S.B. No. 7
 
 
 
 
AN ACT
  relating to the administration, quality, and efficiency of health
  care, health and human services, and health benefits programs in
  this state; creating an offense; providing penalties.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
  ARTICLE 1.  ADMINISTRATION OF AND EFFICIENCY, COST-SAVING, AND
  FRAUD PREVENTION MEASURES FOR CERTAIN HEALTH AND HUMAN SERVICES AND
  HEALTH BENEFITS PROGRAMS
         SECTION 1.01.  (a)  Subchapter B, Chapter 531, Government
  Code, is amended by adding Sections 531.02417, 531.024171, and
  531.024172 to read as follows:
         Sec. 531.02417.  MEDICAID NURSING SERVICES ASSESSMENTS.
  (a)  In this section, "acute nursing services" means home health
  skilled nursing services, home health aide services, and private
  duty nursing services.
         (b)  If cost-effective, the commission shall develop an
  objective assessment process for use in assessing a Medicaid
  recipient's needs for acute nursing services. If the commission
  develops an objective assessment process under this section, the
  commission shall require that:
               (1)  the assessment be conducted:
                     (A)  by a state employee or contractor who is a
  registered nurse who is licensed to practice in this state and who
  is not the person who will deliver any necessary services to the
  recipient and is not affiliated with the person who will deliver
  those services; and
                     (B)  in a timely manner so as to protect the health
  and safety of the recipient by avoiding unnecessary delays in
  service delivery; and
               (2)  the process include:
                     (A)  an assessment of specified criteria and
  documentation of the assessment results on a standard form;
                     (B)  an assessment of whether the recipient should
  be referred for additional assessments regarding the recipient's
  needs for therapy services, as defined by Section 531.024171,
  attendant care services, and durable medical equipment; and
                     (C)  completion by the person conducting the
  assessment of any documents related to obtaining prior
  authorization for necessary nursing services.
         (c)  If the commission develops the objective assessment
  process under Subsection (b), the commission shall:
               (1)  implement the process within the Medicaid
  fee-for-service model and the primary care case management Medicaid
  managed care model; and
               (2)  take necessary actions, including modifying
  contracts with managed care organizations under Chapter 533 to the
  extent allowed by law, to implement the process within the STAR and
  STAR + PLUS Medicaid managed care programs.
         (d)  Unless the commission determines that the assessment is
  feasible and beneficial, an assessment under Subsection (b)(2)(B)
  of whether a recipient should be referred for additional therapy
  services shall be waived if the recipient's need for therapy
  services has been established by a recommendation from a therapist
  providing care prior to discharge of the recipient from a licensed
  hospital or nursing home. The assessment may not be waived if the
  recommendation is made by a therapist who will deliver any services
  to the recipient or is affiliated with a person who will deliver
  those services when the recipient is discharged from the licensed
  hospital or nursing home.
         (e)  The executive commissioner shall adopt rules providing
  for a process by which a provider of acute nursing services who
  disagrees with the results of the assessment conducted under
  Subsection (b) may request and obtain a review of those results.
         Sec. 531.024171.  THERAPY SERVICES ASSESSMENTS. (a)  In
  this section, "therapy services" includes occupational, physical,
  and speech therapy services.
         (b)  After implementing the objective assessment process for
  acute nursing services in accordance with Section 531.02417, the
  commission shall consider whether implementing age- and
  diagnosis-appropriate objective assessment processes for assessing
  the needs of a Medicaid recipient for therapy services would be
  feasible and beneficial.
         (c)  If the commission determines that implementing age- and
  diagnosis-appropriate processes with respect to one or more types
  of therapy services is feasible and would be beneficial, the
  commission may implement the processes within:
               (1)  the Medicaid fee-for-service model;
               (2)  the primary care case management Medicaid managed
  care model; and
               (3)  the STAR and STAR + PLUS Medicaid managed care
  programs.
         (d)  An objective assessment process implemented under this
  section must include a process that allows a provider of therapy
  services to request and obtain a review of the results of an
  assessment conducted as provided by this section that is comparable
  to the process implemented under rules adopted under Section
  531.02417(e).
         Sec. 531.024172.  ELECTRONIC VISIT VERIFICATION SYSTEM.
  (a)  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 implement an electronic visit verification system to
  electronically verify and document, through a telephone or
  computer-based system, basic information relating to the delivery
  of Medicaid acute nursing services, including:
               (1)  the provider's name;
               (2)  the recipient's name; and
               (3)  the date and time the provider begins and ends each
  service delivery visit.
         (b)  Not later than September 1, 2012, the Health and Human
  Services Commission shall implement the electronic visit
  verification system required by Section 531.024172, Government
  Code, as added by this section, if the commission determines that
  implementation of that system is cost-effective and feasible.
         SECTION 1.02.  (a)  Subsection (e), Section 533.0025,
  Government Code, is amended to read as follows:
         (e)  The commission shall determine the most cost-effective
  alignment of managed care service delivery areas. The commissioner
  may consider the number of lives impacted, the usual source of
  health care services for residents in an area, and other factors
  that impact the delivery of health care services in the area 
  [Notwithstanding Subsection (b)(1), the commission may not provide
  medical assistance using a health maintenance organization in
  Cameron County, Hidalgo County, or Maverick County].
         (b)  Subchapter A, Chapter 533, Government Code, is amended
  by adding Sections 533.0027, 533.0028, and 533.0029 to read as
  follows:
         Sec. 533.0027.  PROCEDURES TO ENSURE CERTAIN RECIPIENTS ARE
  ENROLLED IN SAME MANAGED CARE PLAN. The commission shall ensure
  that all recipients who are children and who reside in the same
  household may, at the family's election, be enrolled in the same
  managed care plan.
         Sec. 533.0028.  EVALUATION OF CERTAIN STAR + PLUS MEDICAID
  MANAGED CARE PROGRAM SERVICES. The external quality review
  organization shall periodically conduct studies and surveys to
  assess the quality of care and satisfaction with health care
  services provided to enrollees in the STAR + PLUS Medicaid managed
  care program who are eligible to receive health care benefits under
  both the Medicaid and Medicare programs.
         Sec. 533.0029.  PROMOTION AND PRINCIPLES OF
  PATIENT-CENTERED MEDICAL HOMES FOR RECIPIENTS. (a)  For purposes
  of this section, a "patient-centered medical home" means a medical
  relationship:
               (1)  between a primary care physician and a child or
  adult patient in which the physician:
                     (A)  provides comprehensive primary care to the
  patient; and
                     (B)  facilitates partnerships between the
  physician, the patient, acute care and other care providers, and,
  when appropriate, the patient's family; and
               (2)  that encompasses the following primary
  principles:
                     (A)  the patient has an ongoing relationship with
  the physician, who is trained to be the first contact for the
  patient and to provide continuous and comprehensive care to the
  patient;
                     (B)  the physician leads a team of individuals at
  the practice level who are collectively responsible for the ongoing
  care of the patient;
                     (C)  the physician is responsible for providing
  all of the care the patient needs or for coordinating with other
  qualified providers to provide care to the patient throughout the
  patient's life, including preventive care, acute care, chronic
  care, and end-of-life care;
                     (D)  the patient's care is coordinated across
  health care facilities and the patient's community and is
  facilitated by registries, information technology, and health
  information exchange systems to ensure that the patient receives
  care when and where the patient wants and needs the care and in a
  culturally and linguistically appropriate manner; and
                     (E)  quality and safe care is provided.
         (b)  The commission shall, to the extent possible, work to
  ensure that managed care organizations:
               (1)  promote the development of patient-centered
  medical homes for recipients; and
               (2)  provide payment incentives for providers that meet
  the requirements of a patient-centered medical home.
         (c)  Section 533.003, Government Code, is amended to read as
  follows:
         Sec. 533.003.  CONSIDERATIONS IN AWARDING CONTRACTS.
  (a)  In awarding contracts to managed care organizations, the
  commission shall:
               (1)  give preference to organizations that have
  significant participation in the organization's provider network
  from each health care provider in the region who has traditionally
  provided care to Medicaid and charity care patients;
               (2)  give extra consideration to organizations that
  agree to assure continuity of care for at least three months beyond
  the period of Medicaid eligibility for recipients;
               (3)  consider the need to use different managed care
  plans to meet the needs of different populations; [and]
               (4)  consider the ability of organizations to process
  Medicaid claims electronically; and
               (5)  in the initial implementation of managed care in
  the South Texas service region, give extra consideration to an
  organization that either:
                     (A)  is locally owned, managed, and operated, if
  one exists; or
                     (B)  is in compliance with the requirements of
  Section 533.004.
         (b)  The commission, in considering approval of a
  subcontract between a managed care organization and a pharmacy
  benefit manager for the provision of prescription drug benefits
  under the Medicaid program, shall review and consider whether the
  pharmacy benefit manager has been in the preceding three years:
               (1)  convicted of an offense involving a material
  misrepresentation or an act of fraud or of another violation of
  state or federal criminal law;
               (2)  adjudicated to have committed a breach of
  contract; or
               (3)  assessed a penalty or fine in the amount of
  $500,000 or more in a state or federal administrative proceeding.
         (d)  Section 533.005, Government Code, is amended by
  amending Subsection (a) and adding Subsection (a-1) 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 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 and the office of the attorney general;
               (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;
               (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;
               (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 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
  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 will provide recipients sufficient access to:
                     (A)  preventive care;
                     (B)  primary care;
                     (C)  specialty care;
                     (D)  after-hours urgent care; and
                     (E)  chronic care;
               (21)  a requirement that the managed care organization
  demonstrate to the commission, before the organization begins to
  provide health care services to recipients, that:
                     (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; and
                           (iii)  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 the Medicaid program;
                     (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; and
                     (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
               (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.
         (a-1)  The requirements imposed by Subsections (a)(23)(A),
  (B), and (C) do not apply, and may not be enforced, on and after
  August 31, 2013.
         (e)  Subchapter A, Chapter 533, Government Code, is amended
  by adding Section 533.0066 to read as follows:
         Sec. 533.0066.  PROVIDER INCENTIVES. The commission shall,
  to the extent possible, work to ensure that managed care
  organizations provide payment incentives to health care providers
  in the organizations' networks whose performance in promoting
  recipients' use of preventive services exceeds minimum established
  standards.
         (f)  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 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
                     (E)  providing a single portal through which
  providers in any managed care organization's provider network may
  submit 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.
         (g)  Subchapter A, Chapter 533, Government Code, is amended
  by adding Section 533.0073 to read as follows:
         Sec. 533.0073.  MEDICAL DIRECTOR QUALIFICATIONS. A person
  who serves as a medical director for a managed care plan must be a
  physician licensed to practice medicine in this state under
  Subtitle B, Title 3, Occupations Code.
         (h)  Subsections (a) and (c), Section 533.0076, Government
  Code, are amended to read as follows:
         (a)  Except as provided by Subsections (b) and (c), and to
  the extent permitted by federal law, [the commission may prohibit]
  a recipient enrolled [from disenrolling] in a managed care plan
  under this chapter may not disenroll from that plan and enroll 
  [enrolling] in another managed care plan during the 12-month period
  after the date the recipient initially enrolls in a plan.
         (c)  The commission shall allow a recipient who is enrolled
  in a managed care plan under this chapter to disenroll from [in]
  that plan and enroll in another managed care plan:
               (1)  at any time for cause in accordance with federal
  law; and
               (2)  once for any reason after the periods described by
  Subsections (a) and (b).
         (i)  Subsections (a), (b), (c), and (e), Section 533.012,
  Government Code, are amended to read as follows:
         (a)  Each managed care organization contracting with the
  commission under this chapter shall submit the following, at no
  cost, to the commission and, on request, the office of the attorney
  general:
               (1)  a description of any financial or other business
  relationship between the organization and any subcontractor
  providing health care services under the contract;
               (2)  a copy of each type of contract between the
  organization and a subcontractor relating to the delivery of or
  payment for health care services;
               (3)  a description of the fraud control program used by
  any subcontractor that delivers health care services; and
               (4)  a description and breakdown of all funds paid to or
  by the managed care organization, including a health maintenance
  organization, primary care case management provider, pharmacy
  benefit manager, and [an] exclusive provider organization,
  necessary for the commission to determine the actual cost of
  administering the managed care plan.
         (b)  The information submitted under this section must be
  submitted in the form required by the commission or the office of
  the attorney general, as applicable, and be updated as required by
  the commission or the office of the attorney general, as
  applicable.
         (c)  The commission's office of investigations and
  enforcement or the office of the attorney general, as applicable, 
  shall review the information submitted under this section as
  appropriate in the investigation of fraud in the Medicaid managed
  care program.
         (e)  Information submitted to the commission or the office of
  the attorney general, as applicable, under Subsection (a)(1) is
  confidential and not subject to disclosure under Chapter 552,
  Government Code.
         (j)  The heading to Section 32.046, Human Resources Code, is
  amended to read as follows:
         Sec. 32.046.  [VENDOR DRUG PROGRAM;] SANCTIONS AND PENALTIES
  RELATED TO THE PROVISION OF PHARMACY PRODUCTS.
         (k)  Subsection (a), Section 32.046, Human Resources Code,
  is amended to read as follows:
         (a)  The executive commissioner of the Health and Human
  Services Commission [department] shall adopt rules governing
  sanctions and penalties that apply to a provider who participates 
  in the vendor drug program or is enrolled as a network pharmacy
  provider of a managed care organization contracting with the
  commission under Chapter 533, Government Code, or its subcontractor
  and who submits an improper claim for reimbursement under the
  program.
         (l)  Subsection (d), Section 533.012, Government Code, is
  repealed.
         (m)  Not later than December 1, 2013, the Health and Human
  Services Commission shall submit a report to the legislature
  regarding the commission's work to ensure that Medicaid managed
  care organizations promote the development of patient-centered
  medical homes for recipients of medical assistance as required
  under Section 533.0029, Government Code, as added by this section.
         (n)  The Health and Human Services Commission shall, in a
  contract between the 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 Act, include the provisions
  required by Subsection (a), Section 533.005, Government Code, as
  amended by this section.
         (o)  Section 533.0073, Government Code, as added by this
  section, applies only to a person hired or otherwise retained as the
  medical director of a Medicaid managed care plan on or after the
  effective date of this Act.  A person hired or otherwise retained
  before the effective date of this Act is governed by the law in
  effect immediately before the effective date of this Act, and that
  law is continued in effect for that purpose.
         (p)  Subsections (a) and (c), Section 533.0076, Government
  Code, as amended by this section, apply only to a request for
  disenrollment from a Medicaid managed care plan under Chapter 533,
  Government Code, made by a recipient on or after the effective date
  of this Act.  A request made by a recipient before that date is
  governed by the law in effect on the date the request was made, and
  the former law is continued in effect for that purpose.
         SECTION 1.03.  (a)  Section 62.101, Health and Safety Code,
  is amended by adding Subsection (a-1) to read as follows:
         (a-1)  A child who is the dependent of an employee of an
  agency of this state and who meets the requirements of Subsection
  (a) may be eligible for health benefits coverage in accordance with
  42 U.S.C. Section 1397jj(b)(6) and any other applicable law or
  regulations.
         (b)  Sections 1551.159 and 1551.312, Insurance Code, are
  repealed.
         (c)  The State Kids Insurance Program operated by the
  Employees Retirement System of Texas is abolished on the effective
  date of this Act.  The Health and Human Services Commission shall:
               (1)  establish a process in cooperation with the
  Employees Retirement System of Texas to facilitate the enrollment
  of eligible children in the child health plan program established
  under Chapter 62, Health and Safety Code, on or before the date
  those children are scheduled to stop receiving dependent child
  coverage under the State Kids Insurance Program; and
               (2)  modify any applicable administrative procedures
  to ensure that children described by this subsection maintain
  continuous health benefits coverage while transitioning from
  enrollment in the State Kids Insurance Program to enrollment in the
  child health plan program.
         SECTION 1.04.  (a)  Subchapter B, Chapter 31, Human
  Resources Code, is amended by adding Section 31.0326 to read as
  follows:
         Sec. 31.0326.  VERIFICATION OF IDENTITY AND PREVENTION OF
  DUPLICATE PARTICIPATION. The Health and Human Services Commission
  shall use appropriate technology to:
               (1)  confirm the identity of applicants for benefits
  under the financial assistance program; and
               (2)  prevent duplicate participation in the program by
  a person.
         (b)  Chapter 33, Human Resources Code, is amended by adding
  Section 33.0231 to read as follows:
         Sec. 33.0231.  VERIFICATION OF IDENTITY AND PREVENTION OF
  DUPLICATE PARTICIPATION IN SNAP. The department shall use
  appropriate technology to:
               (1)  confirm the identity of applicants for benefits
  under the supplemental nutrition assistance program; and
               (2)  prevent duplicate participation in the program by
  a person.
         (c)  Section 531.109, Government Code, is amended by adding
  Subsection (d) to read as follows:
         (d)  Absent an allegation of fraud, waste, or abuse, the
  commission may conduct an annual review of claims under this
  section only after the commission has completed the prior year's
  annual review of claims.
         (d)  If H.B. No. 710, Acts of the 82nd Legislature, Regular
  Session, 2011, does not become law, Section 31.0325, Human
  Resources Code, is repealed.
         (e)  If H.B. No. 710, Acts of the 82nd Legislature, Regular
  Session, 2011, becomes law, Section 31.0326, Human Resources Code,
  as added by this section, has no effect.
         (f)  If H.B. No. 710, Acts of the 82nd Legislature, Regular
  Session, 2011, becomes law, Section 33.0231, Human Resources Code,
  as added by that Act, is repealed.
         SECTION 1.05.  (a)  Section 242.033, Health and Safety Code,
  is amended by amending Subsection (d) and adding Subsection (g) to
  read as follows:
         (d)  Except as provided by Subsection (f), a license is
  renewable every three [two] years after:
               (1)  an inspection, unless an inspection is not
  required as provided by Section 242.047;
               (2)  payment of the license fee; and
               (3)  department approval of the report filed every
  three [two] years by the licensee.
         (g)  The executive commissioner by rule shall adopt a system
  under which an appropriate number of licenses issued by the
  department under this chapter expire on staggered dates occurring
  in each three-year period. If the expiration date of a license
  changes as a result of this subsection, the department shall
  prorate the licensing fee relating to that license as appropriate.
         (b)  Subsection (e-1), Section 242.159, Health and Safety
  Code, is amended to read as follows:
         (e-1)  An institution is not required to comply with
  Subsections (a) and (e) until September 1, 2014 [2012].  This
  subsection expires January 1, 2015 [2013].
         (c)  Subtitle B, Title 4, Health and Safety Code, is amended
  by adding Chapter 260A to read as follows:
  CHAPTER 260A. REPORTS OF ABUSE, NEGLECT, AND EXPLOITATION OF
  RESIDENTS OF CERTAIN FACILITIES
         Sec. 260A.001.  DEFINITIONS. In this chapter:
               (1)  "Abuse" means:
                     (A)  the negligent or wilful infliction of injury,
  unreasonable confinement, intimidation, or cruel punishment with
  resulting physical or emotional harm or pain to a resident by the
  resident's caregiver, family member, or other individual who has an
  ongoing relationship with the resident; or
                     (B)  sexual abuse of a resident, including any
  involuntary or nonconsensual sexual conduct that would constitute
  an offense under Section 21.08, Penal Code (indecent exposure), or
  Chapter 22, Penal Code (assaultive offenses), committed by the
  resident's caregiver, family member, or other individual who has an
  ongoing relationship with the resident.
               (2)  "Department" means the Department of Aging and
  Disability Services.
               (3)  "Executive commissioner" means the executive
  commissioner of the Health and Human Services Commission.
               (4)  "Exploitation" means the illegal or improper act
  or process of a caregiver, family member, or other individual who
  has an ongoing relationship with the resident using the resources
  of a resident for monetary or personal benefit, profit, or gain
  without the informed consent of the resident.
               (5)  "Facility" means:
                     (A)  an institution as that term is defined by
  Section 242.002; and
                     (B)  an assisted living facility as that term is
  defined by Section 247.002.
               (6)  "Neglect" means the failure to provide for one's
  self the goods or services, including medical services, which are
  necessary to avoid physical or emotional harm or pain or the failure
  of a caregiver to provide such goods or services.
               (7)  "Resident" means an individual, including a
  patient, who resides in a facility.
         Sec. 260A.002.  REPORTING OF ABUSE, NEGLECT, AND
  EXPLOITATION. (a)  A person, including an owner or employee of a
  facility, who has cause to believe that the physical or mental
  health or welfare of a resident has been or may be adversely
  affected by abuse, neglect, or exploitation caused by another
  person shall report the abuse, neglect, or exploitation in
  accordance with this chapter.
