BILL ANALYSIS

C.S.H.B. 3982

By: Raymond

Human Services

Committee Report (Substituted)

BACKGROUND AND PURPOSE

Interested parties contend that the Medicaid process is laden with inefficiencies that discourage many healthcare providers from participating in the program, thus hindering Medicaid recipients' ability to receive adequate care. C.S.H.B. 3982 seeks to address these issues by clarifying contract requirements, providing certain protections to providers, and providing for a certain pilot program and study.

CRIMINAL JUSTICE IMPACT

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

RULEMAKING AUTHORITY

It is the committee's opinion that rulemaking authority is expressly granted to the executive commissioner of the Health and Human Services Commission in SECTION 1 of this bill.

ANALYSIS

C.S.H.B. 3982 amends the Government Code to remove the requirement that the Health and Human Services Commission (HHSC), if it is cost-effective and feasible, implement an electronic visit verification system to electronically verify and document, through a telephone or computer-based system, basic information relating to the delivery of Medicaid acute nursing services. The bill instead requires HHSC, in accordance with federal law, to implement an electronic visit verification system to electronically verify through a telephone, global positioning, or computer-based system that personal care services or attendant care services provided to Medicaid recipients are provided to recipients in accordance with a prior authorization or plan of care. The bill requires the electronic visit verification system to allow verification of only specified information relating to the delivery of Medicaid services. The bill requires HHSC to establish minimum requirements for third-party entities seeking to provide electronic visit verification system services to health care providers providing Medicaid services and to certify that a third-party entity complies with those minimum requirements before the entity may provide electronic visit verification system services to a health care provider. The bill requires HHSC to inform each Medicaid recipient who receives personal care services or attendant care services that the health care provider providing the services and the recipient are each required to comply with the electronic visit verification system. The bill require a managed care organization that contracts with HHSC to provide health care services to Medicaid recipients who receive personal care services or attendant care services to also inform recipients enrolled in a managed care plan offered by the organization of those requirements.

C.S.H.B. 3982 requires the executive commissioner of HHSC, in implementing the electronic visit verification system, to adopt compliance standards for health care providers. The bill requires HHSC, in implementing the system, to ensure that the information required to be reported by health care providers is standardized across managed care organizations that contract with HHSC to provide health care services to Medicaid recipients and across HHSC programs and to ensure that time frames for the maintenance of electronic visit verification data by health care providers align with claims payment time frames. The bill requires the executive commissioner, in establishing the compliance standards, to consider the administrative burdens placed on health care providers required to comply with the standards and the benefits of using emerging technologies for ensuring compliance. The bill sets out certain requirements for a health care provider that provides personal care services or attendant care services to Medicaid recipients. The bill authorizes HHSC to recognize a health care provider's proprietary electronic visit verification system as complying with the bill's electronic visit verification system provisions and, contingent on HHSC making certain determinations regarding the system, to allow the health care provider to use that system for a period determined by HHSC. The bill prohibits HHSC or a managed care organization that contracts with HHSC to provide health care services to Medicaid recipients from paying a reimbursement claim for personal care services or attendant care services provided to a recipient unless the information from the electronic visit verification system corresponds with the information contained in the claim and the services were provided consistent with a prior authorization or plan of care. The bill subjects a previously paid claim to retrospective review and recoupment if unverified. The bill requires HHSC to create a stakeholder work group comprised of representatives of affected health care providers, managed care organizations, and Medicaid recipients and to periodically solicit from that work group input regarding the ongoing operation of the electronic visit verification system. The bill authorizes the executive commissioner to adopt rules necessary to implement the bill's provisions relating to the electronic visit verification system and reimbursement of certain related claims.

C.S.H.B. 3982 grants a provider that contracts with a managed care organization under contract with HHSC to provide health care services to Medicaid recipients immunity from liability for the good faith provision of services under the provider's contract with the organization that were provided with prior authorization if the office of inspector general of HHSC makes a determination to recoup an overpayment or debt from the organization. This bill provision expressly does not limit the office's authority to recoup an overpayment or debt from a provider that is owed by the provider as a result of the provider's failure to comply with applicable law or a contract provision, notwithstanding any prior authorization for a service provided, or apply to an action brought under Human Resources Code provisions relating to Medicaid fraud prevention. The bill requires HHSC to provide to a provider that is a hospital written notice of any proposed recoupment of an overpayment or debt and any damages or penalties relating to a proposed recoupment of an overpayment or debt arising out of a fraud or abuse investigation not later than the 90th day before the date the overpayment or debt that is the subject of the notice must be paid.

C.S.H.B. 3982 removes the specification that the Medicaid managed care program to which statutory provisions relating to a utilization review process for Medicaid managed care organizations apply is the STAR + PLUS Medicaid managed care program, with certain exceptions, and includes a financial audit process as an aspect of the utilization review process the office of contract management of HHSC is required to establish for managed care organizations participating in the Medicaid managed care program. The bill revises the purposes for which the office must use the utilization review and financial audit process and requires the office, in addition to conducting certain reviews, to use the utilization review and financial audit process to review each managed care organization participating in the Medicaid managed care program at least once every five years. The bill replaces a provision prohibiting a service provider who contracts with a managed care organization from being held liable for the good faith provision of services based on an authorization from the organization if a utilization review results in a determination to recoup money from the organization with a provision applying the bill's provisions relating to provider immunity from liability for a managed care organization overpayment or debt if a utilization or financial audit review results in such a determination.

