HBA-MPM S.B. 1615 76(R) BILL ANALYSIS Office of House Bill AnalysisS.B. 1615 By: Lucio Public Health 5/12/1999 Engrossed BACKGROUND AND PURPOSE Counties with a hospital district or public hospital provide care to indigent patients through that district or hospital. These hospital districts may receive additional compensation for indigent health care services through the disproportionate share hospital program, which is established under Medicaid and provides federal funds to match state and local expenditures. Counties without a hospital district or public hospital must provide care to indigent patients and pay the cost of this care from general revenue. This may pose a hardship for counties with many low-income residents, because the tax base is lower and the county has no opportunity to recoup any of the cost of indigent health care. S.B. 1615 allows counties and hospital districts to pool resources in providing health care for indigent residents through the formation of a health services district (district). This bill provides such a district with contracting and bonding authority, and provides the counties with the opportunity to pool their resources and function as one unit for the purpose of providing indigent health care. 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 Subtitle D, Title 4, Health and Safety Code, by adding Chapter 287, as follows: CHAPTER 287. HEALTH SERVICES DISTRICTS SUBCHAPTER A. GENERAL PROVISIONS Sec. 287.001. DEFINITIONS. Defines "board," "district," " and "director" for purposes of this chapter. Sec. 287.002. DISTRICT AUTHORIZATION. Authorizes a health services district (district) to be created and established. Provides that if created, the district is required to be maintained, operated, and financed as provided by this chapter. SUBCHAPTER B. CREATION OF DISTRICT Sec. 287.021. CREATION BY CONCURRENT ORDERS. (a) Authorizes a county or hospital district and one or more other counties or hospital districts, except as provided in Subsection (b), to create a district by adopting concurrent orders. (b) Prohibits a county or portion of a county that is in the boundaries of a hospital district from being a party to the creation of a district or to a contract with a district. Authorizes the hospital district serving the county or portion of the county to create and contract with the district for the boundaries of the district. (c) Provides that a concurrent order to create a district must to meet certain criteria, including being coextensive with the combined boundaries of each creating county and hospital district. (d) Provides that a concurrent order to create a district adopted by a hospital district for which the tax rate is set by the commissioners court of the county in which the hospital district operates must be approved by the commissioner's court of that county. Sec. 287.022. CONTRACT TERMS. (a) Requires a county or hospital district creating a district under this chapter to contract with the district to provide, at a minimum, the health care services the county or hospital district is required to provide by law or under the constitution. Provides that a contract with a county or hospital district that created the district under this chapter must contain certain information. (b) Makes Chapter 791 (Interlocal Cooperation Contracts), Government Code, inapplicable to a contract made under this chapter. Sec. 287.023. PURPOSE AND DUTIES. (a) Requires a district to: provide health care services to indigent residents of the district; manage the funds contributed to the district by each county or hospital district contracting with the district; and plan and coordinate with public and private health care providers and entities for long-term provision of health care services to residents of the district. (b) Authorizes a district to: provide health care services on a sliding-fee scale to district residents who do not meet the basic income and resources requirements established under Sections 61.006 and 61.008, Government Code, to be eligible for assistance under Chapter 61 (General Provisions), but who are unable to pay for the full cost of health care services; and to assume responsibility for management and operation of the land, buildings, improvements, equipment, and other assets acquired by the district or for which the district agrees to assume responsibility for under the contract terms. Sec. 287.024. FUNDING. (a) Requires each county or hospital district contracting with the district to contribute for its operation a specified dollar amount or percentage of funding under certain conditions, certain state assistance, certain federal matching funds, and certain tobacco settlement proceeds. (b) Requires the district to maintain an accounting of the funds received from each county or hospital district contracting with the district. (c) Authorizes the district to administer the financial contributions of all parties to the contract for district purposes. SUBCHAPTER C. DISTRICT ADMINISTRATION Sec. 287.041. BOARD OF DIRECTORS. (a) Requires a county or hospital district that creates the district and has a population of 125,000 or more to appoint one director