means a subnetwork within a
2-16 health maintenance organization delivery network in which
2-17 contractual relationships exist between physicians, certain
2-18 providers, independent physician associations, or physician groups
2-19 that limits the physicians and providers to which the enrollees
2-20 have access to physicians and providers in the subnetwork.
2-21 SECTION 2. Section 11(b), Texas Health Maintenance
2-22 Organization Act (Article 20A.11, Vernon's Texas Insurance Code),
2-23 is amended to read as follows:
2-24 (b) A health maintenance organization shall provide an
2-25 accurate written description of health care plan terms and
2-26 conditions, including an explanation of, and a description of the
2-27 restrictions or limitations related to, limited provider networks
3-1 or delegated entities [networks] within a health care plan, to
3-2 allow any current or prospective group contract holder and current
3-3 or prospective enrollee eligible for enrollment in a health care
3-4 plan to make comparisons and informed decisions before selecting
3-5 among health care plans. The written description must be in a
3-6 readable and understandable format as prescribed by the
3-7 commissioner and shall include a telephone number a person may call
3-8 to obtain more information and a current list of physicians and
3-9 providers, including delineation of limited provider networks and
3-10 delegated entities [networks]. The health maintenance organization
3-11 may provide its handbook to satisfy this requirement provided the
3-12 handbook's content is substantially similar to and achieves the
3-13 same level of disclosure as the written description prescribed by
3-14 the commissioner and the current list of physicians and providers
3-15 is also provided. If an enrollee designates a primary care
3-16 physician who practices in a limited provider network or delegated
3-17 entity, not later than the 30th day after the date of the
3-18 enrollee's enrollment, the health maintenance organization shall
3-19 provide the information required under this subsection to the
3-20 enrollee with the enrollee's identification card or in a mailing
3-21 separate from other information.
3-22 SECTION 3. Sections 12(o), (p), and (q), Texas Health
3-23 Maintenance Organization Act (Article 20A.12, Vernon's Texas
3-24 Insurance Code), are amended to read as follows:
3-25 (o) The health maintenance organization shall maintain a
3-26 record of each complaint and any complaint proceeding and any
3-27 actions taken on a complaint for three years from the date of the
4-1 receipt of the complaint. The record must include complaints
4-2 relating to limited provider networks and delegated entities. A
4-3 complainant is entitled to a copy of the record on the applicable
4-4 complaint and any complaint proceeding.
4-5 (p) Each health maintenance organization shall maintain a
4-6 complaint and appeal log regarding each complaint. The log must
4-7 identify those complaints relating to limited provider networks and
4-8 delegated entities.
4-9 (q) Each health maintenance organization shall maintain
4-10 documentation on each complaint received and the action taken on
4-11 each [the] complaint, including a complaint relating to a limited
4-12 provider network or delegated entity, until the third anniversary
4-13 of the date of receipt of the complaint. The Texas Department of
4-14 Insurance may review documentation maintained under this
4-15 subsection, including original documentation, during any
4-16 investigation of the health maintenance organization.
4-17 SECTION 4. Section 18C, Texas Health Maintenance
4-18 Organization Act (Article 20A.18C, Vernon's Texas Insurance Code),
4-19 is amended to read as follows:
4-20 Art. 20A.18C. DELEGATION OF CERTAIN FUNCTIONS [TO DELEGATED
4-21 NETWORKS]. (a) A health maintenance organization that delegates
4-22 any function required by this Act [enters into a delegation
4-23 agreement with a delegated network] shall execute a written
4-24 agreement with each [the] delegated entity [network]. The health
4-25 maintenance organization shall file the written agreement with the
4-26 Texas Department of Insurance [department] not later than the 30th
4-27 day after the date the agreement is executed. The parties to each
5-1 agreement shall determine the party that will bear the expense of
5-2 compliance with any requirement of this subsection, including the
5-3 cost of any examinations required by the department under Article
5-4 1.15, Insurance Code, if applicable. The written agreement must
5-5 contain:
5-6 (1) a monitoring plan that allows the health
5-7 maintenance organization to monitor compliance with the minimum
