78R1576 KLA-D
By:  Pitts                                                        H.B. No. 1814
A BILL TO BE ENTITLED
AN ACT
relating to the provision of health and human services in this 
state, including the powers and duties of the Health and Human 
Services Commission and other state agencies; providing civil and 
criminal penalties.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
ARTICLE 1.  HEALTH AND HUMAN SERVICES COMMISSION
	SECTION 1.01.  Section 531.001(4), Government Code, as 
amended by Chapters 53, 957, and 1420, Acts of the 77th Legislature, 
Regular Session, 2001, is reenacted and amended to read as follows:
		(4)  "Health and human services agencies" includes the:                       
			(A)  Department for Children and Families
[Interagency Council on Early Childhood Intervention];
			(B)  [Texas] Department on Aging;                           
			(C)  Department for Persons with Disabilities
[Texas Commission on Alcohol and Drug Abuse]; and
			(D)  Department for Health and Mental Health
[Texas Commission for the Blind;
			[(E) Texas Commission for the Deaf and Hard of 
Hearing;   
			[(F)  Texas Department of Health;                           
			[(G)  Texas Department of Human Services;                   
			[(H)  Texas Department of Mental Health and Mental 
Retardation;
			[(I)  Texas Rehabilitation Commission;                      
			[(J)  Department of Protective and Regulatory 
Services; and
			[(K)  Texas Health Care Information Council].               
	SECTION 1.02.  Section 531.004, Government Code, is amended 
to read as follows:
	Sec. 531.004.  SUNSET PROVISION.  The Health and Human 
Services Commission is subject to Chapter 325 (Texas Sunset Act).  
Unless continued in existence as provided by that chapter, the 
commission is abolished and this chapter expires September 1, 2009
[2007].
	SECTION 1.03.  Section 531.0055, Government Code, is amended 
to read as follows:
	Sec. 531.0055.  COMMISSIONER:  GENERAL RESPONSIBILITY FOR
[RELATING TO CERTAIN FUNCTIONS OF] HEALTH AND HUMAN SERVICES 
AGENCIES.  (a)  In this section and in Section 531.0056, "agency 
director"[:
		[(1)  "Agency director"] means the [director,] 
executive director[, or commissioner] of a health and human 
services agency.
		[(2)  "Policymaking body" means the board or commission 
with policymaking authority over a health and human services 
agency.]
	(b)  The commission shall:                                                     
		(1)  supervise the administration and operation of the 
Medicaid program, including the administration and operation of the 
Medicaid managed care system in accordance with Section 531.021;
		(2)  perform [supervise] information systems planning 
and management for health and human services agencies under Section 
531.0273, with the provision of information technology services at 
health and human services agencies considered to be a centralized 
administrative support service either performed by commission 
personnel or performed under a contract with the commission;
		(3)  monitor and ensure the effective use of all 
federal funds received by a health and human services agency in 
accordance with Section 531.028 and the General Appropriations Act; 
and
		(4)  implement Texas Integrated Enrollment Services as 
required by Subchapter F, except that notwithstanding Subchapter F, 
determining eligibility for benefits under the following programs 
is the responsibility of and must be centralized by the commission:
			(A)  the children's health insurance program 
under Chapter 62, Health and Safety Code;
			(B)  the financial assistance program under 
Chapter 31, Human Resources Code, including the earned income 
disregard;
			(C)  the medical assistance program under Chapter 
32, Human Resources Code; and
			(D)  the nutritional assistance programs under 
Chapter 33, Human Resources Code.
	(c)  The [After implementation of the commission's duties 
under Subsection (b), the] commission shall implement the powers 
and duties given to the commission under Sections 531.0246, 
531.0247, 2155.144, [as added by Chapter 1045, Acts of the 75th 
Legislature, Regular Session, 1997,] and 2167.004.
	(d)  After implementation of the commission's duties under 
Subsections (b) and (c), the commission shall implement the powers 
and duties given to the commission under Section 531.0248.  Nothing 
in the priorities established by this section is intended to limit 
the authority of the commission to work simultaneously to achieve 
the multiple tasks assigned to the commission in this section, when 
such an approach is beneficial in the judgment of the commission.  
The commission shall plan and implement an efficient and effective 
centralized system of administrative support services for health 
and human services agencies.  The performance of administrative 
support services for health and human services agencies is the 
responsibility of the commission.  The term "administrative support 
services" includes, but is not limited to, strategic planning and 
evaluation, audit, legal, human resources, purchasing, contract 
management, financial management, and accounting services.
	(e)  Notwithstanding any other law, the commissioner shall 
adopt rules and policies for the operation of and provision of 
health and human services by the health and human services 
agencies.  In addition, the commissioner, as necessary to perform 
the functions described by Subsections (b), (c), and (d) in 
implementation of applicable [the] policies established for an 
agency by the commissioner [each agency's policymaking body], 
shall:
		(1)  manage and direct the operations of each health 
and human services agency; and
		(2)  supervise and direct the activities of each agency 
director.           
	(f)  The operational authority and responsibility of the 
commissioner for purposes of Subsection (e) at each health and 
human services agency includes authority over and responsibility 
for the:
		(1)  management of the daily operations of the agency, 
including the organization and management of the agency and agency 
operating procedures;
		(2)  allocation of resources within the agency, 
including use of federal funds received by the agency;
		(3)  personnel and employment policies;                                       
		(4)  contracting, purchasing, and related policies, 
subject to this chapter and other laws relating to contracting and 
purchasing by a state agency;
		(5)  information resources systems used by the agency;                        
		(6)  location of agency facilities;  and                                      
		(7)  coordination of agency activities with activities 
of other state agencies, including other health and human services 
agencies.
	(g)  Notwithstanding any other law, the operational 
authority and responsibility of the commissioner for purposes of 
Subsection (e) at each health and human services agency includes 
the authority and responsibility to adopt or approve, subject to 
applicable limitations, any rate of payment or similar provision 
required by law to be adopted or approved by the agency.
	(h)  For each health and human services agency, the 
commissioner shall implement a program to evaluate and supervise 
the daily operations of the agency.  The program must include 
measurable performance objectives for each agency director and 
adequate reporting requirements to permit the commissioner to 
perform the duties assigned to the commissioner under this section.
	(i)  To facilitate the operations of a health and human 
services agency in accordance with this section, the commissioner 
may delegate a specific power or duty given under Subsection (f) or 
(g) to an agency director.  The agency director acts on behalf of 
and reports to the commissioner in performing the delegated 
function.
	(j)  The commissioner shall [may] adopt rules to implement 
the commissioner's authority under this section.
	(k)  The commissioner and each agency director shall enter 
into a memorandum of understanding in the manner prescribed by 
Section 531.0164 that:
		(1)  clearly defines the responsibilities of the agency 
director and the commissioner, including:
			(A)  the responsibility of the agency director to 
report to and implement policies of the commissioner; and
			(B)  the extent to which the agency director acts 
as a liaison between the agency and the commission;
		(2)  establishes the program of evaluation and 
supervision of daily operations required by Subsection (h); and
		(3)  describes each delegation of a power or duty made 
under Subsection (i) or other law.
	(l)  Notwithstanding any other law, the commissioner 
[provision of this section, a policymaking body] has the authority 
[provided by law] to adopt policies and rules governing the 
delivery of services to persons who are served by each health and 
human services [the] agency and the rights and duties of persons who 
are served or regulated by each [the] agency.  [The commissioner and 
each policymaking body shall enter into a memorandum of 
understanding that clearly defines:
		[(1)  the policymaking authority of the policymaking 
body; and
		[(2)  the operational authority of the commissioner.]        
	SECTION 1.04.  Section 531.0056, Government Code, is amended 
to read as follows:
	Sec. 531.0056.  EMPLOYMENT OF AGENCY DIRECTOR.  (a)  The 
commissioner shall hire an agency director for each health and 
human services agency [This section applies only to an agency 
director employed by the commissioner].
	(b)  The agency director shall serve at the pleasure of the 
commissioner [An agency director employed by the commissioner may 
be employed only with the concurrence of the agency's policymaking 
body and the approval of the governor].
	(c)  In addition to the requirements of [As established in] 
Section 531.0055(k)(1), the memorandum of understanding between 
the commissioner and agency director required by that section must 
[shall enter into a memorandum of understanding that] clearly 
define [defines] the [responsibilities of the agency director and 
may establish] terms [and conditions] of the agency director's 
employment [in the memorandum of understanding].
	(d)  The terms of the memorandum of understanding shall 
outline specific performance objectives, as defined [jointly] by 
the commissioner [and the policymaking body], to be fulfilled by 
the agency director, including the performance objectives outlined 
in Section 531.0055(h).
	(e)  Based upon the performance objectives outlined in the 
memorandum of understanding, the commissioner shall perform an 
employment evaluation of the agency director.
	[(f)  The commissioner shall submit the evaluation, along 
with any recommendation regarding the employment of the agency 
director, to the agency's policymaking body and the governor not 
later than January 1 of each even-numbered year.
	[(g)  The policymaking body shall consider the evaluation in 
a meeting of the policymaking body and take necessary action, if 
any, not later than 90 days after the date of the receipt of the 
evaluation.
	[(h)  An agency director employed by the commissioner serves 
at the pleasure of the commissioner but may be discharged only with 
the concurrence of the agency's policymaking body.]
	SECTION 1.05.  Subchapter A, Chapter 531, Government Code, 
is amended by adding Sections 531.0161, 531.0162, 531.0163, 
531.0164, and 531.0165 to read as follows:
	Sec. 531.0161.  NEGOTIATED RULEMAKING AND ALTERNATIVE 
DISPUTE PROCEDURES.  (a)  The commission shall develop and 
implement a policy, for the commission and each health and human 
services agency, to encourage the use of:
		(1)  negotiated rulemaking procedures under Chapter 
2008 for the adoption of commission rules; and
		(2)  appropriate alternative dispute resolution 
procedures under Chapter 2009 to assist in the resolution of 
internal and external disputes under the commission's or agency's 
jurisdiction.
	(b)  The procedures relating to alternative dispute 
resolution must conform, to the extent possible, to any model 
guidelines issued by the State Office of Administrative Hearings 
for the use of alternative dispute resolution by state agencies.
	Sec. 531.0162.  USE OF TECHNOLOGY.  (a)  The commission shall 
develop and implement a policy requiring the executive director and 
employees of each health and human services agency to research and 
propose appropriate technological solutions to improve the 
agency's ability to perform its functions.  The technological 
solutions must:
		(1)  ensure that the public is able to easily find 
information about a health and human services agency on the 
Internet;
		(2)  ensure that persons who want to use a health and 
human services agency's services are able to:
			(A)  interact with the agency through the 
Internet; and             
			(B)  access any service that can be provided 
effectively through the Internet; and
		(3)  be cost-effective and developed through the 
commission's planning process.
	(b)  The commission shall develop and implement a policy 
described by Subsection (a) in relation to the commission's 
functions.
	Sec. 531.0163.  PURCHASING.  Notwithstanding any other law, 
the commission shall make all purchases for health and human 
services agencies.  The commission may delegate purchasing 
authority to a health and human services agency under circumstances 
in which the commission determines that it is not cost-effective 
for the commission to make the purchases.  If the commission 
delegates purchasing authority to a health and human services 
agency, the agency shall comply with Section 2155.144.
	Sec. 531.0164.  MEMORANDUM OF UNDERSTANDING.  (a)  The 
memorandum of understanding under Section 531.0055(k) must be 
adopted by the commissioner by rule in accordance with the 
procedures prescribed by Subchapter B, Chapter 2001, for adopting 
rules, except that the requirements of Section 2001.033(a)(1)(A) or 
(C) do not apply with respect to any part of the memorandum of 
understanding that:
		(1)  concerns only internal management or organization 
within or among health and human services agencies and does not 
affect private rights or procedures; or
		(2)  relates solely to the internal personnel practices 
of health and human services agencies.
	(b)  The memorandum of understanding may be amended only by 
following the procedures prescribed under Subsection (a).
	Sec. 531.0165.  TRANSFER OF PROGRAMS AND FUNCTIONS; 
COORDINATION.  (a)  The commission may:
		(1)  assign responsibility for all or part of a health 
and human services program or function to the commission or any 
health and human services agency;
		(2)  transfer all or part of a health and human services 
program or function to the commission or one or more health and 
human services agencies and may require that health and human 
services agencies cooperate as necessary to administer the program 
or function; and
		(3)  transfer amounts appropriated to the commission or 
a health and human services agency as necessary for an assignment or 
transfer.
	(b)  A decision of the commissioner shall resolve any 
conflict between the health and human services agencies.
	(c)  If the commissioner transfers all or part of a program 
or function to the commission or one or more health and human 
services agencies, the commissioner and the executive director of 
each affected agency shall amend the memorandum of understanding 
required by Section 531.0055(k) to reflect any change in 
responsibilities that results from the transfer.
	SECTION 1.06.  Subchapter B, Chapter 531, Government Code, 
is amended by adding Section 531.0224 to read as follows:
	Sec. 531.0224.  PLANNING AND POLICY DIRECTION OF TEMPORARY 
ASSISTANCE FOR NEEDY FAMILIES PROGRAM.  The commission shall:
		(1)  plan and direct the financial assistance program 
under Chapter 31, Human Resources Code, including the procurement, 
management, and monitoring of contracts necessary to implement the 
program;
		(2)  adopt rules and standards governing the financial 
assistance program under Chapter 31, Human Resources Code, in 
consultation with the advisory boards of the agencies that operate 
the program, including rules for determining eligibility for and 
the amount and duration of an earned income disregard; and
		(3)  establish requirements for and define the scope of 
the ongoing evaluation of the financial assistance program under 
Chapter 31, Human Resources Code.
	SECTION 1.07.  Sections 531.0057, 531.034, and 531.0345, 
Government Code, are repealed.
ARTICLE 2.  HEALTH AND HUMAN SERVICES AGENCIES
	SECTION 2.01.  The Health and Safety Code is amended by 
adding Title 12 to read as follows:
TITLE 12.  HEALTH AND MENTAL HEALTH
SUBTITLE A.  HEALTH AND MENTAL HEALTH SERVICES
CHAPTER 1001.  DEPARTMENT FOR HEALTH AND MENTAL HEALTH
SUBCHAPTER A.  GENERAL PROVISIONS
	Sec. 1001.001.  DEFINITIONS.  In this chapter:                          
		(1)  "Advisory board" means the advisory board for 
health and mental health.
		(2)  "Agency" means the Department for Health and 
Mental Health.     
		(3)  "Commission" means the Health and Human Services 
Commission.    
		(4)  "Commissioner" means the commissioner of health 
and human services.