to the board for every 125,000 persons in the population of the county or hospital district, rounded to the nearest 125,000. (b) Authorizes a county or hospital district that creates the district and has a population of less than 125,000 to appoint one director to the board. (c) Requires the county judges of a country that creates the district to appoint the directors to the board on the county's behalf. Requires the board of directors of a hospital district that creates that district to appoint the directors to the board on behalf of the hospital district. (d) Provides that directors serve staggered two-year terms, with as near as possible to one-half of their terms expiring each year. (e) Provides that the number of board directors appointed by each county or hospital district that creates the district is determined at the time of the initial appointment of directors under this section and does not vary with subsequent variations in the population of the county or hospital district. Sec. 287.042. QUALIFICATIONS FOR OFFICE. Provides that in order to be eligible to serve as a director, an individual must be a resident of the county or hospital district that appoints the person under Section 287.041. Prohibits an employee of the district from serving as a director. Sec. 287.043. BOND. (a) Provides that before assuming the duties of office, each director must execute a bond for $5,000 payable to the district, conditioned on the faithful performance of the person's duties as director. (b) Requires the bond to be kept in the district's permanent records. (c) Authorizes the board to pay for directors' bonds with district funds. Sec. 287.044. BOARD VACANCY. Requires a vacancy in the office of a director to be filled for the unexpired term in the same manner as the original appointment. Sec. 287.045. OFFICERS. (a) Requires the board to elect from its members a president and vice president. (b) Requires the board to appoint a secretary who need not be a director. Sec. 287.046. OFFICERS' TERMS; VACANCY. (a) Provides that each officer of the board serves for a one-year term. (b) Requires the board to fill a vacancy for the unexpired term. Sec. 287.047. COMPENSATION. (a) Provides that directors and officers serve without compensation, but authorizes them to be reimbursed for actual expenses incurred in the performance of official duties. (b) Provides that expenses reimbursed under this section must be reported in a certain manner and approved by the board. Sec. 287.048. VOTING REQUIREMENT. Provides that a majority of board members voting must concur in a matter relating to the district's business. Sec. 287.049. ADMINISTRATOR AND ADDITIONAL STAFF. (a) Authorizes the board to appoint qualified persons as administrator of the district and as additional staff members as necessary. (b) Provides that the individuals listed in Subsection (a) serve at the board's will. (c) Entitles individuals in Subsection (a) to compensation as determined by the board. (d) Requires the administrator, before assuming duties, to execute a bond payable to the district for no less than $5,000 as determined by the board, conditioned on the faithful performance of the administrator's duties under this chapter. Authorizes the board to pay for the bond with district funds. Sec. 287.050. APPOINTMENTS TO STAFF. Authorizes the board to appoint to the staff any doctors it considers necessary for the efficient operation of the district and make temporary appointments as necessary. Sec. 287.051. TECHNICIANS, NURSES, AND OTHER DISTRICT EMPLOYEES. (a) Authorizes the district to employ technicians, nurses, fiscal agents, accountants, architects, additional attorneys, and other necessary employees. (b) Authorizes the board to delegate to the administrator the authority to employ persons for the district. Sec. 287.052. GENERAL DUTIES OF ADMINISTRATOR. Requires the administrator to supervise the work and activities of the district and direct the district's general affairs, subject to limitations prescribed by the board. Sec. 287.053. RETIREMENT BENEFITS. Authorizes the board to provide retirement benefits for district employees by establishing or administering a retirement program or electing to participate in certain statewide retirement systems. SUBCHAPTER D. POWERS AND DUTIES Sec. 287.071. RESPONSIBILITY OF GOVERNMENTAL ENTITY. Requires a county or hospital district creating the district to transfer certain operations and funds to the district upon its creation. Sec. 287.072. DISTRICT RESPONSIBILITIES. Provides that upon creation of a district, the district assumes the duties required by Section 287.023, Health and Safety Code, and any additional duties specified in the contract with the counties and hospital districts that created the district. Sec. 287.073. MANAGEMENT, CONTROL, AND ADMINISTRATION. Requires the board to manage, control, and administer the health care system and the funds and resources of the district that are transferred under Section 287.071, Health and Safety Code. Sec. 287.074. DISTRICT RULES. Authorizes the board to adopt rules governing the district's operation, and the duties, functions and responsibilities of