5-8 solvency requirements established under Section 18D of this Act, if
5-9 applicable, and that [which] includes:
5-10 (A) a description of financial practices that
5-11 will ensure that the delegated entity [network] tracks and reports
5-12 liabilities that have been incurred but not reported;
5-13 (B) a summary of the total amount paid by the
5-14 delegated entity [network] to physicians and providers on a monthly
5-15 basis; and
5-16 (C) a summary of complaints from physicians,
5-17 enrollees, and providers regarding delays in payments of claims or
5-18 nonpayment of claims, including the status of each complaint, on a
5-19 monthly basis;
5-20 (2) a provision that the agreement cannot be
5-21 terminated without cause by the delegated entity [network] or the
5-22 health maintenance organization without written notice provided
5-23 before the 90th day preceding the termination date;
5-24 (3) a provision that prohibits the delegated entity
5-25 [network] and the physicians and providers with whom it has
5-26 contracted from billing or attempting to collect from an enrollee
5-27 under any circumstance, including the insolvency of the health
6-1 maintenance organization or delegated entity [network], payments
6-2 for covered services other than authorized copayments and
6-3 deductibles;
6-4 (4) a provision that the delegation agreement may not
6-5 be construed to limit in any way the health maintenance
6-6 organization's authority or responsibility, including financial
6-7 responsibility, to comply with all statutory and regulatory
6-8 requirements;
6-9 (5) a provision that requires the delegated entity
6-10 [network] to comply with all statutory and regulatory requirements
6-11 relating to any function, duty, responsibility, or delegation
6-12 assumed by or carried out by the delegated entity [network];
6-13 (6) a provision that requires the delegated entity to
6-14 permit the commissioner to examine at any time any information the
6-15 commissioner reasonably believes is relevant to:
6-16 (A) the financial solvency of the delegated
6-17 entity; or
6-18 (B) the ability of the delegated entity to meet
6-19 the entity's responsibilities in connection with any function
6-20 delegated to the entity by the health maintenance organization;
6-21 (7) a provision that requires the [a] delegated entity
6-22 [network or a third party] to provide the [a] license number of any
6-23 delegated [and to certify that the network or] third party
6-24 performing any function that requires a license [is licensed] as a
6-25 third party administrator under Article 21.07-6, Insurance Code, or
6-26 a license as a utilization review agent under Article 21.58A,
6-27 Insurance Code, or that requires any other license under the
7-1 Insurance Code or another insurance law of this state [if the
7-2 health maintenance organization delegates its claims payment
7-3 function to the delegated network or a third party];
7-4 (8) [(7)] a provision that requires [a delegated
7-5 network or a third party to provide a license number and to certify
7-6 that the network or third party is licensed as a utilization review
7-7 agent under Article 21.58A, Insurance Code, if the health
7-8 maintenance organization delegates its utilization review function
7-9 to the delegated network or a third party, and] that:
7-10 (A) enrollees will receive notification at the
7-11 time of enrollment which entity has responsibility for performing
7-12 utilization review; [and]
7-13 (B) the delegated entity [network] or third
7-14 party performing utilization review shall do so in accordance with
7-15 Article [Art.] 21.58A, Insurance Code; and
7-16 (C) utilization review decisions made by the
7-17 delegated entity [network] or a third party shall be forwarded to
7-18 the health maintenance organization on a monthly basis;
7-19 (9) a provision that requires that any agreement in
7-20 which the delegated entity directly or indirectly delegates any
7-21 function required by this Act, including the handling of funds, if
7-22 applicable, to a delegated third party be in writing;
7-23 (10) a provision that requires the delegated entity,
7-24 in contracting with a delegated third party directly or through a
7-25 third party, to require the delegated third party to comply with
7-26 the requirements of Subdivision (6) of this subsection and any
7-27 rules adopted by the commissioner implementing that subdivision;
8-1 (11) [(8)] an acknowledgment and agreement by the
8-2 delegated entity [network] that:
8-3 (A) the health maintenance organization is:
8-4 (i) required to establish, operate, and
