1-1 By: Smithee (Senate Sponsor - Harris) H.B. No. 2828
1-2 (In the Senate - Received from the House April 25, 2001;
1-3 April 26, 2001, read first time and referred to Committee on
1-4 Business and Commerce; May 4, 2001, reported adversely, with
1-5 favorable Committee Substitute by the following vote: Yeas 5, Nays
1-6 0; May 4, 2001, sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR H.B. No. 2828 By: Van de Putte
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to the delegation of certain functions by a health
1-11 maintenance organization; providing penalties.
1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13 SECTION 1. Section 2, Texas Health Maintenance Organization
1-14 Act (Article 20A.02, Vernon's Texas Insurance Code), is amended by
1-15 amending Subsection (ee) and adding Subsections (ff), (gg), and
1-16 (hh) to read as follows:
1-17 (ee) "Delegated entity [network]" means an entity, other
1-18 than a health maintenance organization authorized to do business
1-19 under this Act [or an insurer authorized to do business under
1-20 Chapter 3, Insurance Code], that [which: (i)] by itself, or
1-21 through subcontracts with one or more entities, undertakes to
1-22 arrange for or to provide medical care or health care to an
1-23 enrollee in exchange for a predetermined payment on a prospective
1-24 basis [;] and that accepts responsibility to perform [(ii)
1-25 performs] on behalf of the health maintenance organization [,] any
1-26 function regulated by this Act. The term does not include an
1-27 individual physician or a group of employed physicians practicing
1-28 medicine under one federal tax identification number and whose
1-29 total claims paid to providers not employed by the group is less
1-30 than 20 percent of the total collected revenue of the group
1-31 calculated on a calendar year basis.
1-32 (ff) "Delegated network" means any delegated entity that
1-33 assumes total financial risk for more than one of the following
1-34 categories of health care services: medical care, hospital or other
1-35 institutional services, or prescription drugs, as defined by
1-36 Section 551.003, Occupations Code. The term does not include a
1-37 delegated entity that shares risk for a category of services with a
1-38 health maintenance organization.
1-39 (gg) "Delegated third party" means a third party other than
1-40 a delegated entity that contracts with a delegated entity, either
1-41 directly or through another third party, to:
1-42 (1) accept responsibility to perform any function
1-43 regulated by this Act; or
1-44 (2) receive, handle, or administer funds, if the
1-45 receipt, handling, or administration of the funds is directly or
1-46 indirectly related to a function regulated by this Act.
1-47 (hh) "Limited provider network" means a subnetwork within a
1-48 health maintenance organization delivery network in which
1-49 contractual relationships exist between physicians, certain
1-50 providers, independent physician associations, or physician groups
1-51 that limits the physicians and providers to which the enrollees
1-52 have access to physicians and providers in the subnetwork.
1-53 SECTION 2. Section 11(b), Texas Health Maintenance
1-54 Organization Act (Article 20A.11, Vernon's Texas Insurance Code),
1-55 is amended to read as follows:
1-56 (b) A health maintenance organization shall provide an
1-57 accurate written description of health care plan terms and
1-58 conditions, including an explanation of, and a description of the
1-59 restrictions or limitations related to, limited provider networks
1-60 or delegated entities [networks] within a health care plan, to
1-61 allow any current or prospective group contract holder and current
1-62 or prospective enrollee eligible for enrollment in a health care
1-63 plan to make comparisons and informed decisions before selecting
1-64 among health care plans. The written description must be in a
2-1 readable and understandable format as prescribed by the
2-2 commissioner and shall include a telephone number a person may call
2-3 to obtain more information and a current list of physicians and
2-4 providers, including delineation of limited provider networks and
2-5 delegated entities [networks]. The health maintenance organization
2-6 may provide its handbook to satisfy this requirement provided the
2-7 handbook's content is substantially similar to and achieves the
2-8 same level of disclosure as the written description prescribed by
2-9 the commissioner and the current list of physicians and providers
2-10 is also provided. If an enrollee designates a primary care
2-11 physician who practices in a limited provider network or delegated
2-12 entity, not later than the 30th day after the date of the
2-13 enrollee's enrollment, the health maintenance organization shall
2-14 provide the information required under this subsection to the
2-15 enrollee with the enrollee's identification card or in a mailing
2-16 separate from other information.
