84R7767 KEL/AJA-D
By: Guillen H.B. No. 1445
A BILL TO BE ENTITLED
AN ACT
relating to measures to support or enhance graduate medical
education in this state, including the transfer of assets following
the dissolution of the Texas Medical Liability Insurance
Underwriting Association.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter A, Chapter 58A, Education Code, is
amended by adding Section 58A.002 to read as follows:
Sec. 58A.002. PERMANENT FUND SUPPORTING GRADUATE MEDICAL
EDUCATION. (a) In this section, "trust company" means the Texas
Treasury Safekeeping Trust Company.
(b) The permanent fund supporting graduate medical
education is a special fund in the treasury outside the general
revenue fund. The fund is composed of:
(1) money transferred or appropriated to the fund by
the legislature;
(2) gifts and grants contributed to the fund; and
(3) the returns received from investment of money in
the fund.
(c) The trust company shall administer the fund. The trust
company shall determine the amount available for distribution from
the fund, determined in accordance with a distribution policy that
is adopted by the comptroller and designed to preserve the
purchasing power of the fund's assets and to provide a stable and
predictable stream of annual distributions. Expenses of managing
the fund's assets shall be paid from the fund. Except as provided
by this section, money in the fund may not be used for any purpose.
Sections 403.095 and 404.071, Government Code, do not apply to the
fund.
(d) In managing the assets of the fund, through procedures
and subject to restrictions the trust company considers
appropriate, the trust company may acquire, exchange, sell,
supervise, manage, or retain any kind of investment that a prudent
investor, exercising reasonable care, skill, and caution, would
acquire or retain in light of the purposes, terms, distribution
requirements, and other circumstances of the fund then prevailing,
taking into consideration the investment of all the assets of the
fund rather than a single investment.
(e) The amount available for distribution from the fund may
be appropriated only to fund the programs created under this
chapter and any other programs designed to support or enhance
graduate medical education in this state.
(f) A public or private institution of higher education or
other entity that may receive money under a program described by
Subsection (e) may solicit and accept gifts and grants to the fund.
A gift or grant to the fund must be distributed and appropriated for
the purposes of the fund, subject to any limitation or requirement
placed on the gift or grant by the donor or granting entity.
SECTION 2. Chapter 58A, Education Code, is amended by
adding Subchapters D, E, and F to read as follows:
SUBCHAPTER D. CRITICAL SHORTAGE PHYSICIAN GRANT PROGRAM
Sec. 58A.101. DEFINITIONS. In this subchapter:
(1) "Center" means the comprehensive health
professions resource center established under Chapter 105, Health
and Safety Code.
(2) "Graduate medical residency training program"
means a residency or other postgraduate medical training program:
(A) participation in which may be counted toward
certification in a medical specialty or subspecialty; and
(B) that:
(i) is accredited by the Accreditation
Council for Graduate Medical Education or the American Osteopathic
Association; or
(ii) demonstrates eligibility to apply for
and receive an accreditation described by Subparagraph (i).
(3) "Program" means the critical shortage physician
grant program established under this subchapter.
(4) "Teaching hospital" means a teaching hospital
affiliated with a medical school that is described as a medical and
dental unit under Section 61.003.
Sec. 58A.102. ESTABLISHMENT OF PROGRAM. The board shall
establish the critical shortage physician grant program to provide
grants to teaching hospitals for graduate medical residency
training programs to increase the number of physicians in the
medical specialties and subspecialties that are determined by the
board to be at a critical shortage level in this state.
Sec. 58A.103. RULES. (a) The board shall adopt rules to
administer the program, including rules regarding:
(1) a grant application process;
(2) reporting requirements for grant recipients; and
(3) requirements and benchmarks for grant recipients
to satisfy regarding the granting of additional program funding
under Section 58A.106.
(b) The rules adopted under Subsection (a) must require
grant recipients to submit reports at least quarterly, based on
outcome measures established by the board in consultation with the
Legislative Budget Board.
