HBA-ATS, NIK H.B. 3021 76(R)BILL ANALYSIS


Office of House Bill AnalysisH.B. 3021
By: Smithee
Insurance
9/14/1999
Enrolled



BACKGROUND AND PURPOSE 

In 1975, The 64th Texas Legislature enacted the Texas Health Maintenance
Organization Act (Article 20A, V.T.I.C.) to regulate the health maintenance
organization (HMO) industry.  Article 20A.12A (Review of Adverse
Determinations) of the Act, as added in 1997 by the 75th Legislature,
requires an HMO to notify an enrollee of the enrollee's right to appeal an
adverse determination to an independent review organization (IRO); to
notify an enrollee of the procedure for such an appeal; and to notify an
enrollee with a life-threatening condition of the enrollee's right to an
immediate appeal.  Article 20A.12 (Complaint System), which requires every
HMO to implement a system to address a complaint brought by an enrollee,
was also amended. 

Prior to the 76th Legislature, some HMOs contended that an enrollee's
disagreement with an adverse determination constituted a complaint and not
an appeal within the meaning of Article 20A.12.  An appeal of an adverse
determination activates the requirements set forth by Article 21.58A
(Health Care Utilization Review Agents), Insurance Code, to which HMOs are
subject. Under Article 21.58A, an enrollee may request an IRO review of a
denied claim.  However, an enrollee must first complete the utilization
review agent's appeal process before requesting an IRO review.  This
process is typically used by insurers to help make payment determinations. 

H.B. 3021 redefines "complaint" to include procedures related to review or
appeal of an adverse determination, and provides that the term does not
include a written dissatisfaction with an adverse determination.  This bill
requires each HMO to implement and maintain a complaint system to address
complaints of enrollees and health care providers, and establishes the
process for an appeal of an adverse determination, as that term is defined.
H.B. 3021 redefines "adverse determination," for the purposes of Article
20A.12A, as a determination by an HMO or a utilization review agent (in
addition to an HMO) that health care services, either furnished or
proposed, are  not appropriate (in addition to not medically necessary). 

This bill also establishes the consumer assistance program for HMOs.  The
program is required to assist individual consumers in complaints or appeals
within and outside the operation of an HMO, including appeals under Article
21.58A or in Medicaid and Medicare fair hearings, and to refer consumers to
other programs or agencies if appropriate.  However, this program would not
take effect unless the legislature appropriates money specifically for the
purpose of administering that section. 

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. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 2(f), Article 20A.02, V.T.I.C. (Texas Health
Maintenance Organization Act), to redefine "complaint" by including
procedures related to review or appeal of an adverse determination as that
term is defined by Section 12A of this article; and the denial, reduction,
or termination of a service for reasons not related to medical necessity as
aspects of the health maintenance organization's (HMO) operation.  Provides
that the term does not include a provider's or enrollee's oral or written
dissatisfaction or disagreement with an adverse determination. 
 
SECTION 2.  Amends Section 12, Article 20A.12, V.T.I.C. (Texas Health
Maintenance Organization Act), as amended by Chapters 163 and 1026, Acts of
the 75th Legislature, Regular Session, 1997, as follows: 

Sec. 12.  COMPLAINT SYSTEM.  (a) Requires every HMO to implement, rather
than establish, and maintain a complaint system to provide reasonable
procedures for the resolution of oral and written complaints initiated by
enrollees or providers concerning health care services.  Rectifies
statutory duplication by deleting "an internal system for the notice and
appeal of complaints." 

(b)  Makes a conforming change.

(c)-(e) Redesignated from Subsections (b)-(d), respectively.

(f) Makes conforming changes.

(g)  Deletes the provision that if a resolution is to deny services upon an
adverse determination of medical necessity, the clinical basis used to
reach that decision must be included. Makes a conforming change.
Redesignated from Subsection (f).  

(h)  Specifies that a request for appeal must be in writing.

