84R28081 KEL-D
	By: Nelson, et al.	S.B. No. 18
	(Zerwas)
	Substitute the following for S.B. No. 18:  No.

	A BILL TO BE ENTITLED
	AN ACT
	relating to measures to support or enhance graduate medical
	education in this state, including the transfer of certain assets
	from the Texas Medical Liability Insurance Underwriting
	Association to the permanent fund supporting graduate medical
	education and the authority of the association to issue new
	policies.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Section 58A.001, Education Code, is amended to
	read as follows:
	Sec. 58A.001.  DEFINITIONS [DEFINITION].  In this chapter:
	(1)  "Board"[, "board"] means the Texas Higher
	Education Coordinating Board.
	(2)  "Center" means the comprehensive health
	professions resource center established under Chapter 105, Health
	and Safety Code.
	(3)  "Community-based, ambulatory patient care center"
	includes:
	(A)  a federally qualified health center, as
	defined by Section 1905(l)(2)(B), Social Security Act (42 U.S.C.
	Section 1396d(l)(2)(B));
	(B)  a community mental health center, as defined
	by Section 1861(ff)(3)(B), Social Security Act (42 U.S.C. Section
	1395x(ff)(3)(B));
	(C)  a rural health clinic, as defined by Section
	1861(aa)(2), Social Security Act (42 U.S.C. Section 1395x(aa)(2));
	and
	(D)  a teaching health center, as defined by 42
	U.S.C. Section 293l-1(f)(3)(A).
	(4)  "First-year residency position" means a residency
	position offering first year training in a graduate medical
	education program.
	(5)  "Graduate medical education program" means a
	nationally accredited post-doctor of medicine (M.D.) or
	post-doctor of osteopathic medicine (D.O.) program that prepares
	physicians for the independent practice of medicine in a specific
	specialty area.
	(6)  "Hospital" means:
	(A)  a facility licensed as a hospital under
	Chapter 241, Health and Safety Code, or as a mental hospital under
	Chapter 577, Health and Safety Code; or
	(B)  a similar facility owned or operated by this
	state or an agency of this state.
	(7)  "Medical school" means a public or independent
	educational institution that awards a doctor of medicine (M.D.) or
	doctor of osteopathic medicine (D.O.) degree.
	(8)  "Sponsoring institution" means the entity that
	assumes the ultimate financial or academic responsibility for a
	graduate medical education program.
	(9)  "Teaching hospital" means a hospital that:
	(A)  is formally affiliated with a medical school
	for purposes of providing a graduate medical education program; or
	(B)  serves as the sponsoring institution for a
	graduate medical education program.
	SECTION 2.  Subchapter A, Chapter 58A, Education Code, is
	amended by adding Sections 58A.002 and 58A.003 to read as follows:
	Sec. 58A.002.  PERMANENT FUND SUPPORTING GRADUATE MEDICAL
	EDUCATION. (a)  In this section, "trust company" means the Texas
	Treasury Safekeeping Trust Company.
	(b)  The permanent fund supporting graduate medical
	education is a special fund in the treasury outside the general
	revenue fund. The fund is composed of:
	(1)  money transferred or appropriated to the fund by
	the legislature;
	(2)  gifts and grants contributed to the fund; and
	(3)  the returns received from investment of money in
	the fund.
	(c)  The trust company shall administer the fund. The trust
	company shall determine the amount available for distribution from
	the fund, determined in accordance with a distribution policy that
	is adopted by the comptroller and designed to preserve the
	purchasing power of the fund's assets and to provide a stable and
	predictable stream of annual distributions. Expenses of managing
	the fund's assets shall be paid from the fund. Except as provided
	by this section, money in the fund may not be used for any purpose.
	Sections 403.095 and 404.071, Government Code, do not apply to the
	fund.
	(d)  In managing the assets of the fund, through procedures
	and subject to restrictions the trust company considers
	appropriate, the trust company may acquire, exchange, sell,
	supervise, manage, or retain any kind of investment that a prudent
	investor, exercising reasonable care, skill, and caution, would
	acquire or retain in light of the purposes, terms, distribution
	requirements, and other circumstances of the fund then prevailing,
	taking into consideration the investment of all the assets of the
	fund rather than a single investment.
	(e)  The amount available for distribution from the fund may
	be appropriated only:
	(1)  to the board to fund the programs created under
	this chapter; or
	(2)  as otherwise directed by the legislature.
	(f)  A public or private institution of higher education or
	other entity that may receive money under a program described by
	Subsection (e) may solicit and accept gifts and grants to be
	deposited to the credit of the fund. A gift or grant to the fund
	must be distributed and appropriated for the purposes of the fund,
	subject to any limitation or requirement placed on the gift or grant
	by the donor or granting entity.