		(5)  "Executive director" means the executive director 
of the agency.
	Sec. 1001.002.  AGENCY.  The agency is an agency of the 
state.        
	Sec. 1001.003.  SUNSET PROVISION.  The agency is subject to 
Chapter 325, Government Code (Texas Sunset Act).  Unless continued 
in existence as provided by that chapter, the agency is abolished 
and this chapter expires September 1, 2009.
[Sections 1001.004-1001.020 reserved for expansion]
SUBCHAPTER B.  ADMINISTRATIVE PROVISIONS
	Sec. 1001.021.  ADVISORY BOARD FOR HEALTH AND MENTAL HEALTH.  
(a)  The advisory board for health and mental health is created to 
assist the commissioner in developing rules and policies for the 
agency.
	(b)  The advisory board is composed of seven members 
appointed by the governor.  To be eligible for appointment to the 
advisory board, a person must have demonstrated an interest in and 
knowledge of problems and available services related to public 
health and mental health, including those concerning substance 
abuse.  The members must include the following:
		(1)  two members of the general public;                                
		(2)  a person with experience in public health matters;                
		(3)  a person with experience in regulating health or 
hospital facilities and services;
		(4)  a person with experience in mental health 
services;             
		(5)  a person with experience in substance abuse 
services; and       
		(6)  a person with experience in professional 
licensing.             
	(c)  A person may not be a public member of the advisory board 
if the person or the person's spouse:
		(1)  is registered, certified, or licensed by a 
regulatory agency in the field of health, mental health, or 
substance abuse services;
		(2)  is employed by or participates in the management 
of a business entity or other organization regulated by or 
receiving money from the agency;
		(3)  owns or controls, directly or indirectly, more 
than a 10 percent interest in a business entity or other 
organization regulated by or receiving money from the agency; or
		(4)  uses or receives a substantial amount of tangible 
goods, services, or money from the agency other than reimbursement 
authorized by law for advisory board membership, attendance, or 
expenses.
	(d)  The advisory board shall study and make recommendations 
to the executive director regarding the management and operation of 
the agency, including policies and rules governing the delivery of 
services to persons who are served by the agency and the rights and 
duties of persons who are served or regulated by the agency.
	(e)  Chapter 551, Government Code, applies to the advisory 
board.     
	(f)  Chapter 2110, Government Code, does not apply to the 
advisory board.
	Sec. 1001.022.  APPOINTMENTS.  (a)  Appointments to the 
advisory board shall be made without regard to the race, color, 
disability, sex, religion, age, or national origin of the 
appointees.
	(b)  To the extent possible, appointments to the advisory 
board shall be made so that the ethnic and geographic diversity of 
the state is reflected on the board.
	Sec. 1001.023.  CONFLICTS OF INTEREST.  (a)  In this section, 
"Texas trade association" means a cooperative and voluntarily 
joined statewide association of business or professional 
competitors in this state designed to assist its members and its 
industry or profession in dealing with mutual business or 
professional problems and in promoting their common interest.
	(b)  A person may not be a member of the advisory board and 
may not be an agency employee employed in a "bona fide executive, 
administrative, or professional capacity," as that phrase is used 
for purposes of establishing an exemption to the overtime 
provisions of the federal Fair Labor Standards Act of 1938 (29 
U.S.C. Section 201 et seq.), and its subsequent amendments, if:
		(1)  the person is an officer, employee, or paid 
consultant of a Texas trade association in the field of health, 
mental health, or substance abuse services; or
		(2)  the person's spouse is an officer, manager, or paid 
consultant of a Texas trade association in the field of health, 
mental health, or substance abuse services.
	(c)  A person may not be a member of the advisory board if the 
person is required to register as a lobbyist under Chapter 305, 
Government Code, because of the person's activities for 
compensation on behalf of a profession related to the operation of 
the agency.
	Sec. 1001.024.  TRAINING PROGRAM FOR ADVISORY BOARD MEMBERS.  
(a)  A person who is appointed as a member of the advisory board may 
not vote, deliberate, or be counted as a member in attendance at a 
meeting of the advisory board until the person completes a training 
program that complies with this section.
	(b)  The training program must provide the person with 
information regarding:
		(1)  the legislation that created the agency and the 
advisory board; 
		(2)  the programs operated by the agency;                              
		(3)  the role and functions of the agency and the 
advisory board, including detailed information regarding:
			(A)  the division of authority and of 
responsibility between the executive director and the 
commissioner; and
			(B)  the advisory responsibilities of the 
advisory board;           
		(4)  the rules of the commissioner applicable to the 
agency, with an emphasis on the rules that relate to disciplinary 
and investigatory authority;
		(5)  the current budget for the agency;                                
		(6)  the results of the most recent formal audit of the 
agency;      
		(7)  the requirements of:                                              
			(A)  the open meetings law, Chapter 551, 
Government Code;           
			(B)  the public information law, Chapter 552, 
Government Code;      
			(C)  the administrative procedure law, Chapter 
2001, Government Code; and
			(D)  other laws relating to public officials, 
including conflict-of-interest laws; and
		(8)  any applicable ethics policies adopted by the 
commissioner or the Texas Ethics Commission.
	Sec. 1001.025.  TERMS.  (a)  Advisory board members serve for 
staggered six-year terms with the terms of two or three members 
expiring February 1 of each odd-numbered year.
	(b)  A member of the advisory board may not serve more than 
two consecutive full terms as a board member.
	Sec. 1001.026.  VACANCY.  The governor by appointment shall 
fill the unexpired term of a vacancy on the advisory board.
	Sec. 1001.027.  PRESIDING OFFICER; OTHER OFFICERS; 
MEETINGS.  (a)  The governor shall designate a member of the 
advisory board as the presiding officer to serve in that capacity at 
the pleasure of the governor.
	(b)  The members of the advisory board shall elect any other 
necessary officers.
	(c)  The advisory board shall meet quarterly and at other 
times at the call of the presiding officer.  The board may hold 
meetings in different areas of the state.
	Sec. 1001.028.  REIMBURSEMENT FOR EXPENSES.  An advisory 
board member may not receive compensation for service as a member of 
the advisory board but is entitled to reimbursement for travel 
expenses incurred by the member while conducting the business of 
the advisory board as provided by the General Appropriations Act.
	Sec. 1001.029.  PUBLIC INTEREST INFORMATION AND COMPLAINTS.  
(a)  The executive director, with the advice of the advisory board, 
shall prepare information of public interest describing the 
functions of the agency and the procedures by which complaints are 
filed with and resolved by the agency.  The agency shall make the 
information available to the public and appropriate state 
governmental entities.
	(b)  The commissioner by rule shall establish methods by 
which consumers and service recipients are notified of the name, 
mailing address, and telephone number of the agency for directing 
complaints to the agency.
	Sec. 1001.030.  PUBLIC ACCESS AND TESTIMONY.  The 
commissioner shall develop and implement policies that provide the 
public with a reasonable opportunity to appear before the advisory 
board or commissioner and to speak on any issue under the 
jurisdiction of the agency.
	Sec. 1001.031.  POLICYMAKING AND MANAGEMENT 
RESPONSIBILITIES.  The commissioner, with the advice of the 
advisory board, shall develop and the agency shall implement 
policies that clearly delineate the policymaking responsibilities 
of the commissioner from the management responsibilities of the 
commission, the executive director, and the staff of the agency.
	Sec. 1001.032.  ANNUAL REPORT.  (a)  The executive director 
shall file annually with the commissioner a complete and detailed 
written report accounting for all funds received and disbursed by 
the agency during the preceding fiscal year.
	(b)  The annual report must be in the form and be reported in 
the time provided by the commissioner.
	Sec. 1001.033.  OFFICES.  The agency shall maintain its 
central office in Austin.  The agency may maintain offices in other 
areas of the state as necessary.
[Sections 1001.034-1001.050 reserved for expansion]
SUBCHAPTER C.  PERSONNEL
	Sec. 1001.051.  EXECUTIVE DIRECTOR.  (a)  The commissioner 
shall appoint an executive director, who is to be selected 
according to education, training, experience, and demonstrated 
ability.
	(b)  The executive director serves at the pleasure of the 
commissioner.
	(c)  The executive director shall act as the agency's chief 
administrative officer and as a liaison between the agency and 
commission.
	(d)  The executive director shall administer this chapter 
under operational policies established by the commissioner and in 
accordance with the memorandum of understanding under Section 
531.0055(k), Government Code, between the executive director and 
the commissioner, as adopted by rule.
	Sec. 1001.052.  PERSONNEL.  (a)  The agency may employ, 
compensate, and prescribe the duties of personnel necessary and 
suitable to administer this chapter.
	(b)  The commissioner shall prepare and by rule adopt 
personnel standards.
	(c)  A personnel position may be filled only by an individual 
selected and appointed on a nonpartisan merit basis.
	(d)  The commissioner, with the advice of the advisory board, 
shall develop and the agency shall implement policies that clearly 
define the responsibilities of the staff of the agency.
	Sec. 1001.053.  INFORMATION ABOUT QUALIFICATIONS AND 
STANDARDS OF CONDUCT.  The executive director or the executive 
director's designee shall provide to agency employees, as often as 
necessary, information regarding the requirements for employment 
under this chapter or rules adopted by the commissioner, including 
information regarding a person's responsibilities under applicable 
laws relating to standards of conduct for state employees.
	Sec. 1001.054.  MERIT PAY.  Subject to rules adopted by the 
commissioner, the executive director or the executive director's 
designee shall develop a system of annual performance evaluations.  
All merit pay for agency employees must be given under the system 
established under this section or under rules adopted by the 
commissioner.
	Sec. 1001.055.  CAREER LADDER.  The executive director or 
the executive director's designee shall develop an intra-agency 
career ladder program.  The program must require intra-agency 
postings of all nonentry-level positions concurrently with any 
public posting.
	Sec. 1001.056.  EQUAL EMPLOYMENT OPPORTUNITY POLICY.  (a)  
Subject to rules adopted by the commissioner, the executive 
director or the executive director's designee shall prepare and 
maintain a written policy statement that implements a program of 
equal employment opportunity to ensure that all personnel decisions 
are made without regard to race, color, disability, sex, religion, 
age, or national origin.
	(b)  Unless the following are included in a policy statement 
adopted by the commissioner that is applicable to the agency, the 
policy statement must include:
		(1)  personnel policies, including policies relating 
to recruitment, evaluation, selection, training, and promotion of 
personnel, that show the intent of the agency to avoid the unlawful 
employment practices described by Chapter 21, Labor Code; and
		(2)  an analysis of the extent to which the composition 
of the agency's personnel is in accordance with state and federal 
law and a description of reasonable methods to achieve compliance 
with state and federal law.
	(c)  The policy statement must be:                                      
		(1)  updated annually;                                                 
		(2)  reviewed by the state Commission on Human Rights 
for compliance with Subsection (b)(1); and
		(3)  filed with the governor's office.                                 
	Sec. 1001.057.  STATE EMPLOYEE INCENTIVE PROGRAM.  The 
executive director or the executive director's designee shall 
provide to agency employees information and training on the 
benefits and methods of participation in the state employee 
incentive program.
[Sections 1001.058-1001.070 reserved for expansion]
SUBCHAPTER D.  POWERS AND DUTIES OF AGENCY
	Sec. 1001.071.  GENERAL POWERS AND DUTIES OF AGENCY RELATED 
TO HEALTH CARE.  The agency is responsible for administering human 
services programs regarding the public health, including:
		(1)  implementing the state's health care delivery 
programs;         
		(2)  administering state health facilities, hospitals, 
and health care systems;
		(3)  developing and providing health care services, as 
directed by law;
		(4)  providing for the prevention and control of 
communicable diseases;
		(5)  providing public education on health-related 
matters, as directed by law;
		(6)  compiling and reporting health-related 
information, as directed by law;
		(7)  acting as the lead agency for implementation of 
state policies regarding the human immunodeficiency virus and 
acquired immunodeficiency syndrome;
		(8)  administering state programs related to cancer, 
including the Texas Cancer Plan;
		(9)  investigating the causes of injuries and methods 
of prevention; 
		(10)  administering a grant program to provide 
appropriated money to counties, municipalities, public health 
districts, and other political subdivisions for their use to 
provide or pay for essential public health services;
		(11)  licensing, permitting, or certifying, and 
enforcing regulations regarding:
			(A)  youth camps;                                                     
			(B)  home and community support services;                             
			(C)  industrial homework;                                             
			(D)  renderers;                                                       
			(E)  tanning facilities;                                              
			(F)  tattoo and body piercing studios;                                
			(G)  migrant labor housing facilities; and                            
			(H)  other facilities or businesses as directed by 
law;             
		(12)  administering the registration of vital 
statistics;            
		(13)  licensing, inspecting, and enforcing regulations 
regarding health facilities;
		(14)  implementing established standards and 
procedures for the management and control of sanitation and for 
health protection measures;
		(15)  enforcing regulations regarding radioactive 
materials;         
		(16)  enforcing regulations regarding food, bottled 
and vended drinking water, drugs, cosmetics, and health devices;
		(17)  enforcing regulations regarding food service 
establishments, retail food stores, mobile food units, and roadside 
food vendors;
		(18)  enforcing regulations regarding controlling 
hazardous substances in households and workplaces; and
		(19)  licensing professionals and other persons who 
provide health-related services.
	Sec. 1001.072.  GENERAL POWERS AND DUTIES OF AGENCY RELATED 
TO MENTAL HEALTH.  The agency is responsible for administering 
human services programs regarding mental health, including:
		(1)  coordinating mental health services at the local 
and state level;
		(2)  operating the state's mental health facilities;                   
		(3)  inspecting, licensing, and enforcing regulations 
regarding mental health facilities; and
		(4)  licensing professionals and other persons who 
provide mental health treatment services.
	Sec. 1001.073.  GENERAL POWERS AND DUTIES OF AGENCY RELATED 
TO SUBSTANCE ABUSE.  The agency is responsible for administering 
human services programs regarding substance abuse, including:
		(1)  administering and coordinating substance abuse 
prevention and treatment programs at the state and local level;
		(2)  inspecting, licensing, and enforcing regulations 
regarding substance abuse treatment facilities;
		(3)  providing public education on substance abuse 
issues, as directed by law; and
		(4)  licensing professionals and other persons who 
provide substance abuse treatment services.
	Sec. 1001.074.  ADMINISTRATION OF OTHER HEALTH, MENTAL 
HEALTH, OR SUBSTANCE ABUSE PROGRAMS AND SERVICES.  The agency shall 
administer other programs and services related to health, mental 
health, or substance abuse that the commissioner delegates to the 
agency as the commissioner determines necessary to efficiently 
provide those services in this state.
