85R24666 KFF-F
	By: Raymond	H.B. No. 3982
	Substitute the following for H.B. No. 3982:
	By:  Minjarez	C.S.H.B. No. 3982

	A BILL TO BE ENTITLED
	AN ACT
	relating to the Medicaid program, including the administration and
	operation of the Medicaid managed care program.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Section 531.024172, Government Code, is amended
	to read as follows:
	Sec. 531.024172.  ELECTRONIC VISIT VERIFICATION SYSTEM;
	REIMBURSEMENT OF CERTAIN RELATED CLAIMS. (a)  Subject to
	Subsection (g), [In this section, "acute nursing services" has the
	meaning assigned by Section 531.02417.
	[(b)  If it is cost-effective and feasible,] the commission
	shall, in accordance with federal law, implement an electronic
	visit verification system to electronically verify [and document,]
	through a telephone, global positioning, or computer-based system
	that personal care services or attendant care services provided to
	recipients under Medicaid, including personal care services or
	attendant care services provided under the Texas Health Care
	Transformation and Quality Improvement Program waiver issued under
	Section 1115 of the federal Social Security Act (42 U.S.C. Section
	1315) or any other Medicaid waiver program, are provided to
	recipients in accordance with a prior authorization or plan of
	care. The electronic visit verification system implemented under
	this subsection must allow for verification of only the following[,
	basic] information relating to the delivery of Medicaid [acute
	nursing] services[, including]:
	(1)  the type of service provided [the provider's
	name];
	(2)  the name of the recipient to whom the service is
	provided [the recipient's name]; [and]
	(3)  the date and times [time] the provider began
	[begins] and ended the [ends each] service delivery visit;
	(4)  the location, including the address, at which the
	service was provided;
	(5)  the name of the individual who provided the
	service; and
	(6)  other information the commission determines is
	necessary to ensure the accurate adjudication of Medicaid claims.
	(b)  The commission shall establish minimum requirements for
	third-party entities seeking to provide electronic visit
	verification system services to health care providers providing
	Medicaid services and must certify that a third-party entity
	complies with those minimum requirements before the entity may
	provide electronic visit verification system services to a health
	care provider.
	(c)  The commission shall inform each Medicaid recipient who
	receives personal care services or attendant care services that the
	health care provider providing the services and the recipient are
	each required to comply with the electronic visit verification
	system.  A managed care organization that contracts with the
	commission to provide health care services to Medicaid recipients
	described by this subsection shall also inform recipients enrolled
	in a managed care plan offered by the organization of those
	requirements.
	(d)  In implementing the electronic visit verification
	system:
	(1)  subject to Subsection (e), the executive
	commissioner shall adopt compliance standards for health care
	providers; and
	(2)  the commission shall ensure that:
	(A)  the information required to be reported by
	health care providers is standardized across managed care
	organizations that contract with the commission to provide health
	care services to Medicaid recipients and across commission
	programs; and
	(B)  time frames for the maintenance of electronic
	visit verification data by health care providers align with claims
	payment time frames.
	(e)  In establishing compliance standards for health care
	providers under this section, the executive commissioner shall
	consider:
	(1)  the administrative burdens placed on health care
	providers required to comply with the standards; and
	(2)  the benefits of using emerging technologies for
	ensuring compliance, including Internet-based, mobile
	telephone-based, and global positioning-based technologies.
	(f)  A health care provider that provides personal care
	services or attendant care services to Medicaid recipients shall:
	(1)  use an electronic visit verification system to
	document the provision of those services;
	(2)  comply with all documentation requirements
	established by the commission;
	(3)  comply with applicable federal and state laws
	regarding confidentiality of recipients' information;
	(4)  ensure that the commission or the managed care
	organization with which a claim for reimbursement for a service is
	filed may review electronic visit verification system
	documentation related to the claim or obtain a copy of that
	documentation at no charge to the commission or the organization;
	and
	(5)  at any time, allow the commission or a managed care
	organization with which a health care provider contracts to provide
	health care services to recipients enrolled in the organization's
	managed care plan to have direct, on-site access to the electronic
	visit verification system in use by the health care provider.
	(g)  The commission may recognize a health care provider's
	proprietary electronic visit verification system as complying with
	this section and allow the health care provider to use that system
	for a period determined by the commission if the commission
	determines that the system:
	(1)  complies with all necessary data submission,
	exchange, and reporting requirements established under this
	section;
	(2)  meets all other standards and requirements
	established under this section; and
	(3)  has been in use by the health care provider since
	at least June 1, 2014.
	(h)  The commission or a managed care organization that
	contracts with the commission to provide health care services to
	Medicaid recipients may not pay a claim for reimbursement for
	personal care services or attendant care services provided to a
	recipient unless the information from the electronic visit
	verification system corresponds with the information contained in
	the claim and the services were provided consistent with a prior
	authorization or plan of care.  A previously paid claim is subject
	to retrospective review and recoupment if unverified.
	(i)  The commission shall create a stakeholder work group
	comprised of representatives of affected health care providers,
	managed care organizations, and Medicaid recipients and
	periodically solicit from that work group input regarding the
	ongoing operation of the electronic visit verification system under
	this section.
	(j)  The executive commissioner may adopt rules necessary to
	implement this section.
	SECTION 2.  Subchapter C, Chapter 531, Government Code, is
	amended by adding Section 531.1133 to read as follows:
	Sec. 531.1133.  PROVIDER NOT LIABLE FOR MANAGED CARE
	ORGANIZATION OVERPAYMENT OR DEBT. (a)  If the commission's office
	of inspector general makes a determination to recoup an overpayment
	or debt from a managed care organization that contracts with the
	commission to provide health care services to Medicaid recipients,
	a provider that contracts with the managed care organization may
	not be held liable for the good faith provision of services under
	the provider's contract with the managed care organization that
	were provided with prior authorization.