8-5 maintain a health care delivery system, quality assurance system,
8-6 provider credentialing system, and other systems and programs that
8-7 meet statutory and regulatory standards;
8-8 (ii) directly accountable for compliance
8-9 with those standards; and
8-10 (iii) not precluded from contractually
8-11 requesting that the delegated entity [network] provide proof of
8-12 financial viability;
8-13 (B) the role of any [the] delegated [network and
8-14 any] entity with which it subcontracts through a delegated third
8-15 party [in contracting with the health maintenance organization] is
8-16 limited to performing certain delegated functions of the health
8-17 maintenance organization, using standards that are approved by the
8-18 health maintenance organization and that [which] are in compliance
8-19 with applicable statutes and rules and subject to the health
8-20 maintenance organization's oversight and monitoring of the
8-21 delegated entity's [network's] performance; and
8-22 (C) if the delegated entity [network] fails to
8-23 meet monitoring standards established to ensure that functions
8-24 delegated or assigned to the entity [network] under the delegation
8-25 contract are in full compliance with all statutory and regulatory
8-26 requirements, the health maintenance organization may cancel
8-27 delegation of any or all delegated functions;
9-1 (12) [(9)] a provision that requires the delegated
9-2 entity [network] to make available to the health maintenance
9-3 organization samples of contracts with physicians and providers to
9-4 ensure compliance with the contractual requirements described by
9-5 Subdivisions (2) and (3) of this subsection, except that the
9-6 agreement may not require that the delegated entity [network] make
9-7 available to the health maintenance organization contractual
9-8 provisions relating to financial arrangements with the delegated
9-9 entity's [network's] physicians and providers;
9-10 (13) [(10)] a provision that requires the delegated
9-11 entity [network] to provide the health maintenance organization, in
9-12 a usable format necessary for audit purposes and at most quarterly
9-13 unless otherwise specified in the agreement, the data necessary for
9-14 the health maintenance organization to comply with the department's
9-15 reporting requirements with respect to any delegated functions
9-16 performed under the delegation agreement, including:
9-17 (A) a summary:
9-18 (i) describing the methods, including
9-19 capitation, fee-for-service, or other risk arrangements, that the
9-20 delegated entity [network] used to pay its physicians and
9-21 providers; and
9-22 (ii) including the percentage of
9-23 physicians and providers paid for each payment category;
9-24 (B) the period that claims and debts for medical
9-25 services owed by the delegated entity [network] have been pending
9-26 and the aggregate dollar amount of those claims and debts;
9-27 (C) information that will enable the health
10-1 maintenance organization to file claims for reinsurance,
10-2 coordination of benefits, and subrogation, if required by the
10-3 health maintenance organization's contract with the delegated
10-4 entity [network]; and
10-5 (D) documentation, except for information,
10-6 documents, and deliberations related to peer review that are
10-7 confidential or privileged under Subchapter A, Chapter 160,
10-8 Occupations Code [Section 5.06, Medical Practice Act (Article
10-9 4495b, Vernon's Texas Civil Statutes)], that relates to:
10-10 (i) a regulatory agency's inquiry or
10-11 investigation of the delegated entity [network] or of an individual
10-12 physician or provider with whom the delegated entity [network]
10-13 contracts that relates to an enrollee of the health maintenance
10-14 organization; and
10-15 (ii) the final resolution of a regulatory
10-16 agency's inquiry or investigation; and
10-17 (14) [(11)] a provision relating to enrollee
10-18 complaints that requires the delegated entity [network] to ensure
10-19 that upon receipt of a complaint, as defined by this Act, the
10-20 delegated entity [network] shall report the complaint to the health
10-21 maintenance organization within two business days, except that in a
10-22 [the] case in which [of] a complaint involves [involving] emergency
10-23 care, as defined in this Act[. In the case of a complaint
10-24 involving emergency care], the delegated entity [network] shall
10-25 forward the complaint immediately to the health maintenance
10-26 organization, and provided that nothing in this subdivision
10-27 prohibits[. Nothing herein shall prohibit] the delegated entity
11-1 [network] from attempting to resolve a complaint.