Sec. 58A.104. ELIGIBILITY. To be eligible to receive a
grant under this subchapter, a teaching hospital must:
(1) provide a number of graduate medical residency
positions in excess of both the cap on the number of positions
funded by direct graduate medical education payments made under
Section 1886(h), Social Security Act (42 U.S.C. Section 1395ww(h)),
and the cap on the number of positions funded by indirect medical
education payments made under Section 1886(d)(5)(B), Social
Security Act (42 U.S.C. Section 1395ww(d)(5)(B)); and
(2) offer or seek to offer one or more graduate medical
residency training programs in a specialty described by Section
58.008(a) or in any other medical specialty or subspecialty
determined by the board to be at a critical shortage level in this
state.
Sec. 58A.105. USE OF FUNDS. In each state fiscal year, the
board shall award grants for establishing new accredited graduate
medical residency training programs or increasing the number of
residency positions in existing accredited graduate medical
residency training programs in specialties described by Section
58.008(a) or in any other medical specialties or subspecialties
determined by the board to be at a critical shortage level in this
state.
Sec. 58A.106. ADDITIONAL USE: START-UP COSTS. (a) If in a
state fiscal year excess program funds remain after funds are
granted under Section 58A.105, the board may grant additional
program funding to teaching hospitals to pay any start-up costs
associated with establishing and seeking accreditation for a new
graduate medical residency training program in a specialty
described by Section 58.008(a) or in any other medical specialty or
subspecialty determined by the board to be at a critical shortage
level in this state, provided that no other federal or state funding
is available for that program.
(b) To be eligible for funding under this section, start-up
costs must be directly related to the establishment or
accreditation of the new program.
(c) The board may grant program funding under this section
to pay a percentage of the total amount of applicable start-up costs
for the teaching hospital, not to exceed 20 percent.
Sec. 58A.107. REDUCTION IN FUNDING. The board shall limit
or withhold funding from grant recipients that do not comply with
reporting requirements or that use grant funds for a purpose not
authorized by this subchapter. The board shall seek reimbursement
with respect to any grant funds that are not used for purposes
authorized by this subchapter.
Sec. 58A.108. CRITERIA FOR DETERMINING CRITICAL SHORTAGE
LEVELS. (a) For purposes of this subchapter, the board shall
determine critical shortage levels for medical specialties and
subspecialties in this state according to criteria used by the
United States Department of Health and Human Services Health
Resources and Services Administration to designate health
professional shortage areas.
(b) In its methodology for determining critical shortage
levels under this section, the board shall include the results of
the research conducted by the center under Section 105.009(a)(1),
Health and Safety Code, and similar research performed by other
appropriate entities.
SUBCHAPTER E. TEXAS TEACHING HEALTH CENTER
GRADUATE MEDICAL EDUCATION GRANT PROGRAM
Sec. 58A.121. DEFINITIONS. In this subchapter:
(1) "Graduate medical residency training program"
means a residency or other postgraduate medical training program:
(A) participation in which may be counted toward
certification in a medical specialty or subspecialty; and
(B) that:
(i) is accredited by the Accreditation
Council for Graduate Medical Education or the American Osteopathic
Association; or
(ii) demonstrates eligibility to apply for
and receive an accreditation described by Subparagraph (i).
(2) "Primary care residency program" means a graduate
medical residency training program in a specialty described by
Section 58.008(a).
(3) "Program" means the Texas teaching health center
graduate medical education grant program established under this
subchapter.
(4) "Teaching health center" means a community-based,
ambulatory patient care center that operates a primary care
residency program. The term includes:
(A) a federally qualified health center, as
defined by Section 1905(l)(2)(B), Social Security Act (42 U.S.C.
Section 1396d(l)(2)(B));
(B) a community mental health center, as defined
by Section 1861(ff)(3)(B), Social Security Act (42 U.S.C. Section
1395x(ff)(3)(B));
(C) a rural health clinic, as defined by Section
1861(aa)(2), Social Security Act (42 U.S.C. Section 1395x(aa)(2));
(D) a health center operated by the Indian Health
Service, an Indian tribe or tribal organization, or an urban Indian
organization, as defined by Section 4, Indian Health Care
Improvement Act (25 U.S.C. Section 1603); and
(E) an entity receiving funds under Title X,
Public Health Service Act (42 U.S.C. Section 300 et seq.).