	(b)  This section does not:
	(1)  limit the office of inspector general's authority
	to recoup an overpayment or debt from a provider that is owed by the
	provider as a result of the provider's failure to comply with
	applicable law or a contract provision, notwithstanding any prior
	authorization for a service provided; or
	(2)  apply to an action brought under Chapter 36, Human
	Resources Code.
	SECTION 3.  Section 531.120, Government Code, is amended by
	adding Subsection (c) to read as follows:
	(c)  The commission shall provide the notice required by
	Subsection (a) to a provider that is a hospital not later than the
	90th day before the date the overpayment or debt that is the subject
	of the notice must be paid.
	SECTION 4.  Section 533.00281, Government Code, is
	redesignated as Section 533.0121, Government Code, and amended to
	read as follows:
	Sec. 533.0121 [533.00281].  UTILIZATION REVIEW AND
	FINANCIAL AUDIT PROCESS FOR [STAR + PLUS] MEDICAID MANAGED CARE
	ORGANIZATIONS CONDUCTED BY OFFICE OF CONTRACT MANAGEMENT. (a) The
	commission's office of contract management shall establish an
	annual utilization review and financial audit process for managed
	care organizations participating in the [STAR + PLUS] Medicaid
	managed care program. The commission shall determine the topics to
	be examined in a [the] review [process], except that with respect to
	a managed care organization participating in the STAR + PLUS
	Medicaid managed care program, the review [process] must include a
	thorough investigation of the [each managed care] organization's
	procedures for determining whether a recipient should be enrolled
	in the STAR + PLUS home and community-based services and supports
	(HCBS) program, including the conduct of functional assessments for
	that purpose and records relating to those assessments.
	(b)  The office of contract management shall use the
	utilization review and financial audit process established under
	this section to review each fiscal year:
	(1)  each managed care organization [every managed care
	organization] participating in the [STAR + PLUS] Medicaid managed
	care program in this state for that organization's first five years
	of participation; [or]
	(2)  each managed care organization providing health
	care services to a population of recipients new to receiving those
	services through a Medicaid [only the] managed care delivery model
	for the first three years that organization provides those services
	to that population; or
	(3)  managed care organizations that, using a
	risk-based assessment process and evaluation of prior history, the
	office determines have a higher likelihood of contract or financial
	noncompliance [inappropriate client placement in the STAR + PLUS
	home and community-based services and supports (HCBS) program].
	(c)  In addition to the reviews required by Subsection (b),
	the office of contract management shall use the utilization review
	and financial audit process established under this section to
	review each managed care organization participating in the Medicaid
	managed care program at least once every five years.
	(d)  In conjunction with the commission's office of contract
	management, the commission shall provide a report to the standing
	committees of the senate and house of representatives with
	jurisdiction over Medicaid not later than December 1 of each year.
	The report must:
	(1)  summarize the results of the [utilization] reviews
	conducted under this section during the preceding fiscal year;
	(2)  provide analysis of errors committed by each
	reviewed managed care organization; and
	(3)  extrapolate those findings and make
	recommendations for improving the efficiency of the Medicaid
	managed care program.
	(e)  If a [utilization] review conducted under this section
	results in a determination to recoup money from a managed care
	organization, the provider protections from liability under
	Section 531.1133 apply [a service provider who contracts with the
	managed care organization may not be held liable for the good faith
	provision of services based on an authorization from the managed
	care organization].
	SECTION 5.  Section 533.005, Government Code, is amended by
	amending Subsection (a) and adding Subsection (d) to read as
	follows:
	(a)  A contract between a managed care organization and the
	commission for the organization to provide health care services to
	recipients must contain:
	(1)  procedures to ensure accountability to the state
	for the provision of health care services, including procedures for
	financial reporting, quality assurance, utilization review, and
	assurance of contract and subcontract compliance;
	(2)  capitation rates that ensure access to and the
	cost-effective provision of quality health care;
	(3)  a requirement that the managed care organization
	provide ready access to a person who assists recipients in
	resolving issues relating to enrollment, plan administration,
	education and training, access to services, and grievance
	procedures;
	(4)  a requirement that the managed care organization
	provide ready access to a person who assists providers in resolving
	issues relating to payment, plan administration, education and
	training, and grievance procedures;
	(5)  a requirement that the managed care organization
	provide information and referral about the availability of
	educational, social, and other community services that could
	benefit a recipient;
	(6)  procedures for recipient outreach and education;
	(7)  subject to Subdivision (7-b), a requirement that
	the managed care organization make payment to a physician or
	provider for health care services rendered to a recipient under a
	managed care plan offered by the managed care organization on any
	claim for payment that is received with documentation reasonably
	necessary for the managed care organization to process the claim:
	(A)  not later than[:
	[(i)]  the 10th day after the date the claim
	is received if the claim relates to services provided by a nursing
	facility, intermediate care facility, or group home; and
	(B)  on average, not later than [(ii)] the 15th
	[30th] day after the date the claim is received if the claim,
	including a claim that relates to the provision of long-term
	services and supports, is not subject to Paragraph (A)
	[Subparagraph (i); and
	[(iii)     the 45th day after the date the claim
	is received if the claim is not subject to Subparagraph (i) or (ii);
	or
	[(B)     within a period, not to exceed 60 days,
	specified by a written agreement between the physician or provider
	and the managed care organization];
	(7-a)  a requirement that the managed care organization
	demonstrate to the commission that the organization pays claims to
	which [described by] Subdivision (7)(B) applies [(7)(A)(ii)] on
	average not later than the 15th [21st] day after the date the claim
	is received by the organization;
	(7-b)  a requirement that the managed care organization
	demonstrate to the commission that, within each provider category
	and service delivery area designated by the commission, the
	organization pays at least 98 percent of claims within the times
	prescribed by Subdivision (7);
	(7-c)  a requirement that the managed care organization
	establish an electronic process for use by providers in submitting
	claims documentation that complies with Section 533.0055(b)(6) and
	allows providers to submit additional documentation on a claim when
	the organization determines the claim was not submitted with
	documentation reasonably necessary to process the claim;
	(8)  a requirement that the commission, on the date of a
	recipient's enrollment in a managed care plan issued by the managed
	care organization, inform the organization of the recipient's
	Medicaid certification date;
