By: Nelson S.B. No. 8
 
  (Kolkhorst)
 
   
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to improving the quality and efficiency of health care.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
  ARTICLE 1.  LEGISLATIVE FINDINGS AND INTENT; COMPLIANCE WITH
  ANTITRUST LAWS
         SECTION 1.01.  (a)  The legislature finds that it would
  benefit the State of Texas to:
               (1)  explore innovative health care delivery and
  payment models to improve the quality and efficiency of health care
  in this state;
               (2)  improve health care transparency;
               (3)  give health care providers the flexibility to
  collaborate and innovate to improve the quality and efficiency of
  health care; and
               (4)  create incentives to improve the quality and
  efficiency of health care.
         (b)  The legislature finds that the use of certified health
  care collaboratives will increase pro-competitive effects as the
  ability to compete on the basis of quality of care and the
  furtherance of the quality of care through a health care
  collaborative will overcome any anticompetitive effects of joining
  competitors to create the health care collaboratives and the
  payment mechanisms that will be used to encourage the furtherance
  of quality of care. Consequently, the legislature finds it
  appropriate and necessary to authorize health care collaboratives
  to promote the efficiency and quality of health care.
         (c)  The legislature intends to exempt from antitrust laws
  and provide immunity from federal antitrust laws through the state
  action doctrine a health care collaborative that holds a
  certificate of authority under Chapter 848, Insurance Code, as
  added by Article 3 of this Act, and that collaborative's
  negotiations of contracts with payors. The legislature does not
  intend or authorize any person or entity to engage in activities or
  to conspire to engage in activities that would constitute per se
  violations of federal antitrust laws.
         (d)  The legislature intends to permit the use of alternative
  payment mechanisms, including bundled or global payments and
  quality-based payments, among physicians and other health care
  providers participating in a health care collaborative that holds a
  certificate of authority under Chapter 848, Insurance Code, as
  added by Article 3 of this Act.  The legislature intends to
  authorize a health care collaborative to contract for and accept
  payments from governmental and private payors based on alternative
  payment mechanisms, and intends that the receipt and distribution
  of payments to participating physicians and health care providers
  is not a violation of any existing state law.
  ARTICLE 2.  TEXAS INSTITUTE OF HEALTH CARE QUALITY AND EFFICIENCY
         SECTION 2.01.  Title 12, Health and Safety Code, is amended
  by adding Chapter 1002 to read as follows:
  CHAPTER 1002.  TEXAS INSTITUTE OF HEALTH CARE QUALITY AND
  EFFICIENCY
  SUBCHAPTER A.  GENERAL PROVISIONS
         Sec. 1002.001.  DEFINITIONS. In this chapter:
               (1)  "Board" means the board of directors of the Texas
  Institute of Health Care Quality and Efficiency established under
  this chapter.
               (2)  "Commission" means the Health and Human Services
  Commission.
               (3)  "Department" means the Department of State Health
  Services.
               (4)  "Executive commissioner" means the executive
  commissioner of the Health and Human Services Commission.
               (5)  "Health care collaborative" has the meaning
  assigned by Section 848.001, Insurance Code.
               (6)  "Health care facility" means:
                     (A)  a hospital licensed under Chapter 241;
                     (B)  an institution licensed under Chapter 242;
                     (C)  an ambulatory surgical center licensed under
  Chapter 243;
                     (D)  a birthing center licensed under Chapter 244;
                     (E)  an abortion facility licensed under Chapter
  245;
                     (F)  an end stage renal disease facility licensed
  under Chapter 251; or
                     (G)  a freestanding emergency medical care
  facility licensed under Chapter 254.
               (7)  "Institute" means the Texas Institute of Health
  Care Quality and Efficiency established under this chapter.
               (8)  "Potentially preventable admission" means an
  admission of a person to a health care facility that could
  reasonably have been prevented if care and treatment had been
  provided by a health care provider in accordance with accepted
  standards of care.
               (9)  "Potentially preventable ancillary service" means
  a health care service provided or ordered by a health care provider
  to supplement or support the evaluation or treatment of a patient,
  including a diagnostic test, laboratory test, therapy service, or
  radiology service, that is not reasonably necessary for the
  provision of quality health care or treatment.
               (10)  "Potentially preventable complication" means a
  harmful event or negative outcome with respect to a person,
  including an infection or surgical complication, that:
                     (A)  occurs after the person's admission to a
  health care facility;
                     (B)  may result from the care or treatment
  provided or the lack of care during the health care facility stay
  rather than from a natural progression of an underlying disease;
  and
                     (C)  could reasonably have been prevented if care
  and treatment had been provided in accordance with accepted
  standards of care.
               (11)  "Potentially preventable event" means a
  potentially preventable admission, a potentially preventable
  ancillary service, a potentially preventable complication, a
  potentially preventable emergency room visit, a potentially
  preventable readmission, or a combination of those events.
               (12)  "Potentially preventable emergency room visit"
  means treatment of a person in a hospital emergency room or
  freestanding emergency medical care facility for a condition that
  does not require emergency medical attention because the condition
  could be treated by a health care provider in a nonemergency
  setting.
               (13)  "Potentially preventable readmission" means a
  return hospitalization of a person within a period specified by the
  commission that may result from deficiencies in the care or
  treatment provided to the person during a previous hospital stay or
  from deficiencies in post-hospital discharge follow-up.  The term
  does not include a hospital readmission necessitated by the
  occurrence of unrelated events after the discharge.  The term
  includes the readmission of a person to a hospital for:
                     (A)  the same condition or procedure for which the
  person was previously admitted;
                     (B)  an infection or other complication resulting
  from care previously provided;
                     (C)  a condition or procedure that indicates that
  a surgical intervention performed during a previous admission was
  unsuccessful in achieving the anticipated outcome; or
                     (D)  another condition or procedure of a similar
  nature, as determined by the executive commissioner in consultation
  with the institute.
         Sec. 1002.002.  ESTABLISHMENT; PURPOSE. The Texas Institute
  of Health Care Quality and Efficiency is established to improve
  health care quality, accountability, education, and cost
  containment in this state by encouraging health care provider
  collaboration, effective health care delivery models, and
  coordination of health care services.
  [Sections 1002.003-1002.050 reserved for expansion]
  SUBCHAPTER B.  ADMINISTRATION
         Sec. 1002.051.  APPLICATION OF SUNSET ACT. The institute is
  subject to Chapter 325, Government Code (Texas Sunset Act).  Unless
  continued in existence as provided by that chapter, the institute
  is abolished and this chapter expires September 1, 2017.
         Sec. 1002.052.  COMPOSITION OF BOARD OF DIRECTORS.  (a)  The
  institute is governed by a board of 15 directors appointed by the
  governor.
         (b)  The following ex officio, nonvoting members also serve
  on the board:
               (1)  the commissioner of the department;
               (2)  the executive commissioner;
               (3)  the commissioner of insurance;
               (4)  the executive director of the Employees Retirement
  System of Texas;
               (5)  the executive director of the Teacher Retirement
  System of Texas;
               (6)  the state Medicaid director of the Health and
  Human Services Commission;
               (7)  the executive director of the Texas Medical Board;
  and
               (8)  a representative from each state agency or system
  of higher education that purchases or provides health care
  services, as determined by the governor.
         (c)  The governor shall appoint as board members health care
  providers, payors, consumers, and health care quality experts or
  persons who possess expertise in any other area the governor finds
  necessary for the successful operation of the institute.
         (d)  A person may not serve as a voting member of the board if
  the person serves on or advises another board or advisory board of a
  state agency.
         Sec. 1002.053.  TERMS OF OFFICE.  (a)  Appointed members of
  the board serve two-year terms ending January 31 of each
  odd-numbered year.
         (b)  Board members may serve consecutive terms.
         Sec. 1002.054.  ADMINISTRATIVE SUPPORT.  (a)  The institute
  is administratively attached to the commission.
         (b)  The commission shall coordinate administrative
  responsibilities with the institute to streamline and integrate the
  institute's administrative operations and avoid unnecessary
  duplication of effort and costs.
         Sec. 1002.055.  EXPENSES. (a)  Members of the board serve
  without compensation but, subject to the availability of
  appropriated funds, may receive reimbursement for actual and
  necessary expenses incurred in attending meetings of the board.
         (b)  Information relating to the billing and payment of
  expenses under this section is subject to Chapter 552, Government
  Code.
