84R7767 KEL/AJA-D

By: Guillen H.B. No. 1445

A BILL TO BE ENTITLED

AN ACT

relating to measures to support or enhance graduate medical education in this state, including the transfer of assets following the dissolution of the Texas Medical Liability Insurance Underwriting Association.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subchapter A, Chapter 58A, Education Code, is amended by adding Section 58A.002 to read as follows:

Sec. 58A.002. PERMANENT FUND SUPPORTING GRADUATE MEDICAL EDUCATION. (a) In this section, "trust company" means the Texas Treasury Safekeeping Trust Company.

(b) The permanent fund supporting graduate medical education is a special fund in the treasury outside the general revenue fund. The fund is composed of:

(1) money transferred or appropriated to the fund by the legislature;

(2) gifts and grants contributed to the fund; and

(3) the returns received from investment of money in the fund.

(c) The trust company shall administer the fund. The trust company shall determine the amount available for distribution from the fund, determined in accordance with a distribution policy that is adopted by the comptroller and designed to preserve the purchasing power of the fund's assets and to provide a stable and predictable stream of annual distributions. Expenses of managing the fund's assets shall be paid from the fund. Except as provided by this section, money in the fund may not be used for any purpose. Sections 403.095 and 404.071, Government Code, do not apply to the fund.

(d) In managing the assets of the fund, through procedures and subject to restrictions the trust company considers appropriate, the trust company may acquire, exchange, sell, supervise, manage, or retain any kind of investment that a prudent investor, exercising reasonable care, skill, and caution, would acquire or retain in light of the purposes, terms, distribution requirements, and other circumstances of the fund then prevailing, taking into consideration the investment of all the assets of the fund rather than a single investment.

(e) The amount available for distribution from the fund may be appropriated only to fund the programs created under this chapter and any other programs designed to support or enhance graduate medical education in this state.

(f) A public or private institution of higher education or other entity that may receive money under a program described by Subsection (e) may solicit and accept gifts and grants to the fund. A gift or grant to the fund must be distributed and appropriated for the purposes of the fund, subject to any limitation or requirement placed on the gift or grant by the donor or granting entity.

SECTION 2. Chapter 58A, Education Code, is amended by adding Subchapters D, E, and F to read as follows:

SUBCHAPTER D. CRITICAL SHORTAGE PHYSICIAN GRANT PROGRAM

Sec. 58A.101. DEFINITIONS. In this subchapter:

(1) "Center" means the comprehensive health professions resource center established under Chapter 105, Health and Safety Code.

(2) "Graduate medical residency training program" means a residency or other postgraduate medical training program:

(A) participation in which may be counted toward certification in a medical specialty or subspecialty; and

(B) that:

(i) is accredited by the Accreditation Council for Graduate Medical Education or the American Osteopathic Association; or

(ii) demonstrates eligibility to apply for and receive an accreditation described by Subparagraph (i).

(3) "Program" means the critical shortage physician grant program established under this subchapter.

(4) "Teaching hospital" means a teaching hospital affiliated with a medical school that is described as a medical and dental unit under Section 61.003.

Sec. 58A.102. ESTABLISHMENT OF PROGRAM. The board shall establish the critical shortage physician grant program to provide grants to teaching hospitals for graduate medical residency training programs to increase the number of physicians in the medical specialties and subspecialties that are determined by the board to be at a critical shortage level in this state.

Sec. 58A.103. RULES. (a) The board shall adopt rules to administer the program, including rules regarding:

(1) a grant application process;

(2) reporting requirements for grant recipients; and

(3) requirements and benchmarks for grant recipients to satisfy regarding the granting of additional program funding under Section 58A.106.

(b) The rules adopted under Subsection (a) must require grant recipients to submit reports at least quarterly, based on outcome measures established by the board in consultation with the Legislative Budget Board.