	(9)  a requirement that the managed care organization
	comply with Section 533.006 as a condition of contract retention
	and renewal;
	(10)  a requirement that the managed care organization
	provide the information required by Section 533.012 and otherwise
	comply and cooperate with the commission's office of inspector
	general and the office of the attorney general;
	(11)  a requirement that the managed care
	organization's utilization [usages] of out-of-network providers or
	groups of out-of-network providers may not exceed limits determined
	by the commission, including limits [for those usages] relating to:
	(A)  total inpatient admissions, total outpatient
	services, and emergency room admissions [determined by the
	commission];
	(B)  acute care services not described by
	Paragraph (A); and
	(C)  long-term services and supports;
	(12)  if the commission finds that a managed care
	organization has violated Subdivision (11), a requirement that the
	managed care organization reimburse an out-of-network provider for
	health care services at a rate that is equal to the allowable rate
	for those services, as determined under Sections 32.028 and
	32.0281, Human Resources Code;
	(13)  a requirement that, notwithstanding any other
	law, including Sections 843.312 and 1301.052, Insurance Code, the
	organization:
	(A)  use advanced practice registered nurses and
	physician assistants in addition to physicians as primary care
	providers to increase the availability of primary care providers in
	the organization's provider network; and
	(B)  treat advanced practice registered nurses
	and physician assistants in the same manner as primary care
	physicians with regard to:
	(i)  selection and assignment as primary
	care providers;
	(ii)  inclusion as primary care providers in
	the organization's provider network; and
	(iii)  inclusion as primary care providers
	in any provider network directory maintained by the organization;
	(14)  a requirement that the managed care organization
	reimburse a federally qualified health center or rural health
	clinic for health care services provided to a recipient outside of
	regular business hours, including on a weekend day or holiday, at a
	rate that is equal to the allowable rate for those services as
	determined under Section 32.028, Human Resources Code, if the
	recipient does not have a referral from the recipient's primary
	care physician;
	(15)  a requirement that the managed care organization
	develop, implement, and maintain a system for tracking and
	resolving all provider complaints and appeals related to claims
	payment and prior authorization and service denials, including a
	system [process] that will [require]:
	(A)  allow providers to electronically track and
	determine [a tracking mechanism to document] the status and final
	disposition of the [each] provider's [claims payment] appeal or
	complaint, as applicable;
	(B)  require the contracting with physicians or
	other health care providers who are not network providers and who
	are of the same or related specialty as the appealing physician or
	other provider, as appropriate, to resolve claims disputes related
	to denial on the basis of medical necessity that remain unresolved
	subsequent to a provider appeal; and
	(C)  require the determination of the physician or
	other health care provider resolving the dispute to be binding on
	the managed care organization and the appealing provider; [and
	[(D)     the managed care organization to allow a
	provider with a claim that has not been paid before the time
	prescribed by Subdivision (7)(A)(ii) to initiate an appeal of that
	claim;]
	(15-a)  a requirement that the managed care
	organization make available on the organization's Internet website
	summary information that is accessible to the public regarding the
	number of provider appeals and the disposition of those appeals,
	organized by provider and service types;
	(16)  a requirement that a medical director who is
	authorized to make medical necessity determinations is available to
	the region where the managed care organization provides health care
	services;
	(17)  a requirement that the managed care organization
	ensure that a medical director and patient care coordinators and
	provider and recipient support services personnel are located in
	the South Texas service region, if the managed care organization
	provides Medicaid services to recipients [a managed care plan] in
	that region;
	(18)  a requirement that the managed care organization
	provide special programs and materials for recipients with limited
	English proficiency or low literacy skills;
	(19)  a requirement that the managed care organization
	develop and establish a process for responding to provider appeals
	in the region where the organization provides health care services;
	(20)  a requirement that the managed care organization:
	(A)  develop and submit to the commission, before
	the organization begins to provide health care services to
	recipients, a comprehensive plan that describes how the
	organization's provider network complies with the provider access
	standards established under Section 533.0061, as added by Chapter
	1272 (S.B. 760), Acts of the 84th Legislature, Regular Session,
	2015;
	(B)  as a condition of contract retention and
	renewal:
	(i)  continue to comply with the provider
	access standards established under Section 533.0061, as added by
	Chapter 1272 (S.B. 760), Acts of the 84th Legislature, Regular
	Session, 2015; and
	(ii)  make substantial efforts, as
	determined by the commission, to mitigate or remedy any
	noncompliance with the provider access standards established under
	Section 533.0061, as added by Chapter 1272 (S.B. 760), Acts of the
	84th Legislature, Regular Session, 2015;
	(C)  pay liquidated damages for each failure, as
	determined by the commission, to comply with the provider access
	standards established under Section 533.0061, as added by Chapter
	1272 (S.B. 760), Acts of the 84th Legislature, Regular Session,
	2015, in amounts that are reasonably related to the noncompliance;
	and
	(D)  annually [regularly, as determined by the
	commission,] submit to the commission and make available to the
	public a report containing data on the sufficiency of the
	organization's provider network with regard to providing the care
	and services described under Section 533.0061(a), as added by
	Chapter 1272 (S.B. 760), Acts of the 84th Legislature, Regular
	Session, 2015, and specific data with respect to access to primary
	care, specialty care, long-term services and supports, nursing
	services, and therapy services on:
	(i)  the average length of time between[:
	[(i)]  the date a provider requests prior
	authorization for the care or service and the date the organization
	approves or denies the request; [and]
	(ii)  the average length of time between the
	date the organization approves a request for prior authorization
	for the care or service and the date the care or service is
	initiated; and
	(iii)  the number of providers who are
	accepting new patients;
	(21)  a requirement that the managed care organization
	demonstrate to the commission, before the organization begins to
	provide health care services to recipients, that, subject to the
	provider access standards established under Section 533.0061, as
	added by Chapter 1272 (S.B. 760), Acts of the 84th Legislature,
	Regular Session, 2015:
	(A)  the organization's provider network has the
	capacity to serve the number of recipients expected to enroll in a
	managed care plan offered by the organization;
	(B)  the organization's provider network
	includes:
	(i)  a sufficient number of primary care
	providers;
	(ii)  a sufficient variety of provider
	types;
	(iii)  a sufficient number of providers of