         Sec. 1002.056.  OFFICER; CONFLICT OF INTEREST. (a)  The
  governor shall designate a member of the board as presiding officer
  to serve in that capacity at the pleasure of the governor.
         (b)  Any board member or a member of a committee formed by the
  board with direct interest, personally or through an employer, in a
  matter before the board shall abstain from deliberations and
  actions on the matter in which the conflict of interest arises and
  shall further abstain on any vote on the matter, and may not
  otherwise participate in a decision on the matter.
         (c)  Each board member shall:
               (1)  file a conflict of interest statement and a
  statement of ownership interests with the board to ensure
  disclosure of all existing and potential personal interests related
  to board business; and
               (2)  update the statements described by Subdivision (1)
  at least annually.
         (d)  A statement filed under Subsection (c) is subject to
  Chapter 552, Government Code.
         Sec. 1002.057.  PROHIBITION ON CERTAIN CONTRACTS AND
  EMPLOYMENT. (a)  The board may not compensate, employ, or contract
  with any individual who serves as a member of the board of, or on an
  advisory board or advisory committee for, any other governmental
  body, including any agency, council, or committee, in this state.
         (b)  The board may not compensate, employ, or contract with
  any person that provides financial support to the board, including
  a person who provides a gift, grant, or donation to the board.
         Sec. 1002.058.  MEETINGS.  (a)  The board may meet as often
  as necessary, but shall meet at least once each calendar quarter.
         (b)  The board shall develop and implement policies that
  provide the public with a reasonable opportunity to appear before
  the board and to speak on any issue under the authority of the
  institute.
         Sec. 1002.059.  BOARD MEMBER IMMUNITY. (a)  A board member
  may not be held civilly liable for an act performed, or omission
  made, in good faith in the performance of the member's powers and
  duties under this chapter.
         (b)  A cause of action does not arise against a member of the
  board for an act or omission described by Subsection (a).
         Sec. 1002.060.  PRIVACY OF INFORMATION. (a)  Protected
  health information and individually identifiable health
  information collected, assembled, or maintained by the institute is
  confidential and is not subject to disclosure under Chapter 552,
  Government Code.
         (b)  The institute shall comply with all state and federal
  laws and rules relating to the protection, confidentiality, and
  transmission of health information, including the Health Insurance
  Portability and Accountability Act of 1996 (Pub. L. No. 104-191)
  and rules adopted under that Act, 42 U.S.C. Section 290dd-2, and 42
  C.F.R. Part 2.
         (c)  The commission, department, or institute or an officer
  or employee of the commission, department, or institute, including
  a board member, may not disclose any information that is
  confidential under this section.
         (d)  Information, documents, and records that are
  confidential as provided by this section are not subject to
  subpoena or discovery and may not be introduced into evidence in any
  civil or criminal proceeding.
         (e)  An officer or employee of the commission, department, or
  institute, including a board member, may not be examined in a civil,
  criminal, special, administrative, or other proceeding as to
  information that is confidential under this section.
         Sec. 1002.061.  FUNDING. (a)  The institute may be funded
  through the General Appropriations Act and may request, accept, and
  use gifts, grants, and donations as necessary to implement its
  functions.
         (b)  The institute may participate in other
  revenue-generating activity that is consistent with the
  institute's purposes.
         (c)  Each state agency represented on the board as a
  nonvoting member shall provide funds to support the institute and
  implement this chapter.  The commission shall establish a funding
  formula to determine the level of support each state agency is
  required to provide.
  [Sections 1002.062-1002.100 reserved for expansion]
  SUBCHAPTER C.  POWERS AND DUTIES
         Sec. 1002.101.  GENERAL POWERS AND DUTIES. The institute
  shall make recommendations to the legislature on:
               (1)  improving quality and efficiency of health care
  delivery by:
                     (A)  providing a forum for regulators, payors, and
  providers to discuss and make recommendations for initiatives that
  promote the use of best practices, increase health care provider
  collaboration, improve health care outcomes, and contain health
  care costs;
                     (B)  researching, developing, supporting, and
  promoting strategies to improve the quality and efficiency of
  health care in this state;
                     (C)  determining the outcome measures that are the
  most effective measures of quality and efficiency;
                     (D)  reducing the incidence of potentially
  preventable events; and
                     (E)  creating a state plan that takes into
  consideration the regional differences of the state to encourage
  the improvement of the quality and efficiency of health care
  services;
               (2)  improving reporting, consolidation, and
  transparency of health care information; and
               (3)  implementing and supporting innovative health
  care collaborative payment and delivery systems under Chapter 848,
  Insurance Code.
         Sec. 1002.102.  GOALS FOR QUALITY AND EFFICIENCY OF HEALTH
  CARE; STATEWIDE PLAN. (a)  The institute shall study and develop
  recommendations to improve the quality and efficiency of health
  care delivery in this state, including:
               (1)  quality-based payment systems that align payment
  incentives with high-quality, cost-effective health care;
               (2)  alternative health care delivery systems that
  promote health care coordination and provider collaboration; and
               (3)  quality of care and efficiency outcome
  measurements that are effective measures of prevention, wellness,
  coordination, provider collaboration, and cost-effective health
  care.
         (b)  The institute shall study and develop recommendations
  for measuring quality of care and efficiency across:
               (1)  all state employee and state retiree benefit
  plans;
               (2)  employee and retiree benefit plans provided
  through the Teacher Retirement System of Texas;
               (3)  the state medical assistance program under Chapter
  32, Human Resources Code; and
               (4)  the child health plan under Chapter 62.
         (c)  In developing recommendations under Subsections (a) and
  (b), the institute may not base its recommendations solely on
  actuarial data.
         (d)  Using the studies described by Subsections (a) and (b),
  the institute shall develop recommendations for a statewide plan
  for quality and efficiency of the delivery of health care.
  [Sections 1002.103-1002.150 reserved for expansion]
  SUBCHAPTER D.  HEALTH CARE COLLABORATIVE GUIDELINES AND SUPPORT
         Sec.  1002.151.  INSTITUTE STUDIES AND RECOMMENDATIONS
  REGARDING HEALTH CARE PAYMENT AND DELIVERY SYSTEMS.  (a)  The
  institute shall study and make recommendations for alternative
  health care payment and delivery systems.
         (b)  The institute shall recommend methods to evaluate a
  health care collaborative's effectiveness, including methods to
  evaluate:
               (1)  the efficiency and effectiveness of
  cost-containment methods used by the collaborative;
               (2)  alternative health care payment and delivery
  systems used by the collaborative;
               (3)  the quality of care;
               (4)  health care provider collaboration and
  coordination;
               (5)  the protection of patients; and
               (6)  patient satisfaction.
  [Sections 1002.152-1002.200 reserved for expansion]
  SUBCHAPTER E.  IMPROVED TRANSPARENCY
         Sec. 1002.201.  HEALTH CARE ACCOUNTABILITY; IMPROVED
  TRANSPARENCY.  (a)  With the assistance of the department, the
  institute shall complete an assessment of all health-related data
  collected by the state and how the public and health care providers
  benefit from this information, including health care cost and
  quality information.
         (b)  The institute shall develop a plan:
               (1)  for consolidating reports of health-related data
  from various sources to reduce administrative costs to the state
  and reduce the administrative burden to health care providers;
               (2)  for improving health care transparency to the
  public and health care providers by making information available in
  the most effective format; and
               (3)  providing recommendations to the legislature on
  enhancing existing health-related information available to health
  care providers and the public, including provider reporting of
  additional information not currently required to be reported under
  existing law, to improve quality of care.
         Sec. 1002.202.  ALL PAYOR CLAIMS DATABASE.  (a)  The
  institute shall study the feasibility and desirability of
  establishing a centralized database for health care claims
  information across all payors.
         (b)  The institute shall consult with the department and the
  Texas Department of Insurance to develop recommendations to submit
  to the legislature on the establishment of the centralized claims
  database described by Subsection (a).
         SECTION 2.02.  Chapter 109, Health and Safety Code, is
  repealed.
         SECTION 2.03.  On the effective date of this Act:
               (1)  the Texas Health Care Policy Council established
  under Chapter 109, Health and Safety Code, is abolished; and
               (2)  any unexpended and unobligated balance of money
  appropriated by the legislature to the Texas Health Care Policy
  Council established under Chapter 109, Health and Safety Code, as
  it existed immediately before the effective date of this Act, is
  transferred to the Texas Institute of Health Care Quality and
  Efficiency created by Chapter 1002, Health and Safety Code, as
  added by this Act.