         (b)  Each facility shall require each employee of the
  facility, as a condition of employment with the facility, to sign a
  statement that the employee realizes that the employee may be
  criminally liable for failure to report those abuses.
         (c)  A person shall make an oral report immediately on
  learning of the abuse, neglect, or exploitation and shall make a
  written report to the department not later than the fifth day after
  the oral report is made.
         Sec. 260A.003.  CONTENTS OF REPORT. (a)  A report of abuse,
  neglect, or exploitation is nonaccusatory and reflects the
  reporting person's belief that a resident has been or will be
  abused, neglected, or exploited or has died of abuse or neglect.
         (b)  The report must contain:
               (1)  the name and address of the resident;
               (2)  the name and address of the person responsible for
  the care of the resident, if available; and
               (3)  other relevant information.
         (c)  Except for an anonymous report under Section 260A.004, a
  report of abuse, neglect, or exploitation under Section 260A.002
  should also include the address or phone number of the person making
  the report so that an investigator can contact the person for any
  necessary additional information. The phone number, address, and
  name of the person making the report must be deleted from any copy
  of any type of report that is released to the public, to the
  facility, or to an owner or agent of the facility.
         Sec. 260A.004.  ANONYMOUS REPORTS OF ABUSE, NEGLECT, OR
  EXPLOITATION. (a)  An anonymous report of abuse, neglect, or
  exploitation, although not encouraged, shall be received and acted
  on in the same manner as an acknowledged report.
         (b)  An anonymous report about a specific individual that
  accuses the individual of abuse, neglect, or exploitation need not
  be investigated.
         Sec. 260A.005.  TELEPHONE HOTLINE; PROCESSING OF REPORTS.
  (a)  The department shall operate the department's telephone
  hotline to:
               (1)  receive reports of abuse, neglect, or
  exploitation; and
               (2)  dispatch investigators.
         (b)  A report of abuse, neglect, or exploitation shall be
  made to the department's telephone hotline or to a local or state
  law enforcement agency. A report made relating to abuse, neglect,
  or exploitation or another complaint described by Section
  260A.007(c)(1) shall be made to the department's telephone hotline
  and to the law enforcement agency described by Section 260A.017(a).
         (c)  Except as provided by Section 260A.017, a local or state
  law enforcement agency that receives a report of abuse, neglect, or
  exploitation shall refer the report to the department.
         Sec. 260A.006.  NOTICE. (a)  Each facility shall
  prominently and conspicuously post a sign for display in a public
  area of the facility that is readily available to residents,
  employees, and visitors.
         (b)  The sign must include the statement:  CASES OF SUSPECTED
  ABUSE, NEGLECT, OR EXPLOITATION SHALL BE REPORTED TO THE TEXAS
  DEPARTMENT OF AGING AND DISABILITY SERVICES BY CALLING (insert
  telephone hotline number).
         (c)  A facility shall provide the telephone hotline number to
  an immediate family member of a resident of the facility upon the
  resident's admission into the facility.
         Sec. 260A.007.  INVESTIGATION AND REPORT OF DEPARTMENT.
  (a)  The department shall make a thorough investigation after
  receiving an oral or written report of abuse, neglect, or
  exploitation under Section 260A.002 or another complaint alleging
  abuse, neglect, or exploitation.
         (b)  The primary purpose of the investigation is the
  protection of the resident.
         (c)  The department shall begin the investigation:
               (1)  within 24 hours after receipt of the report or
  other allegation, if the report of abuse, neglect, exploitation, or
  other complaint alleges that:
                     (A)  a resident's health or safety is in imminent
  danger;
                     (B)  a resident has recently died because of
  conduct alleged in the report of abuse, neglect, exploitation, or
  other complaint;
                     (C)  a resident has been hospitalized or been
  treated in an emergency room because of conduct alleged in the
  report of abuse, neglect, exploitation, or other complaint;
                     (D)  a resident has been a victim of any act or
  attempted act described by Section 21.02, 21.11, 22.011, or 22.021,
  Penal Code; or
                     (E)  a resident has suffered bodily injury, as
  that term is defined by Section 1.07, Penal Code, because of conduct
  alleged in the report of abuse, neglect, exploitation, or other
  complaint; or
               (2)  before the end of the next working day after the
  date of receipt of the report of abuse, neglect, exploitation, or
  other complaint, if the report or complaint alleges the existence
  of circumstances that could result in abuse, neglect, or
  exploitation and that could place a resident's health or safety in
  imminent danger.
         (d)  The department shall adopt rules governing the conduct
  of investigations, including procedures to ensure that the
  complainant and the resident, the resident's next of kin, and any
  person designated to receive information concerning the resident
  receive periodic information regarding the investigation.
         (e)  In investigating the report of abuse, neglect,
  exploitation, or other complaint, the investigator for the
  department shall:
               (1)  make an unannounced visit to the facility to
  determine the nature and cause of the alleged abuse, neglect, or
  exploitation of the resident;
               (2)  interview each available witness, including the
  resident who suffered the alleged abuse, neglect, or exploitation
  if the resident is able to communicate or another resident or other
  witness identified by any source as having personal knowledge
  relevant to the report of abuse, neglect, exploitation, or other
  complaint;
               (3)  personally inspect any physical circumstance that
  is relevant and material to the report of abuse, neglect,
  exploitation, or other complaint and that may be objectively
  observed;
               (4)  make a photographic record of any injury to a
  resident, subject to Subsection (n); and
               (5)  write an investigation report that includes:
                     (A)  the investigator's personal observations;
                     (B)  a review of relevant documents and records;
                     (C)  a summary of each witness statement,
  including the statement of the resident that suffered the alleged
  abuse, neglect, or exploitation and any other resident interviewed
  in the investigation; and
                     (D)  a statement of the factual basis for the
  findings for each incident or problem alleged in the report or other
  allegation.
         (f)  An investigator for an investigating agency shall
  conduct an interview under Subsection (e)(2) in private unless the
  witness expressly requests that the interview not be private.
         (g)  Not later than the 30th day after the date the
  investigation is complete, the investigator shall prepare the
  written report required by Subsection (e). The department shall
  make the investigation report available to the public on request
  after the date the department's letter of determination is
  complete. The department shall delete from any copy made available
  to the public:
               (1)  the name of:
                     (A)  any resident, unless the department receives
  written authorization from a resident or the resident's legal
  representative requesting the resident's name be left in the
  report;
                     (B)  the person making the report of abuse,
  neglect, exploitation, or other complaint; and
                     (C)  an individual interviewed in the
  investigation; and
               (2)  photographs of any injury to the resident.
         (h)  In the investigation, the department shall determine:
               (1)  the nature, extent, and cause of the abuse,
  neglect, or exploitation;
               (2)  the identity of the person responsible for the
  abuse, neglect, or exploitation;
               (3)  the names and conditions of the other residents;
               (4)  an evaluation of the persons responsible for the
  care of the residents;
               (5)  the adequacy of the facility environment; and
               (6)  any other information required by the department.
         (i)  If the department attempts to carry out an on-site
  investigation and it is shown that admission to the facility or any
  place where the resident is located cannot be obtained, a probate or
  county court shall order the person responsible for the care of the
  resident or the person in charge of a place where the resident is
  located to allow entrance for the interview and investigation.
         (j)  Before the completion of the investigation, the
  department shall file a petition for temporary care and protection
  of the resident if the department determines that immediate removal
  is necessary to protect the resident from further abuse, neglect,
  or exploitation.
         (k)  The department shall make a complete final written
  report of the investigation and submit the report and its
  recommendations to the district attorney and, if a law enforcement
  agency has not investigated the report of abuse, neglect,
  exploitation, or other complaint, to the appropriate law
  enforcement agency.
         (l)  Within 24 hours after receipt of a report of abuse,
  neglect, exploitation, or other complaint described by Subsection
  (c)(1), the department shall report the report or complaint to the
  law enforcement agency described by Section 260A.017(a). The
  department shall cooperate with that law enforcement agency in the
  investigation of the report or complaint as described by Section
  260A.017.
         (m)  The inability or unwillingness of a local law
  enforcement agency to conduct a joint investigation under Section
  260A.017 does not constitute grounds to prevent or prohibit the
  department from performing its duties under this chapter. The
  department shall document any instance in which a law enforcement
  agency is unable or unwilling to conduct a joint investigation
  under Section 260A.017.
         (n)  If the department determines that, before a
  photographic record of an injury to a resident may be made under
  Subsection (e), consent is required under state or federal law, the
  investigator:
               (1)  shall seek to obtain any required consent; and
               (2)  may not make the photographic record unless the
  consent is obtained.
         Sec. 260A.008.  CONFIDENTIALITY. A report, record, or
  working paper used or developed in an investigation made under this
  chapter and the name, address, and phone number of any person making
  a report under this chapter are confidential and may be disclosed
  only for purposes consistent with rules adopted by the executive
  commissioner. The report, record, or working paper and the name,
  address, and phone number of the person making the report shall be
  disclosed to a law enforcement agency as necessary to permit the law
  enforcement agency to investigate a report of abuse, neglect,
  exploitation, or other complaint in accordance with Section
  260A.017.
         Sec. 260A.009.  IMMUNITY. (a)  A person who reports as
  provided by this chapter is immune from civil or criminal liability
  that, in the absence of the immunity, might result from making the
  report.
         (b)  The immunity provided by this section extends to
  participation in any judicial proceeding that results from the
  report.
         (c)  This section does not apply to a person who reports in
  bad faith or with malice.
         Sec. 260A.010.  PRIVILEGED COMMUNICATIONS. In a proceeding
  regarding the abuse, neglect, or exploitation of a resident or the
  cause of any abuse, neglect, or exploitation, evidence may not be
  excluded on the ground of privileged communication except in the
  case of a communication between an attorney and client.
         Sec. 260A.011.  CENTRAL REGISTRY. (a)  The department shall
  maintain in the city of Austin a central registry of reported cases
  of resident abuse, neglect, or exploitation.
         (b)  The executive commissioner may adopt rules necessary to
  carry out this section.
         (c)  The rules shall provide for cooperation with hospitals
  and clinics in the exchange of reports of resident abuse, neglect,
  or exploitation.
         Sec. 260A.012.  FAILURE TO REPORT; CRIMINAL PENALTY. (a)  A
  person commits an offense if the person has cause to believe that a
  resident's physical or mental health or welfare has been or may be
  further adversely affected by abuse, neglect, or exploitation and
  knowingly fails to report in accordance with Section 260A.002.
         (b)  An offense under this section is a Class A misdemeanor.
         Sec. 260A.013.  BAD FAITH, MALICIOUS, OR RECKLESS REPORTING;
  CRIMINAL PENALTY. (a)  A person commits an offense if the person
  reports under this chapter in bad faith, maliciously, or
  recklessly.
         (b)  An offense under this section is a Class A misdemeanor.
         (c)  The criminal penalty provided by this section is in
  addition to any civil penalties for which the person may be liable.
         Sec. 260A.014.  RETALIATION AGAINST EMPLOYEES PROHIBITED.
  (a)  In this section, "employee" means a person who is an employee
  of a facility or any other person who provides services for a
  facility for compensation, including a contract laborer for the
  facility.
         (b)  An employee has a cause of action against a facility, or
  the owner or another employee of the facility, that suspends or
  terminates the employment of the person or otherwise disciplines or
  discriminates or retaliates against the employee for reporting to
  the employee's supervisor, an administrator of the facility, a
  state regulatory agency, or a law enforcement agency a violation of
  law, including a violation of Chapter 242 or 247 or a rule adopted
  under Chapter 242 or 247, or for initiating or cooperating in any
  investigation or proceeding of a governmental entity relating to
  care, services, or conditions at the facility.
         (c)  The petitioner may recover:
               (1)  the greater of $1,000 or actual damages, including
  damages for mental anguish even if an injury other than mental
  anguish is not shown, and damages for lost wages if the petitioner's
  employment was suspended or terminated;
               (2)  exemplary damages;
               (3)  court costs; and
               (4)  reasonable attorney's fees.
         (d)  In addition to the amounts that may be recovered under
  Subsection (c), a person whose employment is suspended or
  terminated is entitled to appropriate injunctive relief,
  including, if applicable:
               (1)  reinstatement in the person's former position; and
               (2)  reinstatement of lost fringe benefits or seniority
  rights.
         (e)  The petitioner, not later than the 90th day after the
  date on which the person's employment is suspended or terminated,
  must bring suit or notify the Texas Workforce Commission of the
  petitioner's intent to sue under this section. A petitioner who
  notifies the Texas Workforce Commission under this subsection must
  bring suit not later than the 90th day after the date of the
  delivery of the notice to the commission. On receipt of the notice,
  the commission shall notify the facility of the petitioner's intent
  to bring suit under this section.
         (f)  The petitioner has the burden of proof, except that
  there is a rebuttable presumption that the person's employment was
  suspended or terminated for reporting abuse, neglect, or
  exploitation if the person is suspended or terminated within 60
  days after the date on which the person reported in good faith.
         (g)  A suit under this section may be brought in the district
  court of the county in which:
               (1)  the plaintiff resides;
               (2)  the plaintiff was employed by the defendant; or
               (3)  the defendant conducts business.
         (h)  Each facility shall require each employee of the
  facility, as a condition of employment with the facility, to sign a
  statement that the employee understands the employee's rights under
  this section. The statement must be part of the statement required
  under Section 260A.002. If a facility does not require an employee
  to read and sign the statement, the periods under Subsection (e) do
  not apply, and the petitioner must bring suit not later than the
  second anniversary of the date on which the person's employment is
  suspended or terminated.
         Sec. 260A.015.  RETALIATION AGAINST VOLUNTEERS, RESIDENTS,
  OR FAMILY MEMBERS OR GUARDIANS OF RESIDENTS. (a) A facility may
  not retaliate or discriminate against a volunteer, resident, or
  family member or guardian of a resident because the volunteer,
  resident, resident's family member or guardian, or any other
  person:
               (1)  makes a complaint or files a grievance concerning
  the facility;
               (2)  reports a violation of law, including a violation
  of Chapter 242 or 247 or a rule adopted under Chapter 242 or 247; or
               (3)  initiates or cooperates in an investigation or
  proceeding of a governmental entity relating to care, services, or
  conditions at the facility.
         (b)  A volunteer, resident, or family member or guardian of a
  resident who is retaliated or discriminated against in violation of
  Subsection (a) is entitled to sue for:
               (1)  injunctive relief;
               (2)  the greater of $1,000 or actual damages, including
  damages for mental anguish even if an injury other than mental
  anguish is not shown;
               (3)  exemplary damages;
               (4)  court costs; and
               (5)  reasonable attorney's fees.
         (c)  A volunteer, resident, or family member or guardian of a
  resident who seeks relief under this section must report the
  alleged violation not later than the 180th day after the date on
  which the alleged violation of this section occurred or was
  discovered by the volunteer, resident, or family member or guardian
  of the resident through reasonable diligence.
         (d)  A suit under this section may be brought in the district
  court of the county in which the facility is located or in a
  district court of Travis County.
         Sec. 260A.016.  REPORTS RELATING TO DEATHS OF RESIDENTS OF
  AN INSTITUTION. (a)  In this section, "institution" has the
  meaning assigned by Section 242.002.
         (b)  An institution shall submit a report to the department
  concerning deaths of residents of the institution. The report must
  be submitted not later than the 10th day after the last day of each
  month in which a resident of the institution dies. The report must
  also include the death of a resident occurring within 24 hours after
  the resident is transferred from the institution to a hospital.
         (c)  The institution must make the report on a form
  prescribed by the department. The report must contain the name and
  social security number of the deceased.
         (d)  The department shall correlate reports under this
  section with death certificate information to develop data relating
  to the:
               (1)  name and age of the deceased;
               (2)  official cause of death listed on the death
  certificate;
               (3)  date, time, and place of death; and
               (4)  name and address of the institution in which the
  deceased resided.
         (e)  Except as provided by Subsection (f), a record under
  this section is confidential and not subject to the provisions of
  Chapter 552, Government Code.
         (f)  The department shall develop statistical information on
  official causes of death to determine patterns and trends of
  incidents of death among residents and in specific institutions.
  Information developed under this subsection is public.
         (g)  A licensed institution shall make available historical
  statistics on all required information on request of an applicant
  or applicant's representative.
         Sec. 260A.017.  DUTIES OF LAW ENFORCEMENT; JOINT
  INVESTIGATION. (a)  The department shall investigate a report of
  abuse, neglect, exploitation, or other complaint described by
  Section 260A.007(c)(1) jointly with:
               (1)  the municipal law enforcement agency, if the
  facility is located within the territorial boundaries of a
  municipality; or
               (2)  the sheriff's department of the county in which the
  facility is located, if the facility is not located within the
  territorial boundaries of a municipality.
         (b)  The law enforcement agency described by Subsection (a)
  shall acknowledge the report of abuse, neglect, exploitation, or
  other complaint and begin the joint investigation required by this
  section within 24 hours after receipt of the report or complaint.
  The law enforcement agency shall cooperate with the department and
  report to the department the results of the investigation.
         (c)  The requirement that the law enforcement agency and the
  department conduct a joint investigation under this section does
  not require that a representative of each agency be physically
  present during all phases of the investigation or that each agency
  participate equally in each activity conducted in the course of the
  investigation.
         Sec. 260A.018.  CALL CENTER EVALUATION; REPORT. (a)  The
  department, using existing resources, shall test, evaluate, and
  determine the most effective and efficient staffing pattern for
  receiving and processing complaints by expanding customer service
  representatives' hours of availability at the department's
  telephone hotline call center.
         (b)  The department shall report the findings of the
  evaluation described by Subsection (a) to the House Committee on
  Human Services and the Senate Committee on Health and Human
  Services not later than September 1, 2012.
         (c)  This section expires October 31, 2012.
         (d)  Chapter 2, Code of Criminal Procedure, is amended by
  adding Article 2.271 to read as follows:
         Art. 2.271.  INVESTIGATION OF CERTAIN REPORTS ALLEGING
  ABUSE, NEGLECT, OR EXPLOITATION. Notwithstanding Article 2.27, on
  receipt of a report of abuse, neglect, exploitation, or other
  complaint of a resident of a nursing home, convalescent home, or
  other related institution or an assisted living facility, under
  Section 260A.007(c)(1), Health and Safety Code, the appropriate
  local law enforcement agency shall investigate the report as
  required by Section 260A.017, Health and Safety Code.
         (e)  Subchapter A, Chapter 242, Health and Safety Code, is
  amended by adding Section 242.018 to read as follows:
         Sec. 242.018.  COMPLIANCE WITH CHAPTER 260A. (a)  An
  institution shall comply with Chapter 260A and the rules adopted
  under that chapter.
         (b)  A person, including an owner or employee of an
  institution, shall comply with Chapter 260A and the rules adopted
  under that chapter.
         (f)  Subsection (a), Section 242.042, Health and Safety
  Code, is amended to read as follows:
         (a)  Each institution shall prominently and conspicuously
  post for display in a public area of the institution that is readily
  available to residents, employees, and visitors:
               (1)  the license issued under this chapter;
               (2)  a sign prescribed by the department that specifies
  complaint procedures established under this chapter or rules
  adopted under this chapter and that specifies how complaints may be
  registered with the department;
               (3)  a notice in a form prescribed by the department
  stating that licensing inspection reports and other related reports
  which show deficiencies cited by the department are available at
  the institution for public inspection and providing the
  department's toll-free telephone number that may be used to obtain
  information concerning the institution;
               (4)  a concise summary of the most recent inspection
  report relating to the institution;
               (5)  notice that the department can provide summary
  reports relating to the quality of care, recent investigations,
  litigation, and other aspects of the operation of the institution;
               (6)  notice that the Texas Board of Nursing Facility
  Administrators can provide information about the nursing facility
  administrator;
               (7)  any notice or written statement required to be
  posted under Section 242.072(c);
               (8)  notice that informational materials relating to
  the compliance history of the institution are available for
  inspection at a location in the institution specified by the sign;
  [and]
               (9)  notice that employees, other staff, residents,
  volunteers, and family members and guardians of residents are
  protected from discrimination or retaliation as provided by
  Sections 260A.014 and 260A.015; and
               (10)  a sign required to be posted under Section
  260A.006(a) [242.133 and 242.1335].