2-17 SECTION 3. Sections 12(o), (p), and (q), Texas Health
2-18 Maintenance Organization Act (Article 20A.12, Vernon's Texas
2-19 Insurance Code), are amended to read as follows:
2-20 (o) The health maintenance organization shall maintain a
2-21 record of each complaint and any complaint proceeding and any
2-22 actions taken on a complaint for three years from the date of the
2-23 receipt of the complaint. The record must include complaints
2-24 relating to limited provider networks and delegated entities. A
2-25 complainant is entitled to a copy of the record on the applicable
2-26 complaint and any complaint proceeding.
2-27 (p) Each health maintenance organization shall maintain a
2-28 complaint and appeal log regarding each complaint. The log must
2-29 identify those complaints relating to limited provider networks and
2-30 delegated entities.
2-31 (q) Each health maintenance organization shall maintain
2-32 documentation on each complaint received and the action taken on
2-33 each [the] complaint, including a complaint relating to a limited
2-34 provider network or delegated entity, until the third anniversary
2-35 of the date of receipt of the complaint. The Texas Department of
2-36 Insurance may review documentation maintained under this
2-37 subsection, including original documentation, during any
2-38 investigation of the health maintenance organization.
2-39 SECTION 4. Section 18C, Texas Health Maintenance
2-40 Organization Act (Article 20A.18C, Vernon's Texas Insurance Code),
2-41 is amended to read as follows:
2-42 Art. 20A.18C. DELEGATION OF CERTAIN FUNCTIONS [TO DELEGATED
2-43 NETWORKS]. (a) A health maintenance organization that delegates
2-44 any function required by this Act [enters into a delegation
2-45 agreement with a delegated network] shall execute a written
2-46 agreement with each [the] delegated entity [network]. The health
2-47 maintenance organization shall file the written agreement with the
2-48 Texas Department of Insurance [department] not later than the 30th
2-49 day after the date the agreement is executed. The parties to each
2-50 agreement shall determine the party that will bear the expense of
2-51 compliance with any requirement of this subsection, including the
2-52 cost of any examinations required by the department under Article
2-53 1.15, Insurance Code, if applicable. The written agreement must
2-54 contain:
2-55 (1) a monitoring plan that allows the health
2-56 maintenance organization to monitor compliance with the minimum
2-57 solvency requirements established under Section 18D of this Act, if
2-58 applicable, and that [which] includes:
2-59 (A) a description of financial practices that
2-60 will ensure that the delegated entity [network] tracks and reports
2-61 liabilities that have been incurred but not reported;
2-62 (B) a summary of the total amount paid by the
2-63 delegated entity [network] to physicians and providers on a monthly
2-64 basis; and
2-65 (C) a summary of complaints from physicians,
2-66 enrollees, and providers regarding delays in payments of claims or
2-67 nonpayment of claims, including the status of each complaint, on a
2-68 monthly basis;
2-69 (2) a provision that the agreement cannot be
3-1 terminated without cause by the delegated entity [network] or the
3-2 health maintenance organization without written notice provided
3-3 before the 90th day preceding the termination date;
3-4 (3) a provision that prohibits the delegated entity
3-5 [network] and the physicians and providers with whom it has
3-6 contracted from billing or attempting to collect from an enrollee
3-7 under any circumstance, including the insolvency of the health
3-8 maintenance organization or delegated entity [network], payments
3-9 for covered services other than authorized copayments and
3-10 deductibles;
3-11 (4) a provision that the delegation agreement may not
3-12 be construed to limit in any way the health maintenance
3-13 organization's authority or responsibility, including financial
3-14 responsibility, to comply with all statutory and regulatory
3-15 requirements;
3-16 (5) a provision that requires the delegated entity
3-17 [network] to comply with all statutory and regulatory requirements
3-18 relating to any function, duty, responsibility, or delegation
3-19 assumed by or carried out by the delegated entity [network];
3-20 (6) a provision that requires the delegated entity to
3-21 permit the commissioner to examine at any time any information the
3-22 commissioner reasonably believes is relevant to:
3-23 (A) the financial solvency of the delegated
3-24 entity; or
3-25 (B) the ability of the delegated entity to meet
3-26 the entity's responsibilities in connection with any function
3-27 delegated to the entity by the health maintenance organization;
3-28 (7) a provision that requires the [a] delegated entity
3-29 [network or a third party] to provide the [a] license number of any