	Sec. 1001.075.  INFORMATION REGARDING COMPLAINTS.  (a)  The 
agency shall maintain a file on each written complaint filed with 
the agency.  The file must include:
		(1)  the name of the person who filed the complaint;                   
		(2)  the date the complaint is received by the agency;                 
		(3)  the subject matter of the complaint;                              
		(4)  the name of each person contacted in relation to 
the complaint; 
		(5)  a summary of the results of the review or 
investigation of the complaint; and
		(6)  an explanation of the reason the file was closed, 
if the agency closed the file without taking action other than to 
investigate the complaint.
	(b)  The agency shall provide to the person filing the 
complaint and to each person who is a subject of the complaint a 
copy of the commissioner's and the agency's policies and procedures 
relating to complaint investigation and resolution.
	(c)  The agency, at least quarterly until final disposition 
of the complaint, shall notify the person filing the complaint and 
each person who is a subject of the complaint of the status of the 
investigation unless the notice would jeopardize an undercover 
investigation.
	Sec. 1001.076.  RULES.  The commissioner may adopt rules 
reasonably necessary for the agency to administer this chapter, 
consistent with the memorandum of understanding under Section 
531.0055(k), Government Code, between the executive director and 
the commissioner, as adopted by rule.
	SECTION 2.02.  The Human Resources Code is amended by adding 
Title 11 to read as follows:
TITLE 11.  SERVICES FOR CHILDREN, FAMILIES, AND THE AGING AND 
DISABLED
SUBTITLE A.  SERVICES FOR CHILDREN AND FAMILIES
CHAPTER 161.  DEPARTMENT FOR CHILDREN AND FAMILIES
SUBCHAPTER A.  GENERAL PROVISIONS
	Sec. 161.001.  DEFINITIONS.  In this chapter:                           
		(1)  "Advisory board" means the advisory board for 
child and family services.
		(2)  "Agency" means the Department for Children and 
Families.        
		(3)  "Commission" means the Health and Human Services 
Commission.    
		(4)  "Commissioner" means the commissioner of health 
and human services.
		(5)  "Executive director" means the executive director 
of the agency.
	Sec. 161.002.  AGENCY.  The agency is an agency of the state.           
	Sec. 161.003.  SUNSET PROVISION.  The agency is subject to 
Chapter 325, Government Code (Texas Sunset Act). Unless continued 
in existence as provided by that chapter, the agency is abolished 
and this chapter expires September 1, 2009.
[Sections 161.004-161.020 reserved for expansion]
SUBCHAPTER B.  ADMINISTRATIVE PROVISIONS
	Sec. 161.021.  ADVISORY BOARD FOR CHILD AND FAMILY SERVICES.  
(a)  The advisory board for child and family services is created to 
assist the commissioner in developing rules and policies for the 
agency.
	(b)  The advisory board is composed of seven members 
appointed by the governor.  To be eligible for appointment to the 
advisory board, a person must have demonstrated an interest in and 
knowledge of problems faced by and services available to children 
and families.  The members must include the following:
		(1)  two members of the general public;                                
		(2)  a person with experience in child protective 
services;          
		(3)  a person with experience in family violence 
services;           
		(4)  a person with experience in services available to 
children at risk of engaging in delinquent conduct or conduct 
indicating a need for supervision and children adjudged to be 
delinquent;
		(5)  a person with experience in managing correctional 
facilities for children; and
		(6)  a person with other specialized knowledge in 
providing services to children and families.
	(c)  A person may not be a public member of the advisory board 
if the person or the person's spouse:
		(1)  is registered, certified, or licensed by a 
regulatory agency in the field of human services for children and 
families;
		(2)  is employed by or participates in the management 
of a business entity or other organization regulated by or 
receiving money from the agency;
		(3)  owns or controls, directly or indirectly, more 
than a 10 percent interest in a business entity or other 
organization regulated by or receiving money from the agency; or
		(4)  uses or receives a substantial amount of tangible 
goods, services, or money from the agency other than reimbursement 
authorized by law for advisory board membership, attendance, or 
expenses.
	(d)  The advisory board shall study and make recommendations 
to the executive director regarding the management and operation of 
the agency, including policies and rules governing the delivery of 
services to persons who are served by the agency and the rights and 
duties of persons who are served or regulated by the agency.
	(e)  Chapter 551, Government Code, applies to the advisory 
board.     
	(f)  Chapter 2110, Government Code, does not apply to the 
advisory board.
	Sec. 161.022.  APPOINTMENTS.  (a)  Appointments to the 
advisory board shall be made without regard to the race, color, 
disability, sex, religion, age, or national origin of the 
appointees.
	(b)  To the extent possible, appointments to the advisory 
board shall be made so that the ethnic and geographic diversity of 
the state is reflected on the board.
	Sec. 161.023.  CONFLICTS OF INTEREST.  (a)  In this section, 
"Texas trade association" means a cooperative and voluntarily 
joined statewide association of business or professional 
competitors in this state designed to assist its members and its 
industry or profession in dealing with mutual business or 
professional problems and in promoting their common interest.
	(b)  A person may not be a member of the advisory board and 
may not be an agency employee employed in a "bona fide executive, 
administrative, or professional capacity," as that phrase is used 
for purposes of establishing an exemption to the overtime 
provisions of the federal Fair Labor Standards Act of 1938 (29 
U.S.C. Section 201 et seq.), and its subsequent amendments, if:
		(1)  the person is an officer, employee, or paid 
consultant of a Texas trade association in the field of human 
services for children and families; or
		(2)  the person's spouse is an officer, manager, or paid 
consultant of a Texas trade association in the field of human 
services for children and families.
	(c)  A person may not be a member of the advisory board if the 
person is required to register as a lobbyist under Chapter 305, 
Government Code, because of the person's activities for 
compensation on behalf of a profession related to the operation of 
the agency.
	Sec. 161.024.  TRAINING PROGRAM FOR ADVISORY BOARD MEMBERS.  
(a)  A person who is appointed as a member of the advisory board may 
not vote, deliberate, or be counted as a member in attendance at a 
meeting of the advisory board until the person completes a training 
program that complies with this section.
	(b)  The training program must provide the person with 
information regarding:
		(1)  the legislation that created the agency and the 
advisory board; 
		(2)  the programs operated by the agency;                              
		(3)  the role and functions of the agency and the 
advisory board, including detailed information regarding:
			(A)  the division of authority and of 
responsibility between the executive director and the 
commissioner; and
			(B)  the advisory responsibilities of the 
advisory board;           
		(4)  the rules of the commissioner applicable to the 
agency, with an emphasis on the rules that relate to disciplinary 
and investigatory authority;
		(5)  the current budget for the agency;                                
		(6)  the results of the most recent formal audit of the 
agency;      
		(7)  the requirements of:                                              
			(A)  the open meetings law, Chapter 551, 
Government Code;           
			(B)  the public information law, Chapter 552, 
Government Code;      
			(C)  the administrative procedure law, Chapter 
2001, Government Code; and
			(D)  other laws relating to public officials, 
including conflict-of-interest laws; and
		(8)  any applicable ethics policies adopted by the 
commissioner or the Texas Ethics Commission.
	Sec. 161.025.  TERMS.  (a)  Advisory board members serve for 
staggered six-year terms with the terms of two or three members 
expiring February 1 of each odd-numbered year.
	(b)  A member of the advisory board may not serve more than 
two consecutive full terms as a board member.
	Sec. 161.026.  VACANCY.  The governor by appointment shall 
fill the unexpired term of a vacancy on the advisory board.
	Sec. 161.027.  PRESIDING OFFICER; OTHER OFFICERS; MEETINGS.  
(a)  The governor shall designate a member of the advisory board as 
the presiding officer to serve in that capacity at the pleasure of 
the governor.
	(b)  The members of the advisory board shall elect any other 
necessary officers.
	(c)  The advisory board shall meet quarterly and at other 
times at the call of the presiding officer.  The board may hold 
meetings in different areas of the state.
	Sec. 161.028.  REIMBURSEMENT FOR EXPENSES.  An advisory 
board member may not receive compensation for service as a member of 
the advisory board but is entitled to reimbursement for travel 
expenses incurred by the member while conducting the business of 
the advisory board as provided by the General Appropriations Act.
	Sec. 161.029.  PUBLIC INTEREST INFORMATION AND COMPLAINTS.  
(a)  The executive director, with the advice of the advisory board, 
shall prepare information of public interest describing the 
functions of the agency and the procedures by which complaints are 
filed with and resolved by the agency.  The agency shall make the 
information available to the public and appropriate state 
governmental entities.
	(b)  The commissioner by rule shall establish methods by 
which consumers and service recipients are notified of the name, 
mailing address, and telephone number of the agency for directing 
complaints to the agency.
	Sec. 161.030.  PUBLIC ACCESS AND TESTIMONY.  The  
commissioner shall develop and implement policies that provide the 
public with a reasonable opportunity to appear before the advisory 
board or commissioner and to speak on any issue under the 
jurisdiction of the agency.
	Sec. 161.031.  POLICYMAKING AND MANAGEMENT 
RESPONSIBILITIES.  The commissioner, with the advice of the 
advisory board, shall develop and the agency shall implement 
policies that clearly delineate the policymaking responsibilities 
of the commissioner from the management responsibilities of the 
commission, the executive director, and the staff of the agency.
	Sec. 161.032.  ANNUAL REPORT.  (a)  The executive director 
shall file annually with the commissioner a complete and detailed 
written report accounting for all funds received and disbursed by 
the agency during the preceding fiscal year.
	(b)  The annual report must be in the form and be reported in 
the time provided by the commissioner.
	Sec. 161.033.  OFFICES.  The agency shall maintain its 
central office in Austin. The agency may maintain offices in other 
areas of the state as necessary.
[Sections 161.034-161.050 reserved for expansion]
SUBCHAPTER C.  PERSONNEL
	Sec. 161.051.  EXECUTIVE DIRECTOR.  (a)  The commissioner 
shall appoint an executive director, who is to be selected 
according to education, training, experience, and demonstrated 
ability.
	(b)  The executive director serves at the pleasure of the 
commissioner.
	(c)  The executive director shall act as the agency's chief 
administrative officer and as a liaison between the agency and 
commission.
	(d)  The executive director shall administer this chapter 
under operational policies established by the commissioner and in 
accordance with the memorandum of understanding under Section 
531.0055(k), Government Code, between the executive director and 
the commissioner, as adopted by rule.
	Sec. 161.052.  PERSONNEL.  (a)  The agency may employ, 
compensate, and prescribe the duties of personnel necessary and 
suitable to administer this chapter.
	(b)  The commissioner shall prepare and by rule adopt 
personnel standards.
	(c)  A personnel position may be filled only by an individual 
selected and appointed on a nonpartisan merit basis.
	(d)  The commissioner, with the advice of the advisory board, 
shall develop and the agency shall implement policies that clearly 
define the responsibilities of the staff of the agency.
	Sec. 161.053.  INFORMATION ABOUT QUALIFICATIONS AND 
STANDARDS OF CONDUCT.  The executive director or the executive 
director's designee shall provide to agency employees, as often as 
necessary, information regarding the requirements for employment 
under this chapter or rules adopted by the commissioner, including 
information regarding a person's responsibilities under applicable 
laws relating to standards of conduct for state employees.
	Sec. 161.054.  MERIT PAY.  Subject to rules adopted by the 
commissioner, the executive director or the executive director's 
designee shall develop a system of annual performance evaluations.  
All merit pay for agency employees must be given under the system 
established under this section or under rules adopted by the 
commissioner.
	Sec. 161.055.  CAREER LADDER.  The executive director or the 
executive director's designee shall develop an intra-agency career 
ladder program.  The program must require intra-agency postings of 
all nonentry-level positions concurrently with any public posting.
	Sec. 161.056.  EQUAL EMPLOYMENT OPPORTUNITY POLICY.  (a)  
Subject to rules adopted by the commissioner, the executive 
director or the executive director's designee shall prepare and 
maintain a written policy statement that implements a program of 
equal employment opportunity to ensure that all personnel decisions 
are made without regard to race, color, disability, sex, religion, 
age, or national origin.
	(b)  Unless the following are included in a policy statement 
adopted by the commissioner that is applicable to the agency, the 
policy statement must include:
		(1)  personnel policies, including policies relating 
to recruitment, evaluation, selection, training, and promotion of 
personnel, that show the intent of the agency to avoid the unlawful 
employment practices described by Chapter 21, Labor Code; and
		(2)  an analysis of the extent to which the composition 
of the agency's personnel is in accordance with state and federal 
law and a description of reasonable methods to achieve compliance 
with state and federal law.
	(c)  The policy statement must be:                                      
		(1)  updated annually;                                                 
		(2)  reviewed by the state Commission on Human Rights 
for compliance with Subsection (b)(1); and
		(3)  filed with the governor's office.                                 
	Sec. 161.057.  STATE EMPLOYEE INCENTIVE PROGRAM.  The 
executive director or the executive director's designee shall 
provide to agency employees information and training on the 
benefits and methods of participation in the state employee 
incentive program.
[Sections 161.058-161.070 reserved for expansion]
SUBCHAPTER D.  POWERS AND DUTIES OF AGENCY
	Sec. 161.071.  GENERAL POWERS AND DUTIES OF AGENCY.  (a)  The 
agency is responsible for administering human services programs for 
children and families, including:
		(1)  operating the financial assistance program under 
Chapter 31 and the nutritional assistance programs under Chapter 
33, except as provided by Section 531.0055(b)(4), Government Code;
		(2)  providing family violence and child protective 
services, including conducting child abuse and neglect 
investigations;
		(3)  enforcing regulations regarding child-care 
facilities and services;
		(4)  administering the foster care program, including 
determining eligibility for foster care services and funds;
		(5)  managing the state's correctional facilities for 
children; and  
		(6)  providing:                                                        
			(A)  prevention and early intervention services 
for children at risk of engaging in delinquent conduct or conduct 
indicating a need for supervision and their families; and
			(B)  rehabilitation and parole supervision 
services for children adjudged delinquent by the courts of this 
state and committed to the agency.
	(b)  The agency shall administer other programs and services 
for children and families that the commissioner delegates to the 
agency as the commissioner determines necessary to efficiently 
provide those services in this state.
	Sec. 161.072.  INFORMATION REGARDING COMPLAINTS.  (a)  The 
agency shall maintain a file on each written complaint filed with 
the agency. The file must include:
		(1)  the name of the person who filed the complaint;                   
		(2)  the date the complaint is received by the agency;                 
		(3)  the subject matter of the complaint;                              
		(4)  the name of each person contacted in relation to 
the complaint; 
		(5)  a summary of the results of the review or 
investigation of the complaint; and
		(6)  an explanation of the reason the file was closed, 
if the agency closed the file without taking action other than to 
investigate the complaint.
