HBA-MPM H.B. 2896 76(R)BILL ANALYSIS


Office of House Bill AnalysisH.B. 2896
By: Coleman
Public Health
7/19/1999
Enrolled


BACKGROUND AND PURPOSE 

In 1993, Texas began the transition to managed care for certain recipients
of Medicaid services, with pilot programs in Travis County and the
tri-county area of Jefferson, Chambers, and Galveston counties.  Since that
time, Medicaid managed care has been implemented in four additional service
areas:  Bexar, Tarrant, Lubbock, and Harris Counties.  The Dallas County
and El Paso County service areas are scheduled for implementation in the
fall of 1999, which would bring total enrollment in Medicaid managed care
to more than 800,000 individuals. 

The transition to Medicaid managed care has produced difficulties with
client enrollment, access to services, and provider reimbursement.  The
Health and Human Services Commission and the Texas Department of Health
jointly operate the program and are charged with ensuring that the
implementation of Medicaid managed care meets the state's goals of
improving the health of needy Texans while realizing cost efficiencies in
the system.  H.B. 2896 addresses these matters and places a moratorium on
future implementation of Medicaid managed care until the commission
demonstrates that certain issues are resolved.  Additionally, this bill
requires the commission to develop rules regarding the sharing of annual
profit earned by Medicaid managed care.  

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the Health and Human Services
Commission in SECTION 8 (Section 533.014, Government Code) and SECTION 10
(Section 2.07, Chapter 1153, Acts of the 75th Legislature, Regular Session,
1997), of this bill. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Subchapter B, Chapter 13, Health and Safety Code, by
adding Section 12.0123, as follows: 

Sec. 12.0123.  EXTERNAL AUDITS OF CERTAIN MEDICAID CONTRACTORS.  (a)
Defines "Medicaid contractor" for purposes of this section. 

(b)  Requires the Texas Department of Health (department) to contract with
an independent auditor to perform annual independent external financial and
performance audits of any Medicaid contractor used by the department in its
operation of a part of the state Medicaid program. 

(c)  Requires the department to ensure that audit procedures related to
financial audits and performance audits are used consistently in audits
required under this section. 

(d)  Provides that an audit required by this section must be completed
before the end of the fiscal year, immediately following the fiscal year
for which the audit is performed. 

SECTION 2.  Amends Section 533.003, Government Code, as follows:

Section 533.003.  CONSIDERATIONS IN AWARDING CONTRACTS.  Requires the
Health and Human Services Commission or an agency operating as part of the
state Medicaid managed care program, as appropriate (commission) to
consider the ability of organizations  to process Medicaid claims
electronically when awarding contracts to managed care organizations.
Makes nonsubstantive changes. 

SECTION 3.  Amends Section 533.004, Government Code, to require the
commission to contract with a managed care organization, rather than at
least one managed care organization, in a health care service region that
meets certain criteria when providing health care services through Medicaid
managed care to recipients in that region.  Requires the commission, in
providing health care services through Medicaid managed care to recipients
in a health care service region, with the exception of the Harris service
area for the STAR Medicaid managed care program, as defined by the
commission as of September 1, 1999, to also contract with a managed care
organization in that region holding a certificate of authority as a health
maintenance organization under Section 5, Article 20A.05, V.T.C.S. (Texas
Health Maintenance Organization), and that meets certain criteria.  

SECTION 4.  Amends Section 533.005, Government Code, to provide that a
contract between a managed care organization and the commission for the
provision of health care services must include 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 certification, rather than recertification, date. 

SECTION 5.  Amends Section 533.006(a), Government Code, to include each
specialized pediatric laboratory in the region, including those located in
children's hospitals, among those entities from which each managed care
organization contracting with the commission to provide health care
services is required to seek participation in the organization's provider
network. 

SECTION 6.  Amends Section 533.007(e), Government Code, to include the
ability of the managed care organization to process claims electronically
among those processes or systems required by a contract that a compliance
and readiness review by the commission is required to address. 