C.S.H.B. 3982 requires a Medicaid managed care contract between a managed care organization and HHSC to contain capitation rates that ensure access to quality health care; a requirement that the organization demonstrate to HHSC that, within each provider category and service delivery area designated by HHSC, the organization pays at least 98 percent of claims for health care services rendered to a Medicaid recipient under a managed care plan that are received with documentation reasonably necessary to process the claims by certain prescribed deadlines; a requirement that the organization establish an electronic process for use by providers in submitting claims documentation that complies with requirements for an electronic process applicable to a provider protection plan and allows providers to submit additional documentation on a claim when the organization determines the claim was not submitted with documentation reasonably necessary to process the claim; and a requirement that the organization make available on the organization's website summary information that is accessible to the public regarding the number of provider appeals and the disposition of those appeals, organized by provider and service types. The bill removes as a required Medicaid managed care contract provision a provision that prohibits a managed care organization from implementing significant, nonnegotiated, across-the-board provider reimbursement rate reductions, subject to certain exceptions, and revises certain other required Medicaid managed care contract provisions relating to claims payments, limits on the use of out-of-network providers or groups of out‑of‑network providers, a system for tracking and resolving provider appeals, the provision of services in the South Texas service region, a requirement regarding a report on the sufficiency of a managed care organization's provider network, and a requirement regarding the accessibility of health care services through a managed care organization's provider network. The bill requires a Medicaid managed care contract to provide that, if the managed care organization has an ownership interest in a health care provider in the organization's provider network, the organization must include in the provider network at least one other health care provider of the same type in which the organization does not have an ownership interest, unless the organization is able to demonstrate to HHSC that the provider included in the provider network is the only provider located in an area that meets requirements established by HHSC relating to the time and distance a recipient is expected to travel to receive services, and that the organization may not give preference in authorizing referrals to the provider in which the organization has an ownership interest as compared to other providers of the same or similar services participating in the organization's provider network.

C.S.H.B. 3982 requires HHSC, except as otherwise provided by a settlement agreement filed with and approved by a court, to require a managed care organization that contracts with HHSC to provide health care services to Medicaid recipients to approve or pend a request from a provider of acute care inpatient services for prior authorization for specified services or equipment not later than 72 hours after receiving the request to allow for a safe and timely discharge of a patient from an inpatient facility; ensure that the provider has an opportunity to engage in direct discussions with the organization regarding the appropriate level of post-acute care while a request for prior authorization is pending; contact, notify, and negotiate with the provider before approving a prior authorization request for personal care services or attendant care services with an expiration date different from the expiration date requested by the provider; submit to a provider of personal care services or attendant care services any change to a recipient's service plan relating to those services not later than the fifth day before the date the plan is to be effective for purposes of giving the provider time to initiate the change and the recipient an opportunity to agree to the change, unless the organization is changing the plan in order to meet an emerging need for personal care services or attendant care services; include on subsequent prior authorization requests approved with a retroactive effective date an expiration date that takes into account the date the service change was implemented by the provider; and provide complete electronic access to prior authorizations through the organization's electronic process as required by the bill. The bill clarifies and revises certain requirements for the provider protection plan developed and implemented by HHSC under the Medicaid managed care program.

C.S.H.B. 3982 prohibits a managed care organization that contracts with HHSC to provide health care services to Medicaid recipients from implementing a significant, as determined by HHSC in accordance with the bill's provisions, across-the-board provider reimbursement rate reduction unless the organization receives prior approval from HHSC and, at least 90 days before the proposed rate reduction is to take effect, provides HHSC and affected providers with written notice of the proposed rate reduction and makes a good faith effort to negotiate the reduction with the affected providers. The bill establishes that an across-the-board provider reimbursement rate reduction is considered to have received prior approval of HHSC unless HHSC issues a written statement of disapproval not later than the 45th day after the date HHSC receives notice of the proposed rate reduction from the organization. The bill requires a managed care organization that proposes an across-the-board provider reimbursement rate reduction in accordance with these provisions and subsequently rejects alternative rate reductions suggested by an affected provider to provide the provider with written notice of that rejection, including an explanation of the grounds for the rejection, before implementing any rate reduction. The bill's provisions restricting certain reimbursement rate reductions expressly do not apply to rate reductions that are implemented because of reductions to the Medicaid fee schedule or cost containment initiatives that are specifically directed by the legislature and implemented by HHSC. The bill repeals a provision establishing that a provider reimbursement rate reduction is considered to have received prior approval of HHSC unless HHSC issues a written statement of disapproval not later than the 45th day after the date HHSC receives notice of the proposed rate reduction from the managed care organization.

C.S.H.B. 3982 requires HHSC to establish standards that govern the processes, criteria, and guidelines under which managed care organizations determine the medical necessity of a health care service covered by Medicaid. The bill requires HHSC, in establishing those standards, to ensure that each Medicaid recipient has equal access in scope and duration to the same covered health care services for which the recipient is eligible regardless of the managed care organization with which the recipient is enrolled; provide managed care organizations with flexibility to approve covered medically necessary services for recipients that may not be within prescribed criteria and guidelines; require managed care organizations to make available to providers all criteria and guidelines used to determine medical necessity through an Internet portal accessible by the providers; ensure that managed care organizations consistently apply the same medical necessity criteria and guidelines for the approval of services and in retrospective utilization reviews; and ensure that managed care organizations include in any service or prior authorization denial specific information about the medical necessity criteria or guidelines that were not met. The bill's provisions relating to standards for determining medical necessity expressly do not apply to or affect the authority of HHSC to determine medical necessity for home and community-based services provided under the STAR + PLUS Medicaid managed care program or to conduct utilization reviews of those services.