3-30 delegated [and to certify that the network or] third party
3-31 performing any function that requires a license [is licensed] as a
3-32 third party administrator under Article 21.07-6, Insurance Code, or
3-33 a license as a utilization review agent under Article 21.58A,
3-34 Insurance Code, or that requires any other license under the
3-35 Insurance Code or another insurance law of this state [if the
3-36 health maintenance organization delegates its claims payment
3-37 function to the delegated network or a third party];
3-38 (8) [(7)] a provision that requires [a delegated
3-39 network or a third party to provide a license number and to certify
3-40 that the network or third party is licensed as a utilization review
3-41 agent under Article 21.58A, Insurance Code, if the health
3-42 maintenance organization delegates its utilization review function
3-43 to the delegated network or a third party, and] that:
3-44 (A) enrollees will receive notification at the
3-45 time of enrollment which entity has responsibility for performing
3-46 utilization review; [and]
3-47 (B) the delegated entity [network] or third
3-48 party performing utilization review shall do so in accordance with
3-49 Article [Art.] 21.58A, Insurance Code; and
3-50 (C) utilization review decisions made by the
3-51 delegated entity [network] or a third party shall be forwarded to
3-52 the health maintenance organization on a monthly basis;
3-53 (9) a provision that requires that any agreement in
3-54 which the delegated entity directly or indirectly delegates any
3-55 function required by this Act, including the handling of funds, if
3-56 applicable, to a delegated third party be in writing;
3-57 (10) a provision that requires the delegated entity,
3-58 in contracting with a delegated third party directly or through a
3-59 third party, to require the delegated third party to comply with
3-60 the requirements of Subdivision (6) of this subsection and any
3-61 rules adopted by the commissioner implementing that subdivision;
3-62 (11) [(8)] an acknowledgment and agreement by the
3-63 delegated entity [network] that:
3-64 (A) the health maintenance organization is:
3-65 (i) required to establish, operate, and
3-66 maintain a health care delivery system, quality assurance system,
3-67 provider credentialing system, and other systems and programs that
3-68 meet statutory and regulatory standards;
3-69 (ii) directly accountable for compliance
4-1 with those standards; and
4-2 (iii) not precluded from contractually
4-3 requesting that the delegated entity [network] provide proof of
4-4 financial viability;
4-5 (B) the role of any [the] delegated [network and
4-6 any] entity with which it subcontracts through a delegated third
4-7 party [in contracting with the health maintenance organization] is
4-8 limited to performing certain delegated functions of the health
4-9 maintenance organization, using standards that are approved by the
4-10 health maintenance organization and that [which] are in compliance
4-11 with applicable statutes and rules and subject to the health
4-12 maintenance organization's oversight and monitoring of the
4-13 delegated entity's [network's] performance; and
4-14 (C) if the delegated entity [network] fails to
4-15 meet monitoring standards established to ensure that functions
4-16 delegated or assigned to the entity [network] under the delegation
4-17 contract are in full compliance with all statutory and regulatory
4-18 requirements, the health maintenance organization may cancel
4-19 delegation of any or all delegated functions;
4-20 (12) [(9)] a provision that requires the delegated
4-21 entity [network] to make available to the health maintenance
4-22 organization samples of contracts with physicians and providers to
4-23 ensure compliance with the contractual requirements described by
4-24 Subdivisions (2) and (3) of this subsection, except that the
4-25 agreement may not require that the delegated entity [network] make
4-26 available to the health maintenance organization contractual
4-27 provisions relating to financial arrangements with the delegated
4-28 entity's [network's] physicians and providers;
4-29 (13) [(10)] a provision that requires the delegated
4-30 entity [network] to provide the health maintenance organization, in
4-31 a usable format necessary for audit purposes and at most quarterly
4-32 unless otherwise specified in the agreement, the data necessary for
4-33 the health maintenance organization to comply with the department's
4-34 reporting requirements with respect to any delegated functions
4-35 performed under the delegation agreement, including:
4-36 (A) a summary:
4-37 (i) describing the methods, including
4-38 capitation, fee-for-service, or other risk arrangements, that the
4-39 delegated entity [network] used to pay its physicians and
4-40 providers; and