11-2 (b) The commissioner shall determine the information that a
11-3 [A] health maintenance organization shall provide to each delegated
11-4 entity [network] with which the health maintenance organization
11-5 [it] has a delegation agreement. The information must include the
11-6 following information, provided in standard electronic format [,]
11-7 at least monthly unless otherwise stated [provided] in the
11-8 agreement:
11-9 (1) the names and dates of birth or social security
11-10 numbers of the enrollees of the health maintenance organization who
11-11 are eligible or assigned to receive services from the delegated
11-12 entity [network], including the enrollees added and terminated
11-13 since the previous reporting period;
11-14 (2) the age, sex, benefit plan and any riders to that
11-15 benefit plan, and employer for the enrollees of the health
11-16 maintenance organization who are eligible or assigned to receive
11-17 services from the delegated entity [network];
11-18 (3) if the health maintenance organization pays any
11-19 claims for the delegated entity [network], a summary of the number
11-20 and amount of claims paid by the health maintenance organization on
11-21 behalf of the delegated entity [network] during the previous
11-22 reporting period, provided that a[. A] delegated entity [network]
11-23 is not precluded from receiving, upon request, additional
11-24 nonproprietary information regarding such claims;
11-25 (4) if the health maintenance organization pays any
11-26 claims for the delegated entity [network], a summary of the number
11-27 and amount of pharmacy prescriptions paid for each enrollee for
12-1 which the delegated entity [network] has taken partial risk during
12-2 the previous reporting period, provided that a[. A] delegated
12-3 entity [network] is not precluded from receiving, upon request,
12-4 additional nonproprietary information regarding such claims;
12-5 (5) information that enables the delegated entity
12-6 [network] to file claims for reinsurance, coordination of benefits,
12-7 and subrogation; and
12-8 (6) patient complaint data that relates to the
12-9 delegated entity [network].
12-10 (c) In addition to the information required by Subsection
12-11 (b) of this section, a health maintenance organization shall
12-12 provide to a delegated entity [network with which it has a
12-13 delegation agreement]:
12-14 (1) detailed risk-pool data, reported quarterly and on
12-15 settlement; and
12-16 (2) the percent of premium attributable to hospital or
12-17 facility costs, if hospital or facility costs impact the delegated
12-18 entity's [network's] costs, reported quarterly, and, if there are
12-19 changes in hospital or facility contracts with the health
12-20 maintenance organization, the projected impact of those changes on
12-21 the percent of premium attributable to hospital and facility costs
12-22 within 30 days of such changes.
12-23 (d) A health maintenance organization that becomes aware of
12-24 any [receives] information [through the monitoring plan required by
12-25 Subsection (a)(1) of this section] that indicates the delegated
12-26 entity [network] is not operating in accordance with its written
12-27 agreement or is operating in a condition that renders the
13-1 continuance of its business hazardous to the enrollees, shall[, in
13-2 writing]:
13-3 (1) notify the delegated entity in writing [network]
13-4 of those findings; [and]
13-5 (2) request, in writing, a written explanation, with
13-6 documentation supporting the explanation, of:
13-7 (A) the delegated entity's apparent [network's]
13-8 noncompliance with the written agreement; or
13-9 (B) the existence of the condition that
13-10 apparently renders the continuance of the delegated entity's
13-11 [network's] business hazardous to the enrollees; and
13-12 (3) provide the commissioner with copies of all
13-13 notices and requests submitted to the delegated entity and the
13-14 responses and other documentation the health maintenance
13-15 organization generates or receives in response to the notices and
13-16 requests.
13-17 (e) A delegated entity [network] shall respond to a request
13-18 from a health maintenance organization under Subsection (d) of this
13-19 section in writing not later than the 30th day after the date the
13-20 request is received.
13-21 (f) The health maintenance organization shall cooperate with
13-22 the delegated entity [network] to correct any failure by the
13-23 delegated entity [network] to comply with the regulatory
13-24 requirements of the department relating to any matters:
13-25 (1) delegated to the delegated entity [network] by the
13-26 health maintenance organization; or
13-27 (2) necessary for the health maintenance organization
14-1 to ensure compliance with statutory or regulatory requirements.
14-2 (g) [The health maintenance organization shall notify the
14-3 department and request intervention if:]
14-4 [(1) the health maintenance organization does not
14-5 receive a timely response from the delegated network as required by
14-6 Subsection (e) of this section; or]
14-7 [(2) the health maintenance organization receives a
14-8 timely response from the delegated network as required by
14-9 Subsection (e) of this section, but the health maintenance
14-10 organization and the delegated network are unable to reach an
14-11 agreement as to whether the delegated network:]
14-12 [(A) is complying with the written agreement; or]
14-13 [(B) has corrected any problem regarding a
14-14 practice that is hazardous to an enrollee of the health maintenance
14-15 organization.]
