BILL ANALYSIS H.B. 2254 By: Hull Insurance Committee Report (Unamended) BACKGROUND AND PURPOSE The bill author has informed the committee that primary care physicians, health plans, and employers have expressed an interest in expanding the use of value-based health care delivery models to improve health care quality, while also constraining patient and payer costs, and that currently health maintenance organizations are the only type of health plan in Texas that can partner with physicians to provide risk-based, capitated value-based payments. As a result, employers and employees whose preference is a preferred provider organization or exclusive provider organization cannot benefit from participation in some innovative new models of care. H.B. 2254 seeks to resolve this issue by authorizing a preferred provider benefit plan or exclusive provider benefit plan to enter into voluntary capitated or risk-based arrangements with primary care physicians or primary care physician groups. CRIMINAL JUSTICE IMPACT It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS H.B. 2254 amends the Insurance Code to authorize a preferred provider benefit plan or an exclusive provider benefit plan to provide or arrange for health care services with a primary care physician or primary care physician group through a contract for compensation under any of the following arrangements: a fee-for-service arrangement; a risk-sharing arrangement; a capitation arrangement under which a fixed predetermined payment is made in exchange for the provision of, or for the arrangement to provide and the guaranty of the provision of, a contractually defined set of covered services to covered persons for a specified period without regard to the quantity of services actually provided; or any combination of these arrangements. The bill specifies that a primary care physician or primary care physician group that enters into such a contract is not considered to be engaging in the business of insurance. The bill expressly does not authorize a preferred provider benefit plan or an exclusive provider benefit plan to provide or arrange for health care services with a primary care physician or primary care physician group through a contract for compensation under a global capitation arrangement. H.B. 2254 establishes that a primary care physician or primary care physician group is not required to enter into a payment arrangement and prohibits an insurer from discriminating against a physician or physician group that elects not to participate in an arrangement, including by: reducing the fee schedule of a physician or physician group because the physician or physician group does not participate in the insurer's value-based or capitated payment arrangement or other payment arrangement; or requiring a physician or physician group to participate in the insurer's value-based or capitated payment arrangement or other payment arrangement as a condition of participation in the insurer's provider network. The bill authorizes a primary care physician or primary care physician group to file a complaint with the Texas Department of Insurance (TDI) if the physician or physician group believes they have been discriminated against in violation of that prohibition. H.B. 2254 provides the following with respect to the contents of a contract allowing for a value-based or capitated payment arrangement or other payment arrangement: the agreement may not create a disincentive to the provision of medically necessary health care services and may not interfere with the physician's independent medical judgment on which services are medically appropriate or medically necessary; the agreement must specify: o in writing if compensation is being paid based on satisfaction of performance measures and, if so, specifically provide: the performance measures; the source of the measures; the method and time period for calculating whether the performance measures have been satisfied; access to financial and performance-based information used to determine whether the physician met those measures; and the method by which the physician may request reconsideration; o that the attribution process will assign a patient to first the patient's established physician, as determined by a prior annual exam or other office visits, and, if no established physician relationship exists, then a physician chosen by the patient; o if payment involves capitation, whether a bridge rate, such as a discounted fee for service, will remain in effect for a certain period until sufficient data has been generated regarding utilization to allow an insurer to make an informed decision regarding fully capitated rates; o whether the capitated rate, if any, will provide for a stop-loss threshold or a guaranteed minimum level of payment per month, and whether the physician will obtain stop-loss coverage; and o whether payment will take into account patients who are added to or eliminated from the attributed population during the course of a measurement period; if payment involves capitation, the agreement must provide for the opportunity to renegotiate in good faith a revised capitation rate, or reimburse on a fee-for-service basis under a contractual fee schedule until a revised capitation rate is agreed to if there is a material increase in the scope of services provided by the physician or a material change by the payer in the benefit structure; and the agreement must state whether catastrophic events are excluded from the final cost calculation for an attributed population when compared to the cost target for the measurement period, if applicable, and, if payment involves shared savings, whether the entire savings is shared when the minimum savings rate is reached, or whether only the amount in excess of the minimum savings rate is shared. The bill establishes that the parties to such a contract are the primary care physician or primary care physician group and the preferred provider benefit plan or exclusive provider benefit plan and prohibits a party to the contract from subcontracting. H.B. 2254 defines "primary care physician" and "primary care physician group" as follows: "primary care physician" as a specialist in family medicine, general internal medicine, or general pediatrics who provides definitive care to the undifferentiated patient at the point of first contact and takes continuing responsibility for providing the patient's comprehensive care, which may include chronic, preventive, and acute care; and "primary care physician group" as an entity through which two or more primary care physicians deliver health care to the public through the practice of medicine on a regular basis and that is either owned and operated by two or more physicians or a freestanding clinic, center, or office of a nonprofit health organization that is certified by the Texas Medical Board (TMB) and complies with the requirements of state law providing for the regulation by the TMB of certain nonprofit health corporations. EFFECTIVE DATE On passage, or, if the bill does not receive the necessary vote, September 1, 2025.