	Sec. 58A.003.  REDUCTION IN FUNDING. (a)  The board shall
	limit or withhold funding from any grant recipient under this
	chapter that does not comply with reporting requirements or that
	uses grant funds for a purpose not authorized by this chapter for
	the grant awarded.
	(b)  The board shall seek reimbursement with respect to any
	grant funds that are not used for purposes authorized by this
	chapter for the grant awarded.
	SECTION 3.  Section 58A.022, Education Code, is amended to
	read as follows:
	Sec. 58A.022.  GRADUATE MEDICAL EDUCATION PLANNING AND
	PARTNERSHIP GRANTS. (a)  The board shall award one-time graduate
	medical education planning and partnership grants to hospitals,
	medical schools, and community-based, ambulatory patient care
	centers [entities] located in this state that seek to develop new
	graduate medical education programs with first-year residency
	positions, regardless of whether the grant recipient currently
	offers or has previously offered[:
	[(1)  have never had] a graduate medical education
	program with first-year residency positions[; and
	[(2)     are eligible for Medicare funding of graduate
	medical education].
	(b)  The board shall award graduate medical education
	planning and partnership grants on a competitive basis according to
	criteria adopted by the board.  The board shall determine the number
	of grants awarded and the amount of each grant consistent with any
	conditions provided by legislative appropriation.  A grant received
	under this section must be used for the purpose of planning a new
	graduate medical education program with [additional] first-year
	residency positions.
	(c)  A hospital, medical school, or community-based,
	ambulatory patient care center [An application for a planning grant
	for a state fiscal year must be submitted to the board not later
	than July 15 preceding that fiscal year.   Not later than August 15,
	the board shall make decisions about grant awards for the following
	state fiscal year.
	[(d)  An entity] that is awarded a graduate medical education
	planning and partnership grant and that establishes new first-year
	residency positions after receipt of the grant is eligible to apply
	for additional funds under Section 58A.024 for each such position
	established, as provided by appropriation.
	(d)  A hospital, medical school, or community-based,
	ambulatory patient care center may partner with an existing
	graduate medical education program or sponsoring institution for
	purposes of planning a new graduate medical education program using
	grant funds awarded under this section.
	SECTION 4.  Section 58A.023, Education Code, is amended to
	read as follows:
	Sec. 58A.023.  GRANTS FOR UNFILLED RESIDENCY POSITIONS.
	(a)  The board shall award grants to graduate medical education
	programs to enable those programs to fill first-year residency
	positions that are accredited but unfilled as of July 1, 2013
	[first-year residency positions].  The board shall determine the
	number of grants awarded and the amount of each grant consistent
	with any conditions provided by legislative appropriation.
	(b)  A grant received under this section must be expended to
	support:
	(1)  resident stipends and benefits; and
	(2)  other [the] direct resident costs to the program[,
	including the resident stipend and benefits].
	(c)  A grant application must include proof of the accredited
	but unfilled positions to which the application applies.  [An
	application for a grant must be submitted to the board not later
	than October 1 preceding the period for which the grant is made.
	The board shall make decisions about grant awards not later than
	January 1 preceding the grant period.]
	(d)  The board may distribute a grant amount for a residency
	position only on receiving verification that the applicable
	residency position has been filled.
	(e)  Grant amounts are awarded under this section for the
	duration of the period in which the resident who initially fills the
	residency position continues to hold that position [two consecutive
	state fiscal years.   For each first-year residency position for
	which a program receives an initial grant amount in a fiscal year,
	the board shall award the program an equal grant amount for the
	following fiscal year].
	SECTION 5.  Section 58A.024, Education Code, is amended to
	read as follows:
	Sec. 58A.024.  GRANTS FOR PROGRAM EXPANSION OR NEW PROGRAM.
	(a)  The board shall award grants to enable new or existing
	graduate medical education programs to increase the number of
	first-year residency positions [or to provide for the establishment
	of new graduate medical education programs with first-year
	residency positions].  The board shall determine the number of
	grants awarded and the amount of each grant consistent with any
	conditions provided by legislative appropriation.
	(b)  [A grant received under this section must be expended to
	support the direct resident costs to the program, including the
	resident stipend and benefits.
	[(c)]  A grant application must include a plan for receiving
	accreditation for the increased number of positions or for the new
	program, as applicable.  [An application for a grant must be
	submitted to the board not later than October 1 preceding the period
	for which the grant is made.   The board shall make decisions about
	grant awards not later than January 1 preceding the grant period.]
	(c) [(d)]  The board may distribute a grant amount for a
	residency position only on receiving verification that the
	applicable residency position has been filled.
	(d) [(e)]  Grant amounts are awarded under this section for
	the duration of the period in which the resident who initially fills
	the residency position continues to hold that position [three
	consecutive state fiscal years.   For each first-year residency
	position for which a program receives an initial grant amount in a
	fiscal year, the board shall award the program an equal grant amount
	for the following two fiscal years].