district staff and employees. Sec. 287.075. METHODS AND PROCEDURES. Authorizes the board to prescribe the method of making purchases and expenditures and accounting and control procedures or the district. Sec. 287.076. HEALTH CARE PROPERTY, FACILITIES, AND EQUIPMENT. (a) Requires the board to determine the type, number, and location of buildings required to establish and maintain an adequate health care system and the type of equipment necessary for health care. (b) Authorizes the board to make additional determinations related to: _acquisition of property, facilities, and equipment; _a mortgage or pledge of the property, facilities, or equipment acquired as security for the payment of the purchase price; _transfer by lease to certain individuals and entities; _sale or disposal of properties, facilities, or equipment; and _contracts with a state agency or other qualified provider to provide services. Sec. 287.077. CONSTRUCTION CONTRACTS. (a) Authorizes the board to enter into construction contracts for the district. (b) Authorizes the board to enter into construction contracts of more than $10,000 only after competitive bidding as provided by Subchapter B (Competitive Bidding on Certain Public Works Contracts), Chapter 271 (Purchasing and Contracting Authority of Municipalities, Counties, and Certain Other Local Governments), Local Government Code. (c) Makes Chapter 2253 (Public Work Performance and Payment Bonds), Government Code, as it relates to performance and payment bonds, applicable to construction contracts let by the district. Sec. 287.078. DISTRICT OPERATING AND MANAGEMENT CONTRACTS. Authorizes the board to enter into operating or management contracts relating to health care facilities owned by the district or for which the district assumes responsibility for managing and operating under the terms of the contract with the counties and hospital districts that created the district. Sec. 287.079. PAYMENT FOR HEALTH CARE SERVICES. (a) Requires the district without charge to supply to a patient residing in the district the care and treatment the patient or relative of a patient who is legally responsible for the patient's support cannot pay. (b) Requires the district to adopt an application procedure to determine eligibility for assistance that complies with Section 61.053 (Application Procedure) no later than the first day of each operating year. (c) Authorizes the administrator of the district to have an inquiry made into the financial circumstances of certain patients and individuals legally responsible for the patient's support. (d) Authorizes the board to adopt a sliding-fee scale for health care services provided to a patient who can pay for some, but not all, of the care and treatment provided by the district. (e) Authorizes a county that created and subcontracted with the district to credit a district expenditure for the care and treatment of an eligible county resident to the same extent and in the same manner the county would be able to claim the expenditure under Chapter 61, Government Code, if the county made the expenditure. (f) Requires the board to adopt rules regarding the collection of money owed to the district for health care services provided to a patient who is determined to be able to pay for all or any part of the services from a patient, a patient's estate, or a relative who is legally responsible for the patient's support. Sec. 287.080. REIMBURSEMENT FOR SERVICES. (a) Requires the board to mandate reimbursement from a county, municipality, or public hospital located outside the district's boundaries for the district's care and treatment of a sick, diseased, or injured person of that service area as provided by Chapter 61 (Indigent Health Care and Treatment Act), Health and Safety Code. (b) Requires the board to mandate reimbursement from the sheriff or police chief of a county or municipality for the district's care and treatment of a person confined in a jail of that area who is not a resident of the district, as determined in the same manner as the person's residence is determined under Chapter 61, Health and Safety Code. (c) Authorizes the board to contract with the state or federal agency or political subdivision of the state to provide health care services. Sec. 287.081. SERVICE CONTRACTS. Authorizes the board to contract with a municipality, county, special district, or other county or hospital district of the state or with a state or federal agency for the district to furnish a mobile emergency medical service or provide for the investigatory or welfare needs of inhabitants of the district. Sec. 287.082. GIFTS AND ENDOWMENTS. Authorizes the board, on behalf of the district, to accept gifts and endowments to be held in trust for any purpose and under any direction, limitation, or provision prescribed in writing by the donor that is consistent with the proper management of the district. Sec. 287.083. AUTHORITY TO SUE AND BE SUED. Authorizes the board to sue and be sued on the district's behalf. SUBCHAPTER E. DISSOLUTION OF DISTRICT Sec. 287.101. DISSOLUTION. Requires the district to be dissolved if the contract with the counties and hospital districts that