         SECTION 2.04.  The governor shall appoint voting members of
  the board of directors of the Texas Institute of Health Care Quality
  and Efficiency under Section 1002.052, Health and Safety Code, as
  added by this Act, as soon as practicable after the effective date
  of this Act.
         SECTION 2.05.  (a)  Not later than December 1, 2012, the
  Texas Institute of Health Care Quality and Efficiency shall submit
  a report regarding recommendations for improved health care
  reporting to the governor, the lieutenant governor, the speaker of
  the house of representatives, and the chairs of the appropriate
  standing committees of the legislature outlining:
               (1)  the initial assessment conducted under Subsection
  (a), Section 1002.201, Health and Safety Code, as added by this Act;
               (2)  the plans initially developed under Subsection
  (b), Section 1002.201, Health and Safety Code, as added by this Act;
               (3)  the changes in existing law that would be
  necessary to implement the assessment and plans described by
  Subdivisions (1) and (2) of this subsection; and
               (4)  the cost implications to state agencies, small
  businesses, micro businesses, and health care providers to
  implement the assessment and plans described by Subdivisions (1)
  and (2) of this subsection.
         (b)  Not later than December 1, 2012, the Texas Institute of
  Health Care Quality and Efficiency shall submit a report regarding
  recommendations for an all payor claims database to the governor,
  the lieutenant governor, the speaker of the house of
  representatives, and the chairs of the appropriate standing
  committees of the legislature outlining:
               (1)  the feasibility and desirability of establishing a
  centralized database for health care claims;
               (2)  the recommendations developed under Subsection
  (b), Section 1002.202, Health and Safety Code, as added by this Act;
               (3)  the changes in existing law that would be
  necessary to implement the recommendations described by
  Subdivision (2) of this subsection; and
               (4)  the cost implications to state agencies, small
  businesses, micro businesses, and health care providers to
  implement the plan described by Subdivision (2) of this subsection.
  ARTICLE 3.  HEALTH CARE COLLABORATIVES
         SECTION 3.01.  Subtitle C, Title 6, Insurance Code, is
  amended by adding Chapter 848 to read as follows:
  CHAPTER 848.  HEALTH CARE COLLABORATIVES
  SUBCHAPTER A.  GENERAL PROVISIONS
         Sec. 848.001.  DEFINITIONS. In this chapter:
               (1)  "Affiliate" means a person who controls, is
  controlled by, or is under common control with one or more other
  persons.
               (2)  "Health care collaborative" means an
  organization:
                     (A)  that consists of:
                           (i)  participating physicians;
                           (ii)  participating physicians and health
  care providers; or
                           (iii)  entities contracting on behalf of
  participating physicians or health care providers;
                     (B)  that is organized within a formal legal
  structure to provide or arrange to provide health care services;
  and
                     (C)  that is capable of receiving and distributing
  payments to participating physicians or health care providers.
               (3)  "Health care services" means services provided by
  a physician or health care provider to prevent, alleviate, cure, or
  heal human illness or injury.  The term includes:
                     (A)  pharmaceutical services;
                     (B)  medical, chiropractic, or dental care; and
                     (C)  hospitalization.
               (4)  "Health care provider" means any person,
  partnership, professional association, corporation, facility, or
  institution licensed, certified, registered, or chartered by this
  state to provide health care services.  The term includes a hospital
  but does not include a physician.
               (5)  "Health maintenance organization" means an
  organization operating under Chapter 843.
               (6)  "Hospital" means a general or special hospital,
  including a public or private institution licensed under Chapter
  241 or 577, Health and Safety Code.
               (7)  "Institute" means the Texas Institute of Health
  Care Quality and Efficiency established under Chapter 1002, Health
  and Safety Code.
               (8)  "Physician" means:
                     (A)  an individual licensed to practice medicine
  in this state;
                     (B)  a professional association organized under
  the Texas Professional Association Act (Article 1528f, Vernon's
  Texas Civil Statutes) or the Texas Professional Association Law by
  an individual or group of individuals licensed to practice medicine
  in this state;
                     (C)  a partnership or limited liability
  partnership formed by a group of individuals licensed to practice
  medicine in this state;
                     (D)  a nonprofit health corporation certified
  under Section 162.001, Occupations Code;
                     (E)  a company formed by a group of individuals
  licensed to practice medicine in this state under the Texas Limited
  Liability Company Act (Article 1528n, Vernon's Texas Civil
  Statutes) or the Texas Professional Limited Liability Company Law;
  or
                     (F)  an organization wholly owned and controlled
  by individuals licensed to practice medicine in this state.
               (9)  "Potentially preventable event" has the meaning
  assigned by Section 1002.001, Health and Safety Code.
         Sec. 848.002.  EXCEPTION:  DELEGATED ENTITIES. (a)  This
  section applies only to an entity, other than a health maintenance
  organization, that:
               (1)  by itself or through a subcontract with another
  entity, undertakes to arrange for or provide medical care or health
  care services to enrollees in exchange for predetermined payments
  on a prospective basis; and
               (2)  accepts responsibility for performing functions
  that are required by:
                     (A)  Chapter 222, 251, 258, or 1272, as
  applicable, to a health maintenance organization; or
                     (B)  Chapter 843, Chapter 1271, Section 1367.053,
  Subchapter A, Chapter 1452, or Subchapter B, Chapter 1507, as
  applicable, solely on behalf of health maintenance organizations.
         (b)  An entity described by Subsection (a) is subject to
  Chapter 1272 and is not required to obtain a certificate of
  authority or determination of approval under this chapter.
         Sec. 848.003.  USE OF INSURANCE-RELATED TERMS BY HEALTH CARE
  COLLABORATIVE. A health care collaborative that is not an insurer
  or health maintenance organization may not use in its name,
  contracts, or literature:
               (1)  the following words or initials:
                     (A)  "insurance";
                     (B)  "casualty";
                     (C)  "surety";
                     (D)  "mutual";
                     (E)  "health maintenance organization"; or
                     (F)  "HMO"; or
               (2)  any other words or initials that are:
                     (A)  descriptive of the insurance, casualty,
  surety, or health maintenance organization business; or
                     (B)  deceptively similar to the name or
  description of an insurer, surety corporation, or health
  maintenance organization engaging in business in this state.
         Sec. 848.004.  APPLICABILITY OF INSURANCE LAWS. An
  organization may not arrange for or provide health care services to
  enrollees on a prepaid or indemnity basis through health insurance
  or a health benefit plan, including a health care plan, as defined
  by Section 843.002, unless the organization as an insurer or health
  maintenance organization holds the appropriate certificate of
  authority issued under another chapter of this code.
         Sec. 848.005.  CERTAIN INFORMATION CONFIDENTIAL.  A health
  care collaborative's written description of a compensation
  agreement made or to be made with a health benefit plan, insurer, or
  health care provider in exchange for the provision or arrangement
  to provide services to enrollees is confidential and is not subject
  to disclosure under Chapter 552, Government Code.
  [Sections 848.006-848.050 reserved for expansion]
  SUBCHAPTER B.  AUTHORITY TO ENGAGE IN BUSINESS
         Sec. 848.051.  OPERATION OF HEALTH CARE COLLABORATIVE. A
  health care collaborative that is certified by the department under
  this chapter may provide or arrange to provide health care services
  under contract with a governmental or private entity.
         Sec. 848.052.  FORMATION AND GOVERNANCE OF HEALTH CARE
  COLLABORATIVE. (a)  A health care collaborative is governed by a
  board of directors.
         (b)  The person who establishes a health care collaborative
  shall appoint an initial board of directors. Each member of the
  initial board serves a term of not more than 18 months. Subsequent
  members of the board shall be elected to serve two-year terms by
  physicians and health care providers who participate in the health
  care collaborative as provided by this section. The board shall
  elect a chair from among its members.
         (c)  If the participants in a health care collaborative are
  all physicians, each member of the board of directors must be an
  individual physician who is a participant in the health care
  collaborative.
         (d)  If the participants in a health care collaborative are
  both physicians and other health care providers, the board of
  directors must consist of:
               (1)  an even number of members who are individual
  physicians, selected by physicians who participate in the health
  care collaborative;
               (2)  a number of members equal to the number of members
  under Subdivision (1) who represent health care providers, one of
  whom is an individual physician, selected by health care providers
  who participate in the health care collaborative; and
               (3)  one individual member with business expertise,
  selected by unanimous vote of the members described by Subdivisions
  (1) and (2).