	(b)  The agency shall provide to the person filing the 
complaint and to each person who is a subject of the complaint a 
copy of the commissioner's and the agency's policies and procedures 
relating to complaint investigation and resolution.
	(c)  The agency, at least quarterly until final disposition 
of the complaint, shall notify the person filing the complaint and 
each person who is a subject of the complaint of the status of the 
investigation unless the notice would jeopardize an undercover 
investigation.
	Sec. 161.073.  RULES.  The commissioner may adopt rules 
reasonably necessary for the agency to administer this chapter, 
consistent with the memorandum of understanding under Section 
531.0055(k), Government Code, between the executive director and 
the commissioner, as adopted by rule.
[Chapters 162-180 reserved for expansion]
SUBTITLE B.  SERVICES FOR THE AGING
CHAPTER 181.  DEPARTMENT ON AGING
SUBCHAPTER A.  GENERAL PROVISIONS
	Sec. 181.001.  DEFINITIONS.  In this chapter:                           
		(1)  "Advisory board" means the advisory board for 
aging services.   
		(2)  "Agency" means the Department on Aging.                           
		(3)  "Commission" means the Health and Human Services 
Commission.    
		(4)  "Commissioner" means the commissioner of health 
and human services.
		(5)  "Executive director" means the executive director 
of the agency.
	Sec. 181.002.  AGENCY.  The agency is an agency of the state.           
	Sec. 181.003.  SUNSET PROVISION.  The agency is subject to 
Chapter 325, Government Code (Texas Sunset Act).  Unless continued 
in existence as provided by that chapter, the agency is abolished 
and this chapter expires September 1, 2009.
[Sections 181.004-181.020 reserved for expansion]
SUBCHAPTER B.  ADMINISTRATIVE PROVISIONS
	Sec. 181.021.  ADVISORY BOARD FOR AGING SERVICES.  (a)  The 
advisory board for aging services is created to assist the 
commissioner in developing rules and policies for the agency.
	(b)  The advisory board is composed of seven members 
appointed by the governor.  To be eligible for appointment to the 
advisory board, a person must have demonstrated an interest in and 
knowledge of the problems of aging.  The members must include the 
following:
		(1)  two members of the general public;                                
		(2)  a medical professional, preferably a 
gerontologist;             
		(3)  an advocate for consumers of services for the 
aging and their families;
		(4)  a person experienced in adult protective services;                
		(5)  a person with knowledge of federal funding 
available to provide programs and services for the aging; and
		(6)  a person with other specialized knowledge of 
programs and services for the aging.
	(c)  A person may not be a public member of the advisory board 
if the person or the person's spouse:
		(1)  is registered, certified, or licensed by a 
regulatory agency in the field of services for the aging;
		(2)  is employed by or participates in the management 
of a business entity or other organization regulated by or 
receiving money from the agency;
		(3)  owns or controls, directly or indirectly, more 
than a 10 percent interest in a business entity or other 
organization regulated by or receiving money from the agency; or
		(4)  uses or receives a substantial amount of tangible 
goods, services, or money from the agency other than reimbursement 
authorized by law for advisory board membership, attendance, or 
expenses.
	(d)  The advisory board shall study and make recommendations 
to the executive director regarding the management and operation of 
the agency, including policies and rules governing the delivery of 
services to persons who are served by the agency and the rights and 
duties of persons who are served or regulated by the agency.
	(e)  Chapter 551, Government Code, applies to the advisory 
board.     
	(f)  Chapter 2110, Government Code, does not apply to the 
advisory board.
	Sec. 181.022.  APPOINTMENTS.  (a)  Appointments to the 
advisory board shall be made without regard to the race, color, 
disability, sex, religion, age, or national origin of the 
appointees.
	(b)  To the extent possible, appointments to the advisory 
board shall be made so that the ethnic and geographic diversity of 
the state is reflected on the board.
	Sec. 181.023.  CONFLICTS OF INTEREST.  (a)  In this section, 
"Texas trade association" means a cooperative and voluntarily 
joined statewide association of business or professional 
competitors in this state designed to assist its members and its 
industry or profession in dealing with mutual business or 
professional problems and in promoting their common interest.
	(b)  A person may not be a member of the advisory board and 
may not be an agency employee employed in a "bona fide executive, 
administrative, or professional capacity," as that phrase is used 
for purposes of establishing an exemption to the overtime 
provisions of the federal Fair Labor Standards Act of 1938 (29 
U.S.C. Section 201 et seq.), and its subsequent amendments, if:
		(1)  the person is an officer, employee, or paid 
consultant of a Texas trade association in the field of services for 
the aging; or
		(2)  the person's spouse is an officer, manager, or paid 
consultant of a Texas trade association in the field of services for 
the aging.
	(c)  A person may not be a member of the advisory board if the 
person is required to register as a lobbyist under Chapter 305, 
Government Code, because of the person's activities for 
compensation on behalf of a profession related to the operation of 
the agency.
	Sec. 181.024.  TRAINING PROGRAM FOR ADVISORY BOARD MEMBERS.  
(a)  A person who is appointed as a member of the advisory board may 
not vote, deliberate, or be counted as a member in attendance at a 
meeting of the advisory board until the person completes a training 
program that complies with this section.
	(b)  The training program must provide the person with 
information regarding:
		(1)  the legislation that created the agency and the 
advisory board; 
		(2)  the programs operated by the agency;                              
		(3)  the role and functions of the agency and the 
advisory board, including detailed information regarding:
			(A)  the division of authority and of 
responsibility between the executive director and the 
commissioner; and
			(B)  the advisory responsibilities of the 
advisory board;           
		(4)  the rules of the commissioner applicable to the 
agency, with an emphasis on the rules that relate to disciplinary 
and investigatory authority;
		(5)  the current budget for the agency;                                
		(6)  the results of the most recent formal audit of the 
agency;      
		(7)  the requirements of:                                              
			(A)  the open meetings law, Chapter 551, 
Government Code;           
			(B)  the public information law, Chapter 552, 
Government Code;      
			(C)  the administrative procedure law, Chapter 
2001, Government Code; and
			(D)  other laws relating to public officials, 
including conflict-of-interest laws; and
		(8)  any applicable ethics policies adopted by the 
commissioner or the Texas Ethics Commission.
	Sec. 181.025.  TERMS.  (a)  Advisory board members serve for 
staggered six-year terms with the terms of two or three members 
expiring February 1 of each odd-numbered year.
	(b)  A member of the advisory board may not serve more than 
two consecutive full terms as a board member.
	Sec. 181.026.  VACANCY.  The governor by appointment shall 
fill the unexpired term of a vacancy on the advisory board.
	Sec. 181.027.  PRESIDING OFFICER; OTHER OFFICERS; MEETINGS.  
(a)  The governor shall designate a member of the advisory board as 
the presiding officer to serve in that capacity at the pleasure of 
the governor.
	(b)  The members of the advisory board shall elect any other 
necessary officers.
	(c)  The advisory board shall meet quarterly and at other 
times at the call of the presiding officer.  The board may hold 
meetings in different areas of the state.
	Sec. 181.028.  REIMBURSEMENT FOR EXPENSES.  An advisory 
board member may not receive compensation for service as a member of 
the advisory board but is entitled to reimbursement for travel 
expenses incurred by the member while conducting the business of 
the advisory board as provided by the General Appropriations Act.
	Sec. 181.029.  PUBLIC INTEREST INFORMATION AND COMPLAINTS.  
(a)  The executive director, with the advice of the advisory board, 
shall prepare information of public interest describing the 
functions of the agency and the procedures by which complaints are 
filed with and resolved by the agency.  The agency shall make the 
information available to the public and appropriate state 
governmental entities.
	(b)  The commissioner by rule shall establish methods by 
which consumers and service recipients are notified of the name, 
mailing address, and telephone number of the agency for directing 
complaints to the agency.
	Sec. 181.030.  PUBLIC ACCESS AND TESTIMONY.  The 
commissioner shall develop and implement policies that provide the 
public with a reasonable opportunity to appear before the advisory 
board or commissioner and to speak on any issue under the 
jurisdiction of the agency.
	Sec. 181.031.  POLICYMAKING AND MANAGEMENT 
RESPONSIBILITIES.  The commissioner, with the advice of the 
advisory board, shall develop and the agency shall implement 
policies that clearly delineate the policymaking responsibilities 
of the commissioner from the management responsibilities of the 
commission, the executive director, and the staff of the agency.
	Sec. 181.032.  ANNUAL REPORT.  (a)  The executive director 
shall file annually with the commissioner a complete and detailed 
written report accounting for all funds received and disbursed by 
the agency during the preceding fiscal year.
	(b)  The annual report must be in the form and be reported in 
the time provided by the commissioner.
	Sec. 181.033.  OFFICES.  The agency shall maintain its 
central office in Austin.  The agency may maintain offices in other 
areas of the state as necessary.
[Sections 181.034-181.050 reserved for expansion]
SUBCHAPTER C.  PERSONNEL
	Sec. 181.051.  EXECUTIVE DIRECTOR.  (a)  The commissioner 
shall appoint an executive director, who is to be selected 
according to education, training, experience, and demonstrated 
ability.
	(b)  The executive director serves at the pleasure of the 
commissioner.
	(c)  The executive director shall act as the agency's chief 
administrative officer and as a liaison between the agency and 
commission.
	(d)  The executive director shall administer this chapter 
under operational policies established by the commissioner and in 
accordance with the memorandum of understanding under Section 
531.0055(k), Government Code, between the executive director and 
the commissioner, as adopted by rule.
	Sec. 181.052.  PERSONNEL.  (a)  The agency may employ, 
compensate, and prescribe the duties of personnel necessary and 
suitable to administer this chapter.
	(b)  The commissioner shall prepare and by rule adopt 
personnel standards.
	(c)  A personnel position may be filled only by an individual 
selected and appointed on a nonpartisan merit basis.
	(d)  The commissioner, with the advice of the advisory board, 
shall develop and the agency shall implement policies that clearly 
define the responsibilities of the staff of the agency.
	Sec. 181.053.  INFORMATION ABOUT QUALIFICATIONS AND 
STANDARDS OF CONDUCT.  The executive director or the executive 
director's designee shall provide to agency employees, as often as 
necessary, information regarding the requirements for employment 
under this chapter or rules adopted by the commissioner, including 
information regarding a person's responsibilities under applicable 
laws relating to standards of conduct for state employees.
	Sec. 181.054.  MERIT PAY.  Subject to rules adopted by the 
commissioner, the executive director or the executive director's 
designee shall develop a system of annual performance evaluations.  
All merit pay for agency employees must be given under the system 
established under this section or under rules adopted by the 
commissioner.
	Sec. 181.055.  CAREER LADDER.  The executive director or the 
executive director's designee shall develop an intra-agency career 
ladder program.  The program must require intra-agency postings of 
all nonentry-level positions concurrently with any public posting.
	Sec. 181.056.  EQUAL EMPLOYMENT OPPORTUNITY POLICY.  (a)  
Subject to rules adopted by the commissioner, the executive 
director or the executive director's designee shall prepare and 
maintain a written policy statement that implements a program of 
equal employment opportunity to ensure that all personnel decisions 
are made without regard to race, color, disability, sex, religion, 
age, or national origin.
	(b)  Unless the following are included in a policy statement 
adopted by the commissioner that is applicable to the agency, the 
policy statement must include:
		(1)  personnel policies, including policies relating 
to recruitment, evaluation, selection, training, and promotion of 
personnel, that show the intent of the agency to avoid the unlawful 
employment practices described by Chapter 21, Labor Code; and
		(2)  an analysis of the extent to which the composition 
of the agency's personnel is in accordance with state and federal 
law and a description of reasonable methods to achieve compliance 
with state and federal law.
	(c)  The policy statement must be:                                      
		(1)  updated annually;                                                 
		(2)  reviewed by the state Commission on Human Rights 
for compliance with Subsection (b)(1); and
		(3)  filed with the governor's office.                                 
	Sec. 181.057.  STATE EMPLOYEE INCENTIVE PROGRAM.  The 
executive director or the executive director's designee shall 
provide to agency employees information and training on the 
benefits and methods of participation in the state employee 
incentive program.
[Sections 181.058-181.070 reserved for expansion]
SUBCHAPTER D.  POWERS AND DUTIES OF AGENCY
	Sec. 181.071.  GENERAL POWERS AND DUTIES OF AGENCY.  (a)  The 
agency shall:
		(1)  provide expertise and advice to state agencies and 
the legislature and other elected officials on issues related to 
aging, including recommendations to meet the needs of this state's 
aging population;
		(2)  strengthen the services available for the aging in 
this state by coordinating services provided by governmental and 
private agencies and facilities;
		(3)  extend and expand services for the aging by 
coordinating the interest and efforts of local communities in 
studying the problems of aging residents of this state;
		(4)  encourage, promote, and aid in establishing area 
agencies on aging to develop local programs and services that 
improve the living conditions of the aging by enabling them to more 
fully enjoy and participate in family and community life;
		(5)  enforce regulations regarding long-term care 
services and facilities and community services and facilities, to 
the extent provided by other law; and
		(6)  provide adult protective services to the extent 
provided by Chapter 48 and other law.
	(b)  The agency shall administer other programs and services 
for the aging that the commissioner delegates to the agency as the 
commissioner determines necessary to efficiently provide those 
services in this state.
	Sec. 181.072.  INFORMATION REGARDING COMPLAINTS.  (a)  The 
agency shall maintain a file on each written complaint filed with 
the agency.  The file must include:
		(1)  the name of the person who filed the complaint;                   
		(2)  the date the complaint is received by the agency;                 
		(3)  the subject matter of the complaint;                              
		(4)  the name of each person contacted in relation to 
the complaint; 
		(5)  a summary of the results of the review or 
investigation of the complaint; and
		(6)  an explanation of the reason the file was closed, 
if the agency closed the file without taking action other than to 
investigate the complaint.
	(b)  The agency shall provide to the person filing the 
complaint and to each person who is a subject of the complaint a 
copy of the commissioner's and the agency's policies and procedures 
relating to complaint investigation and resolution.
	(c)  The agency, at least quarterly until final disposition 
of the complaint, shall notify the person filing the complaint and 
each person who is a subject of the complaint of the status of the 
investigation unless the notice would jeopardize an undercover 
investigation.
	Sec. 181.073.  RULES.  The commissioner may adopt rules 
reasonably necessary for the agency to administer this chapter, 
consistent with the memorandum of understanding under Section 
531.0055(k), Government Code, between the executive director and 
the commissioner, as adopted by rule.
