June 28, 2017

Texas 85th Legislative Digest – Issue 22, Regular Session Wrap-up

Issue 22 – June 26, 2017

• Governor Calls Special Session
• Election Season Begins Post-session
• Governor Signs Budget and Wields Veto Pen
• Health Insurance-related Bills of the Session
• Timetable

Governor Calls Special Session
Gov. Greg Abbott announced on June 6 that he was calling a special session of the Texas legislature to convene on July 18. The legislature adjourned at the end of the regular session without enacting must-pass “sunset” safety-net legislation that would have continued five state agencies that license certain health care professionals. Sunset review is an evaluation of a program or agency’s effectiveness and performance, which is used to determine whether it should continue to operate. The sunset safety-net bill allows agencies under sunset review to continue operating. Without it, agencies for which individual sunset bills have not passed would be required to begin winding down operations.

Several professional licensing agencies were reviewed this session and legislation to continue their operation was passed, except for: the Texas Medical Board and the Texas State Boards of Social Worker Examiners, Examiners of Marriage and Family Therapists, Examiners of Psychologists, and Examiners of Professional Counselors. Several attempts to pass safety-net legislation extending the lives of those five agencies for another two years were unsuccessful, necessitating the special session.

In his announcement, Abbott chastised lawmakers, saying he was calling a special session, “[b]ecause of their inability or refusal to pass a simple law that would prevent the medical profession from shutting down.” He added that as long as they were in town, he had a list of 19 additional items lawmakers should take up during the 30-day special session, although those wouldn’t be added to the workload until the sunset legislation was passed by the Senate. The list included some of the more controversial issues considered during the regular session. These included rollback elections for property tax increases; restrictions on school bathroom use for transgender students; and school vouchers for special-needs students. The only insurance-related item on the governor’s list would require women to obtain separate insurance policies to cover non-emergency abortions.

Election Season Begins Post Session
The end of the 2017 Texas legislative session heralds the unofficial beginning of the 2018 election cycle. The conclusion of the session usually brings several announcements about lawmakers’ plans:
 

• State Rep. Mark Keough (R-The Woodlands) is not running for re-election to represent House District 15 in 2018 and instead will seek the office of Montgomery County judge. Keough will likely be replaced by another Republican. Shortly after Keough's announcement, former Rep. Steve Toth announced he will run for the seat, which he held from 2013-2015.
   
• State Rep. Matt Rinaldi (R-Irving), who represents House District 115, which includes parts of Farmers Branch, Irving and Carrollton, will be challenged by Democrat Dorotha Ocker. Rinaldi defeated Ocker in 2016 by just over 1,000 votes.
   
• State Rep. Dennis Bonnen (R-Angleton) appears to have a primary challenger in Markham pastor Damon Rambo. This would be Bonnen’s first contested primary since 2000.
   
• State Rep. Cesar J. Blanco (D-El Paso) will seek re-election, rather than run for the open Congressional District 16 seat being vacated by Democrat Beto O'Rourke, who is challenging Texas Republican Sen. Ted Cruz.
   
• State Rep. Wayne Faircloth (R-Galveston) will likely be challenged in the Republican primary by Mayes Middleton, president of Middleton Oil Company, an independent oil and gas company that operates in South Texas and along the Gulf Coast.
   
• Dallas lawyer and Democrat John Turner will challenge state Rep. Jason Villalba (R-Dallas). Turner is the son of former U.S. Rep. Jim Turner, who was the Democratic representative for the Texas 2nd congressional district from 1997 until 2005. Villalba will run for re-election rather than challenge state Sen. Don Huffines (R-Dallas) as had been speculated.
   
• State Rep. Charlie Geren (R-Fort Worth) plans to seek re-election. His 2016 primary opponent Bo French says he likely won't run again. During the 2016 campaign, Geren and French combined raised $1.6 million, an unusually high amount for a Texas house race.
   
• Austin House District 47 representative, Paul Workman, a Republican, is up to five apparent Democratic challengers. Only one ran in 2016, Sheri Soltes, an Austin service-dog nonprofit executive.
   
• State Rep. Linda Koop (R-Dallas) will likely be challenged by Democrat and Richardson attorney Ana-Maria Ramos.
   
• Houston attorney Adam Milasincic has established a campaign committee for a potential challenge of state Rep. Dwayne Bohac (R-Houston). Milasincic is expected to run as a Democrat.
   
• Austin psychological evaluator Zack Tedder will challenge state Rep. Donna Howard as a Republican. Howard, a Democrat, represents western Austin.
   
• Elgin Democratic precinct chair Michelle Ryan has established a campaign committee for a potential challenge of Rep. John Cyrier (R-Lockhart), who represents House District 17.
   