         (e)  The board of directors may include nonvoting ex officio
  members.
         (f)  An individual may not serve on the board of directors of
  a health care collaborative if the individual has an ownership
  interest in, serves on the board of directors of, or maintains an
  officer position with:
               (1)  another health care collaborative that provides
  health care services in the same service area as the health care
  collaborative; or
               (2)  a physician or health care provider that:
                     (A)  does not participate in the health care
  collaborative; and
                     (B)  provides health care services in the same
  service area as the health care collaborative.
         (g)  In addition to the requirements of Subsection (f), the
  board of directors of a health care collaborative shall adopt a
  conflict of interest policy to be followed by members.
         (h)  The board of directors may remove a member for cause. A
  member may not be removed from the board without cause.
         (i)  The organizational documents of a health care
  collaborative may not conflict with any provision of this chapter,
  including this section.
         Sec. 848.053.  COMPENSATION ADVISORY COMMITTEE. The board
  of directors of a health care collaborative shall establish a
  compensation advisory committee to develop and make
  recommendations to the board regarding charges, fees, payments,
  distributions, or other compensation assessed for health care
  services provided by physicians or health care providers who
  participate in the health care collaborative. The committee must
  include:
               (1)  a member of the board of directors; and
               (2)  if the health care collaborative consists of
  physicians and other health care providers:
                     (A)  a physician who is not a participant in the
  health care collaborative, selected by the physicians who are
  participants in the collaborative; and
                     (B)  a member selected by the other health care
  providers who participate in the collaborative.
         Sec. 848.054.  CERTIFICATE OF AUTHORITY AND DETERMINATION OF
  APPROVAL REQUIRED. (a)  An organization may not organize or
  operate a health care collaborative in this state unless the
  organization holds a certificate of authority issued under this
  chapter.
         (b)  The commissioner shall adopt rules governing the
  application for a certificate of authority under this subchapter.
         Sec. 848.055.  EXCEPTIONS. (a)  An organization is not
  required to obtain a certificate of authority under this chapter if
  the organization holds an appropriate certificate of authority
  issued under another chapter of this code.
         (b)  A person is not required to obtain a certificate of
  authority under this chapter to the extent that the person is:
               (1)  a physician engaged in the delivery of medical
  care; or
               (2)  a health care provider engaged in the delivery of
  health care services other than medical care as part of a health
  maintenance organization delivery network.
         Sec. 848.056.  APPLICATION FOR CERTIFICATE OF AUTHORITY.
  (a)  An organization may apply to the commissioner for and obtain a
  certificate of authority to organize and operate a health care
  collaborative.
         (b)  An application for a certificate of authority must:
               (1)  comply with all rules adopted by the commissioner;
               (2)  be verified under oath by the applicant or an
  officer or other authorized representative of the applicant;
               (3)  be reviewed by the division within the office of
  attorney general that is primarily responsible for enforcing the
  antitrust laws of this state and of the United States under Section
  848.059;
               (4)  demonstrate that the health care collaborative
  contracts with a sufficient number of primary care physicians in
  the health care collaborative's service area;
               (5)  state that enrollees may obtain care from any
  physician or health care provider in the health care collaborative;
  and
               (6)  identify a service area within which medical
  services are available and accessible to enrollees.
         (c)  Not later than the 190th day after the date an applicant
  submits an application to the commissioner under this section, the
  commissioner shall approve or deny the application.
         Sec. 848.057.  REQUIREMENTS FOR APPROVAL OF APPLICATION.
  The commissioner shall issue a certificate of authority on payment
  of the application fee prescribed by Section 848.152 if the
  commissioner is satisfied that:
               (1)  the applicant meets the requirements of Section
  848.056;
               (2)  with respect to health care services to be
  provided, the applicant:
                     (A)  has demonstrated the willingness and
  potential ability to ensure that the health care services will be
  provided in a manner that:
                           (i)  increases collaboration among health
  care providers and integrates health care services;
                           (ii)  promotes quality-based health care
  outcomes, patient engagement, and coordination of services; and
                           (iii)  reduces the occurrence of potentially
  preventable events;
                     (B)  has processes that contain health care costs
  without jeopardizing the quality of patient care;
                     (C)  has processes to develop, compile, evaluate,
  and report statistics relating to the quality and cost of health
  care services, the pattern of utilization of services, and the
  availability and accessibility of services; and
                     (D)  has processes to address complaints made by
  patients receiving services provided through the organization;
               (3)  the applicant is in compliance with all rules
  adopted by the commissioner under Section 848.151;
               (4)  the applicant has working capital and reserves
  sufficient to operate and maintain the health care collaborative
  and to arrange for services and expenses incurred by the health care
  collaborative;
               (5)  the applicant's proposed health care collaborative
  is not likely to reduce competition in any market for physician,
  hospital, or ancillary health care services due to:
                     (A)  the size of the health care collaborative; or
                     (B)  the composition of the collaborative,
  including the distribution of physicians by specialty within the
  collaborative in relation to the number of competing health care
  providers in the health care collaborative's geographic market; and
               (6)  the applicant's proposed health care collaborative
  is not likely to possess market power.
         Sec. 848.058.  DENIAL OF CERTIFICATE OF AUTHORITY. (a)  The
  commissioner may not issue a certificate of authority if the
  commissioner determines that the applicant's proposed plan of
  operation does not meet the requirements of Section 848.057.
         (b)  If the commissioner denies an application for a
  certificate of authority under Subsection (a), the commissioner
  shall notify the applicant that the plan is deficient and specify
  the deficiencies.
         Sec. 848.059.  REVIEW BY ATTORNEY GENERAL. (a)  If the
  commissioner determines that an application for a certificate of
  authority filed under Section 848.056 complies with the
  requirements of Section 848.057, the commissioner shall forward the
  application to the attorney general. The attorney general shall
  review the application and, if the attorney general determines that
  the commissioner's review of the application under Sections
  848.057(5) and (6) is adequate, the attorney general shall notify
  the commissioner of this determination.
         (b)  If the attorney general determines that the
  commissioner's review of the application under Sections 848.057(5)
  and (6) is not adequate, the attorney general shall notify the
  commissioner of this determination.
         (c)  A determination under this section shall be made not
  later than the 60th day after the date the attorney general receives
  the application from the commissioner.
         (d)  If the attorney general lacks sufficient information to
  make a determination as to the adequacy of the commissioner's
  review of the application under Sections 848.057(5) and (6) within
  60 days of the attorney general's receipt of the application, the
  attorney general shall inform the commissioner that the attorney
  general lacks sufficient information as well as what information
  the attorney general requires. The commissioner shall then either
  provide the additional information to the attorney general or
  request the additional information from the applicant. The
  commissioner shall promptly deliver any such additional
  information to the attorney general. The attorney general shall
  then have 30 days from receipt of the additional information to make
  a determination under Subsection (a) or (b).
         (e)  If the attorney general notifies the commissioner that
  the commissioner's review under Sections 848.057(5) and (6) is not
  adequate, then, notwithstanding any other provision of this
  subchapter, the commissioner shall deny the application.
         Sec. 848.060.  RENEWAL OF CERTIFICATE OF AUTHORITY AND
  DETERMINATION OF APPROVAL. (a)  Not later than the 180th day
  before the one-year anniversary of the date on which a health care
  collaborative's certificate of authority was issued, the health
  care collaborative shall file with the commissioner an application
  to renew the certificate.
         (b)  An application for renewal must:
               (1)  be verified by at least two principal officers of
  the health care collaborative; and
               (2)  include:
                     (A)  a financial statement of the health care
  collaborative, including a balance sheet and receipts and
  disbursements for the preceding calendar year, certified by an
  independent certified public accountant;
                     (B)  a description of the service area of the
  health care collaborative;
                     (C)  a description of the number and types of
  physicians and health care providers participating in the health
  care collaborative;
                     (D)  an evaluation of the quality and cost of
  health care services provided by the health care collaborative;
                     (E)  an evaluation of the health care
  collaborative's processes to promote evidence-based medicine,
  patient engagement, and coordination of health care services
  provided by the health care collaborative; and
                     (F)  the number, nature, and disposition of any
  complaints filed with the health care collaborative under Section
  848.107.
         (c)  If a completed application for renewal is filed under
  this section:
               (1)  the commissioner shall deliver the application for
  renewal to the attorney general, who shall conduct a review under
  Section 848.059 as if the application for renewal was a new
  application; and
               (2)  the commissioner shall renew or deny the renewal
  of a certificate of authority at least 20 days before the one-year
  anniversary of the date on which a health care collaborative's
  certificate of authority was issued.
