By Martin, McCall, Harris, et al. H.B. No. 2055
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to health insurance and health costs and the availability
1-3 of health insurance coverage for certain individuals and small
1-4 employers.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. The Insurance Code is amended by adding Chapter
1-7 26 to read as follows:
1-8 CHAPTER 26. HEALTH INSURANCE AVAILABILITY
1-9 SUBCHAPTER A. GENERAL PROVISIONS
1-10 Art. 26.01. SHORT TITLE. This chapter may be cited as the
1-11 Small Employer Health Insurance Availability Act.
1-12 Art. 26.02. DEFINITIONS. In this chapter:
1-13 (1) "Affiliated employer" means a person connected by
1-14 commonality of ownership with a small employer. The term includes
1-15 a person that owns a small employer, shares directors with a small
1-16 employer, or is eligible to file a consolidated tax return with a
1-17 small employer.
1-18 (2) "Agent" means a person who may act as an agent for
1-19 the sale of a health benefit plan under a license issued under
1-20 Section 15 or 15A, Texas Health Maintenance Organization Act
1-21 (Article 20A.15 or 20A.15A, Vernon's Texas Insurance Code), or
1-22 under Subchapter A, Chapter 21, of this code.
1-23 (3) "Base premium rate" means, for each class of
2-1 business and for a specific rating period, the lowest premium rate
2-2 that is charged or that could be charged under a rating system for
2-3 that class of business by the small employer carrier to small
2-4 employers with similar case characteristics for small employer
2-5 health benefit plans with the same or similar coverage.
2-6 (4) "Board of directors" means the board of directors
2-7 of the Texas Health Reinsurance System.
2-8 (5) "Case characteristics" means, with respect to a
2-9 small employer, the geographic area in which that employer's
2-10 employees reside, the age and gender of the individual employees
2-11 and their dependents, the composition of the employees' families,
2-12 the appropriate industry classification as determined by the small
2-13 employer carrier, the number of employees and dependents, and other
2-14 objective criteria as established by the small employer carrier
2-15 that are considered by the small employer carrier in setting
2-16 premium rates for that small employer. The term does not include
2-17 claim experience, health status, duration of coverage since the
2-18 date of issuance of a health benefit plan, or whether a covered
2-19 person is or may become pregnant.
2-20 (6) "Class of business" means all small employers or a
2-21 separate grouping of small employers established under this
2-22 chapter.
2-23 (7) "Dependent" means:
2-24 (A) a spouse;
2-25 (B) a newborn child;
3-1 (C) a child under the age of 19 years;
3-2 (D) a child who is a full-time student under the
3-3 age of 22 years and who is financially dependent on the parent;
3-4 (E) a child of any age who is medically
3-5 certified as disabled and dependent on the parent; and
3-6 (F) any person who must be covered under:
3-7 (i) Section 3D or 3E, Article 3.51-6, of
3-8 this code; or
3-9 (ii) Section 2(L), Chapter 397, Acts of
3-10 the 54th Legislature, Regular Session, 1955 (Article 3.70-2,
3-11 Vernon's Texas Insurance Code).
3-12 (8) "Eligible employee" means an employee who works on
3-13 a full-time basis and who usually works at least 30 hours a week.
3-14 The term includes a sole proprietor, a partner, and an independent
3-15 contractor, if the sole proprietor, partner, or independent
3-16 contractor is included as an employee under a health benefit plan
3-17 of a small employer. The term does not include:
3-18 (A) an employee who works on a part-time,
3-19 temporary, or substitute basis or during a probationary period
3-20 established by the small employer of not more than six months after
3-21 the date employment begins; or
3-22 (B) an employee who is covered under:
3-23 (i) another health benefit plan; or
3-24 (ii) an employee welfare benefit plan that
3-25 provides health benefits and that is established in accordance with
4-1 the Employee Retirement Income Security Act of 1974 (29 U.S.C.
4-2 Section 1001 et seq.).
4-3 (9) "Health benefit plan" means a group, blanket, or
4-4 franchise insurance policy, a certificate issued under a group
4-5 policy, a group hospital service contract, or a group subscriber
4-6 contract or evidence of coverage issued by a health maintenance
4-7 organization that provides benefits for health care services. The
4-8 term does not include:
4-9 (A) accident-only insurance coverage;
4-10 (B) credit insurance coverage;
4-11 (C) disability insurance coverage;
4-12 (D) specified disease coverage or other limited
4-13 benefit policies;
4-14 (E) coverage of Medicare services under a
4-15 federal contract;
4-16 (F) Medicare supplement and Medicare Select
4-17 policies regulated in accordance with federal law;
4-18 (G) long-term care insurance coverage;
4-19 (H) coverage limited to dental care;
4-20 (I) coverage limited to care of vision;
4-21 (J) coverage provided by a single service health
4-22 maintenance organization;
4-23 (K) insurance coverage issued as a supplement to
4-24 liability insurance;
4-25 (L) insurance coverage arising out of a workers'
5-1 compensation system or similar statutory system;
5-2 (M) automobile medical payment insurance
5-3 coverage;
5-4 (N) jointly managed trusts authorized under 29
5-5 U.S.C. Section 141 et seq. that contain a plan of benefits for
5-6 employees that is negotiated in a collective bargaining agreement
5-7 governing wages, hours, and working conditions of the employees
5-8 that is authorized under 29 U.S.C. Section 157;
5-9 (O) hospital confinement indemnity coverage; or
5-10 (P) reinsurance contracts issued on a stop-loss,
5-11 quota-share, or similar basis.
5-12 (10) "Health carrier" means any entity authorized
5-13 under this code or another insurance law of this state that
5-14 provides health insurance or health benefits in this state,
5-15 including an insurance company, a group hospital service
5-16 corporation under Chapter 20 of this code, a health maintenance
5-17 organization under the Texas Health Maintenance Organization Act
5-18 (Chapter 20A, Vernon's Texas Insurance Code), and a stipulated
5-19 premium company under Chapter 22 of this code.