• Former Austin city councilwoman Sheryl Cole will challenge state Rep. Dawnna Dukes (D-Austin) in the Democratic primary for House District 46, which covers parts of Austin, Pflugerville and Manor. Dukes had promised to resign if she won election in 2016, but reneged on her promise when the legislature convened. She has been charged with felony corruption charges and two misdemeanors for improper use of office staff and resources.
   
• State Rep. Briscoe Cain (R-Deer Park) has announced that he will run for re-election. He has a potential primary opponent in Terry Sain, a member of the Baytown city council, whose term expires in November 2017. Cain represents House District 28, which includes parts of east Houston, Pasadena, Deer Park and Baytown.

Governor Signs Budget and Wields Veto Pen
By the time the veto period ended at midnight on June 18, Gov. Greg Abbott had vetoed 50 bills and struck more than $120 million from a budget that had initially totaled $217 billion. The actual number of vetoes by Abbott is probably closer to 44, if vetoes are excluded for the line-item budget reductions and the bills pulled at the request of the lawmaker or duplicates of other bills passed in the current or past sessions.

Overall, the $217 billion appropriated for the 2018-2019 budget is about the same as the 2016-2017 level of support for public and higher education, health care, public safety and other services. It is a decrease of about 8 percent in “real” terms, due to Texas’ rapid population growth and inflation forecast for the next two years.

The Senate and House had conflicting provisions in their original budgets that included reductions to risk margins for all Medicaid programs up to 1.5 percent, which would have resulted in an overall reduction of $105 million in general revenue funds and a corresponding reduction in federal matching funds of $106 million. The Medicaid appropriation includes funding to restore approximately 25 percent of reductions made to therapy reimbursement rates in the 2016-2017 biennium; $1 billion overall in cost containment, including amounts related to reducing the Medicaid risk margin; and specific direction to the Health and Human Services Commission (HHSC) to contain costs and execute savings.

The supplemental budget bill covered the Medicaid shortfall for fiscal year 2017 as well as other budget items in which appropriations fell short of actual costs. Medicaid funds made up, by far, the largest amount of the $2.6 billion supplemental budget.

Abbott nixed $120 million from the budget for initiatives such as assisting needy border communities and improving the state's air quality. The reduction, which is less than one-tenth of 1 percent of the overall budget, would "further restrain the growth of government and reduce the expenditure of taxpayer funds," Abbott said in his June 12 proclamation.

The governor vetoed around $87 million from a state program to help low-income Texans in urban counties repair or replace their cars if they fail emissions tests. He also cut $6 million for air quality planning at the Texas Commission on Environmental Quality, suggesting the program could "be funded at the local government level." Around $860,000 in funding for a measure to help Texans living in colonias — impoverished regions on the Texas-Mexico border — was eliminated, since the state budget already accounted for other sources of funding, Abbott said. He vetoed $150,000 for a Legislative Law Clinic at the University of Texas and around $4.7 million for "safety education" at the Texas Department of Public Safety, among other items.

Of the bills vetoed, only one dealt with an insurance or Medicaid issue. Senate Bill 670 would have required the governor to appoint the commissioners of the Departments of State Health Services and Family Protective Services. Currently, those commissioners are appointed by the executive commissioner for HHSC, which oversees the state Medicaid program. More than 150 bills became law without the governor’s signature, though many of those were related to local governmental entities such as municipal utility districts.

Health Insurance-related Bills of the Session
After getting off to a slow start during the filing period, the number of bills and joint resolutions (JRs) proposed during the 85th session was somewhat above average for a regular session. However, the number of bills passed was the lowest since 1995 when 1,088 were passed.

Health insurance-related bills and/or joint resolutions made up a small portion of the total bills filed, but those that passed will have a significant impact on health plans as the new requirements are implemented.
 

• 617 bills filed dealing with health insurance, health plan operations, or Medicaid/CHIP
• 96 Sent to the Governor
• 90 signed, 5 filed without signature, and 1 vetoed

Bills that will impact the health insurance industry, or would have if they had passed, are summarized below. Legislation that did not pass in one session will often be filed again in the next and may be topics for interim studies by legislative committees. Because of the limited time that the legislature is in session, in-depth studies of important issues often are conducted by committees during the interim, the period between regular legislative sessions.

BCBSTX Priority Accomplishments
 

• House Bill 1227 by Rep. John Smithee (R-Amarillo) and Sen. Kel Seliger (R-Amarillo) provides a technical correction for House Bill 1624, which passed in 2015. HB 1227 modifies the formulary disclosure requirements from HB 1624 so that the provisions apply to individual health plans only. Effective on 9/1/2017.
   