(i) Redesignated from Subsection (h).  Makes a conforming change.

(j) Provides that the appeal panel must include a, rather than an
additional, person who is a specialist in the field of care to which an
appeal relates.  Redesignated from Subsection (i). 

(k)-(r) Redesignated from Subsections (j)-(q), respectively.

SECTION 3.  Amends Section 12A, Article 20A.12A, V.T.I.C. (Texas Health
Maintenance Organization Act), as added by Chapter 163, Acts of the 75th
Legislature, Regular Session, 1997, as follows: 

Sec.  12A.  New title: APPEAL OF ADVERSE DETERMINATIONS.  (a) Redefines
"adverse determination" to include a utilization review agent as an entity
who may determine that furnished or proposed health care services are not
medically appropriate, in addition to not medically necessary.  Makes
conforming changes. 

(b)  Requires an HMO to implement and maintain an internal appeal system
that provides reasonable procedures for the resolution of an oral or
written appeal concerning dissatisfaction or disagreement with an adverse
determination that is initiated by an enrollee, a person acting on behalf
of an enrollee, or an enrollee's provider of record. Provides that the
appeal system must include procedures for notification, review, and appeal
of an adverse determination, as defined by this section, in accordance with
Article 21.58A (Health Care Utilization Review Agents), Insurance Code. 

(c) Requires the HMO or utilization review agent to regard oral or written
expression of dissatisfaction or disagreement as an appeal of the adverse
determination, when an enrollee, a person acting on behalf of an enrollee,
or an enrollee's provider of record expresses orally or in writing any
dissatisfaction or disagreement with an adverse determination, as defined
by this section  Requires the HMO to review and resolve the appeal in
accordance with Article 21.58A, Insurance Code. 

(d) Authorizes an HMO to integrate its appeal procedures related to adverse
determinations with the complaint and appeal procedures established by the
HMO under Section 12 of this article only if the procedures related to
adverse determinations comply with this section and Article 21.58A,
Insurance Code. 
 
SECTION 4.  Redesignates Section 12A, Article 20A.12A, V.T.I.C. (Texas
Health Maintenance Organization Act), as added by Chapter 1026, Acts of the
75th Legislature, Regular Session, 1997, as Section 12B.  Makes a
conforming change. 

SECTION 5.  Amends Subchapter G, Chapter 3, Insurance Code, by adding
Article 3.70-3D, as follows: 

Art. 3.70-3D.  CONSUMER ASSISTANCE PROGRAM FOR HEALTH MAINTENANCE
ORGANIZATIONS.  (a) Establishes the consumer assistance program (program)
for HMOs. Authorizes the commissioner of insurance (commissioner) to
contract, through a request for proposals, with a nonprofit organization to
operate the program.  

(b) Requires the program to assist individual consumers in complaints or
appeals within and outside the operation of an HMO, including appeals under
Article 21.58A or in Medicaid and Medicare fair hearings, and to refer
consumers to other programs or agencies if appropriate.  

(c) Authorizes the program to operate a statewide clearinghouse for
objective consumer information about health care coverage, including
options for obtaining health care coverage, and to accept gifts, grants, or
donations from any source for the purpose of operating the program.
Authorizes the program to charge reasonable fees to consumers to support
the program.  

(d) Authorizes the commissioner or an entity contracting with the
commissioner to implement this article to establish an advisory committee
composed of consumers, health care providers, and health care plan
representatives.  

(e) Provides that a nonprofit organization contracting with the
commissioner must not be involved in providing health care or health care
plans and must demonstrate that it has expertise in providing direct
assistance to consumers with respect to their concerns and problems with
HMOs.  

SECTION 6.  Sets forth that the changes made by Section 5 do not take
effect unless the legislature appropriates money specifically for the
purpose of administering that section. 

SECTION 7.  Effective date: September 1, 1999.
      Makes application of this Act prospective.

SECTION 8.  Emergency clause.