C.S.H.B. 3982 revises certain HHSC requirements regarding the administration of Medicaid managed care contracts by requiring HHSC to decrease certain administrative burdens by allowing managed care organizations to provide updated contact information in addition to updated address information directly to HHSC, specifying that the state system in which HHSC corrects that information is the state eligibility system, removing the requirement that HHSC decrease certain administrative burdens by reviewing the appropriateness of primary care case management requirements in the admission and clinical criteria process, and requiring the portal through which providers in any managed care organization's provider network may submit acute care services and long-term services and supports claims to comply with certain provider protection plan requirements regarding an electronic process. The bill specifies certain circumstances under which HHSC is required to allow a Medicaid recipient who is enrolled in a managed care plan under the Medicaid managed care program to disenroll from that plan and enroll in another managed care plan at any time for cause in accordance with federal law and removes the requirement that HHSC allow such a Medicaid recipient do so once for any reason after certain periods. The bill requires HHSC to implement a process by which HHSC verifies that a recipient is permitted to disenroll from one managed care plan offered by a managed care organization and enroll in another plan, including a plan offered by another managed care organization, before the disenrollment occurs.

C.S.H.B. 3982 requires a managed care organization under contract with HHSC to provide health care services to Medicaid recipients to ensure that persons providing care coordination services through the organization coordinate with hospital discharge planners, who must notify the organization of an inpatient admission of a recipient, to facilitate the timely discharge of the recipient to the appropriate level of care and minimize potentially preventable readmissions. The bill requires the office of inspector general of HHSC, if the office intends to conduct a utilization review audit of a provider of services under a Medicaid managed care delivery model, to inform both the provider and the managed care organization with which the provider contracts of any applicable criteria and guidelines the office will use in the course of the audit. The bill requires the office to ensure that each person conducting such a utilization review audit has experience and training regarding the operations of managed care organizations. The bill prohibits the office, as the result of a utilization review audit, from recouping an overpayment or debt from a provider that contracts with a managed care organization based on a determination that a provided service was not medically necessary unless the office uses the same criteria and guidelines that were used by the organization in its determination of medical necessity for the service and verifies with the organization and the provider that the provider, at the time the service was delivered, had reasonable notice of the criteria and guidelines used by the organization to determine medical necessity and did not follow the criteria and guidelines used by the organization to determine medical necessity that were in effect at the time the service was delivered. The bill applies the provider protections from liability for a managed care organization's overpayment or debt under the bill's provisions to a utilization review audit conducted by the office that results in a determination to recoup money from a managed care organization that contracts with HHSC to provide health care services to Medicaid recipients.

C.S.H.B. 3982 requires HHSC to ensure that managed care organizations that contract with HHSC to provide health care services to Medicaid recipients have policies regarding treatment and services related to a recipient's inpatient hospital stay, including a behavioral health hospital stay, that is less than 48 hours. The bill requires HHSC, for purposes of that requirement, to ensure that the organization specifies certain criteria that warrant reimbursement of services related to the stay as either inpatient hospital services or outpatient hospital services, account for medical necessity based on recognized inpatient criteria, the severity of any psychological disorder, and the judgment of the treating physician or other provider, and do not permit classification of services as either inpatient or outpatient hospital services for purposes of reimbursement based solely on the duration of the stay; provides an opportunity for direct discussions regarding the medical necessity of a recipient's inpatient hospital admission; and reviews documentation in a recipient's medical record that supports the medical necessity of the inpatient hospital stay at the time of admission for reimbursement of services related to the stay.

C.S.H.B. 3982 requires the Medicaid waiver program or ICF-IID program that serves an individual with an intellectual or developmental disability who is receiving services under such a program and who requires medically necessary acute care services or long-term services and supports that are not available to the individual through the redesigned services delivery model to pay the cost of the service. The bill authorizes such a program to submit to HHSC a claim for reimbursement for the cost of that service and authorizes HHSC, if HHSC determines that a claim paid by HHSC should have been covered and paid by a managed care organization that contracts with HHSC, to recoup the entire cost of that claim from the organization.

C.S.H.B. 3982 includes a temporary provision set to expire January 1, 2019, to require HHSC to develop and implement a pilot program in up to three urban service delivery areas that is designed to increase the incidence of ambulance service providers directing recipients of Medicaid managed care program services who are experiencing a behavioral health emergency to more appropriate health care providers for treatment of behavioral health illnesses and, not later than December 1, 2018, to develop a report analyzing any cost savings and other benefits realized as a result of the pilot program and deliver the report to the governor, lieutenant governor, speaker of the house of representatives, and chairs of the standing legislative committees having primary jurisdiction over Medicaid.

C.S.H.B. 3982 includes a temporary provision set to expire December 31, 2017, to require HHSC, not later than November 30, 2017, to conduct a study to determine the cost-effectiveness and feasibility of providing prescription drug benefits to recipients of acute care services under Medicaid by pharmacies with a Class A pharmacy license through a single statewide prescription drug administrator that adheres to a pharmacy services reimbursement methodology that uses the most accurate and transparent ingredient drug pricing model, the National Average Drug Acquisition Cost published by the Centers for Medicare and Medicaid Services as the drug acquisition cost, and the most recent dispensing fee study contracted for by HHSC to set an accurate and transparent professional dispensing fee as defined by specified Texas Administrative Code provisions. The bill sets out certain requirements for HHSC in conducting the study and establishes that its provisions relating to the study expressly do not apply to the provision of prescription drug benefits by long-term care facility pharmacies and specialty pharmacies and expressly prohibits HHSC from considering such provision by such pharmacies. The bill requires HHSC to combine the study with any other similar study required to be conducted by HHSC and requires HHSC, not later than November 30, 2017, to report its findings to the legislature.

C.S.H.B. 3982 repeals Section 533.005(a-3), Government Code.

EFFECTIVE DATE

September 1, 2017.

COMPARISON OF ORIGINAL AND SUBSTITUTE

While C.S.H.B. 3982 may differ from the original in minor or nonsubstantive ways, the following comparison is organized and formatted in a manner that indicates the substantial differences between the introduced and committee substitute versions of the bill.

INTRODUCED

HOUSE COMMITTEE SUBSTITUTE

No equivalent provision.

