By: Nelson, et al. S.B. No. 1571 A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to standard physician contract forms for use in managed 1-3 care plans. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. Subchapter E, Chapter 21, Insurance Code, is 1-6 amended by adding Article 21.52K to read as follows: 1-7 Art. 21.52K. STANDARD MANAGED CARE CONTRACTS FOR PHYSICIANS 1-8 Sec. 1. DEFINITIONS. In this article: 1-9 (1) "Managed care entity" means an entity described by 1-10 Section 2 of this article. 1-11 (2) "Managed care plan" means a health benefit plan: 1-12 (A) under which health care services are 1-13 provided to enrollees through contracts with physicians, other 1-14 health care professionals, or health care facilities; and 1-15 (B) that provides financial incentives to 1-16 enrollees in the plan to use the participating physicians and other 1-17 health care professionals and participating health care facilities. 1-18 Sec. 2. APPLICABILITY OF ARTICLE. This article applies to a 1-19 health maintenance organization, a preferred provider organization, 1-20 an approved nonprofit health corporation that holds a certificate 1-21 of authority under Article 21.52F of this code, and any other 1-22 entity that offers a managed care plan, including: 1-23 (1) an insurance company; 1-24 (2) a group hospital service corporation operating 1-25 under Chapter 20 of this code; 2-1 (3) a fraternal benefit society operating under 2-2 Chapter 10 of this code; or 2-3 (4) a stipulated premium insurance company operating 2-4 under Chapter 22 of this code. 2-5 Sec. 3. STANDARD PHYSICIAN CONTRACTS. (a) Except as 2-6 provided by Subsection (b) of this section, the commissioner, in 2-7 consultation with the contract advisory panel, shall adopt rules 2-8 that establish standard contract forms for use by managed care 2-9 entities in entering into contracts with physicians and require 2-10 managed care entities to use those contracts. 2-11 (b) A managed care entity or a physician may use a contract 2-12 form other than a form required under Subsection (a) of this 2-13 section that: 2-14 (1) the physician asks to be used; 2-15 (2) the physician and managed care entity prepare with 2-16 equal representation; 2-17 (3) the physician and the managed care entity mutually 2-18 agree may be used; and 2-19 (4) would not cause a managed care entity to violate 2-20 Section 5 of this article. 2-21 Sec. 4. CONTRACT ADVISORY PANEL; MEMBERSHIP. (a) The 2-22 contract advisory panel is established as an advisory panel to the 2-23 commissioner to advise and make recommendations to the commissioner 2-24 regarding the adoption of standard contract forms under Section 3 2-25 of this article. 2-26 (b) The advisory panel is composed of nine members appointed 3-1 jointly by the lieutenant governor and the speaker of the house of 3-2 representatives as follows: 3-3 (1) two attorneys who primarily represent actively 3-4 practicing physicians; 3-5 (2) two attorneys who primarily represent insurers, 3-6 health maintenance organizations, or health plans; 3-7 (3) one individual who serves as manager for 3-8 independently practicing physicians; 3-9 (4) one physician actively engaged in the independent 3-10 practice of medicine in this state; 3-11 (5) one individual who serves as medical director for 3-12 an insurer, health maintenance organization, or health plan; 3-13 (6) one individual who serves as a provider relations 3-14 director or contract manager for an insurer, health maintenance 3-15 organization, or health plan; and 3-16 (7) one individual who represents consumers. 3-17 (c) The consumer representative on the advisory panel may 3-18 not: 3-19 (1) receive any compensation from or be employed 3-20 directly or indirectly by physicians, health care providers, 3-21 insurers, health maintenance organizations, or other health benefit 3-22 plan issuers; 3-23 (2) be a health care provider; or 3-24 (3) be a person required to be registered as a 3-25 lobbyist under Chapter 305, Government Code, because of the 3-26 person's activities for compensation on behalf of a profession 4-1 related to the operation of the advisory panel. 4-2 (d) Members serve without compensation and at the will of 4-3 the lieutenant governor and speaker of the house of 4-4 representatives. 4-5 Sec. 5. CERTAIN DISCRIMINATION PROHIBITED. A managed care 4-6 entity may not: 4-7 (1) discriminate against a physician who uses a 4-8 standard contract form adopted under this article; 4-9 (2) require or use reimbursement differentials or 4-10 financial incentives that penalize or place a physician at a 4-11 disadvantage based in whole or in part on the use of a standard 4-12 contract form adopted under this article; or 4-13 (3) require a physician to waive the use of a standard 4-14 contract form adopted under this article. 4-15 Sec. 6. EFFECT OF VIOLATION. (a) A violation of this 4-16 article or a rule adopted under this article by a managed care 4-17 entity constitutes a violation of Articles 21.21 and 21.21A of this 4-18 code and is subject to the remedies available under those articles. 4-19 (b) The commissioner may suspend or revoke a managed care 4-20 entity's license or other authority to engage in the business of 4-21 insurance in this state if the commissioner determines that the 4-22 managed care entity has failed to use a contract form the use of 4-23 which is required under this article. 4-24 SECTION 2. Not later than June 1, 2002, the commissioner of 4-25 insurance shall adopt the rules and contract forms required by 4-26 Section 3, Article 21.52K, Insurance Code, as added by this Act. 5-1 SECTION 3. Unless an exception applies, a managed care 5-2 entity shall use a standard contract form adopted under Section 3, 5-3 Article 21.52K, Insurance Code, as added by this Act, for any 5-4 contract between the managed care entity and a physician signed or 5-5 renewed on or after January 1, 2003. 5-6 SECTION 4. This Act takes effect immediately if it receives 5-7 a vote of two-thirds of all the members elected to each house, as 5-8 provided by Section 39, Article III, Texas Constitution. If this 5-9 Act does not receive the vote necessary for immediate effect, this 5-10 Act takes effect September 1, 2001.