  
• House Bill 1428 by Smithee and Sen. Joan Huffman (R-Houston) extends the out-of-network claim dispute resolution process to enrollees of the Teacher Retirement System health plans. Effective on 9/1/2017.
   
• House Bill 3218 by Rep. Larry Phillips (R-Sherman) and Sen. Charles Schwertner, M.D. (R-Georgetown) allows HMOs to contract with entities such as pharmacy benefit managers rather than contracting with individual health care providers. The bill revises an overly technical agency interpretation. Effective on 9/1/2017.
   
• House Bill 3276 by Rep. Tom Oliverson (R-Cypress) and Sen. Larry Taylor (R-Friendswood) requires a freestanding emergency room (FSER) to post information available to consumers that lists which health plans the FSER contracts with or states that the facility is not a participating provider for any health plan provider network. Effective on 9/1/2017.
   
• Senate Bill 507 by Sen. Kelly Hancock (R-North Richland Hills) and Rep. John Frullo (R-Lubbock) expands mediation protections for members of a preferred provider organization (PPO) plan. Under the expansion, mediation protections would apply to claims submitted by all out-of-network emergency providers, including FSERs, and out-of-network providers working at a network facility. The mediation process enables health plan members to challenge the balances of “surprise” medical bills greater than $500 after their out-of-pocket payments have been met. Effective on 9/1/2017.
   
• Senate Bill 1107 by Schwertner and Rep. Four Price (R-Lubbock) modifies the state’s current regulatory structure to expand telemedicine and clarifies that health plans are not required to pay for faxes, texts and phone calls. The negotiated language was agreed upon by both chambers, the Texas Medical Association, the Texas Hospital Association, Texas Association of Health Plans and several others. The bill takes effect immediately, except for certain sections added to the Insurance Code, which take effect 1/1/2018.
   
• Senate Bill 1070 by Hancock and Frullo gives Texas insurers the option to negotiate reinsurance contracts that do not require 100 percent collateral. To qualify for reduced collateral requirements, reinsurers must: (1) meet certain financial requirements and (2) reside in a jurisdiction with a history of honoring and enforcing U.S. judgments. Effective on 9/1/2017.
   
• Senate Bill 1406 by Sen. Brandon Creighton (R-Conroe) and Smithee authorizes TDI to apply for a state innovation waiver for small employer health benefit plans. Effective immediately.
   
• Senate Bill 2087 by Hancock and Phillips authorizes the Texas Department of Insurance to establish a temporary health insurance risk pool with federal funds, to the extent those funds become available. As part of this year's health reform efforts, legislation is pending at the federal level that would provide federal funding for state high-risk pools to cover individuals with high-cost medical conditions or provide for a state reinsurance program for the individual market. Effective on 9/1/2017.

Good Bills that Didn’t Make It
 

• House Bill 3124 by Rep. Lance Gooden (R-Terrell) and Creighton — Blue Cross and Blue Shield of Texas (BCBSTX) and Texas Medical Association’s agreed-to data sharing bill — would have allowed the release of certain physician-specific comparison data to physicians who are participating in physician-led accountable care organizations. Dr. Robert “Bob” Morrow, BCBSTX Market Strategy President-Southeast Region, provided supporting testimony in committee. The bill died after the Senate added several non-germane amendments, which the House refused to consider. It was then returned to the Senate to make corrections, which the Senate didn’t take up.
   
• House Bill 3867 by Smithee was left pending in the House Judiciary & Civil Jurisprudence Committee after the deadline for committees to approve House bills. The legislation would have granted the Texas Attorney General authority to protect consumers from unconscionable pricing when they have suffered from a personal medical emergency, similar to protections in declared natural emergencies. Smithee’s bill would have applied to freestanding emergency rooms (FSERs) and hospital emergency departments. BCBSTX supported the legislation and company medical director, Dr. Leslie Weisberg, testified in support of HB 3867, as well as a similar bill, Senate Bill 2064 by Sen. Kelly Hancock (R-North Richland Hills), which was left pending in the Senate Business and Commerce Committee.
   
• Senate Bill 1592 by Schwertner and Oliverson would have increased to $25,000 the total amount of administrative penalties that could be assessed against FSERs for regulatory violations. The bill missed final passage by minutes as it was postponed on the House floor just before a midnight deadline for passage of Senate bills.
   
• Senate Bill 2127 by Larry Taylor would have prohibited a consumer credit reporting agency from including medical collection information in a consumer report when the consumer had health insurance at the time services were received and the collection is for an outstanding balance owed to an emergency care or an out-of-network provider. SB 2127 was passed by the Senate, but left pending in the House Business and Industry Committee.
   