	long-term services and supports and specialty pediatric care
	providers of home and community-based services; and
	(iv)  providers located throughout the
	region where the organization will provide health care services;
	and
	(C)  health care services will be accessible to
	recipients through the organization's provider network to a
	comparable extent that health care services would be available to
	recipients under a fee-for-service [or primary care case
	management] model of Medicaid [managed care];
	(22)  a requirement that the managed care organization
	develop a monitoring program for measuring the quality of the
	health care services provided by the organization's provider
	network that:
	(A)  incorporates the National Committee for
	Quality Assurance's Healthcare Effectiveness Data and Information
	Set (HEDIS) measures;
	(B)  focuses on measuring outcomes; and
	(C)  includes the collection and analysis of
	clinical data relating to prenatal care, preventive care, mental
	health care, and the treatment of acute and chronic health
	conditions and substance abuse;
	(23)  subject to Subsection (a-1), a requirement that
	the managed care organization develop, implement, and maintain an
	outpatient pharmacy benefit plan  for its enrolled recipients:
	(A)  that exclusively employs the vendor drug
	program formulary and preserves the state's ability to reduce
	waste, fraud, and abuse under Medicaid;
	(B)  that adheres to the applicable preferred drug
	list adopted by the commission under Section 531.072;
	(C)  that includes the prior authorization
	procedures and requirements prescribed by or implemented under
	Sections 531.073(b), (c), and (g) for the vendor drug program;
	(D)  for purposes of which the managed care
	organization:
	(i)  may not negotiate or collect rebates
	associated with pharmacy products on the vendor drug program
	formulary; and
	(ii)  may not receive drug rebate or pricing
	information that is confidential under Section 531.071;
	(E)  that complies with the prohibition under
	Section 531.089;
	(F)  under which the managed care organization may
	not prohibit, limit, or interfere with a recipient's selection of a
	pharmacy or pharmacist of the recipient's choice for the provision
	of pharmaceutical services under the plan through the imposition of
	different copayments;
	(G)  that allows the managed care organization or
	any subcontracted pharmacy benefit manager to contract with a
	pharmacist or pharmacy providers separately for specialty pharmacy
	services, except that:
	(i)  the managed care organization and
	pharmacy benefit manager are prohibited from allowing exclusive
	contracts with a specialty pharmacy owned wholly or partly by the
	pharmacy benefit manager responsible for the administration of the
	pharmacy benefit program; and
	(ii)  the managed care organization and
	pharmacy benefit manager must adopt policies and procedures for
	reclassifying prescription drugs from retail to specialty drugs,
	and those policies and procedures must be consistent with rules
	adopted by the executive commissioner and include notice to network
	pharmacy providers from the managed care organization;
	(H)  under which the managed care organization may
	not prevent a pharmacy or pharmacist from participating as a
	provider if the pharmacy or pharmacist agrees to comply with the
	financial terms and conditions of the contract as well as other
	reasonable administrative and professional terms and conditions of
	the contract;
	(I)  under which the managed care organization may
	include mail-order pharmacies in its networks, but may not require
	enrolled recipients to use those pharmacies, and may not charge an
	enrolled recipient who opts to use this service a fee, including
	postage and handling fees;
	(J)  under which the managed care organization or
	pharmacy benefit manager, as applicable, must pay claims in
	accordance with Section 843.339, Insurance Code; and
	(K)  under which the managed care organization or
	pharmacy benefit manager, as applicable:
	(i)  to place a drug on a maximum allowable
	cost list, must ensure that:
	(a)  the drug is listed as "A" or "B"
	rated in the most recent version of the United States Food and Drug
	Administration's Approved Drug Products with Therapeutic
	Equivalence Evaluations, also known as the Orange Book, has an "NR"
	or "NA" rating or a similar rating by a nationally recognized
	reference; and
	(b)  the drug is generally available
	for purchase by pharmacies in the state from national or regional
	wholesalers and is not obsolete;
	(ii)  must provide to a network pharmacy
	provider, at the time a contract is entered into or renewed with the
	network pharmacy provider, the sources used to determine the
	maximum allowable cost pricing for the maximum allowable cost list
	specific to that provider;
	(iii)  must review and update maximum
	allowable cost price information at least once every seven days to
	reflect any modification of maximum allowable cost pricing;
	(iv)  must, in formulating the maximum
	allowable cost price for a drug, use only the price of the drug and
	drugs listed as therapeutically equivalent in the most recent
	version of the United States Food and Drug Administration's
	Approved Drug Products with Therapeutic Equivalence Evaluations,
	also known as the Orange Book;
	(v)  must establish a process for
	eliminating products from the maximum allowable cost list or
	modifying maximum allowable cost prices in a timely manner to
	remain consistent with pricing changes and product availability in
	the marketplace;
	(vi)  must:
	(a)  provide a procedure under which a
	network pharmacy provider may challenge a listed maximum allowable
	cost price for a drug;
	(b)  respond to a challenge not later
	than the 15th day after the date the challenge is made;
	(c)  if the challenge is successful,
	make an adjustment in the drug price effective on the date the
	challenge is resolved, and make the adjustment applicable to all
	similarly situated network pharmacy providers, as determined by the
	managed care organization or pharmacy benefit manager, as
	appropriate;
	(d)  if the challenge is denied,
	provide the reason for the denial; and
	(e)  report to the commission every 90
	days the total number of challenges that were made and denied in the
	preceding 90-day period for each maximum allowable cost list drug
	for which a challenge was denied during the period;
	(vii)  must notify the commission not later
	than the 21st day after implementing a practice of using a maximum
	allowable cost list for drugs dispensed at retail but not by mail;
	and
	(viii)  must provide a process for each of
	its network pharmacy providers to readily access the maximum
	allowable cost list specific to that provider;
	(24)  a requirement that the managed care organization
	and any entity with which the managed care organization contracts
	for the performance of services under a managed care plan disclose,
	at no cost, to the commission and, on request, the office of the
	attorney general all discounts, incentives, rebates, fees, free
	goods, bundling arrangements, and other agreements affecting the
	net cost of goods or services provided under the plan; and
	(25)  a requirement that the managed care organization
	[not implement significant, nonnegotiated, across-the-board
	provider reimbursement rate reductions unless:
	[(A)     subject to Subsection (a-3), the
	organization has the prior approval of the commission to make the
	reduction; or
	[(B)     the rate reductions are based on changes to
	the Medicaid fee schedule or cost containment initiatives
	implemented by the commission; and
	[(26)     a requirement that the managed care
	organization] make initial and subsequent primary care provider
	assignments and changes.