[Chapters 182-200 reserved for expansion]
SUBTITLE C.  SERVICES FOR PERSONS WITH DISABILITIES
CHAPTER 201.  DEPARTMENT FOR PERSONS WITH DISABILITIES
SUBCHAPTER A.  GENERAL PROVISIONS
	Sec. 201.001.  DEFINITIONS.  In this chapter:                           
		(1)  "Advisory board" means the board for persons with 
disabilities. 
		(2)  "Agency" means the Department for Persons with 
Disabilities.    
		(3)  "Commission" means the Health and Human Services 
Commission.    
		(4)  "Commissioner" means the commissioner of health 
and human services.
		(5)  "Executive director" means the executive director 
of the agency.
	Sec. 201.002.  AGENCY.  The agency is an agency of the state.           
	Sec. 201.003.  SUNSET PROVISION.  The agency is subject to 
Chapter 325, Government Code (Texas Sunset Act).  Unless continued 
in existence as provided by that chapter, the agency is abolished 
and this chapter expires September 1, 2009.
[Sections 201.004-201.020 reserved for expansion]
SUBCHAPTER B.  ADMINISTRATIVE PROVISIONS
	Sec. 201.021.  ADVISORY BOARD FOR PERSONS WITH DISABILITIES.  
(a)  The advisory board for persons with disabilities is created to 
assist the commissioner in developing rules and policies for the 
agency.
	(b)  The advisory board is composed of seven members 
appointed by the governor.  To be eligible for appointment to the 
advisory board, a person must have demonstrated an interest in and 
knowledge of the problems faced by and services available to 
persons with disabilities.  The members must include the following:
		(1)  two members of the general public;                                
		(2)  a person with experience in the provision of 
services to blind or visually impaired persons;
		(3)  a person with experience in the provision of 
services to persons with mental retardation;
		(4)  a person with experience in the provision of 
services to deaf persons and persons who are hard of hearing;
		(5)  a person experienced in matters related to early 
childhood intervention for developmental disabilities or 
developmental delays; and
		(6)  a medical professional with experience in the 
treatment of persons with disabilities.
	(c)  A person may not be a public member of the advisory board 
if the person or the person's spouse:
		(1)  is registered, certified, or licensed by a 
regulatory agency in the field of services for persons with 
disabilities;
		(2)  is employed by or participates in the management 
of a business entity or other organization regulated by or 
receiving money from the agency;
		(3)  owns or controls, directly or indirectly, more 
than a 10 percent interest in a business entity or other 
organization regulated by or receiving money from the agency; or
		(4)  uses or receives a substantial amount of tangible 
goods, services, or money from the agency other than reimbursement 
authorized by law for advisory board membership, attendance, or 
expenses.
	(d)  The advisory board shall study and make recommendations 
to the executive director regarding the management and operation of 
the agency, including policies and rules governing the delivery of 
services to persons who are served by the agency and the rights and 
duties of persons who are served or regulated by the agency.
	(e)  Chapter 551, Government Code, applies to the advisory 
board.     
	(f)  Chapter 2110, Government Code, does not apply to the 
advisory board.
	Sec. 201.022.  APPOINTMENTS.  (a)  Appointments to the 
advisory board shall be made without regard to the race, color, 
disability, sex, religion, age, or national origin of the 
appointees.
	(b)  To the extent possible, appointments to the advisory 
board shall be made so that the ethnic and geographic diversity of 
the state is reflected on the board.
	Sec. 201.023.  CONFLICTS OF INTEREST.  (a)  In this section, 
"Texas trade association" means a cooperative and voluntarily 
joined statewide association of business or professional 
competitors in this state designed to assist its members and its 
industry or profession in dealing with mutual business or 
professional problems and in promoting their common interest.
	(b)  A person may not be a member of the advisory board and 
may not be an agency employee employed in a "bona fide executive, 
administrative, or professional capacity," as that phrase is used 
for purposes of establishing an exemption to the overtime 
provisions of the federal Fair Labor Standards Act of 1938 (29 
U.S.C. Section 201 et seq.), and its subsequent amendments, if:
		(1)  the person is an officer, employee, or paid 
consultant of a Texas trade association in the field of services for 
persons with disabilities; or
		(2)  the person's spouse is an officer, manager, or paid 
consultant of a Texas trade association in the field of services for 
persons with disabilities.
	(c)  A person may not be a member of the advisory board if the 
person is required to register as a lobbyist under Chapter 305, 
Government Code, because of the person's activities for 
compensation on behalf of a profession related to the operation of 
the agency.
	Sec. 201.024.  TRAINING PROGRAM FOR ADVISORY BOARD MEMBERS.  
(a)  A person who is appointed as a member of the advisory board may 
not vote, deliberate, or be counted as a member in attendance at a 
meeting of the advisory board until the person completes a training 
program that complies with this section.
	(b)  The training program must provide the person with 
information regarding:
		(1)  the legislation that created the agency and the 
advisory board; 
		(2)  the programs operated by the agency;                              
		(3)  the role and functions of the agency and the 
advisory board, including detailed information regarding:
			(A)  the division of authority and of 
responsibilities between the executive director and the 
commissioner; and
			(B)  the advisory responsibilities of the 
advisory board;           
		(4)  the rules of the commissioner applicable to the 
agency, with an emphasis on the rules that relate to disciplinary 
and investigatory authority;
		(5)  the current budget for the agency;                                
		(6)  the results of the most recent formal audit of the 
agency;      
		(7)  the requirements of:                                              
			(A)  the open meetings law, Chapter 551, 
Government Code;           
			(B)  the public information law, Chapter 552, 
Government Code;      
			(C)  the administrative procedure law, Chapter 
2001, Government Code; and
			(D)  other laws relating to public officials, 
including conflict-of-interest laws; and
		(8)  any applicable ethics policies adopted by the 
commissioner or the Texas Ethics Commission.
	Sec. 201.025.  TERMS.  (a)  Advisory board members serve for 
staggered six-year terms with the terms of two or three members 
expiring February 1 of each odd-numbered year.
	(b)  A member of the advisory board may not serve more than 
two consecutive full terms as a board member.
	Sec. 201.026.  VACANCY.  The governor by appointment shall 
fill the unexpired term of a vacancy on the advisory board.
	Sec. 201.027.  PRESIDING OFFICER; OTHER OFFICERS; MEETINGS.  
(a)  The governor shall designate a member of the advisory board as 
the presiding officer to serve in that capacity at the pleasure of 
the governor.
	(b)  The members of the advisory board shall elect any other 
necessary officers.
	(c)  The advisory board shall meet quarterly and at other 
times at the call of the presiding officer.  The board may hold 
meetings in different areas of the state.
	Sec. 201.028.  REIMBURSEMENT FOR EXPENSES.  An advisory 
board member may not receive compensation for service as a member of 
the advisory board but is entitled to reimbursement for travel 
expenses incurred by the member while conducting the business of 
the advisory board as provided by the General Appropriations Act.
	Sec. 201.029.  PUBLIC INTEREST INFORMATION AND COMPLAINTS.  
(a)  The executive director, with the advice of the advisory board, 
shall prepare information of public interest describing the 
functions of the agency and the procedures by which complaints are 
filed with and resolved by the agency.  The agency shall make the 
information available to the public and appropriate state 
governmental entities.
	(b)  The commissioner by rule shall establish methods by 
which consumers and service recipients are notified of the name, 
mailing address, and telephone number of the agency for directing 
complaints to the agency.
	Sec. 201.030.  PUBLIC ACCESS AND TESTIMONY.  The 
commissioner shall develop and implement policies that provide the 
public with a reasonable opportunity to appear before the advisory 
board or commissioner and to speak on any issue under the 
jurisdiction of the agency.
	Sec. 201.031.  POLICYMAKING AND MANAGEMENT 
RESPONSIBILITIES.  The commissioner, with the advice of the 
advisory board, shall develop and the agency shall implement 
policies that clearly delineate the policymaking responsibilities 
of the commissioner from the management responsibilities of the 
commission, the executive director, and the staff of the agency.
	Sec. 201.032.  ANNUAL REPORT.  (a)  The executive director 
shall file annually with the commissioner a complete and detailed 
written report accounting for all funds received and disbursed by 
the agency during the preceding fiscal year.
	(b)  The annual report must be in the form and be reported in 
the time provided by the commissioner.
	Sec. 201.033.  OFFICES.  The agency shall maintain its 
central office in Austin.  The agency may maintain offices in other 
areas of the state as necessary.
[Sections 201.034-201.050 reserved for expansion]
SUBCHAPTER C.  PERSONNEL
	Sec. 201.051.  EXECUTIVE DIRECTOR.  (a)  The commissioner 
shall appoint an executive director, who is to be selected 
according to education, training, experience, and demonstrated 
ability.
	(b)  The executive director serves at the pleasure of the 
commissioner.
	(c)  The executive director shall act as the agency's chief 
administrative officer and as a liaison between the agency and the 
commission.
	(d)  The executive director shall administer this chapter 
under operational policies established by the commissioner and in 
accordance with the memorandum of understanding under Section 
531.0055(k), Government Code, between the executive director and 
the commissioner, as adopted by rule.
	Sec. 201.052.  PERSONNEL.  (a)  The agency may employ, 
compensate, and prescribe the duties of personnel necessary and 
suitable to administer this chapter.
	(b)  The commissioner shall prepare and by rule adopt 
personnel standards.
	(c)  A personnel position may be filled only by an individual 
selected and appointed on a nonpartisan merit basis.
	(d)  The commissioner, with the advice of the advisory board, 
shall develop and the agency shall implement policies that clearly 
define the responsibilities of the staff of the agency.
	Sec. 201.053.  INFORMATION ABOUT QUALIFICATIONS AND 
STANDARDS OF CONDUCT.  The executive director or the executive 
director's designee shall provide to agency employees, as often as 
necessary, information regarding the requirements for employment 
under this chapter or rules adopted by the commissioner, including 
information regarding a person's responsibilities under applicable 
laws relating to standards of conduct for state employees.
	Sec. 201.054.  MERIT PAY.  Subject to rules adopted by the 
commissioner, the executive director or the executive director's 
designee shall develop a system of annual performance evaluations.  
All merit pay for agency employees must be given under the system 
established under this section or under rules adopted by the 
commissioner.
	Sec. 201.055.  CAREER LADDER.  The executive director or the 
executive director's designee shall develop an intra-agency career 
ladder program.  The program must require intra-agency postings of 
all nonentry-level positions concurrently with any public posting.
	Sec. 201.056.  EQUAL EMPLOYMENT OPPORTUNITY POLICY.  (a)  
Subject to rules adopted by the commissioner, the executive 
director or the executive director's designee shall prepare and 
maintain a written policy statement that implements a program of 
equal employment opportunity to ensure that all personnel decisions 
are made without regard to race, color, disability, sex, religion, 
age, or national origin.
	(b)  Unless the following are included in a policy statement 
adopted by the commissioner that is applicable to the agency, the 
policy statement must include:
		(1)  personnel policies, including policies relating 
to recruitment, evaluation, selection, training, and promotion of 
personnel, that show the intent of the agency to avoid the unlawful 
employment practices described by Chapter 21, Labor Code; and
		(2)  an analysis of the extent to which the composition 
of the agency's personnel is in accordance with state and federal 
law and a description of reasonable methods to achieve compliance 
with state and federal law.
	(c)  The policy statement must be:                                      
		(1)  updated annually;                                                 
		(2)  reviewed by the state Commission on Human Rights 
for compliance with Subsection (b)(1); and
		(3)  filed with the governor's office.                                 
	Sec. 201.057.  STATE EMPLOYEE INCENTIVE PROGRAM.  The 
executive director or the executive director's designee shall 
provide to agency employees information and training on the 
benefits and methods of participation in the state employee 
incentive program.
[Sections 201.058-201.070 reserved for expansion]
SUBCHAPTER D.  POWERS AND DUTIES OF AGENCY
	Sec. 201.071.  GENERAL POWERS AND DUTIES OF AGENCY.  (a)  The 
agency is responsible for:
		(1)  providing and coordinating state and local 
programs and services for persons with disabilities, including 
programs for the treatment, rehabilitation, or benefit of:
			(A)  persons with mental retardation;                                 
			(B)  persons who are blind, visually impaired, 
deaf, or hard of hearing;
			(C)  persons with developmental disabilities; and                     
			(D)  persons with other disabilities;                                 
		(2)  inspecting, licensing, and enforcing regulations 
regarding facilities for the treatment, rehabilitation, or benefit 
of persons with disabilities;
		(3)  operating state facilities for the housing, 
treatment, rehabilitation, or benefit of persons with 
disabilities, including state schools for persons with mental 
retardation; and
		(4)  providing public education programs on matters 
related to persons with disabilities, as directed by law.
	(b)  The agency shall administer other programs and services 
for persons with disabilities that the commissioner delegates to 
the agency as the commissioner determines necessary to efficiently 
provide those services in this state.
	Sec. 201.072.  INFORMATION REGARDING COMPLAINTS.  (a)  The 
agency shall maintain a file on each written complaint filed with 
the agency.  The file must include:
		(1)  the name of the person who filed the complaint;                   
		(2)  the date the complaint is received by the agency;                 
		(3)  the subject matter of the complaint;                              
		(4)  the name of each person contacted in relation to 
the complaint; 
		(5)  a summary of the results of the review or 
investigation of the complaint; and
		(6)  an explanation of the reason the file was closed, 
if the agency closed the file without taking action other than to 
investigate the complaint.
	(b)  The agency shall provide to the person filing the 
complaint and to each person who is a subject of the complaint a 
copy of the commissioner's and the agency's policies and procedures 
relating to complaint investigation and resolution.
	(c)  The agency, at least quarterly until final disposition 
of the complaint, shall notify the person filing the complaint and 
each person who is a subject of the complaint of the status of the 
investigation unless the notice would jeopardize an undercover 
investigation.
	Sec. 201.073.  RULES.  The commissioner may adopt rules 
reasonably necessary for the agency to administer this chapter, 
consistent with the memorandum of understanding under Section 
531.0055(k), Government Code, between the executive director and 
the commissioner, as adopted by rule.
	SECTION 2.03.  APPOINTMENTS OF EXECUTIVE DIRECTORS.  As soon 
as possible after the effective date of this article, the 
commissioner of health and human services shall appoint the 
executive directors of:
		(1)  the Department for Health and Mental Health in 
accordance with Chapter 1001, Health and Safety Code, as added by 
this article;
		(2)  the Department for Children and Families in 
accordance with Chapter 161, Human Resources Code, as added by this 
article;
		(3)  the Department on Aging in accordance with Chapter 
181, Human Resources Code, as added by this article; and
		(4)  the Department for Persons with Disabilities in 
accordance with Chapter 201, Human Resources Code, as added by this 
article.