BILL ANALYSIS
# BILL ANALYSIS
H.B. 2254
By: Hull
Insurance
Committee Report (Unamended)
H.B. 2254
By: Hull
Insurance
Committee Report (Unamended)
BACKGROUND AND PURPOSE The bill author has informed the committee that primary care physicians, health plans, and employers have expressed an interest in expanding the use of value-based health care delivery models to improve health care quality, while also constraining patient and payer costs, and that currently health maintenance organizations are the only type of health plan in Texas that can partner with physicians to provide risk-based, capitated value-based payments. As a result, employers and employees whose preference is a preferred provider organization or exclusive provider organization cannot benefit from participation in some innovative new models of care. H.B. 2254 seeks to resolve this issue by authorizing a preferred provider benefit plan or exclusive provider benefit plan to enter into voluntary capitated or risk-based arrangements with primary care physicians or primary care physician groups.
CRIMINAL JUSTICE IMPACT It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.
RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.
ANALYSIS H.B. 2254 amends the Insurance Code to authorize a preferred provider benefit plan or an exclusive provider benefit plan to provide or arrange for health care services with a primary care physician or primary care physician group through a contract for compensation under any of the following arrangements: a fee-for-service arrangement; a risk-sharing arrangement; a capitation arrangement under which a fixed predetermined payment is made in exchange for the provision of, or for the arrangement to provide and the guaranty of the provision of, a contractually defined set of covered services to covered persons for a specified period without regard to the quantity of services actually provided; or any combination of these arrangements. The bill specifies that a primary care physician or primary care physician group that enters into such a contract is not considered to be engaging in the business of insurance. The bill expressly does not authorize a preferred provider benefit plan or an exclusive provider benefit plan to provide or arrange for health care services with a primary care physician or primary care physician group through a contract for compensation under a global capitation arrangement. H.B. 2254 establishes that a primary care physician or primary care physician group is not required to enter into a payment arrangement and prohibits an insurer from discriminating against a physician or physician group that elects not to participate in an arrangement, including by: reducing the fee schedule of a physician or physician group because the physician or physician group does not participate in the insurer's value-based or capitated payment arrangement or other payment arrangement; or requiring a physician or physician group to participate in the insurer's value-based or capitated payment arrangement or other payment arrangement as a condition of participation in the insurer's provider network. The bill authorizes a primary care physician or primary care physician group to file a complaint with the Texas Department of Insurance (TDI) if the physician or physician group believes they have been discriminated against in violation of that prohibition. H.B. 2254 provides the following with respect to the contents of a contract allowing for a value-based or capitated payment arrangement or other payment arrangement: the agreement may not create a disincentive to the provision of medically necessary health care services and may not interfere with the physician's independent medical judgment on which services are medically appropriate or medically necessary; the agreement must specify: o in writing if compensation is being paid based on satisfaction of performance measures and, if so, specifically provide: the performance measures; the source of the measures; the method and time period for calculating whether the performance measures have been satisfied; access to financial and performance-based information used to determine whether the physician met those measures; and the method by which the physician may request reconsideration; o that the attribution process will assign a patient to first the patient's established physician, as determined by a prior annual exam or other office visits, and, if no established physician relationship exists, then a physician chosen by the patient; o if payment involves capitation, whether a bridge rate, such as a discounted fee for service, will remain in effect for a certain period until sufficient data has been generated regarding utilization to allow an insurer to make an informed decision regarding fully capitated rates; o whether the capitated rate, if any, will provide for a stop-loss threshold or a guaranteed minimum level of payment per month, and whether the physician will obtain stop-loss coverage; and o whether payment will take into account patients who are added to or eliminated from the attributed population during the course of a measurement period; if payment involves capitation, the agreement must provide for the opportunity to renegotiate in good faith a revised capitation rate, or reimburse on a fee-for-service basis under a contractual fee schedule until a revised capitation rate is agreed to if there is a material increase in the scope of services provided by the physician or a material change by the payer in the benefit structure; and the agreement must state whether catastrophic events are excluded from the final cost calculation for an attributed population when compared to the cost target for the measurement period, if applicable, and, if payment involves shared savings, whether the entire savings is shared when the minimum savings rate is reached, or whether only the amount in excess of the minimum savings rate is shared. The bill establishes that the parties to such a contract are the primary care physician or primary care physician group and the preferred provider benefit plan or exclusive provider benefit plan and prohibits a party to the contract from subcontracting. H.B. 2254 defines "primary care physician" and "primary care physician group" as follows: "primary care physician" as a specialist in family medicine, general internal medicine, or general pediatrics who provides definitive care to the undifferentiated patient at the point of first contact and takes continuing responsibility for providing the patient's comprehensive care, which may include chronic, preventive, and acute care; and "primary care physician group" as an entity through which two or more primary care physicians deliver health care to the public through the practice of medicine on a regular basis and that is either owned and operated by two or more physicians or a freestanding clinic, center, or office of a nonprofit health organization that is certified by the Texas Medical Board (TMB) and complies with the requirements of state law providing for the regulation by the TMB of certain nonprofit health corporations.
EFFECTIVE DATE On passage, or, if the bill does not receive the necessary vote, September 1, 2025.