created the district expires and is not renewed, or the counties and hospital districts that created the district adopt concurrent orders to terminate the contract and dissolve the district and the concurrent orders are approved by the governing bodies of each county and hospital district and contain identical provisions. Sec. 287.102. TRANSFER OF ASSETS AFTER DISSOLUTION. (a) Requires the board, after the district is dissolved, to perform certain functions with respect to transference of district property. (b) Provides that if the district transfers its lands, buildings, improvements, equipment, and other assets to a county or hospital district, the county or hospital district assumes all debts and obligations related to these assets, and the district is dissolved. Sec. 287.103. ADMINISTRATION OF PROPERTY, DEBTS, AND ASSETS AFTER DISSOLUTION. (a) Requires the board, if the district does not transfer its assets to a county or hospital district in the district, to continue to control and administer the property, debts, and assets of the district until all funds have been exhausted and the district's debts have been paid or settled. (b) Requires the district, if, after administering the property and assets and determining that these are insufficient to pay the district's debts, to transfer the remaining debts to the counties and hospital districts that created the district in proportion to the funds contributed to the district by each county or hospital district. (c) Requires the board, if after administering the property and assets and determining that unused funds remain, to transfer these funds to the counties ad hospital districts that created the district in proportion to the funds contributed to the district by the county or hospital district. Sec. 287.104. ACCOUNTING. Requires the board, after the district has paid all debts and disposed of all assets and funds, to provide an accounting to each county and hospital district that created and contracted with the district. Provides that the accounting must show the manner in which the assets and debts of the district were distributed. SUBCHAPTER F. DISTRICT FINANCES Sec. 287.121. FISCAL YEAR. (a) Provides that the district operates on the fiscal year established by the board. (b) Prohibits the fiscal year from being changed if revenue bonds of the district are outstanding or more than once in a 24-month period. Sec. 287.122. ANNUAL AUDIT. (a) Requires the board to have an independent annual audit made of the financial condition of the district. (b) Provides that a copy of the audit must be provided to: each county and hospital district that created and contracted with the district; each state and federal agency with which the district contracts; and any other entity that contributes substantial funds to the district. Sec. 287.123. DISTRICT AUDIT AND RECORDS. Provides that the annual audit and other district records are open for inspection during regular business hours and at the principal office of the district. Sec. 287.124. ANNUAL BUDGET. (a) Requires the district administrator to prepare a proposed annual budget for the district. (b) Provides that the budget is required to contain a complete financial statement, including certain information regarding the district's financial status. Sec. 287.125. NOTICE; HEARING; ADOPTION OF BUDGET. (a) Requires the board to hold a public hearing on the proposed annual budget. (b) Requires the board to publish notice of the hearing in a newspaper of general circulation in the district no later than the 10th day before the hearing. (c) Entitles any resident of the district to attend and participate in the hearing. (d) Authorizes the board, at the conclusion of the hearing, to adopt a budget by acting on the budget proposed by the administrator. Authorizes the board to make any changes in the budget that, in its judgment, the interests of the district residents demand. (e) Provides that the budget is effective only after the board adopts it. Sec. 287.126. AMENDING BUDGET. Authorizes the budget to be amended on the board's approval after its adoption. Sec. 287.127. LIMITATION OF EXPENDITURES. Prohibits money from being spent for an expense not included in the annual budget or an amendment to it. Sec. 287.128. SWORN STATEMENT. Requires the administrator to prepare for the board a sworn statement of the amount of money that belongs to the district and an account of the disbursements of that money as soon as practicable after the close of the fiscal year. Sec. 287.129. SPENDING AND INVESTMENT LIMITATIONS. (a) Prohibits the district from incurring a debt payable from revenues of the district other than those on hand or to be on hand in the current and immediately following fiscal year of the district, except for construction contracts under Section 287.077(a), Health and Safety Code, or as provided by Sections 287.142 and 287.143, Health and Safety Code. (b) Authorizes the board to invest operating, depreciation, or building reserves only in funds or securities specified by Articles 836 or 837, V.T.C.S. (Investments and Secondary Investments, respectively). Sec. 287.130. DEPOSITORY. (a) Requires the board