         (d)  If the commissioner does not act on a renewal
  application before the one-year anniversary of the date on which a
  health care collaborative's certificate of authority was issued,
  the health care collaborative's certificate of authority expires on
  the 90th day after the date of the one-year anniversary unless the
  renewal of the certificate of authority or determination of
  approval, as applicable, is approved before that date.
  [Sections 848.061-848.100 reserved for expansion]
  SUBCHAPTER C.  GENERAL POWERS AND DUTIES OF HEALTH CARE
  COLLABORATIVE
         Sec. 848.101.  PROVIDING OR ARRANGING FOR SERVICES. (a)  A
  health care collaborative may provide or arrange for health care
  services through contracts with physicians and health care
  providers or with entities contracting on behalf of participating
  physicians and health care providers.
         (b)  A health care collaborative may not prohibit a physician
  or other health care provider, as a condition of participating in
  the health care collaborative, from participating in another health
  care collaborative.
         (c)  A health care collaborative may not use a covenant not
  to compete to prohibit a physician from providing medical services
  or participating in another health care collaborative in the same
  service area after the termination of the physician's contract with
  the health care collaborative.
         (d)  Except as provided by Subsection (f), on written consent
  of a patient who was treated by a physician participating in a
  health care collaborative, the health care collaborative shall
  provide the physician with the medical records of the patient,
  regardless of whether the physician is participating in the health
  care collaborative at the time the request for the records is made.
         (e)  Records provided under Subsection (d) shall be made
  available to the physician in the format in which the records are
  maintained by the health care collaborative. The health care
  collaborative may charge the physician a fee for copies of the
  records, as established by the Texas Medical Board.
         (f)  If a physician requests a patient's records from a
  health care collaborative under Subsection (d) for the purpose of
  providing emergency treatment to the patient:
               (1)  the health care collaborative may not charge a fee
  to the physician under Subsection (e); and
               (2)  the health care collaborative shall provide the
  records to the physician regardless of whether the patient has
  provided written consent.
         Sec. 848.102.  INSURANCE, REINSURANCE, INDEMNITY, AND
  REIMBURSEMENT. A health care collaborative may contract with an
  insurer authorized to engage in business in this state to provide
  insurance, reinsurance, indemnification, or reimbursement against
  the cost of health care and medical care services provided by the
  health care collaborative.  This section does not affect the
  requirement that the health care collaborative maintain sufficient
  working capital and reserves.
         Sec. 848.103.  PAYMENT BY GOVERNMENTAL OR PRIVATE ENTITY.  
  (a)  A health care collaborative may:
               (1)  contract for and accept payments from a
  governmental or private entity for all or part of the cost of
  services provided or arranged for by the health care collaborative;
  and
               (2)  distribute payments to participating physicians
  and health care providers.
         (b)  Notwithstanding any other law, a health care
  collaborative may contract for and accept payments from
  governmental or private payors based on alternative payment
  mechanisms, including:
               (1)  bundled or global payments; and
               (2)  quality-based payments.
         Sec. 848.104.  CONTRACTS FOR ADMINISTRATIVE OR MANAGEMENT
  SERVICES. A health care collaborative may contract with any
  person, including an affiliated entity, to perform administrative,
  management, or any other required business functions on behalf of
  the health care collaborative.
         Sec. 848.105.  CORPORATION, PARTNERSHIP, OR ASSOCIATION
  POWERS. A health care collaborative has all powers of a
  partnership, association, corporation, or limited liability
  company, including a professional association or corporation, as
  appropriate under the organizational documents of the health care
  collaborative, that are not in conflict with this chapter or other
  applicable law.
         Sec. 848.106.  QUALITY AND COST OF HEALTH CARE SERVICES.  
  (a)  A health care collaborative shall establish policies to
  improve the quality and control the cost of health care services
  provided by participating physicians and health care providers that
  are consistent with prevailing professionally recognized standards
  of medical practice. The policies must include standards and
  procedures relating to:
               (1)  the selection and credentialing of participating
  physicians and health care providers;
               (2)  the development, implementation, and monitoring
  of evidence-based best practices and other processes to improve the
  quality and control the cost of health care services provided by
  participating physicians and health care providers, including
  practices or processes to reduce the occurrence of potentially
  preventable events;
               (3)  the development, implementation, and monitoring
  of processes to improve patient engagement and coordination of
  health care services provided by participating physicians and
  health care providers; and
               (4)  complaints initiated by participating physicians
  and health care providers under Section 848.107.
         (b)  The governing body of a health care collaborative shall
  establish a procedure for the periodic review of quality
  improvement and cost control measures.
         Sec. 848.107.  COMPLAINT SYSTEMS.  (a)  A health care
  collaborative shall implement and maintain complaint systems that
  provide reasonable procedures to resolve an oral or written
  complaint initiated by:
               (1)  a patient who received health care services
  provided by a participating physician or health care provider; or
               (2)  a participating physician or health care provider.
         (b)  The complaint system for complaints initiated by
  patients must include a process for the notice and appeal of a
  complaint.
         (c)  A health care collaborative may not take a retaliatory
  or adverse action against a physician or health care provider who
  files a complaint with a regulatory authority regarding an action
  of the health care collaborative.
         Sec. 848.108.  DELEGATION AGREEMENTS.  (a)  Except as
  provided by Subsection (b), a health care collaborative that enters
  into a delegation agreement described by Section 1272.001 is
  subject to the requirements of Chapter 1272 in the same manner as a
  health maintenance organization.
         (b)  Section 1272.301 does not apply to a delegation
  agreement entered into by a health care collaborative.
         (c)  A health care collaborative may enter into a delegation
  agreement with an entity licensed under Chapter 841, 842, or 883 if
  the delegation agreement assigns to the entity responsibility for:
               (1)  a function regulated by:
                     (A)  Chapter 222;
                     (B)  Chapter 841;
                     (C)  Chapter 842;
                     (D)  Chapter 883;
                     (E)  Chapter 1272;
                     (F)  Chapter 1301;
                     (G)  Chapter 4201;
                     (H)  Section 1367.053; or
                     (I)  Subchapter A, Chapter 1507; or
               (2)  another function specified by commissioner rule.
         (d)  A health care collaborative that enters into a
  delegation agreement under this section shall maintain reserves and
  capital in addition to the amounts required under Chapter 1272, in
  an amount and form determined by rule of the commissioner to be
  necessary for the liabilities and risks assumed by the health care
  collaborative.
         (e)  A health care collaborative that enters into a
  delegation agreement under this section is subject to Chapters 404,
  441, and 443 and is considered to be an insurer for purposes of
  those chapters.
         Sec. 848.109.  VALIDITY OF OPERATIONS AND TRADE PRACTICES OF
  HEALTH CARE COLLABORATIVES. The operations and trade practices of
  a health care collaborative that are consistent with the provisions
  of this chapter, the rules adopted under this chapter, and
  applicable federal antitrust laws are presumed to be consistent
  with Chapter 15, Business & Commerce Code, or any other applicable
  provision of law.
         Sec. 848.110.  RIGHTS OF PHYSICIANS; LIMITATIONS ON
  PARTICIPATION.  (a)  Before a complaint against a physician under
  Section 848.107 is resolved, or before a physician's association
  with a health care collaborative is terminated, the physician is
  entitled to an opportunity to dispute the complaint or termination
  through a process that includes:
               (1)  written notice of the complaint or basis of the
  termination;
               (2)  an opportunity for a hearing not earlier than the
  30th day after receiving notice under Subdivision (1);
               (3)  the right to provide information at the hearing,
  including testimony and a written statement; and
               (4)  a written decision that includes the specific
  facts and reasons for the decision.
         (b)  A health care collaborative may limit a physician or
  group of physicians from participating in the health care
  collaborative if the limitation is based on an established
  development plan approved by the board of directors. Each
  applicant physician or group shall be provided with a copy of the
  development plan.
  [Sections 848.111-848.150 reserved for expansion]
  SUBCHAPTER D.  REGULATION OF HEALTH CARE COLLABORATIVES
         Sec. 848.151.  RULES.  The commissioner and the attorney
  general may adopt reasonable rules as necessary and proper to
  implement the requirements of this chapter.
         Sec. 848.152.  FEES AND ASSESSMENTS.  (a)  The commissioner
  shall, within the limits prescribed by this section, prescribe the
  fees to be charged and the assessments to be imposed under this
  section.