5-20 (11) "Index rate" means, for each class of business as
5-21 to a rating period for small employers with similar case
5-22 characteristics, the arithmetic average of the applicable base
5-23 premium rate and corresponding highest premium rate.
5-24 (12) "Late enrollee" means an eligible employee or
5-25 dependent who requests enrollment in a small employer's health
6-1 benefit plan after the expiration of the initial enrollment period
6-2 established under the terms of the first plan for which that
6-3 employee or dependent was eligible through the small employer. An
6-4 eligible employee or dependent is not a late enrollee if:
6-5 (A) the individual:
6-6 (i) was covered under another employer
6-7 health benefit plan at the time the individual was eligible to
6-8 enroll;
6-9 (ii) states, at the time of the initial
6-10 eligibility, that coverage under another employer health benefit
6-11 plan was the reason for declining enrollment;
6-12 (iii) has lost coverage under another
6-13 employer health benefit plan as a result of the termination of
6-14 employment, the termination of the other plan's coverage, the death
6-15 of a spouse, or divorce; and
6-16 (iv) requests enrollment not later than
6-17 the 31st day after the date on which coverage under another
6-18 employer health benefit plan terminates;
6-19 (B) the individual is employed by an employer
6-20 who offers multiple health benefit plans and the individual elects
6-21 a different health benefit plan during an open enrollment period;
6-22 or
6-23 (C) a court has ordered coverage to be provided
6-24 for a spouse or minor child under a covered employee's plan and
6-25 request for enrollment is made not later than the 31st day after
7-1 issuance of the date on which the court order is issued.
7-2 (13) "New business premium rate" means, for each class
7-3 of business as to a rating period, the lowest premium rate that is
7-4 charged or offered or that could be charged or offered by the small
7-5 employer carrier to small employers with similar case
7-6 characteristics for newly issued small employer health benefit
7-7 plans that provide the same or similar coverage.
7-8 (14) "Person" means an individual, corporation,
7-9 partnership, association, or other private legal entity.
7-10 (15) "Plan of operation" means the plan of operation
7-11 of the system established under Article 26.55 of this code.
7-12 (16) "Preexisting condition provision" means a
7-13 provision that denies, excludes, or limits coverage as to a disease
7-14 or condition for a specified period after the effective date of
7-15 coverage.
7-16 (17) "Premium" means all amounts paid by a small
7-17 employer and eligible employees as a condition of receiving
7-18 coverage from a small employer carrier, including any fees or
7-19 other contributions associated with a health benefit plan.
7-20 (18) "Rating period" means a calendar period for which
7-21 premium rates established by a small employer carrier are assumed
7-22 to be in effect.
7-23 (19) "Reinsured carrier" means a small employer
7-24 carrier participating in the system.
7-25 (20) "Risk-assuming carrier" means a small employer
8-1 carrier that elects not to participate in the system.
8-2 (21) "Small employer" means a person that is actively
8-3 engaged in business and that, on at least 50 percent of its working
8-4 days during the preceding calendar quarter, employed at least three
8-5 but not more than 50 eligible employees, including the employees of
8-6 an affiliated employer, the majority of whom were employed in this
8-7 state.
8-8 (22) "Small employer carrier" means a health carrier,
8-9 to the extent that that carrier is offering, delivering, issuing
8-10 for delivery, or renewing health benefit plans subject to this
8-11 chapter under Article 26.06(a) of this code.
8-12 (23) "Small employer health benefit plan" means the
8-13 preventive and primary care benefit plan, the in-hospital benefit
8-14 plan, or the standard health benefit plan described by Subchapter E
8-15 of this chapter or any other health benefit plan offered to a small
8-16 employer in accordance with Article 26.42(d) of this code.
8-17 (24) "System" means the Texas Health Reinsurance
8-18 System established under Subchapter F of this chapter.
8-19 Art. 26.03. AFFILIATED CARRIERS. (a) For purposes of this
8-20 chapter, health carriers that are affiliates or that are eligible
8-21 to file a consolidated tax return are considered to be one carrier,
8-22 and a restriction imposed by this chapter applies as if the health
8-23 benefit plans delivered or issued for delivery to small employers
8-24 in this state by the affiliates were issued by one carrier.
8-25 (b) An affiliate that is a health maintenance organization
9-1 is considered to be a separate health carrier for purposes of this
9-2 chapter.
9-3 (c) In this article, "affiliate" has the meaning assigned by
9-4 Article 21.49-1 of this code.
9-5 Art. 26.04. RULES. The board shall adopt rules to implement
9-6 this chapter.
9-7 Art. 26.05. STATUTORY REFERENCES. A reference in this
9-8 chapter to a statutory provision applies to all reenactments,
9-9 revisions, or amendments of that statutory provision.
9-10 Art. 26.06. APPLICABILITY. (a) An individual or group
9-11 health benefit plan is subject to this chapter if it provides
9-12 health care benefits covering three or more eligible employees of a
9-13 small employer and if it meets any one of the following conditions:
9-14 (1) a portion of the premium or benefits is paid by or
9-15 on behalf of a small employer;
9-16 (2) a covered individual is reimbursed, whether
9-17 through wage adjustments or otherwise, by or on behalf of a small
9-18 employer for a portion of the premium; or
9-19 (3) the health benefit plan is treated by the employer
9-20 or by a covered individual as part of a plan or program for the
9-21 purposes of Section 106 or 162, Internal Revenue Code of 1986 (26
9-22 U.S.C. Section 106 or 162).
9-23 (b) Except as provided by Subsection (a) of this article,
9-24 this chapter does not apply to an individual health insurance
9-25 policy that is underwritten individually.
10-1 (c) Except as expressly provided in this chapter, a small
10-2 employer health benefit plan is not subject to a law that requires
10-3 coverage or the offer of coverage of a health care service or
10-4 benefit.