	SECTION 2.04.  APPOINTMENTS OF BOARD MEMBERS.  (a)  As soon 
as possible after the effective date of this article, the governor 
shall appoint the members of the advisory board for health and 
mental health in accordance with Chapter 1001, Health and Safety 
Code, as added by this article.  In making the initial appointments, 
the governor shall designate three members for terms expiring 
February 1, 2005, two members for terms expiring February 1, 2007, 
and two members for terms expiring February 1, 2009.
	(b)  As soon as possible after the effective date of this 
article, the governor shall appoint the members of the advisory 
board for child and family services in accordance with Chapter 161, 
Human Resources Code, as added by this article.  In making the 
initial appointments, the governor shall designate three members 
for terms expiring February 1, 2005, two members for terms expiring 
February 1, 2007, and two members for terms expiring February 1, 
2009.
	(c)  As soon as possible after the effective date of this 
article, the governor shall appoint the members of the advisory 
board for aging services in accordance with Chapter 181, Human 
Resources Code, as added by this article.  In making the initial 
appointments, the governor shall designate three members for terms 
expiring February 1, 2005, two members for terms expiring February 
1, 2007, and two members for terms expiring February 1, 2009.
	(d)  As soon as possible after the effective date of this 
article, the governor shall appoint the members of the advisory 
board for persons with disabilities in accordance with Chapter 201, 
Human Resources Code, as added by this article.  In making the 
initial appointments, the governor shall designate three members 
for terms expiring February 1, 2005, two members for terms expiring 
February 1, 2007, and two members for terms expiring February 1, 
2009.
	SECTION 2.05.  LIMITATION ON ACTIVITIES.  A state agency 
created under this article may, before September 1, 2004, perform 
only those powers, duties, functions, and activities that relate to 
preparing for the transfer of powers, duties, functions, programs, 
and activities to that agency in accordance with Article 3 of this 
Act.  A state agency created under this article may not operate all 
or any part of a health and human services program before September 
1, 2004.
	SECTION 2.06.  INITIAL ADVISORY BOARD MEETINGS.  The 
presiding officer of the advisory board for each state agency 
created under this article shall call the initial meeting of the 
advisory board as soon as possible after the advisory board members 
are appointed.
	SECTION 2.07.  EFFECTIVE DATE.  This article takes effect 
June 1, 2004, and the Department for Health and Mental Health, the 
Department for Children and Families, the Department on Aging, and 
the Department for Persons with Disabilities are created on that 
date.
ARTICLE 3.  INTERAGENCY TRANSFERS OF PROPERTY,
RECORDS, OBLIGATIONS, FUNDS, FUNCTIONS, PROGRAMS,
AND ACTIVITIES
	SECTION 3.01.  TRANSFERS TO THE HEALTH AND HUMAN SERVICES 
COMMISSION.  (a)  On September 1, 2004, the following powers, 
duties, functions, programs, and activities are transferred to the 
Health and Human Services Commission:
		(1)  all powers, duties, functions, programs, and 
activities related to administrative support services, such as 
strategic planning and evaluation, audit, legal, human resources, 
accounting, purchasing, financial management, and contract 
management services, of a state agency or entity abolished by 
Section 5.01 of this Act;
		(2)  all powers, duties, functions, programs, and 
activities related to determining eligibility for benefits under 
the following programs administered by a state agency or entity 
abolished by Section 5.01 of this Act:
			(A)  the children's health insurance program 
under Chapter 62, Health and Safety Code;
			(B)  the financial assistance program under 
Chapter 31, Human Resources Code;
			(C)  the medical assistance program under Chapter 
32, Human Resources Code; and
			(D)  the nutritional assistance programs under 
Chapter 33, Human Resources Code; and
		(3)  all rulemaking and policymaking authority for the 
provision of health and human services in this state.
	(b)  On the date specified by Subsection (a) of this section:                  
		(1)  all obligations and contracts of a state agency or 
entity abolished by Section 5.01 of this Act that are related to a 
power, duty, function, program, or activity transferred under 
Subsection (a) of this section are transferred to the Health and 
Human Services Commission;
		(2)  all property and records in the custody of a state 
agency or entity abolished by Section 5.01 of this Act that are 
related to a power, duty, function, program, or activity 
transferred under Subsection (a) of this section and all funds 
appropriated by the legislature for the power, duty, function, 
program, or activity shall be transferred to the Health and Human 
Services Commission; and
		(3)  all complaints, investigations, or contested 
cases that are pending before a state agency or entity abolished by 
Section 5.01 of this Act or the governing body of the agency or 
entity and that are related to a power, duty, function, program, or 
activity transferred under Subsection (a) of this section are 
transferred without change in status to the Health and Human 
Services Commission.
	(c)  A rule or form adopted by a state agency or entity 
abolished by Section 5.01 of this Act that relates to a power, duty, 
function, program, or activity transferred under Subsection (a) of 
this section is a rule or form of the Health and Human Services 
Commission and remains in effect until altered by the commission.
	(d)  A reference in law to a state agency or entity abolished 
by Section 5.01 of this Act, or to the governing body of the agency 
or entity, that relates to a power, duty, function, program, or 
activity transferred under Subsection (a) of this section means the 
Health and Human Services Commission.
	(e)  A license, permit, or certification in effect that was 
issued by a state agency or entity abolished by Section 5.01 of this 
Act and that relates to a power, duty, function, program, or 
activity transferred under Subsection (a) of this section is 
continued in effect as a license, permit, or certification of the 
Health and Human Services Commission.
	SECTION 3.02.  TRANSFERS TO THE DEPARTMENT FOR HEALTH AND 
MENTAL HEALTH.  (a)  On September 1, 2004, the following powers, 
duties, functions, programs, and activities, other than those 
related to rulemaking or policymaking, or administrative support 
services such as strategic planning and evaluation, audit, legal, 
human resources, accounting, purchasing, financial management, and 
contract management services, are transferred to the Department for 
Health and Mental Health:
		(1)  except as provided by Section 3.01 of this 
article, all powers, duties, functions, programs, and activities of 
the Texas Department of Health;
		(2)  all powers, duties, functions, programs, and 
activities of the Texas Department of Mental Health and Mental 
Retardation relating to mental health services;
		(3)  all powers, duties, functions, programs, and 
activities of the Texas Commission on Alcohol and Drug Abuse;
		(4)  all powers, duties, functions, programs, and 
activities of the Texas Health Care Information Council;
		(5)  all powers, duties, functions, programs, and 
activities of the Texas Cancer Council; and
		(6)  all powers, duties, functions, programs, and 
activities of:            
			(A)  the Board of Nurse Examiners;                                           
			(B)  the Board of Vocational Nurse Examiners;                                
			(C)  the Executive Council of Physical Therapy and 
Occupational Therapy Examiners;
			(D)  the State Board of Dental Examiners;                                    
			(E)  the Texas Board of Chiropractic Examiners;                              
			(F)  the Texas Optometry Board;                                              
			(G)  the Texas State Board of Examiners of 
Psychologists;                  
			(H)  the Texas State Board of Medical Examiners;                             
			(I)  the Texas State Board of Pharmacy; and                                  
			(J)  the Texas State Board of Podiatric Medical 
Examiners.                 
	(b)  On the date specified by Subsection (a) of this section:                  
		(1)  all obligations and contracts of an entity listed 
in Subsection (a) of this section that are related to a power, duty, 
function, program, or activity transferred under that subsection 
are transferred to the Department for Health and Mental Health;
		(2)  all property and records in the custody of an 
entity listed in Subsection (a) of this section that are related to 
a power, duty, function, program, or activity transferred under 
that subsection and all funds appropriated by the legislature for 
the power, duty, function, program, or activity shall be 
transferred to the Department for Health and Mental Health; and
		(3)  all complaints, investigations, or contested 
cases that are pending before an entity or the governing body of an 
entity listed in Subsection (a) of this section and that are related 
to a power, duty, function, program, or activity transferred under 
that subsection are transferred without change in status to the 
Department for Health and Mental Health.
	(c)  A rule or form adopted by an entity listed in Subsection 
(a) of this section that relates to a power, duty, function, 
program, or activity transferred under that subsection is a rule or 
form of the Department for Health and Mental Health and remains in 
effect until altered by the commissioner of health and human 
services.
	(d)  A reference in law to an entity listed in Subsection (a) 
of this section that relates to a power, duty, function, program, or 
activity transferred under that subsection means, as appropriate, 
the Department for Health and Mental Health or any other health and 
human services agency to which the commissioner of health and human 
services transfers the power, duty, function, program, or activity 
under Section 531.0165, Government Code, as added by this Act.  A 
reference in law to the governing body of an entity listed in 
Subsection (a) of this section means the Health and Human Services 
Commission or the commissioner of health and human services.
	(e)  A license, permit, or certification in effect that was 
issued by an entity listed in Subsection (a) of this section and 
that relates to a power, duty, function, program, or activity 
transferred under that subsection is continued in effect as a 
license, permit, or certification of the Department for Health and 
Mental Health.
	SECTION 3.03.  TRANSFERS TO THE DEPARTMENT FOR CHILDREN AND 
FAMILIES.  (a)  On September 1, 2004, the following powers, duties, 
functions, programs, and activities, other than those related to 
rulemaking or policymaking, or administrative support services 
such as strategic planning and evaluation, audit, legal, human 
resources, accounting, purchasing, financial management, and 
contract management services, are transferred to the Department for 
Children and Families:
		(1)  except as provided by Section 3.04 of this 
article, all powers, duties, functions, programs, and activities of 
the Department of Protective and Regulatory Services;
		(2)  except as provided by Sections 3.01, 3.04, and 
3.05 of this article, all powers, duties, functions, programs, and 
activities of the Texas Department of Human Services, including 
those related to preventing family violence, providing services to 
victims of family violence, and operating the financial and 
nutritional assistance programs;
		(3)  all powers, duties, functions, programs, and 
activities of the Texas Juvenile Probation Commission; and
		(4)  all powers, duties, functions, programs, and 
activities of the Texas Youth Commission.
	(b)  On the date specified by Subsection (a) of this section:                  
		(1)  all obligations and contracts of an entity listed 
in Subsection (a) of this section that are related to a power, duty, 
function, program, or activity transferred under that subsection 
are transferred to the Department for Children and Families;
		(2)  all property and records in the custody of an 
entity listed in Subsection (a) of this section that are related to 
a power, duty, function, program, or activity transferred under 
that subsection and all funds appropriated by the legislature for 
the power, duty, function, program, or activity shall be 
transferred to the Department for Children and Families; and
		(3)  all complaints, investigations, or contested 
cases that are pending before an entity or the governing body of an 
entity listed in Subsection (a) of this section and that are related 
to a power, duty, function, program, or activity transferred under 
that subsection are transferred without change in status to the 
Department for Children and Families.
	(c)  A rule or form adopted by an entity listed in Subsection 
(a) of this section that relates to a power, duty, function, 
program, or activity transferred under that subsection is a rule or 
form of the Department for Children and Families and remains in 
effect until altered by the commissioner of health and human 
services.
	(d)  A reference in law to an entity listed in Subsection (a) 
of this section that relates to a power, duty, function, program, or 
activity transferred under that subsection means, as appropriate, 
the Department for Children and Families or any other health and 
human services agency to which the commissioner of health and human 
services transfers the power, duty, function, program, or activity 
under Section 531.0165, Government Code, as added by this Act.  A 
reference in law to the governing body of an entity listed in 
Subsection (a) of this section means the Health and Human Services 
Commission or the commissioner of health and human services.
	(e)  A license, permit, or certification in effect that was 
issued by an entity listed in Subsection (a) of this section and 
that relates to a power, duty, function, program, or activity 
transferred under that subsection is continued in effect as a 
license, permit, or certification of the Department for Children 
and Families.
	SECTION 3.04.  TRANSFERS TO THE DEPARTMENT ON AGING.  (a)  On 
September 1, 2004, the following powers, duties, functions, 
programs, and activities, other than those related to rulemaking or 
policymaking, or administrative support services such as strategic 
planning and evaluation, audit, legal, human resources, 
accounting, purchasing, financial management, and contract 
management services, are transferred to the Department on Aging:
		(1)  all powers, duties, functions, programs, and 
activities of the Texas Department on Aging;
		(2)  from the Department of Protective and Regulatory 
Services, all powers, duties, functions, programs, and activities 
related to the adult protective services program under Chapter 48, 
Human Resources Code, including investigations and client 
services; and
		(3)  from the Texas Department of Human Services, all 
powers, duties, functions, programs, and activities related to 
providing long-term care services and community-based support and 
services.
	(b)  On the date specified by Subsection (a) of this section:                  
		(1)  all obligations and contracts of an entity listed 
in Subsection (a) of this section that are related to a power, duty, 
function, program, or activity transferred under that subsection 
are transferred to the Department on Aging;
		(2)  all property and records in the custody of an 
entity listed in Subsection (a) of this section that are related to 
a power, duty, function, program, or activity transferred under 
that subsection and all funds appropriated by the legislature for 
the power, duty, function, program, or activity shall be 
transferred to the Department on Aging; and
		(3)  all complaints, investigations, or contested 
cases that are pending before an entity or the governing body of an 
entity listed in Subsection (a) of this section and that are related 
to a power, duty, function, program, or activity transferred under 
that subsection are transferred without change in status to the 
Department on Aging.
	(c)  A rule or form adopted by an entity listed in Subsection 
(a) of this section that relates to a power, duty, function, 
program, or activity transferred under that subsection is a rule or 
form of the Department on Aging and remains in effect until altered 
by the commissioner of health and human services.
	(d)  A reference in law to an entity listed in Subsection (a) 
of this section that relates to a power, duty, function, program, or 
activity transferred under that subsection means, as appropriate, 
the Department on Aging or any other health and human services 
agency to which the commissioner of health and human services 
transfers the power, duty, function, program, or activity under 
Section 531.0165, Government Code, as added by this Act.  A 
reference in law to the governing body of an entity listed in 
Subsection (a) of this section means the Health and Human Services 
Commission or the commissioner of health and human services.
	(e)  A license, permit, or certification in effect that was 
issued by an entity listed in Subsection (a) of this section and 
that relates to a power, duty, function, program, or activity 
transferred under that subsection is continued in effect as a 
license, permit, or certification of the Department on Aging.
