1-1     By:  Nelson                                           S.B. No. 1571
 1-2           (In the Senate - Filed March 9, 2001; March 14, 2001, read
 1-3     first time and referred to Committee on Business and Commerce;
 1-4     April 27, 2001, reported adversely, with favorable Committee
 1-5     Substitute by the following vote:  Yeas 4, Nays 0; April 27, 2001,
 1-6     sent to printer.)
 1-7     COMMITTEE SUBSTITUTE FOR S.B. No. 1571                  By:  Carona
 1-8                            A BILL TO BE ENTITLED
 1-9                                   AN ACT
1-10     relating to standard physician contract forms for use in managed
1-11     care plans.
1-12           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13           SECTION 1.  Subchapter E, Chapter 21, Insurance Code, is
1-14     amended by adding Article 21.52K to read as follows:
1-15           Art. 21.52K.  STANDARD MANAGED CARE CONTRACTS FOR PHYSICIANS
1-16           Sec. 1.  DEFINITIONS.  In this article:
1-17                 (1)  "Managed care entity" means an entity described by
1-18     Section 2 of this article.
1-19                 (2)  "Managed care plan" means a health benefit plan:
1-20                       (A)  under which health care services are
1-21     provided to enrollees through contracts with physicians, other
1-22     health care professionals, or health care facilities; and
1-23                       (B)  that provides financial incentives to
1-24     enrollees in the plan to use the participating physicians and other
1-25     health care professionals and participating health care facilities.
1-26           Sec. 2.  APPLICABILITY OF ARTICLE.  This article applies to a
1-27     health maintenance organization, a preferred provider organization,
1-28     an approved nonprofit health corporation that holds a certificate
1-29     of authority under Article 21.52F of this code, and any other
1-30     entity that offers a managed care plan, including:
1-31                 (1)  an insurance company;
1-32                 (2)  a group hospital service corporation operating
1-33     under Chapter 20 of this code;
1-34                 (3)  a fraternal benefit society operating under
1-35     Chapter 10 of this code; or
1-36                 (4)  a stipulated premium insurance company operating
1-37     under Chapter 22 of this code.
1-38           Sec. 3.  STANDARD PHYSICIAN CONTRACTS.  (a)  Except as
1-39     provided by Subsection (b) of this section, the commissioner, in
1-40     consultation with the contract advisory panel, shall adopt rules
1-41     that establish standard contract forms for use by managed care
1-42     entities in entering into contracts with physicians and require
1-43     managed care entities to use those contracts.
1-44           (b)  A managed care entity or a physician may use a contract
1-45     form other than a form required under Subsection (a) of this
1-46     section that:
1-47                 (1)  the physician asks to be used;
1-48                 (2)  the physician and managed care entity prepare with
1-49     equal representation;
1-50                 (3)  the physician and the managed care entity mutually
1-51     agree may be used; and
1-52                 (4)  would not cause a managed care entity to violate
1-53     Section 5 of this article.
1-54           Sec. 4.  CONTRACT ADVISORY PANEL; MEMBERSHIP.  (a)  The
1-55     contract advisory panel is established as an advisory panel to the
1-56     commissioner to advise and make recommendations to the commissioner
1-57     regarding the adoption of standard contract forms under Section 3
1-58     of this article.
1-59           (b)  The advisory panel is composed of nine members appointed
1-60     jointly by the lieutenant governor and the speaker of the house of
1-61     representatives as follows:
1-62                 (1)  two attorneys who primarily represent actively
1-63     practicing physicians;
1-64                 (2)  two attorneys who primarily represent insurers,
 2-1     health maintenance organizations, or health plans;
 2-2                 (3)  one individual who serves as manager for
 2-3     independently practicing physicians;
 2-4                 (4)  one physician actively engaged in the independent
 2-5     practice of medicine in this state;
 2-6                 (5)  one individual who serves as medical director for
 2-7     an insurer, health maintenance organization, or health plan;
 2-8                 (6)  one individual who serves as a provider relations
 2-9     director or contract manager for an insurer, health maintenance
2-10     organization, or health plan; and
2-11                 (7)  one individual who represents consumers.
2-12           (c)  The consumer representative on the advisory panel may
2-13     not:
2-14                 (1)  receive any compensation from or be employed
2-15     directly or indirectly by physicians, health care providers,
2-16     insurers, health maintenance organizations, or other health benefit
2-17     plan issuers;
2-18                 (2)  be a health care provider; or
2-19                 (3)  be a person required to be registered as a
2-20     lobbyist under Chapter 305, Government Code, because of the
2-21     person's activities for compensation on behalf of a profession
2-22     related to the operation of the advisory panel.
2-23           (d)  Members serve without compensation and at the will of
2-24     the lieutenant governor and speaker of the house of
2-25     representatives.
2-26           Sec. 5.  CERTAIN DISCRIMINATION PROHIBITED.  A managed care
2-27     entity may not:
2-28                 (1)  discriminate against a physician who uses a
2-29     standard contract form adopted under this article;
2-30                 (2)  require or use reimbursement differentials or
2-31     financial incentives that penalize or place a physician at a
2-32     disadvantage based in whole or in part on the use of a standard
2-33     contract form adopted under this article; or
2-34                 (3)  require a physician to waive the use of a standard
2-35     contract form adopted under this article.
2-36           Sec. 6.  EFFECT OF VIOLATION.  (a)  A violation of this
2-37     article or a rule adopted under this article by a managed care
2-38     entity constitutes a violation of Articles 21.21 and 21.21A of this
2-39     code and is subject to the remedies available under those articles.
2-40           (b)  The commissioner may suspend or revoke a managed care
2-41     entity's license or other authority to engage in the business of
2-42     insurance in this state if the commissioner determines that the
2-43     managed care entity has failed to use a contract form the use of
2-44     which is required under this article.
2-45           SECTION 2.  Not later than June 1, 2002, the commissioner of
2-46     insurance shall adopt the rules and contract forms required by
2-47     Section 3, Article 21.52K, Insurance Code, as added by this Act.
2-48           SECTION 3.  Unless an exception applies, a managed care
2-49     entity shall use a standard contract form adopted under Section 3,
2-50     Article 21.52K, Insurance Code, as added by this Act, for any
2-51     contract between the managed care entity and a physician signed or
2-52     renewed on or after January 1, 2003.
2-53           SECTION 4.  This Act takes effect immediately if it receives
2-54     a vote of two-thirds of all the members elected to each house, as
2-55     provided by Section 39, Article III, Texas Constitution.  If this
2-56     Act does not receive the vote necessary for immediate effect, this
2-57     Act takes effect September 1, 2001.
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