Sec. 58A.122. ESTABLISHMENT OF PROGRAM. The board shall
establish the Texas teaching health center graduate medical
education grant program to award grants to teaching health centers
for the purpose of establishing new primary care residency programs
or increasing the number of residency positions in existing primary
care residency programs.
Sec. 58A.123. RULES. (a) The board shall adopt rules to
administer the program, including rules regarding:
(1) a grant application process;
(2) reporting requirements for grant recipients under
Section 58A.128; and
(3) the amount of the payments for direct expenses and
indirect expenses, as defined by and calculated in the same manner
as those expenses are calculated under the federal rules described
by Subsection (b).
(b) The rules adopted under this subchapter must be based as
nearly as possible on the rules adopted under the federal teaching
health centers development grant program established under Section
5508, Patient Protection and Affordable Care Act of 2010 (Pub. L.
No. 111-148).
(c) The rules adopted in relation to the reporting
requirements under Section 58A.128 must also:
(1) authorize the board to conduct audits of grant
recipients to the extent necessary to ensure the accuracy and
completeness of their annual reports; and
(2) specify a mandatory amount of reduction in grant
funds under Section 58A.127 for a failure to submit an accurate or
complete report.
Sec. 58A.124. AMOUNT AND DURATION OF GRANT. Subject to
Section 58A.127, the board may award grants under this subchapter
for a term of not more than three years, and the maximum award to a
recipient may not exceed $500,000 during each state fiscal year.
Sec. 58A.125. RELATIONSHIP OF GRANTS TO OTHER FEDERAL
PAYMENTS FOR GRADUATE MEDICAL EDUCATION. A grant awarded by the
board under this subchapter is in addition to any payments for:
(1) direct graduate medical education costs under
Section 1886(h), Social Security Act (42 U.S.C. Section 1395ww(h));
(2) indirect medical education costs under Section
1886(d)(5)(B), Social Security Act (42 U.S.C. Section
1395ww(d)(5)(B)); and
(3) direct costs of medical education under Section
1886(k), Social Security Act (42 U.S.C. Section 1395ww(k)).
Sec. 58A.126. USE OF FUNDS. A grant awarded under this
subchapter may be used only to cover the costs of establishing a new
primary care residency program at a teaching health center or the
costs of increasing the number of residency positions in an
existing primary care residency program, including costs
associated with:
(1) curriculum development;
(2) recruitment, training, and retention of residents
and faculty;
(3) obtaining accreditation by the Accreditation
Council for Graduate Medical Education or the American Osteopathic
Association; and
(4) faculty salaries during the development phase.
Sec. 58A.127. REDUCTION IN FUNDING. The board shall limit
or withhold funding from grant recipients that do not comply with
reporting requirements or that use grant funds for a purpose not
authorized by this subchapter. The board shall seek reimbursement
with respect to any grant funds that are not used for purposes
authorized by this subchapter.
Sec. 58A.128. REPORTING. (a) A grant recipient shall
submit an annual report that fully accounts for the use of a grant
awarded under this subchapter.
(b) The annual report must be made in the form and manner
specified by the board and must include the following information
for the most recent residency academic year completed immediately
before the applicable state fiscal year:
(1) the types of primary care residency programs that
the grant recipient provided for residents;
(2) the number of approved training positions in those
programs for part-time or full-time residents;
(3) the number of part-time or full-time residents
who:
(A) completed their residency training in those
programs at the end of the residency academic year; and
(B) care for vulnerable populations living in
underserved areas; and
(4) any other information considered appropriate by
the board.
SUBCHAPTER F. GRADUATE MEDICAL EDUCATION
PARTNERSHIP GRANT PROGRAM
Sec. 58A.151. DEFINITIONS. In this subchapter:
(1) "Graduate medical education partnership" means a
partnership entered into by a teaching health center and an
accredited graduate medical residency training program offered by a
hospital or medical school.