         (b)  Amounts collected under this section shall be deposited
  to the credit of the Texas Department of Insurance operating
  account.
         (c)  A health care collaborative shall pay to the department:
               (1)  an application fee in an amount determined by
  commissioner rule; and
               (2)  an annual assessment in an amount determined by
  commissioner rule.
         (d)  The commissioner shall set fees and assessments under
  this section in an amount sufficient to pay the reasonable expenses
  of the department and attorney general in administering this
  chapter, including the direct and indirect expenses incurred by the
  department and attorney general in examining and reviewing health
  care collaboratives.  Fees and assessments imposed under this
  section shall be allocated among health care collaboratives on a
  pro rata basis to the extent that the allocation is feasible.
         Sec. 848.153.  EXAMINATIONS.  (a)  The attorney general may
  examine the financial affairs and operations of any health care
  collaborative or applicant for a certificate of authority under
  this chapter.
         (b)  A health care collaborative shall make its books and
  records relating to its financial affairs and operations available
  for an examination by the commissioner or attorney general.
         (c)  On request of the commissioner or attorney general, a
  health care collaborative shall provide to the commissioner or
  attorney general, as applicable:
               (1)  a copy of any contract, agreement, or other
  arrangement between the health care collaborative and a physician
  or health care provider; and
               (2)  a general description of the fee arrangements
  between the health care collaborative and the physician or health
  care provider.
         (d)  Documentation provided to the commissioner or attorney
  general under this section is confidential and is not subject to
  disclosure under Chapter 552, Government Code.
  [Sections 848.154-848.200 reserved for expansion]
  SUBCHAPTER E.  ENFORCEMENT
         Sec. 848.201.  ENFORCEMENT ACTIONS. (a)  After notice and
  opportunity for a hearing, the commissioner may:
               (1)  suspend or revoke a certificate of authority
  issued to a health care collaborative under this chapter;
               (2)  impose sanctions under Chapter 82;
               (3)  issue a cease and desist order under Chapter 83; or
               (4)  impose administrative penalties under Chapter 84.
         (b)  The commissioner may take an enforcement action listed
  in Subsection (a) against a health care collaborative if the
  commissioner finds that the health care collaborative:
               (1)  is operating in a manner that is:
                     (A)  significantly contrary to its basic
  organizational documents; or
                     (B)  contrary to the manner described in and
  reasonably inferred from other information submitted under Section
  848.057;
               (2)  does not meet the requirements of Section 848.057;
               (3)  cannot fulfill its obligation to provide health
  care services as required under its contracts with governmental or
  private entities;
               (4)  does not meet the requirements of Chapter 1272, if
  applicable;
               (5)  has not implemented the complaint system required
  by Section 848.107 in a manner to resolve reasonably valid
  complaints;
               (6)  has advertised or merchandised its services in an
  untrue, misrepresentative, misleading, deceptive, or unfair manner
  or a person on behalf of the health care collaborative has
  advertised or merchandised the health care collaborative's
  services in an untrue, misrepresentative, misleading, deceptive,
  or untrue manner;
               (7)  has not complied substantially with this chapter
  or a rule adopted under this chapter; or
               (8)  has not taken corrective action the commissioner
  considers necessary to correct a failure to comply with this
  chapter, any applicable provision of this code, or any applicable
  rule or order of the commissioner not later than the 30th day after
  the date of notice of the failure or within any longer period
  specified in the notice and determined by the commissioner to be
  reasonable.
         Sec. 848.202.  OPERATIONS DURING SUSPENSION OR AFTER
  REVOCATION OF CERTIFICATE OF AUTHORITY. (a)  During the period a
  certificate of authority of a health care collaborative is
  suspended, the health care collaborative may not:
               (1)  enter into a new contract with a governmental or
  private entity; or
               (2)  advertise or solicit in any way.
         (b)  After a certificate of authority of a health care
  collaborative is revoked, the health care collaborative:
               (1)  shall proceed, immediately following the
  effective date of the order of revocation, to conclude its affairs;
               (2)  may not conduct further business except as
  essential to the orderly conclusion of its affairs; and
               (3)  may not advertise or solicit in any way.
         (c)  Notwithstanding Subsection (b), the commissioner may,
  by written order, permit the further operation of the health care
  collaborative to the extent that the commissioner finds necessary
  to serve the best interest of governmental or private entities that
  have entered into contracts with the health care collaborative.
         Sec. 848.203.  INJUNCTIONS.  If the commissioner believes
  that a health care collaborative or another person is violating or
  has violated this chapter or a rule adopted under this chapter, the
  attorney general at the request of the commissioner may bring an
  action in a Travis County district court to enjoin the violation and
  obtain other relief the court considers appropriate.
         SECTION 3.02.  Paragraph (A), Subdivision (12), Subsection
  (a), Section 74.001, Civil Practice and Remedies Code, is amended
  to read as follows:
                     (A)  "Health care provider" means any person,
  partnership, professional association, corporation, facility, or
  institution duly licensed, certified, registered, or chartered by
  the State of Texas to provide health care, including:
                           (i)  a registered nurse;
                           (ii)  a dentist;
                           (iii)  a podiatrist;
                           (iv)  a pharmacist;
                           (v)  a chiropractor;
                           (vi)  an optometrist; [or]
                           (vii)  a health care institution; or
                           (viii)  a health care collaborative
  certified under Chapter 848, Insurance Code.
         SECTION 3.03.  Subchapter B, Chapter 1301, Insurance Code,
  is amended by adding Sections 1301.0625 and 1301.0626 to read as
  follows:
         Sec. 1301.0625.  HEALTH CARE COLLABORATIVES.  (a)  An
  insurer may enter into an agreement with a health care
  collaborative for the purpose of offering a network of preferred
  providers.
         (b)  An insurer's preferred provider benefit plan may:
               (1)  offer access to other preferred providers; or
               (2)  limit access only to preferred providers who
  participate in the health care collaborative.
         (c)  An insurer may offer a preferred provider benefit plan
  with enhanced benefits for services from preferred providers who
  participate in the health care collaborative.
         (d)  An insurer offering a preferred provider benefit plan
  with access to a health care collaborative is not subject to
  Sections 1301.0046 and 1301.005(a).
         Sec. 1301.0626.  ALTERNATIVE PAYMENT METHODOLOGIES IN
  HEALTH CARE COLLABORATIVES.  A preferred provider contract between
  an insurer and a health care collaborative may use a payment
  methodology other than a fee-for-service or discounted fee basis.
  An insurer is not subject to Chapter 843 solely because an agreement
  between the insurer and a health care collaborative uses an
  alternative payment methodology under this section.
         SECTION 3.04.  Subchapter O, Chapter 285, Health and Safety
  Code, is amended by adding Section 285.303 to read as follows:
         Sec. 285.303.  ESTABLISHMENT OF HEALTH CARE COLLABORATIVE.
  (a)  A hospital district created under general or special law may
  form and sponsor a nonprofit health care collaborative that is
  certified under Chapter 848, Insurance Code.
         (b)  The hospital district may contribute money to or solicit
  money for the health care collaborative.  If the district
  contributes money to or solicits money for the health care
  collaborative, the district shall establish procedures and
  controls sufficient to ensure that the money is used by the health
  care collaborative for public purposes.
         SECTION 3.05.  Section 102.005, Occupations Code, is amended
  to read as follows:
         Sec. 102.005.  APPLICABILITY TO CERTAIN ENTITIES. Section
  102.001 does not apply to:
               (1)  a licensed insurer;
               (2)  a governmental entity, including:
                     (A)  an intergovernmental risk pool established
  under Chapter 172, Local Government Code; and
                     (B)  a system as defined by Section 1601.003,
  Insurance Code;
               (3)  a group hospital service corporation; [or]
               (4)  a health maintenance organization that
  reimburses, provides, offers to provide, or administers hospital,
  medical, dental, or other health-related benefits under a health
  benefits plan for which it is the payor; or
               (5)  a health care collaborative certified under
  Chapter 848, Insurance Code.