	SECTION 3.05.  TRANSFERS TO THE DEPARTMENT FOR PERSONS WITH 
DISABILITIES.  (a)  On September 1, 2004, the following powers, 
duties, functions, programs, and activities, other than those 
related to rulemaking or policymaking, or administrative support 
services such as strategic planning and evaluation, audit, legal, 
human resources, accounting, purchasing, financial management, and 
contract management services, are transferred to the Department for 
Persons with Disabilities:
		(1)  except as provided by Section 3.02 of this 
article, all powers, duties, functions, programs, and activities of 
the Texas Department of Mental Health and Mental Retardation;
		(2)  all powers, duties, functions, programs, and 
activities of the Texas Rehabilitation Commission;
		(3)  all powers, duties, functions, programs, and 
activities of the Texas Commission for the Blind;
		(4)  all powers, duties, functions, programs, and 
activities of the Texas Commission for the Deaf and Hard of Hearing;
		(5)  all powers, duties, functions, programs, and 
activities of the Interagency Council on Early Childhood 
Intervention; and
		(6)  all powers, duties, functions, programs, and 
activities of the office of services to persons with disabilities 
in the Texas Department of Human Services.
	(b)  On the date specified by Subsection (a) of this section:                  
		(1)  all obligations and contracts of an entity listed 
in Subsection (a) of this section that are related to a power, duty, 
function, program, or activity transferred under that subsection 
are transferred to the Department for Persons with Disabilities;
		(2)  all property and records in the custody of an 
entity listed in Subsection (a) of this section that are related to 
a power, duty, function, program, or activity transferred under 
that subsection and all funds appropriated by the legislature for 
the power, duty, function, program, or activity shall be 
transferred to the Department for Persons with Disabilities; and
		(3)  all complaints, investigations, or contested 
cases that are pending before an entity or the governing body of an 
entity listed in Subsection (a) of this section and that are related 
to a power, duty, function, program, or activity transferred under 
that subsection are transferred without change in status to the 
Department for Persons with Disabilities.
	(c)  A rule or form adopted by an entity listed in Subsection 
(a) of this section that relates to a power, duty, function, 
program, or activity transferred under that subsection is a rule or 
form of the Department for Persons with Disabilities and remains in 
effect until altered by the commissioner of health and human 
services.
	(d)  A reference in law to an entity listed in Subsection (a) 
of this section that relates to a power, duty, function, program, or 
activity transferred under that subsection means, as appropriate, 
the Department for Persons with Disabilities or any other health 
and human services agency to which the commissioner of health and 
human services transfers the power, duty, function, program, or 
activity under Section 531.0165, Government Code, as added by this 
Act.  A reference in law to the governing body of an entity listed in 
Subsection (a) of this section means the Health and Human Services 
Commission or the commissioner of health and human services.
	(e)  A license, permit, or certification in effect that was 
issued by an entity listed in Subsection (a) of this section and 
that relates to a power, duty, function, program, or activity 
transferred under that subsection is continued in effect as a 
license, permit, or certification of the Department for Persons 
with Disabilities.
	SECTION 3.06.  FACILITATION OF TRANSFERS BY COMMISSIONER OF 
HEALTH AND HUMAN SERVICES.  (a)  To facilitate the transfer of 
powers, duties, functions, programs, and activities among the 
state's health and human services agencies, the Health and Human 
Services Commission, and other agencies as provided by this article 
with a minimal negative effect on the delivery of health and human 
services in this state, the commissioner of health and human 
services shall:
		(1)  for each power, duty, function, program, or 
activity transferred under this article, determine:
			(A)  the relevant agency actions that constitute 
the power, duty, function, program, or activity;
			(B)  the pertinent records and property used by a 
state agency for the power, duty, function, program, or activity;
			(C)  each state agency employee whose primary 
duties involve the power, duty, function, program, or activity and 
whether:
				(i)  the employee becomes an employee of an 
agency created under Article 2 of this Act, to be assigned duties by 
the executive director of that agency, or an employee of the Health 
and Human Services Commission, to be assigned duties by the 
commissioner of health and human services;
				(ii)  the employee must reapply with an 
agency created under Article 2 of this Act or with the Health and 
Human Services Commission, as applicable, for a comparable 
employment position; or
				(iii)  the employment position will be 
eliminated; and                    
			(D)  the funds and obligations that are related to 
the power, duty, function, program, or activity; and
		(2)  oversee and assist the entities listed in Sections 
3.01, 3.02, 3.03, 3.04, and 3.05 of this article in transferring the 
powers, duties, functions, programs, activities, records, 
property, funds, obligations, and employees in accordance with this 
article.
	(b)  A state agency or entity abolished by Section 5.01 of 
this Act shall assist the commissioner of health and human services 
in planning for an orderly transfer of powers, duties, functions, 
programs, and activities as provided by this article.
	SECTION 3.07.  APPLICABILITY OF FORMER LAW.  An action 
brought or proceeding commenced before the effective date of a 
transfer prescribed by this article, including a contested case or 
a remand of an action or proceeding by a reviewing court, is 
governed by the laws and rules applicable to the action or 
proceeding before the transfer.
ARTICLE 4.  OPERATION OF THE MEDICAL
ASSISTANCE PROGRAM
	SECTION 4.01.  Section 32.024, Human Resources Code, is 
amended by adding Subsection (t-1) to read as follows:
	(t-1)  The department, in its rules governing the medical 
transportation program, may not prohibit a recipient of medical 
assistance from receiving transportation services through the 
program on the basis that the recipient resides in a nursing 
facility.
	SECTION 4.02.  Section 32.026, Human Resources Code, is 
amended by adding Subsection (d-1) to read as follows:
	(d-1)  The department shall establish not more than four call 
centers for purposes of determining and certifying the eligibility 
and need for public assistance benefits administered by the 
department, including determining and certifying the eligibility 
and need for medical assistance for children under 19 years of age.
	SECTION 4.03.  Subchapter B, Chapter 32, Human Resources 
Code, is amended by adding Section 32.0291 to read as follows:
	Sec. 32.0291.  PREPAYMENT REVIEWS AND POSTPAYMENT HOLDS.  
(a)  Notwithstanding any other law, the department may:
		(1)  perform a prepayment review of a claim for 
reimbursement under the medical assistance program to determine 
whether the claim involves fraud or abuse; and
		(2)  as necessary to perform that review, withhold 
payment of the claim for not more than five working days without 
notice to the person submitting the claim.
	(b)  Notwithstanding any other law, the department may 
impose a postpayment hold on payment of future claims submitted by a 
provider if the department has reliable evidence that the provider 
has committed fraud or wilful misrepresentation regarding a claim 
for reimbursement under the medical assistance program.  The 
department must notify the provider of the postpayment hold not 
later than the fifth working day after the date the hold is imposed.
	SECTION 4.04.  Section 32.032, Human Resources Code, is 
amended to read as follows:
	Sec. 32.032.  PREVENTION AND DETECTION OF FRAUD AND ABUSE.  
The department shall adopt reasonable rules for minimizing the 
opportunity for fraud and abuse, for establishing and maintaining 
methods for detecting and identifying situations in which a 
question of fraud or abuse in the program may exist, and for 
referring cases where fraud or abuse appears to exist to the 
appropriate law enforcement agencies for prosecution.
	SECTION 4.05.  Section 32.0321(a), Human Resources Code, is 
amended to read as follows:
	(a)  The department by rule may require each provider of 
medical assistance in a provider type that has demonstrated 
significant potential for fraud or abuse to file with the 
department a surety bond in a reasonable amount.  The department by 
rule shall require a provider of medical assistance to file with the 
department a surety bond in a reasonable amount if the department 
identifies an irregularity relating to the provider's services 
under the medical assistance program that indicates the need for 
protection against potential future acts of fraud or abuse.
	SECTION 4.06.  Section 32.039(a), Human Resources Code, is 
amended by adding Subdivision (1-a) to read as follows:
		(1-a)  "Inducement" includes a service, cash in any 
amount, entertainment, or any item of value.
	SECTION 4.07.  Section 32.039, Human Resources Code, is 
amended by amending Subsections (b), (u), and (v) and adding 
Subsections (w) and (x) to read as follows:
	(b)  A person commits a violation if the person:                               
		(1)  presents or causes to be presented to the 
department a claim that contains a statement or representation the 
person knows or should know to be false;
		(1-a)  engages in conduct that violates Section 
102.001, Occupations Code;
		(1-b)  solicits or receives, directly or indirectly, 
overtly or covertly any remuneration, including any kickback, 
bribe, or rebate, in cash or in kind for referring an individual to 
a person for the furnishing of, or for arranging the furnishing of, 
any item or service for which payment may be made, in whole or in 
part, under the medical assistance program;
		(1-c)  solicits or receives, directly or indirectly, 
overtly or covertly any remuneration, including any kickback, 
bribe, or rebate, in cash or in kind for purchasing, leasing, or 
ordering, or arranging for or recommending the purchasing, leasing, 
or ordering of any good, facility, service, or item for which 
payment may be made, in whole or in part, under the medical 
assistance program;
		(1-d)  offers or pays, directly or indirectly, overtly 
or covertly any remuneration, including any kickback, bribe, or 
rebate, in cash or in kind to induce a person to refer an individual 
to another person for the furnishing of, or for arranging the 
furnishing of, any item or service for which payment made be made, 
in whole or in part, under the medical assistance program;
		(1-e)  offers or pays, directly or indirectly, overtly 
or covertly any remuneration, including any kickback, bribe, or 
rebate, in cash or in kind to induce a person to purchase, lease, or 
order or arrange for or recommend the purchase, lease, or order of 
any good, facility, service, or item for which payment may be made, 
in whole or in part, under the medical assistance program;
		(1-f)  provides or offers an inducement in a manner or 
for a purpose not otherwise prohibited by this section or Section 
102.001, Occupations Code, to an individual, including a recipient, 
provider, or employee of a provider, for the purpose of influencing 
a decision regarding selection of a provider or  receipt of a good 
or service under the medical assistance program or for the purpose 
of otherwise influencing a decision regarding the use of goods or 
services provided under the medical assistance program; or
		(2)  is a managed care organization that contracts with 
the department to provide or arrange to provide health care 
benefits or services to individuals eligible for medical assistance 
and:
			(A)  fails to provide to an individual a health 
care benefit or service that the organization is required to 
provide under the contract with the department;
			(B)  fails to provide to the department 
information required to be provided by law, department rule, or 
contractual provision;
			(C)  engages in a fraudulent activity in 
connection with the enrollment in the organization's managed care 
plan of an individual eligible for medical assistance or in 
connection with marketing the organization's services to an 
individual eligible for medical assistance; or
			(D)  engages in actions that indicate a pattern 
of:                        
				(i)  wrongful denial of payment for a health 
care benefit or service that the organization is required to 
provide under the contract with the department; or
				(ii)  wrongful delay of at least 45 days or a 
longer period specified in the contract with the department, not to 
exceed 60 days, in making payment for a health care benefit or 
service that the organization is required to provide under the 
contract with the department.
	(u)  Except as provided by Subsection (w), a [A] person found 
liable for a violation under Subsection (c) that resulted in injury 
to an elderly person, as defined by Section 48.002(a)(1)
[48.002(1)], a disabled person, as defined by Section 
48.002(a)(8)(A) [48.002(8)(A)], or a person younger than 18 years 
of age may not provide or arrange to provide health care services 
under the medical assistance program for a period of 10 years.  The 
department by rule may provide for a period of ineligibility longer 
than 10 years.  The period of ineligibility begins on the date on 
which the determination that the person is liable becomes final.  
[This subsection does not apply to a person who operates a nursing 
facility or an ICF-MR facility.]
	(v)  Except as provided by Subsection (w), a [A] person found 
liable for a violation under Subsection (c) that did not result in 
injury to an elderly person, as defined by Section 48.002(a)(1)
[48.002(1)], a disabled person, as defined by Section 
48.002(a)(8)(A) [48.002(8)(A)], or a person younger than 18 years 
of age may not provide or arrange to provide health care services 
under the medical assistance program for a period of three years.  
The department by rule may provide for a period of ineligibility 
longer than three years.  The period of ineligibility begins on the 
date on which the determination that the person is liable becomes 
final[.  This subsection does not apply to a person who operates a 
nursing facility or an ICF-MR facility].
	(w)  The department by rule may prescribe criteria under 
which a person described by Subsection (u) or (v) is not prohibited 
from providing or arranging to provide health care services under 
the medical assistance program.  The criteria may include 
consideration of:
		(1)  the person's knowledge of the violation;                          
		(2)  the likelihood that education provided to the 
person would be sufficient to prevent future violations;
		(3)  the potential impact on availability of services 
in the community served by the person; and
		(4)  any other reasonable factor identified by the 
department.       
	(x)  Subsections (b)(1-b) through (1-f) do not prohibit a 
person from engaging in:
		(1)  generally accepted business practices, as 
determined by department rule, including:
			(A)  conducting a marketing campaign;                                 
			(B)  providing token items of minimal value that 
advertise the person's trade name; and
			(C)  providing complimentary refreshments at an 
informational meeting promoting the person's goods or services; or
		(2)  conduct specifically authorized by law.                           
	SECTION 4.08.  Subchapter B, Chapter 32, Human Resources 
Code, is amended by adding Section 32.0391 to read as follows:
	Sec. 32.0391.  CRIMINAL OFFENSE.  (a)  A person commits an 
offense if the person commits a violation under Section 
32.039(b)(1-b), (1-c), (1-d), or (1-e).
	(b)  An offense under this section is a state jail felony.              
	(c)  If conduct constituting an offense under this section 
also constitutes an offense under another provision of law, 
including a provision in the Penal Code, the person may be 
prosecuted under either this section or the other provision.
	SECTION 4.09.  Subchapter B, Chapter 32, Human Resources 
Code, is amended by adding Section 32.0423 to read as follows:
	Sec. 32.0423.  RECOVERY OF REIMBURSEMENTS FROM HEALTH 
COVERAGE PROVIDERS.  The medical assistance identification card of 
a recipient of medical assistance shall state whether the recipient 
is covered by any third-party health coverage or insurance.  To the 
extent allowed by federal law, a health care service provider must 
seek reimbursement from available third-party health coverage or 
insurance before billing the medical assistance program.
	SECTION 4.10.  Section 32.050, Human Resources Code, is 
amended by adding Subsections (d) and (e) to read as follows:
	(d)  A nursing facility, home health services provider, or 
any other similar long-term care services provider must:
		(1)  seek reimbursement from Medicare before billing 
the medical assistance program for services provided to an 
individual identified under Subsection (a); and
		(2)  as directed by the department, appeal Medicare 
claim denials for payment of services provided to an individual 
identified under Subsection (a).