4-41 (ii) including the percentage of
4-42 physicians and providers paid for each payment category;
4-43 (B) the period that claims and debts for medical
4-44 services owed by the delegated entity [network] have been pending
4-45 and the aggregate dollar amount of those claims and debts;
4-46 (C) information that will enable the health
4-47 maintenance organization to file claims for reinsurance,
4-48 coordination of benefits, and subrogation, if required by the
4-49 health maintenance organization's contract with the delegated
4-50 entity [network]; and
4-51 (D) documentation, except for information,
4-52 documents, and deliberations related to peer review that are
4-53 confidential or privileged under Subchapter A, Chapter 160,
4-54 Occupations Code [Section 5.06, Medical Practice Act (Article
4-55 4495b, Vernon's Texas Civil Statutes)], that relates to:
4-56 (i) a regulatory agency's inquiry or
4-57 investigation of the delegated entity [network] or of an individual
4-58 physician or provider with whom the delegated entity [network]
4-59 contracts that relates to an enrollee of the health maintenance
4-60 organization; and
4-61 (ii) the final resolution of a regulatory
4-62 agency's inquiry or investigation; and
4-63 (14) [(11)] a provision relating to enrollee
4-64 complaints that requires the delegated entity [network] to ensure
4-65 that upon receipt of a complaint, as defined by this Act, the
4-66 delegated entity [network] shall report the complaint to the health
4-67 maintenance organization within two business days, except that in a
4-68 [the] case in which [of] a complaint involves [involving] emergency
4-69 care, as defined in this Act[. In the case of a complaint
5-1 involving emergency care], the delegated entity [network] shall
5-2 forward the complaint immediately to the health maintenance
5-3 organization, and provided that nothing in this subdivision
5-4 prohibits[. Nothing herein shall prohibit] the delegated entity
5-5 [network] from attempting to resolve a complaint.
5-6 (b) The commissioner shall determine the information that a
5-7 [A] health maintenance organization shall provide to each delegated
5-8 entity [network] with which the health maintenance organization
5-9 [it] has a delegation agreement. The information must include the
5-10 following information, provided in standard electronic format [,]
5-11 at least monthly unless otherwise stated [provided] in the
5-12 agreement:
5-13 (1) the names and dates of birth or social security
5-14 numbers of the enrollees of the health maintenance organization who
5-15 are eligible or assigned to receive services from the delegated
5-16 entity [network], including the enrollees added and terminated
5-17 since the previous reporting period;
5-18 (2) the age, sex, benefit plan and any riders to that
5-19 benefit plan, and employer for the enrollees of the health
5-20 maintenance organization who are eligible or assigned to receive
5-21 services from the delegated entity [network];
5-22 (3) if the health maintenance organization pays any
5-23 claims for the delegated entity [network], a summary of the number
5-24 and amount of claims paid by the health maintenance organization on
5-25 behalf of the delegated entity [network] during the previous
5-26 reporting period, provided that a[. A] delegated entity [network]
5-27 is not precluded from receiving, upon request, additional
5-28 nonproprietary information regarding such claims;
5-29 (4) if the health maintenance organization pays any
5-30 claims for the delegated entity [network], a summary of the number
5-31 and amount of pharmacy prescriptions paid for each enrollee for
5-32 which the delegated entity [network] has taken partial risk during
5-33 the previous reporting period, provided that a[. A] delegated
5-34 entity [network] is not precluded from receiving, upon request,
5-35 additional nonproprietary information regarding such claims;
5-36 (5) information that enables the delegated entity
5-37 [network] to file claims for reinsurance, coordination of benefits,
5-38 and subrogation; and
5-39 (6) patient complaint data that relates to the
5-40 delegated entity [network].
5-41 (c) In addition to the information required by Subsection
5-42 (b) of this section, a health maintenance organization shall
5-43 provide to a delegated entity [network with which it has a
5-44 delegation agreement]:
5-45 (1) detailed risk-pool data, reported quarterly and on
5-46 settlement; and
5-47 (2) the percent of premium attributable to hospital or
5-48 facility costs, if hospital or facility costs impact the delegated
5-49 entity's [network's] costs, reported quarterly, and, if there are
5-50 changes in hospital or facility contracts with the health
5-51 maintenance organization, the projected impact of those changes on
5-52 the percent of premium attributable to hospital and facility costs
5-53 within 30 days of such changes.