10-5 Art. 26.07. CERTIFICATION. (a) Not later than March 1 of
10-6 each year, each health carrier shall certify to the commissioner
10-7 whether, as of January 1 of that year, it is offering a health
10-8 benefit plan subject to this chapter under Article 26.06(a) of this
10-9 code.
10-10 (b) The certification shall list each other health insurance
10-11 coverage that:
10-12 (1) the health carrier is offering, delivering,
10-13 issuing for delivery, or renewing to or through small employers in
10-14 this state; and
10-15 (2) is not subject to this chapter because it is
10-16 listed as excluded from the definition of a health benefit plan
10-17 under Article 26.02 of this code.
10-18 (c) The certification shall include a statement that the
10-19 carrier is not offering or marketing to small employers as a health
10-20 benefit plan the coverage listed under Subsection (b) of this
10-21 article and that the health carrier is complying with this chapter
10-22 to the extent it is applicable to the carrier.
10-23 Art. 26.08. COST CONTAINMENT. (a) A small employer carrier
10-24 may use cost containment and managed care features in a small
10-25 employer health benefit plan, including:
11-1 (1) utilization review of health care services,
11-2 including review of the medical necessity of hospital and physician
11-3 services;
11-4 (2) case management, including discharge planning and
11-5 review of stays in hospitals or other health care facilities;
11-6 (3) selective contracting with hospitals, physicians,
11-7 and other health care providers;
11-8 (4) reasonable benefit differentials applicable to
11-9 health care providers that participate or do not participate in
11-10 restricted network arrangements;
11-11 (5) precertification or preauthorization for certain
11-12 covered services;
11-13 (6) coordination of benefits; and
11-14 (7) development of medically based screening criteria.
11-15 (b) A provision of a small employer health benefit plan that
11-16 provides for coordination of benefits must comply with this chapter
11-17 and guidelines established by the National Association of Insurance
11-18 Commissioners or its successor organization.
11-19 SUBCHAPTER B. PURCHASING COOPERATIVES
11-20 Art. 26.11. DEFINITIONS. In this subchapter:
11-21 (1) "Board of trustees" means the board of trustees of
11-22 the Texas cooperative.
11-23 (2) "Board of directors" means the board of directors
11-24 elected by a private purchasing cooperative.
11-25 (3) "Cooperative" means a purchasing cooperative
12-1 established under this subchapter.
12-2 (4) "Texas cooperative" means the Texas Health
12-3 Benefits Purchasing Cooperative established under Article 26.13 of
12-4 this code.
12-5 Art. 26.12. APPLICABILITY OF OTHER LAWS. Section 1(a),
12-6 Article 3.51-6, of this code, does not limit the type of group that
12-7 may be covered by a group health benefit plan issued through a
12-8 cooperative.
12-9 Art. 26.13. TEXAS HEALTH BENEFITS PURCHASING COOPERATIVE.
12-10 (a) The Texas Health Benefits Purchasing Cooperative is a
12-11 nonprofit organization established to make health care coverage
12-12 available to small employers and their eligible employees and
12-13 eligible employees' dependents.
12-14 (b) The Texas cooperative is administered by a six-member
12-15 board of trustees appointed by the governor with the advice and
12-16 consent of the senate. Two members must represent employers, two
12-17 members must represent employees, and two members must represent
12-18 the public. The executive director of the Texas Department of
12-19 Commerce shall serve as an ex officio member of the board of
12-20 trustees.
12-21 (c) The appointed members of the board of trustees serve
12-22 staggered six-year terms, with the terms of two members expiring
12-23 February 1 of each odd-numbered year.
12-24 (d) A member of the board of trustees may not be compensated
12-25 for serving on the board of trustees but is entitled to
13-1 reimbursement for actual expenses incurred in performing functions
13-2 as a member of the board of trustees as provided by the General
13-3 Appropriations Act.
13-4 (e) The board of trustees shall employ an executive
13-5 director. The executive director may hire other employees as
13-6 necessary.
13-7 (f) The board of trustees may develop regional subdivisions
13-8 of the Texas cooperative and may authorize each subdivision to
13-9 separately exercise the powers and duties of a cooperative.
13-10 (g) Salaries for employees of the Texas cooperative and
13-11 related costs may be paid from administrative fees collected from
13-12 employers and carriers or other sources of funding arranged by the
13-13 Texas cooperative.
13-14 (h) A member of the board of trustees, the executive
13-15 director, and an employee or agent of the Texas cooperative is not
13-16 liable for an act performed in good faith in the execution of
13-17 duties in connection with the Texas cooperative.
13-18 (i) The Texas cooperative may not use money appropriated by
13-19 the state to pay or otherwise subsidize any portion of the premium
13-20 for a small employer insured through the cooperative.
13-21 Art. 26.14. PRIVATE PURCHASING COOPERATIVE. (a) Two or
13-22 more small employers may form a cooperative for the purchase of
13-23 small employer health benefit plans. A cooperative must be
13-24 organized as a nonprofit corporation and has the rights and duties
13-25 provided by the Texas Non-Profit Corporation Act (Article 1396-1.01
14-1 et seq., Vernon's Texas Civil Statutes).
14-2 (b) The board of directors shall file annually with the
14-3 commissioner a statement of all amounts collected and expenses
14-4 incurred for each of the preceding three years.
14-5 Art. 26.15. POWERS AND DUTIES OF COOPERATIVES. (a) A
14-6 cooperative may:
14-7 (1) arrange for small employer health benefit plan
14-8 coverage for small employer groups who participate in the
14-9 cooperative by contracting with one or more small employer
14-10 carriers;
14-11 (2) collect premiums to cover the cost of:
14-12 (A) small employer health benefit plan coverage
14-13 purchased through the cooperative; and
14-14 (B) the cooperative's administrative expenses;
14-15 (3) contract with agents to market coverage issued
14-16 through the cooperative;
14-17 (4) establish administrative and accounting procedures
14-18 for the operation of the cooperative;
14-19 (5) establish criteria governing the eligibility of
14-20 small employer carriers or health care providers to participate in
14-21 the program;
14-22 (6) establish procedures under which an applicant for
14-23 or participant in coverage issued through the cooperative may have
14-24 a grievance reviewed by an impartial person;
14-25 (7) contract with a small employer carrier or
15-1 third-party administrator to provide administrative services to the
15-2 cooperative;
15-3 (8) contract with a small employer carrier for the
15-4 provision of services to small employers covered through the
15-5 cooperative;
15-6 (9) develop and implement a plan to maintain public
15-7 awareness of the cooperative and publicize the eligibility
15-8 requirements for, and the procedures for enrollment in coverage
15-9 through, the cooperative; and
15-10 (10) negotiate the premiums paid by its members.
