HBA-MPM H.B. 1223 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 1223 By: Coleman Human Services 3/28/2001 Introduced 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 in the tri-county area of Jefferson, Chambers, and Galveston counties. Since that time, Medicaid managed care has been implemented in six additional service areas. In fiscal year 2000, 29 percent of Texas Medicaid clients and most of the state's major urban areas were in Medicaid managed care. The transition to Medicaid managed care posed difficulties with client enrollment, access to services, and provider reimbursement. The 76th Texas Legislature passed legislation that imposed a moratorium on future implementations of Medicaid managed care until July 1, 2001, and required the Health and Human Services Commission (HHSC) to conduct a comprehensive study of Medicaid managed care in Texas. The study concluded that Medicaid managed care has succeeded in providing Medicaid enrollees with a medical home, improved access to services, and better case management. However, the study also identified continuing concerns about Medicaid managed care, including a high level of administrative complexity for providers that hinders timely reimbursement, low rates of reimbursement for providers, eligibility rules for children that do not provide continuity of care, burdensome regulation of managed care organizations, and lack of timely and accurate data about the program. House Bill 1223 continues the moratorium on the future implementation of Medicaid managed care programs and sets forth provisions to address the concerns in existing programs as identified by HHSC. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS House Bill 1223 amends the Government Code to require the Health and Human Services Commission (HHSC) to: _evaluate the number of managed care organizations contracted with HHSC to provide health care services to Medicaid recipients within each health care service region, with a focus on the market share of each managed care organization; and _limit the number of managed care organizations contracted with HHSC in a manner that will promote successful implementation of health care service delivery to Medicaid recipients through managed care (Sec. 533.0035). The bill requires HHSC to develop and assess administrative penalties for failure to meet the required contract (Sec. 533.0055). The bill requires HHSC when renewing a contract for services provided by a third party on behalf of the state Medicaid program to ensure that the contract's renewal date coincides with the beginning of a state fiscal year (Sec. 533.0056). The bill requires HHSC to require all entities contracted with the state Medicaid program to conduct outreach to locate eligible recipients and provide education to recipients regarding the processes of managed care (Sec. 533.0085). The bill prohibits HHSC or a health and human services agency from implementing managed care for substance abuse delivery or protective and regulatory services (Sec. 533.0125). The bill authorizes HHSC to contract with a third party to assist with negotiation of rates paid to managed care organizations or any other entity contracted with HHSC or a health and human services agency to perform administrative services for the state Medicaid program (Sec. 533.0135). H.B. 1223 requires HHSC to streamline on-site inspection procedures of managed care organizations contracting with HHSC as well as reporting requirements for managed care organizations with HHSC. The bill also requires HHSC to require managed care organizations contracting with HHSC to reduce the administrative burden placed on providers (Sec. 533.016). The bill requires HHSC in cooperation with the Texas Department of Insurance to require managed care organizations providing health care services to Medicaid recipients to eliminate preauthorization requirements for routine health care services customarily approved by the managed care organizations, and develop procedures for identifying the services for which preauthorization requirements should be eliminated and ensure that health care providers receive notice of services that require preauthorization (Sec. 533.017). The bill requires HHSC to develop uniform forms for referral of services, credentialing of health care providers providing health care services to Medicaid recipients, and preauthorization for health care services delivered to recipients. HHSC shall require managed care organizations to use the forms and revise its contracts with managed care organizations to reflect this requirement (Sec. 533.018). The bill requires HHSC to develop a uniform assessment tool for managed care organizations to use in identifying members with a disability or condition requiring chronic and long term care (Sec. 533.019). The bill prohibits HHSC from implementing a Medicaid managed care pilot program, Medicaid behavioral health pilot program, or Medicaid Star + Plus pilot program in a region in which HHSC is not currently operating a pilot program. This provision expires July 1, 2003 (Sec. 533.012). EFFECTIVE DATE On passage, or if the Act does not receive the necessary vote, the Act takes effect September 1, 2001.