         (g)  Subsection (b), Section 242.0665, Health and Safety
  Code, is amended to read as follows:
         (b)  Subsection (a) does not apply:
               (1)  to a violation that the department determines:
                     (A)  results in serious harm to or death of a
  resident;
                     (B)  constitutes a serious threat to the health or
  safety of a resident; or
                     (C)  substantially limits the institution's
  capacity to provide care;
               (2)  to a violation described by Sections
  242.066(a)(2)-(7);
               (3)  to a violation of Section 260A.014 [242.133] or
  260A.015 [242.1335]; or
               (4)  to a violation of a right of a resident adopted
  under Subchapter L.
         (h)  Subsections (a) and (b), Section 242.848, Health and
  Safety Code, are amended to read as follows:
         (a)  For purposes of the duty to report abuse or neglect
  under Section 260A.002 [242.122] and the criminal penalty for the
  failure to report abuse or neglect under Section 260A.012
  [242.131], a person who is conducting electronic monitoring on
  behalf of a resident under this subchapter is considered to have
  viewed or listened to a tape or recording made by the electronic
  monitoring device on or before the 14th day after the date the tape
  or recording is made.
         (b)  If a resident who has capacity to determine that the
  resident has been abused or neglected and who is conducting
  electronic monitoring under this subchapter gives a tape or
  recording made by the electronic monitoring device to a person and
  directs the person to view or listen to the tape or recording to
  determine whether abuse or neglect has occurred, the person to whom
  the resident gives the tape or recording is considered to have
  viewed or listened to the tape or recording on or before the seventh
  day after the date the person receives the tape or recording for
  purposes of the duty to report abuse or neglect under Section
  260A.002 [242.122] and of the criminal penalty for the failure to
  report abuse or neglect under Section 260A.012 [242.131].
         (i)  Subchapter A, Chapter 247, Health and Safety Code, is
  amended by adding Section 247.007 to read as follows:
         Sec. 247.007.  COMPLIANCE WITH CHAPTER 260A. (a)  An
  assisted living facility shall comply with Chapter 260A and the
  rules adopted under that chapter.
         (b)  A person, including an owner or employee of an assisted
  living facility, shall comply with Chapter 260A and the rules
  adopted under that chapter.
         (j)  Subsection (a), Section 247.043, Health and Safety
  Code, is amended to read as follows:
         (a)  The department shall conduct an investigation in
  accordance with Section 260A.007 after receiving a report [a
  preliminary investigation of each allegation] of abuse,
  exploitation, or neglect of a resident of an assisted living
  facility [to determine if there is evidence to corroborate the
  allegation. If the department determines that there is evidence to
  corroborate the allegation, the department shall conduct a thorough
  investigation of the allegation].
         (k)  Subsection (b), Section 247.0452, Health and Safety
  Code, is amended to read as follows:
         (b)  Subsection (a) does not apply:
               (1)  to a violation that the department determines
  results in serious harm to or death of a resident;
               (2)  to a violation described by Sections
  247.0451(a)(2)-(7) or a violation of Section 260A.014 or 260A.015;
               (3)  to a second or subsequent violation of:
                     (A)  a right of the same resident under Section
  247.064; or
                     (B)  the same right of all residents under Section
  247.064; or
               (4)  to a violation described by Section 247.066, which
  contains its own right to correct provisions.
         (l)  Section 48.003, Human Resources Code, is amended to read
  as follows:
         Sec. 48.003.  INVESTIGATIONS IN NURSING HOMES, ASSISTED
  LIVING FACILITIES, AND SIMILAR FACILITIES. (a)  This chapter does
  not apply if the alleged or suspected abuse, neglect, or
  exploitation occurs in a facility licensed under Chapter 242 or
  247, Health and Safety Code.
         (b)  Alleged or suspected abuse, neglect, or exploitation
  that occurs in a facility licensed under Chapter 242 or 247, Health
  and Safety Code, is governed by Chapter 260A [Subchapter B, Chapter
  242], Health and Safety Code.
         (m)  Subchapter E, Chapter 242, Health and Safety Code, is
  repealed.
         (n)  The executive commissioner of the Health and Human
  Services Commission shall adopt the rules required under Subsection
  (g), Section 242.033, Health and Safety Code, as added by this
  section, as soon as practicable after the effective date of this
  Act, but not later than December 1, 2012.
         (o)  The repeal by this Act of Section 242.131, Health and
  Safety Code, does not apply to an offense committed under that
  section before the effective date of this Act. An offense committed
  before the effective date of this Act is governed by that section as
  it existed on the date the offense was committed, and the former law
  is continued in effect for that purpose. For purposes of this
  subsection, an offense was committed before the effective date of
  this Act if any element of the offense occurred before that date.
         (p)  The repeal by this Act of Sections 242.133 and 242.1335,
  Health and Safety Code, does not apply to a cause of action that
  accrues before the effective date of this Act. A cause of action
  that accrues before the effective date of this Act is governed by
  Section 242.133 or 242.1335, Health and Safety Code, as applicable,
  as the section existed at the time the cause of action accrued, and
  the former law is continued in effect for that purpose.
         (q)  The change in law made by this Act by the repeal of
  Subchapter E, Chapter 242, Health and Safety Code, does not apply to
  a disciplinary action under Subchapter C, Chapter 242, Health and
  Safety Code, for conduct that occurred before the effective date of
  this Act. Conduct that occurs before the effective date of this Act
  is governed by the law as it existed on the date the conduct
  occurred, and the former law is continued in effect for that
  purpose.
         (r)  The Department of Aging and Disability Services shall
  implement Chapter 260A, Health and Safety Code, as added by this
  Act, using only existing resources and personnel.
         (s)  The Department of Aging and Disability Services shall
  ensure that the services provided on the effective date of this Act
  are at least as comprehensive as the services provided on the day
  before the effective date of this Act.
         SECTION 1.06.  (a)  Section 161.081, Human Resources Code,
  as effective September 1, 2011, is amended to read as follows:
         Sec. 161.081.  LONG-TERM CARE MEDICAID WAIVER PROGRAMS:
  STREAMLINING AND UNIFORMITY. (a)  In this section, "Section
  1915(c) waiver program" has the meaning assigned by Section
  531.001, Government Code.
         (b)  The department, in consultation with the commission,
  shall streamline the administration of and delivery of services
  through Section 1915(c) waiver programs.  In implementing this
  subsection, the department, subject to Subsection (c), may consider
  implementing the following streamlining initiatives:
               (1)  reducing the number of forms used in administering
  the programs;
               (2)  revising program provider manuals and training
  curricula;
               (3)  consolidating service authorization systems;
               (4)  eliminating any physician signature requirements
  the department considers unnecessary;
               (5)  standardizing individual service plan processes
  across the programs; [and]
               (6)  if feasible:
                     (A)  concurrently conducting program
  certification and billing audit and review processes and other
  related audit and review processes;
                     (B)  streamlining other billing and auditing
  requirements;
                     (C)  eliminating duplicative responsibilities
  with respect to the coordination and oversight of individual care
  plans for persons receiving waiver services; and
                     (D)  streamlining cost reports and other cost
  reporting processes; and
               (7)  any other initiatives that will increase
  efficiencies in the programs.
         (c)  The department shall ensure that actions taken under
  Subsection (b) [this section] do not conflict with any requirements
  of the commission under Section 531.0218, Government Code.
         (d)  The department and the commission shall jointly explore
  the development of uniform licensing and contracting standards that
  would:
               (1)  apply to all contracts for the delivery of Section
  1915(c) waiver program services;
               (2)  promote competition among providers of those
  program services; and
               (3)  integrate with other department and commission
  efforts to streamline and unify the administration and delivery of
  the program services, including those required by this section or
  Section 531.0218, Government Code.
         (b)  Subchapter D, Chapter 161, Human Resources Code, is
  amended by adding Section 161.082 to read as follows:
         Sec. 161.082.  LONG-TERM CARE MEDICAID WAIVER PROGRAMS:
  UTILIZATION REVIEW. (a)  In this section, "Section 1915(c) waiver
  program" has the meaning assigned by Section 531.001, Government
  Code.
         (b)  The department shall perform a utilization review of
  services in all Section 1915(c) waiver programs. The utilization
  review must include, at a minimum, reviewing program recipients'
  levels of care and any plans of care for those recipients that
  exceed service level thresholds established in the applicable
  waiver program guidelines.
         SECTION 1.07.  Subchapter D, Chapter 161, Human Resources
  Code, is amended by adding Section 161.086 to read as follows:
         Sec. 161.086.  ELECTRONIC VISIT VERIFICATION SYSTEM. If it
  is cost-effective, the department shall implement an electronic
  visit verification system under appropriate programs administered
  by the department under the Medicaid program that allows providers
  to electronically verify and document basic information relating to
  the delivery of services, including:
               (1)  the provider's name;
               (2)  the recipient's name;
               (3)  the date and time the provider begins and ends the
  delivery of services; and
               (4)  the location of service delivery.
         SECTION 1.08.  (a)  Subdivision (1), Section 247.002, Health
  and Safety Code, is amended to read as follows:
               (1)  "Assisted living facility" means an establishment
  that:
                     (A)  furnishes, in one or more facilities, food
  and shelter to four or more persons who are unrelated to the
  proprietor of the establishment;
                     (B)  provides:
                           (i)  personal care services; or
                           (ii)  administration of medication by a
  person licensed or otherwise authorized in this state to administer
  the medication; [and]
                     (C)  may provide assistance with or supervision of
  the administration of medication; and
                     (D)  may provide skilled nursing services for the
  following limited purposes:
                           (i)  coordination of resident care with
  outside home and community support services agencies and other
  health care professionals;
                           (ii)  provision or delegation of personal
  care services and medication administration as described by this
  subdivision;
                           (iii)  assessment of residents to determine
  the care required; and
                           (iv)  for periods of time as established by
  department rule, delivery of temporary skilled nursing treatment
  for a minor illness, injury, or emergency.
         (b)  Section 247.004, Health and Safety Code, as effective
  September 1, 2011, is amended to read as follows:
         Sec. 247.004.  EXEMPTIONS. This chapter does not apply to:
               (1)  a boarding home facility as defined by Section
  260.001;
               (2)  an establishment conducted by or for the adherents
  of the Church of Christ, Scientist, for the purpose of providing
  facilities for the care or treatment of the sick who depend
  exclusively on prayer or spiritual means for healing without the
  use of any drug or material remedy if the establishment complies
  with local safety, sanitary, and quarantine ordinances and
  regulations;
               (3)  a facility conducted by or for the adherents of a
  qualified religious society classified as a tax-exempt
  organization under an Internal Revenue Service group exemption
  ruling for the purpose of providing personal care services without
  charge solely for the society's professed members or ministers in
  retirement, if the facility complies with local safety, sanitation,
  and quarantine ordinances and regulations; or
               (4)  a facility that provides personal care services
  only to persons enrolled in a program that:
                     (A)  is funded in whole or in part by the
  department and that is monitored by the department or its
  designated local mental retardation authority in accordance with
  standards set by the department; or
                     (B)  is funded in whole or in part by the
  Department of State Health Services and that is monitored by that
  department, or by its designated local mental health authority in
  accordance with standards set by the department.
         (c)  Subsection (b), Section 247.067, Health and Safety
  Code, is amended to read as follows:
         (b)  Unless otherwise prohibited by law, a [A] health care
  professional may be employed by an assisted living facility to 
  provide at the facility to the facility's residents services that
  are authorized by this chapter and that are within the
  professional's scope of practice [to a resident of an assisted
  living facility at the facility].  This subsection does not
  authorize a facility to provide ongoing services comparable to the
  services available in an institution licensed under Chapter 242.  A
  health care professional providing services under this subsection
  shall maintain medical records of those services in accordance with
  the licensing, certification, or other regulatory standards
  applicable to the health care professional under law.
         SECTION 1.09.  (a)  Subchapter B, Chapter 531, Government
  Code, is amended by adding Sections 531.086 and 531.0861 to read as
  follows:
         Sec. 531.086.  STUDY REGARDING PHYSICIAN INCENTIVE PROGRAMS
  TO REDUCE HOSPITAL EMERGENCY ROOM USE FOR NON-EMERGENT CONDITIONS.
  (a)  The commission shall conduct a study to evaluate physician
  incentive programs that attempt to reduce hospital emergency room
  use for non-emergent conditions by recipients under the medical
  assistance program. Each physician incentive program evaluated in
  the study must:
               (1)  be administered by a health maintenance
  organization participating in the STAR or STAR + PLUS Medicaid
  managed care program; and
               (2)  provide incentives to primary care providers who
  attempt to reduce emergency room use for non-emergent conditions by
  recipients.
         (b)  The study conducted under Subsection (a) must evaluate:
               (1)  the cost-effectiveness of each component included
  in a physician incentive program; and
               (2)  any change in statute required to implement each
  component within the Medicaid fee-for-service payment model.
         (c)  Not later than August 31, 2013, the executive
  commissioner shall submit to the governor and the Legislative
  Budget Board a report summarizing the findings of the study
  required by this section.
         (d)  This section expires September 1, 2014.
         Sec. 531.0861.  PHYSICIAN INCENTIVE PROGRAM TO REDUCE
  HOSPITAL EMERGENCY ROOM USE FOR NON-EMERGENT CONDITIONS.  (a)  If
  cost-effective, the executive commissioner by rule shall establish
  a physician incentive program designed to reduce the use of
  hospital emergency room services for non-emergent conditions by
  recipients under the medical assistance program.
         (b)  In establishing the physician incentive program under
  Subsection (a), the executive commissioner may include only the
  program components identified as cost-effective in the study
  conducted under Section 531.086.
         (c)  If the physician incentive program includes the payment
  of an enhanced reimbursement rate for routine after-hours
  appointments, the executive commissioner shall implement controls
  to ensure that the after-hours services billed are actually being
  provided outside of normal business hours.
         (b)  Section 32.0641, Human Resources Code, is amended to
  read as follows:
         Sec. 32.0641.  RECIPIENT ACCOUNTABILITY PROVISIONS;
  COST-SHARING REQUIREMENT TO IMPROVE APPROPRIATE UTILIZATION OF 
  [COST SHARING FOR CERTAIN HIGH-COST MEDICAL] SERVICES.  (a)  To [If
  the department determines that it is feasible and cost-effective,
  and to] the extent permitted under and in a manner that is
  consistent with Title XIX, Social Security Act (42 U.S.C. Section
  1396 et seq.) and any other applicable law or regulation or under a
  federal waiver or other authorization, the executive commissioner
  of the Health and Human Services Commission shall adopt, after
  consulting with the Medicaid and CHIP Quality-Based Payment
  Advisory Committee established under Section 536.002, Government
  Code, cost-sharing provisions that encourage personal
  accountability and appropriate utilization of health care
  services, including a cost-sharing provision applicable to 
  [require] a recipient who chooses to receive a nonemergency [a
  high-cost] medical service [provided] through a hospital emergency
  room [to pay a copayment, premium payment, or other cost-sharing
  payment for the high-cost medical service if:
               [(1)     the hospital from which the recipient seeks
  service:
                     [(A)     performs an appropriate medical screening
  and determines that the recipient does not have a condition
  requiring emergency medical services;
                     [(B)  informs the recipient:
                           [(i)     that the recipient does not have a
  condition requiring emergency medical services;
                           [(ii)     that, if the hospital provides the
  nonemergency service, the hospital may require payment of a
  copayment, premium payment, or other cost-sharing payment by the
  recipient in advance; and
                           [(iii)     of the name and address of a
  nonemergency Medicaid provider who can provide the appropriate
  medical service without imposing a cost-sharing payment; and
                     [(C)     offers to provide the recipient with a
  referral to the nonemergency provider to facilitate scheduling of
  the service; and
               [(2)     after receiving the information and assistance
  described by Subdivision (1) from the hospital, the recipient
  chooses to obtain emergency medical services   despite having access
  to medically acceptable, lower-cost medical services].
         (b)  The department may not seek a federal waiver or other
  authorization under this section [Subsection (a)] that would:
               (1)  prevent a Medicaid recipient who has a condition
  requiring emergency medical services from receiving care through a
  hospital emergency room; or
               (2)  waive any provision under Section 1867, Social
  Security Act (42 U.S.C. Section 1395dd).
         [(c)     If the executive commissioner of the Health and Human
  Services Commission adopts a copayment or other cost-sharing
  payment under Subsection (a), the commission may not reduce
  hospital payments to reflect the potential receipt of a copayment
  or other payment from a recipient receiving medical services
  provided through a hospital emergency room.]
         (c)  If H.B. No. 2245, Acts of the 82nd Legislature, Regular
  Session, 2011, becomes law, Sections 531.086 and 531.0861,
  Government Code, as added by that Act, are repealed.
         SECTION 1.10.  Subchapter B, Chapter 531, Government Code,
  is amended by adding Section 531.024131 to read as follows:
         Sec. 531.024131.  EXPANSION OF BILLING COORDINATION AND
  INFORMATION COLLECTION ACTIVITIES. (a)  If cost-effective, the
  commission may:
               (1)  contract to expand all or part of the billing
  coordination system established under Section 531.02413 to process
  claims for services provided through other benefits programs
  administered by the commission or a health and human services
  agency;
               (2)  expand any other billing coordination tools and
  resources used to process claims for health care services provided
  through the Medicaid program to process claims for services
  provided through other benefits programs administered by the
  commission or a health and human services agency; and
               (3)  expand the scope of persons about whom information
  is collected under Section 32.042, Human Resources Code, to include
  recipients of services provided through other benefits programs
  administered by the commission or a health and human services
  agency.
         (b)  Notwithstanding any other state law, each health and
  human services agency shall provide the commission with any
  information necessary to allow the commission or the commission's
  designee to perform the billing coordination and information
  collection activities authorized by this section.
         SECTION 1.11.  (a)  Subsections (b), (c), and (d), Section
  531.502, Government Code, are amended to read as follows:
         (b)  The executive commissioner may include the following
  federal money in the waiver:
               (1)  [all] money provided under the disproportionate
  share hospitals or [and] upper payment limit supplemental payment
  program, or both [programs];
               (2)  money provided by the federal government in lieu
  of some or all of the payments under one or both of those programs;
               (3)  any combination of funds authorized to be pooled
  by Subdivisions (1) and (2); and
               (4)  any other money available for that purpose,
  including:
                     (A)  federal money and money identified under
  Subsection (c);
                     (B)  gifts, grants, or donations for that purpose;
                     (C)  local funds received by this state through
  intergovernmental transfers; and
                     (D)  if approved in the waiver, federal money
  obtained through the use of certified public expenditures.
         (c)  The commission shall seek to optimize federal funding
  by:
               (1)  identifying health care related state and local
  funds and program expenditures that, before September 1, 2011
  [2007], are not being matched with federal money; and
               (2)  exploring the feasibility of:
                     (A)  certifying or otherwise using those funds and
  expenditures as state expenditures for which this state may receive
  federal matching money; and
                     (B)  depositing federal matching money received
  as provided by Paragraph (A) with other federal money deposited as
  provided by Section 531.504, or substituting that federal matching
  money for federal money that otherwise would be received under the
  disproportionate share hospitals and upper payment limit
  supplemental payment programs as a match for local funds received
  by this state through intergovernmental transfers.
         (d)  The terms of a waiver approved under this section must:
               (1)  include safeguards to ensure that the total amount
  of federal money provided under the disproportionate share
  hospitals or [and] upper payment limit supplemental payment program
  [programs] that is deposited as provided by Section 531.504 is, for
  a particular state fiscal year, at least equal to the greater of the
  annualized amount provided to this state under those supplemental
  payment programs during state fiscal year 2011 [2007], excluding
  amounts provided during that state fiscal year that are retroactive
  payments, or the state fiscal years during which the waiver is in
  effect; and
               (2)  allow for the development by this state of a
  methodology for allocating money in the fund to:
                     (A)  be used to supplement Medicaid hospital
  reimbursements under a waiver that includes terms that are
  consistent with, or that produce revenues consistent with,
  disproportionate share hospital and upper payment limit principles 
  [offset, in part, the uncompensated health care costs incurred by
  hospitals];
                     (B)  reduce the number of persons in this state
  who do not have health benefits coverage; and
                     (C)  maintain and enhance the community public
  health infrastructure provided by hospitals.
         (b)  Section 531.504, Government Code, is amended to read as
  follows:
         Sec. 531.504.  DEPOSITS TO FUND. (a)  The comptroller shall
  deposit in the fund:
               (1)  [all] federal money provided to this state under
  the disproportionate share hospitals supplemental payment program
  or [and] the hospital upper payment limit supplemental payment
  program, or both, other than money provided under those programs to
  state-owned and operated hospitals, and all other non-supplemental
  payment program federal money provided to this state that is
  included in the waiver authorized by Section 531.502; and
               (2)  state money appropriated to the fund.