	(d)  In addition to the requirements specified by Subsection
	(a), a contract described by that subsection must provide that if
	the managed care organization has an ownership interest in a health
	care provider in the organization's provider network, the
	organization:
	(1)  must include in the provider network at least one
	other health care provider of the same type in which the
	organization does not have an ownership interest unless the
	organization is able to demonstrate to the commission that the
	provider included in the provider network is the only provider
	located in an area that meets requirements established by the
	commission relating to the time and distance a recipient is
	expected to travel to receive services; and
	(2)  may not give preference in authorizing referrals
	to the provider in which the organization has an ownership interest
	as compared to other providers of the same or similar services
	participating in the organization's provider network.
	SECTION 6.  Subchapter A, Chapter 533, Government Code, is
	amended by adding Section 533.00541 to read as follows:
	Sec. 533.00541.  PRIOR AUTHORIZATION REQUIREMENTS FOR
	CERTAIN POST-ACUTE CARE SERVICES. Notwithstanding any other law
	and except as otherwise provided by a settlement agreement filed
	with and approved by a court, the commission shall require a managed
	care organization that contracts with the commission to provide
	health care services to recipients to:
	(1)  approve or pend a request from a provider of acute
	care inpatient services for prior authorization for the following
	services or equipment not later than 72 hours after receiving the
	request to allow for a safe and timely discharge of a patient from
	an inpatient facility:
	(A)  home health services;
	(B)  long-term services and supports, including
	care provided through a nursing facility;
	(C)  private-duty nursing;
	(D)  therapy services; and
	(E)  durable medical equipment;
	(2)  ensure that a provider described by Subdivision
	(1) has an opportunity to engage in direct discussions with the
	organization regarding the appropriate level of post-acute care
	while a request for prior authorization is pending;
	(3)  contact, notify, and negotiate with a provider
	described by Subdivision (1) before approving a prior authorization
	request for personal care services or attendant care services with
	an expiration date different from the expiration date requested by
	the provider;
	(4)  submit to a provider of personal care services or
	attendant care services any change to a recipient's service plan
	relating to personal care services or attendant care services not
	later than the fifth day before the date the plan is to be effective
	for purposes of giving the provider time to initiate the change and
	the recipient an opportunity to agree to the change, unless the
	organization is changing the plan in order to meet an emerging need
	for personal care services or attendant care services;
	(5)  include on subsequent prior authorization
	requests approved with a retroactive effective date an expiration
	date that takes into account the date the service change described
	by Subdivision (4) was implemented by the provider; and
	(6)  provide complete electronic access to prior
	authorizations through the organization's process required under
	Section 533.005(a)(7-c).
	SECTION 7.  Section 533.0055(b), Government Code, is amended
	to read as follows:
	(b)  The provider protection plan required under this
	section must provide for:
	(1)  prompt payment and proper reimbursement of
	providers by managed care organizations;
	(2)  prompt and accurate adjudication of claims
	through:
	(A)  provider education on the proper submission
	of clean claims and on appeals;
	(B)  acceptance of uniform forms, including HCFA
	Forms 1500 and UB-92 and subsequent versions of those forms,
	through an electronic portal; and
	(C)  the establishment of standards for claims
	payments in accordance with a provider's contract;
	(3)  adequate and clearly defined provider network
	standards that are specific to provider type, including physicians,
	general acute care facilities, and other provider types defined in
	the commission's network adequacy standards [in effect on January
	1, 2013], and that ensure choice among multiple providers to the
	greatest extent possible;
	(4)  a prompt credentialing process for providers;
	(5)  uniform efficiency standards and requirements for
	managed care organizations for the submission and electronic
	tracking of prior authorization [preauthorization] requests for
	services provided under Medicaid;
	(6)  establishment of an electronic process, including
	the use of an Internet portal, through which providers in any
	managed care organization's provider network may:
	(A)  submit electronic claims, prior
	authorization request forms and attachments [requests], claims
	appeals and reconsiderations, clinical data, and other
	documentation that the managed care organization requests for prior
	authorization and claims processing, including an electronic
	process that allows for the resubmission of a claim without a
	requirement that the resubmitted claim be submitted in paper form
	in order to avoid treatment of the resubmitted claim as a duplicate
	claim; and
	(B)  obtain electronic remittance advice
	documents, explanation of benefits statements, service plans under
	the STAR Kids Medicaid managed care program, and other standardized
	reports;
	(7)  the measurement of the rates of retention by
	managed care organizations of significant traditional providers;
	(8)  the creation of a work group to review and make
	recommendations to the commission concerning any requirement under
	this subsection for which immediate implementation is not feasible
	at the time the plan is otherwise implemented, including the
	required process for submission and acceptance of attachments for
	claims processing and prior authorization requests through an
	electronic process under Subdivision (6) and, for any requirement
	that is not implemented immediately, recommendations regarding the
	expected:
	(A)  fiscal impact of implementing the
	requirement; and
	(B)  timeline for implementation of the
	requirement; and
	(9)  any other provision that the commission determines
	will ensure efficiency or reduce administrative burdens on
	providers participating in a Medicaid managed care model or
	arrangement.
