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  S.B. No. 18
 
 
 
 
AN ACT
  relating to measures to support or enhance graduate medical
  education in this state, including the transfer of certain assets
  from the Texas Medical Liability Insurance Underwriting
  Association to the permanent fund supporting graduate medical
  education and the authority of the association to issue new
  policies.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 58A.001, Education Code, is amended to
  read as follows:
         Sec. 58A.001.  DEFINITIONS [DEFINITION].  In this chapter:
               (1)  "Board"[, "board"] means the Texas Higher
  Education Coordinating Board.
               (2)  "Center" means the comprehensive health
  professions resource center established under Chapter 105, Health
  and Safety Code.
               (3)  "Community-based, ambulatory patient care center"
  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));
  and
                     (D)  a teaching health center, as defined by 42
  U.S.C. Section 293l-1(f)(3)(A).
               (4)  "First-year residency position" means a residency
  position offering first year training in a graduate medical
  education program.
               (5)  "Graduate medical education program" means a
  nationally accredited post-doctor of medicine (M.D.) or
  post-doctor of osteopathic medicine (D.O.) program that prepares
  physicians for the independent practice of medicine in a specific
  specialty area.
               (6)  "Hospital" means:
                     (A)  a facility licensed as a hospital under
  Chapter 241, Health and Safety Code, or as a mental hospital under
  Chapter 577, Health and Safety Code; or
                     (B)  a similar facility owned or operated by this
  state or an agency of this state.
               (7)  "Medical school" means a public or independent
  educational institution that awards a doctor of medicine (M.D.) or
  doctor of osteopathic medicine (D.O.) degree.
               (8)  "Sponsoring institution" means the entity that
  assumes the ultimate financial or academic responsibility for a
  graduate medical education program.
               (9)  "Teaching hospital" means a hospital that:
                     (A)  is formally affiliated with a medical school
  for purposes of providing a graduate medical education program; or
                     (B)  serves as the sponsoring institution for a
  graduate medical education program.
         SECTION 2.  Subchapter A, Chapter 58A, Education Code, is
  amended by adding Sections 58A.002 and 58A.003 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:
               (1)  to the board to fund the programs created under
  this chapter; or
               (2)  as otherwise directed by the legislature.
         (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 be
  deposited to the credit of 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.
         Sec. 58A.003.  REDUCTION IN FUNDING. (a)  The board shall
  limit or withhold funding from any grant recipient under this
  chapter that does not comply with reporting requirements or that
  uses grant funds for a purpose not authorized by this chapter for
  the grant awarded.
         (b)  The board shall seek reimbursement with respect to any
  grant funds that are not used for purposes authorized by this
  chapter for the grant awarded.
         SECTION 3.  Section 58A.022, Education Code, is amended to
  read as follows:
         Sec. 58A.022.  GRADUATE MEDICAL EDUCATION PLANNING AND
  PARTNERSHIP GRANTS. (a)  The board shall award one-time graduate
  medical education planning and partnership grants to hospitals,
  medical schools, and community-based, ambulatory patient care
  centers [entities] located in this state that seek to develop new
  graduate medical education programs with first-year residency
  positions, regardless of whether the grant recipient currently
  offers or has previously offered[:
               [(1)  have never had] a graduate medical education
  program with first-year residency positions[; and
               [(2)     are eligible for Medicare funding of graduate
  medical education].
         (b)  The board shall award graduate medical education
  planning and partnership grants on a competitive basis according to
  criteria adopted by the board.  The board shall determine the number
  of grants awarded and the amount of each grant consistent with any
  conditions provided by legislative appropriation.  A grant received
  under this section must be used for the purpose of planning a new
  graduate medical education program with [additional] first-year
  residency positions.
         (c)  A hospital, medical school, or community-based,
  ambulatory patient care center [An application for a planning grant
  for a state fiscal year must be submitted to the board not later
  than July 15 preceding that fiscal year.   Not later than August 15,
  the board shall make decisions about grant awards for the following