         (b)  The commission and comptroller may accept gifts,
  grants, and donations from any source, and receive
  intergovernmental transfers, for purposes consistent with this
  subchapter and the terms of the waiver.  The comptroller shall
  deposit a gift, grant, or donation made for those purposes in the
  fund.  Any intergovernmental transfer received, including
  associated federal matching funds, shall be used, if feasible, for
  the purposes intended by the transferring entity and in accordance
  with the terms of the waiver.
         (c)  Section 531.508, Government Code, is amended by adding
  Subsection (d) to read as follows:
         (d)  Money from the fund may not be used to finance the
  construction, improvement, or renovation of a building or land
  unless the construction, improvement, or renovation is approved by
  the commission, according to rules adopted by the executive
  commissioner for that purpose.
         (d)  Subsection (g), Section 531.502, Government Code, is
  repealed.
         SECTION 1.12.  (a)  Subtitle I, Title 4, Government Code, is
  amended by adding Chapter 536, and Section 531.913, Government
  Code, is transferred to Subchapter D, Chapter 536, Government Code,
  redesignated as Section 536.151, Government Code, and amended to
  read as follows:
  CHAPTER 536. MEDICAID AND CHILD HEALTH PLAN PROGRAMS:  
  QUALITY-BASED OUTCOMES AND PAYMENTS
  SUBCHAPTER A.  GENERAL PROVISIONS
         Sec. 536.001.  DEFINITIONS. In this chapter:
               (1)  "Advisory committee" means the Medicaid and CHIP
  Quality-Based Payment Advisory Committee established under Section
  536.002.
               (2)  "Alternative payment system" includes:
                     (A)  a global payment system;
                     (B)  an episode-based bundled payment system; and
                     (C)  a blended payment system.
               (3)  "Blended payment system" means a system for
  compensating a physician or other health care provider that
  includes at least one or more features of a global payment system
  and an episode-based bundled payment system, but that may also
  include a system under which a portion of the compensation paid to a
  physician or other health care provider is based on a
  fee-for-service payment arrangement.
               (4)  "Child health plan program," "commission," 
  "executive commissioner," and "health and human services agencies" 
  have the meanings assigned by Section 531.001.
               (5)  "Episode-based bundled payment system" means a
  system for compensating a physician or other health care provider
  for arranging for or providing health care services to child health
  plan program enrollees or Medicaid recipients that is based on a
  flat payment for all services provided in connection with a single
  episode of medical care.
               (6)  "Exclusive provider benefit plan" means a managed
  care plan subject to 28 T.A.C. Part 1, Chapter 3, Subchapter KK.
               (7)  "Freestanding emergency medical care facility" 
  means a facility licensed under Chapter 254, Health and Safety
  Code.
               (8)  "Global payment system" means a system for
  compensating a physician or other health care provider for
  arranging for or providing a defined set of covered health care
  services to child health plan program enrollees or Medicaid
  recipients for a specified period that is based on a predetermined
  payment per enrollee or recipient, as applicable, for the specified
  period, without regard to the quantity of services actually
  provided.
               (9)  "Health care provider" means any person,
  partnership, professional association, corporation, facility, or
  institution licensed, certified, registered, or chartered by this
  state to provide health care.  The term includes an employee,
  independent contractor, or agent of a health care provider acting
  in the course and scope of the employment or contractual
  relationship.
               (10)  "Hospital" means a public or private institution
  licensed under Chapter 241 or 577, Health and Safety Code,
  including a general or special hospital as defined by Section
  241.003, Health and Safety Code.
               (11)  "Managed care organization" means a person that
  is authorized or otherwise permitted by law to arrange for or
  provide a managed care plan.  The term includes health maintenance
  organizations and exclusive provider organizations.
               (12)  "Managed care plan" means a plan, including an
  exclusive provider benefit plan, under which a person undertakes to
  provide, arrange for, pay for, or reimburse any part of the cost of
  any health care services. A part of the plan must consist of
  arranging for or providing health care services as distinguished
  from indemnification against the cost of those services on a
  prepaid basis through insurance or otherwise. The term does not
  include a plan that indemnifies a person for the cost of health care
  services through insurance.
               (13)  "Medicaid program" means the medical assistance
  program established under Chapter 32, Human Resources Code.
               (14)  "Physician" means a person licensed to practice
  medicine in this state under Subtitle B, Title 3, Occupations Code.
               (15)  "Potentially preventable admission" means an
  admission of a person to a hospital or long-term care facility that
  may have reasonably been prevented with adequate access to
  ambulatory care or health care coordination.
               (16)  "Potentially preventable ancillary service"
  means a health care service provided or ordered by a physician or
  other health care provider to supplement or support the evaluation
  or treatment of a patient, including a diagnostic test, laboratory
  test, therapy service, or radiology service, that may not be
  reasonably necessary for the provision of quality health care or
  treatment.
               (17)  "Potentially preventable complication" means a
  harmful event or negative outcome with respect to a person,
  including an infection or surgical complication, that:
                     (A)  occurs after the person's admission to a
  hospital or long-term care facility; and
                     (B)  may have resulted from the care, lack of
  care, or treatment provided during the hospital or long-term care
  facility stay rather than from a natural progression of an
  underlying disease.
               (18)  "Potentially preventable event" means a
  potentially preventable admission, a potentially preventable
  ancillary service, a potentially preventable complication, a
  potentially preventable emergency room visit, a potentially
  preventable readmission, or a combination of those events.
               (19)  "Potentially preventable emergency room visit"
  means treatment of a person in a hospital emergency room or
  freestanding emergency medical care facility for a condition that
  may not require emergency medical attention because the condition
  could be, or could have been, treated or prevented by a physician or
  other health care provider in a nonemergency setting.
               (20)  "Potentially preventable readmission" means a
  return hospitalization of a person within a period specified by the
  commission that may have resulted from deficiencies in the care or
  treatment provided to the person during a previous hospital stay or
  from deficiencies in post-hospital discharge follow-up.  The term
  does not include a hospital readmission necessitated by the
  occurrence of unrelated events after the discharge.  The term
  includes the readmission of a person to a hospital for:
                     (A)  the same condition or procedure for which the
  person was previously admitted;
                     (B)  an infection or other complication resulting
  from care previously provided;
                     (C)  a condition or procedure that indicates that
  a surgical intervention performed during a previous admission was
  unsuccessful in achieving the anticipated outcome; or
                     (D)  another condition or procedure of a similar
  nature, as determined by the executive commissioner after
  consulting with the advisory committee.
               (21)  "Quality-based payment system" means a system for
  compensating a physician or other health care provider, including
  an alternative payment system, that provides incentives to the
  physician or other health care provider for providing high-quality,
  cost-effective care and bases some portion of the payment made to
  the physician or other health care provider on quality of care
  outcomes, which may include the extent to which the physician or
  other health care provider reduces potentially preventable events.
         Sec. 536.002.  MEDICAID AND CHIP QUALITY-BASED PAYMENT
  ADVISORY COMMITTEE. (a)  The Medicaid and CHIP Quality-Based
  Payment Advisory Committee is established to advise the commission
  on establishing, for purposes of the child health plan and Medicaid
  programs administered by the commission or a health and human
  services agency:
               (1)  reimbursement systems used to compensate
  physicians or other health care providers under those programs that
  reward the provision of high-quality, cost-effective health care
  and quality performance and quality of care outcomes with respect
  to health care services;
               (2)  standards and benchmarks for quality performance,
  quality of care outcomes, efficiency, and accountability by managed
  care organizations and physicians and other health care providers;
               (3)  programs and reimbursement policies that
  encourage high-quality, cost-effective health care delivery models
  that increase appropriate provider collaboration, promote wellness
  and prevention, and improve health outcomes; and
               (4)  outcome and process measures under Section
  536.003.
         (b)  The executive commissioner shall appoint the members of
  the advisory committee. The committee must consist of physicians
  and other health care providers, representatives of health care
  facilities, representatives of managed care organizations, and
  other stakeholders interested in health care services provided in
  this state, including:
               (1)  at least one member who is a physician with
  clinical practice experience in obstetrics and gynecology;
               (2)  at least one member who is a physician with
  clinical practice experience in pediatrics;
               (3)  at least one member who is a physician with
  clinical practice experience in internal medicine or family
  medicine;
               (4)  at least one member who is a physician with
  clinical practice experience in geriatric medicine;
               (5)  at least one member who is or who represents a
  health care provider that primarily provides long-term care
  services;
               (6)  at least one member who is a consumer
  representative; and
               (7)  at least one member who is a member of the Advisory
  Panel on Health Care-Associated Infections and Preventable Adverse
  Events who meets the qualifications prescribed by Section
  98.052(a)(4), Health and Safety Code.
         (c)  The executive commissioner shall appoint the presiding
  officer of the advisory committee.
         Sec. 536.003.  DEVELOPMENT OF QUALITY-BASED OUTCOME AND
  PROCESS MEASURES. (a)  The commission, in consultation with the
  advisory committee, shall develop quality-based outcome and
  process measures that promote the provision of efficient, quality
  health care and that can be used in the child health plan and
  Medicaid programs to implement quality-based payments for acute and
  long-term care services across all delivery models and payment
  systems, including fee-for-service and managed care payment
  systems. The commission, in developing outcome measures under this
  section, must consider measures addressing potentially preventable
  events.
         (b)  To the extent feasible, the commission shall develop
  outcome and process measures:
               (1)  consistently across all child health plan and
  Medicaid program delivery models and payment systems;
               (2)  in a manner that takes into account appropriate
  patient risk factors, including the burden of chronic illness on a
  patient and the severity of a patient's illness;
               (3)  that will have the greatest effect on improving
  quality of care and the efficient use of services; and
               (4)  that are similar to outcome and process measures
  used in the private sector, as appropriate.
         (c)  The commission shall, to the extent feasible, align
  outcome and process measures developed under this section with
  measures required or recommended under reporting guidelines
  established by the federal Centers for Medicare and Medicaid
  Services, the Agency for Healthcare Research and Quality, or
  another federal agency.
         (d)  The executive commissioner by rule may require managed
  care organizations and physicians and other health care providers
  participating in the child health plan and Medicaid programs to
  report to the commission in a format specified by the executive
  commissioner information necessary to develop outcome and process
  measures under this section.
         (e)  If the commission increases physician and other health
  care provider reimbursement rates under the child health plan or
  Medicaid program as a result of an increase in the amounts
  appropriated for the programs for a state fiscal biennium as
  compared to the preceding state fiscal biennium, the commission
  shall, to the extent permitted under federal law and to the extent
  otherwise possible considering other relevant factors, correlate
  the increased reimbursement rates with the quality-based outcome
  and process measures developed under this section.
         Sec. 536.004.  DEVELOPMENT OF QUALITY-BASED PAYMENT
  SYSTEMS. (a)  Using quality-based outcome and process measures
  developed under Section 536.003 and subject to this section, the
  commission, after consulting with the advisory committee, shall
  develop quality-based payment systems for compensating a physician
  or other health care provider participating in the child health
  plan or Medicaid program that:
               (1)  align payment incentives with high-quality,
  cost-effective health care;
               (2)  reward the use of evidence-based best practices;
               (3)  promote the coordination of health care;
               (4)  encourage appropriate physician and other health
  care provider collaboration;
               (5)  promote effective health care delivery models; and
               (6)  take into account the specific needs of the child
  health plan program enrollee and Medicaid recipient populations.
         (b)  The commission shall develop quality-based payment
  systems in the manner specified by this chapter. To the extent
  necessary, the commission shall coordinate the timeline for the
  development and implementation of a payment system with the
  implementation of other initiatives such as the Medicaid
  Information Technology Architecture (MITA) initiative of the
  Center for Medicaid and State Operations, the ICD-10 code sets
  initiative, or the ongoing Enterprise Data Warehouse (EDW) planning
  process in order to maximize the receipt of federal funds or reduce
  any administrative burden.
         (c)  In developing quality-based payment systems under this
  chapter, the commission shall examine and consider implementing:
               (1)  an alternative payment system;
               (2)  any existing performance-based payment system
  used under the Medicare program that meets the requirements of this
  chapter, modified as necessary to account for programmatic
  differences, if implementing the system would:
                     (A)  reduce unnecessary administrative burdens;
  and
                     (B)  align quality-based payment incentives for
  physicians and other health care providers with the Medicare
  program; and
               (3)  alternative payment methodologies within the
  system that are used in the Medicare program, modified as necessary
  to account for programmatic differences, and that will achieve cost
  savings and improve quality of care in the child health plan and
  Medicaid programs.
         (d)  In developing quality-based payment systems under this
  chapter, the commission shall ensure that a managed care
  organization or physician or other health care provider will not be
  rewarded by the system for withholding or delaying the provision of
  medically necessary care.
         (e)  The commission may modify a quality-based payment
  system developed under this chapter to account for programmatic
  differences between the child health plan and Medicaid programs and
  delivery systems under those programs.
         Sec. 536.005.  CONVERSION OF PAYMENT METHODOLOGY. (a)  To
  the extent possible, the commission shall convert hospital
  reimbursement systems under the child health plan and Medicaid
  programs to a diagnosis-related groups (DRG) methodology that will
  allow the commission to more accurately classify specific patient
  populations and account for severity of patient illness and
  mortality risk.
         (b)  Subsection (a) does not authorize the commission to
  direct a managed care organization to compensate physicians and
  other health care providers providing services under the
  organization's managed care plan based on a diagnosis-related
  groups (DRG) methodology.
         Sec. 536.006.  TRANSPARENCY. The commission and the
  advisory committee shall:
               (1)  ensure transparency in the development and
  establishment of:
                     (A)  quality-based payment and reimbursement
  systems under Section 536.004 and Subchapters B, C, and D,
  including the development of outcome and process measures under
  Section 536.003; and
                     (B)  quality-based payment initiatives under
  Subchapter E, including the development of quality of care and
  cost-efficiency benchmarks under Section 536.204(a) and efficiency
  performance standards under Section 536.204(b);
               (2)  develop guidelines establishing procedures for
  providing notice and information to, and receiving input from,
  managed care organizations, health care providers, including
  physicians and experts in the various medical specialty fields, and
  other stakeholders, as appropriate, for purposes of developing and
  establishing the quality-based payment and reimbursement systems
  and initiatives described under Subdivision (1); and
               (3)  in developing and establishing the quality-based
  payment and reimbursement systems and initiatives described under
  Subdivision (1), consider that as the performance of a managed care
  organization or physician or other health care provider improves
  with respect to an outcome or process measure, quality of care and
  cost-efficiency benchmark, or efficiency performance standard, as
  applicable, there will be a diminishing rate of improved
  performance over time.
         Sec. 536.007.  PERIODIC EVALUATION. (a)  At least once each
  two-year period, the commission shall evaluate the outcomes and
  cost-effectiveness of any quality-based payment system or other
  payment initiative implemented under this chapter.
         (b)  The commission shall:
               (1)  present the results of its evaluation under
  Subsection (a) to the advisory committee for the committee's input
  and recommendations; and
               (2)  provide a process by which managed care
  organizations and physicians and other health care providers may
  comment and provide input into the committee's recommendations
  under Subdivision (1).
         Sec. 536.008.  ANNUAL REPORT. (a)  The commission shall
  submit an annual report to the legislature regarding:
               (1)  the quality-based outcome and process measures
  developed under Section 536.003; and
               (2)  the progress of the implementation of
  quality-based payment systems and other payment initiatives
  implemented under this chapter.
         (b)  The commission shall report outcome and process
  measures under Subsection (a)(1) by health care service region and
  service delivery model.
  [Sections 536.009-536.050 reserved for expansion]
  SUBCHAPTER B. QUALITY-BASED PAYMENTS RELATING TO MANAGED CARE
  ORGANIZATIONS
         Sec. 536.051.  DEVELOPMENT OF QUALITY-BASED PREMIUM
  PAYMENTS; PERFORMANCE REPORTING.  (a)  Subject to Section
  1903(m)(2)(A), Social Security Act (42 U.S.C. Section
  1396b(m)(2)(A)), and other applicable federal law, the commission
  shall base a percentage of the premiums paid to a managed care
  organization participating in the child health plan or Medicaid
  program on the organization's performance with respect to outcome
  and process measures developed under Section 536.003, including
  outcome measures addressing potentially preventable events.
         (b)  The commission shall make available information
  relating to the performance of a managed care organization with
  respect to outcome and process measures under this subchapter to
  child health plan program enrollees and Medicaid recipients before
  those enrollees and recipients choose their managed care plans.
         Sec. 536.052.  PAYMENT AND CONTRACT AWARD INCENTIVES FOR
  MANAGED CARE ORGANIZATIONS. (a)  The commission may allow a
  managed care organization participating in the child health plan or
  Medicaid program increased flexibility to implement quality
  initiatives in a managed care plan offered by the organization,
  including flexibility with respect to financial arrangements, in
  order to:
               (1)  achieve high-quality, cost-effective health care;
               (2)  increase the use of high-quality, cost-effective
  delivery models; and
               (3)  reduce potentially preventable events.
         (b)  The commission, after consulting with the advisory
  committee, shall develop quality of care and cost-efficiency
  benchmarks, including benchmarks based on a managed care
  organization's performance with respect to reducing potentially
  preventable events and containing the growth rate of health care
  costs.
         (c)  The commission may include in a contract between a
  managed care organization and the commission financial incentives
  that are based on the organization's successful implementation of
  quality initiatives under Subsection (a) or success in achieving
  quality of care and cost-efficiency benchmarks under Subsection
  (b).
         (d)  In awarding contracts to managed care organizations
  under the child health plan and Medicaid programs, the commission
  shall, in addition to considerations under Section 533.003 of this
  code and Section 62.155, Health and Safety Code, give preference to
  an organization that offers a managed care plan that successfully
  implements quality initiatives under Subsection (a) as determined
  by the commission based on data or other evidence provided by the
  organization or meets quality of care and cost-efficiency
  benchmarks under Subsection (b).
         (e)  The commission may implement financial incentives under
  this section only if implementing the incentives would be
  cost-effective.
  [Sections 536.053-536.100 reserved for expansion]
  SUBCHAPTER C. QUALITY-BASED HEALTH HOME PAYMENT SYSTEMS
         Sec. 536.101.  DEFINITIONS. In this subchapter:
               (1)  "Health home" means a primary care provider
  practice or, if appropriate, a specialty care provider practice,
  incorporating several features, including comprehensive care
  coordination, family-centered care, and data management, that are
  focused on improving outcome-based quality of care and increasing
  patient and provider satisfaction under the child health plan and
  Medicaid programs.
               (2)  "Participating enrollee" means a child health plan
  program enrollee or Medicaid recipient who has a health home.
         Sec. 536.102.  QUALITY-BASED HEALTH HOME PAYMENTS.  
  (a)  Subject to this subchapter, the commission, after consulting
  with the advisory committee, may develop and implement
  quality-based payment systems for health homes designed to improve
  quality of care and reduce the provision of unnecessary medical
  services. A quality-based payment system developed under this
  section must:
               (1)  base payments made to a participating enrollee's
  health home on quality and efficiency measures that may include
  measurable wellness and prevention criteria and use of
  evidence-based best practices, sharing a portion of any realized
  cost savings achieved by the health home, and ensuring quality of
  care outcomes, including a reduction in potentially preventable
  events; and
               (2)  allow for the examination of measurable wellness
  and prevention criteria, use of evidence-based best practices, and
  quality of care outcomes based on the type of primary or specialty
  care provider practice.
         (b)  The commission may develop a quality-based payment
  system for health homes under this subchapter only if implementing
  the system would be feasible and cost-effective.
         Sec. 536.103.  PROVIDER ELIGIBILITY.  To be eligible to
  receive reimbursement under a quality-based payment system under
  this subchapter, a health home provider must:
               (1)  provide participating enrollees, directly or
  indirectly, with access to health care services outside of regular
  business hours;
               (2)  educate participating enrollees about the
  availability of health care services outside of regular business
  hours; and
               (3)  provide evidence satisfactory to the commission
  that the provider meets the requirement of Subdivision (1).