Sec. 58A.104. ELIGIBILITY. To be eligible to receive a grant under this subchapter, a teaching hospital must:

(1) provide a number of graduate medical residency positions in excess of both the cap on the number of positions funded by direct graduate medical education payments made under Section 1886(h), Social Security Act (42 U.S.C. Section 1395ww(h)), and the cap on the number of positions funded by indirect medical education payments made under Section 1886(d)(5)(B), Social Security Act (42 U.S.C. Section 1395ww(d)(5)(B)); and

(2) offer or seek to offer one or more graduate medical residency training programs in a specialty described by Section 58.008(a) or in any other medical specialty or subspecialty determined by the board to be at a critical shortage level in this state.

Sec. 58A.105. USE OF FUNDS. In each state fiscal year, the board shall award grants for establishing new accredited graduate medical residency training programs or increasing the number of residency positions in existing accredited graduate medical residency training programs in specialties described by Section 58.008(a) or in any other medical specialties or subspecialties determined by the board to be at a critical shortage level in this state.

Sec. 58A.106. ADDITIONAL USE: START-UP COSTS. (a) If in a state fiscal year excess program funds remain after funds are granted under Section 58A.105, the board may grant additional program funding to teaching hospitals to pay any start-up costs associated with establishing and seeking accreditation for a new graduate medical residency training program in a specialty described by Section 58.008(a) or in any other medical specialty or subspecialty determined by the board to be at a critical shortage level in this state, provided that no other federal or state funding is available for that program.

(b) To be eligible for funding under this section, start-up costs must be directly related to the establishment or accreditation of the new program.

(c) The board may grant program funding under this section to pay a percentage of the total amount of applicable start-up costs for the teaching hospital, not to exceed 20 percent.

Sec. 58A.107. REDUCTION IN FUNDING. The board shall limit or withhold funding from grant recipients that do not comply with reporting requirements or that use grant funds for a purpose not authorized by this subchapter. The board shall seek reimbursement with respect to any grant funds that are not used for purposes authorized by this subchapter.

Sec. 58A.108. CRITERIA FOR DETERMINING CRITICAL SHORTAGE LEVELS. (a) For purposes of this subchapter, the board shall determine critical shortage levels for medical specialties and subspecialties in this state according to criteria used by the United States Department of Health and Human Services Health Resources and Services Administration to designate health professional shortage areas.

(b) In its methodology for determining critical shortage levels under this section, the board shall include the results of the research conducted by the center under Section 105.009(a)(1), Health and Safety Code, and similar research performed by other appropriate entities.

SUBCHAPTER E. TEXAS TEACHING HEALTH CENTER

GRADUATE MEDICAL EDUCATION GRANT PROGRAM

Sec. 58A.121. DEFINITIONS. In this subchapter:

(1) "Graduate medical residency training program" means a residency or other postgraduate medical training program:

(A) participation in which may be counted toward certification in a medical specialty or subspecialty; and

(B) that:

(i) is accredited by the Accreditation Council for Graduate Medical Education or the American Osteopathic Association; or

(ii) demonstrates eligibility to apply for and receive an accreditation described by Subparagraph (i).

(2) "Primary care residency program" means a graduate medical residency training program in a specialty described by Section 58.008(a).

(3) "Program" means the Texas teaching health center graduate medical education grant program established under this subchapter.

(4) "Teaching health center" means a community-based, ambulatory patient care center that operates a primary care residency program. The term includes:

(A) a federally qualified health center, as defined by Section 1905(l)(2)(B), Social Security Act (42 U.S.C. Section 1396d(l)(2)(B));

(B) a community mental health center, as defined by Section 1861(ff)(3)(B), Social Security Act (42 U.S.C. Section 1395x(ff)(3)(B));

(C) a rural health clinic, as defined by Section 1861(aa)(2), Social Security Act (42 U.S.C. Section 1395x(aa)(2));

(D) a health center operated by the Indian Health Service, an Indian tribe or tribal organization, or an urban Indian organization, as defined by Section 4, Indian Health Care Improvement Act (25 U.S.C. Section 1603); and

(E) an entity receiving funds under Title X, Public Health Service Act (42 U.S.C. Section 300 et seq.).

