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From the 2005 Regular Session of the Texas Legislature

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	S.B. No. 1188



AN ACT



relating to the medical assistance program
and other health and human services.


BE IT ENACTED BY THE LEGISLATURE OF THE
STATE OF TEXAS:


SECTION 1.  COMMUNITY COLLABORATION.  Subchapter
A, Chapter 531, Government Code, is amended by adding
Section 531.020 to read as follows:


Sec. 531.020.  OFFICE OF COMMUNITY COLLABORATION.
 The executive commissioner shall establish within
the commission an office of community collaboration.
 The office is responsible for:


(1)  collaborating with community, state,
and federal stakeholders to improve the elements of
the health care system that are involved in the delivery
of Medicaid services; and


(2)  sharing with Medicaid providers,
including hospitals, any best practices, resources,
or other information regarding improvements to the
health care system.


SECTION 2.  MEDICAID FINANCING.  (a)  Subchapter
B, Chapter 531, Government Code, is amended by adding
Section 531.02113 to read as follows:


Sec. 531.02113.  OPTIMIZATION OF MEDICAID
FINANCING.  The commission shall ensure that the Medicaid
finance system is optimized to:


(1)  maximize the state's receipt of
federal funds;


(2)  create incentives for providers
to use preventive care;


(3)  increase and retain providers in
the system to maintain an adequate provider network;


(4)  more accurately reflect the costs
borne by providers; and


(5)  encourage the improvement of the
quality of care.


(b)  Section 32.042, Human Resources Code,
is amended by amending Subsections (a), (b), (d), and
(e) and adding Subsection (b-1) to read as follows:


(a)  An insurer shall maintain a file system
that contains:


(1)  the name, address, including claim
submission address, group policy number, employer's
mailing address, social security number, and date of
birth of each enrollee, beneficiary, subscriber,
or policyholder covered by the insurer; and


(2)  the name, address, including claim
submission address, and date of birth of each dependent
of each enrollee, beneficiary, subscriber,
or policyholder covered by the insurer.


(b)  The state's Medicaid third-party recovery
division shall identify state medical assistance recipients
who have third-party health coverage or insurance as
provided by this subsection.  The department may:


(1)  shall provide
to an insurer Medicaid data tapes that identify medical
assistance recipients and request that the insurer
identify each enrollee, beneficiary, subscriber,
or policyholder of the insurer whose name also appears
on the Medicaid data tape; or


(2)  request that an insurer provide
to the department identifying information for each
enrollee, beneficiary, subscriber, or policyholder
of the insurer.


(b-1)  An insurer from which the department
requests information under Subsection (b) shall provide
that information, except that the  An
insurer shall comply with a request under this subsection
not later than the 60th day after the date the request
was made.  An insurer is only required under
this subsection to provide the department
with the information maintained under Subsection (a)
by the insurer or made available to the insurer from
the plan.  A plan administrator is subject to Subsection
(b) and shall provide information under that this
subsection to the extent the information described
in this subsection is made available to the
plan administrator from the insurer or plan.


(d)  An insurer shall provide the information
required under Subsection (b)(1) this
section only if the department certifies
that the identified individuals are applicants for
or recipients of services under Medicaid or are legally
responsible for an applicant for or recipient of Medicaid
services.


(e)  The department shall enter into an
agreement to reimburse an insurer or plan administrator
for necessary and reasonable costs incurred in providing
information requested under Subsection (b)(1), not
to exceed $5,000 for each data match made under that
subdivision.  If the department makes a data match
using information provided under Subsection (b)(2),
the department shall reimburse the insurer or plan
administrator for reasonable administrative expenses
incurred in providing the information.  The reimbursement
for information under Subsection (b)(2) may not exceed
$5,000 for initially producing information with respect
to a person, or $200 for each subsequent production
of information with respect to the person this
section.  The department may enter into an
agreement with an insurer or plan administrator
insurers that provides procedures
for requesting and providing information under this
section.  An agreement under this subsection may not
be inconsistent with any law relating to the confidentiality
or privacy of personal information or medical records.
 The procedures agreed to under this subsection must
state the time and manner the procedures take effect.


(c)  The Health and Human Services Commission
shall:


(1)  examine the possibility of using existing
state funds, including existing state funds for the
county indigent health care program and the area health
education centers in this state, on health-related
programs to maximize receipt of additional federal
Medicaid funds;


(2)  subject to availability of funds,
increase Medicaid reimbursement rates for hospitals
and physicians to better align those rates with Medicare
and private-pay reimbursement rates;


(3)  examine the possibility of a program
under which intergovernmental transfers are used to
support graduate medical education in support of the
Medicaid program and, if cost-effective, implement
that program;


(4)  examine the possibility of a program
that includes comprehensive outpatient rehabilitation
facilities in the prospective payment systems methodology
and, if cost-effective, implement that program;


(5)  examine the possibility of developing
Medicaid waivers for intergovernmental transfers from
local entities similar to those used in the demonstration
projects under Chapter 534, Government Code;


(6)  examine the possibility of developing
a Medicaid waiver program to allow local governmental
entities as well as private employers to buy into the
Medicaid or children's health insurance programs and,
if cost-effective, implement that program;


(7)  examine the possibility of using employer
contributions and donations to expand eligibility and
funding for the Medicaid and children's health insurance
programs and, if cost-effective, implement that option;
and


(8)  examine the possibility of providing
a tax incentive in the form of an ad valorem, franchise,
or sales tax credit for employers to enable those employers
to pay the state's portion of the premiums for Medicaid
or children's health insurance for employees whose
family income does not exceed 200 percent of the federal
poverty limit and, if cost-effective, implement that
option.


(d)  If the Health and Human Services Commission
chooses to increase reimbursement rates for any providers
under Subdivision (2), Subsection (c) of this section,
the commission shall give priority to providers serving
medically underserved areas, those who treat a high
volume of Medicaid patients, and those who provide
care that is an alternative to care in an emergency
department.


SECTION 3.  COLLECTION AND ANALYSIS OF INFORMATION.
 (a)  Subchapter B, Chapter 531, Government Code, is
amended by adding Section 531.02141 to read as follows:


Sec. 531.02141.  MEDICAID INFORMATION
COLLECTION AND ANALYSIS.  (a)  The commission shall
make every effort to improve data analysis and integrate
available information associated with the Medicaid
program.  The commission shall use the decision support
system in the commission's center for strategic decision
support for this purpose and shall modify or redesign
the system to allow for the data collected by the Medicaid
program to be used more systematically and effectively
for Medicaid program evaluation and policy development.
 The commission shall develop or redesign the system
as necessary to ensure that the system:


(1)  incorporates program enrollment,
utilization, and provider data that are currently collected;


(2)  allows data manipulation and quick
analysis to address a large variety of questions concerning
enrollment and utilization patterns and trends within
the program;


(3)  is able to obtain consistent and
accurate answers to questions;


(4)  allows for analysis of multiple
issues within the program to determine whether any
programmatic or policy issues overlap or are in conflict;


(5)  includes predefined data reports
on utilization of high-cost services that allow program
management to analyze and determine the reasons for
an increase or decrease in utilization and immediately
proceed with policy changes, if appropriate;


(6)  includes any encounter data with
respect to recipients that a managed care organization
that contracts with the commission under Chapter 533
receives from a health care provider under the organization's
provider network; and


(7)  links Medicaid and non-Medicaid
data sets, including data sets related to the Medicaid
program, the Temporary Assistance for Needy Families
program, the Special Supplemental Nutrition Program
for Women, Infants, and Children, vital statistics,
and other public health programs.