  [Sections 536.104-536.150 reserved for expansion]
  SUBCHAPTER D.  QUALITY-BASED HOSPITAL REIMBURSEMENT SYSTEM
         Sec. 536.151 [531.913].  COLLECTION AND REPORTING OF
  CERTAIN [HOSPITAL HEALTH] INFORMATION [EXCHANGE]. (a)  [In this
  section, "potentially preventable readmission" means a return
  hospitalization of a person within a period specified by the
  commission that results from deficiencies in the care or treatment
  provided to the person during a previous hospital stay or from
  deficiencies in post-hospital discharge follow-up.   The term does
  not include a hospital readmission necessitated by the occurrence
  of unrelated events after the discharge.   The term includes the
  readmission of a person to a hospital for:
               [(1)     the same condition or procedure for which the
  person was previously admitted;
               [(2)     an infection or other complication resulting from
  care previously provided;
               [(3)     a condition or procedure that indicates that a
  surgical intervention performed during a previous admission was
  unsuccessful in achieving the anticipated outcome; or
               [(4)     another condition or procedure of a similar
  nature, as determined by the executive commissioner.
         [(b)]  The executive commissioner shall adopt rules for
  identifying potentially preventable readmissions of child health
  plan program enrollees and Medicaid recipients and potentially
  preventable complications experienced by child health plan program
  enrollees and Medicaid recipients.  The [and the] commission shall
  collect [exchange] data from [with] hospitals on
  present-on-admission indicators for purposes of this section.
         (b) [(c)]  The commission shall establish a [health
  information exchange] program to provide a [exchange] confidential
  report to [information with] each hospital in this state that
  participates in the child health plan or Medicaid program regarding
  the hospital's performance with respect to potentially preventable
  readmissions and potentially preventable complications.  To the
  extent possible, a report provided under this section should
  include potentially preventable readmissions and potentially
  preventable complications information across all child health plan
  and Medicaid program payment systems.  A hospital shall distribute
  the information contained in the report [received from the
  commission] to physicians and other health care providers providing
  services at the hospital.
         (c)  A report provided to a hospital under this section is
  confidential and is not subject to Chapter 552.
         Sec. 536.152.  REIMBURSEMENT ADJUSTMENTS.  (a)  Subject to
  Subsection (b), using the data collected under Section 536.151 and
  the diagnosis-related groups (DRG) methodology implemented under
  Section 536.005, the commission, after consulting with the advisory
  committee, shall to the extent feasible adjust child health plan
  and Medicaid reimbursements to hospitals, including payments made
  under the disproportionate share hospitals and upper payment limit
  supplemental payment programs, in a manner that may reward or
  penalize a hospital based on the hospital's performance with
  respect to exceeding, or failing to achieve, outcome and process
  measures developed under Section 536.003 that address the rates of
  potentially preventable readmissions and potentially preventable
  complications.
         (b)  The commission must provide the report required under
  Section 536.151(b) to a hospital at least one year before the
  commission adjusts child health plan and Medicaid reimbursements to
  the hospital under this section.
  [Sections 536.153-536.200 reserved for expansion]
  SUBCHAPTER E.  QUALITY-BASED PAYMENT INITIATIVES
         Sec. 536.201.  DEFINITION.  In this subchapter, "payment
  initiative" means a quality-based payment initiative established
  under this subchapter.
         Sec. 536.202.  PAYMENT INITIATIVES; DETERMINATION OF
  BENEFIT TO STATE. (a)  The commission shall, after consulting with
  the advisory committee, establish payment initiatives to test the
  effectiveness of quality-based payment systems, alternative
  payment methodologies, and high-quality, cost-effective health
  care delivery models that provide incentives to physicians and
  other health care providers to develop health care interventions
  for child health plan program enrollees or Medicaid recipients, or
  both, that will:
               (1)  improve the quality of health care provided to the
  enrollees or recipients;
               (2)  reduce potentially preventable events;
               (3)  promote prevention and wellness;
               (4)  increase the use of evidence-based best practices;
               (5)  increase appropriate physician and other health
  care provider collaboration; and
               (6)  contain costs.
         (b)  The commission shall:
               (1)  establish a process by which managed care
  organizations and physicians and other health care providers may
  submit proposals for payment initiatives described by Subsection
  (a); and
               (2)  determine whether it is feasible and
  cost-effective to implement one or more of the proposed payment
  initiatives.
         Sec. 536.203.  PURPOSE AND IMPLEMENTATION OF PAYMENT
  INITIATIVES. (a)  If the commission determines under Section
  536.202 that implementation of one or more payment initiatives is
  feasible and cost-effective for this state, the commission shall
  establish one or more payment initiatives as provided by this
  subchapter.
         (b)  The commission shall administer any payment initiative
  established under this subchapter.  The executive commissioner may
  adopt rules, plans, and procedures and enter into contracts and
  other agreements as the executive commissioner considers
  appropriate and necessary to administer this subchapter.
         (c)  The commission may limit a payment initiative to:
               (1)  one or more regions in this state;
               (2)  one or more organized networks of physicians and
  other health care providers; or
               (3)  specified types of services provided under the
  child health plan or Medicaid program, or specified types of
  enrollees or recipients under those programs.
         (d)  A payment initiative implemented under this subchapter
  must be operated for at least one calendar year.
         Sec. 536.204.  STANDARDS; PROTOCOLS. (a)  The executive
  commissioner shall:
               (1)  consult with the advisory committee to develop
  quality of care and cost-efficiency benchmarks and measurable goals
  that a payment initiative must meet to ensure high-quality and
  cost-effective health care services and healthy outcomes; and
               (2)  approve benchmarks and goals developed as provided
  by Subdivision (1).
         (b)  In addition to the benchmarks and goals under Subsection
  (a), the executive commissioner may approve efficiency performance
  standards that may include the sharing of realized cost savings
  with physicians and other health care providers who provide health
  care services that exceed the efficiency performance standards.  
  The efficiency performance standards may not create any financial
  incentive for or involve making a payment to a physician or other
  health care provider that directly or indirectly induces the
  limitation of medically necessary services.
         Sec. 536.205.  PAYMENT RATES UNDER PAYMENT INITIATIVES.  The
  executive commissioner may contract with appropriate entities,
  including qualified actuaries, to assist in determining
  appropriate payment rates for a payment initiative implemented
  under this subchapter.
         (b)  The Health and Human Services Commission shall convert
  the hospital reimbursement systems used under the child health plan
  program under Chapter 62, Health and Safety Code, and medical
  assistance program under Chapter 32, Human Resources Code, to the
  diagnosis-related groups (DRG) methodology to the extent possible
  as required by Section 536.005, Government Code, as added by this
  section, as soon as practicable after the effective date of this
  Act, but not later than:
               (1)  September 1, 2013, for reimbursements paid to
  children's hospitals; and
               (2)  September 1, 2012, for reimbursements paid to
  other hospitals under those programs.
         (c)  Not later than September 1, 2012, the Health and Human
  Services Commission shall begin providing performance reports to
  hospitals regarding the hospitals' performances with respect to
  potentially preventable complications as required by Section
  536.151, Government Code, as designated and amended by this
  section.
         (d)  Subject to Subsection (b), Section 536.004, Government
  Code, as added by this section, the Health and Human Services
  Commission shall begin making adjustments to child health plan and
  Medicaid reimbursements to hospitals as required by Section
  536.152, Government Code, as added by this section:
               (1)  not later than September 1, 2012, based on the
  hospitals' performances with respect to reducing potentially
  preventable readmissions; and
               (2)  not later than September 1, 2013, based on the
  hospitals' performances with respect to reducing potentially
  preventable complications.
         SECTION 1.13.  (a)  The heading to Section 531.912,
  Government Code, is amended to read as follows:
         Sec. 531.912.  COMMON PERFORMANCE MEASUREMENTS AND
  PAY-FOR-PERFORMANCE INCENTIVES FOR [QUALITY OF CARE HEALTH
  INFORMATION EXCHANGE WITH] CERTAIN NURSING FACILITIES.
         (b)  Subsections (b), (c), and (f), Section 531.912,
  Government Code, are amended to read as follows:
         (b)  If feasible, the executive commissioner by rule may 
  [shall] establish an incentive payment program for [a quality of
  care health information exchange with] nursing facilities that
  choose to participate.  The [in a] program must be designed to
  improve the quality of care and services provided to medical
  assistance recipients.  Subject to Subsection (f), the program may
  provide incentive payments in accordance with this section to
  encourage facilities to participate in the program.
         (c)  In establishing an incentive payment [a quality of care
  health information exchange] program under this section, the
  executive commissioner shall, subject to Subsection (d), adopt
  common [exchange information with participating nursing facilities
  regarding] performance measures to be used in evaluating nursing
  facilities that are related to structure, process, and outcomes
  that positively correlate to nursing facility quality and
  improvement.  The common performance measures:
               (1)  must be:
                     (A)  recognized by the executive commissioner as
  valid indicators of the overall quality of care received by medical
  assistance recipients; and
                     (B)  designed to encourage and reward
  evidence-based practices among nursing facilities; and
               (2)  may include measures of:
                     (A)  quality of care, as determined by clinical
  performance ratings published by the federal Centers for Medicare
  and Medicaid Services, the Agency for Healthcare Research and
  Quality, or another federal agency [life];
                     (B)  direct-care staff retention and turnover;
                     (C)  recipient satisfaction, including the
  satisfaction of recipients who are short-term and long-term
  residents of facilities, and family satisfaction, as determined by
  the Nursing Home Consumer Assessment of Health Providers and
  Systems survey relied upon by the federal Centers for Medicare and
  Medicaid Services;
                     (D)  employee satisfaction and engagement;
                     (E)  the incidence of preventable acute care
  emergency room services use;
                     (F)  regulatory compliance;
                     (G)  level of person-centered care; and
                     (H)  direct-care staff training, including a
  facility's [level of occupancy or of facility] utilization of
  independent distance learning programs for the continuous training
  of direct-care staff.
         (f)  The commission may make incentive payments under the
  program only if money is [specifically] appropriated for that
  purpose.
         (c)  The Department of Aging and Disability Services shall
  conduct a study to evaluate the feasibility of expanding any
  incentive payment program established for nursing facilities under
  Section 531.912, Government Code, as amended by this section, by
  providing incentive payments for the following types of providers
  of long-term care services, as defined by Section 22.0011, Human
  Resources Code, under the medical assistance program:
               (1)  intermediate care facilities for persons with
  mental retardation licensed under Chapter 252, Health and Safety
  Code; and
               (2)  providers of home and community-based services, as
  described by 42 U.S.C. Section 1396n(c), who are licensed or
  otherwise authorized to provide those services in this state.
         (d)  Not later than September 1, 2012, the Department of
  Aging and Disability Services shall submit to the legislature a
  written report containing the findings of the study conducted under
  Subsection (c) of this section and the department's
  recommendations.
         SECTION 1.14.  Section 780.004, Health and Safety Code, is
  amended by amending Subsection (a) and adding Subsection (j) to
  read as follows:
         (a)  The commissioner:
               (1)  [,] with advice and counsel from the chairpersons
  of the trauma service area regional advisory councils, shall use
  money appropriated from the account established under this chapter
  to fund designated trauma facilities, county and regional emergency
  medical services, and trauma care systems in accordance with this
  section; and
               (2)  after consulting with the executive commissioner
  of the Health and Human Services Commission, may transfer to an
  account in the general revenue fund money appropriated from the
  account established under this chapter to maximize the receipt of
  federal funds under the medical assistance program established
  under Chapter 32, Human Resources Code, and to fund provider
  reimbursement payments as provided by Subsection (j).
         (j)  Money in the account described by Subsection (a)(2) may
  be appropriated only to the Health and Human Services Commission to
  fund provider reimbursement payments under the medical assistance
  program established under Chapter 32, Human Resources Code,
  including reimbursement enhancements to the statewide dollar
  amount (SDA) rate used to reimburse designated trauma hospitals
  under the program.
         SECTION 1.15.  Subchapter B, Chapter 531, Government Code,
  is amended by adding Sections 531.0696 and 531.0697 to read as
  follows:
         Sec. 531.0696.  CONSIDERATIONS IN AWARDING CERTAIN
  CONTRACTS. The commission may not contract with a managed care
  organization, including a health maintenance organization, or a
  pharmacy benefit manager if, in the preceding three years, the
  organization or pharmacy benefit manager, in connection with a bid,
  proposal, or contract with the commission, was subject to a final
  judgment by a court of competent jurisdiction resulting in a
  conviction for a criminal offense under state or federal law:
               (1)  related to the delivery of an item or service;
               (2)  related to neglect or abuse of patients in
  connection with the delivery of an item or service;
               (3)  consisting of a felony related to fraud, theft,
  embezzlement, breach of fiduciary responsibility, or other
  financial misconduct; or
               (4)  resulting in a penalty or fine in the amount of
  $500,000 or more in a state or federal administrative proceeding.
         Sec. 531.0697.  PRIOR APPROVAL AND PROVIDER ACCESS TO
  CERTAIN COMMUNICATIONS WITH CERTAIN RECIPIENTS.  (a)  This section
  applies to:
               (1)  the vendor drug program for the Medicaid and child
  health plan programs;
               (2)  the kidney health care program;
               (3)  the children with special health care needs
  program; and
               (4)  any other state program administered by the
  commission that provides prescription drug benefits.
         (b)  A managed care organization, including a health
  maintenance organization, or a pharmacy benefit manager, that
  administers claims for prescription drug benefits under a program
  to which this section applies shall, at least 10 days before the
  date the organization or pharmacy benefit manager intends to
  deliver a communication to recipients collectively under a program:
               (1)  submit a copy of the communication to the
  commission for approval; and
               (2)  if applicable, allow the pharmacy providers of
  recipients who are to receive the communication access to the
  communication.
         SECTION 1.16.  (a)  Subchapter A, Chapter 61, Health and
  Safety Code, is amended by adding Section 61.012 to read as follows:
         Sec. 61.012.  REIMBURSEMENT FOR SERVICES. (a)  In this
  section, "sponsored alien" means a person who has been lawfully
  admitted to the United States for permanent residence under the
  Immigration and Nationality Act (8 U.S.C. Section 1101 et seq.) and
  who, as a condition of admission, was sponsored by a person who
  executed an affidavit of support on behalf of the person.
         (b)  A public hospital or hospital district that provides
  health care services to a sponsored alien under this chapter may
  recover from a person who executed an affidavit of support on behalf
  of the alien the costs of the health care services provided to the
  alien.
         (c)  A public hospital or hospital district described by
  Subsection (b) must notify a sponsored alien and a person who
  executed an affidavit of support on behalf of the alien, at the time
  the alien applies for health care services, that a person who
  executed an affidavit of support on behalf of a sponsored alien is
  liable for the cost of health care services provided to the alien.
         (b)  Section 61.012, Health and Safety Code, as added by this
  section, applies only to health care services provided by a public
  hospital or hospital district on or after the effective date of this
  Act.
         SECTION 1.17.  Subchapter B, Chapter 531, Government Code,
  is amended by adding Sections 531.024181 and 531.024182 to read as
  follows:
         Sec. 531.024181.  VERIFICATION OF IMMIGRATION STATUS OF
  APPLICANTS FOR CERTAIN BENEFITS WHO ARE QUALIFIED ALIENS.
  (a)  This section applies only with respect to the following
  benefits programs:
               (1)  the child health plan program under Chapter 62,
  Health and Safety Code;
               (2)  the financial assistance program under Chapter 31,
  Human Resources Code;
               (3)  the medical assistance program under Chapter 32,
  Human Resources Code; and
               (4)  the nutritional assistance program under Chapter
  33, Human Resources Code.
         (b)  If, at the time of application for benefits under a
  program to which this section applies, a person states that the
  person is a qualified alien, as that term is defined by 8 U.S.C.
  Section 1641(b), the commission shall, to the extent allowed by
  federal law, verify information regarding the immigration status of
  the person using an automated system or systems where available.
         (c)  The executive commissioner shall adopt rules necessary
  to implement this section.
         (d)  Nothing in this section adds to or changes the
  eligibility requirements for any of the benefits programs to which
  this section applies.
         Sec. 531.024182.  VERIFICATION OF SPONSORSHIP INFORMATION
  FOR CERTAIN BENEFITS RECIPIENTS; REIMBURSEMENT. (a)  In this
  section, "sponsored alien" means a person who has been lawfully
  admitted to the United States for permanent residence under the
  Immigration and Nationality Act (8 U.S.C. Section 1101 et seq.) and
  who, as a condition of admission, was sponsored by a person who
  executed an affidavit of support on behalf of the person.
         (b)  If, at the time of application for benefits, a person
  stated that the person is a sponsored alien, the commission may, to
  the extent allowed by federal law, verify information relating to
  the sponsorship, using an automated system or systems where
  available, after the person is determined eligible for and begins
  receiving benefits under any of the following benefits programs:
               (1)  the child health plan program under Chapter 62,
  Health and Safety Code;
               (2)  the financial assistance program under Chapter 31,
  Human Resources Code;
               (3)  the medical assistance program under Chapter 32,
  Human Resources Code; or
               (4)  the nutritional assistance program under Chapter
  33, Human Resources Code.
         (c)  If the commission verifies that a person who receives
  benefits under a program listed in Subsection (b) is a sponsored
  alien, the commission may seek reimbursement from the person's
  sponsor for benefits provided to the person under those programs to
  the extent allowed by federal law, provided the commission
  determines that seeking reimbursement is cost-effective.
         (d)  If, at the time a person applies for benefits under a
  program listed in Subsection (b), the person states that the person
  is a sponsored alien, the commission shall make a reasonable effort
  to notify the person that the commission may seek reimbursement
  from the person's sponsor for any benefits the person receives
  under those programs.
         (e)  The executive commissioner shall adopt rules necessary
  to implement this section, including rules that specify the most
  cost-effective procedures by which the commission may seek
  reimbursement under Subsection (c).
         (f)  Nothing in this section adds to or changes the
  eligibility requirements for any of the benefits programs listed in
  Subsection (b).
         SECTION 1.18.  Subchapter B, Chapter 32, Human Resources
  Code, is amended by adding Section 32.0314 to read as follows:
         Sec. 32.0314.  REIMBURSEMENT FOR DURABLE MEDICAL EQUIPMENT
  AND SUPPLIES. The executive commissioner of the Health and Human
  Services Commission shall adopt rules requiring the electronic
  submission of any claim for reimbursement for durable medical
  equipment and supplies under the medical assistance program.
         SECTION 1.19.  (a)  Subchapter A, Chapter 531, Government
  Code, is amended by adding Section 531.0025 to read as follows:
         Sec. 531.0025.  RESTRICTIONS ON AWARDS TO FAMILY PLANNING
  SERVICE PROVIDERS. (a)  Notwithstanding any other law, money
  appropriated to the Department of State Health Services for the
  purpose of providing family planning services must be awarded:
               (1)  to eligible entities in the following order of
  descending priority:
                     (A)  public entities that provide family planning
  services, including state, county, and local community health
  clinics and federally qualified health centers;
                     (B)  nonpublic entities that provide
  comprehensive primary and preventive care services in addition to
  family planning services; and
                     (C)  nonpublic entities that provide family
  planning services but do not provide comprehensive primary and
  preventive care services; or
               (2)  as otherwise directed by the legislature in the
  General Appropriations Act.
         (b)  Notwithstanding Subsection (a), the Department of State
  Health Services shall, in compliance with federal law, ensure
  distribution of funds for family planning services in a manner that
  does not severely limit or eliminate access to those services in any
  region of the state.
         (b)  Section 32.024, Human Resources Code, is amended by
  adding Subsection (c-1) to read as follows:
         (c-1)  The department shall ensure that money spent for
  purposes of the demonstration project for women's health care
  services under former Section 32.0248, Human Resources Code, or a
  similar successor program is not used to perform or promote
  elective abortions, or to contract with entities that perform or
  promote elective abortions or affiliate with entities that perform
  or promote elective abortions.
         SECTION 1.20.  Subchapter B, Chapter 32, Human Resources
  Code, is amended by adding Section 32.074 to read as follows:
         Sec. 32.074.  ACCESS TO PERSONAL EMERGENCY RESPONSE SYSTEM.
  (a)  In this section, "personal emergency response system" has the
  meaning assigned by Section 781.001, Health and Safety Code.
         (b)  The department shall ensure that each Medicaid
  recipient enrolled in a home and community-based services waiver
  program that includes a personal emergency response system as a
  service has access to a personal emergency response system, if
  necessary, without regard to the recipient's access to a landline
  telephone.
         SECTION 1.21.  Chapter 33, Human Resources Code, is amended
  by adding Section 33.029 to read as follows:
         Sec. 33.029.  CERTAIN ELIGIBILITY RESTRICTIONS.
  Notwithstanding any other provision of this chapter, an applicant
  for or recipient of benefits under the supplemental nutrition
  assistance program is not entitled to and may not receive or
  continue to receive any benefit under the program if the applicant
  or recipient is not legally present in the United States.