  state fiscal year.
         [(d)  An entity] that is awarded a graduate medical education
  planning and partnership grant and that establishes new first-year
  residency positions after receipt of the grant is eligible to apply
  for additional funds under Section 58A.024 for each such position
  established, as provided by appropriation.
         (d)  A hospital, medical school, or community-based,
  ambulatory patient care center may partner with an existing
  graduate medical education program or sponsoring institution for
  purposes of planning a new graduate medical education program using
  grant funds awarded under this section.
         SECTION 4.  Section 58A.023, Education Code, is amended to
  read as follows:
         Sec. 58A.023.  GRANTS FOR UNFILLED RESIDENCY POSITIONS.
  (a)  The board shall award grants to graduate medical education
  programs to enable those programs to fill first-year residency
  positions that are accredited but unfilled as of July 1, 2013
  [first-year residency positions].  The board shall determine the
  number of grants awarded and the amount of each grant consistent
  with any conditions provided by legislative appropriation.
         (b)  A grant received under this section must be expended to
  support:
               (1)  resident stipends and benefits; and
               (2)  other [the] direct resident costs to the program[,
  including the resident stipend and benefits].
         (c)  A grant application must include proof of the accredited
  but unfilled positions to which the application applies.  [An
  application for a grant must be submitted to the board not later
  than October 1 preceding the period for which the grant is made.  
  The board shall make decisions about grant awards not later than
  January 1 preceding the grant period.]
         (d)  The board may distribute a grant amount for a residency
  position only on receiving verification that the applicable
  residency position has been filled.
         (e)  Grant amounts are awarded under this section for the
  duration of the period in which the resident who initially fills the
  residency position continues to hold that position [two consecutive
  state fiscal years.   For each first-year residency position for
  which a program receives an initial grant amount in a fiscal year,
  the board shall award the program an equal grant amount for the
  following fiscal year].
         SECTION 5.  Section 58A.024, Education Code, is amended to
  read as follows:
         Sec. 58A.024.  GRANTS FOR PROGRAM EXPANSION OR NEW PROGRAM.
  (a)  The board shall award grants to enable new or existing
  graduate medical education programs to increase the number of
  first-year residency positions [or to provide for the establishment
  of new graduate medical education programs with first-year
  residency positions].  The board shall determine the number of
  grants awarded and the amount of each grant consistent with any
  conditions provided by legislative appropriation.
         (b)  [A grant received under this section must be expended to
  support the direct resident costs to the program, including the
  resident stipend and benefits.
         [(c)]  A grant application must include a plan for receiving
  accreditation for the increased number of positions or for the new
  program, as applicable.  [An application for a grant must be
  submitted to the board not later than October 1 preceding the period
  for which the grant is made.   The board shall make decisions about
  grant awards not later than January 1 preceding the grant period.]
         (c) [(d)]  The board may distribute a grant amount for a
  residency position only on receiving verification that the
  applicable residency position has been filled.
         (d) [(e)]  Grant amounts are awarded under this section for
  the duration of the period in which the resident who initially fills
  the residency position continues to hold that position [three
  consecutive state fiscal years.   For each first-year residency
  position for which a program receives an initial grant amount in a
  fiscal year, the board shall award the program an equal grant amount
  for the following two fiscal years].
         SECTION 6.  Subchapter B, Chapter 58A, Education Code, is
  amended by adding Sections 58A.0245 and 58A.0246 to read as
  follows:
         Sec. 58A.0245.  CRITICAL SHORTAGE LEVELS. (a)  If the board
  determines that the number of first-year residency positions
  proposed by eligible applicants under Sections 58A.023 and 58A.024
  exceeds the number of first-year residency positions for which
  grant funding under those sections is appropriated, in awarding
  grants under those sections the board shall prioritize the awarding
  of new grants to medical specialties determined by the board to be
  at critical shortage levels.
         (b)  In determining critical shortage levels under this
  section, the board shall consider:
               (1)  the available results of research conducted by the
  center under Section 105.009, Health and Safety Code;
               (2)  other relevant research and criteria, including
  research and criteria related to the designation of health
  professional shortage areas; and
               (3)  research performed by other appropriate entities.
         Sec. 58A.0246.  CONTINUATION OF GRANTS AWARDED FOR 2015
  STATE FISCAL YEAR. The board shall award additional grants to fund
  eligible graduate medical education programs that, for the state
  fiscal year ending on August 31, 2015, received a grant awarded
  under Section 58A.023 or 58A.024 or under Section 61.511, as that
  section existed immediately before September 1, 2015, if those
  programs continue to meet the applicable grant requirements that
  existed at the time of the initial award.
         SECTION 7.  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 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 May 1 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 8.  Chapter 2203, Insurance Code, is amended by
  adding Subchapter J to read as follows:
  SUBCHAPTER J.  TRANSFER OF ASSETS; SUSPENSION OF NEW BUSINESS 
         Sec. 2203.451.  TRANSFER OF ASSETS. (a)  Not later than the
  90th day after the effective date of this section, the department
  shall complete an actuarial study to determine the amount of assets
  necessary for:
               (1)  the association's known and unknown insurance
  claims and costs associated with those claims; and
               (2)  administrative expenses of the association,
  including liabilities for employee retirement plans.
         (b)  The association shall cooperate with the department in
  completing the actuarial study required by Subsection (a).
         (c)  Notwithstanding any other provision of this code, all
  association reserve funds and policyholder stabilization reserve
  funds under Subchapter G, including funds held on behalf of the
  department under Section 2203.303(c), not necessary for the
  purposes described by Subsection (a) may be transferred under
  Subsection (d) to the permanent fund supporting graduate medical
  education established under Section 58A.002, Education Code.
         (d)  Not later than the 60th day after the date on which the
  department completes the actuarial study required by Subsection
  (a), the association shall transfer the amount of association
  assets not necessary for the purposes described by Subsection (a)
  to the permanent fund supporting graduate medical education
  established under Section 58A.002, Education Code. If that fund is
  not in existence on the date of transfer, the association shall
  transfer the assets to an account created by the comptroller
  outside of the state treasury, and the comptroller shall hold the
  assets in trust pending creation of the fund.
         Sec. 2203.4515.  SUSPENSION OF NEW BUSINESS. (a)  Promptly
  after the completion of the actuarial study required by Section
  2203.451, the commissioner, after notice and hearing, shall
  determine whether a necessity exists to suspend the association's
  authority to issue new insurance policies pending a future
  enactment by the legislature that becomes law or the expiration of
  this subchapter under Section 2203.452, whichever occurs earlier.
         (b)  If the commissioner determines that a necessity
  described by Subsection (a) exists, the commissioner shall order
  the association to cease issuing new policies immediately, and the
  association may not issue a new policy before the expiration of this
  subchapter under Section 2203.452 unless authorized by a law that
  takes effect before the expiration of this subchapter. 
         (c)  Notwithstanding any order under this section, the
  association may continue to renew policies in effect immediately
  before the effective date of the order in accordance with the
  association's plan of operation.
         Sec. 2203.452.  EXPIRATION OF SUBCHAPTER. This subchapter
  expires September 1, 2017.
         SECTION 9.  The following provisions of the Education Code
  are repealed:
               (1)  Section 58A.025; and
               (2)  Section 61.511.
         SECTION 10.  This Act takes effect September 1, 2015.
 
 
 
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
         I hereby certify that S.B. No. 18 passed the Senate on
  April 7, 2015, by the following vote: Yeas 31, Nays 0; and that
  the Senate concurred in House amendment on May 26, 2015, by the
  following vote: Yeas 31, Nays 0.
 
 
  ______________________________
  Secretary of the Senate    
 
         I hereby certify that S.B. No. 18 passed the House, with
  amendment, on May 21, 2015, by the following vote: Yeas 147,
  Nays 0, one present not voting.
 
 
  ______________________________
  Chief Clerk of the House   
 
 
 
  Approved:
 
  ______________________________ 
              Date
 
 
  ______________________________ 
            Governor