14-16 [(h)] On receipt of a notice [request for intervention]
14-17 under Subsection (d) [(g)] of this section, or if complaints are
14-18 filed with the Texas Department of Insurance, the department may
14-19 examine the matters contained in the notice as well as any other
14-20 matter relating to the financial solvency of the delegated entity
14-21 or the delegated entity's ability to meet its responsibilities in
14-22 connection with any function delegated to the entity by the health
14-23 maintenance organization [:]
14-24 [(1) request financial and operational documents from
14-25 the delegated network to further investigate deficiencies indicated
14-26 by the monitoring plan;]
14-27 [(2) conduct an on-site audit of the delegated network
15-1 if the department determines that the delegated network is not
15-2 complying with the monitoring standards required under Subsection
15-3 (a)(1) of this section; or]
15-4 [(3) notwithstanding any other provisions, upon
15-5 violation of a monitoring plan, suspend or revoke the third party
15-6 administrator license or utilization review agent license of:]
15-7 [(A) the delegated network; or]
15-8 [(B) a third party with which the delegated
15-9 network has contracted].
15-10 (h) [(i)] Except as provided by this subsection, the Texas
15-11 Department of Insurance, on completion of the department's
15-12 examination, [The department] shall report to the delegated entity
15-13 [network] and the health maintenance organization the results of
15-14 the department's examination and any action the department
15-15 determines is necessary to ensure that the health maintenance
15-16 organization meets its responsibilities under this Act, the
15-17 Insurance Code, any other insurance laws of this state, and rules
15-18 adopted by the commissioner, and that the delegated entity can meet
15-19 its responsibilities in connection with any function delegated to
15-20 the entity by the health maintenance organization. The [its review
15-21 not later than the 60th day after the date of the department's
15-22 initial request for documentation; provided, however, the]
15-23 department may [shall] not report to the health maintenance
15-24 organization any information regarding fee schedules, prices, cost
15-25 of care, or other information not relevant to the monitoring plan.
15-26 (i) [(j)] The delegated entity and the health maintenance
15-27 organization [network] shall respond to the department's report and
16-1 submit a corrective plan to the Texas Department of Insurance
16-2 [department and to the health maintenance organization] not later
16-3 than the 30th day after the date of receipt of [the delegated
16-4 network receives] the department's report. [The delegated network
16-5 may withhold information regarding fee schedules, prices, cost of
16-6 care, or other information not relevant to the monitoring plan.]
16-7 (j) [(k)] Health [Reports and corrective plans required
16-8 under Subsection (i) or (j) of this section shall be treated as
16-9 public documents, except that health] care provider fee schedules,
16-10 prices, costs of care, reports, corrective plans, or other
16-11 information not relevant to the monitoring plan and any other
16-12 information that is considered confidential by law shall be
16-13 considered confidential. A list of all delegated entity agreements,
16-14 indicating the parties to the agreements filed under Subsection (a)
16-15 of this section, is public information and subject to disclosure
16-16 under Chapter 552, Government Code.
16-17 (k) [(l)] The department may request at any time that a
16-18 delegated entity [network] take corrective action to comply with
16-19 the department's statutory and regulatory requirements that:
16-20 (1) relate to any matters delegated by the health
16-21 maintenance organization to the delegated entity [network]; or
16-22 (2) are necessary to ensure the health maintenance
16-23 organization's compliance with statutory and regulatory
16-24 requirements.
16-25 (l) [(m)] Regardless of whether [If] a delegated entity
16-26 complies [network does not comply] with a [the department's]
16-27 request for corrective action, the commissioner [department] may
17-1 order the health maintenance organization to take any action the
17-2 commissioner determines is necessary to ensure that the health
17-3 maintenance organization is in compliance with this Act, including:
17-4 (1) reassuming the functions delegated to the
17-5 delegated entity, including claims payments for services previously
17-6 rendered to enrollees of the health maintenance organization;
17-7 (2) temporarily or permanently ceasing [cease]
17-8 assignment of new enrollees to the delegated entity [network];
17-9 (3) [(2)] temporarily or permanently transferring
17-10 [transfer] enrollees to alternative delivery systems to receive
17-11 services; or
17-12 (4) terminating the health maintenance organization's
17-13 [(3) modify or terminate its] contract with the delegated entity
17-14 [network].
17-15 (m) [(n)] The Texas Department of Insurance [commissioner]
17-16 shall maintain enrollee and provider complaints in a manner that
17-17 identifies complaints made about limited provider networks and
17-18 delegated entities [networks]. The department shall periodically
17-19 issue a report on the complaints received by the department that
17-20 includes a list of complaints by category, by action taken on the
17-21 complaint, and by entity or network name and type. The department
17-22 shall make the report available to the public and shall include
17-23 information to assist the public in evaluating the information
17-24 contained in the report.