(b)  The commission shall ensure that
all Medicaid data sets created or identified by the
decision support system are made available on the Internet
to the extent not prohibited by federal or state laws
regarding medical privacy or security.  If privacy
concerns exist or arise with respect to making the
data sets available on the Internet, the system and
the commission shall make every effort to make the
data available through that means either by removing
information by which particular individuals may be
identified or by aggregating the data in a manner so
that individual records cannot be associated with particular
individuals.


(b)  The Health and Human Services Commission
shall allow for sufficient opportunities for stakeholder
input in the modification or redesign of the decision
support system in the commission's center for strategic
decision support as required by Section 531.02141,
Government Code, as added by this section.  The commission
may provide these opportunities through:


(1)  existing mechanisms, such as regional
advisory committees or public forums; and


(2)  meetings involving state and local
agencies and other entities involved in the planning,
management, or delivery of health and human services
in this state.


SECTION 4.  ADMINISTRATIVE PROCESSES AND
AUDIT REQUIREMENTS.  (a)  Subchapter B, Chapter 531,
Government Code, is amended by adding Sections 531.02411
and 531.02412 to read as follows:


Sec. 531.02411.  STREAMLINING ADMINISTRATIVE
PROCESSES.  The commission shall make every effort
using the commission's existing resources to reduce
the paperwork and other administrative burdens placed
on Medicaid recipients and providers and other participants
in the Medicaid program and shall use technology and
efficient business practices to decrease those burdens.
 In addition, the commission shall make every effort
to improve the business practices associated with the
administration of the Medicaid program by any method
the commission determines is cost-effective, including:


(1)  expanding the utilization of the
electronic claims payment system;


(2)  developing an Internet portal system
for prior authorization requests;


(3)  encouraging Medicaid providers
to submit their program participation applications
electronically;


(4)  ensuring that the Medicaid provider
application is easy to locate on the Internet so that
providers may conveniently apply to the program;


(5)  working with federal partners to
take advantage of every opportunity to maximize additional
federal funding for technology in the Medicaid program;
and


(6)  encouraging the increased use of
medical technology by providers, including increasing
their use of:


(A)  electronic communications between
patients and their physicians or other health care
providers;


(B)  electronic prescribing tools that
provide up-to-date payer formulary information at the
time a physician or other health care practitioner
writes a prescription and that support the electronic
transmission of a prescription;


(C)  ambulatory computerized order entry
systems that facilitate physician and other health
care practitioner orders at the point of care for medications
and laboratory and radiological tests;


(D)  inpatient computerized order entry
systems to reduce errors, improve health care quality,
and lower costs in a hospital setting;


(E)  regional data-sharing to coordinate
patient care across a community for patients who are
treated by multiple providers; and


(F)  electronic intensive care unit
technology to allow physicians to fully monitor hospital
patients remotely.


Sec. 531.02412.  SERVICE DELIVERY AUDIT
MECHANISMS.  (a)  The commission shall make every effort
to ensure the integrity of the Medicaid program.  To
ensure that integrity, the commission shall:


(1)  perform risk assessments of every
element of the Medicaid program and audit those elements
of the program that are determined to present the greatest
risks;


(2)  ensure that sufficient oversight
is in place for the Medicaid medical transportation
program;


(3)  ensure that a quality review assessment
of the Medicaid medical transportation program occurs;
and


(4)  evaluate the Medicaid program with
respect to use of the metrics developed through the
Texas Health Steps performance improvement plan to
guide changes and improvements to the program.


(b)  This section does not affect the
duty of the Texas Department of Transportation to manage
the delivery of transportation services, including
the delivery of transportation services for clients
of health and human services programs.


(b)  To further encourage the use of medical
technology by providers under the Medicaid program,
the Health and Human Services Commission may enter
into a written agreement with a manufacturer, as defined
by Section 531.070, Government Code, to accept as a
program benefit in lieu of supplemental rebates, as
defined by Section 531.070, Government Code, the manufacturer's
operation of a pilot program under which the manufacturer
supplies those providers with a graphical electronic
medical record system and evaluates the benefits and
cost-effectiveness of the system.  The program must
be operated in a manner that is acceptable to the commission
and must be designed to test the benefits and cost-effectiveness
on a sufficiently large scale.  The manufacturer shall
report the results of the program, including an analysis
of the program's benefits and cost-effectiveness, to
the commission.  The commission shall report those
results to the 80th Legislature not later than January
15, 2007.


(c)  The Health and Human Services Commission
shall examine options for standardizing and simplifying
the interaction between the Medicaid system and providers
regardless of the service delivery system through which
a provider provides services and, using existing resources,
implement any options that are anticipated to increase
the quality of care and contain costs.


SECTION 5.  LONG-TERM CARE SERVICES.  (a)
 Subchapter B, Chapter 531, Government Code, is amended
by adding Sections 531.083 and 531.084 to read as follows:


Sec. 531.083.  MEDICAID LONG-TERM CARE
SYSTEM.  The commission shall ensure that the Medicaid
long-term care system provides the broadest array of
choices possible for recipients while ensuring that
the services are delivered in a manner that is cost-effective
and makes the best use of available funds.  The commission
shall also make every effort to improve the quality
of care for recipients of Medicaid long-term care services
by:


(1)  evaluating the need for expanding
the provider base for consumer-directed services and,
if the commission identifies a demand for that expansion,
encouraging area agencies on aging, independent living
centers, and other potential long-term care providers
to become providers through contracts with the Department
of Aging and Disability Services;


(2)  ensuring that all recipients who
reside in a nursing facility are provided information
about end-of-life care options and the importance of
planning for end-of-life care; and


(3)  developing policies to encourage
a recipient who resides in a nursing facility to receive
treatment at that facility whenever possible, while
ensuring that the recipient receives an appropriate
continuum of care.


Sec. 531.084.  MEDICAID LONG-TERM CARE
COST CONTAINMENT STRATEGIES.  (a)  The commission shall
make every effort to achieve cost efficiencies within
the Medicaid long-term care program.  To achieve those
efficiencies, the commission shall:


(1)  establish a fee schedule for reimbursable
incurred medical expenses for dental services controlled
in long-term care facilities;


(2)  implement a fee schedule for reimbursable
incurred medical expenses for durable medical equipment
in nursing facilities and ICF-MR facilities;


(3)  implement a durable medical equipment
fee schedule action plan;


(4)  establish a system for private
contractors to secure and coordinate the collection
of Medicare funds for recipients who are dually eligible
for Medicare and Medicaid;


(5)  create additional partnerships
with pharmaceutical companies to obtain discounted
prescription drugs for Medicaid recipients; and


(6)  develop and implement a system
for auditing the Medicaid hospice care system that
provides services in long-term care facilities to ensure
correct billing for pharmaceuticals.


(b)  The executive commissioner and
the commissioner of aging and disability services shall
jointly appoint persons to serve on a work group to
assist the commission in developing the fee schedule
required by Subsection (a)(1).  The work group must
consist of providers of long-term care services, including
dentists and long-term care advocates.


(c)  In developing the fee schedule
required by Subsection (a)(1), the commission shall
consider:


(1)  the need to ensure access to dental
services for residents of long-term care facilities
who are unable to travel to a dental office to obtain
care;


(2)  the most recent Comprehensive Fee
Report published by the National Dental Advisory Service;


(3)  the difficulty of providing dental
services in long-term care facilities;


(4)  the complexity of treating medically
compromised patients; and


(5)  time-related and travel-related
costs incurred by dentists providing dental services
in long-term care facilities.


(d)  The commission shall annually update
the fee schedule required by Subsection (a)(1).