15-11 (b) A cooperative may not self-insure or self-fund any
15-12 health benefit plan or portion of a plan.
15-13 (c) A cooperative shall comply with federal laws applicable
15-14 to cooperatives and health benefit plans issued through
15-15 cooperatives.
15-16 Art. 26.16. COOPERATIVE NOT INSURER. (a) A cooperative is
15-17 not an insurer and the employees of the cooperative are not
15-18 required to be licensed under Subchapter A, Chapter 21, of this
15-19 code.
15-20 (b) An agent or third-party administrator used and
15-21 compensated by the cooperative must be licensed as required by
15-22 Subchapter A, Chapter 21, of this code.
15-23 SUBCHAPTER C. GUARANTEED ISSUE AND RENEWABILITY
15-24 Art. 26.21. SMALL EMPLOYER HEALTH BENEFIT PLANS; EMPLOYER
15-25 ELECTION. (a) Each small employer carrier shall provide the small
16-1 employer health benefit plans without regard to claim experience,
16-2 health status, or medical history. Each small employer carrier
16-3 shall issue the plan chosen by the small employer to each small
16-4 employer that elects to be covered under that plan, agrees to make
16-5 the required premium payments, and agrees to satisfy the other
16-6 requirements of the plan.
16-7 (b) Coverage under a small employer health benefit plan is
16-8 not available to a small employer unless the small employer pays at
16-9 least 75 percent of the insurance premium for all of its eligible
16-10 employees for at least one of the small employer health benefit
16-11 plans selected by the small employer. The small employer may elect
16-12 to pay the premium cost for additional coverage. This chapter does
16-13 not require a small employer to purchase health insurance coverage
16-14 for the employer's employees.
16-15 (c) An eligible employee may obtain coverage in addition to
16-16 coverage purchased by the employer if at least 40 percent of the
16-17 eligible employees elect to obtain the same additional coverage.
16-18 The additional coverage may be paid for by the employer, the
16-19 employee, or both.
16-20 (d) The initial enrollment period for the employees and
16-21 their dependents must be at least 30 days.
16-22 (e) A new employee of a covered small employer and the
16-23 dependents of that employee may not be denied coverage if the
16-24 application for coverage is received by the small employer carrier
16-25 not later than the 31st day after the date on which the employment
17-1 begins.
17-2 (f) A late enrollee may be excluded from coverage for 18
17-3 months from the date of application or may be subject to an
17-4 18-month preexisting condition provision as described by Articles
17-5 26.49(b), (c), (d), and (e) of this code. If both a period of
17-6 exclusion from coverage and a preexisting condition provision are
17-7 applicable to a late enrollee, the combined period of exclusion may
17-8 not exceed 18 months from the date of the late application.
17-9 (g) A small employer carrier may not exclude any eligible
17-10 employee or dependent who would otherwise be covered under a small
17-11 employer group.
17-12 (h) A small employer health benefit plan issued by a small
17-13 employer carrier may not limit or exclude, by use of a rider or
17-14 amendment applicable to a specific individual, coverage by type of
17-15 illness, treatment, medical condition, or accident, except for
17-16 preexisting conditions or diseases as permitted under Article 26.49
17-17 of this code.
17-18 (i) A small employer health benefit plan may not limit or
17-19 exclude initial coverage of a newborn child of a covered employee.
17-20 Any coverage of a newborn child of an employee under this
17-21 subsection terminates on the 31st day after the date of the birth
17-22 of the child unless:
17-23 (1) dependent children are eligible for coverage; and
17-24 (2) notification of the birth and any required
17-25 additional premium are received by the small employer carrier not
18-1 later than the 30th day after the date of birth.
18-2 (j) If the Consolidated Omnibus Budget Reconciliation Act of
18-3 1985 (Pub. L. No. 99-272, 100 Stat. 222) does not require
18-4 continuation or conversion coverage for dependents of an employee,
18-5 a dependent who has been covered by that small employer for at
18-6 least one year or is under one year of age may elect to continue
18-7 coverage under a small employer health benefit plan, if the
18-8 dependent loses eligibility for coverage because of the death,
18-9 divorce, or retirement of the employee, as required by Section 3B,
18-10 Article 3.51-6, of this code.
18-11 Art. 26.22. GEOGRAPHIC SERVICE AREA. (a) A small employer
18-12 carrier is not required to offer or issue the small employer health
18-13 benefit plans:
18-14 (1) to a small employer that is not located within a
18-15 geographic service area of the small employer carrier;
18-16 (2) to an employee of a small employer who does not
18-17 reside or work in the geographic service area of the small employer
18-18 carrier; or
18-19 (3) to a small employer located within a geographic
18-20 service area with respect to which the small employer carrier
18-21 demonstrates to the satisfaction of the commissioner that the small
18-22 employer carrier reasonably anticipates that it will not have the
18-23 capacity to deliver services adequately because of obligations to
18-24 existing covered individuals.
18-25 (b) A small employer carrier that refuses to issue a small
19-1 employer health benefit plan in a geographic service area may not
19-2 offer a health benefit plan to a group of not more than 50
19-3 individuals in the affected service area before the fifth date of
19-4 the refusal.
19-5 (c) A small employer carrier must file each of its
19-6 geographic service areas with the commissioner. The commissioner
19-7 may disapprove the use of a geographic service area by a small
19-8 employer carrier.