5-54 (d) A health maintenance organization that becomes aware of
5-55 any [receives] information [through the monitoring plan required by
5-56 Subsection (a)(1) of this section] that indicates the delegated
5-57 entity [network] is not operating in accordance with its written
5-58 agreement or is operating in a condition that renders the
5-59 continuance of its business hazardous to the enrollees, shall[, in
5-60 writing]:
5-61 (1) notify the delegated entity in writing [network]
5-62 of those findings; [and]
5-63 (2) request, in writing, a written explanation, with
5-64 documentation supporting the explanation, of:
5-65 (A) the delegated entity's apparent [network's]
5-66 noncompliance with the written agreement; or
5-67 (B) the existence of the condition that
5-68 apparently renders the continuance of the delegated entity's
5-69 [network's] business hazardous to the enrollees; and
6-1 (3) provide the commissioner with copies of all
6-2 notices and requests submitted to the delegated entity and the
6-3 responses and other documentation the health maintenance
6-4 organization generates or receives in response to the notices and
6-5 requests.
6-6 (e) A delegated entity [network] shall respond to a request
6-7 from a health maintenance organization under Subsection (d) of this
6-8 section in writing not later than the 30th day after the date the
6-9 request is received.
6-10 (f) The health maintenance organization shall cooperate with
6-11 the delegated entity [network] to correct any failure by the
6-12 delegated entity [network] to comply with the regulatory
6-13 requirements of the department relating to any matters:
6-14 (1) delegated to the delegated entity [network] by the
6-15 health maintenance organization; or
6-16 (2) necessary for the health maintenance organization
6-17 to ensure compliance with statutory or regulatory requirements.
6-18 (g) [The health maintenance organization shall notify the
6-19 department and request intervention if:]
6-20 [(1) the health maintenance organization does not
6-21 receive a timely response from the delegated network as required by
6-22 Subsection (e) of this section; or]
6-23 [(2) the health maintenance organization receives a
6-24 timely response from the delegated network as required by
6-25 Subsection (e) of this section, but the health maintenance
6-26 organization and the delegated network are unable to reach an
6-27 agreement as to whether the delegated network:]
6-28 [(A) is complying with the written agreement; or]
6-29 [(B) has corrected any problem regarding a
6-30 practice that is hazardous to an enrollee of the health maintenance
6-31 organization.]
6-32 [(h)] On receipt of a notice [request for intervention]
6-33 under Subsection (d) [(g)] of this section, or if complaints are
6-34 filed with the Texas Department of Insurance, the department may
6-35 examine the matters contained in the notice as well as any other
6-36 matter relating to the financial solvency of the delegated entity
6-37 or the delegated entity's ability to meet its responsibilities in
6-38 connection with any function delegated to the entity by the health
6-39 maintenance organization [:]
6-40 [(1) request financial and operational documents from
6-41 the delegated network to further investigate deficiencies indicated
6-42 by the monitoring plan;]
6-43 [(2) conduct an on-site audit of the delegated network
6-44 if the department determines that the delegated network is not
6-45 complying with the monitoring standards required under Subsection
6-46 (a)(1) of this section; or]
6-47 [(3) notwithstanding any other provisions, upon
6-48 violation of a monitoring plan, suspend or revoke the third party
6-49 administrator license or utilization review agent license of:]
6-50 [(A) the delegated network; or]
6-51 [(B) a third party with which the delegated
6-52 network has contracted].
6-53 (h) [(i)] Except as provided by this subsection, the Texas
6-54 Department of Insurance, on completion of the department's
6-55 examination, [The department] shall report to the delegated entity
6-56 [network] and the health maintenance organization the results of
6-57 the department's examination and any action the department
6-58 determines is necessary to ensure that the health maintenance
6-59 organization meets its responsibilities under this Act, the
6-60 Insurance Code, any other insurance laws of this state, and rules
6-61 adopted by the commissioner, and that the delegated entity can meet
6-62 its responsibilities in connection with any function delegated to
6-63 the entity by the health maintenance organization. The [its review
6-64 not later than the 60th day after the date of the department's
6-65 initial request for documentation; provided, however, the]
6-66 department may [shall] not report to the health maintenance
6-67 organization any information regarding fee schedules, prices, cost
6-68 of care, or other information not relevant to the monitoring plan.
