Office of House Bill AnalysisS.B. 1571
By: Nelson


Managed care organizations use a wide variety of contracts and forms in
negotiations and agreements with health care providers.  Senate Bill 1571
requires the commissioner of insurance to adopt rules that establish
standard contract forms for use by managed care entities in entering into
certain contracts. 


It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the commissioner of insurance in
SECTION 1 (Section 3,  Article 21.52K,  Insurance Code) and SECTION 2 of
this bill. 


Senate Bill 1571 amends the Insurance Code to require the commissioner of
insurance (commissioner) to adopt rules that establish standard contract
forms for use by managed care entities in entering into contracts with
physicians and to require managed care entities to use those contracts. The
bill authorizes a managed care entity or a physician to use an alternate
contract form that meets certain requirements.   

The bill establishes the nine-member contract advisory panel (panel)  as an
advisory panel to the commissioner to advise and make recommendations
regarding the adoption of standard contract forms. The bill provides that
the panel is appointed jointly by the lieutenant governor and the speaker
of the house of representatives and sets forth membership requirements for
the panel.  The bill prohibits the consumer representative on the panel
from receiving any compensation from or being employed directly or
indirectly by physicians, health care providers, insurers, health
maintenance organizations, or other health benefit plan issuers; being a
health care provider; or being a person required to be registered as a
lobbyist for activities that relate to the panel.  The bill provides that
members of the panel serve without compensation and at the will of the
lieutenant governor and speaker of the house of representatives.  

The bill sets forth provisions prohibiting a managed care entity from
certain discriminatory practices and sets forth provisions regarding a
violation of the Act.  The bill authorizes the commissioner to suspend or
revoke a managed care entity's license or other authority to engage in the
business of insurance in this state if the commissioner determines that the
managed care entity has failed to use the requisite contract form. 

The bill applies to a health maintenance organization, a preferred provider
organization, an approved nonprofit health corporation that holds a
certificate of authority and any other entity that offers a managed care
plan, including an insurance company, a group hospital service corporation,
a fraternal benefit society, or a stipulated premium insurance company. 

Not later than June 1, 2002, the bill requires the commissioner to adopt
the rules and contract forms required by the Act.  Unless an exception
applies, the bill requires a managed care entity to use a standard contract
form for any contract between the managed care entity and a physician
signed or renewed on or after January 1, 2003. 


On passage, or if the Act does not receive the necessary vote, the Act
takes effect September 1, 2001.