19-9 (d) A small employer carrier that is unable to offer
19-10 coverage in a geographic service area in accordance with a
19-11 determination made by the commissioner under Subsection (a)(3) of
19-12 this article may not offer a small employer benefit plan in the
19-13 applicable geographic service area before the 180th day after the
19-14 later of:
19-15 (1) the date of the refusal; or
19-16 (2) the date the carrier demonstrates to the
19-17 satisfaction of the commissioner that it has regained the capacity
19-18 to deliver services to small employers in the geographic service
19-19 area.
19-20 (e) A small employer carrier is not required to provide
19-21 coverage to small employers for a period if the commissioner
19-22 determines that requiring the acceptance of small employers under
19-23 this subchapter during that period would place the small employer
19-24 carrier in a financially impaired condition.
19-25 Art. 26.23. RENEWABILITY OF COVERAGE; CANCELLATION. (a)
20-1 Except as provided by Article 26.24 of this code, a small employer
20-2 carrier shall renew the small employer health benefit plan for any
20-3 covered small employer at the option of the small employer, except
20-4 for:
20-5 (1) nonpayment of a premium as required by the terms
20-6 of the plan;
20-7 (2) fraud or misrepresentation of a material fact by
20-8 the small employer; or
20-9 (3) noncompliance with small employer health benefit
20-10 plan provisions.
20-11 (b) A small employer carrier may refuse to renew the
20-12 coverage of an eligible employee or dependent for fraud or
20-13 misrepresentation of a material fact by that individual.
20-14 (c) A small employer carrier may not cancel a small employer
20-15 health benefit plan except for the reasons specified for refusal to
20-16 renew under Subsection (a) of this article.
20-17 Art. 26.24. REFUSAL TO RENEW. (a) A small employer carrier
20-18 may elect to refuse to renew each small employer health benefit
20-19 plan delivered or issued for delivery by the small employer carrier
20-20 in this state or in a geographic service area approved under
20-21 Article 26.22 of this code. The small employer carrier must notify
20-22 the commissioner of the election not later than the 180th day
20-23 before the date coverage under the first small employer health
20-24 benefit plan terminates under this subsection.
20-25 (b) The small employer carrier must notify each affected
21-1 covered small employer not later than the 180th day before the date
21-2 on which coverage terminates for that small employer.
21-3 (c) A small employer carrier that elects under Subsection
21-4 (a) of this article to refuse to renew all small employer health
21-5 benefit plans in this state or in an approved geographic service
21-6 area may not write a new small employer health benefit plan in this
21-7 state or in the geographic service area, as applicable, before the
21-8 fifth anniversary of the date of notice to the commissioner under
21-9 Subsection (a) of this article.
21-10 Art. 26.25. NOTICE TO COVERED PERSONS. Not later than the
21-11 30th day before the date on which termination of coverage is
21-12 effective, a small employer carrier that cancels or refuses to
21-13 renew coverage under a small employer health benefit plan under
21-14 Article 26.23 or 26.24 of this code shall notify each covered
21-15 person of the cancellation or refusal to renew.
21-16 SUBCHAPTER D. UNDERWRITING AND RATING
21-17 Art. 26.31. ESTABLISHMENT OF CLASSES OF BUSINESS. (a) A
21-18 small employer carrier may establish a separate class of business
21-19 only to reflect substantial differences in expected claim
21-20 experience or administrative costs related to the following
21-21 reasons:
21-22 (1) the small employer carrier uses more than one type
21-23 of system for the marketing and sale of small employer health
21-24 benefit plans to small employers;
21-25 (2) the small employer carrier has acquired a class of
22-1 business from another health carrier; or
22-2 (3) the small employer carrier provides coverage to
22-3 one or more employer-based association groups.
22-4 (b) A small employer carrier may establish up to nine
22-5 separate classes of business under this article.
22-6 (c) The commissioner may establish regulations to provide
22-7 for a period of transition in order for a small employer carrier to
22-8 come into compliance with Subsection (b) of this article in the
22-9 instance of acquisition of an additional class of business from
22-10 another small employer carrier.
22-11 (d) The commissioner may approve the establishment of
22-12 additional classes of business on application to the commissioner
22-13 and a finding by the commissioner that the establishment of
22-14 additional classes would enhance the efficiency and fairness of the
22-15 insurance market for small employers.
22-16 Art. 26.32. INDEX RATES. (a) The premium rates for a small
22-17 employer health benefit plan are subject to this article.
22-18 (b) The index rate for a rating period for any class of
22-19 business may not exceed the index rate for any other class of
22-20 business by more than 20 percent.
22-21 (c) For a class of business, the premium rates charged
22-22 during a rating period to small employers with similar case
22-23 characteristics for the same or similar coverage, or the rates that
22-24 could be charged to those employers under the rating system for
22-25 that class of business, may not vary from the index rate by more
23-1 than 25 percent.
23-2 Art. 26.33. PREMIUM RATES; ADJUSTMENTS. (a) The percentage
23-3 increase in the premium rate charged to a small employer for a new
23-4 rating period may not exceed the sum of:
23-5 (1) the percentage change in the new business premium
23-6 rate measured from the first day of the prior rating period to the
23-7 first day of the new rating period;
23-8 (2) any adjustment, not to exceed 15 percent annually
23-9 and adjusted pro rata for rating periods of less than one year, due
23-10 to the claim experience, health status, or duration of coverage of
23-11 the employees or dependents of the small employer as determined
23-12 from the small employer carrier's rate manual for the class of
23-13 business; and
23-14 (3) any adjustment due to change in coverage or change
23-15 in the case characteristics of the small employer as determined
23-16 from the small employer carrier's rate manual for the class of
23-17 business.
23-18 (b) Adjustments in premium rates for claim experience,
23-19 health status, or duration of coverage may not be charged to
23-20 individual employees or dependents. Such an adjustment must be
23-21 applied uniformly to the rates charged for all employees and
23-22 dependents of employees of the small employer.