         SECTION 3.06.  Subdivision (5), Subsection (a), Section
  151.002, Occupations Code, is amended to read as follows:
               (5)  "Health care entity" means:
                     (A)  a hospital licensed under Chapter 241 or 577,
  Health and Safety Code;
                     (B)  an entity, including a health maintenance
  organization, group medical practice, nursing home, health science
  center, university medical school, hospital district, hospital
  authority, or other health care facility, that:
                           (i)  provides or pays for medical care or
  health care services; and
                           (ii)  follows a formal peer review process
  to further quality medical care or health care;
                     (C)  a professional society or association of
  physicians, or a committee of such a society or association, that
  follows a formal peer review process to further quality medical
  care or health care; [or]
                     (D)  an organization established by a
  professional society or association of physicians, hospitals, or
  both, that:
                           (i)  collects and verifies the authenticity
  of documents and other information concerning the qualifications,
  competence, or performance of licensed health care professionals;
  and
                           (ii)  acts as a health care facility's agent
  under the Health Care Quality Improvement Act of 1986 (42 U.S.C.
  Section 11101 et seq.); or
                     (E)  a health care collaborative certified under
  Chapter 848, Insurance Code.
         SECTION 3.07.  Not later than April 1, 2012, the
  commissioner of insurance, the attorney general, and the board of
  directors of the Texas Institute of Health Care Quality and
  Efficiency shall adopt rules as necessary to implement this
  article.
  ARTICLE 4.  PATIENT IDENTIFICATION
         SECTION 4.01.  Subchapter A, Chapter 311, Health and Safety
  Code, is amended by adding Section 311.004 to read as follows:
         Sec. 311.004.  STANDARDIZED PATIENT RISK IDENTIFICATION
  SYSTEM. (a)  In this section:
               (1)  "Department" means the Department of State Health
  Services.
               (2)  "Hospital" means a general or special hospital as
  defined by Section 241.003.  The term includes a hospital
  maintained or operated by this state.
         (b)  The department shall coordinate with hospitals to
  develop a statewide standardized patient risk identification
  system under which a patient with a specific medical risk may be
  readily identified through the use of a system that communicates to
  hospital personnel the existence of that risk. The executive
  commissioner of the Health and Human Services Commission shall
  appoint an ad hoc committee of hospital representatives to assist
  the department in developing the statewide system.
         (c)  The department shall require each hospital to implement
  and enforce the statewide standardized patient risk identification
  system developed under Subsection (b) unless the department
  authorizes an exemption for the reason stated in Subsection (d).
         (d)  The department may exempt from the statewide
  standardized patient risk identification system a hospital that
  seeks to adopt another patient risk identification methodology
  supported by evidence-based protocols for the practice of medicine.
         (e)  The department shall modify the statewide standardized
  patient risk identification system in accordance with
  evidence-based medicine as necessary.
         (f)  The executive commissioner of the Health and Human
  Services Commission may adopt rules to implement this section.
  ARTICLE 5.  REPORTING OF HEALTH CARE-ASSOCIATED INFECTIONS
         SECTION 5.01.  Section 98.001, Health and Safety Code, as
  added by Chapter 359 (S.B. 288), Acts of the 80th Legislature,
  Regular Session, 2007, is amended by adding Subdivision (10-a) to
  read as follows:
               (10-a)  "Potentially preventable complication" and
  "potentially preventable readmission" have the meanings assigned
  by Section 1002.001, Health and Safety Code.
         SECTION 5.02.  Subsection (c), Section 98.102, Health and
  Safety Code, as added by Chapter 359 (S.B. 288), Acts of the 80th
  Legislature, Regular Session, 2007, is amended to read as follows:
         (c)  The data reported by health care facilities to the
  department must contain sufficient patient identifying information
  to:
               (1)  avoid duplicate submission of records;
               (2)  allow the department to verify the accuracy and
  completeness of the data reported; and
               (3)  for data reported under Section 98.103 [or
  98.104], allow the department to risk adjust the facilities'
  infection rates.
         SECTION 5.03.  Section 98.103, Health and Safety Code, as
  added by Chapter 359 (S.B. 288), Acts of the 80th Legislature,
  Regular Session, 2007, is amended by amending Subsection (b) and
  adding Subsection (d-1) to read as follows:
         (b)  A pediatric and adolescent hospital shall report the
  incidence of surgical site infections, including the causative
  pathogen if the infection is laboratory-confirmed, occurring in the
  following procedures to the department:
               (1)  cardiac procedures, excluding thoracic cardiac
  procedures;
               (2)  ventricular [ventriculoperitoneal] shunt
  procedures; and
               (3)  spinal surgery with instrumentation.
         (d-1)  The executive commissioner by rule may designate the
  federal Centers for Disease Control and Prevention's National
  Healthcare Safety Network, or its successor, to receive reports of
  health care-associated infections from health care facilities on
  behalf of the department.  A health care facility must file a report
  required in accordance with a designation made under this
  subsection in accordance with the National Healthcare Safety
  Network's definitions, methods, requirements, and procedures.  A
  health care facility shall authorize the department to have access
  to facility-specific data contained in a report filed with the
  National Healthcare Safety Network in accordance with a designation
  made under this subsection.
         SECTION 5.04.  Section 98.1045, Health and Safety Code, as
  added by Chapter 359 (S.B. 288), Acts of the 80th Legislature,
  Regular Session, 2007, is amended by adding Subsection (c) to read
  as follows:
         (c)  The executive commissioner by rule may designate an
  agency of the United States Department of Health and Human Services
  to receive reports of preventable adverse events by health care
  facilities on behalf of the department.  A health care facility
  shall authorize the department to have access to facility-specific
  data contained in a report made in accordance with a designation
  made under this subsection.
         SECTION 5.05.  Subchapter C, Chapter 98, Health and Safety
  Code, as added by Chapter 359 (S.B. 288), Acts of the 80th
  Legislature, Regular Session, 2007, is amended by adding Sections
  98.1046 and 98.1047 to read as follows:
         Sec. 98.1046.  PUBLIC REPORTING OF CERTAIN POTENTIALLY
  PREVENTABLE EVENTS FOR HOSPITALS.  (a)  In consultation with the
  Texas Institute of Health Care Quality and Efficiency under Chapter
  1002, the department shall publicly report outcomes for potentially
  preventable complications and potentially preventable readmissions
  for hospitals.
         (b)  The department shall make the reports compiled under
  Subsection (a) available to the public on the department's Internet
  website.
         (c)  The department may not disclose the identity of a
  patient or health care provider in the reports authorized in this
  section.
         Sec. 98.1047.  STUDIES ON LONG-TERM CARE FACILITY REPORTING
  OF ADVERSE HEALTH CONDITIONS. (a)  The department shall study
  which adverse health conditions commonly occur in long-term care
  facilities and, of those health conditions, which are potentially
  preventable.
         (b)  The department shall develop recommendations for
  reporting adverse health conditions identified under Subsection
  (a).
         SECTION 5.06.  Section 98.105, Health and Safety Code, as
  added by Chapter 359 (S.B. 288), Acts of the 80th Legislature,
  Regular Session, 2007, is amended to read as follows:
         Sec. 98.105.  REPORTING SYSTEM MODIFICATIONS.  Based on the
  recommendations of the advisory panel, the executive commissioner
  by rule may modify in accordance with this chapter the list of
  procedures that are reportable under Section 98.103 [or 98.104].  
  The modifications must be based on changes in reporting guidelines
  and in definitions established by the federal Centers for Disease
  Control and Prevention.
         SECTION 5.07.  Subsections (a), (b), and (d), Section
  98.106, Health and Safety Code, as added by Chapter 359 (S.B. 288),
  Acts of the 80th Legislature, Regular Session, 2007, are amended to
  read as follows:
         (a)  The department shall compile and make available to the
  public a summary, by health care facility, of:
               (1)  the infections reported by facilities under
  Section [Sections] 98.103 [and 98.104]; and
               (2)  the preventable adverse events reported by
  facilities under Section 98.1045.
         (b)  Information included in the departmental summary with
  respect to infections reported by facilities under Section
  [Sections] 98.103 [and 98.104] must be risk adjusted and include a
  comparison of the risk-adjusted infection rates for each health
  care facility in this state that is required to submit a report
  under Section [Sections] 98.103 [and 98.104].
         (d)  The department shall publish the departmental summary
  at least annually and may publish the summary more frequently as the
  department considers appropriate. Data made available to the
  public must include aggregate data covering a period of at least a
  full calendar quarter.
         SECTION 5.08.  Subchapter C, Chapter 98, Health and Safety
  Code, as added by Chapter 359 (S.B. 288), Acts of the 80th
  Legislature, Regular Session, 2007, is amended by adding Section
  98.1065 to read as follows:
         Sec.  98.1065.  INCENTIVES; RECOGNITION FOR HEALTH CARE
  QUALITY.  (a)  The department, in consultation with the Texas
  Institute of Health Care Quality and Efficiency, shall develop a
  recognition program to recognize exemplary health care facilities
  for superior quality of health care.