	SECTION 8.  Subchapter A, Chapter 533, Government Code, is
	amended by adding Section 533.0058 to read as follows:
	Sec. 533.0058.  RESTRICTIONS ON CERTAIN REIMBURSEMENT RATE
	REDUCTIONS. (a)  In this section, "across-the-board provider
	reimbursement rate reduction" means a provider reimbursement rate
	reduction proposed by a managed care organization that the
	commission determines is likely to affect more than 50 percent of a
	particular type of provider participating in the organization's
	provider network during the 12-month period following
	implementation of the proposed reduction, regardless of whether:
	(1)  the organization limits the proposed reduction to
	specific service areas or provider types; or
	(2)  the affected providers are likely to experience
	differing percentages of rate reductions or amounts of lost revenue
	as a result of the proposed reduction.
	(b)  Except as provided by Subsection (e), a managed care
	organization that contracts with the commission to provide health
	care services to recipients may not implement a significant, as
	determined by the commission, across-the-board provider
	reimbursement rate reduction unless the organization:
	(1)  at least 90 days before the proposed rate
	reduction is to take effect:
	(A)  provides the commission and affected
	providers with written notice of the proposed rate reduction; and
	(B)  makes a good faith effort to negotiate the
	reduction with the affected providers; and
	(2)  receives prior approval from the commission,
	subject to Subsection (c).
	(c)  An across-the-board provider reimbursement rate
	reduction is considered to have received the commission's prior
	approval for purposes of Subsection (b)(2) unless the commission
	issues a written statement of disapproval not later than the 45th
	day after the date the commission receives notice of the proposed
	rate reduction from the managed care organization under Subsection
	(b)(1)(A).
	(d)  If a managed care organization proposes an
	across-the-board provider reimbursement rate reduction in
	accordance with this section and subsequently rejects alternative
	rate reductions suggested by an affected provider, the organization
	must provide the provider with written notice of that rejection,
	including an explanation of the grounds for the rejection, before
	implementing any rate reduction.
	(e)  This section does not apply to rate reductions that are
	implemented because of reductions to the Medicaid fee schedule or
	cost containment initiatives that are specifically directed by the
	legislature and implemented by the commission.
	SECTION 9.  Subchapter A, Chapter 533, Government Code, is
	amended by adding Section 533.00611 to read as follows:
	Sec. 533.00611.  STANDARDS FOR DETERMINING MEDICAL
	NECESSITY. (a)  Except as provided by Subsection (b), the
	commission shall establish standards that govern the processes,
	criteria, and guidelines under which managed care organizations
	determine the medical necessity of a health care service covered by
	Medicaid. In establishing standards under this section, the
	commission shall:
	(1)  ensure that each recipient has equal access in
	scope and duration to the same covered health care services for
	which the recipient is eligible, regardless of the managed care
	organization with which the recipient is enrolled;
	(2)  provide managed care organizations with
	flexibility to approve covered medically necessary services for
	recipients that may not be within prescribed criteria and
	guidelines;
	(3)  require managed care organizations to make
	available to providers all criteria and guidelines used to
	determine medical necessity through an Internet portal accessible
	by the providers;
	(4)  ensure that managed care organizations
	consistently apply the same medical necessity criteria and
	guidelines for the approval of services and in retrospective
	utilization reviews; and
	(5)  ensure that managed care organizations include in
	any service or prior authorization denial specific information
	about the medical necessity criteria or guidelines that were not
	met.
	(b)  This section does not apply to or affect the
	commission's authority to:
	(1)  determine medical necessity for home and
	community-based services provided under the STAR + PLUS Medicaid
	managed care program; or
	(2)  conduct utilization reviews of those services.
	SECTION 10.  Section 533.0071, Government Code, is amended
	to read as follows:
	Sec. 533.0071.  ADMINISTRATION OF CONTRACTS.  The
	commission shall make every effort to improve the administration of
	contracts with managed care organizations.  To improve the
	administration of these contracts, the commission shall:
	(1)  ensure that the commission has appropriate
	expertise and qualified staff to effectively manage contracts with
	managed care organizations under the Medicaid managed care program;
	(2)  evaluate options for Medicaid payment recovery
	from managed care organizations if the enrollee dies or is
	incarcerated or if an enrollee is enrolled in more than one state
	program or is covered by another liable third party insurer;
	(3)  maximize Medicaid payment recovery options by
	contracting with private vendors to assist in the recovery of
	capitation payments, payments from other liable third parties, and
	other payments made to managed care organizations with respect to
	enrollees who leave the managed care program;
	(4)  decrease the administrative burdens of managed
	care for the state, the managed care organizations, and the
	providers under managed care networks to the extent that those
	changes are compatible with state law and existing Medicaid managed
	care contracts, including decreasing those burdens by:
	(A)  where possible, decreasing the duplication
	of administrative reporting and process requirements for the
	managed care organizations and providers, such as requirements for
	the submission of encounter data, quality reports, historically
	underutilized business reports, and claims payment summary
	reports;
	(B)  allowing managed care organizations to
	provide updated address and other contact information directly to
	the commission for correction in the state eligibility system;
	(C)  promoting consistency and uniformity among
	managed care organization policies, including policies relating to
	the prior authorization processes [preauthorization process],
	lengths of hospital stays, filing deadlines, levels of care, and
	case management services; and
	(D)  [reviewing the appropriateness of primary
	care case management requirements in the admission and clinical
	criteria process, such as requirements relating to including a
	separate cover sheet for all communications, submitting
	handwritten communications instead of electronic or typed review
	processes, and admitting patients listed on separate
	notifications; and
	[(E)]  providing a portal that complies with
	Section 533.0055(b)(6) through which providers in any managed care
	organization's provider network may submit acute care services and
	long-term services and supports claims; and
	(5)  reserve the right to amend the managed care
	organization's process for resolving provider appeals of denials
	based on medical necessity to include an independent review process
	established by the commission for final determination of these
	disputes.