6-69 (i) [(j)] The delegated entity and the health maintenance
7-1 organization [network] shall respond to the department's report and
7-2 submit a corrective plan to the Texas Department of Insurance
7-3 [department and to the health maintenance organization] not later
7-4 than the 30th day after the date of receipt of [the delegated
7-5 network receives] the department's report. [The delegated network
7-6 may withhold information regarding fee schedules, prices, cost of
7-7 care, or other information not relevant to the monitoring plan.]
7-8 (j) [(k)] Reports and corrective plans required under
7-9 Subsection (h) or (i) [(i) or (j)] of this section shall be treated
7-10 as public documents, except that health care provider fee
7-11 schedules, prices, costs of care, or other information not relevant
7-12 to the monitoring plan and any other information that is considered
7-13 confidential by law shall be considered confidential.
7-14 (k) [(l)] The department may request at any time that a
7-15 delegated entity [network] take corrective action to comply with
7-16 the department's statutory and regulatory requirements that:
7-17 (1) relate to any matters delegated by the health
7-18 maintenance organization to the delegated entity [network]; or
7-19 (2) are necessary to ensure the health maintenance
7-20 organization's compliance with statutory and regulatory
7-21 requirements.
7-22 (l) [(m)] Regardless of whether [If] a delegated entity
7-23 complies [network does not comply] with a [the department's]
7-24 request for corrective action, the commissioner [department] may
7-25 order the health maintenance organization to take any action the
7-26 commissioner determines is necessary to ensure that the health
7-27 maintenance organization is in compliance with this Act, including:
7-28 (1) reassuming the functions delegated to the
7-29 delegated entity, including claims payments for services previously
7-30 rendered to enrollees of the health maintenance organization;
7-31 (2) temporarily or permanently ceasing [cease]
7-32 assignment of new enrollees to the delegated entity [network];
7-33 (3) [(2)] temporarily or permanently transferring
7-34 [transfer] enrollees to alternative delivery systems to receive
7-35 services; or
7-36 (4) terminating the health maintenance organization's
7-37 [(3) modify or terminate its] contract with the delegated entity
7-38 [network].
7-39 (m) [(n)] The Texas Department of Insurance [commissioner]
7-40 shall maintain enrollee and provider complaints in a manner that
7-41 identifies complaints made about limited provider networks and
7-42 delegated entities [networks]. The department shall periodically
7-43 issue a report on the complaints received by the department that
7-44 includes a list of complaints by category, by action taken on the
7-45 complaint, and by entity or network name and type. The department
7-46 shall make the report available to the public and shall include
7-47 information to assist the public in evaluating the information
7-48 contained in the report.
7-49 (n) Notwithstanding any other provision of this Act, the
7-50 Insurance Code, or any other insurance law of this state, the
7-51 commissioner may suspend or revoke the license of any third party
7-52 administrator or utilization review agent that fails to comply with
7-53 this section.
7-54 (o) The commissioner may impose sanctions or penalties under
7-55 Chapters 82, 83, and 84, Insurance Code, against a health
7-56 maintenance organization that does not provide timely information
7-57 required by Subsections (b) and (c) of this section.
7-58 (p) A health maintenance organization shall by contract
7-59 establish penalties for delegated entities that do not provide
7-60 timely information required under a monitoring plan as required by
7-61 Subsection (a)(1) of this section.
7-62 (q) This section does not apply to a group model health
7-63 maintenance organization, as defined by Section 6A of this Act.
7-64 (r) The commissioner may adopt rules as necessary to
7-65 [interpret,] implement [, and enforce] this section.
7-66 SECTION 5. The Texas Health Maintenance Organization Act
7-67 (Chapter 20A, Vernon's Texas Insurance Code) is amended by adding
7-68 Sections 18D, 18E, 18F, and 18G to read as follows:
7-69 Sec. 18D. RESERVE REQUIREMENTS FOR DELEGATED NETWORK. (a) A
8-1 delegated network shall establish and maintain reserves that are
8-2 adequate for the liabilities and risks assumed by the delegated
8-3 network, as computed in accordance with accepted standards,
8-4 practices, and procedures relating to the liabilities and risks
8-5 reserved for, including known and unknown components and
8-6 anticipated expenses of providing benefits or services.