(2) "Graduate medical residency training program"
means a residency or other postgraduate medical training program:
(A) participation in which may be counted toward
certification in a medical specialty or subspecialty; and
(B) that:
(i) is accredited by the Accreditation
Council for Graduate Medical Education or the American Osteopathic
Association; or
(ii) demonstrates eligibility to apply for
and receive an accreditation described by Subparagraph (i).
(3) "Primary care residency program" means a graduate
medical residency training program in a specialty described by
Section 58.008(a).
(4) "Program" means the graduate medical education
partnership grant program established under this subchapter.
(5) "Teaching health center" means a community-based,
ambulatory patient care center that operates a primary care
residency program. The term includes:
(A) a federally qualified health center, as
defined by Section 1905(l)(2)(B), Social Security Act (42 U.S.C.
Section 1396d(l)(2)(B));
(B) a community mental health center, as defined
by Section 1861(ff)(3)(B), Social Security Act (42 U.S.C. Section
1395x(ff)(3)(B));
(C) a rural health clinic, as defined by Section
1861(aa)(2), Social Security Act (42 U.S.C. Section 1395x(aa)(2));
(D) a health center operated by the Indian Health
Service, an Indian tribe or tribal organization, or an urban Indian
organization, as defined by Section 4, Indian Health Care
Improvement Act (25 U.S.C. Section 1603); and
(E) an entity receiving funds under Title X,
Public Health Service Act (42 U.S.C. Section 300 et seq.).
Sec. 58A.152. ESTABLISHMENT OF PROGRAM. The board shall
establish the graduate medical education partnership grant program
to allow a teaching health center that is establishing and seeking
accreditation for a new primary care residency program to partner
with an accredited graduate medical residency training program
offered by a hospital or medical school.
Sec. 58A.153. RULES. The board shall adopt rules to
administer the program, including rules regarding a grant
application process and reporting requirements for grant
recipients.
Sec. 58A.154. USE OF FUNDS. The board shall award grants to
each participant in a graduate medical education partnership to:
(1) facilitate a mentoring relationship between
partners that will provide information and guidance for the
participating teaching health center during the accreditation
process; and
(2) assist the partners in building a collaborative
working relationship for the future.
Sec. 58A.155. REDUCTION IN FUNDING. The board shall limit
or withhold funding from grant recipients that do not comply with
reporting requirements or that use grant funds for a purpose not
authorized by this subchapter. The board shall seek reimbursement
for any grant funds that are not used for purposes authorized by
this subchapter.
SECTION 3. Chapter 105, Health and Safety Code, is amended
by adding Section 105.009 to read as follows:
Sec. 105.009. RESEARCH REGARDING GRADUATE MEDICAL
EDUCATION SYSTEM. (a) The comprehensive health professions
resource center shall conduct research:
(1) to identify:
(A) the ratio of primary care to non-primary care
physicians that is necessary and appropriate to meet the current
and future health care needs of this state; and
(B) all medical specialties and subspecialties
that are at critical shortage levels in this state, together with
the geographic location of the physicians in those specialties and
subspecialties; and
(2) regarding the overall supply of physicians in this
state and any other issues that are relevant to the status of the
state's graduate medical education system and the ability of that
system to meet the current and future health care needs of this
state.
(b) Not later than August 31 of each even-numbered year, the
council shall report the results of the center's research to the
Legislative Budget Board, the Texas Higher Education Coordinating
Board, the office of the governor, and the standing committees of
each house of the legislature with primary jurisdiction over state
finance or appropriations.
SECTION 4. Chapter 2203, Insurance Code, is amended by
adding Subchapter J to read as follows:
SUBCHAPTER J. DISSOLUTION OF ASSOCIATION; REACTIVATION OF
ASSOCIATION BY COMMISSIONER
Sec. 2203.451. DISSOLUTION DATE. The association shall
cease all operations before and is dissolved on August 31, 2017.
Sec. 2203.452. DISSOLUTION PLAN. (a) The board of
directors, in consultation with the department, shall develop a
dissolution plan to:
(1) wind down and cease the association's operations
before the dissolution date established by this subchapter; and
(2) transfer to the commissioner and the department:
(A) any obligations of the association that
survive the association's dissolution;
(B) any rights of the association that:
(i) accrued before the association's
dissolution and survive the association's dissolution; or
(ii) accrue after the association's
dissolution with respect to coverage issued by the association
before the association's dissolution;
(C) any authority previously held by the
association the continuation of which is necessary or appropriate;
and
(D) subject to Section 2203.456, any association
assets.
