85R1823 KFF-F     By: Collier H.B. No. 335       A BILL TO BE ENTITLED   AN ACT   relating to administrative and judicial review of certain Medicaid   reimbursement disputes; authorizing a fee.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Subchapter A, Chapter 533, Government Code, is   amended by adding Section 533.0057 to read as follows:          Sec. 533.0057.  CONFISCATORY REIMBURSEMENT RATES   PROHIBITED; ADMINISTRATIVE AND JUDICIAL REVIEW OF CERTAIN   REIMBURSEMENT DISPUTES. (a)  In this section, "confiscatory"   means, with respect to the reimbursement rate paid by a managed care   organization to a provider, a rate that is below the rate necessary   to:                (1)  recover the provider's reasonable operating   expenses;                 (2)  realize a reasonable return on the provider's   costs; and                (3)  ensure confidence in the provider's continued:                      (A)  financial integrity; and                      (B)  participation in Medicaid.          (b)  A managed care organization may not pay a confiscatory   reimbursement rate to a provider under a Medicaid managed care   model or arrangement implemented under this chapter.          (c)  Notwithstanding any other law, a provider, including a   pharmacy provider, has the right to a contested case hearing under   Chapter 2001 to dispute the amount of a reimbursement rate paid to   the provider by a managed care organization or the organization's   pharmacy benefit manager if, subject to Subsection (f), the   provider believes the rate is confiscatory in violation of   Subsection (b), except that the decision of the hearing officer or   the administrative law judge, as applicable, is not subject to   judicial review under Chapter 2001. Solely for purposes of this   section, a managed care organization is to be treated as a state   agency under Chapter 2001.          (d)  A contested case hearing under Subsection (c) shall be   conducted by an administrative law judge, unless the commission's   appeals division employs at least one full-time hearing officer   whose sole duty is to preside over contested cases. If the   commission's appeals division employs a hearing officer described   by this subsection, that officer shall conduct the contested case   hearing under Subsection (c).          (e)  Parties to a contested case brought under this section:                (1)  must include:                      (A)  the provider; and                      (B)  the managed care organization and any   appropriate agent of the organization, including a pharmacy benefit   manager; and                (2)  may not include the commission.          (f)  If the provider's contract with the managed care   organization or the organization's agent contains a process for   handling disputes relating to provider reimbursement, the provider   may request a contested case hearing under Subsection (c) only if:                (1)  the provider first submits the dispute for   resolution through the contractual process; and                (2)  the managed care organization or the   organization's agent, as appropriate, fails to resolve the dispute   through the contractual process not later than the 45th day after   the day the dispute is submitted, or if the provider is dissatisfied   with the resolution of the contractual process.          (g)  In a contested case brought under this section, the   hearing officer or administrative law judge, as applicable, shall   determine whether the reimbursement rate is confiscatory and may   order the managed care organization or the organization's agent to   pay a rate that is not confiscatory. A hearing officer or   administrative law judge, as applicable, may not award an amount:                (1)  to any one provider that, as a percentage of the   provider's average net income before taxes, exceeds the managed   care organization's percentage of net income before taxes that is   computed in accordance with the contract between the organization   and the commission and is authorized to be retained by the   organization under that contract, averaged over all financial   statistical reporting periods; or                (2)  that, in the aggregate, exceeds the amount of   resources maintained by the managed care organization to reasonably   accommodate program changes at no additional cost to the commission   in accordance with the contract between the organization and the   commission.          (h)  In a contested case brought under this section, the   hearing officer or administrative law judge, as applicable, has the   discretion:                (1)  considering the interest of judicial economy and   efficiency, to combine cases wholly or partly that involve the same   type of provider and the same or substantially similar   reimbursement issues; or                (2)  to impose part or all of the costs for the hearing   against the party or parties that do not substantially prevail.          (i)  In awarding costs in a contested case brought under this   section, the hearing officer or administrative law judge, as   applicable:                (1)  shall consider whether the position of the party   was taken in good faith and had a reasonable basis in fact and law;   and                (2)  may not award attorney's fees.          (j)  The commission or the State Office of Administrative   Hearings may impose a fee in an amount not to exceed $500 on each   party to a contested case brought under this section for the purpose   of offsetting the costs of the hearing.          SECTION 2.  The change in law made by this Act applies only   to a reimbursement paid to a Medicaid provider on or after the   effective date of this Act.          SECTION 3.  If before implementing any provision of this Act   a state agency determines that a waiver or authorization from a   federal agency is necessary for implementation of that provision,   the agency affected by the provision shall request the waiver or   authorization and may delay implementing that provision until the   waiver or authorization is granted.          SECTION 4.  This Act takes effect immediately if it receives   a vote of two-thirds of all the members elected to each house, as   provided by Section 39, Article III, Texas Constitution. If this   Act does not receive the vote necessary for immediate effect, this   Act takes effect September 1, 2017.