• Senate Bill 2240 by Larry Taylor would have required FSERs to post a notice that the facility was not an urgent care center, that any facility fee would be disclosed at the time of service upon request, and whether the facility participated in the consumer’s health plan provider network. The bill was approved by the Senate Business and Commerce committee, but was not considered by the full Senate.

Adverse Bills that Died
 

• House Bill 307 filed by Dustin Burrows (R-Lubbock) would have provided for increased provider charge transparency and would have required sharing "savings" with enrollees who obtain services for less than the average network cost.
   
• House Bill 2345 filed by Rep. Paul Workman (R-Austin) would have required physicians who provide utilization review services to utilization review agents or health plans to be licensed in Texas.
   
• House Bill 2760 by Rep. Greg Bonnen (R-Friendswood) would have imposed additional requirements on health plans for updating provider directories, including daily updates.
   
• House Bill 2882 by Oliverson would have prohibited health plans from modifying coverage of prescription drugs that were approved or covered by the plan in the immediately preceding plan year and prescribed during that year for a medical condition or mental illness.
   
• House Bill 2942 by Rep. Sergio Muñoz, Jr. (D-Palmview) would have required TDI to adopt additional network adequacy standards that discourage balance billing by non-contracted providers.
   
• House Bill 3755 by Rep. Rodney Anderson (R-Grand Prairie) would have required preferred provider benefit plans to pay the average out-of-network charge for out-of-network services to prevent the consumer from being “balanced billed.”
   
• House Bill 4105, filed by Muñoz, Jr., would have required disclosure to TDI of compensation paid in connection with an employee health benefit plan. Any entity authorized in Texas to provide employee benefit plans that provides compensation would be required to report, as would any individual that receives such compensation.

Other Bills of Interest
 

• House Resolution 487 by Rep. Jeff Leach (R-Plano) and coauthors Rep. Kyle Kacal (R-College Station) and Rep. Chris Paddie (R-Marshall) commemorated the 25th anniversary of the Caring for Children Foundation of Texas and recognized its work to provide free and low-cost access to primary and preventive health care to the uninsured and medically underserved children of Texas. Recently retired Executive Director Craig Jeffery accepted the recognition on behalf of the Foundation and BCBSTX. In addition to Leach, Kacal, and Paddie — who represent BCBSTX offices in Richardson, Waco and Marshall respectively — the resolution proclamation was also signed by other House members with BCBSTX offices in their district: Stan Lambert (R-Abilene); John Smithee (R-Amarillo); Gina Hinojosa (D-Austin); Joe Deshotel (D-Beaumont); Abel Herrero (D-Corpus Christi); Evelyn Ortega (D-El Paso); Sarah Davis (R-Houston); John Frullo (R-Lubbock); Tom Craddick (R-Midland); Drew Darby (R-San Angelo); Lyle Larson (R-San Antonio); Matt Schaefer (R-Tyler); and James Frank (R-Wichita Falls).
   
• House Bill 1917 by Rep. Richard Peña Raymond (D-Laredo) and Schwertner amends current statute to postpone planned changes to the Medicaid preferred drug list (PDL) from 2018 to 2023. Without the bill’s changes, HHSC would have given complete control of the PDL to Medicaid managed care organizations beginning in 2018. The PDL is a list of medications, i.e., a formulary, that a Medicaid beneficiary may receive without prior authorization. Effective immediately.
   
• House Bill 1296 by Frullo and Sen. Dawn Buckingham, M.D. (R-Lake Travis), will require a health plan to establish a process through which the plan, the enrollee, the prescribing physician or health care provider, and a pharmacist can jointly approve a medication synchronization plan for prescriptions to treat an enrollee's chronic illness. The ‘medication synchronization plan’ will tie the filling of multiple prescriptions to a uniform date. A health plan must provide coverage for medications dispensed per a medication synchronization plan. Effective on 9/1/2017.
   
• Senate Bill 680 by Hancock and Greg Bonnen requires a health plan to establish a process through which a provider may request an exception to the plan's required step therapy protocol. Effective on 9/1/2017.
   
• Senate Bill 894 by Buckingham and Muñoz, Jr. directs HHSC to develop and implement an overall strategy for planning, managing and coordinating audits to verify the accuracy and reliability of program and financial information reported by Medicaid MCOs. Audits are used to certify the accuracy of information that determines MCO compliance with contract requirements. Effective on 9/1/2017.

Timetable
With the 2017 legislative session concluded, the 2018 election cycle unofficially begins and the 2019 legislative session will follow.