SECTION 1. Section 531.024172, Government Code, is amended to read as follows:

Sec. 531.024172. ELECTRONIC VISIT VERIFICATION SYSTEM; REIMBURSEMENT OF CERTAIN RELATED CLAIMS. (a) Subject to Subsection (g), [~~In this section, "acute nursing services" has the meaning assigned by Section 531.02417.~~

[~~(b) If it is cost-effective and feasible,~~] the commission shall, in accordance with federal law, implement an electronic visit verification system to electronically verify [~~and document,~~] through a telephone, global positioning, or computer-based system that personal care services or attendant care services provided to recipients under Medicaid, including personal care services or attendant care services provided under the Texas Health Care Transformation and Quality Improvement Program waiver issued under Section 1115 of the federal Social Security Act (42 U.S.C. Section 1315) or any other Medicaid waiver program, are provided to recipients in accordance with a prior authorization or plan of care. The electronic visit verification system implemented under this subsection must allow for verification of only the following[~~, basic~~] information relating to the delivery of Medicaid [~~acute nursing~~] services[~~, including~~]:

(1) the type of service provided [~~the provider's name~~];

(2) the name of the recipient to whom the service is provided [~~the recipient's name~~]; [~~and~~]

(3) the date and times [~~time~~] the provider began [~~begins~~] and ended the [~~ends each~~] service delivery visit;

(4) the location, including the address, at which the service was provided;

(5) the name of the individual who provided the service; and

(6) other information the commission determines is necessary to ensure the accurate adjudication of Medicaid claims.

(b) The commission shall establish minimum requirements for third-party entities seeking to provide electronic visit verification system services to health care providers providing Medicaid services and must certify that a third-party entity complies with those minimum requirements before the entity may provide electronic visit verification system services to a health care provider.

(c) The commission shall inform each Medicaid recipient who receives personal care services or attendant care services that the health care provider providing the services and the recipient are each required to comply with the electronic visit verification system. A managed care organization that contracts with the commission to provide health care services to Medicaid recipients described by this subsection shall also inform recipients enrolled in a managed care plan offered by the organization of those requirements.

(d) In implementing the electronic visit verification system:

(1) subject to Subsection (e), the executive commissioner shall adopt compliance standards for health care providers; and

(2) the commission shall ensure that:

(A) the information required to be reported by health care providers is standardized across managed care organizations that contract with the commission to provide health care services to Medicaid recipients and across commission programs; and

(B) time frames for the maintenance of electronic visit verification data by health care providers align with claims payment time frames.

(e) In establishing compliance standards for health care providers under this section, the executive commissioner shall consider:

(1) the administrative burdens placed on health care providers required to comply with the standards; and

(2) the benefits of using emerging technologies for ensuring compliance, including Internet-based, mobile telephone-based, and global positioning-based technologies.

(f) A health care provider that provides personal care services or attendant care services to Medicaid recipients shall:

(1) use an electronic visit verification system to document the provision of those services;

(2) comply with all documentation requirements established by the commission;

(3) comply with applicable federal and state laws regarding confidentiality of recipients' information;

(4) ensure that the commission or the managed care organization with which a claim for reimbursement for a service is filed may review electronic visit verification system documentation related to the claim or obtain a copy of that documentation at no charge to the commission or the organization; and

(5) at any time, allow the commission or a managed care organization with which a health care provider contracts to provide health care services to recipients enrolled in the organization's managed care plan to have direct, on-site access to the electronic visit verification system in use by the health care provider.

(g) The commission may recognize a health care provider's proprietary electronic visit verification system as complying with this section and allow the health care provider to use that system for a period determined by the commission if the commission determines that the system:

(1) complies with all necessary data submission, exchange, and reporting requirements established under this section;

(2) meets all other standards and requirements established under this section; and

(3) has been in use by the health care provider since at least June 1, 2014.

(h) The commission or a managed care organization that contracts with the commission to provide health care services to Medicaid recipients may not pay a claim for reimbursement for personal care services or attendant care services provided to a recipient unless the information from the electronic visit verification system corresponds with the information contained in the claim and the services were provided consistent with a prior authorization or plan of care. A previously paid claim is subject to retrospective review and recoupment if unverified.

(i) The commission shall create a stakeholder work group comprised of representatives of affected health care providers, managed care organizations, and Medicaid recipients and periodically solicit from that work group input regarding the ongoing operation of the electronic visit verification system under this section.

(j) The executive commissioner may adopt rules necessary to implement this section.

SECTION 1. Subchapter C, Chapter 531, Government Code, is amended by adding Section 531.1133 to read as follows:

Sec. 531.1133. PROVIDER NOT LIABLE FOR MANAGED CARE ORGANIZATION OVERPAYMENT OR DEBT. If the commission's office of inspector general makes a determination to recoup an overpayment or debt from a managed care organization that contracts with the commission to provide health care services to recipients, a provider that contracts with the managed care organization may not be held liable for the good faith provision of services under the provider's contract with the managed care organization.

SECTION 2. Subchapter C, Chapter 531, Government Code, is amended by adding Section 531.1133 to read as follows:

Sec. 531.1133. PROVIDER NOT LIABLE FOR MANAGED CARE ORGANIZATION OVERPAYMENT OR DEBT. (a) If the commission's office of inspector general makes a determination to recoup an overpayment or debt from a managed care organization that contracts with the commission to provide health care services to Medicaid recipients, a provider that contracts with the managed care organization may not be held liable for the good faith provision of services under the provider's contract with the managed care organization that were provided with prior authorization.

(b) This section does not:

(1) limit the office of inspector general's authority to recoup an overpayment or debt from a provider that is owed by the provider as a result of the provider's failure to comply with applicable law or a contract provision, notwithstanding any prior authorization for a service provided; or

(2) apply to an action brought under Chapter 36, Human Resources Code.

SECTION 2. Section 531.120, Government Code, is amended.

SECTION 3. Same as introduced version.

No equivalent provision.