23-23 (c) A health carrier may use the industry classification to
23-24 which a small employer belongs as a case characteristic in
23-25 establishing premium rates, but the highest rate factor associated
24-1 with any industry classification may not exceed the lowest rate
24-2 factor associated with any industry classification by more than 15
24-3 percent.
24-4 Art. 26.34. EFFECT OF PRIOR COVERAGE. For a health benefit
24-5 plan delivered or issued for delivery before September 1, 1993, a
24-6 premium rate for a rating period may exceed the ranges set forth in
24-7 Articles 26.32 and 26.33 of this code until September 1, 1995. The
24-8 percentage increase in the premium rate charged to a small employer
24-9 under this article for a new rating period may not exceed the sum
24-10 of:
24-11 (1) the percentage change in the new business premium
24-12 rate measured from the first day of the prior rating period to the
24-13 first day of the new rating period; and
24-14 (2) any adjustment due to change in coverage or change
24-15 in the case characteristics of the small employer as determined
24-16 from the small employer carrier's rate manual for the class of
24-17 business.
24-18 Art. 26.35. RATE ADJUSTMENT IN CLOSED PLAN. In the case of
24-19 a health benefit plan into which a small employer carrier is no
24-20 longer enrolling new small employers, the small employer carrier
24-21 shall use the percentage change in the base premium rate to adjust
24-22 rates under Articles 26.33(1) and 26.34(1) of this code. The
24-23 portion of change in rates computed under those subdivisions may
24-24 not exceed, on a percentage basis, the change in the new business
24-25 premium rate for the most similar health benefit plan into which
25-1 the small employer carrier is actively enrolling new small
25-2 employers.
25-3 Art. 26.36. PREMIUM RATES; NONDISCRIMINATION. (a) A small
25-4 employer carrier shall apply rating factors, including case
25-5 characteristics, consistently with respect to all small employers
25-6 in a class of business. Rating factors shall produce premiums for
25-7 identical groups that differ only by the amounts attributable to
25-8 plan design and that do not reflect differences due to the nature
25-9 of the groups assumed to select particular health benefit plans.
25-10 (b) A small employer carrier shall treat each health
25-11 benefit plan issued or renewed in the same calendar month as having
25-12 the same rating period.
25-13 (c) A small employer carrier may not use case
25-14 characteristics without the prior approval of the commissioner
25-15 other than the geographic area in which the small employer's
25-16 employees reside, the age and gender of the individual employees
25-17 and their dependents, the composition of the employees' families,
25-18 the appropriate industry classification, and the number of
25-19 employees and dependents.
25-20 (d) Premium rates for a small employer health benefit plan
25-21 must comply with the requirements of this chapter, notwithstanding
25-22 any assessments paid or payable by small employer carriers.
25-23 (e) The board may adopt rules to implement this article and
25-24 to ensure that rating practices used by small employer carriers are
25-25 consistent with the purposes of this chapter, including rules that
26-1 ensure that differences in rates charged for each small employer
26-2 health benefit plan are reasonable and reflect objective
26-3 differences in plan design.
26-4 (f) A small employer carrier may not transfer a small
26-5 employer involuntarily into or out of a class of business. A small
26-6 employer carrier may not offer to transfer a small employer into or
26-7 out of a class of business unless the offer is made to transfer all
26-8 small employers in that class of business without regard to case
26-9 characteristics, claim experience, health status, or duration of
26-10 coverage since the issuance of the health benefit plan.
26-11 Art. 26.37. RESTRICTED PROVIDER NETWORKS. For purposes of
26-12 this subchapter, a small employer health benefit plan may use a
26-13 restricted provider network to provide the benefits under the plan.
26-14 A plan that uses a restricted provider network does not provide
26-15 similar coverage to a small employer health benefit plan that does
26-16 not use a restricted provider network, if the use of the network
26-17 results in reduced premiums to the small employer or substantial
26-18 differences in claim costs.
26-19 Art. 26.38. HEALTH MAINTENANCE ORGANIZATION; APPROVED
26-20 HEALTH BENEFIT PLAN. The premium rates for a state-approved
26-21 health benefit plan offered by a health maintenance organization
26-22 under Article 26.48 of this code must be established in accordance
26-23 with formulas or schedules of charges filed with the department.
26-24 Art. 26.39. ENFORCEMENT. If the commissioner finds that a
26-25 small employer carrier subject to this chapter exceeds the
27-1 applicable rate established under this subchapter, the commissioner
27-2 may order restitution and assess penalties as provided by Section
27-3 7, Article 1.10, of this code.
27-4 Art. 26.40. DISCLOSURE. In connection with the offering for
27-5 sale of any small employer health benefit plan, each small employer
27-6 carrier shall make a reasonable disclosure, as part of its
27-7 solicitation and sales materials, of:
27-8 (1) the extent to which premium rates for a specific
27-9 small employer are established or adjusted based on the actual or
27-10 expected variation in claim costs or the actual or expected
27-11 variation in health status of the employees of the small employer
27-12 and their dependents;
27-13 (2) provisions concerning the small employer carrier's
27-14 right to change premium rates and the factors other than claim
27-15 experience that affect changes in premium rates;
27-16 (3) provisions relating to renewability of policies
27-17 and contracts; and
27-18 (4) any preexisting condition provision.
27-19 Art. 26.41. REPORTING REQUIREMENTS. (a) Compliance with
27-20 the underwriting and rating requirements of this chapter shall be
27-21 demonstrated through actuarial certification. Small employer
27-22 carriers offering a small employer health benefit plan shall file
27-23 annually with the commissioner an actuarial certification stating
27-24 that the underwriting and rating methods of the small employer
27-25 carrier:
28-1 (1) comply with accepted actuarial practices;
28-2 (2) are uniformly applied to each small employer
28-3 health benefit plan covering a small employer; and
28-4 (3) comply with the provisions of this chapter.