17-25 (n) Notwithstanding any other provision of this Act, the
17-26 Insurance Code, or any other insurance law of this state, the
17-27 commissioner may suspend or revoke the license of any third party
18-1 administrator or utilization review agent that fails to comply with
18-2 this section.
18-3 (o) The commissioner may impose sanctions or penalties under
18-4 Chapters 82, 83, and 84, Insurance Code, against a health
18-5 maintenance organization that does not provide timely information
18-6 required by Subsections (b) and (c) of this section.
18-7 (p) A health maintenance organization shall by contract
18-8 establish penalties for delegated entities that do not provide
18-9 timely information required under a monitoring plan as required by
18-10 Subsection (a)(1) of this section.
18-11 (q) This section does not apply to a group model health
18-12 maintenance organization, as defined by Section 6A of this Act.
18-13 (r) The commissioner may adopt rules as necessary to
18-14 [interpret,] implement [, and enforce] this section.
18-15 SECTION 5. The Texas Health Maintenance Organization Act
18-16 (Chapter 20A, Vernon's Texas Insurance Code) is amended by adding
18-17 Sections 18D, 18E, 18F, and 18G to read as follows:
18-18 Sec. 18D. RESERVE REQUIREMENTS FOR DELEGATED NETWORK. (a) A
18-19 delegated network shall establish and maintain reserves that are
18-20 adequate for the liabilities and risks assumed by the delegated
18-21 network, as computed in accordance with accepted standards,
18-22 practices, and procedures relating to the liabilities and risks
18-23 reserved for, including known and unknown components and
18-24 anticipated expenses of providing benefits or services.
18-25 (b) Except as provided by Subsections (c) and (d), the
18-26 delegated network shall establish and maintain reserves as
18-27 described by Subsection (e)(1) or (2) only with respect to the
19-1 portion of services assumed under the delegation agreement that are
19-2 not within the scope of the network's license for medical care or
19-3 hospital or other institutional services, as applicable.
19-4 (c) If the scope of services assumed under the delegation
19-5 agreement includes both medical care and hospital or institutional
19-6 services, the delegated network shall establish and maintain
19-7 reserves that are adequate to cover the liabilities and risks
19-8 associated with medical care or with hospital or institutional
19-9 services, whichever type of services has been allocated the largest
19-10 portion of the premium by the health maintenance organization.
19-11 (d) If the delegated network assumes financial risk for
19-12 medical care or hospital or institutional services and for
19-13 prescription drugs, as defined by Section 551.003, Occupations
19-14 Code, the network shall establish and maintain reserves that are
19-15 adequate to cover the liabilities and risks associated with the
19-16 prescription drug benefits, in addition to any other reserves
19-17 required under this section.
19-18 (e) A delegated network shall maintain financial reserves
19-19 equal to the greater of:
19-20 (1) 80 percent of the risk and liabilities that must
19-21 be reserved under this section and that have been incurred but not
19-22 paid by the delegated network; or
19-23 (2) two months of premium amount assumed by the
19-24 delegated network for services that must be reserved under this
19-25 section.
19-26 (f) The reserves required under this section must be secured
19-27 by and only consist of legal tender of the United States or bonds
20-1 of the United States or this state. The reserves must be held at a
20-2 financial institution in this state that is chartered by the United
20-3 States or this state. The reserves must be held in trust for, for
20-4 the benefit of, or to provide health care services to, enrollees of
20-5 the health maintenance organization under the agreement between the
20-6 health maintenance organization and the delegated network.
20-7 (g) This section does not apply to a group model health
20-8 maintenance organization, as defined by Section 6A of this Act.
20-9 Sec. 18E. CERTAIN PHYSICIAN AND PROVIDER CONTRACTS;
20-10 CONTINUITY OF CARE FOR CERTAIN ENROLLEES. (a) In this section,
20-11 "special circumstance" means a condition for which the treating
20-12 physician or provider reasonably believes that discontinuing care
20-13 by the treating physician or provider could cause harm to the
20-14 patient.