(b)  The Health and Human Services Commission
shall examine:


(1)  the possibility of implementing a
program to expand Medicaid home health benefits to
include speech pathology services, intravenous therapy,
and chemotherapy treatments and, if cost-effective,
implement that program;


(2)  the possibility of implementing a
program to provide respite and other support services
to individuals providing daily assistance to persons
with Alzheimer's disease or dementia to reduce caregiver
burnout and, if cost-effective, implement that program;


(3)  the possibility of implementing a
program to offer services through state schools to
recipients who are living in the community and a program
to use funding for community-based services to pay
for the services from the state schools and, if cost-effective,
implement those programs;


(4)  in conjunction with the Department
of Aging and Disability Services, the possibility of
implementing a program to simplify the administrative
procedures for regulating nursing facilities and, if
cost-effective, implement that program; and


(5)  the possibility of using fee schedules,
prior approval processes, and alternative service delivery
options to ensure appropriate utilization and payment
for Medicaid services and, if cost-effective, implement
those schedules, processes, and options.


(c)  The Health and Human Services Commission
shall study and determine whether polypharmacy reviews
for Medicaid recipients receiving long-term care services
could identify inappropriate pharmaceutical usage patterns
and lead to controlled costs.


(d)  Prior to developing and adopting the
fee schedule required by Subdivision (1), Subsection
(a), Section 531.084, Government Code, as added by
this section, the Health and Human Services Commission
shall make every effort to expedite the approval of
dental treatment plans and the approval and payment
of reimbursable incurred medical expenses for dental
services provided to residents of long-term care facilities.


SECTION 6.  MEDICAID MANAGED CARE.  (a)
 Section 533.005, Government Code, is amended by amending
Subsection (a) and adding Subsection (c) 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 and provider payment
rates that ensure 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)  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 not later than the 45th day after
the date a claim for payment is received with documentation
reasonably necessary for the managed care organization
to process the claim, or within a period, not to exceed
60 days, specified by a written agreement between the
physician or provider and the managed care organization;


(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 investigations
and enforcement;


(11)  a requirement that the managed care
organization's usages of out-of-network providers or
groups of out-of-network providers may not exceed limits
for those usages relating to total inpatient admissions,
total outpatient services, and emergency room admissions
determined by the commission; and


(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 the organization
use advanced practice nurses in addition to physicians
as primary care providers to increase the availability
of primary care providers in the organization's provider
network;


(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; and


(15)  a requirement that the managed
care organization develop, implement, and maintain
a system for tracking and resolving all provider appeals
related to claims payment, including a process that
will require:


(A)  a tracking mechanism to document
the status and final disposition of each provider's
claims payment appeal;


(B)  the contracting with physicians
who are not network providers and who are of the same
or related specialty as the appealing physician to
resolve claims disputes related to denial on the basis
of medical necessity that remain unresolved subsequent
to a provider appeal; and


(C)  the determination of the physician
resolving the dispute to be binding on the managed
care organization and provider.


(c)  The executive commissioner shall
adopt rules regarding the days, times of days, and
holidays that are considered to be outside of regular
business hours for purposes of Subsection (a)(14).


(b)  Subchapter A, Chapter 533, Government
Code, is amended by adding Sections 533.0071 and 533.0072
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 requirements
for the managed care organizations, 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 information directly to
the commission for correction in the state system;


(C)  promoting consistency and uniformity
among managed care organization policies, including
policies relating to the 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


(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.


Sec. 533.0072.  INTERNET POSTING OF
SANCTIONS IMPOSED FOR CONTRACTUAL VIOLATIONS.  (a)
 The commission shall prepare and maintain a record
of each enforcement action initiated by the commission
that results in a sanction, including a penalty, being
imposed against a managed care organization for failure
to comply with the terms of a contract to provide health
care services to recipients through a managed care
plan issued by the organization.


(b)  The record must include:


(1)  the name and address of the organization;


(2)  a description of the contractual
obligation the organization failed to meet;


(3)  the date of determination of noncompliance;


(4)  the date the sanction was imposed;


(5)  the maximum sanction that may be
imposed under the contract for the violation; and


(6)  the actual sanction imposed against
the organization.


(c)  The commission shall post and maintain
the records required by this section on the commission's
Internet website in English and Spanish.  The records
must be posted in a format that is readily accessible
to and understandable by a member of the public.  The
commission shall update the list of records on the
website at least quarterly.


(d)  The commission may not post information
under this section that relates to a sanction while
the sanction is the subject of an administrative appeal
or judicial review.


(e)  A record prepared under this section
may not include information that is excepted from disclosure
under Chapter 552.


(f)  The executive commissioner shall
adopt rules as necessary to implement this section.


(c)  The Health and Human Services Commission
shall reevaluate the case management fee used in the
primary care case management program and shall make
recommendations to the Legislative Budget Board if
the commission finds that a different rate is appropriate.


(d)  The Health and Human Services Commission
shall examine:


(1)  the feasibility and cost-effectiveness
of establishing a sliding-scale case management fee
for the primary care case management program based
on primary care provider performance;


(2)  the operational efficiency, health
outcomes, case management, and cost-effectiveness of
the primary care case management program and adopt
any necessary changes to maximize health outcomes and
cost-effectiveness; and


(3)  the mechanism used to encourage hospital
participation in the primary care case management program
and adopt alternative policies if current policies
are determined to be ineffective.


(e)  The Health and Human Services Commission
shall make every effort to improve the delivery of
health care services to recipients enrolled in the
Medicaid managed care program by evaluating the following
actions for a determination of cost-effectiveness and
pursuing those actions if they are determined to be
cost-effective:


(1)  adding a Medicaid managed care contract
requirement that requires each managed care plan to
work with the commission and health care providers
to improve the immunization rate of Medicaid clients
and the reporting of immunization information for inclusion
in ImmTrac;


(2)  to the extent permitted by federal
law, allowing managed care organizations access to
the previous claims history of a new enrollee that
is maintained by a claims administrator if the new
managed care organization enrollee was formerly a recipient
under the Medicaid fee for service or primary care
case management system;


(3)  encouraging managed care organizations
to operate nurse triage telephone lines and to more
effectively notify enrollees that the lines exist and
inform enrollees regarding how to access those lines;


(4)  creating more rigorous contract standards
for managed care organizations to ensure that children
have clinically appropriate alternatives to emergency
room services outside of regular office hours;


(5)  developing more effective mechanisms
to identify and control the utilization of program
services by enrollees who are found to have abused
the services; and


(6)  studying the impact on the program
of enrollees who have a history of high or abusive
use of program services and incorporating the most
effective methods of curtailing that activity while
assuring that those enrollees receive adequate health
services.


(f)  Section 533.005, Government Code,
as amended by this section, applies only to a contract
between the Health and Human Services Commission and
a managed care organization under Chapter 533, Government
Code, that is entered into or renewed on or after the
effective date of this section.  A contract between
the commission and an organization that is entered
into or renewed before the effective date of this section
is governed by the law in effect on the date the contract
was entered into or renewed, and the former law is
continued in effect for that purpose.


(g)  Section 533.0072, Government Code,
as added by this section, applies only to a sanction
imposed on or after the effective date of this section.


SECTION 7.  SELECTION OF MEDICAL ASSISTANCE
PROVIDERS.  (a)  Section 32.027, Human Resources Code,
is amended by amending Subsection (f) and adding Subsection
(l) to read as follows:


(f)  The executive commissioner of the
Health and Human Services Commission department
by rule may shall develop
a system of selective contracting with health care
providers for the provision of nonemergency inpatient
hospital services to a recipient of medical assistance
under this chapter.  In implementing this subsection,
the executive commissioner department
shall:


(1)  seek input from consumer representatives
and from representatives of hospitals licensed under
Chapter 241, Health and Safety Code, and from organizations
representing those hospitals; and


(2)  ensure that providers selected under
the system meet the needs of a recipient of medical
assistance under this chapter.