         SECTION 1.22.  If before implementing any provision of this
  article 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.
  ARTICLE 2.  LEGISLATIVE FINDINGS AND INTENT; COMPLIANCE WITH
  ANTITRUST LAWS
         SECTION 2.01.  (a)  The legislature finds that it would
  benefit the State of Texas to:
               (1)  explore innovative health care delivery and
  payment models to improve the quality and efficiency of health care
  in this state;
               (2)  improve health care transparency;
               (3)  give health care providers the flexibility to
  collaborate and innovate to improve the quality and efficiency of
  health care; and
               (4)  create incentives to improve the quality and
  efficiency of health care.
         (b)  The legislature finds that the use of certified health
  care collaboratives will increase pro-competitive effects as the
  ability to compete on the basis of quality of care and the
  furtherance of the quality of care through a health care
  collaborative will overcome any anticompetitive effects of joining
  competitors to create the health care collaboratives and the
  payment mechanisms that will be used to encourage the furtherance
  of quality of care. Consequently, the legislature finds it
  appropriate and necessary to authorize health care collaboratives
  to promote the efficiency and quality of health care.
         (c)  The legislature intends to exempt from antitrust laws
  and provide immunity from federal antitrust laws through the state
  action doctrine a health care collaborative that holds a
  certificate of authority under Chapter 848, Insurance Code, as
  added by Article 4 of this Act, and that collaborative's
  negotiations of contracts with payors. The legislature does not
  intend or authorize any person or entity to engage in activities or
  to conspire to engage in activities that would constitute per se
  violations of federal antitrust laws.
         (d)  The legislature intends to permit the use of alternative
  payment mechanisms, including bundled or global payments and
  quality-based payments, among physicians and other health care
  providers participating in a health care collaborative that holds a
  certificate of authority under Chapter 848, Insurance Code, as
  added by Article 4 of this Act.  The legislature intends to
  authorize a health care collaborative to contract for and accept
  payments from governmental and private payors based on alternative
  payment mechanisms, and intends that the receipt and distribution
  of payments to participating physicians and health care providers
  is not a violation of any existing state law.
  ARTICLE 3.  TEXAS INSTITUTE OF HEALTH CARE QUALITY AND EFFICIENCY
         SECTION 3.01.  Title 12, Health and Safety Code, is amended
  by adding Chapter 1002 to read as follows:
  CHAPTER 1002.  TEXAS INSTITUTE OF HEALTH CARE QUALITY AND
  EFFICIENCY
  SUBCHAPTER A.  GENERAL PROVISIONS
         Sec. 1002.001.  DEFINITIONS. In this chapter:
               (1)  "Board" means the board of directors of the Texas
  Institute of Health Care Quality and Efficiency established under
  this chapter.
               (2)  "Commission" means the Health and Human Services
  Commission.
               (3)  "Department" means the Department of State Health
  Services.
               (4)  "Executive commissioner" means the executive
  commissioner of the Health and Human Services Commission.
               (5)  "Health care collaborative" has the meaning
  assigned by Section 848.001, Insurance Code.
               (6)  "Health care facility" means:
                     (A)  a hospital licensed under Chapter 241;
                     (B)  an institution licensed under Chapter 242;
                     (C)  an ambulatory surgical center licensed under
  Chapter 243;
                     (D)  a birthing center licensed under Chapter 244;
                     (E)  an end stage renal disease facility licensed
  under Chapter 251; or
                     (F)  a freestanding emergency medical care
  facility licensed under Chapter 254.
               (7)  "Institute" means the Texas Institute of Health
  Care Quality and Efficiency established under this chapter.
               (8)  "Potentially preventable admission" means an
  admission of a person to a hospital or long-term care facility that
  may have reasonably been prevented with adequate access to
  ambulatory care or health care coordination.
               (9)  "Potentially preventable ancillary service" means
  a health care service provided or ordered by a physician or other
  health care provider to supplement or support the evaluation or
  treatment of a patient, including a diagnostic test, laboratory
  test, therapy service, or radiology service, that may not be
  reasonably necessary for the provision of quality health care or
  treatment.
               (10)  "Potentially preventable complication" means a
  harmful event or negative outcome with respect to a person,
  including an infection or surgical complication, that:
                     (A)  occurs after the person's admission to a
  hospital or long-term care facility; and
                     (B)  may have resulted from the care, lack of
  care, or treatment provided during the hospital or long-term care
  facility stay rather than from a natural progression of an
  underlying disease.
               (11)  "Potentially preventable event" means a
  potentially preventable admission, a potentially preventable
  ancillary service, a potentially preventable complication, a
  potentially preventable emergency room visit, a potentially
  preventable readmission, or a combination of those events.
               (12)  "Potentially preventable emergency room visit"
  means treatment of a person in a hospital emergency room or
  freestanding emergency medical care facility for a condition that
  may not require emergency medical attention because the condition
  could be, or could have been, treated or prevented by a physician or
  other health care provider in a nonemergency setting.
               (13)  "Potentially preventable readmission" means a
  return hospitalization of a person within a period specified by the
  commission that may have resulted from deficiencies in the care or
  treatment provided to the person during a previous hospital stay or
  from deficiencies in post-hospital discharge follow-up.  The term
  does not include a hospital readmission necessitated by the
  occurrence of unrelated events after the discharge.  The term
  includes the readmission of a person to a hospital for:
                     (A)  the same condition or procedure for which the
  person was previously admitted;
                     (B)  an infection or other complication resulting
  from care previously provided; or
                     (C)  a condition or procedure that indicates that
  a surgical intervention performed during a previous admission was
  unsuccessful in achieving the anticipated outcome.
         Sec. 1002.002.  ESTABLISHMENT; PURPOSE. The Texas Institute
  of Health Care Quality and Efficiency is established to improve
  health care quality, accountability, education, and cost
  containment in this state by encouraging health care provider
  collaboration, effective health care delivery models, and
  coordination of health care services.
  [Sections 1002.003-1002.050 reserved for expansion]
  SUBCHAPTER B.  ADMINISTRATION
         Sec. 1002.051.  APPLICATION OF SUNSET ACT. The institute is
  subject to Chapter 325, Government Code (Texas Sunset Act).  Unless
  continued in existence as provided by that chapter, the institute
  is abolished and this chapter expires September 1, 2017.
         Sec. 1002.052.  COMPOSITION OF BOARD OF DIRECTORS.  (a)  The
  institute is governed by a board of 15 directors appointed by the
  governor.
         (b)  The following ex officio, nonvoting members also serve
  on the board:
               (1)  the commissioner of the department;
               (2)  the executive commissioner;
               (3)  the commissioner of insurance;
               (4)  the executive director of the Employees Retirement
  System of Texas;
               (5)  the executive director of the Teacher Retirement
  System of Texas;
               (6)  the state Medicaid director of the Health and
  Human Services Commission;
               (7)  the executive director of the Texas Medical Board;
               (8)  the commissioner of the Department of Aging and
  Disability Services;
               (9)  the executive director of the Texas Workforce
  Commission;
               (10)  the commissioner of the Texas Higher Education
  Coordinating Board; and
               (11)  a representative from each state agency or system
  of higher education that purchases or provides health care
  services, as determined by the governor.
         (c)  The governor shall appoint as board members health care
  providers, payors, consumers, and health care quality experts or
  persons who possess expertise in any other area the governor finds
  necessary for the successful operation of the institute.
         (d)  A person may not serve as a voting member of the board if
  the person serves on or advises another board or advisory board of a
  state agency.
         Sec. 1002.053.  TERMS OF OFFICE. (a)  Appointed members of
  the board serve staggered terms of four years, with the terms of as
  close to one-half of the members as possible expiring January 31 of
  each odd-numbered year.
         (b)  Board members may serve consecutive terms.
         Sec. 1002.054.  ADMINISTRATIVE SUPPORT.  (a)  The institute
  is administratively attached to the commission.
         (b)  The commission shall coordinate administrative
  responsibilities with the institute to streamline and integrate the
  institute's administrative operations and avoid unnecessary
  duplication of effort and costs.
         (c)  The institute may collaborate with, and coordinate its
  administrative functions, including functions related to research
  and reporting activities with, other public or private entities,
  including academic institutions and nonprofit organizations, that
  perform research on health care issues or other topics consistent
  with the purpose of the institute.
         Sec. 1002.055.  EXPENSES. (a)  Members of the board serve
  without compensation but, subject to the availability of
  appropriated funds, may receive reimbursement for actual and
  necessary expenses incurred in attending meetings of the board.
         (b)  Information relating to the billing and payment of
  expenses under this section is subject to Chapter 552, Government
  Code.
         Sec. 1002.056.  OFFICER; CONFLICT OF INTEREST. (a)  The
  governor shall designate a member of the board as presiding officer
  to serve in that capacity at the pleasure of the governor.
         (b)  Any board member or a member of a committee formed by the
  board with direct interest, personally or through an employer, in a
  matter before the board shall abstain from deliberations and
  actions on the matter in which the conflict of interest arises and
  shall further abstain on any vote on the matter, and may not
  otherwise participate in a decision on the matter.
         (c)  Each board member shall:
               (1)  file a conflict of interest statement and a
  statement of ownership interests with the board to ensure
  disclosure of all existing and potential personal interests related
  to board business; and
               (2)  update the statements described by Subdivision (1)
  at least annually.
         (d)  A statement filed under Subsection (c) is subject to
  Chapter 552, Government Code.
         Sec. 1002.057.  PROHIBITION ON CERTAIN CONTRACTS AND
  EMPLOYMENT. (a)  The board may not compensate, employ, or contract
  with any individual who serves as a member of the board of, or on an
  advisory board or advisory committee for, any other governmental
  body, including any agency, council, or committee, in this state.
         (b)  The board may not compensate, employ, or contract with
  any person that provides financial support to the board, including
  a person who provides a gift, grant, or donation to the board.
         Sec. 1002.058.  MEETINGS.  (a)  The board may meet as often
  as necessary, but shall meet at least once each calendar quarter.
         (b)  The board shall develop and implement policies that
  provide the public with a reasonable opportunity to appear before
  the board and to speak on any issue under the authority of the
  institute.
         Sec. 1002.059.  BOARD MEMBER IMMUNITY. (a)  A board member
  may not be held civilly liable for an act performed, or omission
  made, in good faith in the performance of the member's powers and
  duties under this chapter.
         (b)  A cause of action does not arise against a member of the
  board for an act or omission described by Subsection (a).
         Sec. 1002.060.  PRIVACY OF INFORMATION. (a)  Protected
  health information and individually identifiable health
  information collected, assembled, or maintained by the institute is
  confidential and is not subject to disclosure under Chapter 552,
  Government Code.
         (b)  The institute shall comply with all state and federal
  laws and rules relating to the protection, confidentiality, and
  transmission of health information, including the Health Insurance
  Portability and Accountability Act of 1996 (Pub. L. No. 104-191)
  and rules adopted under that Act, 42 U.S.C. Section 290dd-2, and 42
  C.F.R. Part 2.
         (c)  The commission, department, or institute or an officer
  or employee of the commission, department, or institute, including
  a board member, may not disclose any information that is
  confidential under this section.
         (d)  Information, documents, and records that are
  confidential as provided by this section are not subject to
  subpoena or discovery and may not be introduced into evidence in any
  civil or criminal proceeding.
         (e)  An officer or employee of the commission, department, or
  institute, including a board member, may not be examined in a civil,
  criminal, special, administrative, or other proceeding as to
  information that is confidential under this section.
         Sec. 1002.061.  FUNDING. (a)  The institute may be funded
  through the General Appropriations Act and may request, accept, and
  use gifts, grants, and donations as necessary to implement its
  functions.
         (b)  The institute may participate in other
  revenue-generating activity that is consistent with the
  institute's purposes.
         (c)  Except as otherwise provided by law, each state agency
  represented on the board as a nonvoting member shall provide funds
  to support the institute and implement this chapter.  The
  commission shall establish a funding formula to determine the level
  of support each state agency is required to provide.
         (d)  This section does not permit the sale of information
  that is confidential under Section 1002.060.
  [Sections 1002.062-1002.100 reserved for expansion]
  SUBCHAPTER C.  POWERS AND DUTIES
         Sec. 1002.101.  GENERAL POWERS AND DUTIES. The institute
  shall make recommendations to the legislature on:
               (1)  improving quality and efficiency of health care
  delivery by:
                     (A)  providing a forum for regulators, payors, and
  providers to discuss and make recommendations for initiatives that
  promote the use of best practices, increase health care provider
  collaboration, improve health care outcomes, and contain health
  care costs;
                     (B)  researching, developing, supporting, and
  promoting strategies to improve the quality and efficiency of
  health care in this state;
                     (C)  determining the outcome measures that are the
  most effective measures of quality and efficiency:
                           (i)  using nationally accredited measures;
  or
                           (ii)  if no nationally accredited measures
  exist, using measures based on expert consensus;
                     (D)  reducing the incidence of potentially
  preventable events; and
                     (E)  creating a state plan that takes into
  consideration the regional differences of the state to encourage
  the improvement of the quality and efficiency of health care
  services;
               (2)  improving reporting, consolidation, and
  transparency of health care information; and
               (3)  implementing and supporting innovative health
  care collaborative payment and delivery systems under Chapter 848,
  Insurance Code.
         Sec. 1002.102.  GOALS FOR QUALITY AND EFFICIENCY OF HEALTH
  CARE; STATEWIDE PLAN. (a)  The institute shall study and develop
  recommendations to improve the quality and efficiency of health
  care delivery in this state, including:
               (1)  quality-based payment systems that align payment
  incentives with high-quality, cost-effective health care;
               (2)  alternative health care delivery systems that
  promote health care coordination and provider collaboration;
               (3)  quality of care and efficiency outcome
  measurements that are effective measures of prevention, wellness,
  coordination, provider collaboration, and cost-effective health
  care; and
               (4)  meaningful use of electronic health records by
  providers and electronic exchange of health information among
  providers.
         (b)  The institute shall study and develop recommendations
  for measuring quality of care and efficiency across:
               (1)  all state employee and state retiree benefit
  plans;
               (2)  employee and retiree benefit plans provided
  through the Teacher Retirement System of Texas;
               (3)  the state medical assistance program under Chapter
  32, Human Resources Code; and
               (4)  the child health plan under Chapter 62.
         (c)  In developing recommendations under Subsection (b), the
  institute shall use nationally accredited measures or, if no
  nationally accredited measures exist, measures based on expert
  consensus.
         (d)  The institute may study and develop recommendations for
  measuring the quality of care and efficiency in state or federally
  funded health care delivery systems other than those described by
  Subsection (b).
         (e)  In developing recommendations under Subsections (a) and
  (b), the institute may not base its recommendations solely on
  actuarial data.
         (f)  Using the studies described by Subsections (a) and (b),
  the institute shall develop recommendations for a statewide plan
  for quality and efficiency of the delivery of health care.
  [Sections 1002.103-1002.150 reserved for expansion]
  SUBCHAPTER D.  HEALTH CARE COLLABORATIVE GUIDELINES AND SUPPORT
         Sec.  1002.151.  INSTITUTE STUDIES AND RECOMMENDATIONS
  REGARDING HEALTH CARE PAYMENT AND DELIVERY SYSTEMS.  (a)  The
  institute shall study and make recommendations for alternative
  health care payment and delivery systems.
         (b)  The institute shall recommend methods to evaluate a
  health care collaborative's effectiveness, including methods to
  evaluate:
               (1)  the efficiency and effectiveness of
  cost-containment methods used by the collaborative;
               (2)  alternative health care payment and delivery
  systems used by the collaborative;
               (3)  the quality of care;
               (4)  health care provider collaboration and
  coordination;
               (5)  the protection of patients;
               (6)  patient satisfaction; and
               (7)  the meaningful use of electronic health records by
  providers and electronic exchange of health information among
  providers.
  [Sections 1002.152-1002.200 reserved for expansion]
  SUBCHAPTER E.  IMPROVED TRANSPARENCY
         Sec. 1002.201.  HEALTH CARE ACCOUNTABILITY; IMPROVED
  TRANSPARENCY.  (a)  With the assistance of the department, the
  institute shall complete an assessment of all health-related data
  collected by the state, what information is available to the
  public, and how the public and health care providers currently
  benefit and could potentially benefit from this information,
  including health care cost and quality information.
         (b)  The institute shall develop a plan:
               (1)  for consolidating reports of health-related data
  from various sources to reduce administrative costs to the state
  and reduce the administrative burden to health care providers and
  payors;
               (2)  for improving health care transparency to the
  public and health care providers by making information available in
  the most effective format; and
               (3)  providing recommendations to the legislature on
  enhancing existing health-related information available to health
  care providers and the public, including provider reporting of
  additional information not currently required to be reported under
  existing law, to improve quality of care.
         Sec. 1002.202.  ALL PAYOR CLAIMS DATABASE.  (a)  The
  institute shall study the feasibility and desirability of
  establishing a centralized database for health care claims
  information across all payors.
         (b)  The study described by Subsection (a) shall:
               (1)  use the assessment described by Section 1002.201
  to develop recommendations relating to the adequacy of existing
  data sources for carrying out the state's purposes under this
  chapter and Chapter 848, Insurance Code;
               (2)  determine whether the establishment of an all
  payor claims database would reduce the need for some data
  submissions provided by payors;
               (3)  identify the best available sources of data
  necessary for the state's purposes under this chapter and Chapter
  848, Insurance Code, that are not collected by the state under
  existing law;
               (4)  describe how an all payor claims database may
  facilitate carrying out the state's purposes under this chapter and
  Chapter 848, Insurance Code;
               (5)  identify national standards for claims data
  collection and use, including standardized data sets, standardized
  methodology, and standard outcome measures of health care quality
  and efficiency; and
               (6)  estimate the costs of implementing an all payor
  claims database, including:
                     (A)  the costs to the state for collecting and
  processing data;
                     (B)  the cost to the payors for supplying the
  data; and
                     (C)  the available funding mechanisms that might
  support an all payor claims database.
         (c)  The institute shall consult with the department and the
  Texas Department of Insurance to develop recommendations to submit
  to the legislature on the establishment of the centralized claims
  database described by Subsection (a).
         SECTION 3.02.  Chapter 109, Health and Safety Code, is
  repealed.
         SECTION 3.03.  On the effective date of this Act:
               (1)  the Texas Health Care Policy Council established
  under Chapter 109, Health and Safety Code, is abolished; and
               (2)  any unexpended and unobligated balance of money
  appropriated by the legislature to the Texas Health Care Policy
  Council established under Chapter 109, Health and Safety Code, as
  it existed immediately before the effective date of this Act, is
  transferred to the Texas Institute of Health Care Quality and
  Efficiency created by Chapter 1002, Health and Safety Code, as
  added by this Act.
         SECTION 3.04.  (a)  The governor shall appoint voting
  members of the board of directors of the Texas Institute of Health
  Care Quality and Efficiency under Section 1002.052, Health and
  Safety Code, as added by this Act, as soon as practicable after the
  effective date of this Act.
         (b)  In making the initial appointments under this section,
  the governor shall designate seven members to terms expiring
  January 31, 2013, and eight members to terms expiring January 31,
  2015.
         SECTION 3.05.  (a)  Not later than December 1, 2012, the
  Texas Institute of Health Care Quality and Efficiency shall submit
  a report regarding recommendations for improved health care
  reporting to the governor, the lieutenant governor, the speaker of
  the house of representatives, and the chairs of the appropriate
  standing committees of the legislature outlining:
               (1)  the initial assessment conducted under Subsection
  (a), Section 1002.201, Health and Safety Code, as added by this Act;
               (2)  the plans initially developed under Subsection
  (b), Section 1002.201, Health and Safety Code, as added by this Act;
               (3)  the changes in existing law that would be
  necessary to implement the assessment and plans described by
  Subdivisions (1) and (2) of this subsection; and
               (4)  the cost implications to state agencies, small
  businesses, micro businesses, payors, and health care providers to
  implement the assessment and plans described by Subdivisions (1)
  and (2) of this subsection.
         (b)  Not later than December 1, 2012, the Texas Institute of
  Health Care Quality and Efficiency shall submit a report regarding
  recommendations for an all payor claims database to the governor,
  the lieutenant governor, the speaker of the house of
  representatives, and the chairs of the appropriate standing
  committees of the legislature outlining:
               (1)  the feasibility and desirability of establishing a
  centralized database for health care claims;
               (2)  the recommendations developed under Subsection
  (c), Section 1002.202, Health and Safety Code, as added by this Act;
               (3)  the changes in existing law that would be
  necessary to implement the recommendations described by
  Subdivision (2) of this subsection; and
               (4)  the cost implications to state agencies, small
  businesses, micro businesses, payors, and health care providers to
  implement the recommendations described by Subdivision (2) of this
  subsection.