20-15 (b) Each contract between a health maintenance organization
20-16 and a limited provider network or delegated entity must require
20-17 that each contract between the network or entity and a physician or
20-18 provider provide that:
20-19 (1) reasonable advance notice be given to an enrollee
20-20 of the impending termination from the limited provider network or
20-21 delegated entity of a physician or provider who is currently
20-22 treating the enrollee; and
20-23 (2) the termination of the physician or provider
20-24 contract, except for reason of medical competence or professional
20-25 behavior, does not release the limited provider network or
20-26 delegated entity from the obligation to reimburse a physician or
20-27 provider who is treating an enrollee of special circumstance, such
21-1 as a person who has a disability, acute condition, or
21-2 life-threatening illness or is past the 24th week of pregnancy, at
21-3 a rate that is not less than the contract rate for that enrollee's
21-4 care in exchange for continuity of ongoing treatment of an enrollee
21-5 then receiving medically necessary treatment in accordance with the
21-6 dictates of medical prudence.
21-7 (c) A special circumstance shall be identified by the
21-8 treating physician or provider, who must request that the enrollee
21-9 be permitted to continue treatment under the physician's or
21-10 provider's care and agree not to seek payment from the patient of
21-11 any amounts for which the enrollee would not be responsible if the
21-12 physician or provider were still in the limited provider network or
21-13 delegated entity.
21-14 (d) Contracts between a limited provider network or
21-15 delegated entity and physicians or providers shall provide
21-16 procedures for resolving disputes regarding the necessity for
21-17 continued treatment by a physician or provider.
21-18 (e) This section does not extend the obligation of a limited
21-19 provider network or delegated entity to reimburse a terminated
21-20 physician or provider for ongoing treatment of an enrollee beyond
21-21 the 90th day after the effective date of the termination, or beyond
21-22 nine months in the case of an enrollee who at the time of the
21-23 termination has been diagnosed with a terminal illness. However,
21-24 the obligation of the limited provider network or delegated entity
21-25 to reimburse the terminated physician or provider or, if
21-26 applicable, the enrollee for services to an enrollee who at the
21-27 time of the termination is past the 24th week of pregnancy, extends
22-1 through delivery of the child, immediate postpartum care, and the
22-2 follow-up checkup within the first six weeks of delivery.
22-3 Sec. 18F. OUT-OF-NETWORK SERVICES OF LIMITED PROVIDER
22-4 NETWORK OR DELEGATED ENTITY. (a) Each contract between a health
22-5 maintenance organization and a limited provider network or
22-6 delegated entity must provide that if medically necessary covered
22-7 services are not available through network physicians or providers,
22-8 the limited provider network or delegated entity must, on request
22-9 of a network physician or provider, allow a referral to a
22-10 non-network physician or provider and shall fully reimburse the
22-11 non-network provider at the usual and customary or an agreed-upon
22-12 rate.
22-13 (b) The referral shall be allowed within the time
22-14 appropriate to the circumstances relating to the delivery of the
22-15 services and the condition of the patient, but not later than the
22-16 fifth business day after the date any reasonably requested
22-17 documentation is received by the limited provider network or
22-18 delegated entity.
22-19 (c) The enrollee may not be required to change the
22-20 enrollee's primary care physician or specialist providers to
22-21 receive medically necessary covered services that are not available
22-22 within the limited provider network or delegated entity.
22-23 (d) Each contract must also provide for a review by a
22-24 specialist of the same or similar specialty as the type of
22-25 physician or provider to whom a referral is requested before the
22-26 limited provider network or delegated entity may deny a referral.
22-27 (e) A denial of out-of-network services under this section
23-1 is subject to appeal under Article 21.58A, Insurance Code.
23-2 Sec. 18G. COMPLIANCE OF LIMITED PROVIDER NETWORK OR
23-3 DELEGATED ENTITY WITH CERTAIN REQUIREMENTS. A limited provider
23-4 network or delegated entity shall comply with all statutory and
23-5 regulatory requirements relating to any function, duty,
23-6 responsibility, or delegation assumed by or carried out by the
23-7 limited provider network or delegated entity under this Act.
23-8 SECTION 6. Section 5, Chapter 621, Acts of the 76th
23-9 Legislature, Regular Session, 1999, is repealed.
23-10 SECTION 7. The change in law made by this Act applies only to
23-11 a contract entered into or renewed on or after January 1, 2002. A
23-12 contract entered into before January 1, 2002, is governed by the
23-13 law in effect immediately before the effective date of this Act,
23-14 and that law is continued in effect for that purpose.
23-15 SECTION 8. This Act takes effect September 1, 2001.