(l)  Subject to appropriations, the
department shall assure that a recipient of medical
assistance under this chapter may select a licensed
psychologist, a licensed marriage and family therapist,
as defined by Section 502.002, Occupations Code, a
licensed professional counselor, as defined by Section
503.002, Occupations Code, or a licensed master social
worker, as defined by Section 505.002, Occupations
Code, to perform any health care service or procedure
covered under the medical assistance program if the
selected person is authorized by law to perform the
service or procedure.  This subsection shall be liberally
construed.


(b)  Subsection (e), Section 32.027, Human
Resources Code, as amended by Chapter 1251, Acts of
the 78th Legislature, Regular Session, 2003, is repealed.


SECTION 8.  OPTIMIZATION OF CASE MANAGEMENT
SYSTEMS.  (a)  Subchapter B, Chapter 32, Human Resources
Code, is amended by adding Section 32.0551 to read
as follows:


Sec. 32.0551.  OPTIMIZATION OF CASE
MANAGEMENT SYSTEMS.  The Health and Human Services
Commission shall:


(1)  create and coordinate staffing
and other administrative efficiencies for case management
initiatives across the commission and health and human
services agencies, as defined by Section 531.001, Government
Code; and


(2)  optimize federal funding revenue
sources and maximize the use of state funding resources
for case management initiatives across the commission
and health and human services agencies.


(b)  The Health and Human Services Commission
shall evaluate the cost-effectiveness of developing
intensive case management and targeted interventions
for all Medicaid recipients who are aged, blind, or
disabled.


(c)  The Health and Human Services Commission
shall identify Medicaid programs or protocols in existence
on the effective date of this section that are not
resulting in their anticipated cost savings or quality
outcomes.  The commission shall enhance or replace
these programs or protocols with targeted strategies
that have demonstrated success in improving coordination
of care and cost savings within similar Medicaid recipient
populations.


(d)  The Health and Human Services Commission
shall evaluate the cost-effectiveness of including
within Medicaid disease management programs in existence
on the effective date of this section additional diseases,
such as chronic kidney disease or end-stage renal disease,
additional chronic medical conditions, such as severe
pain that requires management, and other strategies,
such as home health services for children with chronic
conditions that are not included in the existing disease
management programs and the use of schools and school
nurses to manage chronic medical conditions of children.
 In evaluating the cost-effectiveness of including
other diseases, conditions, and strategies, the commission
may review existing data from the provider of disease
management services under Section 32.059, Human Resources
Code, as added by Chapter 208, Acts of the 78th Legislature,
Regular Session, 2003.  The commission may also research
the experiences of other states, insurance companies,
and managed care organizations and review other sources
of data the commission determines is appropriate. 
The commission shall expand Medicaid disease management
programs and related programs to include the diseases,
conditions, and strategies that the commission determines
under this subsection will be cost-effective.


(e)  The Health and Human Services Commission
shall conduct a study to determine the feasibility
of combining the utilization management, case management,
care coordination, high-cost targeting, provider incentives,
and other quality and cost-control measures implemented
with respect to the Medicaid program under a single
federal waiver, which may be a waiver under Section
1915(c) of the federal Social Security Act (42 U.S.C.
Section 1396n(c)) or a waiver under Section 1115(a)
of that Act (42 U.S.C. Section 1315(a)).  If the commission
determines that the combination is feasible, the commission
shall develop the combined program and seek the appropriate
approval from the Centers for Medicare and Medicaid
Services.  In conducting the study, the commission
shall solicit stakeholder input and consider information
from any other optimization-related projects currently
being operated, including the Consolidated Waiver Project
authorized by 531.0219, Government Code, former projects
including the Mental Retardation Local Authority program,
and related information from projects in other states.


SECTION 9.  EDUCATION CAMPAIGN.  (a)  Subchapter
B, Chapter 32, Human Resources Code, is amended by
adding Section 32.071 to read as follows:


Sec. 32.071.  RECIPIENT AND PROVIDER
EDUCATION.  (a)  The department shall develop and implement
a comprehensive medical assistance education campaign
for recipients and providers to ensure that care is
provided in such a way as to improve patient outcomes
and maximize cost-effectiveness.  The department shall
ensure that educational information developed under
this section is demographically relevant and appropriate
for each recipient or provider to whom the information
is provided.


(b)  The comprehensive medical assistance
education campaign must include elements designed to
encourage recipients to obtain, maintain, and use a
medical home and to reduce their use of high-cost emergency
department services for conditions that can be treated
through primary care or nonemergency physicians or
other providers.  The campaign must include the dissemination
of educational information through newsletters and
emergency department staff members and at local health
fairs, unless the department determines that these
methods of dissemination are not effective in increasing
recipients' appropriate use of the health care system.


(c)  The department shall evaluate whether
certain risk groups may disproportionately increase
their appropriate use of the health care system as
a result of targeted elements of an education campaign.
 If the department determines that certain risk groups
will respond with more appropriate use of the system,
the department shall develop and implement the appropriate
targeted educational elements.


(d)  The department shall develop a
system for reviewing recipient prescription drug use
and educating providers with respect to that drug use
in a manner that emphasizes reducing inappropriate
prescription drug use and the possibility of adverse
drug interactions.


(e)  The department shall coordinate
the medical assistance education campaign with area
health education centers, federally qualified health
centers, as defined by 42 U.S.C. Section 1396d(l)(2)(B),
and other stakeholders who use public funds to educate
recipients and providers about the health care system
in this state.  The department shall make every effort
to maximize state funds by working through these partners
to maximize receipt of additional federal funding for
administrative and other costs.


(f)  The department shall coordinate
with other state and local agencies to ensure that
community-based health workers, health educators, state
eligibility determination employees who work in hospitals
and other provider locations, and promoters are used
in the medical assistance education campaign, as appropriate.


(g)  The department shall ensure that
all state agencies that work with recipients, all administrative
persons who provide eligibility determination and enrollment
services, and all service providers use the same curriculum
for recipient and provider education, as appropriate.


(b)  In developing the comprehensive medical
assistance education campaign under Section 32.071,
Human Resources Code, as added by this section, the
Health and Human Services Commission shall ensure that
private entities participating in the Medicaid program,
including vendors providing claims administration,
eligibility determination, enrollment services, and
managed care services, are involved to the extent those
entities' participation is useful.


(c)  The Health and Human Services Commission
shall identify all funds being spent on the effective
date of this section on education for Medicaid recipients.
 The commission shall integrate these funds into the
comprehensive medical assistance education campaign
under Section 32.071, Human Resources Code, as added
by this section.


SECTION 10.  OFFICE OF MEDICAL TECHNOLOGY.
 Subchapter A, Chapter 531, Government Code, is amended
by adding Section 531.0081 to read as follows:


Sec. 531.0081.  OFFICE OF MEDICAL TECHNOLOGY.
 (a)  In this section, "office" means the office of
medical technology.


(b)  The commission shall establish
the office of medical technology within the commission.
 The office shall explore and evaluate new developments
in medical technology and propose implementing the
technology in the medical assistance program under
Chapter 32, Human Resources Code, if appropriate and
cost-effective.


(c)  Office staff must have skills and
experience in research regarding health care technology.


SECTION 11.  MEDICAID REIMBURSEMENT RATES.
 (a)  Section 531.021, Government Code, is amended
by adding Subsections (f) and (g) to read as follows:


(f)  In adopting rates for medical assistance
payments under Subsection (b)(2), the executive commissioner
may adopt reimbursement rates for appropriate nursing
services provided to recipients with certain health
conditions if those services are determined to provide
a cost-effective alternative to hospitalization.  A
physician must certify that the nursing services are
medically appropriate for the recipient for those services
to qualify for reimbursement under this subsection.