	SECTION 11.  Section 533.0076, Government Code, is amended
	by amending Subsection (c) and adding Subsection (d) to read as
	follows:
	(c)  The commission shall allow a recipient who is enrolled
	in a managed care plan under this chapter to disenroll from that
	plan and enroll in another managed care plan[:
	[(1)]  at any time for cause in accordance with federal
	law, including because:
	(1)  the recipient moves out of the managed care
	organization's service area;
	(2)  the plan does not, on the basis of moral or
	religious objections, cover the service the recipient seeks;
	(3)  the recipient needs related services to be
	performed at the same time, not all related services are available
	within the organization's provider network, and the recipient's
	primary care provider or another provider determines that receiving
	the services separately would subject the recipient to unnecessary
	risk;
	(4)  for recipients of long-term services or supports,
	the recipient would have to change the recipient's residential,
	institutional, or employment supports provider based on that
	provider's change in status from an in-network to an out-of-network
	provider with the managed care organization and, as a result, would
	experience a disruption in the recipient's residence or employment;
	or
	(5)  of another reason permitted under federal law,
	including poor quality of care, lack of access to services covered
	under the contract, or lack of access to providers experienced in
	dealing with the recipient's care needs[; and
	[(2)     once for any reason after the periods described
	by Subsections (a) and (b)].
	(d)  The commission shall implement a process by which the
	commission verifies that a recipient is permitted to disenroll from
	one managed care plan offered by a managed care organization and
	enroll in another managed care plan, including a plan offered by
	another managed care organization, before the disenrollment
	occurs.
	SECTION 12.  Subchapter A, Chapter 533, Government Code, is
	amended by adding Section 533.0091 to read as follows:
	Sec. 533.0091.  CARE COORDINATION SERVICES. A managed care
	organization that contracts with the commission to provide health
	care services to recipients shall ensure that persons providing
	care coordination services through the organization coordinate
	with hospital discharge planners, who must notify the organization
	of an inpatient admission of a recipient, to facilitate the timely
	discharge of the recipient to the appropriate level of care and
	minimize potentially preventable readmissions.
	SECTION 13.  Subchapter A, Chapter 533, Government Code, is
	amended by adding Section 533.0122 to read as follows:
	Sec. 533.0122.  UTILIZATION REVIEW AUDITS CONDUCTED BY
	OFFICE OF INSPECTOR GENERAL. (a)  If the commission's office of
	inspector general intends to conduct a utilization review audit of
	a provider of services under a Medicaid managed care delivery
	model, the office shall inform both the provider and the managed
	care organization with which the provider contracts of any
	applicable criteria and guidelines the office will use in the
	course of the audit.
	(b)  The commission's office of inspector general shall
	ensure that each person conducting a utilization review audit under
	this section has experience and training regarding the operations
	of managed care organizations.
	(c)  The commission's office of inspector general may not, as
	the result of a utilization review audit, recoup an overpayment or
	debt from a provider that contracts with a managed care
	organization based on a determination that a provided service was
	not medically necessary unless the office:
	(1)  uses the same criteria and guidelines that were
	used by the managed care organization in its determination of
	medical necessity for the service; and
	(2)  verifies with the managed care organization and
	the provider that the provider:
	(A)  at the time the service was delivered, had
	reasonable notice of the criteria and guidelines used by the
	managed care organization to determine medical necessity; and
	(B)  did not follow the criteria and guidelines
	used by the managed care organization to determine medical
	necessity that were in effect at the time the service was delivered.
	(d)  If the commission's office of inspector general
	conducts a utilization review audit that results in a determination
	to recoup money from a managed care organization that contracts
	with the commission to provide health care services to recipients,
	the provider protections from liability under Section 531.1133
	apply.
	SECTION 14.  Subchapter A, Chapter 533, Government Code, is
	amended by adding Section 533.01316 to read as follows:
	Sec. 533.01316.  MANAGED CARE ORGANIZATION POLICIES FOR
	CERTAIN HOSPITAL STAYS. The commission shall ensure that managed
	care organizations that contract with the commission to provide
	health care services to recipients have policies regarding
	treatment and services related to a recipient's inpatient hospital
	stay, including a behavioral health hospital stay, that is less
	than 48 hours. For purposes of this section, the commission shall
	ensure that the organization:
	(1)  specifies criteria that:
	(A)  warrant reimbursement of services related to
	the stay as either inpatient hospital services or outpatient
	hospital services, including criteria for determining what
	services constitute outpatient observation services;
	(B)  account for medical necessity based on
	recognized inpatient criteria, the severity of any psychological
	disorder, and the judgment of the treating physician or other
	provider; and
	(C)  do not permit classification of services as
	either inpatient or outpatient hospital services for purposes of
	reimbursement based solely on the duration of the stay;
	(2)  provides an opportunity for direct discussions
	regarding the medical necessity of a recipient's inpatient hospital
	admission; and
	(3)  reviews documentation in a recipient's medical
	record that supports the medical necessity of the inpatient
	hospital stay at the time of admission for reimbursement of
	services related to the stay.