28-5 (b) Each small employer carrier shall maintain at its
28-6 principal place of business a complete and detailed description of
28-7 its rating practices and renewal underwriting practices, including
28-8 information and documentation that demonstrate that its rating
28-9 methods and practices are based on commonly accepted actuarial
28-10 assumptions and are in accordance with sound actuarial principles.
28-11 (c) A small employer carrier shall make the information and
28-12 documentation described in Subsection (b) of this article
28-13 available to the commissioner on request. Except in cases of
28-14 violations of this chapter, the information shall be considered
28-15 proprietary and trade secret information and shall not be subject
28-16 to disclosure by the commissioner to persons outside the department
28-17 except as agreed to by the small employer carrier or as ordered by
28-18 a court of competent jurisdiction.
28-19 SUBCHAPTER E. COVERAGE
28-20 Art. 26.42. SMALL EMPLOYER HEALTH BENEFIT PLANS. (a) A
28-21 small employer carrier shall offer the following three health
28-22 benefit plans:
28-23 (1) the preventive and primary care benefit plan;
28-24 (2) the in-hospital benefit plan; and
28-25 (3) the standard health benefit plan.
29-1 (b) A small employer carrier may offer to a small employer
29-2 additional benefit riders to the standard health benefit plan.
29-3 (c) A small employer carrier may not offer to a small
29-4 employer benefit riders to:
29-5 (1) the preventive and primary care benefit plan,
29-6 except as provided by Article 26.45(d) of this code; or
29-7 (2) the in-hospital benefit plan, except as provided
29-8 by Article 26.46(e) of this code.
29-9 (d) Subject to the provisions of this chapter, a small
29-10 employer carrier may also offer to small employers any other health
29-11 benefit plan authorized under this code. Article 26.06(c) does not
29-12 apply to a health benefit plan offered to a small employer under
29-13 this subsection.
29-14 Art. 26.43. POLICY FORMS. The commissioner shall promulgate
29-15 the benefits section of the preventive and primary benefit plan,
29-16 the in-hospital benefit plan, and the standard health benefit plan
29-17 policy forms. For all other portions of these policy forms, a
29-18 small employer carrier shall comply with Article 3.42 of this code
29-19 as it relates to policy form approval. A small employer carrier
29-20 may not offer these three benefit plans through a policy form that
29-21 does not comply with this article.
29-22 Art. 26.44. RIDERS; FILING WITH COMMISSIONER. (a) A small
29-23 employer carrier shall file with the commissioner, in a form and
29-24 manner prescribed by the commissioner, riders to the small employer
29-25 health benefit plans as allowed under Article 26.42 of this code to
30-1 be used by the small employer carrier. A small employer carrier
30-2 may use a rider filed under this article after the 30th day after
30-3 the date the rider is filed unless the commissioner disapproves its
30-4 use.
30-5 (b) The commissioner, after notice and an opportunity for a
30-6 hearing, may disapprove the continued use by a small employer
30-7 carrier of a rider if the rider does not meet the requirements of
30-8 this chapter.
30-9 Art. 26.45. PREVENTIVE AND PRIMARY CARE BENEFIT PLAN. (a)
30-10 The preventive and primary care benefit plan must include coverage
30-11 for the health services described by Subsections (b) and (c) of
30-12 this article when those services are provided within the scope of
30-13 their practice by a physician, physician assistant, advanced nurse
30-14 practitioner, or another licensed practitioner, including any
30-15 practitioner required to be covered under Article 21.52 of this
30-16 code or under Section 2, Chapter 397, Acts of the 54th Legislature,
30-17 Regular Session, l955 (Article 3.70-2, Vernon's Texas Insurance
30-18 Code).
30-19 (b) Coverage for the following preventive care must be
30-20 provided without copayment or deductible:
30-21 (1) childhood immunizations;
30-22 (2) Pap tests;
30-23 (3) mammography, as required by Section 2, Chapter
30-24 397, Acts of the 54th Legislature, Regular Session, l955 (Article
30-25 3.70-2, Vernon's Texas Insurance Code);
31-1 (4) colo-rectal screening;
31-2 (5) prostate cancer screening; and
31-3 (6) vision and hearing tests for children under 19
31-4 years of age.
31-5 (c) Coverage must include the following:
31-6 (1) outpatient hospital care and up to five days per
31-7 policy year of inpatient hospital care;
31-8 (2) emergency care, as defined by Section 2, Chapter
31-9 397, Acts of the 54th Legislature, 1955 (Article 3.70-2, Vernon's
31-10 Texas Insurance Code), and Section 2(t), Texas Health Maintenance
31-11 Organization Act (Article 20A.02, Vernon's Texas Insurance Code);
31-12 (3) pregnancy-related care, including prenatal and
31-13 postnatal care and high-risk pregnancy care;
31-14 (4) well-child care, as defined by the Texas
31-15 Department of Health based on the standards of the American Academy
31-16 of Pediatrics or its successor organization;
31-17 (5) outpatient clinic or office visits for treatment
31-18 of illness or injury;
31-19 (6) one physical examination per policy year;
31-20 (7) diagnostic examinations and laboratory and X-ray
31-21 services, with a limit of $5,000 per policy year;
31-22 (8) mental health services, including outpatient
31-23 evaluation, crisis intervention, and services for treatment of
31-24 serious mental illness as described by Section 1, Article 3.51-14,
31-25 of this code, for five days of inpatient services and 40 outpatient
32-1 visits per policy year;
32-2 (9) evaluation and treatment for the abuse of or
32-3 addiction to alcohol or drugs, for five days of inpatient services
32-4 and 40 outpatient visits per policy year;
32-5 (10) home health services, as defined by Section 1,
32-6 Article 3.70-3B, of this code subject to a maximum of 40 visits per
32-7 policy year;
32-8 (11) rehabilitative services, including outpatient
32-9 diagnostic services and 40 outpatient treatment visits per policy
32-10 year; and
32-11 (12) prescription drugs.
32-12 (d) A preventive and primary care benefit plan may include a
32-13 rider for coverage of prescription drugs but may not include any
32-14 other rider.