(g)  In adopting rates for medical assistance
payments under Subsection (b)(2), the executive commissioner
may adopt cost-effective reimbursement rates for group
appointments with medical assistance providers for
certain diseases and medical conditions specified by
rules of the executive commissioner.


(b)  Subchapter B, Chapter 531, Government
Code, is amended by adding Section 531.02175 to read
as follows:


Sec. 531.02175.  REIMBURSEMENT FOR ONLINE
MEDICAL CONSULTATIONS.  (a)  In this section, "physician"
means a person licensed to practice medicine in this
state under Subtitle B, Title 3, Occupations Code.


(b)  Subject to the requirements of
this subsection, the executive commissioner by rule
may require the commission and each health and human
services agency that administers a part of the Medicaid
program to provide Medicaid reimbursement for a medical
consultation that is provided by a physician or other
health care professional using the Internet as a cost-effective
alternative to an in-person consultation.  The executive
commissioner may require the commission or a health
and human services agency to provide the reimbursement
described by this subsection only if the Centers for
Medicare and Medicaid Services develop an appropriate
Current Procedural Terminology code for medical services
provided using the Internet.


(c)  The executive commissioner may
develop and implement a pilot program in one or more
sites chosen by the executive commissioner under which
Medicaid reimbursements are paid for medical consultations
provided by physicians or other health care professionals
using the Internet.  The pilot program must be designed
to test whether an Internet medical consultation is
a cost-effective alternative to an in-person consultation
under the Medicaid program.  The executive commissioner
may modify the pilot program as necessary throughout
its implementation to maximize the potential cost-effectiveness
of Internet medical consultations.  If the executive
commissioner determines from the pilot program that
Internet medical consultations are cost-effective,
the executive commissioner may expand the pilot program
to additional sites or may implement Medicaid reimbursements
for Internet medical consultations statewide.


(d)  The executive commissioner is not
required to implement the pilot program authorized
under Subsection (c) as a prerequisite to providing
Medicaid reimbursement authorized by Subsection (b)
on a statewide basis.


SECTION 12.  HOSPITAL EMERGENCY ROOM USE
REDUCTION.  (a)  Subchapter B, Chapter 531, Government
Code, is amended by adding Section 531.085 to read
as follows:


Sec. 531.085.  HOSPITAL EMERGENCY ROOM
USE REDUCTION INITIATIVES.  The commission shall develop
and implement a comprehensive plan to reduce the use
of hospital emergency room services by recipients under
the medical assistance program.  The plan may include:


(1)  a pilot program designed to facilitate
program participants in accessing an appropriate level
of health care, which may include as components:


(A)  providing program participants
access to bilingual health services providers; and


(B)  giving program participants information
on how to access primary care physicians, advanced
practice nurses, and local health clinics;


(2)  a pilot program under which health
care providers, other than hospitals, are given financial
incentives for treating recipients outside of normal
business hours to divert those recipients from hospital
emergency rooms;


(3)  payment of a nominal referral fee
to hospital emergency rooms that perform an initial
medical evaluation of a recipient and subsequently
refer the recipient, if medically stable, to an appropriate
level of health care, such as care provided by a primary
care physician, advanced practice nurse, or local clinic;


(4)  a program under which the commission
or a managed care organization that enters into a contract
with the commission under Chapter 533 contacts, by
telephone or mail, a recipient who accesses a hospital
emergency room three times during a six-month period
and provides the recipient with information on ways
the recipient may secure a medical home to avoid unnecessary
treatment at hospital emergency rooms;


(5)  a health care literacy program
under which the commission develops partnerships with
other state agencies and private entities to:


(A)  assist the commission in developing
materials that:


(i)  contain basic health care information
for parents of young children who are recipients under
the medical assistance program and who are participating
in public or private child-care or prekindergarten
programs, including federal Head Start programs; and


(ii)  are written in a language understandable
to those parents and specifically tailored to be applicable
to the needs of those parents;


(B)  distribute the materials developed
under Paragraph (A) to those parents; and


(C)  otherwise teach those parents about
the health care needs of their children and ways to
address those needs; and


(6)  other initiatives developed and
implemented in other states that have shown success
in reducing the incidence of unnecessary treatment
in hospital emergency rooms.


(b)  The Health and Human Services Commission
may develop the health care literacy component of the
comprehensive plan to reduce the use of hospital emergency
room services required by Subdivision (5), Section
531.085, Government Code, as added by this section,
so that the health care literacy component operates
in a manner similar to the manner in which the Johnson
& Johnson/UCLA Health Care Institute operates its health
care training program that is designed to teach parents
to better address the health care needs of their children.


SECTION 13.  PERFORMANCE BONUS PILOT PROGRAM.
 Subchapter B, Chapter 531, Government Code, is amended
by adding Section 531.086 to read as follows:


Sec. 531.086.  PERFORMANCE BONUS PILOT
PROGRAM.  (a)  The commission shall develop a proposal
for providing higher reimbursement rates to primary
care case management providers under the Medicaid program
who treat program recipients with chronic health conditions
in accordance with evidence-based, nationally accepted
best practices and standards of care.


(b)  The commission shall define the
parameters of the proposed program, including:


(1)  the types of chronic health conditions
the program would target;


(2)  the best practices and standards
of care that must be followed for a provider to obtain
a higher reimbursement rate under the proposed program;
and


(3)  the types of providers to whom
the higher reimbursement rate would be offered under
the proposed program.


(c)  Not later than December 1, 2006,
the Health and Human Services Commission shall report
to the standing committees of the senate and the house
of representatives having primary jurisdiction over
welfare programs regarding the proposed program under
this section.  The report must include:


(1)  the anticipated effect of the higher
reimbursement rates to be offered under the program
on the quality of care provided and the health outcomes
for program recipients;


(2)  a determination of whether the
program would be cost-effective; and


(3)  a recommendation regarding implementation
of the program.


(d)  This section expires September
1, 2007.


SECTION 14.  RETURN OF UNUSED DRUGS.  Section
562.1085, Occupations Code, is amended by amending
Subsection (a) and adding Subsection (f) to read as
follows:


(a)  A pharmacist who practices in or serves
as a consultant for a health care facility in this
state may return to a pharmacy certain unused drugs,
other than a controlled substance as defined by Chapter
481, Health and Safety Code, purchased from the pharmacy
as provided by board rule.  The unused drugs must:


(1)  be approved by the federal Food and
Drug Administration and be:


(A)  sealed in the manufacturer's
original unopened tamper-evident packaging
and either individually packaged or packaged in unit-dose
packaging;


(B)  oral or parenteral medication in sealed
single-dose containers approved by the federal Food
and Drug Administration;


(C)  topical or inhalant drugs in sealed
units-of-use containers approved by the federal Food
and Drug Administration; or


(D)  parenteral medications in sealed multiple-dose
containers approved by the federal Food and Drug Administration
from which doses have not been withdrawn; and


(2)  not be the subject of a mandatory
recall by a state or federal agency or a voluntary
recall by a drug seller or manufacturer.


(f)  The tamper-evident packaging required
under Subsection (a)(1) for the return of unused drugs
is not required to be the manufacturer's original packaging
unless that packaging is required by federal law.


SECTION 15.  MEDICAL INFORMATION TELEPHONE
HOTLINE.  (a)  Subchapter B, Chapter 531, Government
Code, is amended by adding Section 531.02131 to read
as follows:


Sec. 531.02131.  MEDICAID MEDICAL INFORMATION
TELEPHONE HOTLINE PILOT PROGRAM.  (a)  In this section,
"net cost-savings" means the total projected cost of
Medicaid benefits for an area served under the pilot
program minus the actual cost of Medicaid benefits
for the area.


