By: Hinojosa S.B. No. 1776
A BILL TO BE ENTITLED
AN ACT
relating to the administration and operation of the Medicaid
program in a managed care model.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
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. Section 531.120, Government Code, is amended by
adding Subsection (c) to read as follows:
(c) The commission shall provide the notice required by
Subsection (a) to a provider that is a hospital not later than the
90th day before the date the overpayment or debt that is the subject
of the notice must be paid.
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 4. Subchapter A, Chapter 533, Government Code, is
amended by adding Section 533.00541 to read as follows:
Sec. 533.00541. PRIOR AUTHORIZATION REQUIREMENTS.
Notwithstanding any other law, the commission shall require a
managed care organization that contracts with the commission to
provide health care services to recipients to:
(1) approve or deny a request from a provider of acute
care inpatient services for prior authorization for the following
services or equipment not later than 48 hours after receiving the
request to allow for a safe and timely discharge of a patient from
an inpatient facility:
(A) home health services;
(B) long-term services and supports, including
care provided through a nursing facility;
(C) private-duty nursing;
(D) therapy services; and
(E) durable medical equipment;
(2) contact, notify, and negotiate with a provider
before approving a prior authorization request with an expiration
date different from the expiration date requested by the provider;
(3) submit to a provider agency any change to a
recipient's service plan not later than the 5th 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;
(4) 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
(5) provide complete electronic access to prior
authorizations through the organization's process required under
Section 533.005(a)(7-c).
SECTION 5. Subchapter A, Chapter 533, Government Code, is
amended by adding Section 533.00611 to read as follows:
Sec. 533.00611. MINIMUM STANDARDS FOR DETERMINING MEDICAL
NECESSITY. The commission shall establish minimum standards for
determining the medical necessity of a health care service covered
by Medicaid. In establishing minimum standards under this section,
the commission shall ensure that each recipient has equal access to
the same covered health care services regardless of the managed
care plan in which the recipient is enrolled.
SECTION 6. Section 533.0076, Government Code, is amended by
amending Subsection (c) and adding Subsection (d) to read as
follows:
(c) The commission shall allow a recipient who is enrolled
in a managed care plan under this chapter to disenroll from that
plan and enroll in another managed care plan:
(1) at any time for cause in accordance with federal
law, including because:
(A) the recipient moves out of the managed care
organization's service area;
(B) the plan does not, on the basis of moral or
religious objections, cover the service the recipient seeks;
(C) the recipient needs related services to be
performed at the same time, not all related services are available
within the organization's provider network, and the recipient's
primary care provider or another provider determines that receiving
the services separately would subject the recipient to unnecessary
risk;
(D) for recipients of long-term services or
supports, the recipient would have to change the recipient's
residential, institutional, or employment supports provider based
on that provider's change in status from an in-network to an
out-of-network provider with the managed care organization and, as
a result, would experience a disruption in the recipient's
residence or employment; or
(E) of another reason permitted under federal
law, including poor quality of care, lack of access to services
covered under the contract, or lack of access to providers
experienced in dealing with the recipient's care needs; and
(2) once for any reason after the periods described by
Subsections (a) and (b).
(d) The commission shall implement a process by which the
commission verifies that a recipient is permitted to disenroll from
one managed care plan and enroll in another plan before the
disenrollment occurs.
SECTION 7. Subchapter A, Chapter 533, Government Code, is
amended by adding Sections 533.0091 and 533.01316 to read as
follows:
Sec. 533.0091. CARE COORDINATION SERVICES. A managed care
organization under contract with the commission to provide health
care services to recipients shall ensure that persons providing
care coordination services through the organization coordinate
with hospital discharge planners to facilitate the timely discharge
of recipients to the appropriate level of care and minimize
potentially preventable readmissions.
Sec. 533.01316. REIMBURSEMENT FOR CERTAIN HOSPITAL STAYS.
The commission by rule shall adopt criteria to be used by managed
care organizations under contract with the commission to provide
health care services to recipients for the reimbursement of
services provided to recipients for treatment related to an
inpatient hospital stay, including a behavioral health hospital
stay, that is less than 72 hours. The rules adopted under this
section:
(1) must identify criteria that warrant reimbursement
of services related to the stay as inpatient hospital services or
outpatient hospital services, including criteria for determining
what services constitute outpatient observation services;
(2) must, in identifying criteria under Subdivision
(1), 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;
(3) may not allow for the classification of services
as either inpatient or outpatient hospital services for purposes of
reimbursement based solely on the duration of the stay; and
(4) require 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.
SECTION 8. Subchapter B, Chapter 534, Government Code, is
amended by adding Section 534.0511 to read as follows:
Sec. 534.0511. ENSURING PROVISION OF MEDICALLY NECESSARY
SERVICES. (a) This section applies only to an individual with an
intellectual or developmental disability who is receiving services
under a Medicaid waiver program or ICF-IID program and who requires
medically necessary acute care services or long-term services and
supports that are not available to the individual through the
delivery model implemented under this chapter.
(b) Notwithstanding any other law, the Medicaid waiver
program or ICF-IID program through which an individual to which
this section applies shall pay the cost of the service and may
submit to the commission a claim for reimbursement for the cost of
that service.
SECTION 9. Section 533.005, Government Code, as amended by
this Act, applies to a contract entered into or renewed on or after
the effective date of this Act. A contract entered into or renewed
before that date is governed by the law in effect on the date the
contract was entered into or renewed, and that law is continued in
effect for that purpose.
SECTION 10. If before implementing any provision of this
Act a state agency determines that a waiver or authorization from a
federal agency is necessary for implementation of that provision,
the agency affected by the provision shall request the waiver or
authorization and may delay implementing that provision until the
waiver or authorization is granted.
SECTION 11. This Act takes effect September 1, 2017.