         SECTION 3.06.  (a)  The Texas Institute of Health Care
  Quality and Efficiency under Chapter 1002, Health and Safety Code,
  as added by this Act, with the assistance of and in coordination
  with the Texas Department of Insurance, shall conduct a study:
               (1)  evaluating how the legislature may promote a
  consumer-driven health care system, including by increasing the
  adoption of high-deductible insurance products with health savings
  accounts by consumers and employers to lower health care costs and
  increase personal responsibility for health care; and
               (2)  examining the issue of differing amounts of
  payment in full accepted by a provider for the same or similar
  health care services or supplies, including bundled health care
  services and supplies, and addressing:
                     (A)  the extent of the differences in the amounts
  accepted as payment in full for a service or supply;
                     (B)  the reasons that amounts accepted as payment
  in full differ for the same or similar services or supplies;
                     (C)  the availability of information to the
  consumer regarding the amount accepted as payment in full for a
  service or supply;
                     (D)  the effects on consumers of differing amounts
  accepted as payment in full; and
                     (E)  potential methods for improving consumers'
  access to information in relation to the amounts accepted as
  payment in full for health care services or supplies, including the
  feasibility and desirability of requiring providers to:
                           (i)  publicly post the amount that is
  accepted as payment in full for a service or supply; and
                           (ii)  adhere to the posted amount.
         (b)  The Texas Institute of Health Care Quality and
  Efficiency shall submit a report to the legislature outlining the
  results of the study conducted under this section and any
  recommendations for potential legislation not later than January 1,
  2013.
         (c)  This section expires September 1, 2013.
  ARTICLE 4.  HEALTH CARE COLLABORATIVES
         SECTION 4.01.  Subtitle C, Title 6, Insurance Code, is
  amended by adding Chapter 848 to read as follows:
  CHAPTER 848.  HEALTH CARE COLLABORATIVES
  SUBCHAPTER A.  GENERAL PROVISIONS
         Sec. 848.001.  DEFINITIONS. In this chapter:
               (1)  "Affiliate" means a person who controls, is
  controlled by, or is under common control with one or more other
  persons.
               (2)  "Health care collaborative" means an entity:
                     (A)  that undertakes to arrange for medical and
  health care services for insurers, health maintenance
  organizations, and other payors in exchange for payments in cash or
  in kind;
                     (B)  that accepts and distributes payments for
  medical and health care services;
                     (C)  that consists of:
                           (i)  physicians;
                           (ii)  physicians and other health care
  providers;
                           (iii)  physicians and insurers or health
  maintenance organizations; or
                           (iv)  physicians, other health care
  providers, and insurers or health maintenance organizations; and
                     (D)  that is certified by the commissioner under
  this chapter to lawfully accept and distribute payments to
  physicians and other health care providers using the reimbursement
  methodologies authorized by this chapter.
               (3)  "Health care services" means services provided by
  a physician or health care provider to prevent, alleviate, cure, or
  heal human illness or injury.  The term includes:
                     (A)  pharmaceutical services;
                     (B)  medical, chiropractic, or dental care; and
                     (C)  hospitalization.
               (4)  "Health care provider" means any person,
  partnership, professional association, corporation, facility, or
  institution licensed, certified, registered, or chartered by this
  state to provide health care services.  The term includes a hospital
  but does not include a physician.
               (5)  "Health maintenance organization" means an
  organization operating under Chapter 843.
               (6)  "Hospital" means a general or special hospital,
  including a public or private institution licensed under Chapter
  241 or 577, Health and Safety Code.
               (7)  "Institute" means the Texas Institute of Health
  Care Quality and Efficiency established under Chapter 1002, Health
  and Safety Code.
               (8)  "Physician" means:
                     (A)  an individual licensed to practice medicine
  in this state;
                     (B)  a professional association organized under
  the Texas Professional Association Act (Article 1528f, Vernon's
  Texas Civil Statutes) or the Texas Professional Association Law by
  an individual or group of individuals licensed to practice medicine
  in this state;
                     (C)  a partnership or limited liability
  partnership formed by a group of individuals licensed to practice
  medicine in this state;
                     (D)  a nonprofit health corporation certified
  under Section 162.001, Occupations Code;
                     (E)  a company formed by a group of individuals
  licensed to practice medicine in this state under the Texas Limited
  Liability Company Act (Article 1528n, Vernon's Texas Civil
  Statutes) or the Texas Professional Limited Liability Company Law;
  or
                     (F)  an organization wholly owned and controlled
  by individuals licensed to practice medicine in this state.
               (9)  "Potentially preventable event" has the meaning
  assigned by Section 1002.001, Health and Safety Code.
         Sec. 848.002.  EXCEPTION:  DELEGATED ENTITIES. (a)  This
  section applies only to an entity, other than a health maintenance
  organization, that:
               (1)  by itself or through a subcontract with another
  entity, undertakes to arrange for or provide medical care or health
  care services to enrollees in exchange for predetermined payments
  on a prospective basis; and
               (2)  accepts responsibility for performing functions
  that are required by:
                     (A)  Chapter 222, 251, 258, or 1272, as
  applicable, to a health maintenance organization; or
                     (B)  Chapter 843, Chapter 1271, Section 1367.053,
  Subchapter A, Chapter 1452, or Subchapter B, Chapter 1507, as
  applicable, solely on behalf of health maintenance organizations.
         (b)  An entity described by Subsection (a) is subject to
  Chapter 1272 and is not required to obtain a certificate of
  authority or determination of approval under this chapter.
         Sec. 848.003.  USE OF INSURANCE-RELATED TERMS BY HEALTH CARE
  COLLABORATIVE. A health care collaborative that is not an insurer
  or health maintenance organization may not use in its name,
  contracts, or literature:
               (1)  the following words or initials:
                     (A)  "insurance";
                     (B)  "casualty";
                     (C)  "surety";
                     (D)  "mutual";
                     (E)  "health maintenance organization"; or
                     (F)  "HMO"; or
               (2)  any other words or initials that are:
                     (A)  descriptive of the insurance, casualty,
  surety, or health maintenance organization business; or
                     (B)  deceptively similar to the name or
  description of an insurer, surety corporation, or health
  maintenance organization engaging in business in this state.
         Sec. 848.004.  APPLICABILITY OF INSURANCE LAWS. (a)  An
  organization may not arrange for or provide health care services to
  enrollees on a prepaid or indemnity basis through health insurance
  or a health benefit plan, including a health care plan, as defined
  by Section 843.002, unless the organization as an insurer or health
  maintenance organization holds the appropriate certificate of
  authority issued under another chapter of this code.
         (b)  Except as provided by Subsection (c), the following
  provisions of this code apply to a health care collaborative in the
  same manner and to the same extent as they apply to an individual or
  entity otherwise subject to the provision:
               (1)  Section 38.001;
               (2)  Subchapter A, Chapter 542;
               (3)  Chapter 541;
               (4)  Chapter 543;
               (5)  Chapter 602;
               (6)  Chapter 701;
               (7)  Chapter 803; and
               (8)  Chapter 804.
         (c)  The remedies available under this chapter in the manner
  provided by Chapter 541 do not include:
               (1)  a private cause of action under Subchapter D,
  Chapter 541; or
               (2)  a class action under Subchapter F, Chapter 541.
         Sec. 848.005.  CERTAIN INFORMATION CONFIDENTIAL.
  (a)  Except as provided by Subsection (b), an application, filing,
  or report required under this chapter is public information subject
  to disclosure under Chapter 552, Government Code.
         (b)  The following information is confidential and is not
  subject to disclosure under Chapter 552, Government Code:
               (1)  a contract, agreement, or document that
  establishes another arrangement:
                     (A)  between a health care collaborative and a
  governmental or private entity for all or part of health care
  services provided or arranged for by the health care collaborative;
  or
                     (B)  between a health care collaborative and
  participating physicians and health care providers;
               (2)  a written description of a contract, agreement, or
  other arrangement described by Subdivision (1);
               (3)  information relating to bidding, pricing, or other
  trade secrets submitted to:
                     (A)  the department under Sections 848.057(a)(5)
  and (6); or
                     (B)  the attorney general under Section 848.059;
               (4)  information relating to the diagnosis, treatment,
  or health of a patient who receives health care services from a
  health care collaborative under a contract for services; and
               (5)  information relating to quality improvement or
  peer review activities of a health care collaborative.
         Sec. 848.006.  COVERAGE BY HEALTH CARE COLLABORATIVE NOT
  REQUIRED. (a)  Except as provided by Subsection (b) and subject to
  Chapter 843 and Section 1301.0625, an individual may not be
  required to obtain or maintain coverage under:
               (1)  an individual health insurance policy written
  through a health care collaborative; or
               (2)  any plan or program for health care services
  provided on an individual basis through a health care
  collaborative.
         (b)  This chapter does not require an individual to obtain or
  maintain health insurance coverage.
         (c)  Subsection (a) does not apply to an individual:
               (1)  who is required to obtain or maintain health
  benefit plan coverage:
                     (A)  written by an institution of higher education
  at which the individual is or will be enrolled as a student; or
                     (B)  under an order requiring medical support for
  a child; or
               (2)  who voluntarily applies for benefits under a state
  administered program under Title XIX of the Social Security Act (42
  U.S.C. Section 1396 et seq.), or Title XXI of the Social Security
  Act (42 U.S.C. Section 1397aa et seq.).
         (d)  Except as provided by Subsection (e), a fine or penalty
  may not be imposed on an individual if the individual chooses not to
  obtain or maintain coverage described by Subsection (a).
         (e)  Subsection (d) does not apply to a fine or penalty
  imposed on an individual described in Subsection (c) for the
  individual's failure to obtain or maintain health benefit plan
  coverage.
  [Sections 848.007-848.050 reserved for expansion]
  SUBCHAPTER B.  AUTHORITY TO ENGAGE IN BUSINESS
         Sec. 848.051.  OPERATION OF HEALTH CARE COLLABORATIVE. A
  health care collaborative that is certified by the department under
  this chapter may provide or arrange to provide health care services
  under contract with a governmental or private entity.
         Sec. 848.052.  FORMATION AND GOVERNANCE OF HEALTH CARE
  COLLABORATIVE. (a)  A health care collaborative is governed by a
  board of directors.
         (b)  The person who establishes a health care collaborative
  shall appoint an initial board of directors. Each member of the
  initial board serves a term of not more than 18 months. Subsequent
  members of the board shall be elected to serve two-year terms by
  physicians and health care providers who participate in the health
  care collaborative as provided by this section. The board shall
  elect a chair from among its members.
         (c)  If the participants in a health care collaborative are
  all physicians, each member of the board of directors must be an
  individual physician who is a participant in the health care
  collaborative.
         (d)  If the participants in a health care collaborative are
  both physicians and other health care providers, the board of
  directors must consist of:
               (1)  an even number of members who are individual
  physicians, selected by physicians who participate in the health
  care collaborative;
               (2)  a number of members equal to the number of members
  under Subdivision (1) who represent health care providers, one of
  whom is an individual physician, selected by health care providers
  who participate in the health care collaborative; and
               (3)  one individual member with business expertise,
  selected by unanimous vote of the members described by Subdivisions
  (1) and (2).
         (d-1)  If a health care collaborative includes
  hospital-based physicians, one member of the board of directors
  must be a hospital-based physician.
         (e)  The board of directors must include at least three
  nonvoting ex officio members who represent the community in which
  the health care collaborative operates.
         (f)  An individual may not serve on the board of directors of
  a health care collaborative if the individual has an ownership
  interest in, serves on the board of directors of, or maintains an
  officer position with:
               (1)  another health care collaborative that provides
  health care services in the same service area as the health care
  collaborative; or
               (2)  a physician or health care provider that:
                     (A)  does not participate in the health care
  collaborative; and
                     (B)  provides health care services in the same
  service area as the health care collaborative.
         (g)  In addition to the requirements of Subsection (f), the
  board of directors of a health care collaborative shall adopt a
  conflict of interest policy to be followed by members.
         (h)  The board of directors may remove a member for cause. A
  member may not be removed from the board without cause.
         (i)  The organizational documents of a health care
  collaborative may not conflict with any provision of this chapter,
  including this section.
         Sec. 848.053.  COMPENSATION ADVISORY COMMITTEE; SHARING OF
  CERTAIN DATA. (a)  The board of directors of a health care
  collaborative shall establish a compensation advisory committee to
  develop and make recommendations to the board regarding charges,
  fees, payments, distributions, or other compensation assessed for
  health care services provided by physicians or health care
  providers who participate in the health care collaborative. The
  committee must include:
               (1)  two members of the board of directors, of which one
  member is the hospital-based physician member, if the health care
  collaborative includes hospital-based physicians; and
               (2)  if the health care collaborative consists of
  physicians and other health care providers:
                     (A)  a physician who is not a participant in the
  health care collaborative, selected by the physicians who are
  participants in the collaborative; and
                     (B)  a member selected by the other health care
  providers who participate in the collaborative.
         (b)  A health care collaborative shall establish and enforce
  policies to prevent the sharing of charge, fee, and payment data
  among nonparticipating physicians and health care providers.
         (c)  The compensation advisory committee shall make
  recommendations to the board of directors regarding all charges,
  fees, payments, distributions, or other compensation assessed for
  health care services provided by a physician or health care
  provider who participates in the health care collaborative.
         (d)  Except as provided by Subsections (e) and (f), the board
  of directors and the compensation advisory committee may not use or
  consider a government payor's payment rates in setting the charges
  or fees for health care services provided by a physician or health
  care provider who participates in the health care collaborative.
         (e)  The board of directors or the compensation advisory
  committee may use or consider a government payor's payment rates
  when setting the charges or fees for health care services paid by a
  government payor.
         (f)  This section does not prohibit a reference to a
  government payor's payment rates in agreements with health
  maintenance organizations, insurers, or other payors.
         (g)  After the compensation advisory committee submits a
  recommendation to the board of directors, the board shall formally
  approve or refuse the recommendation.
         (h)  For purposes of this section, "government payor"
  includes:
               (1)  Medicare;
               (2)  Medicaid;
               (3)  the state child health plan program; and
               (4)  the TRICARE Military Health System.
         Sec. 848.054.  CERTIFICATE OF AUTHORITY AND DETERMINATION OF
  APPROVAL REQUIRED. (a)  An organization may not organize or
  operate a health care collaborative in this state unless the
  organization holds a certificate of authority issued under this
  chapter.
         (b)  The commissioner shall adopt rules governing the
  application for a certificate of authority under this subchapter.
         Sec. 848.055.  EXCEPTIONS. (a)  An organization is not
  required to obtain a certificate of authority under this chapter if
  the organization holds an appropriate certificate of authority
  issued under another chapter of this code.
         (b)  A person is not required to obtain a certificate of
  authority under this chapter to the extent that the person is:
               (1)  a physician engaged in the delivery of medical
  care; or
               (2)  a health care provider engaged in the delivery of
  health care services other than medical care as part of a health
  maintenance organization delivery network.
         (c)  A medical school, medical and dental unit, or health
  science center as described by Section 61.003, 61.501, or 74.601,
  Education Code, is not required to obtain a certificate of
  authority under this chapter to the extent that the medical school,
  medical and dental unit, or health science center contracts to
  deliver medical care services within a health care collaborative.  
  This chapter is otherwise applicable to a medical school, medical
  and dental unit, or health science center.
         (d)  An entity licensed under the Health and Safety Code that
  employs a physician under a specific statutory authority is not
  required to obtain a certificate of authority under this chapter to
  the extent that the entity contracts to deliver medical care
  services and health care services within a health care
  collaborative. This chapter is otherwise applicable to the entity.
         Sec. 848.056.  APPLICATION FOR CERTIFICATE OF AUTHORITY.
  (a)  An organization may apply to the commissioner for and obtain a
  certificate of authority to organize and operate a health care
  collaborative.
         (b)  An application for a certificate of authority must:
               (1)  comply with all rules adopted by the commissioner;
               (2)  be verified under oath by the applicant or an
  officer or other authorized representative of the applicant;
               (3)  be reviewed by the division within the office of
  attorney general that is primarily responsible for enforcing the
  antitrust laws of this state and of the United States under Section
  848.059;
               (4)  demonstrate that the health care collaborative
  contracts with a sufficient number of primary care physicians in
  the health care collaborative's service area;
               (5)  state that enrollees may obtain care from any
  physician or health care provider in the health care collaborative;
  and
               (6)  identify a service area within which medical
  services are available and accessible to enrollees.
         (c)  Not later than the 190th day after the date an applicant
  submits an application to the commissioner under this section, the
  commissioner shall approve or deny the application.
         (d)  The commissioner by rule may:
               (1)  extend the date by which an application is due
  under this section; and
               (2)  require the disclosure of any additional
  information necessary to implement and administer this chapter,
  including information necessary to antitrust review and oversight.
         Sec. 848.057.  REQUIREMENTS FOR APPROVAL OF APPLICATION.
  (a)  The commissioner shall issue a certificate of authority on
  payment of the application fee prescribed by Section 848.152 if the
  commissioner is satisfied that:
               (1)  the applicant meets the requirements of Section
  848.056;
               (2)  with respect to health care services to be
  provided, the applicant:
                     (A)  has demonstrated the willingness and
  potential ability to ensure that the health care services will be
  provided in a manner that:
                           (i)  increases collaboration among health
  care providers and integrates health care services;
                           (ii)  promotes improvement in quality-based
  health care outcomes, patient safety, patient engagement, and
  coordination of services; and
                           (iii)  reduces the occurrence of potentially
  preventable events;
                     (B)  has processes that contain health care costs
  without jeopardizing the quality of patient care;
                     (C)  has processes to develop, compile, evaluate,
  and report statistics on performance measures relating to the
  quality and cost of health care services, the pattern of
  utilization of services, and the availability and accessibility of
  services; and
                     (D)  has processes to address complaints made by
  patients receiving services provided through the organization;
               (3)  the applicant is in compliance with all rules
  adopted by the commissioner under Section 848.151;
               (4)  the applicant has working capital and reserves
  sufficient to operate and maintain the health care collaborative
  and to arrange for services and expenses incurred by the health care
  collaborative;
               (5)  the applicant's proposed health care collaborative
  is not likely to reduce competition in any market for physician,
  hospital, or ancillary health care services due to:
                     (A)  the size of the health care collaborative; or
                     (B)  the composition of the collaborative,
  including the distribution of physicians by specialty within the
  collaborative in relation to the number of competing health care
  providers in the health care collaborative's geographic market; and
               (6)  the pro-competitive benefits of the applicant's
  proposed health care collaborative are likely to substantially
  outweigh the anticompetitive effects of any increase in market
  power.
         (b)  A certificate of authority is effective for a period of
  one year, subject to Section 848.060(d).
         Sec. 848.058.  DENIAL OF CERTIFICATE OF AUTHORITY. (a)  The
  commissioner may not issue a certificate of authority if the
  commissioner determines that the applicant's proposed plan of
  operation does not meet the requirements of Section 848.057.
         (b)  If the commissioner denies an application for a
  certificate of authority under Subsection (a), the commissioner
  shall notify the applicant that the plan is deficient and specify
  the deficiencies.
         Sec. 848.059.  CONCURRENCE OF ATTORNEY GENERAL. (a)  If the
  commissioner determines that an application for a certificate of
  authority filed under Section 848.056 complies with the
  requirements of Section 848.057, the commissioner shall forward the
  application, and all data, documents, and analysis considered by
  the commissioner in making the determination, to the attorney
  general. The attorney general shall review the application and the
  data, documents, and analysis and, if the attorney general concurs
  with the commissioner's determination under Sections 848.057(a)(5)
  and (6), the attorney general shall notify the commissioner.
         (b)  If the attorney general does not concur with the
  commissioner's determination under Sections 848.057(a)(5) and (6),
  the attorney general shall notify the commissioner.
         (c)  A determination under this section shall be made not
  later than the 60th day after the date the attorney general receives
  the application and the data, documents, and analysis from the
  commissioner.
         (d)  If the attorney general lacks sufficient information to
  make a determination under Sections 848.057(a)(5) and (6), within
  60 days of the attorney general's receipt of the application and the
  data, documents, and analysis the attorney general shall inform the
  commissioner that the attorney general lacks sufficient
  information as well as what information the attorney general
  requires. The commissioner shall then either provide the
  additional information to the attorney general or request the
  additional information from the applicant. The commissioner shall
  promptly deliver any such additional information to the attorney
  general. The attorney general shall then have 30 days from receipt
  of the additional information to make a determination under
  Subsection (a) or (b).