(b)  The commission shall evaluate the
cost-effectiveness, in regard to preventing unnecessary
emergency room visits and ensuring that Medicaid recipients
seek medical treatment in the most medically appropriate
and cost-effective setting, of developing a Medicaid
medical information telephone hotline pilot program
under which physicians are available by telephone to
answer medical questions and provide medical information
for recipients.  If the commission determines that
the pilot program is likely to result in net cost-savings,
the commission shall develop the pilot program.


(c)  The commission shall select the
area in which to implement the pilot program.  The
selected area must include:


(1)  at least two counties; and


(2)  not more than 100,000 Medicaid
recipients, with approximately 50 percent of the recipients
enrolled in a managed care program in which the recipients
receive services from a health maintenance organization.


(d)  The commission shall request proposals
from private vendors for the operation of a telephone
hotline under the pilot program.  The commission may
not award a contract to a vendor unless the vendor
agrees to contractual terms:


(1)  requiring the vendor to answer
medical questions and provide medical information by
telephone to recipients using only physicians;


(2)  providing that the value of the
contract is contingent on achievement of net cost-savings
in the area served by the vendor; and


(3)  permitting the commission to terminate
the contract after a reasonable period if the vendor's
services do not result in net cost-savings in the area
served by the vendor.


(e)  The commission shall periodically
determine whether the pilot program is resulting in
net cost-savings.  The commission shall discontinue
the pilot program if the commission determines that
the pilot program is not resulting in net cost-savings
after a reasonable period.


(f)  Notwithstanding any other provision
of this section, including Subsection (b), the commission
is not required to develop the pilot program if suitable
private vendors are not available to operate the telephone
hotline.


(g)  The executive commissioner shall
adopt rules necessary for implementation of this section.


(b)  Not later than December 1, 2005, the
Health and Human Services Commission shall determine
whether the pilot program described by Section 531.02131,
Government Code, as added by this section, is likely
to result in net cost-savings.  If the determination
indicates that net cost-savings are likely, the commission
shall take the action required by Subsections (c),
(d), and (e) of this section.


(c)  Not later than January 1, 2006, the
Health and Human Services Commission shall select the
counties in which the pilot program will be implemented.


(d)  Not later than February 1, 2006, the
Health and Human Services Commission shall request
proposals from private vendors for the operation of
a medical information telephone hotline.  The commission
shall evaluate the proposals and choose one or more
vendors as soon as possible after the receipt of the
proposals.


(e)  Not later than January 1, 2007, the
Health and Human Services Commission shall report to
the governor, the lieutenant governor, and the speaker
of the house of representatives regarding the pilot
program.  The report must include:


(1)  a description of the status of the
pilot program, including whether the commission was
unable to contract with a suitable vendor;


(2)  if the pilot program has been implemented:


(A)  an evaluation of the effects of the
pilot program on emergency room visits by program participants;
and


(B)  a description of cost savings in the
area included in the pilot program; and


(3)  recommendations regarding expanding
or revising the pilot program.


SECTION 16.  PRESCRIPTION DRUGS.  (a)  Section
531.070, Government Code, is amended by amending Subsection
(l) and adding Subsection (n) to read as follows:


(l)  Each year the commission shall provide
a written report to the legislature and the governor.
 The report shall cover:


(1)  the cost of administering the preferred
drug lists adopted under Section 531.072;


(2)  an analysis of the utilization trends
for medical services provided by the state and any
correlation to the preferred drug lists;


(3)  an analysis of the effect on health
outcomes and results for recipients; and


(4)  statistical information related to
the number of approvals granted or denied; and


(5)  an analysis of the effect during
the preceding year of the implementation of the Medicare
Prescription Drug, Improvement, and Modernization Act
of 2003 (Pub. L. No. 108-173) on the preferred drug
list adopted under Section 531.072 and the prior authorization
requirements under Section 531.073 applicable under
the Medicaid vendor drug program.


(n)  Prior to or during supplemental
rebate agreement negotiations for drugs being considered
for the preferred drug list, the commission shall disclose
to pharmaceutical manufacturers any clinical edits
or clinical protocols that may be imposed on drugs
within a particular drug category that are placed on
the preferred list during the contract period.  Clinical
edits will not be imposed for a preferred drug during
the contract period unless the above disclosure is
made.


(b)  Subsection (n), Section 531.070, Government
Code, as added by this section, applies only to a supplemental
rebate agreement that is entered into or renewed on
or after the effective date of this Act.  A supplemental
rebate agreement that is entered into or renewed before
the effective date of this Act is governed by the law
in effect on the date the agreement was entered into
or renewed, and the former law is continued in effect
for that purpose.


SECTION 17.  PHARMACEUTICAL AND THERAPEUTICS
COMMITTEE.  Section 531.074, Government Code, is amended
by adding Subsection (m) to read as follows:


(m)  The commission or the commission's
agent shall publicly disclose each specific drug recommended
for preferred drug list status for each drug class
included in the preferred drug list for the Medicaid
vendor drug program.  The disclosure must be made in
writing after the conclusion of committee deliberations
that result in recommendations made to the executive
commissioner regarding the placement of drugs on the
preferred drug list.


SECTION 18.  FRAUD, ABUSE, OR OVERCHARGES.
 (a)  Section 531.102, Government Code, is amended
by adding Subsections (j) and (k) to read as follows:


(j)  The office shall prepare a final
report on each audit or investigation conducted under
this section.  The final report must include:


(1)  a summary of the activities performed
by the office in conducting the audit or investigation;


(2)  a statement regarding whether the
audit or investigation resulted in a finding of any
wrongdoing; and


(3)  a description of any findings of
wrongdoing.


(k)  A final report on an audit or investigation
is subject to required disclosure under Chapter 552.
 All information and materials compiled during the
audit or investigation remain confidential and not
subject to required disclosure in accordance with Section
531.1021(g).


(b)  Section 531.1021, Government Code,
is amended by amending Subsection (g) and adding Subsection
(h) to read as follows:


(g)  All information and materials subpoenaed
or compiled by the office in connection with an audit
or investigation are confidential and not subject
to disclosure under Chapter 552, and not subject to
disclosure, discovery, subpoena, or other means of
legal compulsion for their release to anyone other
than the office or its employees or agents involved
in the audit or investigation conducted by the
office, except that this information may be disclosed
to the office of the attorney general, the state
auditor's office, and law enforcement agencies.


(h)  A person who receives information
under Subsection (g) may disclose the information only
in accordance with Subsection (g) and in a manner that
is consistent with the authorized purpose for which
the person first received the information.


SECTION 19.  MEDICAID DISEASE MANAGEMENT
PROGRAMS.  (a)  Section 533.009, Government Code, is
amended by adding Subsection (f) to read as follows:


(f)  The executive commissioner, by
rule, shall prescribe the minimum requirements that
a managed care organization, in providing a disease
management program, must meet to be eligible to receive
a contract under this section.  The managed care organization
must, at a minimum, be required to:


(1)  provide disease management services
that have performance measures for particular diseases
that are comparable to the relevant performance measures
applicable to a provider of disease management services
under Section 32.059, Human Resources Code, as added
by Chapter 208, Acts of the 78th Legislature, Regular
Session, 2003; and


(2)  show evidence of ability to manage
complex diseases in the Medicaid population.