8-7 (b) Except as provided by Subsections (c) and (d), the
8-8 delegated network shall establish and maintain reserves as
8-9 described by Subsection (e)(1) or (2) only with respect to the
8-10 portion of services assumed under the delegation agreement that are
8-11 not within the scope of the network's license for medical care or
8-12 hospital or other institutional services, as applicable.
8-13 (c) If the scope of services assumed under the delegation
8-14 agreement includes both medical care and hospital or institutional
8-15 services, the delegated network shall establish and maintain
8-16 reserves that are adequate to cover the liabilities and risks
8-17 associated with medical care or with hospital or institutional
8-18 services, whichever type of services has been allocated the largest
8-19 portion of the premium by the health maintenance organization.
8-20 (d) If the delegated network assumes financial risk for
8-21 medical care or hospital or institutional services and for
8-22 prescription drugs, as defined by Section 551.003, Occupations
8-23 Code, the network shall establish and maintain reserves that are
8-24 adequate to cover the liabilities and risks associated with the
8-25 prescription drug benefits, in addition to any other reserves
8-26 required under this section.
8-27 (e) A delegated network shall maintain financial reserves
8-28 equal to the greater of:
8-29 (1) 80 percent of the risk and liabilities that must
8-30 be reserved under this section and that have been incurred but not
8-31 paid by the delegated network; or
8-32 (2) two months of premium amount assumed by the
8-33 delegated network for services that must be reserved under this
8-34 section.
8-35 (f) The reserves required under this section must be secured
8-36 by and only consist of legal tender of the United States or bonds
8-37 of the United States or this state. The reserves must be held at a
8-38 financial institution in this state that is chartered by the United
8-39 States or this state. The reserves must be held in trust for, for
8-40 the benefit of, or to provide health care services to, enrollees of
8-41 the health maintenance organization under the agreement between the
8-42 health maintenance organization and the delegated network.
8-43 (g) (1) A delegated network required to establish and
8-44 maintain reserves under this section shall establish an escrow
8-45 account for the payment of claims and deposit such reserves into
8-46 the escrow account upon providing notice of its intent to terminate
8-47 or non-renew a contract through which the delegated network assumed
8-48 liabilities and risks from a health maintenance organization. Upon
8-49 the establishment of the escrow account, the delegated network
8-50 shall notify the Commissioner.
8-51 (2) A delegated network required to establish and
8-52 maintain reserves under this section shall establish an escrow
8-53 account for the payment of claims and deposit such reserves into
8-54 the escrow account upon the modification of a contract through
8-55 which the delegated network assumed liabilities and risks from a
8-56 health maintenance organization if the modified contract eliminates
8-57 the liabilities and risks previously assumed by the delegated
8-58 network. Upon the establishment of the escrow account, the
8-59 delegated network shall notify the Commissioner.
8-60 (2) 270 days after the date the reserves are deposited
8-61 into the escrow account, the delegated network shall be entitled to
8-62 the release of the remaining amounts held in escrow.
8-63 (3) the amounts released from the escrow account shall
8-64 be distributed to those individuals who contributed to the reserves
8-65 deposited into escrow in proportion to the individuals' total
8-66 contribution.
8-67 (4) The Commissioner shall, and has the authority to,
8-68 take any action necessary to ensure the release of any amounts
8-69 remaining in escrow in excess of the 270 day time period in
9-1 subsection (g)(2).
9-2 (h) This section does not apply to a group model health
9-3 maintenance organization, as defined by Section 6A of this Act.
9-4 Sec. 18E. CERTAIN PHYSICIAN AND PROVIDER CONTRACTS;
9-5 CONTINUITY OF CARE FOR CERTAIN ENROLLEES. (a) In this section,
9-6 "special circumstance" means a condition for which the treating
9-7 physician or provider reasonably believes that discontinuing care
9-8 by the treating physician or provider could cause harm to the
9-9 patient.