         (e)  If the attorney general notifies the commissioner that
  the attorney general does not concur with the commissioner's
  determination under Sections 848.057(a)(5) and (6), then,
  notwithstanding any other provision of this subchapter, the
  commissioner shall deny the application.
         (f)  In reviewing the commissioner's determination, the
  attorney general shall consider the findings, conclusions, or
  analyses contained in any other governmental entity's evaluation of
  the health care collaborative.
         (g)  The attorney general at any time may request from the
  commissioner additional time to consider an application under this
  section.  The commissioner shall grant the request and notify the
  applicant of the request.  A request by the attorney general or an
  order by the commissioner granting a request under this section is
  not subject to administrative or judicial review.
         Sec. 848.060.  RENEWAL OF CERTIFICATE OF AUTHORITY AND
  DETERMINATION OF APPROVAL. (a)  Not later than the 180th day
  before the one-year anniversary of the date on which a health care
  collaborative's certificate of authority was issued or most
  recently renewed, the health care collaborative shall file with the
  commissioner an application to renew the certificate.
         (b)  An application for renewal must:
               (1)  be verified by at least two principal officers of
  the health care collaborative; and
               (2)  include:
                     (A)  a financial statement of the health care
  collaborative, including a balance sheet and receipts and
  disbursements for the preceding calendar year, certified by an
  independent certified public accountant;
                     (B)  a description of the service area of the
  health care collaborative;
                     (C)  a description of the number and types of
  physicians and health care providers participating in the health
  care collaborative;
                     (D)  an evaluation of the quality and cost of
  health care services provided by the health care collaborative;
                     (E)  an evaluation of the health care
  collaborative's processes to promote evidence-based medicine,
  patient engagement, and coordination of health care services
  provided by the health care collaborative;
                     (F)  the number, nature, and disposition of any
  complaints filed with the health care collaborative under Section
  848.107; and
                     (G)  any other information required by the
  commissioner.
         (c)  If a completed application for renewal is filed under
  this section:
               (1)  the commissioner shall conduct a review under
  Section 848.057 as if the application for renewal were a new
  application, and, on approval by the commissioner, the attorney
  general shall review the application under Section 848.059 as if
  the application for renewal were a new application; and
               (2)  the commissioner shall renew or deny the renewal
  of a certificate of authority at least 20 days before the one-year
  anniversary of the date on which a health care collaborative's
  certificate of authority was issued.
         (d)  If the commissioner does not act on a renewal
  application before the one-year anniversary of the date on which a
  health care collaborative's certificate of authority was issued or
  renewed, the health care collaborative's certificate of authority
  expires on the 90th day after the date of the one-year anniversary
  unless the renewal of the certificate of authority or determination
  of approval, as applicable, is approved before that date.
         (e)  A health care collaborative shall report to the
  department a material change in the size or composition of the
  collaborative.  On receipt of a report under this subsection, the
  department may require the collaborative to file an application for
  renewal before the date required by Subsection (a).
  [Sections 848.061-848.100 reserved for expansion]
  SUBCHAPTER C.  GENERAL POWERS AND DUTIES OF HEALTH CARE
  COLLABORATIVE
         Sec. 848.101.  PROVIDING OR ARRANGING FOR SERVICES. (a)  A
  health care collaborative may provide or arrange for health care
  services through contracts with physicians and health care
  providers or with entities contracting on behalf of participating
  physicians and health care providers.
         (b)  A health care collaborative may not prohibit a physician
  or other health care provider, as a condition of participating in
  the health care collaborative, from participating in another health
  care collaborative.
         (c)  A health care collaborative may not use a covenant not
  to compete to prohibit a physician from providing medical services
  or participating in another health care collaborative in the same
  service area.
         (d)  Except as provided by Subsection (f), on written consent
  of a patient who was treated by a physician participating in a
  health care collaborative, the health care collaborative shall
  provide the physician with the medical records of the patient,
  regardless of whether the physician is participating in the health
  care collaborative at the time the request for the records is made.
         (e)  Records provided under Subsection (d) shall be made
  available to the physician in the format in which the records are
  maintained by the health care collaborative. The health care
  collaborative may charge the physician a fee for copies of the
  records, as established by the Texas Medical Board.
         (f)  If a physician requests a patient's records from a
  health care collaborative under Subsection (d) for the purpose of
  providing emergency treatment to the patient:
               (1)  the health care collaborative may not charge a fee
  to the physician under Subsection (e); and
               (2)  the health care collaborative shall provide the
  records to the physician regardless of whether the patient has
  provided written consent.
         Sec. 848.102.  INSURANCE, REINSURANCE, INDEMNITY, AND
  REIMBURSEMENT. A health care collaborative may contract with an
  insurer authorized to engage in business in this state to provide
  insurance, reinsurance, indemnification, or reimbursement against
  the cost of health care and medical care services provided by the
  health care collaborative.  This section does not affect the
  requirement that the health care collaborative maintain sufficient
  working capital and reserves.
         Sec. 848.103.  PAYMENT BY GOVERNMENTAL OR PRIVATE ENTITY.  
  (a)  A health care collaborative may:
               (1)  contract for and accept payments from a
  governmental or private entity for all or part of the cost of
  services provided or arranged for by the health care collaborative;
  and
               (2)  distribute payments to participating physicians
  and health care providers.
         (b)  Notwithstanding any other law, a health care
  collaborative that is in compliance with this code, including
  Chapters 841, 842, and 843, as applicable, may contract for,
  accept, and distribute payments from governmental or private payors
  based on fee-for-service or alternative payment mechanisms,
  including:
               (1)  episode-based or condition-based bundled
  payments;
               (2)  capitation or global payments; or
               (3)  pay-for-performance or quality-based payments.
         (c)  Except as provided by Subsection (d), a health care
  collaborative may not contract for and accept payment from a
  governmental or private entity on a prepaid, capitation, or
  indemnity basis unless the health care collaborative is licensed as
  a health maintenance organization or insurer. The department shall
  review a health care collaborative's proposed payment methodology
  in contracts with governmental or private entities to ensure
  compliance with this section.
         (d)  A health care collaborative may contract for and accept
  compensation on a prepaid or capitation basis from a health
  maintenance organization or insurer.
         Sec. 848.104.  CONTRACTS FOR ADMINISTRATIVE OR MANAGEMENT
  SERVICES. A health care collaborative may contract with any
  person, including an affiliated entity, to perform administrative,
  management, or any other required business functions on behalf of
  the health care collaborative.
         Sec. 848.105.  CORPORATION, PARTNERSHIP, OR ASSOCIATION
  POWERS. A health care collaborative has all powers of a
  partnership, association, corporation, or limited liability
  company, including a professional association or corporation, as
  appropriate under the organizational documents of the health care
  collaborative, that are not in conflict with this chapter or other
  applicable law.
         Sec. 848.106.  QUALITY AND COST OF HEALTH CARE SERVICES.  
  (a)  A health care collaborative shall establish policies to
  improve the quality and control the cost of health care services
  provided by participating physicians and health care providers that
  are consistent with prevailing professionally recognized standards
  of medical practice. The policies must include standards and
  procedures relating to:
               (1)  the selection and credentialing of participating
  physicians and health care providers;
               (2)  the development, implementation, monitoring, and
  evaluation of evidence-based best practices and other processes to
  improve the quality and control the cost of health care services
  provided by participating physicians and health care providers,
  including practices or processes to reduce the occurrence of
  potentially preventable events;
               (3)  the development, implementation, monitoring, and
  evaluation of processes to improve patient engagement and
  coordination of health care services provided by participating
  physicians and health care providers; and
               (4)  complaints initiated by participating physicians,
  health care providers, and patients under Section 848.107.
         (b)  The governing body of a health care collaborative shall
  establish a procedure for the periodic review of quality
  improvement and cost control measures.
         Sec. 848.107.  COMPLAINT SYSTEMS.  (a)  A health care
  collaborative shall implement and maintain complaint systems that
  provide reasonable procedures to resolve an oral or written
  complaint initiated by:
               (1)  a patient who received health care services
  provided by a participating physician or health care provider; or
               (2)  a participating physician or health care provider.
         (b)  The complaint system for complaints initiated by
  patients must include a process for the notice and appeal of a
  complaint.
         (c)  A health care collaborative may not take a retaliatory
  or adverse action against a physician or health care provider who
  files a complaint with a regulatory authority regarding an action
  of the health care collaborative.
         Sec. 848.108.  DELEGATION AGREEMENTS.  (a)  Except as
  provided by Subsection (b), a health care collaborative that enters
  into a delegation agreement described by Section 1272.001 is
  subject to the requirements of Chapter 1272 in the same manner as a
  health maintenance organization.
         (b)  Section 1272.301 does not apply to a delegation
  agreement entered into by a health care collaborative.
         (c)  A health care collaborative may enter into a delegation
  agreement with an entity licensed under Chapter 841, 842, or 883 if
  the delegation agreement assigns to the entity responsibility for:
               (1)  a function regulated by:
                     (A)  Chapter 222;
                     (B)  Chapter 841;
                     (C)  Chapter 842;
                     (D)  Chapter 883;
                     (E)  Chapter 1272;
                     (F)  Chapter 1301;
                     (G)  Chapter 4201;
                     (H)  Section 1367.053; or
                     (I)  Subchapter A, Chapter 1507; or
               (2)  another function specified by commissioner rule.
         (d)  A health care collaborative that enters into a
  delegation agreement under this section shall maintain reserves and
  capital in addition to the amounts required under Chapter 1272, in
  an amount and form determined by rule of the commissioner to be
  necessary for the liabilities and risks assumed by the health care
  collaborative.
         (e)  A health care collaborative that enters into a
  delegation agreement under this section is subject to Chapters 404,
  441, and 443 and is considered to be an insurer for purposes of
  those chapters.
         Sec. 848.109.  VALIDITY OF OPERATIONS AND TRADE PRACTICES OF
  HEALTH CARE COLLABORATIVES. The operations and trade practices of
  a health care collaborative that are consistent with the provisions
  of this chapter, the rules adopted under this chapter, and
  applicable federal antitrust laws are presumed to be consistent
  with Chapter 15, Business & Commerce Code, or any other applicable
  provision of law.
         Sec. 848.110.  RIGHTS OF PHYSICIANS; LIMITATIONS ON
  PARTICIPATION.  (a)  Before a complaint against a physician under
  Section 848.107 is resolved, or before a physician's association
  with a health care collaborative is terminated, the physician is
  entitled to an opportunity to dispute the complaint or termination
  through a process that includes:
               (1)  written notice of the complaint or basis of the
  termination;
               (2)  an opportunity for a hearing not earlier than the
  30th day after receiving notice under Subdivision (1);
               (3)  the right to provide information at the hearing,
  including testimony and a written statement; and
               (4)  a written decision that includes the specific
  facts and reasons for the decision.
         (b)  A health care collaborative may limit a physician or
  group of physicians from participating in the health care
  collaborative if the limitation is based on an established
  development plan approved by the board of directors. Each
  applicant physician or group shall be provided with a copy of the
  development plan.
  [Sections 848.111-848.150 reserved for expansion]
  SUBCHAPTER D.  REGULATION OF HEALTH CARE COLLABORATIVES
         Sec. 848.151.  RULES.  The commissioner and the attorney
  general may adopt reasonable rules as necessary and proper to
  implement the requirements of this chapter.
         Sec. 848.152.  FEES AND ASSESSMENTS.  (a)  The commissioner
  shall, within the limits prescribed by this section, prescribe the
  fees to be charged and the assessments to be imposed under this
  section.
         (b)  Amounts collected under this section shall be deposited
  to the credit of the Texas Department of Insurance operating
  account.
         (c)  A health care collaborative shall pay to the department:
               (1)  an application fee in an amount determined by
  commissioner rule; and
               (2)  an annual assessment in an amount determined by
  commissioner rule.
         (d)  The commissioner shall set fees and assessments under
  this section in an amount sufficient to pay the reasonable expenses
  of the department and attorney general in administering this
  chapter, including the direct and indirect expenses incurred by the
  department and attorney general in examining and reviewing health
  care collaboratives.  Fees and assessments imposed under this
  section shall be allocated among health care collaboratives on a
  pro rata basis to the extent that the allocation is feasible.
         Sec. 848.153.  EXAMINATIONS.  (a)  The commissioner may
  examine the financial affairs and operations of any health care
  collaborative or applicant for a certificate of authority under
  this chapter.
         (b)  A health care collaborative shall make its books and
  records relating to its financial affairs and operations available
  for an examination by the commissioner or attorney general.
         (c)  On request of the commissioner or attorney general, a
  health care collaborative shall provide to the commissioner or
  attorney general, as applicable:
               (1)  a copy of any contract, agreement, or other
  arrangement between the health care collaborative and a physician
  or health care provider; and
               (2)  a general description of the fee arrangements
  between the health care collaborative and the physician or health
  care provider.
         (d)  Documentation provided to the commissioner or attorney
  general under this section is confidential and is not subject to
  disclosure under Chapter 552, Government Code.
         (e)  The commissioner or attorney general may disclose the
  results of an examination conducted under this section or
  documentation provided under this section to a governmental agency
  that contracts with a health care collaborative for the purpose of
  determining financial stability, readiness, or other contractual
  compliance needs.
  [Sections 848.154-848.200 reserved for expansion]
  SUBCHAPTER E.  ENFORCEMENT
         Sec. 848.201.  ENFORCEMENT ACTIONS. (a)  After notice and
  opportunity for a hearing, the commissioner may:
               (1)  suspend or revoke a certificate of authority
  issued to a health care collaborative under this chapter;
               (2)  impose sanctions under Chapter 82;
               (3)  issue a cease and desist order under Chapter 83; or
               (4)  impose administrative penalties under Chapter 84.
         (b)  The commissioner may take an enforcement action listed
  in Subsection (a) against a health care collaborative if the
  commissioner finds that the health care collaborative:
               (1)  is operating in a manner that is:
                     (A)  significantly contrary to its basic
  organizational documents; or
                     (B)  contrary to the manner described in and
  reasonably inferred from other information submitted under Section
  848.057;
               (2)  does not meet the requirements of Section 848.057;
               (3)  cannot fulfill its obligation to provide health
  care services as required under its contracts with governmental or
  private entities;
               (4)  does not meet the requirements of Chapter 1272, if
  applicable;
               (5)  has not implemented the complaint system required
  by Section 848.107 in a manner to resolve reasonably valid
  complaints;
               (6)  has advertised or merchandised its services in an
  untrue, misrepresentative, misleading, deceptive, or unfair manner
  or a person on behalf of the health care collaborative has
  advertised or merchandised the health care collaborative's
  services in an untrue, misrepresentative, misleading, deceptive,
  or untrue manner;
               (7)  has not complied substantially with this chapter
  or a rule adopted under this chapter;
               (8)  has not taken corrective action the commissioner
  considers necessary to correct a failure to comply with this
  chapter, any applicable provision of this code, or any applicable
  rule or order of the commissioner not later than the 30th day after
  the date of notice of the failure or within any longer period
  specified in the notice and determined by the commissioner to be
  reasonable; or
               (9)  has or is utilizing market power in an
  anticompetitive manner, in accordance with established antitrust
  principles of market power analysis.
         Sec. 848.202.  OPERATIONS DURING SUSPENSION OR AFTER
  REVOCATION OF CERTIFICATE OF AUTHORITY. (a)  During the period a
  certificate of authority of a health care collaborative is
  suspended, the health care collaborative may not:
               (1)  enter into a new contract with a governmental or
  private entity; or
               (2)  advertise or solicit in any way.
         (b)  After a certificate of authority of a health care
  collaborative is revoked, the health care collaborative:
               (1)  shall proceed, immediately following the
  effective date of the order of revocation, to conclude its affairs;
               (2)  may not conduct further business except as
  essential to the orderly conclusion of its affairs; and
               (3)  may not advertise or solicit in any way.
         (c)  Notwithstanding Subsection (b), the commissioner may,
  by written order, permit the further operation of the health care
  collaborative to the extent that the commissioner finds necessary
  to serve the best interest of governmental or private entities that
  have entered into contracts with the health care collaborative.
         Sec. 848.203.  INJUNCTIONS.  If the commissioner believes
  that a health care collaborative or another person is violating or
  has violated this chapter or a rule adopted under this chapter, the
  attorney general at the request of the commissioner may bring an
  action in a Travis County district court to enjoin the violation and
  obtain other relief the court considers appropriate.
         Sec. 848.204.  NOTICE.  The commissioner shall:
               (1)  report any action taken under this subchapter to:
                     (A)  the relevant state licensing or certifying
  agency or board; and
                     (B)  the United States Department of Health and
  Human Services National Practitioner Data Bank; and
               (2)  post notice of the action on the department's
  Internet website.
         Sec. 848.205.  INDEPENDENT AUTHORITY OF ATTORNEY GENERAL.
  (a)  The attorney general may:
               (1)  investigate a health care collaborative with
  respect to anticompetitive behavior that is contrary to the goals
  and requirements of this chapter; and
               (2)  request that the commissioner:
                     (A)  impose a penalty or sanction;
                     (B)  issue a cease and desist order; or
                     (C)  suspend or revoke the health care
  collaborative's certificate of authority.
         (b)  This section does not limit any other authority or power
  of the attorney general.
         SECTION 4.02.  Paragraph (A), Subdivision (12), Subsection
  (a), Section 74.001, Civil Practice and Remedies Code, is amended
  to read as follows:
                     (A)  "Health care provider" means any person,
  partnership, professional association, corporation, facility, or
  institution duly licensed, certified, registered, or chartered by
  the State of Texas to provide health care, including:
                           (i)  a registered nurse;
                           (ii)  a dentist;
                           (iii)  a podiatrist;
                           (iv)  a pharmacist;
                           (v)  a chiropractor;
                           (vi)  an optometrist; [or]
                           (vii)  a health care institution; or
                           (viii)  a health care collaborative
  certified under Chapter 848, Insurance Code.
         SECTION 4.03.  Subchapter B, Chapter 1301, Insurance Code,
  is amended by adding Section 1301.0625 to read as follows:
         Sec. 1301.0625.  HEALTH CARE COLLABORATIVES. (a)  Subject
  to the requirements of this chapter, a health care collaborative
  may be designated as a preferred provider under a preferred
  provider benefit plan and may offer enhanced benefits for care
  provided by the health care collaborative.
         (b)  A preferred provider contract between an insurer and a
  health care collaborative may use a payment methodology other than
  a fee-for-service or discounted fee methodology. A reimbursement
  methodology used in a contract under this subsection is not subject
  to Chapter 843.
         (c)  A contract authorized by Subsection (b) must specify
  that the health care collaborative and the physicians or providers
  providing health care services on behalf of the collaborative will
  hold an insured harmless for payment of the cost of covered health
  care services if the insurer or the health care collaborative do not
  pay the physician or health care provider for the services.
         (d)  An insurer issuing an exclusive provider benefit plan
  authorized by another law of this state may limit access to only
  preferred providers participating in a health care collaborative if
  the limitation is consistent with all requirements applicable to
  exclusive provider benefit plans.
         SECTION 4.04.  Subtitle F, Title 4, Health and Safety Code,
  is amended by adding Chapter 316 to read as follows:
  CHAPTER 316.  ESTABLISHMENT OF HEALTH CARE COLLABORATIVES
         Sec. 316.001.  AUTHORITY TO ESTABLISH HEALTH CARE
  COLLABORATIVE. A public hospital created under Subtitle C or D or a
  hospital district created under general or special law may form and
  sponsor a nonprofit health care collaborative that is certified
  under Chapter 848, Insurance Code.
         SECTION 4.05.  Section 102.005, Occupations Code, is amended
  to read as follows:
         Sec. 102.005.  APPLICABILITY TO CERTAIN ENTITIES. Section
  102.001 does not apply to:
               (1)  a licensed insurer;
               (2)  a governmental entity, including:
                     (A)  an intergovernmental risk pool established
  under Chapter 172, Local Government Code; and
                     (B)  a system as defined by Section 1601.003,
  Insurance Code;
               (3)  a group hospital service corporation; [or]
               (4)  a health maintenance organization that
  reimburses, provides, offers to provide, or administers hospital,
  medical, dental, or other health-related benefits under a health
  benefits plan for which it is the payor; or
               (5)  a health care collaborative certified under
  Chapter 848, Insurance Code.