(b)  Section 32.059, Human Resources Code,
as added by Chapter 208, Acts of the 78th Legislature,
Regular Session, 2003, is amended by amending Subsection
(c) and adding Subsection (c-1) to read as follows:


(c)  The executive commissioner of the
Health and Human Services Commission department,
by rule, shall prescribe the minimum requirements a
provider of a disease management program must meet
to be eligible to receive a contract under this section.
 The provider must, at a minimum, be required to:


(1)  use disease management approaches
that are based on evidence-supported models, minimum
standards of care in the medical community,
and clinical outcomes; and


(2)  ensure that a recipient's primary
care physician and other appropriate specialty physicians,
or registered nurses, advanced practice nurses, or
physician assistants specified and directed or supervised
in accordance with applicable law by the recipient's
primary care physician or other appropriate specialty
physicians, become directly involved in the disease
management program through which the recipient receives
services.


(c-1)  A managed care health plan that
develops and implements a disease management program
under Section 533.009, Government Code, and a provider
of a disease management program under this section
shall coordinate during a transition period beneficiary
care for patients that move from one disease management
program to another program.


(c)  The executive commissioner of the
Health and Human Services Commission may use a provider
of a disease management program under Section 32.059,
Human Resources Code, as added by Chapter 208, Acts
of the 78th Legislature, Regular Session, 2003, as
amended by this section, to provide disease management
services if the executive commissioner determines that
the use of that provider will be more cost-effective
to the Medicaid program than using a provider of a
disease management program under Section 533.009, Government
Code, as amended by this section.  A Medicaid recipient
currently in a disease management program provided
under Section 32.059, Human Resources Code, as added
by Chapter 208, Acts of the 78th Legislature, Regular
Session, 2003, in a service area that is subject to
a Medicaid managed care expansion may remain enrolled
in the recipient's current disease management program
if the executive commissioner determines that allowing
those recipients to remain is cost-effective.


SECTION 20.  INTEGRATED CARE MANAGEMENT MODEL.
 (a)  Chapter 533, Government Code, is amended by adding
Subchapter D to read as follows:






Sec. 533.061.  INTEGRATED CARE MANAGEMENT
MODEL.  (a)  The executive commissioner, by rule, shall
develop an integrated care management model of Medicaid
managed care.  The "integrated care management model"
is a noncapitated primary care case management model
of Medicaid managed care with enhanced components to:


(1)  improve patient health and social
outcomes;


(2)  improve access to care;


(3)  constrain health care costs; and


(4)  integrate the spectrum of acute
care and long-term care services and supports.


(b)  In developing the integrated care
management model, the executive commissioner shall
ensure that the integrated care management model utilizes
managed care principles and strategies to assure proper
utilization of acute care and long-term care services
and supports.  The components of the model must include:


(1)  the assignment of recipients to
a medical home;


(2)  utilization management to assure
appropriate access and utilization of services, including
prescription drugs;


(3)  health risk or functional needs
assessment;


(4)  a method for reporting to medical
homes and other appropriate health care providers on
the utilization by recipients of health care services
and the associated cost of utilization of those services;


(5)  mechanisms to reduce inappropriate
emergency department utilization by recipients, including
the provision of after-hours primary care;


(6)  mechanisms that ensure a robust
system of care coordination for assessing, planning,
coordinating, and monitoring recipients with complex,
chronic, or high-cost health care or social support
needs, including attendant care and other services
needed to remain in the community;


(7)  implementation of a comprehensive,
community-based initiative to educate recipients about
effective use of the health care delivery system;


(8)  strategies to prevent or delay
institutionalization of recipients through the effective
utilization of home and community-based support services;
and


(9)  any other components the executive
commissioner determines will improve a recipient's
health outcome and are cost-effective.


(c)  For purposes of this chapter, the
integrated care management model is a managed care
plan.


Sec. 533.062.  CONTRACTING FOR INTEGRATED
CARE MANAGEMENT.  (a)  The commission may contract
with one or more administrative services organizations
to perform the coordination of care and other services
and functions of the integrated care management model
developed under Section 533.061.


(b)  The commission may require that
each administrative services organization contracting
with the commission under this section assume responsibility
for exceeding administrative costs and not meeting
performance standards in connection with the provision
of acute care and long-term care services and supports
under the terms of the contract.


(c)  The commission may include in a
contract awarded under this section a written guarantee
of state savings on Medicaid expenditures for recipients
receiving services provided under the integrated care
management model developed under Section 533.061.


(d)  The commission may require that
each administrative services organization contracting
with the commission under this section establish pay-for-performance
incentives for providers to improve patient outcomes.


(e)  In this section, "administrative
services organization" means an entity that performs
administrative and management functions, such as the
development of a physician and provider network, care
coordination, service coordination, utilization review
and management, quality management, and patient and
provider education, for a noncapitated system of health
care services, medical services, or long-term care
services and supports.


Sec. 533.063.  STATEWIDE INTEGRATED
CARE MANAGEMENT ADVISORY COMMITTEE.  (a)  The executive
commissioner may appoint an advisory committee to assist
the executive commissioner in the development and implementation
of the integrated care management model.


(b)  The advisory committee is subject
to Chapter 551.


(b)  The Health and Human Services Commission
shall require each administrative services organization
contracting with the commission to perform services
under Section 533.062, Government Code, as added by
this section, to coordinate with, use, and otherwise
interface with the fee-for-service claims payment contractor
operating in this state on August 31, 2005, until the
date the claims payment contract expires, subject to
renewal of the contract.


(c)  The commission may require each administrative
services organization contracting with the commission
to perform services under Section 533.062, Government
Code, as added by this section, to incorporate disease
management into the integrated care management model
established under Section 533.061, Government Code,
as added by this section, utilizing the Medicaid disease
management contractor operating in this state on November
1, 2004, until the date the disease management contract
expires, subject to renewal of the contract.


(d)  If any provision of this section conflicts
with another statute enacted by the 79th Legislature,
Regular Session, 2005, the provision of this section
controls.


SECTION 21.  DISPENSATION OF PRESCRIPTION
DRUGS.  (a)  Subsections (o) and (p), Section 481.074,
Health and Safety Code, are amended to read as follows:


(o)  A pharmacist may dispense a Schedule
II controlled substance pursuant to a facsimile copy
of an official prescription completed in the manner
required by Section 481.075 and transmitted by the
practitioner or the practitioner's agent to the pharmacy
if:


(1)  the prescription is written for:


(A)  a Schedule II narcotic or nonnarcotic
substance for a patient in a long-term care facility
(LTCF), and the practitioner notes on the prescription
"LTCF patient";


(B)  a Schedule II narcotic product to
be compounded for the direct administration to a patient
by parenteral, intravenous, intramuscular, subcutaneous,
or intraspinal infusion; or


(C)  a Schedule II narcotic substance for
a patient with a medical diagnosis documenting a terminal
illness or a patient enrolled in a hospice care program
certified or paid for by Medicare under Title XVIII,
Social Security Act (42 U.S.C. Section 1395 et seq.),
as amended, by Medicaid, or by a hospice
program that is licensed under Chapter 142, and the
practitioner or the practitioner's agent notes on the
prescription "terminally ill" or "hospice patient";
and


(2)  after transmitting the prescription,
the prescribing practitioner or the practitioner's
agent:


(A)  writes across the face of the official
prescription "VOID--sent by fax to (name and telephone
number of receiving pharmacy)"; and


(B)  files the official prescription
in the patient's medical records instead of delivering
it to the patient promptly complies with
Subsection (p).


(p)  Not later than the seventh
day after the date a prescribing practitioner transmits
the facsimile copy of the official prescription to
the pharmacy, the prescribing practitioner shall deliver
in person or mail the official written prescription
to the dispensing pharmacist at the pharmacy where
the prescription was dispensed.  The envelope of a
prescription delivered by mail must be postmarked not
later than the seventh day after the date the official
prescription was written.  On receipt of
the prescription, the dispensing pharmacy shall file
the facsimile copy of the prescription with
the official prescription and shall send
information to the director as required by Section
481.075.