         (b)  The department may:
               (1)  make available to the public the list of exemplary
  facilities recognized under this section; and
               (2)  authorize the facilities to use the receipt of the
  recognition in their advertising materials.
         (c)  The executive commissioner of the Health and Human
  Services Commission may adopt rules to implement this section.
         SECTION 5.09.  Section 98.108, Health and Safety Code, as
  added by Chapter 359 (S.B. 288), Acts of the 80th Legislature,
  Regular Session, 2007, is amended to read as follows:
         Sec. 98.108.  FREQUENCY OF REPORTING.  (a)  In consultation
  with the advisory panel, the executive commissioner by rule shall
  establish the frequency of reporting by health care facilities
  required under Sections 98.103[, 98.104,] and 98.1045.
         (b)  Except as provided by Subsection (c), facilities 
  [Facilities] may not be required to report more frequently than
  quarterly.
         (c)  The executive commissioner may adopt rules requiring
  reporting more frequently than quarterly if more frequent reporting
  is necessary to meet the requirements for participation in the
  federal Centers for Disease Control and Prevention's National
  Healthcare Safety Network.
         SECTION 5.10.  Section 98.110, Health and Safety Code, as
  added by Chapter 359 (S.B. 288), Acts of the 80th Legislature,
  Regular Session, 2007, is amended to read as follows:
         Sec. 98.110.  DISCLOSURE AMONG CERTAIN AGENCIES.  
  (a)  Notwithstanding any other law, the department may disclose
  information reported by health care facilities under Section
  98.103[, 98.104,] or 98.1045 to other programs within the
  department, to the Health and Human Services Commission, [and] to
  other health and human services agencies, as defined by Section
  531.001, Government Code, and to the federal Centers for Disease
  Control and Prevention for public health research or analysis
  purposes only, provided that the research or analysis relates to
  health care-associated infections or preventable adverse events.  
  The privilege and confidentiality provisions contained in this
  chapter apply to such disclosures.
         (b)  If the executive commissioner designates an agency of
  the United States Department of Health and Human Services to
  receive reports of health care-associated infections or
  preventable adverse events, that agency may use the information
  submitted for purposes allowed by federal law.
         SECTION 5.11.  Section 98.104, Health and Safety Code, as
  added by Chapter 359 (S.B. 288), Acts of the 80th Legislature,
  Regular Session, 2007, is repealed.
  ARTICLE 6.  INFORMATION MAINTAINED BY DEPARTMENT OF STATE HEALTH
  SERVICES
         SECTION 6.01.  Section 108.002, Health and Safety Code, is
  amended by adding Subdivisions (4-a) and (8-a) and amending
  Subdivision (7) to read as follows:
               (4-a)  "Commission" means the Health and Human Services
  Commission.
               (7)  "Department" means the [Texas] Department of State 
  Health Services.
               (8-a)  "Executive commissioner" means the executive
  commissioner of the Health and Human Services Commission.
         SECTION 6.02.  Chapter 108, Health and Safety Code, is
  amended by adding Section 108.0026 to read as follows:
         Sec. 108.0026.  TRANSFER OF DUTIES; REFERENCE TO COUNCIL.  
  (a)  The powers and duties of the Texas Health Care Information
  Council under this chapter were transferred to the Department of
  State Health Services in accordance with Section 1.19, Chapter 198
  (H.B. 2292), Acts of the 78th Legislature, Regular Session, 2003.
         (b)  In this chapter or other law, a reference to the Texas
  Health Care Information Council means the Department of State
  Health Services.
         SECTION 6.03.  Subsection (h), Section 108.009, Health and
  Safety Code, is amended to read as follows:
         (h)  The department [council] shall coordinate data
  collection with the data submission formats used by hospitals and
  other providers. The department [council] shall accept data in the
  format developed by the American National Standards Institute
  [National Uniform Billing Committee (Uniform Hospital Billing Form
  UB 92) and HCFA-1500] or its successor [their successors] or other
  nationally [universally] accepted standardized forms that
  hospitals and other providers use for other complementary purposes.
         SECTION 6.04.  Section 108.013, Health and Safety Code, is
  amended by amending Subsections (a) through (d), (g), (i), and (j)
  and adding Subsections (k) through (n) to read as follows:
         (a)  The data received by the department under this chapter
  [council] shall be used by the department and commission [council]
  for the benefit of the public.  Subject to specific limitations
  established by this chapter and executive commissioner [council]
  rule, the department [council] shall make determinations on
  requests for information in favor of access.
         (b)  The executive commissioner [council] by rule shall
  designate the characters to be used as uniform patient identifiers.
  The basis for assignment of the characters and the manner in which
  the characters are assigned are confidential.
         (c)  Unless specifically authorized by this chapter, the
  department [council] may not release and a person or entity may not
  gain access to any data obtained under this chapter:
               (1)  that could reasonably be expected to reveal the
  identity of a patient;
               (2)  that could reasonably be expected to reveal the
  identity of a physician;
               (3)  disclosing provider discounts or differentials
  between payments and billed charges;
               (4)  relating to actual payments to an identified
  provider made by a payer; or
               (5)  submitted to the department [council] in a uniform
  submission format that is not included in the public use data set
  established under Sections 108.006(f) and (g), except in accordance
  with Section 108.0135.
         (d)  Except as provided by this section, all [All] data
  collected and used by the department [and the council] under this
  chapter is subject to the confidentiality provisions and criminal
  penalties of:
               (1)  Section 311.037;
               (2)  Section 81.103; and
               (3)  Section 159.002, Occupations Code.
         (g)  Unless specifically authorized by this chapter, the
  department [The council] may not release data elements in a manner
  that will reveal the identity of a patient. The department
  [council] may not release data elements in a manner that will reveal
  the identity of a physician.
         (i)  Notwithstanding any other law and except as provided by
  this section, the [council and the] department may not provide
  information made confidential by this section to any other agency
  of this state.
         (j)  The executive commissioner [council] shall by rule[,
  with the assistance of the advisory committee under Section
  108.003(g)(5),] develop and implement a mechanism to comply with
  Subsections (c)(1) and (2).
         (k)  The department may disclose data collected under this
  chapter that is not included in public use data to any department or
  commission program if the disclosure is reviewed and approved by
  the institutional review board under Section 108.0135.
         (l)  Confidential data collected under this chapter that is
  disclosed to a department or commission program remains subject to
  the confidentiality provisions of this chapter and other applicable
  law. The department shall identify the confidential data that is
  disclosed to a program under Subsection (k). The program shall
  maintain the confidentiality of the disclosed confidential data.
         (m)  The following provisions do not apply to the disclosure
  of data to a department or commission program:
               (1)  Section 81.103;
               (2)  Sections 108.010(g) and (h);
               (3)  Sections 108.011(e) and (f);
               (4)  Section 311.037; and
               (5)  Section 159.002, Occupations Code.
         (n)  Nothing in this section authorizes the disclosure of
  physician identifying data.
         SECTION 6.05.  Section 108.0135, Health and Safety Code, is
  amended to read as follows:
         Sec. 108.0135.  INSTITUTIONAL [SCIENTIFIC] REVIEW BOARD
  [PANEL].  (a)  The department [council] shall establish an
  institutional [a scientific] review board [panel] to review and
  approve requests for access to data not contained in [information
  other than] public use data. The members of the institutional
  review board must [panel shall] have experience and expertise in
  ethics, patient confidentiality, and health care data.
         (b)  To assist the institutional review board [panel] in
  determining whether to approve a request for information, the
  executive commissioner [council] shall adopt rules similar to the
  federal Centers for Medicare and Medicaid Services' [Health Care
  Financing Administration's] guidelines on releasing data.
         (c)  A request for information other than public use data
  must be made on the form prescribed [created] by the department
  [council].
         (d)  Any approval to release information under this section
  must require that the confidentiality provisions of this chapter be
  maintained and that any subsequent use of the information conform
  to the confidentiality provisions of this chapter.
         SECTION 6.06.  Effective September 1, 2014, Subdivision (5)
  and (18), Section 108.002, Section 108.0025, and Subsection (c),
  Section 108.009, Health and Safety Code, are repealed.
  ARTICLE 7.  EFFECTIVE DATE
         SECTION 7.01.  Except as specifically provided by this Act,
  this Act takes effect September 1, 2011.