	SECTION 6.  Subchapter B, Chapter 58A, Education Code, is
	amended by adding Sections 58A.0245 and 58A.0246 to read as
	follows:
	Sec. 58A.0245.  CRITICAL SHORTAGE LEVELS. (a)  If the board
	determines that the number of first-year residency positions
	proposed by eligible applicants under Sections 58A.023 and 58A.024
	exceeds the number of first-year residency positions for which
	grant funding under those sections is appropriated, in awarding
	grants under those sections the board shall prioritize the awarding
	of new grants to medical specialties determined by the board to be
	at critical shortage levels.
	(b)  In determining critical shortage levels under this
	section, the board shall consider:
	(1)  the available results of research conducted by the
	center under Section 105.009, Health and Safety Code;
	(2)  other relevant research and criteria, including
	research and criteria related to the designation of health
	professional shortage areas; and
	(3)  research performed by other appropriate entities.
	Sec. 58A.0246.  CONTINUATION OF GRANTS AWARDED FOR 2015
	STATE FISCAL YEAR. The board shall award additional grants to fund
	eligible graduate medical education programs that, for the state
	fiscal year ending on August 31, 2015, received a grant awarded
	under Section 58A.023 or 58A.024 or under Section 61.511, as that
	section existed immediately before September 1, 2015, if those
	programs continue to meet the applicable grant requirements that
	existed at the time of the initial award.
	SECTION 7.  Chapter 105, Health and Safety Code, is amended
	by adding Section 105.009 to read as follows:
	Sec. 105.009.  RESEARCH REGARDING GRADUATE MEDICAL
	EDUCATION SYSTEM. (a)  The comprehensive health professions
	resource center shall conduct research:
	(1)  to identify all medical specialties and
	subspecialties that are at critical shortage levels in this state,
	together with the geographic location of the physicians in those
	specialties and subspecialties; and
	(2)  regarding the overall supply of physicians in this
	state and any other issues that are relevant to the status of the
	state's graduate medical education system and the ability of that
	system to meet the current and future health care needs of this
	state.
	(b)  Not later than May 1 of each even-numbered year, the
	council shall report the results of the center's research to the
	Legislative Budget Board, the Texas Higher Education Coordinating
	Board, the office of the governor, and the standing committees of
	each house of the legislature with primary jurisdiction over state
	finance or appropriations.
	SECTION 8.  Chapter 2203, Insurance Code, is amended by
	adding Subchapter J to read as follows:
	SUBCHAPTER J.  TRANSFER OF ASSETS; SUSPENSION OF NEW BUSINESS
	Sec. 2203.451.  TRANSFER OF ASSETS. (a)  Not later than the
	90th day after the effective date of this section, the department
	shall complete an actuarial study to determine the amount of assets
	necessary for:
	(1)  the association's known and unknown insurance
	claims and costs associated with those claims; and
	(2)  administrative expenses of the association,
	including liabilities for employee retirement plans.
	(b)  The association shall cooperate with the department in
	completing the actuarial study required by Subsection (a).
	(c)  Not later than the 60th day after the date on which the
	department completes the actuarial study required by Subsection
	(a), the association shall transfer the amount of association
	assets not necessary for the purposes described by Subsection (a)
	to the permanent fund supporting graduate medical education
	established under Section 58A.002, Education Code. If that fund is
	not in existence on the date of transfer, the association shall
	transfer the assets to an account created by the comptroller
	outside of the state treasury, and the comptroller shall hold the
	assets in trust pending creation of the fund.
	Sec. 2203.4515.  SUSPENSION OF NEW BUSINESS. (a)  Promptly
	after the completion of the actuarial study required by Section
	2203.451, the commissioner, after notice and hearing, shall
	determine whether a necessity exists to suspend the association's
	authority to issue new insurance policies pending a future
	enactment by the legislature that becomes law or the expiration of
	this subchapter under Section 2203.452, whichever occurs earlier.
	(b)  If the commissioner determines that a necessity
	described by Subsection (a) exists, the commissioner shall order
	the association to cease issuing new policies immediately, and the
	association may not issue a new policy before the expiration of this
	subchapter under Section 2203.452 unless authorized by a law that
	takes effect before the expiration of this subchapter.
	(c)  Notwithstanding any order under this section, the
	association may continue to renew policies in effect immediately
	before the effective date of the order in accordance with the
	association's plan of operation.
	Sec. 2203.452.  EXPIRATION OF SUBCHAPTER. This subchapter
	expires September 1, 2017.
	SECTION 9.  The following provisions of the Education Code
	are repealed:
	(1)  Section 58A.025; and
	(2)  Section 61.511.
	SECTION 10.  This Act takes effect September 1, 2015.