SECTION 4. Section 533.00281, Government Code, is redesignated as Section 533.0121, Government Code, and amended to read as follows:

Sec. 533.0121 [~~533.00281~~]. UTILIZATION REVIEW AND FINANCIAL AUDIT PROCESS FOR [~~STAR + PLUS~~] MEDICAID MANAGED CARE ORGANIZATIONS CONDUCTED BY OFFICE OF CONTRACT MANAGEMENT. (a) The commission's office of contract management shall establish an annual utilization review and financial audit process for managed care organizations participating in the [~~STAR + PLUS~~] Medicaid managed care program. The commission shall determine the topics to be examined in a [~~the~~] review [~~process~~], except that with respect to a managed care organization participating in the STAR + PLUS Medicaid managed care program, the review [~~process~~] must include a thorough investigation of the [~~each managed care~~] organization's procedures for determining whether a recipient should be enrolled in the STAR + PLUS home and community-based services and supports (HCBS) program, including the conduct of functional assessments for that purpose and records relating to those assessments.

(b) The office of contract management shall use the utilization review and financial audit process established under this section to review each fiscal year:

(1) each managed care organization [~~every managed care organization~~] participating in the [~~STAR + PLUS~~] Medicaid managed care program in this state for that organization's first five years of participation; [or]

(2) each managed care organization providing health care services to a population of recipients new to receiving those services through a Medicaid [~~only the~~] managed care delivery model for the first three years that organization provides those services to that population; or

(3) managed care organizations that, using a risk-based assessment process and evaluation of prior history, the office determines have a higher likelihood of contract or financial noncompliance [~~inappropriate client placement in the STAR + PLUS home and community-based services and supports (HCBS) program~~].

(c) In addition to the reviews required by Subsection (b), the office of contract management shall use the utilization review and financial audit process established under this section to review each managed care organization participating in the Medicaid managed care program at least once every five years.

(d) In conjunction with the commission's office of contract management, the commission shall provide a report to the standing committees of the senate and house of representatives with jurisdiction over Medicaid not later than December 1 of each year. The report must:

(1) summarize the results of the [~~utilization~~] reviews conducted under this section during the preceding fiscal year;

(2) provide analysis of errors committed by each reviewed managed care organization; and

(3) extrapolate those findings and make recommendations for improving the efficiency of the Medicaid managed care program.

(e) If a [~~utilization~~] review conducted under this section results in a determination to recoup money from a managed care organization, the provider protections from liability under Section 531.1133 apply [a service provider who contracts with the managed care organization may not be held liable for the good faith provision of services based on an authorization from the managed care organization].

SECTION 3. Section 533.005, Government Code, is amended by amending Subsections (a) and (a-3) and adding Subsections (a-4), (a-5), and (e) to read as follows:

(a) A contract between a managed care organization and the commission for the organization to provide health care services to recipients must contain:

(1) procedures to ensure accountability to the state for the provision of health care services, including procedures for financial reporting, quality assurance, utilization review, and assurance of contract and subcontract compliance;

(2) capitation rates that ensure access to and the cost-effective provision of quality health care;

(3) a requirement that the managed care organization provide ready access to a person who assists recipients in resolving issues relating to enrollment, plan administration, education and training, access to services, and grievance procedures;

(4) a requirement that the managed care organization provide ready access to a person who assists providers in resolving issues relating to payment, plan administration, education and training, and grievance procedures;

(5) a requirement that the managed care organization provide information and referral about the availability of educational, social, and other community services that could benefit a recipient;

(6) procedures for recipient outreach and education;

(7) subject to Subdivision (7-b), a requirement that the managed care organization make payment to a physician or provider for health care services rendered to a recipient under a managed care plan on any claim for payment that is received with documentation reasonably necessary for the managed care organization to process the claim:

(A) not later than:

(i) the 10th day after the date the claim is received if the claim relates to services provided by a nursing facility, intermediate care facility, or group home;

(ii) the 30th day after the date the claim is received if the claim relates to the provision of long-term services and supports not subject to Subparagraph (i); and

(iii) the 45th day after the date the claim is received if the claim is not subject to Subparagraph (i) or (ii); or

(B) within a period, not to exceed 60 days, specified by a written agreement between the physician or provider and the managed care organization;

(7-a) a requirement that the managed care organization demonstrate to the commission that the organization pays claims described by Subdivision (7)(A)(ii) on average not later than the 21st day after the date the claim is received by the organization;

(7-b) a requirement that the managed care organization demonstrate to the commission that, within each provider category designated by the commission, the organization pays at least 98 percent of claims described by Subdivision (7) within the time prescribed by that subdivision;

(7-c) a requirement that the managed care organization establish an electronic process for use by providers that complies with Section 533.0055(b)(6);

(8) a requirement that the commission, on the date of a recipient's enrollment in a managed care plan issued by the managed care organization, inform the organization of the recipient's Medicaid certification date;

(9) a requirement that the managed care organization comply with Section 533.006 as a condition of contract retention and renewal;

(10) a requirement that the managed care organization provide the information required by Section 533.012 and otherwise comply and cooperate with the commission's office of inspector general and the office of the attorney general;

(11) a requirement that the managed care organization's usages of out-of-network providers or groups of out-of-network providers may not exceed limits for those usages determined by the commission, including limits relating to:

(A) total inpatient admissions, total outpatient services, and emergency room admissions [~~determined by the commission~~]; and

(B) therapy services, home health services, long-term services and supports, and health care specialists;

(12) if the commission finds that a managed care organization has violated Subdivision (11), a requirement that the managed care organization reimburse an out-of-network provider for health care services at a rate that is equal to the allowable rate for those services, as determined under Sections 32.028 and 32.0281, Human Resources Code;

(13) a requirement that, notwithstanding any other law, including Sections 843.312 and 1301.052, Insurance Code, the organization:

(A) use advanced practice registered nurses and physician assistants in addition to physicians as primary care providers to increase the availability of primary care providers in the organization's provider network; and

(B) treat advanced practice registered nurses and physician assistants in the same manner as primary care physicians with regard to:

(i) selection and assignment as primary care providers;

(ii) inclusion as primary care providers in the organization's provider network; and

(iii) inclusion as primary care providers in any provider network directory maintained by the organization;

(14) a requirement that the managed care organization reimburse a federally qualified health center or rural health clinic for health care services provided to a recipient outside of regular business hours, including on a weekend day or holiday, at a rate that is equal to the allowable rate for those services as determined under Section 32.028, Human Resources Code, if the recipient does not have a referral from the recipient's primary care physician;

(15) a requirement that the managed care organization develop, implement, and maintain a system for tracking and resolving all provider appeals related to claims payment, including a process that will require:

(A) a tracking mechanism to document the status and final disposition of each provider's claims payment appeal;

(B) the contracting with physicians and other health care providers who are not network providers and who are of the same or related specialty as the appealing physician to resolve claims disputes related to denial on the basis of medical necessity that remain unresolved subsequent to a provider appeal;

(C) the determination of the physician or other health care provider resolving the dispute to be binding on the managed care organization and the appealing provider; and

(D) the managed care organization to allow a provider with a claim that has not been paid before the time prescribed by Subdivision (7)(A)(ii) to initiate an appeal of that claim;

(15-a) a requirement that the managed care organization develop, implement, and maintain on the organization's Internet website information that is accessible to the public regarding provider appeals and the disposition of those appeals, organized by provider and service types;

(16) a requirement that a medical director who is authorized to make medical necessity determinations is available to the region where the managed care organization provides health care services;

(17) a requirement that the managed care organization ensure that a medical director and patient care coordinators and provider and recipient support services personnel are located in the South Texas service region, if the managed care organization provides a managed care plan in that region;

(18) a requirement that the managed care organization provide special programs and materials for recipients with limited English proficiency or low literacy skills;

(19) a requirement that the managed care organization develop and establish a process for responding to provider appeals in the region where the organization provides health care services;

(20) a requirement that the managed care organization:

(A) develop and submit to the commission, before the organization begins to provide health care services to recipients, a comprehensive plan that describes how the organization's provider network complies with the provider access standards established under Section 533.0061, as added by Chapter 1272 (S.B. 760), Acts of the 84th Legislature, Regular Session, 2015;

(B) as a condition of contract retention and renewal:

(i) continue to comply with the provider access standards established under Section 533.0061, as added by Chapter 1272 (S.B. 760), Acts of the 84th Legislature, Regular Session, 2015; and

(ii) make substantial efforts, as determined by the commission, to mitigate or remedy any noncompliance with the provider access standards established under Section 533.0061, as added by Chapter 1272 (S.B. 760), Acts of the 84th Legislature, Regular Session, 2015;

(C) pay liquidated damages for each failure, as determined by the commission, to comply with the provider access standards established under Section 533.0061, as added by Chapter 1272 (S.B. 760), Acts of the 84th Legislature, Regular Session, 2015, in amounts that are reasonably related to the noncompliance; and

(D) regularly, as determined by the commission, submit to the commission and make available to the public a report containing data on the sufficiency of the organization's provider network with regard to providing the care and services described under Section 533.0061(a), as added by Chapter 1272 (S.B. 760), Acts of the 84th Legislature, Regular Session, 2015, and specific data with respect to access to primary care, specialty care, long-term services and supports, nursing services, and therapy services on:

(i) the average length of time between[:

[~~(i)~~] the date a provider requests prior authorization for the care or service and the date the organization approves or denies the request; [~~and~~]

(ii) the average length of time between the date the organization approves a request for prior authorization for the care or service and the date the care or service is initiated; and

(iii) the number of providers who are accepting new patients;

(21) a requirement that the managed care organization demonstrate to the commission, before the organization begins to provide health care services to recipients, that, subject to the provider access standards established under Section 533.0061, as added by Chapter 1272 (S.B. 760), Acts of the 84th Legislature, Regular Session, 2015:

(A) the organization's provider network has the capacity to serve the number of recipients expected to enroll in a managed care plan offered by the organization;

(B) the organization's provider network includes:

(i) a sufficient number of primary care providers;

(ii) a sufficient variety of provider types;

(iii) a sufficient number of providers of long-term services and supports and specialty pediatric care providers of home and community-based services; and

(iv) providers located throughout the region where the organization will provide health care services; and

(C) health care services will be accessible to recipients through the organization's provider network to a comparable extent that health care services would be available to recipients under a fee-for-service or primary care case management model of Medicaid managed care;

(22) a requirement that the managed care organization develop a monitoring program for measuring the quality of the health care services provided by the organization's provider network that:

(A) incorporates the National Committee for Quality Assurance's Healthcare Effectiveness Data and Information Set (HEDIS) measures;

(B) focuses on measuring outcomes; and

(C) includes the collection and analysis of clinical data relating to prenatal care, preventive care, mental health care, and the treatment of acute and chronic health conditions and substance abuse;

(23) subject to Subsection (a-1), a requirement that the managed care organization develop, implement, and maintain an outpatient pharmacy benefit plan for its enrolled recipients:

(A) that exclusively employs the vendor drug program formulary and preserves the state's ability to reduce waste, fraud, and abuse under Medicaid;

(B) that adheres to the applicable preferred drug list adopted by the commission under Section 531.072;

(C) that includes the prior authorization procedures and requirements prescribed by or implemented under Sections 531.073(b), (c), and (g) for the vendor drug program;

(D) for purposes of which the managed care organization:

(i) may not negotiate or collect rebates associated with pharmacy products on the vendor drug program formulary; and

(ii) may not receive drug rebate or pricing information that is confidential under Section 531.071;

