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.