SECTION 7.  Amends Section 533.0075, Government Code, as follows:

Sec. 533.0075.  RECIPIENT ENROLLMENT.  Requires the commission to develop
and implement an expedited process for determining eligibility for and
enrolling pregnant women and newborn infants in managed care plans, among
other requirements.  Requires the commission to ensure immediate access to
prenatal services and newborn care for pregnant women and infants enrolled
in managed care plans, including ensuring that a pregnant woman may obtain
an appointment with an obstetrical care provider for an initial maternity
evaluation no later than the 30th day after the woman applies for Medicaid.
Requires the commission to also temporarily assign Medicaid-eligible
newborn infants to the traditional fee-for-service component of the state
Medicaid program for a period not to exceed the earlier of 60 days or the
date on which the Texas Department of Human Services has completed the
newborn's Medicaid eligibility determination, including assignment of a
newborn's Medicaid eligibility number.  Makes a nonsubstantive change. 

SECTION 8.  Amends Subchapter A, Chapter 533, Government Code, by adding
Sections 533.012533.015, as follows: 

Sec. 533.012.  MORATORIUM ON IMPLEMENTATION OF CERTAIN PILOT PROGRAMS;
REVIEW; REPORT.  (a)  Prohibits the commission, notwithstanding any other
law,  from implementing Medicaid managed care pilot programs, Medicaid
behavioral health pilot programs, or Medicaid Star + Plus pilot programs
(henceforth referred to as "Medicaid programs" for purposes of this
section) in a region for which the commission has not received certain bids
for health care services or entered into a contract with a managed health
care organization to provide health care services for the region. 

(b) Requires the commission to:

_review any outstanding administrative and financial issues with respect to
the Medicaid programs implemented in health care service regions; 
_review the impact of the Medicaid managed care delivery systems, including
managed care organizations, prepaid health plans, and primary care case
management on certain aspects of the system; and 
_evaluate the feasibility of developing a separate reimbursement
methodology for public hospitals under a Medicaid managed care delivery
system. 

(c)  Requires the commission to seek input from the state Medicaid managed
care advisory committee created under Subchapter C in performing its duties
and functions under Subsection (b).  Authorizes the commission to
coordinate the review required under Subsection (b) with any other study or
review it is required to complete. 

(d)  Authorizes the commission, notwithstanding Subsection (a), to
implement Medicaid programs in a region described by that subsection if the
commission makes certain findings with respect to outstanding
administrative and financial issues in the implementation of those programs
in health care service regions and implementation of those programs in a
region described by Subsection (a) that would benefit both recipients and
providers. 

(e)  Requires the commission, no later than November 1, 2000, to submit a
report to the governor and the legislature that includes certain
information and recommendations. 

(f)  Prohibits this section, to the extent practicable, from being
construed to affect the duty of the commission to plan the continued
expansion of Medicaid programs in health care service regions described by
Subsection (a) after July 1, 2001. 

(g)  Prohibits the commission from using federal medical assistance funds
to implement any long-term care integrated network pilot studies,
notwithstanding any other law. 

(h)  Provides that this section expires July 1, 2001.

Sec. 533.013.  PREMIUM PAYMENT RATE DETERMINATION; REVIEW AND COMMENT.  (a)
Requires the commission, in determining premium rates paid to a managed
care organization under a managed care plan, to consider certain factors. 

(b)  Requires the commission, in determining premium payment rates paid to
a managed care organization licensed under Chapter 20A, V.T.C.S. (Texas
Health Maintenance Organization Act),  to consider and adjust for the
regional variation in costs of services under the traditional
fee-for-service component of the state Medicaid program, utilization
patterns, and other factors influencing the potential for cost savings.
Prohibits the commission, for a service area with a service area factor of
.93 or less, or another appropriate service area factor, as determined by
the commission, from discounting premium payment rates in an amount more
than that necessary to meet federal budget neutrality requirements for
projected fee-for-service costs unless certain circumstances exist. 