(E) that complies with the prohibition under Section 531.089;

(F) under which the managed care organization may not prohibit, limit, or interfere with a recipient's selection of a pharmacy or pharmacist of the recipient's choice for the provision of pharmaceutical services under the plan through the imposition of different copayments;

(G) that allows the managed care organization or any subcontracted pharmacy benefit manager to contract with a pharmacist or pharmacy providers separately for specialty pharmacy services, except that:

(i) the managed care organization and pharmacy benefit manager are prohibited from allowing exclusive contracts with a specialty pharmacy owned wholly or partly by the pharmacy benefit manager responsible for the administration of the pharmacy benefit program; and

(ii) the managed care organization and pharmacy benefit manager must adopt policies and procedures for reclassifying prescription drugs from retail to specialty drugs, and those policies and procedures must be consistent with rules adopted by the executive commissioner and include notice to network pharmacy providers from the managed care organization;

(H) under which the managed care organization may not prevent a pharmacy or pharmacist from participating as a provider if the pharmacy or pharmacist agrees to comply with the financial terms and conditions of the contract as well as other reasonable administrative and professional terms and conditions of the contract;

(I) under which the managed care organization may include mail-order pharmacies in its networks, but may not require enrolled recipients to use those pharmacies, and may not charge an enrolled recipient who opts to use this service a fee, including postage and handling fees;

(J) under which the managed care organization or pharmacy benefit manager, as applicable, must pay claims in accordance with Section 843.339, Insurance Code; and

(K) under which the managed care organization or pharmacy benefit manager, as applicable:

(i) to place a drug on a maximum allowable cost list, must ensure that:

(a) the drug is listed as "A" or "B" rated in the most recent version of the United States Food and Drug Administration's Approved Drug Products with Therapeutic Equivalence Evaluations, also known as the Orange Book, has an "NR" or "NA" rating or a similar rating by a nationally recognized reference; and

(b) the drug is generally available for purchase by pharmacies in the state from national or regional wholesalers and is not obsolete;

(ii) must provide to a network pharmacy provider, at the time a contract is entered into or renewed with the network pharmacy provider, the sources used to determine the maximum allowable cost pricing for the maximum allowable cost list specific to that provider;

(iii) must review and update maximum allowable cost price information at least once every seven days to reflect any modification of maximum allowable cost pricing;

(iv) must, in formulating the maximum allowable cost price for a drug, use only the price of the drug and drugs listed as therapeutically equivalent in the most recent version of the United States Food and Drug Administration's Approved Drug Products with Therapeutic Equivalence Evaluations, also known as the Orange Book;

(v) must establish a process for eliminating products from the maximum allowable cost list or modifying maximum allowable cost prices in a timely manner to remain consistent with pricing changes and product availability in the marketplace;

(vi) must:

(a) provide a procedure under which a network pharmacy provider may challenge a listed maximum allowable cost price for a drug;

(b) respond to a challenge not later than the 15th day after the date the challenge is made;

(c) if the challenge is successful, make an adjustment in the drug price effective on the date the challenge is resolved, and make the adjustment applicable to all similarly situated network pharmacy providers, as determined by the managed care organization or pharmacy benefit manager, as appropriate;

(d) if the challenge is denied, provide the reason for the denial; and

(e) report to the commission every 90 days the total number of challenges that were made and denied in the preceding 90-day period for each maximum allowable cost list drug for which a challenge was denied during the period;

(vii) must notify the commission not later than the 21st day after implementing a practice of using a maximum allowable cost list for drugs dispensed at retail but not by mail; and

(viii) must provide a process for each of its network pharmacy providers to readily access the maximum allowable cost list specific to that provider;

(24) a requirement that the managed care organization and any entity with which the managed care organization contracts for the performance of services under a managed care plan disclose, at no cost, to the commission and, on request, the office of the attorney general all discounts, incentives, rebates, fees, free goods, bundling arrangements, and other agreements affecting the net cost of goods or services provided under the plan;

(25) a requirement that the managed care organization not implement significant, [~~nonnegotiated,~~] across-the-board provider reimbursement rate reductions unless the organization presented the reduction to providers in an attempt to negotiate the reductions and:

(A) subject to Subsection (a-4) [~~(a-3)~~], the organization has the prior approval of the commission to make the reduction; or

(B) the rate reductions are based on changes to the Medicaid fee schedule or cost containment initiatives implemented by the commission; and

(26) a requirement that the managed care organization make initial and subsequent primary care provider assignments and changes.

(a-3) For purposes of Subsection (a)(25), "across-the-board provider reimbursement rate reductions" means provider reimbursement rate reductions proposed by a managed care organization that the commission determines are likely to affect a substantial number of providers in the organization's provider network during the 12-month period following implementation of the proposed reductions, regardless of whether:

(1) the organization limits the proposed reductions to specific service areas or provider types; or

(2) the affected providers are likely to experience differing percentages of rate reductions or amounts of lost revenue as a result of the proposed reductions.

(a-4) A [~~(a)(25)(A), a~~] provider reimbursement rate reduction is considered to have received the commission's prior approval for purposes of Subsection (a)(25) unless the commission issues a written statement of disapproval not later than the 45th day after the date the commission receives notice of the proposed rate reduction from the managed care organization.

(a-5) If a managed care organization proposes provider reimbursement rate reductions in accordance with Subsection (a)(25) and subsequently rejects alternative rate reductions suggested by an affected provider, the managed care organization must provide the provider with written notice of that rejection, including an explanation of the grounds for the rejection, prior to implementing any rate reductions.

(e) In addition to the requirements specified by Subsection (a), a contract described by that subsection must provide that if the managed care organization has an ownership interest in a health care provider in the organization's provider network, the organization must include in the provider network at least one other health care provider of the same type in which the organization does not have an ownership interest.