Sec. 58A.122. ESTABLISHMENT OF PROGRAM. The board shall establish the Texas teaching health center graduate medical education grant program to award grants to teaching health centers for the purpose of establishing new primary care residency programs or increasing the number of residency positions in existing primary care residency programs.

Sec. 58A.123. RULES. (a) The board shall adopt rules to administer the program, including rules regarding:

(1) a grant application process;

(2) reporting requirements for grant recipients under Section 58A.128; and

(3) the amount of the payments for direct expenses and indirect expenses, as defined by and calculated in the same manner as those expenses are calculated under the federal rules described by Subsection (b).

(b) The rules adopted under this subchapter must be based as nearly as possible on the rules adopted under the federal teaching health centers development grant program established under Section 5508, Patient Protection and Affordable Care Act of 2010 (Pub. L. No. 111-148).

(c) The rules adopted in relation to the reporting requirements under Section 58A.128 must also:

(1) authorize the board to conduct audits of grant recipients to the extent necessary to ensure the accuracy and completeness of their annual reports; and

(2) specify a mandatory amount of reduction in grant funds under Section 58A.127 for a failure to submit an accurate or complete report.

Sec. 58A.124. AMOUNT AND DURATION OF GRANT. Subject to Section 58A.127, the board may award grants under this subchapter for a term of not more than three years, and the maximum award to a recipient may not exceed $500,000 during each state fiscal year.

Sec. 58A.125. RELATIONSHIP OF GRANTS TO OTHER FEDERAL PAYMENTS FOR GRADUATE MEDICAL EDUCATION. A grant awarded by the board under this subchapter is in addition to any payments for:

(1) direct graduate medical education costs under Section 1886(h), Social Security Act (42 U.S.C. Section 1395ww(h));

(2) indirect medical education costs under Section 1886(d)(5)(B), Social Security Act (42 U.S.C. Section 1395ww(d)(5)(B)); and

(3) direct costs of medical education under Section 1886(k), Social Security Act (42 U.S.C. Section 1395ww(k)).

Sec. 58A.126. USE OF FUNDS. A grant awarded under this subchapter may be used only to cover the costs of establishing a new primary care residency program at a teaching health center or the costs of increasing the number of residency positions in an existing primary care residency program, including costs associated with:

(1) curriculum development;

(2) recruitment, training, and retention of residents and faculty;

(3) obtaining accreditation by the Accreditation Council for Graduate Medical Education or the American Osteopathic Association; and

(4) faculty salaries during the development phase.

Sec. 58A.127. REDUCTION IN FUNDING. The board shall limit or withhold funding from grant recipients that do not comply with reporting requirements or that use grant funds for a purpose not authorized by this subchapter. The board shall seek reimbursement with respect to any grant funds that are not used for purposes authorized by this subchapter.

Sec. 58A.128. REPORTING. (a) A grant recipient shall submit an annual report that fully accounts for the use of a grant awarded under this subchapter.

(b) The annual report must be made in the form and manner specified by the board and must include the following information for the most recent residency academic year completed immediately before the applicable state fiscal year:

(1) the types of primary care residency programs that the grant recipient provided for residents;

(2) the number of approved training positions in those programs for part-time or full-time residents;

(3) the number of part-time or full-time residents who:

(A) completed their residency training in those programs at the end of the residency academic year; and

(B) care for vulnerable populations living in underserved areas; and

(4) any other information considered appropriate by the board.

SUBCHAPTER F. GRADUATE MEDICAL EDUCATION

PARTNERSHIP GRANT PROGRAM

Sec. 58A.151. DEFINITIONS. In this subchapter:

(1) "Graduate medical education partnership" means a partnership entered into by a teaching health center and an accredited graduate medical residency training program offered by a hospital or medical school.