(b) The dissolution plan may provide that the obligations,
rights, authority, and, subject to Section 2203.456, assets
transferred to the commissioner and department may be transferred
to a liquidator appointed by the commissioner.
(c) The dissolution plan must be adopted by the commissioner
by rule.
Sec. 2203.453. ISSUANCE AND RENEWAL OF INSURANCE COVERAGE;
TERMINATION OF POLICIES. The association may not issue or renew
an insurance policy on or after the effective date of this
subchapter. A policy issued or renewed by the association before
that date shall continue in force until terminated in accordance
with the terms and conditions of the policy.
Sec. 2203.454. ACCEPTANCE AND DISPOSITION OF CLAIMS. (a)
The association may continue to accept claims under association
policies until:
(1) the dissolution date established by this
subchapter; or
(2) an earlier claims acceptance deadline established
in the dissolution plan.
(b) The dissolution plan must establish processes to ensure
that, to the maximum extent reasonably possible, claims made under
association policies before the dissolution date established by
this subchapter are processed and paid or otherwise appropriately
disposed of before the dissolution date established by this
subchapter.
(c) The dissolution plan must provide that the department or
a liquidator appointed in accordance with the dissolution plan
will:
(1) take over the processing and disposition of any
claims under association policies accepted by the association that
are outstanding on the dissolution date established by this
subchapter; and
(2) accept, process, and dispose of any claims under
association policies that are made after the latest date on which
the association accepts claims under Subsection (a).
Sec. 2203.455. POST-DISSOLUTION CLAIMS. (a) The
dissolution plan must provide for a reasonable and actuarially
sound arrangement, through retention of reserves, purchase of
reinsurance, or otherwise, to ensure that sufficient resources
remain available to pay liability of the association that may arise
in connection with claims made under association policies on or
after the dissolution date established by this subchapter.
(b) If the arrangement provided under Subsection (a) proves
inadequate, the claims that cannot be satisfied shall be treated as
claims against an insolvent insurer liquidated under Chapter 443.
Sec. 2203.456. TRANSFER OF ASSETS. (a) Not later than
October 1, 2017, association assets not retained by the department
under Subsection (b) or otherwise transferred or applied in
accordance with this section shall be transferred to the permanent
fund supporting graduate medical education established under
Section 58A.002, Education Code.
(b) The department shall retain assets sufficient to pay
claims under association policies that are outstanding on the asset
transfer date established by Subsection (a). The department shall
retain, transfer, or apply association assets as necessary for the
portion of the dissolution plan required by Section 2203.455(a).
(c) If a liquidator is appointed under the dissolution plan,
the department may transfer assets to the liquidator in accordance
with the dissolution plan.
(d) Assets of the policyholder's stabilization reserve fund
for nursing homes and assisted living facilities established under
Section 2203.303 shall be transferred to the general revenue fund
to be appropriated as provided by Section 2203.303(e).
Sec. 2203.457. ANNUAL REPORT. The department shall, as
part of each annual report made under Section 32.021 after the asset
transfer date established by Section 2203.456(a):
(1) account for assets retained under Section
2203.456(b) or transferred under Section 2203.456(c) or (d); and
(2) report on the receipt, processing, and disposition
of claims under association policies.
Sec. 2203.458. REACTIVATION OF ASSOCIATION. (a) After the
dissolution of the association and the transfer of the
association's assets in accordance with this subchapter, the
commissioner may, after notice and hearing, order the reactivation
of the association and authorize the association to resume
operations in accordance with the provisions of this chapter other
than this subchapter.
(b) A hearing to determine the need to reactivate the
association shall be held:
(1) on petition of:
(A) the Texas Medical Association;
(B) the Texas Podiatric Medical Association;
(C) the Texas Hospital Association; or
(D) at least 15 physicians or health care
providers practicing or operating in this state; or
(2) on a finding by the commissioner that physicians
or health care providers, or any category of physicians or health
care providers, in this state are threatened with the possibility
of being unable to secure medical liability insurance.
