HBA-CBW S.B. 1571 77(R) BILL ANALYSIS Office of House Bill AnalysisS.B. 1571 By: Nelson Insurance 5/8/2001 Engrossed BACKGROUND AND PURPOSE 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. RULEMAKING AUTHORITY 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. ANALYSIS 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. EFFECTIVE DATE On passage, or if the Act does not receive the necessary vote, the Act takes effect September 1, 2001.