	(e)  If the Medicare reimbursement rate for a service 
provided to an individual identified under Subsection (a) exceeds 
the medical assistance reimbursement rate for a comparable service,  
the medical assistance program may not pay a Medicare coinsurance 
or deductible amount for that service.
	SECTION 4.11.  Subchapter B, Chapter 32, Human Resources 
Code, is amended by adding Section 32.060 to read as follows:
	Sec. 32.060.  THIRD-PARTY BILLING VENDORS.  (a)  A 
third-party billing vendor may not submit a claim with the 
department for reimbursement on behalf of a provider of medical 
services under the medical assistance program unless the vendor has 
entered into a contract with the department authorizing that 
activity.
	(b)  To the extent practical, the contract shall contain 
provisions comparable to the provisions contained in contracts 
between the department and providers of medical services, with an 
emphasis on provisions designed to prevent fraud or abuse under the 
medical assistance program.  At a minimum, the contract must 
require the third-party billing vendor to:
		(1)  provide documentation of the vendor's authority to 
bill on behalf of each provider for whom the vendor submits claims;
		(2)  submit a claim in a manner that permits the 
department to identify and verify the vendor, any computer or  
telephone line used in submitting the claim, any relevant user 
password used in submitting the claim, and any provider number 
referenced in the claim; and
		(3)  subject to any confidentiality requirements 
imposed by federal law, provide the department, the office of the 
attorney general, or authorized representatives with:
			(A)  access to any records maintained by the 
vendor, including original records and records maintained by the 
vendor on behalf of a provider, relevant to an audit or 
investigation of the vendor's services or another function of the 
department or office of the attorney general relating to the 
vendor; and
			(B)  if requested, copies of any records described 
by Paragraph (A) at no charge to the department, the office of the 
attorney general, or authorized representatives.
	(c)  On receipt of a claim submitted by a third-party billing 
vendor, the department shall send a remittance notice directly to 
the provider referenced in the claim.  The notice must:
		(1)  include detailed information regarding the claim 
submitted on behalf of the provider; and
		(2)  require the provider to review the claim for 
accuracy and notify the department promptly regarding any errors.
	(d)  The department shall take all action necessary, 
including any modifications of the department's claims processing 
system, to enable the department to identify and verify a 
third-party billing vendor submitting a claim for reimbursement 
under the medical assistance program, including identification and 
verification of any computer or telephone line used in submitting 
the claim, any relevant user password used in submitting the claim, 
and any provider number referenced in the claim.
	SECTION 4.12.  Subchapter B, Chapter 531, Government Code, 
is amended by adding Sections 531.0392 and 531.063 to read as 
follows:
	Sec. 531.0392.  RECOVERY OF THIRD-PARTY REIMBURSEMENTS 
UNDER MEDICAID.  (a)  In this section, "dually eligible individual" 
means an individual who is eligible to receive health care benefits 
under both the Medicaid and Medicare programs.
	(b)  The commission shall contract directly on a no-risk 
contingency fee basis with a consulting firm experienced in 
third-party reimbursements to assist the state in increasing 
third-party reimbursements under the Medicaid program.
	(c)  The commission shall require a consulting firm with whom 
the commission contracts under this section to:
		(1)  establish to the extent authorized by law 
information-sharing procedures regarding dually eligible 
individuals with fiscal intermediaries and other contractors who 
process Medicare claims;
		(2)  examine and appeal Medicare claim denials for 
payment of home health services and other similar services provided 
to dually eligible individuals; and
		(3)  update the firm's automated systems as reasonably 
necessary to include any new technology that will increase 
third-party reimbursements under the Medicaid program.
	(d)  The commission shall obtain Medicaid reimbursement from 
each fiscal intermediary who makes a payment to a service provider 
on behalf of the Medicare program, including a reimbursement for a 
payment made to a home health services provider or nursing facility 
for services rendered to a dually eligible individual.
	Sec. 531.063.  MEMORANDUM OF UNDERSTANDING RELATING TO 
CERTAIN CLASS-ACTION LAWSUITS.  The commission shall enter into a 
memorandum of understanding with the office of the attorney general 
to establish procedures for the commission to identify and submit 
requests for the review of any health-related class-action lawsuits 
filed in this state or another state to determine:
		(1)  whether a Medicaid recipient is a party to the 
lawsuit; and     
		(2)  whether the state should intervene in the 
proceeding to pursue any third-party reimbursement and subrogation 
right held by the commission or a health and human services agency 
arising from payment of medical expenses.
	SECTION 4.13.  Section 531.102, Government Code, is amended 
by amending Subsections (a) and (d) and adding Subsections (f) and 
(g) to read as follows:
	(a)  The commission, through the commission's office of 
investigations and enforcement, is responsible for the 
investigation of fraud and abuse in the provision of health and 
human services and the enforcement of state law relating to the 
provision of those services.
	(d)  The commission may require employees of health and human 
services agencies to provide assistance to the commission in 
connection with the commission's duties relating to the 
investigation of fraud and abuse in the provision of health and 
human services.
	(f)  Notwithstanding any other law, for purposes of 
obtaining information relevant to the office's duties from a law 
enforcement agency, prosecutor, or governmental entity, the office 
is considered to be a law enforcement agency and may obtain the 
information in the same manner as another law enforcement agency.  
Information obtained by the office under this subsection that deals 
with the detection, investigation, or prosecution of crime is 
excepted from the requirements of Section 552.021 in the manner 
provided by Section 552.108.
	(g)  In connection with the investigation of fraud and abuse 
in the provision of health and human services, the office may issue 
a subpoena throughout this state to compel the attendance and 
testimony of a witness or production of records.  The subpoena may 
compel attendance or production at the office or at another place 
designated in the subpoena.
	SECTION 4.14.  Subchapter C, Chapter 531, Government Code, 
is amended by adding Section 531.1021 to read as follows:
	Sec. 531.1021.  SEIZURE OF ASSETS.  (a)  The commission, 
through the commission's office of investigations and enforcement, 
may seize assets owned by a person if:
		(1)  the commission determines through an 
investigation that there is a substantial likelihood that the 
person has engaged in conduct that constitutes fraud or abuse under 
the medical assistance program; and
		(2)  the seizure of assets is necessary to protect the 
commission's ability to recover amounts wrongfully obtained by the 
person and associated damages and penalties to which the commission 
may otherwise be entitled by law.
	(b)  The commission shall provide a person whose assets are 
seized with an opportunity for a hearing at which the person may 
contest the seizure.
	(c)  The commission may not dispose of seized assets until:             
		(1)  the person is determined to have engaged in 
conduct that constitutes fraud or abuse under the medical 
assistance program; and
		(2)  the commission's entitlement to the assets is 
confirmed in accordance with due process.
	SECTION 4.15.  Section 531.103, Government Code, is amended 
by adding Subsections (c-1) and (e-1) and amending Subsection (e) 
to read as follows:
	(c-1)  In addition to the report required by Subsection (c), 
the office of the attorney general, not later than November 1 of 
each year, shall prepare and submit to the governor, the 
legislature, and the comptroller a report that specifically 
addresses the activities of the attorney general's Medicaid fraud 
control unit and civil Medicaid fraud section.  The attorney 
general shall consult with the comptroller regarding the format of 
the report and make reasonable efforts to provide the report in the 
format requested by the comptroller.  The report must specify, for 
the Medicaid fraud control unit and the civil Medicaid fraud 
section, respectively, the following information:
		(1)  total agency expenditures;                                        
		(2)  caseloads;                                                        
		(3)  the length of time required to complete each case 
through each phase of activity;
		(4)  recoveries and penalties arising from each case;                  
		(5)  difficulties in operations; and                                   
		(6)  any other information considered relevant by the 
attorney general to an analysis of the effectiveness of the unit and 
section.
	(e)  The commission shall refer a case of suspected fraud, 
waste, or abuse under the state Medicaid program to the appropriate 
United States attorney, district attorney, county attorney, city 
attorney, or private collection agency if the attorney general 
fails to act within 30 days of referral of the case to the office of 
the attorney general.  A failure by the attorney general to act 
within 30 days constitutes approval by the attorney general under 
Section 2107.003.
	(e-1)  In addition to the provisions required by Subsection 
(a), the memorandum of understanding required by this section must 
identify circumstances under which the commission may refer a case 
of suspected fraud, waste, or abuse under the state Medicaid 
program directly to the appropriate United States attorney, 
district attorney, county attorney, city attorney, or private 
collection agency.  A case referred in accordance with this 
subsection is considered approved by the attorney general under 
Section 2107.003.
	SECTION 4.16.  Section 531.107(b), Government Code, is 
amended to read as follows:
	(b)  The task force is composed of a representative of the:                    
		(1)  attorney general's office, appointed by the 
attorney general;          
		(2)  comptroller's office, appointed by the 
comptroller;                    
		(3)  Department of Public Safety, appointed by the 
public safety director;  
		(4)  state auditor's office, appointed by the state 
auditor;                
		(5)  commission, appointed by the commissioner of 
health and human services;
		(6)  Texas Department of Human Services or its 
successor in function, appointed by the commissioner of human 
services; [and]
		(7)  Texas Department of Insurance, appointed by the 
commissioner of insurance; and
		(8)  Texas Department of Health or its successor in 
function, appointed by the commissioner of public health.
	SECTION 4.17.  STUDY.  (a)  The Medicaid and Public 
Assistance Fraud Oversight Task Force, with the participation of 
the Texas Department of Health's Bureau of Vital Statistics and 
other agencies designated by the comptroller, shall study 
procedures and documentation requirements used by the state in 
confirming a person's identity for purposes of establishing 
entitlement to Medicaid and other benefits provided through health 
and human services programs.
	(b)  Not later than December 1, 2004, the Medicaid and Public 
Assistance Fraud Oversight Task Force, with assistance from the 
agencies participating in the study required by Subsection (a) of 
this section, shall submit a report to the legislature containing 
recommendations for improvements in the procedures and 
documentation requirements described by Subsection (a) of this 
section that would strengthen the state's ability to prevent fraud 
and abuse in the Medicaid program and other health and human 
services programs.
	SECTION 4.18.  CONSOLIDATION OF CERTAIN DIVISIONS AND 
ACTIVITIES.  (a)  Not later than March 1, 2004, the Health and Human 
Services Commission shall consolidate the Medicaid post-payment 
third-party recovery divisions or activities of the Texas 
Department of Human Services, the Medicaid vendor drug program, and 
the state's Medicaid claims administrator with the Medicaid 
post-payment third-party recovery function.
	(b)  The Health and Human Services Commission shall use the 
commission's Medicaid post-payment third-party recovery contractor  
for the consolidated division.
	(c)  The Health and Human Services Commission shall update 
its computer system to facilitate the consolidation.
	SECTION 4.19.  MEMORANDUMS OF UNDERSTANDING.  (a)  Not later 
than January 1, 2004, the Health and Human Services Commission and 
the office of the attorney general shall enter into the memorandum 
of understanding required by Section 531.063, Government Code, as 
added by this Act.
	(b)  Not later than December 1, 2003, the office of the 
attorney general and the Health and Human Services Commission shall 
amend the memorandum of understanding required by Section 531.103, 
Government Code, as necessary to comply with Section 531.103(e-1), 
Government Code, as added by this Act.
	SECTION 4.20.  APPLICABILITY.  The changes in law made by 
this Act through amending Section 32.039(b), Human Resources Code, 
and adding Section 32.0391, Human Resources Code, apply only to a 
violation committed on or after the effective date of this Act.  For 
purposes of this section, a violation is committed on or after the 
effective date of this Act only if each element of the violation 
occurs on or after that date.  A violation committed before the 
effective date of this Act is covered by the law in effect when the 
violation was committed, and the former law is continued in effect 
for that purpose.
	SECTION 4.21.  EFFECTIVE DATE.  (a)  Except as otherwise 
provided by Subsection (b) of this section, this article takes 
effect September 1, 2003.
	(b)  Section 32.060, Human Resources Code, as added by this 
article, takes effect January 1, 2004.
ARTICLE 5.  MISCELLANEOUS PROVISIONS
	SECTION 5.01.  ABOLITION OF STATE AGENCIES AND ENTITIES.  
(a)  The following state agencies and entities are abolished:
		(1)  the Board of Nurse Examiners;                                            
		(2)  the Board of Vocational Nurse Examiners;                                 
		(3)  the Department of Protective and Regulatory 
Services;                  
		(4)  the Executive Council of Physical Therapy and 
Occupational Therapy Examiners;
		(5)  the Interagency Council on Early Childhood 
Intervention;               
		(6)  the State Board of Dental Examiners;                                     
		(7)  the Texas Board of Chiropractic Examiners;                               
		(8)  the Texas Cancer Council;                                                
		(9)  the Texas Commission for the Blind;                                      
		(10)  the Texas Commission for the Deaf and Hard of 
Hearing;                
		(11)  the Texas Commission on Alcohol and Drug Abuse;                         
		(12)  the Texas Department of Health;                                         
		(13)  the Texas Department of Human Services;                                 
		(14)  the Texas Department of Mental Health and Mental 
Retardation;         
		(15)  the Texas Department on Aging;                                          
		(16)  the Texas Health Care Information Council;                              
		(17)  the Texas Juvenile Probation Commission;                                
		(18)  the Texas Optometry Board;                                              
		(19)  the Texas Rehabilitation Commission;                                    
		(20)  the Texas State Board of Examiners of 
Psychologists;                  
		(21)  the Texas State Board of Medical Examiners;                             
		(22)  the Texas State Board of Pharmacy;                                      
		(23)  the Texas State Board of Podiatric Medical 
Examiners;  and            
		(24)  the Texas Youth Commission.                                             
	(b)  The abolition of a state agency or entity listed in 
Subsection (a) of this section and the transfer of its powers, 
duties, functions, programs, activities, obligations, rights, 
contracts, records, property, funds, and employees as provided by 
this Act do not affect or impair an act done, any obligation, right, 
order, permit, certificate, rule, criterion, standard, or 
requirement existing, or any penalty accrued under former law, and 
that law remains in effect for any action concerning those matters.
	SECTION 5.02.  REPEAL.  Article 2, Chapter 1505, Acts of the 
76th Legislature, Regular Session, 1999, is repealed.
	SECTION 5.03.  REQUIRED WAIVER OR AUTHORIZATION.  If before 
implementing any provision of this Act a state agency determines 
that a waiver or authorization from a federal agency is necessary 
for implementation of that provision, the agency affected by the 
provision shall request the waiver or authorization and may delay 
implementing that provision until the waiver or authorization is 
granted.
	SECTION 5.04.  EFFECTIVE DATE.  Except as otherwise provided 
by this Act, this Act takes effect September 1, 2004.