(c)  Requires the premium payment rates paid to a managed care organization
licensed under Chapter 20A, V.T.C.S. (Texas Health Maintenance Organization
Act) to be established by competitive bidding.  Prohibits the rates from
exceeding the maximum premium payment rates established by the commission
under Subsection (b). 

(d)  Makes Subsection (b) applicable only to a managed care organization
with respect to Medicaid programs implemented in a health service region
after June 1, 1999. 

Sec. 533.014.  PROFIT SHARING.  (a)  Requires the commission to develop
rules regarding the sharing of profits earned by a managed care
organization  through a managed health care plan providing health care
services under a contract with the commission under this chapter. 

(b)  Requires any amount received by the state under this section to be
deposited in the general revenue fund for the purpose of the state Medicaid
program. 

 Sec. 533.015.  COORDINATION OF EXTERNAL OVERSIGHT ACTIVITIES.  Requires
the commission to coordinate all external oversight activities to minimize
duplication of oversight of managed care plans under the state Medicaid
program and disruption of operations under those plans to the extent
possible.   

SECTION 9.  Amends Chapter 533, Government Code, by adding Subchapter C, as
follows: 

SUBCHAPTER C.  STATEWIDE ADVISORY COMMITTEE.

Sec. 533.041.  APPOINTMENT AND COMPOSITION.  (a)  Requires the commission
to appoint a state Medicaid managed care advisory committee (committee) and
sets for the committee's composition. 

(b)  Provides that the committee must include a member of each regional
Medicaid managed care advisory committee appointed by the commission under
Subchapter B (Medicaid Delivery System), Chapter 532 (Medicaid Managed Care
Delivery System), Government Code. 

Sec. 533.042.  MEETINGS.  Requires the committee to meet at least quarterly
and to develop procedures providing the public with reasonable opportunity
to appear before the committee and speak on any issue under the
jurisdiction of the committee, and makes it subject to Chapter 551 (Open
Meetings), Government Code. 

Sec. 533.043.  POWERS AND DUTIES. Requires the committee to perform certain
functions with respect to Medicaid managed care. 

Sec. 533.044.  OTHER LAW.  Makes the committee subject to Chapter 2110
(State Agency Advisory Committees), Government Code, except as provided by
this subchapter. 

SECTION 10.  Amends Section 2.07(c), Chapter 1153, Acts of the 75th
Legislature, Regular Session, 1997, to require the commission to study the
feasibility of authorizing providers to reenroll in the program online or
through other electronic means, and, on completion of the study, to develop
and implement an electronic method of reenrollment for providers no later
than September 1, 2000, if the commission deems it feasible.  Provides that
a provider must re-enroll in the state Medicaid program or make necessary
contract modifications no later than March 31, 2000, rather than September
1, 1999, to retain eligibility to participate in the program unless the
commission implements under this subsection an electronic method of
reenrollment for providers, in which event, a provider must reenroll or
make the contractual modifications no later than September 1, 2000.
Authorizes the commission, by rule, to extend a reenrollment deadline
prescribed by this subsection if a significant number of providers, as
determined by the commission, have not met the reenrollment requirements by
the applicable deadline. 

SECTION 11.  (a)  Requires the commission, no later than January 1, 2000,
to implement the expedited process for determining eligibility for and
enrollment of certain recipients in Medicaid managed care plans required by
Section 533.0075(4), Government Code, as added by this Act. 

(b)  Requires the commission to report quarterly to the standing committees
of the senate and house of representatives with primary jurisdiction over
Medicaid managed care regarding the status of the expedited process
described by Subsection (a) of this section, and requires the commission to
submit quarterly reports under this subsection until it determines that the
process is fully implemented and functioning successfully. 

SECTION 12.  Requires the commission, if it determines that a waiver or
other authorization from a federal agency is necessary before implementing
any provision of this Act, to request the waiver or authorization and to
delay implementing the provision until the waiver or authorization is
granted. 

SECTION 18.  Emergency clause.
Effective date:  Upon passage.