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.