	SECTION 15.  Subchapter B, Chapter 534, Government Code, is
	amended by adding Section 534.0511 to read as follows:
	Sec. 534.0511.  ENSURING PROVISION OF MEDICALLY NECESSARY
	SERVICES. (a) This section applies only to an individual with an
	intellectual or developmental disability who is receiving services
	under a Medicaid waiver program or ICF-IID program and who requires
	medically necessary acute care services or long-term services and
	supports that are not available to the individual through the
	delivery model implemented under this chapter.
	(b)  Notwithstanding any other law, the Medicaid waiver
	program or ICF-IID program that serves an individual to which this
	section applies shall pay the cost of the service and may submit to
	the commission a claim for reimbursement for the cost of that
	service.
	(c)  If the commission determines that a claim paid by the
	commission under Subsection (b) should have been covered and paid
	by a managed care organization that contracts with the commission,
	the commission may recoup the entire cost of that claim from the
	organization.
	SECTION 16.  (a) In this section, "commission" and
	"Medicaid" have the meanings assigned by Section 531.001,
	Government Code.
	(b)  As soon as practicable after the effective date of this
	Act, the commission shall develop and implement a pilot program in
	up to three urban service delivery areas that is designed to
	increase the incidence of ambulance service providers directing
	recipients of Medicaid managed care program services who are
	experiencing a behavioral health emergency to more appropriate
	health care providers for treatment of behavioral health illnesses.
	(c)  Not later than December 1, 2018, the commission shall
	develop a report analyzing any cost savings and other benefits
	realized as a result of the pilot program and deliver a copy of the
	report to the governor, lieutenant governor, speaker of the house
	of representatives, and chairs of the standing legislative
	committees having primary jurisdiction over Medicaid.
	(d)  This section expires January 1, 2019.
	SECTION 17.  (a) In this section, "commission" and
	"Medicaid" have the meanings assigned by Section 531.001,
	Government Code.
	(b)  Not later than November 30, 2017, the commission shall,
	consistent with the purpose of Sections 533.0025(b) and (d),
	Government Code, conduct a study to determine the
	cost-effectiveness and feasibility of providing prescription drug
	benefits to recipients of acute care services under Medicaid by
	pharmacies with a Class A pharmacy license, as described by Section
	560.051, Occupations Code, through a single statewide prescription
	drug administrator that adheres to a pharmacy services
	reimbursement methodology that uses:
	(1)  the most accurate and transparent ingredient drug
	pricing model;
	(2)  the National Average Drug Acquisition Cost
	published by the Centers for Medicare and Medicaid Services as the
	drug acquisition cost; and
	(3)  the most recent dispensing fee study contracted
	for by the commission to set an accurate and transparent
	professional dispensing fee as defined by 1 T.A.C. Section
	355.8551.
	(c)  In conducting a study under this section, the commission
	shall:
	(1)  for purposes of determining cost-effectiveness,
	assume and calculate reductions to the anticipated capitation rate
	paid to Medicaid managed care organizations, including reductions
	resulting from:
	(A)  the elimination or reduction of the per
	member per month administrative expense fee and the consolidation
	of the contracts relating to the prescription drug benefits;
	(B)  the elimination of the guaranteed risk
	margin; and
	(C)  any difference between pharmacy premiums
	paid by the commission to managed care organizations and
	prescription expenses reported by the managed care organizations
	for the preceding four fiscal years;
	(2)  determine and consider cost savings that would be
	achieved through maintaining a single pharmacy claims database to
	enhance patient quality outcomes through implementation of:
	(A)  a medication therapy management program;
	(B)  a prescription monitoring program;
	(C)  an adverse drug interaction avoidance
	program; or
	(D)  other similar results-oriented programs
	based on pay-for-performance outcome models;
	(3)  determine and consider cost savings associated
	with enhancing system audit capabilities and reducing contractor
	and subcontractor noncompliance, including enhanced auditing
	capabilities and reducing noncompliance in relation to:
	(A)  the payment of rebates;
	(B)  drug utilization;
	(C)  the use of prior authorization; and
	(D)  claims adjudication;
	(4)  determine and consider cost savings associated
	with improving patient access to prescribed medications;
	(5)  determine and consider cost savings related to
	further streamlining both the fee-for-service and managed care
	prescription drug benefits under one contract;
	(6)  assume that the administrator described by
	Subsection (b) of this section is, if advantageous to the state,
	subject to Chapter 222, Insurance Code; and
	(7)  consider and determine whether the administrator
	could be excluded from Section 9010 of the federal Patient
	Protection and Affordable Care Act (Pub. L. No. 111-148), as
	amended by the Health Care and Education Reconciliation Act of 2010
	(Pub. L. No. 111-152).
	(d)  This section does not apply to and the commission may
	not consider in conducting the study required by this section the
	provision of prescription drug benefits by long-term care facility
	pharmacies and specialty pharmacies.
	(e)  The commission shall combine the study required by this
	section with any other similar study required to be conducted by the
	commission.
	(f)  Not later than November 30, 2017, the commission shall
	report its findings under this section to the legislature.
	(g)  This section expires December 31, 2017.
	SECTION 18.  Section 533.005(a-3), Government Code, is
	repealed.
	SECTION 19.  As soon as practicable after the effective date
	of this Act, the Health and Human Services Commission shall
	implement an electronic visit verification system in accordance
	with Section 531.024172, Government Code, as amended by this Act.
	SECTION 20.  Section 533.005, Government Code, as amended by
	this Act, applies to a contract entered into or renewed on or after
	the effective date of this Act. A contract entered into or renewed
	before that date is governed by the law in effect on the date the
	contract was entered into or renewed, and that law is continued in
	effect for that purpose.
	SECTION 21.  If before implementing any provision of this
	Act a state agency determines that a waiver or authorization from a
	federal agency is necessary for implementation of that provision,
	the agency affected by the provision shall request the waiver or
	authorization and may delay implementing that provision until the
	waiver or authorization is granted.
	SECTION 22.  This Act takes effect September 1, 2017.