(2) "Graduate medical residency training program" means a residency or other postgraduate medical training program:

(A) participation in which may be counted toward certification in a medical specialty or subspecialty; and

(B) that:

(i) is accredited by the Accreditation Council for Graduate Medical Education or the American Osteopathic Association; or

(ii) demonstrates eligibility to apply for and receive an accreditation described by Subparagraph (i).

(3) "Primary care residency program" means a graduate medical residency training program in a specialty described by Section 58.008(a).

(4) "Program" means the graduate medical education partnership grant program established under this subchapter.

(5) "Teaching health center" means a community-based, ambulatory patient care center that operates a primary care residency program. The term includes:

(A) a federally qualified health center, as defined by Section 1905(l)(2)(B), Social Security Act (42 U.S.C. Section 1396d(l)(2)(B));

(B) a community mental health center, as defined by Section 1861(ff)(3)(B), Social Security Act (42 U.S.C. Section 1395x(ff)(3)(B));

(C) a rural health clinic, as defined by Section 1861(aa)(2), Social Security Act (42 U.S.C. Section 1395x(aa)(2));

(D) a health center operated by the Indian Health Service, an Indian tribe or tribal organization, or an urban Indian organization, as defined by Section 4, Indian Health Care Improvement Act (25 U.S.C. Section 1603); and

(E) an entity receiving funds under Title X, Public Health Service Act (42 U.S.C. Section 300 et seq.).

Sec. 58A.152. ESTABLISHMENT OF PROGRAM. The board shall establish the graduate medical education partnership grant program to allow a teaching health center that is establishing and seeking accreditation for a new primary care residency program to partner with an accredited graduate medical residency training program offered by a hospital or medical school.

Sec. 58A.153. RULES. The board shall adopt rules to administer the program, including rules regarding a grant application process and reporting requirements for grant recipients.

Sec. 58A.154. USE OF FUNDS. The board shall award grants to each participant in a graduate medical education partnership to:

(1) facilitate a mentoring relationship between partners that will provide information and guidance for the participating teaching health center during the accreditation process; and

(2) assist the partners in building a collaborative working relationship for the future.

Sec. 58A.155. REDUCTION IN FUNDING. The board shall limit or withhold funding from grant recipients that do not comply with reporting requirements or that use grant funds for a purpose not authorized by this subchapter. The board shall seek reimbursement for any grant funds that are not used for purposes authorized by this subchapter.

SECTION 3. Chapter 105, Health and Safety Code, is amended by adding Section 105.009 to read as follows:

Sec. 105.009. RESEARCH REGARDING GRADUATE MEDICAL EDUCATION SYSTEM. (a) The comprehensive health professions resource center shall conduct research:

(1) to identify:

(A) the ratio of primary care to non-primary care physicians that is necessary and appropriate to meet the current and future health care needs of this state; and

(B) all medical specialties and subspecialties that are at critical shortage levels in this state, together with the geographic location of the physicians in those specialties and subspecialties; and

(2) regarding the overall supply of physicians in this state and any other issues that are relevant to the status of the state's graduate medical education system and the ability of that system to meet the current and future health care needs of this state.

(b) Not later than August 31 of each even-numbered year, the council shall report the results of the center's research to the Legislative Budget Board, the Texas Higher Education Coordinating Board, the office of the governor, and the standing committees of each house of the legislature with primary jurisdiction over state finance or appropriations.

SECTION 4. Chapter 2203, Insurance Code, is amended by adding Subchapter J to read as follows:

SUBCHAPTER J. DISSOLUTION OF ASSOCIATION; REACTIVATION OF

ASSOCIATION BY COMMISSIONER

Sec. 2203.451. DISSOLUTION DATE. The association shall cease all operations before and is dissolved on August 31, 2017.

Sec. 2203.452. DISSOLUTION PLAN. (a) The board of directors, in consultation with the department, shall develop a dissolution plan to:

(1) wind down and cease the association's operations before the dissolution date established by this subchapter; and

(2) transfer to the commissioner and the department:

(A) any obligations of the association that survive the association's dissolution;

(B) any rights of the association that:

(i) accrued before the association's dissolution and survive the association's dissolution; or

(ii) accrue after the association's dissolution with respect to coverage issued by the association before the association's dissolution;

(C) any authority previously held by the association the continuation of which is necessary or appropriate; and

(D) subject to Section 2203.456, any association assets.