SECTION 5. Section 533.005, Government Code, is amended by amending Subsection (a) and adding Subsection (d) to read as follows:

(a) A contract between a managed care organization and the commission for the organization to provide health care services to recipients must contain:

(2) capitation rates that ensure access to and the cost-effective provision of quality health care;

(5) a requirement that the managed care organization provide information and referral about the availability of educational, social, and other community services that could benefit a recipient;

(6) procedures for recipient outreach and education;

(7) subject to Subdivision (7-b), a requirement that the managed care organization make payment to a physician or provider for health care services rendered to a recipient under a managed care plan offered by the managed care organization on any claim for payment that is received with documentation reasonably necessary for the managed care organization to process the claim:

(A) not later than[:

[~~(i)~~] the 10th day after the date the claim is received if the claim relates to services provided by a nursing facility, intermediate care facility, or group home; and

(B) on average, not later than [~~(ii)~~] the 15th [~~30th~~] day after the date the claim is received if the claim, including a claim that relates to the provision of long-term services and supports, is not subject to Paragraph (A) [~~Subparagraph (i); and~~

[~~(iii) the 45th day after the date the claim is received if the claim is not subject to Subparagraph (i) or (ii); or~~

[~~(B) within a period, not to exceed 60 days, specified by a written agreement between the physician or provider and the managed care organization~~];

(7-a) a requirement that the managed care organization demonstrate to the commission that the organization pays claims to which [~~described by~~] Subdivision (7)(B) applies [~~(7)(A)(ii)~~] on average not later than the 15th [~~21st~~] day after the date the claim is received by the organization;

(7-b) a requirement that the managed care organization demonstrate to the commission that, within each provider category and service delivery area designated by the commission, the organization pays at least 98 percent of claims within the times prescribed by Subdivision (7);

(7-c) a requirement that the managed care organization establish an electronic process for use by providers in submitting claims documentation that complies with Section 533.0055(b)(6) and allows providers to submit additional documentation on a claim when the organization determines the claim was not submitted with documentation reasonably necessary to process the claim;

(9) a requirement that the managed care organization comply with Section 533.006 as a condition of contract retention and renewal;

(11) a requirement that the managed care organization's utilization [~~usages~~] of out-of-network providers or groups of out-of-network providers may not exceed limits determined by the commission, including limits [~~for those usages~~] relating to:

(A) total inpatient admissions, total outpatient services, and emergency room admissions [~~determined by the commission~~];

(B) acute care services not described by Paragraph (A); and

(13) a requirement that, notwithstanding any other law, including Sections 843.312 and 1301.052, Insurance Code, the organization:

(B) treat advanced practice registered nurses and physician assistants in the same manner as primary care physicians with regard to:

(i) selection and assignment as primary care providers;

(ii) inclusion as primary care providers in the organization's provider network; and

(iii) inclusion as primary care providers in any provider network directory maintained by the organization;

(15) a requirement that the managed care organization develop, implement, and maintain a system for tracking and resolving all provider complaints and appeals related to claims payment and prior authorization and service denials, including a system [~~process~~] that will [~~require~~]:

(A) allow providers to electronically track and determine [~~a tracking mechanism to document~~] the status and final disposition of the [~~each~~] provider's [~~claims payment~~] appeal or complaint, as applicable;

(B) require the contracting with physicians or other health care providers who are not network providers and who are of the same or related specialty as the appealing physician or other provider, as appropriate, to resolve claims disputes related to denial on the basis of medical necessity that remain unresolved subsequent to a provider appeal; and

(C) require the determination of the physician or other health care provider resolving the dispute to be binding on the managed care organization and the appealing provider; [~~and~~

[~~(D) the managed care organization to allow a provider with a claim that has not been paid before the time prescribed by Subdivision (7)(A)(ii) to initiate an appeal of that claim;~~]

(15-a) a requirement that the managed care organization make available on the organization's Internet website summary information that is accessible to the public regarding the number of provider appeals and the disposition of those appeals, organized by provider and service types;

(16) a requirement that a medical director who is authorized to make medical necessity determinations is available to the region where the managed care organization provides health care services;

(18) a requirement that the managed care organization provide special programs and materials for recipients with limited English proficiency or low literacy skills;

(19) a requirement that the managed care organization develop and establish a process for responding to provider appeals in the region where the organization provides health care services;

(20) a requirement that the managed care organization:

(B) as a condition of contract retention and renewal:

(i) continue to comply with the provider access standards established under Section 533.0061, as added by Chapter 1272 (S.B. 760), Acts of the 84th Legislature, Regular Session, 2015; and

(D) annually [~~regularly, as determined by the commission,~~] submit to the commission and make available to the public a report containing data on the sufficiency of the organization's provider network with regard to providing the care and services described under Section 533.0061(a), as added by Chapter 1272 (S.B. 760), Acts of the 84th Legislature, Regular Session, 2015, and specific data with respect to access to primary care, specialty care, long-term services and supports, nursing services, and therapy services on:

(i) the average length of time between[:

[~~(i)~~] the date a provider requests prior authorization for the care or service and the date the organization approves or denies the request; [~~and~~]

(ii) the average length of time between the date the organization approves a request for prior authorization for the care or service and the date the care or service is initiated; and

(iii) the number of providers who are accepting new patients;

(A) the organization's provider network has the capacity to serve the number of recipients expected to enroll in a managed care plan offered by the organization;

(B) the organization's provider network includes:

(i) a sufficient number of primary care providers;

(ii) a sufficient variety of provider types;

(iii) a sufficient number of providers of long-term services and supports and specialty pediatric care providers of home and community-based services; and

(iv) providers located throughout the region where the organization will provide health care services; and

(C) health care services will be accessible to recipients through the organization's provider network to a comparable extent that health care services would be available to recipients under a fee-for-service [~~or primary care case management~~] model of Medicaid [~~managed care~~];