to name at least one bank to serve as a depository for district funds. (b) Requires district funds, other than those invested as provided by Section 287.129(b), Health and Safety Code, and those transmitted to a bank of payment for bonds or obligations issued or assumed by the district, to be deposited as received with the depository bank, where they must remain on deposit. Provides that this subsection does not limit the board's power to place a portion of the funds on time deposit or to purchase certificates of deposit. (c) Provides that before the district deposits funds in a bank in an amount that exceeds the maximum amount secured by the Federal Deposit Insurance Corporation, the bank must execute a bond or other security in an amount sufficient to secure from loss the district funds that exceed the amount secured. Sec. 287.131. AD VALOREM TAXATION. Prohibits a district from imposing an ad valorem tax. SUBCHAPTER G. BONDS Sec. 287.141. GENERAL OBLIGATION BONDS. Prohibits a district from issuing general obligation bonds. Sec. 287.142. REVENUE BONDS. (a) Authorizes the board to issue revenue bonds for certain purposes. (b) Provides that the bonds must be payable from and secured by a pledge of all or part of the revenues derived from the operation of the district. Authorizes the bonds to be additionally secured by a mortgage or deed of trust lien on all or part of district property. (c) Provides that the bonds must be issued as provided by Sections 264.042 (Form and Procedure), 264.043 (Terms), 264.046 (Junior Lien Bonds; Parity Bonds), 264.047 (Bond Proceeds; Investment of Funds), 264.048 (Refunding Bonds), and 264.049 (Approval and Registration of Bonds), Health and Safety Code, for issuance of revenue bonds by county hospital authorities. (d) Provides that revenue derived from the district's operation and pledged to the repayment of revenue bonds issued by the district must be used to repay the principal and interest owed on the bonds before being used to repay any other obligation of the district, including money owed to physicians employed by or who contract with the district. Sec. 287.143. REFUNDING BONDS. (a) Authorizes refunding bonds to be issued to refund an outstanding indebtedness the district has issued or assumed. (b) Provides that the bonds are required to be issued as provided by Article 717k-3, V.T.C.S. (Chapter 784, Acts of the 61st Legislature, Regular Session, 1969) (Refunding Bonds; Issuance by Public Agencies; Approval; Registration, Etc.). (c) Authorizes the refunding bonds to be sold and the proceeds applied to the payment of outstanding debts or exchanged in whole or part for no less than a similar principal amount of outstanding debt. Provides if the refunding bonds are to be sold and the proceeds applied to the payment of outstanding debts, the refunding bonds are required to be issued and payments made as provided by Article 717k, V.T.C.S. (Chapter 503, Acts of the 54th Legislature, Regular Session, 1955) (State, County, Municipality or Political Subdivision; Issuer of Bonds, Notes, Etc.). Sec. 287.144. INTEREST AND MATURITY. Provides that district bonds must mature no later than the 50th anniversary of the date of issuance and bear interest at a rate not to exceed that provided by Article 717k-2, V.T.C.S. (Chapter 3, Acts of the 61st Legislature, Regular Session, 1969) (Public Insecurities; Issuance by Public Agencies; Interest Rate). Sec. 287.145. EXECUTION OF BONDS. Requires the board's president to execute the bonds in the name of the district. Requires the board's secretary to countersign the bonds as provided by Article 717j-1, V.T.C.S. (Texas Uniform Facsimile Signature of Public Officials Act). Sec. 287.146. APPROVAL AND REGISTRATION OF BONDS. (a) Provides that district bonds are subject to the same requirements with regard to approval by the attorney general and registration by the comptroller of public accounts (comptroller) as provided by law for approval and registration of bonds issued by counties. (b) Provides that on approval by the attorney general and registration by the comptroller, the bonds are incontestable for any cause. Sec. 287.147. BONDS AS INVESTMENTS. Provides that district bonds and debts assumed by the district are legal and authorized investments for certain individuals, entities, and funds. Sec. 287.148. BONDS AS SECURITY FOR DEPOSITS. Provides that district bonds are eligible to secure deposits of public funds of the state and of municipalities, counties, school districts, and other political subdivisions of the state. Provides that the bonds are lawful and sufficient security for deposits to the extent of their value if accompanied by all unmatured coupons. Sec. 287.149. TAX STATUS OF BONDS. Provides that because the district created under this chapter is a public entity performing an essential public function, bonds issued by the district, any transaction relating to the bonds, and profits made in the sale of the bonds are free from state taxes or taxation by any municipality, county, special district, or other political subdivision of this state. SECTION 2. Effective date: September 1, 1999. SECTION 3. Emergency clause.