(b) The dissolution plan may provide that the obligations, rights, authority, and, subject to Section 2203.456, assets transferred to the commissioner and department may be transferred to a liquidator appointed by the commissioner.

(c) The dissolution plan must be adopted by the commissioner by rule.

Sec. 2203.453. ISSUANCE AND RENEWAL OF INSURANCE COVERAGE; TERMINATION OF POLICIES. The association may not issue or renew an insurance policy on or after the effective date of this subchapter. A policy issued or renewed by the association before that date shall continue in force until terminated in accordance with the terms and conditions of the policy.

Sec. 2203.454. ACCEPTANCE AND DISPOSITION OF CLAIMS. (a) The association may continue to accept claims under association policies until:

(1) the dissolution date established by this subchapter; or

(2) an earlier claims acceptance deadline established in the dissolution plan.

(b) The dissolution plan must establish processes to ensure that, to the maximum extent reasonably possible, claims made under association policies before the dissolution date established by this subchapter are processed and paid or otherwise appropriately disposed of before the dissolution date established by this subchapter.

(c) The dissolution plan must provide that the department or a liquidator appointed in accordance with the dissolution plan will:

(1) take over the processing and disposition of any claims under association policies accepted by the association that are outstanding on the dissolution date established by this subchapter; and

(2) accept, process, and dispose of any claims under association policies that are made after the latest date on which the association accepts claims under Subsection (a).

Sec. 2203.455. POST-DISSOLUTION CLAIMS. (a) The dissolution plan must provide for a reasonable and actuarially sound arrangement, through retention of reserves, purchase of reinsurance, or otherwise, to ensure that sufficient resources remain available to pay liability of the association that may arise in connection with claims made under association policies on or after the dissolution date established by this subchapter.

(b) If the arrangement provided under Subsection (a) proves inadequate, the claims that cannot be satisfied shall be treated as claims against an insolvent insurer liquidated under Chapter 443.

Sec. 2203.456. TRANSFER OF ASSETS. (a) Not later than October 1, 2017, association assets not retained by the department under Subsection (b) or otherwise transferred or applied in accordance with this section shall be transferred to the permanent fund supporting graduate medical education established under Section 58A.002, Education Code.

(b) The department shall retain assets sufficient to pay claims under association policies that are outstanding on the asset transfer date established by Subsection (a). The department shall retain, transfer, or apply association assets as necessary for the portion of the dissolution plan required by Section 2203.455(a).

(c) If a liquidator is appointed under the dissolution plan, the department may transfer assets to the liquidator in accordance with the dissolution plan.

(d) Assets of the policyholder's stabilization reserve fund for nursing homes and assisted living facilities established under Section 2203.303 shall be transferred to the general revenue fund to be appropriated as provided by Section 2203.303(e).

Sec. 2203.457. ANNUAL REPORT. The department shall, as part of each annual report made under Section 32.021 after the asset transfer date established by Section 2203.456(a):

(1) account for assets retained under Section 2203.456(b) or transferred under Section 2203.456(c) or (d); and

(2) report on the receipt, processing, and disposition of claims under association policies.

Sec. 2203.458. REACTIVATION OF ASSOCIATION. (a) After the dissolution of the association and the transfer of the association's assets in accordance with this subchapter, the commissioner may, after notice and hearing, order the reactivation of the association and authorize the association to resume operations in accordance with the provisions of this chapter other than this subchapter.

(b) A hearing to determine the need to reactivate the association shall be held:

(1) on petition of:

(A) the Texas Medical Association;

(B) the Texas Podiatric Medical Association;

(C) the Texas Hospital Association; or

(D) at least 15 physicians or health care providers practicing or operating in this state; or

(2) on a finding by the commissioner that physicians or health care providers, or any category of physicians or health care providers, in this state are threatened with the possibility of being unable to secure medical liability insurance.

