In the 2011 regular legislative session, Senate Bill 1661 was passed, and as of January 1 of 2012, is law. The law requires that Non-Profit Health Organizations (“NPHO”) (formerly known as 5.01(a)’s), ensure through policies, that their employed physicians’ professional judgments are not interfered with, controlled, or otherwise directed by the NPHO. To comply with SB 1661, all NPHOs must adopt and maintain the following policies:
- a credentialing policy;
- a quality assurance policy
- a utilization review policy; and
- a peer review policy.
These polices should be drafted in a way that demonstrates who employed physicians’ are ensured professional independence. The NPHO’s board of directors must approve these policies and any amendments. Further, the policies must be interpreted by the NPHO in a way “that reserves the sole authority to engage in the practice of medicine to a physician . . ..”
NPHOs are permitted to establish ethical and religious directives that a physician may be contractually bound to, but any other contractual requirements that conflict with the law are void. Finally, to enforce the law, the Legislature gave the Texas Medical Board the right to fine or revoke the certification of an NPHO that fails to comply.
Accordingly, all NPHOs should review their policies and procedures to ensure that appropriate policies exist and that SB 1661 is being followed. In addition, we recommend a review of existing employment agreements to ensure that: (1) if an NPHO has religious or ethical directives, the physician employment agreements require observance of those directives; and (2) there are no provisions which conflict with the newly-required policies and procedures.
Incidentally, on September 30, the Texas Medical Board proposed rules that echoed the language of SB 1661. But those rules were withdrawn in the December 16th Texas Register – no reason for the withdrawal was given. Nonetheless, SB 1661 is effective now, and must be complied with. The provisions of SB 1661 are codified in Sections 162.0021 through 162.0024 and Section 162.003 of the Texas Occupations Code.