(c) Not later than the 15th day before the date set for a
hearing under this section, notice of the hearing shall be given to
each insurer that would be a member of the association under Section
2203.055 if the association were reactivated.
(d) If the commissioner finds the reactivation of the
association is in the public interest, the commissioner shall order
the reactivation of the association. In making a determination
under this section, the commissioner shall consider the potential
impact on and harm or benefit to consumers of health care,
physicians and health care providers, and the overall availability
of medical liability insurance in this state. The order must:
(1) designate the category or categories of physicians
or health care providers who are eligible to secure medical
liability insurance coverage from the association; and
(2) specify a date that is not fewer than 15 or more
than 60 days after the date of the order on which the provisions of
this chapter other than this subchapter become effective.
(e) If an order of reactivation is made under this section,
the provisions of this chapter other than this subchapter shall
take effect as if they had been enacted into law with the effective
date specified in the commissioner's order.
(f) The commissioner's order shall specify a deadline for
the initial election and appointment of members of the board of
directors under Section 2203.052. Notwithstanding Section
2203.052, the initial term for each director elected or appointed
under this section expires on the first October 1 that follows the
election and appointment deadline specified in the order.
Sec. 2203.459. DISSOLUTION AFTER REACTIVATION. (a) After
reactivation of the association under Section 2203.458, the
commissioner may, after notice and hearing, order the dissolution
of the association. Dissolution of the association under this
section shall be done in accordance with the provisions of this
subchapter that governed the dissolution of the association on the
dissolution date established by Section 2203.451.
(b) A hearing to determine whether to dissolve the
association under this section shall be held only at the
commissioner's discretion.
(c) The commissioner shall issue an order to dissolve the
association under this section if the commissioner finds that:
(1) there is no category of physicians or health care
providers in this state threatened with the possibility of being
unable to secure medical liability insurance; and
(2) dissolution of the association is in the public
interest.
(d) In making a determination under Subsection (c)(2), the
commissioner shall consider the potential impact on and harm or
benefit to consumers of health care, physicians and health care
providers, and the overall availability of medical liability
insurance in this state.
(e) The commissioner's order must:
(1) prescribe:
(A) a dissolution date;
(B) a date on and after which the association may
not issue or renew insurance policies; and
(C) an asset transfer date; and
(2) direct the board of directors to develop a
dissolution plan in accordance with this subchapter.
(f) A dissolution plan developed under this section must be
adopted by the commissioner by rule.
(g) On the asset transfer date prescribed by the
commissioner's order, association assets not retained by the
department or otherwise transferred or applied in accordance with
Section 2203.456(b) or (c) shall be transferred to the general
revenue fund. After that date, the department shall report on
assets and claims as prescribed by Section 2203.457.
SECTION 5. Sections 2203.303(d) and (e), Insurance Code,
are amended to read as follows:
(d) The [Notwithstanding Sections 11, 12, and 13, Article
21.49-3, the] policyholder's stabilization reserve fund under this
section may be terminated only by law.
(e) On [Notwithstanding Section 11, Article 21.49-3, on]
termination of the policyholder's stabilization reserve fund under
this section, all assets of the fund shall be transferred to the
general revenue fund to be appropriated for purposes related to
ensuring the provision of the kinds of liability insurance coverage
that the association may provide under this chapter to nursing
homes and assisted living facilities.
SECTION 6. Articles 21.49-3 and 21.49-3a, Insurance Code,
are repealed.
SECTION 7. (a) Not later than December 31, 2015, the Texas
Higher Education Coordinating Board shall adopt rules for the
critical shortage physician grant program, the Texas teaching
health center graduate medical education grant program, and the
graduate medical education partnership grant program established
under Subchapters D, E, and F, Chapter 58A, Education Code,
respectively, as added by this Act.
(b) The board shall award grants under the programs
described by Subsection (a) of this section beginning with the
2016-2017 state fiscal year.
SECTION 8. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2015.