(b)  This section takes effect immediately
if this Act receives a vote of two-thirds of all the
members elected to each house, as provided by Section
39, Article III, Texas Constitution.  If this Act does
not receive the vote necessary for immediate effect,
this section takes effect September 1, 2005.


SECTION 22.  PROVISION OF CERTAIN PRESCRIPTION
DRUGS PROHIBITED.  Section 32.024, Human Resources
Code, is amended by adding Subsection (bb) to read
as follows:


(bb)  The department may not provide
an erectile dysfunction medication under the Medicaid
vendor drug program to a person required to register
as a sex offender under Chapter 62, Code of Criminal
Procedure, to the maximum extent federal law allows
the department to deny that medication.


SECTION 23.  CONTINUOUS ELIGIBILITY.  Section
32.0261, Human Resources Code, is amended to read as
follows:


Sec. 32.0261.  CONTINUOUS ELIGIBILITY.
 The department shall adopt rules in accordance with
42 U.S.C. Section 1396a(e)(12), as amended, to provide
for a period of continuous eligibility for a child
under 19 years of age who is determined to be eligible
for medical assistance under this chapter.  The rules
shall provide that the child remains eligible for medical
assistance, without additional review by the department
and regardless of changes in the child's resources
or income, until the earlier of:


(1)  the end of the six-month period
following first anniversary of
the date on which the child's eligibility was determined;
or


(2)  the child's 19th birthday.


SECTION 24.  NOTICE OF AVAILABILITY OF CERTAIN
BENEFITS.  Chapter 159, Occupations Code, is amended
by adding Section 159.010 to read as follows:


Sec. 159.010.  NOTICE OF BENEFITS UNDER
STATE CHILD HEALTH PLAN.  A physician who provides
Medicaid health care services to a pregnant woman shall
inform the woman of the health benefits for which the
woman or the woman's child may be eligible under the
state child health plan under Chapter 62, Health and
Safety Code.


SECTION 25.  MEDICAID COVERAGE FOR HEALTH
INSURANCE PREMIUMS AND LONG-TERM CARE NEEDS.  (a) 
The Health and Human Services Commission shall explore
the commission's authority under federal law to offer,
and the cost and feasibility of offering:


(1)  a stipend paid by the Medicaid program
to a person to cover the cost of a private health insurance
plan as an alternative to providing traditional Medicaid
services for the person;


(2)  premium payment assistance through
the Medicaid program for long-term care insurance for
a person with a health condition that increases the
likelihood that the person will need long-term care
in the future; and


(3)  a long-term care partnership between
the Medicaid program and a person under which the person
pays the premiums for long-term care insurance and
the Medicaid program provides continued coverage after
benefits under that insurance are exhausted.


(b)  In exploring the feasibility of the
options described by Subsection (a) of this section,
the Health and Human Services Commission shall consider
whether other state incentives that could encourage
persons to purchase health insurance plans or long-term
care insurance are feasible.  The incentives may include
offering tax credits to businesses to increase the
availability of affordable insurance.


(c)  If the Health and Human Services Commission
determines that any of the options described by Subsection
(a) of this section are feasible and cost-effective,
the commission shall make efforts to implement those
options to the extent they are authorized by federal
law.  The commission shall request any necessary waivers
from the Centers for Medicare and Medicaid Services
as soon as possible after determining that an option
is feasible and cost-effective.  If the commission
determines that legislative changes are necessary to
implement an option, the commission shall report to
the 80th Legislature and specify the changes that are
needed.


SECTION 26.  MAXIMIZATION OF FEDERAL RESOURCES.
 The Health and Human Services Commission shall make
every effort to maximize the receipt and use of federal
health and human services resources for the office
of community collaboration established under Section
531.020, Government Code, as added by this Act, and
the decision support system in the commission's center
for strategic decision support.


SECTION 27.  ABOLITION OF LONG-TERM CARE
LEGISLATIVE OVERSIGHT COMMITTEE; INTERIM REPORT ON
LONG-TERM CARE.  (a)  On the effective date of this
Act, Subchapter O, Chapter 242, Health and Safety Code,
is repealed, and the long-term care legislative oversight
committee established under that subchapter is abolished.


(b)  All records in the custody of the
long-term care legislative oversight committee that
are related to a duty, function, or activity of the
committee shall be transferred on the effective date
of this Act to the standing committees of the senate
and house of representatives having primary jurisdiction
over long-term care services.


SECTION 28.  ABOLITION OF HEALTH AND HUMAN
SERVICES TRANSITION LEGISLATIVE OVERSIGHT COMMITTEE.
 The Health and Human Services Transition Legislative
Oversight Committee established under Section 1.22,
Chapter 198, Acts of the 78th Legislature, Regular
Session, 2003, is abolished on the effective date of
this Act.


SECTION 29.  ABOLITION OF INTERAGENCY COUNCIL
ON PHARMACEUTICALS BULK PURCHASING.  On September 1,
2007, the Interagency Council on Pharmaceuticals Bulk
Purchasing is abolished, and Chapter 111, Health and
Safety Code, and Subsection (e), Section 431.116, and
Subsection (d), Section 431.208, Health and Safety
Code, are repealed.


SECTION 30.  IMPLEMENTATION; WAIVER.  (a)
 The Health and Human Services Commission shall make
every effort to take each action and implement each
reform required by this Act as soon as possible.  Except
as otherwise provided by this Act, the commission shall
take each action and implement each reform required
by this Act not later than September 1, 2007.  Any
action of the commission taken to justify implementing
or ignoring the reforms required by this Act must be
defensible, but need not be exhaustive.


(b)  Not later than December 1, 2005, the
Health and Human Services Commission shall submit a
report to the governor and to the presiding officers
of the standing committees of the senate and house
of representatives having primary jurisdiction over
health and human services that specifies the strategies
the commission or an appropriate health and human services
agency, as defined by Section 531.001, Government Code,
will use to examine, study, evaluate, or otherwise
make a determination relating to a reform or take another
action required by this Act.


(c)  Except as provided by Subsection (b)
of this section, for each provision of this Act that
requires the Health and Human Services Commission or
a health and human services agency, as defined by Section
531.001, Government Code, to examine the possibility
of making changes to the Medicaid program, to study
an aspect of the Medicaid program, to evaluate the
cost-effectiveness of a proposed reform, or to otherwise
make a determination before implementing a reform,
the Health and Human Services Commission shall submit
a report to the governor and to the presiding officers
of the standing committees of the senate and house
of representatives having primary jurisdiction over
health and human services that includes the criteria
used and the results obtained by the commission or
health and human services agency in taking the required
action.  The report must be delivered not later than
September 1, 2007.


(d)  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 31.  EFFECTIVE DATE.  Except as otherwise
provided by this Act, this Act takes effect September
1, 2005.





______________________________   ______________________________



President of
the Senate             Speaker of the House



I hereby certify that S.B. No. 1188 passed
the Senate on April 26, 2005, by the following vote:
 Yeas 31, Nays 0; May 27, 2005, Senate refused to concur
in House amendments and requested appointment of Conference
Committee; May 28, 2005, House granted request of the
Senate; May 29, 2005, Senate adopted Conference Committee
Report by the following vote:  Yeas 31, Nays 0.




______________________________


    Secretary of the Senate




I hereby certify that S.B. No. 1188 passed
the House, with amendments, on May 25, 2005, by the
following vote:  Yeas 143, Nays 0, two present not
voting; May 28, 2005, House granted request of the
Senate for appointment of Conference Committee; May
29, 2005, House adopted Conference Committee Report
by a non-record vote.




______________________________


    Chief Clerk of the House




Approved:


______________________________


            Date


______________________________


           Governor