BACKGROUND AND PURPOSE
The bill author has informed the committee that primary care physicians, health plans, and employers have expressed an interest in expanding the use of value-based health care delivery models to improve health care quality, while also constraining patient and payer costs, and that currently health maintenance organizations are the only type of health plan in Texas that can partner with physicians to provide risk-based, capitated value-based payments. As a result, employers and employees whose preference is a preferred provider organization or exclusive provider organization cannot benefit from participation in some innovative new models of care. H.B. 2254 seeks to resolve this issue by authorizing a preferred provider benefit plan or exclusive provider benefit plan to enter into voluntary capitated or risk-based arrangements with primary care physicians or primary care physician groups.
CRIMINAL JUSTICE IMPACT
It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.
ANALYSIS
H.B. 2254 amends the Insurance Code to authorize a preferred provider benefit plan or an exclusive provider benefit plan to provide or arrange for health care services with a primary care physician or primary care physician group through a contract for compensation under any of the following arrangements:
a fee-for-service arrangement;
a risk-sharing arrangement;
a capitation arrangement under which a fixed predetermined payment is made in exchange for the provision of, or for the arrangement to provide and the guaranty of the provision of, a contractually defined set of covered services to covered persons for a specified period without regard to the quantity of services actually provided; or
any combination of these arrangements.
The bill specifies that a primary care physician or primary care physician group that enters into such a contract is not considered to be engaging in the business of insurance. The bill expressly does not authorize a preferred provider benefit plan or an exclusive provider benefit plan to provide or arrange for health care services with a primary care physician or primary care physician group through a contract for compensation under a global capitation arrangement.
H.B. 2254 establishes that a primary care physician or primary care physician group is not required to enter into a payment arrangement and prohibits an insurer from discriminating against a physician or physician group that elects not to participate in an arrangement, including by:
reducing the fee schedule of a physician or physician group because the physician or physician group does not participate in the insurer's value-based or capitated payment arrangement or other payment arrangement; or
requiring a physician or physician group to participate in the insurer's value-based or capitated payment arrangement or other payment arrangement as a condition of participation in the insurer's provider network.
The bill authorizes a primary care physician or primary care physician group to file a complaint with the Texas Department of Insurance (TDI) if the physician or physician group believes they have been discriminated against in violation of that prohibition.
H.B. 2254 provides the following with respect to the contents of a contract allowing for a value-based or capitated payment arrangement or other payment arrangement:
the agreement may not create a disincentive to the provision of medically necessary health care services and may not interfere with the physician's independent medical judgment on which services are medically appropriate or medically necessary;
the agreement must specify:
o in writing if compensation is being paid based on satisfaction of performance measures and, if so, specifically provide:
the performance measures;
the source of the measures;
the method and time period for calculating whether the performance measures have been satisfied;
access to financial and performance-based information used to determine whether the physician met those measures; and
the method by which the physician may request reconsideration;
o that the attribution process will assign a patient to first the patient's established physician, as determined by a prior annual exam or other office visits, and, if no established physician relationship exists, then a physician chosen by the patient;
o if payment involves capitation, whether a bridge rate, such as a discounted fee for service, will remain in effect for a certain period until sufficient data has been generated regarding utilization to allow an insurer to make an informed decision regarding fully capitated rates;
o whether the capitated rate, if any, will provide for a stop-loss threshold or a guaranteed minimum level of payment per month, and whether the physician will obtain stop-loss coverage; and
o whether payment will take into account patients who are added to or eliminated from the attributed population during the course of a measurement period;
if payment involves capitation, the agreement must provide for the opportunity to renegotiate in good faith a revised capitation rate, or reimburse on a fee-for-service basis under a contractual fee schedule until a revised capitation rate is agreed to if there is a material increase in the scope of services provided by the physician or a material change by the payer in the benefit structure; and
the agreement must state whether catastrophic events are excluded from the final cost calculation for an attributed population when compared to the cost target for the measurement period, if applicable, and, if payment involves shared savings, whether the entire savings is shared when the minimum savings rate is reached, or whether only the amount in excess of the minimum savings rate is shared.
The bill establishes that the parties to such a contract are the primary care physician or primary care physician group and the preferred provider benefit plan or exclusive provider benefit plan and prohibits a party to the contract from subcontracting.
H.B. 2254 defines "primary care physician" and "primary care physician group" as follows:
"primary care physician" as a specialist in family medicine, general internal medicine, or general pediatrics who provides definitive care to the undifferentiated patient at the point of first contact and takes continuing responsibility for providing the patient's comprehensive care, which may include chronic, preventive, and acute care; and
"primary care physician group" as an entity through which two or more primary care physicians deliver health care to the public through the practice of medicine on a regular basis and that is either owned and operated by two or more physicians or a freestanding clinic, center, or office of a nonprofit health organization that is certified by the Texas Medical Board (TMB) and complies with the requirements of state law providing for the regulation by the TMB of certain nonprofit health corporations.
EFFECTIVE DATE
On passage, or, if the bill does not receive the necessary vote, September 1, 2025.