In July 2011, the governor of Texas signed SB 7, an omnibus bill containing numerous provisions relating to the administration, quality, and efficiency of health care, health and human services, and health benefits programs in Texas.
The legislation allows the Texas Department of Insurance to certify health care collaboratives (HCCs), new entities composed of physicians and health care providers that can contract with payers to assume responsibility for a range of health care services. The HCCs are meant to help achieve the law’s goals of:
  1. Exploring innovative health care delivery and payment models to improve the quality and efficiency of health care in the state
  2. Improving health care transparency
  3. Giving health providers the flexibility to collaborate and innovate to improve the quality and efficiency of health care, and
  4. Creating incentives to improve the quality and efficiency of health care.

HCCs will be able to enter into innovative payment arrangements with public and private payers and offer the promise of more integrated and accountable care delivery.


Last updated November 2013.

Project Scope
Scope of services: The health care services for which health care collaboratives (HCCs) have responsibility is defined broadly in SB 7 as “services provided by a physician or health care provider to prevent, alleviate, cure, or heal human illness or injury.” The legislation explicitly notes that this includes pharmaceutical, medical, chiropractic, dental, and hospital care.
Eligible provider population: The statute does not place restrictions on physicians and health care providers licensed in the state of Texas from voluntarily joining HCCs. It does specify that an HCC may not prohibit a physician or other provider, as a condition of participating in that HCC, from participating in another HCC.
Aside from broad requirements for certification by the Texas Department of Insurance (described in the “Criteria for Participation” section), many of the details of HCC arrangements, including attribution and eligible patient populations, will be determined in contracts between HCCs and interested public and private payers. SB 7 provides the legal framework by which physicians and other providers can form new entities—specified in the legislation as having “all powers of a partnership, association, corporation, or limited liability company”—that can pursue more integrated delivery models and potentially assume more accountability for patient populations.
The development and certification of health care collaboratives (HCCs) was authorized by the Texas legislature via SB 7.
In addition to certification by the Texas Department of Insurance, potential HCCs must have their applications reviewed by the Attorney General of the state to verify that the collaborative will not likely reduce competition in the market for physician, hospital, or ancillary services and that the pro-competitive benefits of proposed HCCs outweigh the anticompetitive effects of increased market power.
SB 7 specified that certified HCC would be provided immunity from federal antitrust laws through the state action doctrine.
Health care collaboratives (HCCs) are required by SB 7 to be governed by a board of directors whose members are elected by physicians and health care providers who participate in the HCC. If all participants in the HCC are physicians, each member of the board must be a physician. If the HCC consists of physicians and other providers, there must be an equal number of physician and health care provider representatives on the board.
The board of directors of an HCC is responsible for establishing a compensation advisory committee that develops recommendations regarding charges, fees, payments, distributions, or other compensation assessed for health care services provided by physicians or other providers participating in the HCC.
Criteria for Participation
Health care collaboratives (HCCs) are defined by SB 7 as entities that arrange for medical and health care services for insurers and other payers. They consist of physicians and may include other health care providers and/or insurers.
The statute establishes that entities seeking certification as HCCs must demonstrate that they have a sufficient number of primary care physicians in the HCC’s service area, they must show that they have sufficient working capital and reserves to operate the collaborative, and they must pass an antitrust review by the Office of the Attorney General. More details about these requirements were established in regulations proposed by the Texas Department of Insurance in September 2012.
Each HCC must also show the “willingness and potential ability” to ensure their approach to service delivery:
  • Increases collaboration among health care providers and integrates health care services,
  • Promotes improvement in quality-based health care outcomes, patient safety, patient engagement, and coordination of services, and
  • Reduces the occurrence of potentially preventable events.
HCCs must also satisfy the Insurance Commissioner that they have processes in place:
  • That contain health care costs without jeopardizing the quality of patient care
  • To develop, compile, 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;
  • To address complaints made by patients.
Health care collaboratives (HCCs) in Texas may contract with governmental or private entities for all or part of the cost of services provided or arranged by the collaborative. They can then distribute payments to participating physicians and health care providers in a manner approved by the board of directors.
HCCs can contract for, accept, and distribute payments from public or private payers based on fee-for-service or alternate payment methodologies, including:
  • Episode-based or condition-based bundled payments,
  • Capitation or global payments, and
  • Pay-for-performance or quality-based payments.
Support for Infrastructure
No infrastructure support for health care collaboratives has been offered by the state at this time.
Measurement and Evaluation
Health care collaboratives (HCCs) are required to have processes in place to report on measures of quality and cost of health care services, utilization patterns, and availability of services.
The statute requires that HCCs establish standards and procedures relating to the development, implementation, monitoring, and evaluation of:
  • Evidence-based 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
  • Processes to improve patient engagement and coordination of health services provided by participating physicians and providers
Regulations proposed by the Texas Department of Insurance in September 2012 would require that HCC continuous quality assurance and quality improvement programs include practice evaluation tools including:
  • Consumer Assessment of Healthcare Providers and Systems (CAHPS) surveys developed by the Agency for Healthcare Research and Quality,
  • Agency for Healthcare Research and Quality standards, and
  • National Quality Forum standards.
Further quality measurement and evaluation requirements can be specified in contracts between individual HCCs and payers.