(c) Not later than the 15th day before the date set for a hearing under this section, notice of the hearing shall be given to each insurer that would be a member of the association under Section 2203.055 if the association were reactivated.

(d) If the commissioner finds the reactivation of the association is in the public interest, the commissioner shall order the reactivation of the association. In making a determination under this section, the commissioner shall consider the potential impact on and harm or benefit to consumers of health care, physicians and health care providers, and the overall availability of medical liability insurance in this state. The order must:

(1) designate the category or categories of physicians or health care providers who are eligible to secure medical liability insurance coverage from the association; and

(2) specify a date that is not fewer than 15 or more than 60 days after the date of the order on which the provisions of this chapter other than this subchapter become effective.

(e) If an order of reactivation is made under this section, the provisions of this chapter other than this subchapter shall take effect as if they had been enacted into law with the effective date specified in the commissioner's order.

(f) The commissioner's order shall specify a deadline for the initial election and appointment of members of the board of directors under Section 2203.052. Notwithstanding Section 2203.052, the initial term for each director elected or appointed under this section expires on the first October 1 that follows the election and appointment deadline specified in the order.

Sec. 2203.459. DISSOLUTION AFTER REACTIVATION. (a) After reactivation of the association under Section 2203.458, the commissioner may, after notice and hearing, order the dissolution of the association. Dissolution of the association under this section shall be done in accordance with the provisions of this subchapter that governed the dissolution of the association on the dissolution date established by Section 2203.451.

(b) A hearing to determine whether to dissolve the association under this section shall be held only at the commissioner's discretion.

(c) The commissioner shall issue an order to dissolve the association under this section if the commissioner finds that:

(1) there is no category of physicians or health care providers in this state threatened with the possibility of being unable to secure medical liability insurance; and

(2) dissolution of the association is in the public interest.

(d) In making a determination under Subsection (c)(2), the commissioner shall consider the potential impact on and harm or benefit to consumers of health care, physicians and health care providers, and the overall availability of medical liability insurance in this state.

(e) The commissioner's order must:

(1) prescribe:

(A) a dissolution date;

(B) a date on and after which the association may not issue or renew insurance policies; and

(C) an asset transfer date; and

(2) direct the board of directors to develop a dissolution plan in accordance with this subchapter.

(f) A dissolution plan developed under this section must be adopted by the commissioner by rule.

(g) On the asset transfer date prescribed by the commissioner's order, association assets not retained by the department or otherwise transferred or applied in accordance with Section 2203.456(b) or (c) shall be transferred to the general revenue fund. After that date, the department shall report on assets and claims as prescribed by Section 2203.457.

SECTION 5. Sections 2203.303(d) and (e), Insurance Code, are amended to read as follows:

(d) The [Notwithstanding Sections 11, 12, and 13, Article 21.49-3, the] policyholder's stabilization reserve fund under this section may be terminated only by law.

(e) On [Notwithstanding Section 11, Article 21.49-3, on] termination of the policyholder's stabilization reserve fund under this section, all assets of the fund shall be transferred to the general revenue fund to be appropriated for purposes related to ensuring the provision of the kinds of liability insurance coverage that the association may provide under this chapter to nursing homes and assisted living facilities.

SECTION 6. Articles 21.49-3 and 21.49-3a, Insurance Code, are repealed.

SECTION 7. (a) Not later than December 31, 2015, the Texas Higher Education Coordinating Board shall adopt rules for the critical shortage physician grant program, the Texas teaching health center graduate medical education grant program, and the graduate medical education partnership grant program established under Subchapters D, E, and F, Chapter 58A, Education Code, respectively, as added by this Act.

(b) The board shall award grants under the programs described by Subsection (a) of this section beginning with the 2016-2017 state fiscal year.

SECTION 8. This Act takes effect immediately if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for immediate effect, this Act takes effect September 1, 2015.