9-10 (b) Each contract between a health maintenance organization
9-11 and a limited provider network or delegated entity must require
9-12 that each contract between the network or entity and a physician or
9-13 provider provide that:
9-14 (1) reasonable advance notice be given to an enrollee
9-15 of the impending termination from the limited provider network or
9-16 delegated entity of a physician or provider who is currently
9-17 treating the enrollee; and
9-18 (2) the termination of the physician or provider
9-19 contract, except for reason of medical competence or professional
9-20 behavior, does not release the limited provider network or
9-21 delegated entity from the obligation to reimburse a physician or
9-22 provider who is treating an enrollee of special circumstance, such
9-23 as a person who has a disability, acute condition, or
9-24 life-threatening illness or is past the 24th week of pregnancy, at
9-25 a rate that is not less than the contract rate for that enrollee's
9-26 care in exchange for continuity of ongoing treatment of an enrollee
9-27 then receiving medically necessary treatment in accordance with the
9-28 dictates of medical prudence.
9-29 (c) A special circumstance shall be identified by the
9-30 treating physician or provider, who must request that the enrollee
9-31 be permitted to continue treatment under the physician's or
9-32 provider's care and agree not to seek payment from the patient of
9-33 any amounts for which the enrollee would not be responsible if the
9-34 physician or provider were still in the limited provider network or
9-35 delegated entity.
9-36 (d) Contracts between a limited provider network or
9-37 delegated entity and physicians or providers shall provide
9-38 procedures for resolving disputes regarding the necessity for
9-39 continued treatment by a physician or provider.
9-40 (e) This section does not extend the obligation of a limited
9-41 provider network or delegated entity to reimburse a terminated
9-42 physician or provider for ongoing treatment of an enrollee beyond
9-43 the 90th day after the effective date of the termination, or beyond
9-44 nine months in the case of an enrollee who at the time of the
9-45 termination has been diagnosed with a terminal illness. However,
9-46 the obligation of the limited provider network or delegated entity
9-47 to reimburse the terminated physician or provider or, if
9-48 applicable, the enrollee for services to an enrollee who at the
9-49 time of the termination is past the 24th week of pregnancy, extends
9-50 through delivery of the child, immediate postpartum care, and the
9-51 follow-up checkup within the first six weeks of delivery.
9-52 Sec. 18F. OUT-OF-NETWORK SERVICES OF LIMITED PROVIDER
9-53 NETWORK OR DELEGATED ENTITY. (a) Each contract between a health
9-54 maintenance organization and a limited provider network or
9-55 delegated entity must provide that if medically necessary covered
9-56 services are not available through network physicians or providers,
9-57 the limited provider network or delegated entity must, on request
9-58 of a network physician or provider, allow a referral to a
9-59 non-network physician or provider and shall fully reimburse the
9-60 non-network provider at the usual and customary or an agreed-upon
9-61 rate.
9-62 (b) The referral shall be allowed within the time
9-63 appropriate to the circumstances relating to the delivery of the
9-64 services and the condition of the patient, but not later than the
9-65 fifth business day after the date any reasonably requested
9-66 documentation is received by the limited provider network or
9-67 delegated entity.
9-68 (c) The enrollee may not be required to change the
9-69 enrollee's primary care physician or specialist providers to
10-1 receive medically necessary covered services that are not available
10-2 within the limited provider network or delegated entity.
10-3 (d) Each contract must also provide for a review by a
10-4 specialist of the same or similar specialty as the type of
10-5 physician or provider to whom a referral is requested before the
10-6 limited provider network or delegated entity may deny a referral.
10-7 (e) A denial of out-of-network services under this section
10-8 is subject to appeal under Article 21.58A, Insurance Code.
10-9 Sec. 18G. COMPLIANCE OF LIMITED PROVIDER NETWORK OR
10-10 DELEGATED ENTITY WITH CERTAIN REQUIREMENTS. A limited provider
10-11 network or delegated entity shall comply with all statutory and
10-12 regulatory requirements relating to any function, duty,
10-13 responsibility, or delegation assumed by or carried out by the
10-14 limited provider network or delegated entity under this Act.
10-15 SECTION 6. Section 5, Chapter 621, Acts of the 76th
10-16 Legislature, Regular Session, 1999, is repealed.
10-17 SECTION 7. The change in law made by this Act applies only to
10-18 a contract entered into or renewed on or after January 1, 2002. A
10-19 contract entered into before January 1, 2002, is governed by the
10-20 law in effect immediately before the effective date of this Act,
10-21 and that law is continued in effect for that purpose.
10-22 SECTION 8. This Act takes effect September 1, 2001.
10-23 * * * * *