By:  Madla                                                        S.B. No. 1240


A BILL TO BE ENTITLED

AN ACT

relating to the employment of physicians by a rural hospital.                 
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Chapter 162, Occupations Code, is amended by 
adding Subchapter F to read as follows:
	SUBCHAPTER F.  EMPLOYMENT OF PHYSICIAN BY RURAL HOSPITAL
	Sec. 162.301.  Application of Subchapter.  This subchapter 
applies only to a hospital located in a county with a population of 
50,000 or less; or designated as a critical access hospital under 
the authority of and in compliance with 42 U.S.C. Section 1395i-4 or 
as a sole community hospital under the authority of and in 
compliance with 42 U.S.C. Section 1395ww(d)(5)(D)(iii).
	Sec. 162.302.  Legislative Findings.  (a)  The Legislature 
finds that a number of rural Texas communities are having great 
difficulty recruiting and retaining physicians.  There is a 
shortage of physicians in rural Texas and this shortage limits 
access to health care by residents of rural communities.
	(b)  The Legislature finds that allowing rural hospitals to 
directly employ physicians will allow rural hospitals to provide 
economic security adequate for a physician to relocate and reside 
in their communities and will help rural hospitals to recruit 
physicians to provide medically necessary services in their 
communities.
	(c)  The Legislature intends that a hospital meeting the 
conditions set forth in this section be able to employ physicians 
directly and to charge for their professional services.
	(4)  The Legislature further intends that a hospital not 
interfere with, control, or otherwise direct a physician's 
professional judgment.
	Sec. 162.303.  Employment of Physician Permitted.  A 
hospital that (1) is designated as a critical access hospital under 
the authority of and in compliance with 42 U.S.C. Section 1395i-4 or 
as a sole community hospital under the authority of and in 
compliance with 42 U.S.C. Section 1395ww(d)(5)(D)(iii) or (2) is 
not located in a Metropolitan Statistical Area (MSA) as defined by 
the federal Office of Management and Budget. may employ a physician 
to provide medical services at the hospital and may retain all or 
part of the professional income generated by such physician for 
medical services provided at the hospital.
	Sec. 162.304.  Independent Medical Judgment of Physician.  
(a)  A hospital subject to this subchapter shall adopt and maintain 
policies to ensure that a physician whose professional income is 
retained under Section 162.303 is exercising the physician's 
independent medical judgment in providing care to patients in the 
hospital.
	(b)  The policies adopted under this section must include 
policies relating to credentialing, quality assurance, utilization 
review, peer review, medical decision-making, and due process.
	(c)  Each physician employed by the hospital shall provide to 
the board biennially a signed statement indicating that the 
physician:
		(1)  is licensed by the board;                                                
		(2)  will exercise independent medical judgment in all 
matters relating to credentialing, quality assurance, utilization 
review, peer review, medical decision-making, and due process; and
		(3)  will report immediately to the board any action or 
event that the physician reasonably and in good faith believes 
constitutes a compromise of the independent judgment of an employed 
physician in caring for a patient in the hospital.
	Sec. 162.305.  Certification of Hospital by Board.  (a)  A 
hospital that employs physicians and retains a physician's 
professional income under Section 162.303 must be certified by the 
board as being in compliance with this subchapter.
	(b)  The board shall prescribe an application form to be 
provided to the hospital and may adopt rules as necessary to 
administer this subchapter.
	(c)  The board may prescribe and assess a fee for the 
certification of a hospital and for investigation and review of the 
hospital in an amount not to exceed the fee assessed on an 
organization described by Section 162.001.
	Sec. 162.306.  Biennial Report.  A hospital certified under 
Section 162.305 shall provide to the board a biennial report 
certifying that the hospital is in compliance with this subchapter.
	Sec. 162.307.  Suspension or Revocation of Certification.  
If the board determines at any time that a hospital certified under 
Section 162.305 has failed to comply with this subchapter, the 
board may suspend or revoke the hospital's certification.
	SECTION 2.  This act takes effect September 1, 2005.