32-15 (e) A preventive and primary care benefit plan must include
32-16 a total benefit cap of $15,000 per policy year.
32-17 (f) Except as provided by Subsection (b) of this article, a
32-18 preventive and primary care benefit plan may require a deductible
32-19 of not more than $250 per policy year and must pay at least 80
32-20 percent of covered charges after the deductible has been satisfied.
32-21 After an insured's copayments have reached $1,000 in a policy year,
32-22 the plan must pay 100 percent of covered charges for the remainder
32-23 of that policy year.
32-24 Art. 26.46. IN-HOSPITAL BENEFIT PLAN. (a) The in-hospital
32-25 benefit plan must include coverage for:
33-1 (1) diagnostic, treatment, and rehabilitative services
33-2 provided through inpatient hospital services; and
33-3 (2) outpatient care necessary as a follow-up to the
33-4 inpatient hospital services until the 90th day after the date of
33-5 discharge from the hospital.
33-6 (b) The in-hospital benefit plan is not subject to any law
33-7 requiring the reimbursement, use, or consideration of a specific
33-8 category of a licensed or certified health care practitioner.
33-9 (c) The in-hospital benefit plan must provide lifetime
33-10 benefits of $1 million and a total benefit cap of $100,000 per
33-11 policy year.
33-12 (d) The in-hospital benefit plan may include deductible and
33-13 copayment requirements.
33-14 (e) The in-hospital benefit plan may include a primary and
33-15 preventive care rider that includes the coverage required by
33-16 Article 26.45 of this code other than the coverage required by
33-17 Subsection (c)(1) of that article. The in-hospital benefit plan
33-18 may also include a supplementary accident benefit plan, but may not
33-19 include other riders or supplementary benefit plans.
33-20 Art. 26.47. STANDARD HEALTH BENEFIT PLAN. (a) The standard
33-21 health benefit plan shall include coverage for:
33-22 (1) health care services, including consulting and
33-23 referral services, provided within the scope of their practice by a
33-24 physician, a physician assistant, an advanced nurse practitioner,
33-25 or another licensed practitioner, including any practitioner
34-1 required to be covered under Article 21.52 of this code or under
34-2 Section 2, Chapter 397, Acts of the 54th Legislature, Regular
34-3 Session, 1955 (Article 3.70-2, Vernon's Texas Insurance Code);
34-4 (2) care in the following facilities:
34-5 (A) inpatient hospitals;
34-6 (B) outpatient hospitals;
34-7 (C) skilled nursing facilities, subject to a
34-8 maximum benefit of $10,000 per policy year; and
34-9 (D) hospice facilities, subject to a maximum
34-10 lifetime benefit of $10,000;
34-11 (3) emergency care, as defined by Section 2, Chapter
34-12 397, Acts of the 54th Legislature, 1955 (Article 3.70-2, Vernon's
34-13 Texas Insurance Code), and Section 2(t), Texas Health Maintenance
34-14 Organization Act (Article 20A.02, Vernon's Texas Insurance Code);
34-15 (4) pregnancy-related care, including prenatal and
34-16 postnatal care and high-risk pregnancy care;
34-17 (5) well-child care, as defined by the Texas
34-18 Department of Health based on the standards of the American Academy
34-19 of Pediatrics or its successor organization;
34-20 (6) outpatient clinic or office visits for treatment
34-21 of illness or injury;
34-22 (7) one physical examination per policy year;
34-23 (8) mental health services, including inpatient and
34-24 outpatient evaluation, crisis intervention, and other treatment for
34-25 serious mental illness as described by Section 1, Article 3.51-14,
35-1 of this code, and coverage described by Section 2(F), Chapter 397,
35-2 Acts of the 54th Legislature, 1955 (Article 3.70-2, Vernon's Texas
35-3 Insurance Code), and Article 3.72 of this code, subject to a limit
35-4 of:
35-5 (A) 90 days of inpatient psychiatric care per
35-6 policy year; and
35-7 (B) 40 outpatient visits per policy year,
35-8 subject to a maximum benefit of $100 for each visit;
35-9 (9) medical treatment and referral services for the
35-10 abuse of or addiction to alcohol or drugs, as required by Article
35-11 3.51-9 of this code;
35-12 (10) diagnostic examinations and laboratory and X-ray
35-13 services;
35-14 (11) physical therapy performed by a qualified
35-15 licensed physical therapist, occupational therapy performed by a
35-16 qualified licensed occupational therapist, or speech-language
35-17 therapy performed by a qualified licensed speech-language
35-18 pathologist, subject to a maximum benefit of $10,000 per policy
35-19 year;
35-20 (12) home health services as required by Article
35-21 3.70-3B of this code, subject to a maximum limit of $10,000 per
35-22 policy year; and
35-23 (13) prescription drugs.
35-24 (b) Coverage for the following preventive care must be
35-25 provided without copayment or deductible:
36-1 (1) childhood immunizations;
36-2 (2) Pap tests;
36-3 (3) mammography, as required by Section 2, Chapter
36-4 397, Acts of the 54th Legislature, Regular Session, l955 (Article
36-5 3.70-2, Vernon's Texas Insurance Code);
36-6 (4) colo-rectal screening;
36-7 (5) prostate cancer screening; and
36-8 (6) vision and hearing tests for children under 19
36-9 years of age.
36-10 (c) The standard health benefit plan shall provide lifetime
36-11 benefits of $1 million and a total benefit cap of at least $250,000
36-12 per policy year.
36-13 (d) Except for services excluded from deductible and
36-14 copayment requirements by Subsection (b) of this article, a
36-15 standard health benefit plan may include deductible and copayment
36-16 requirements.
36-17 (e) The board may adopt rules to implement this article.
36-18 Art. 26.48. HEALTH MAINTENANCE ORGANIZATION PLANS. Instead
36-19 of the small employer health benefit plans described by this
36-20 subchapter, a health maintenance organization may offer a
36-21 state-approved health benefit plan that complies with the
36-22 requirements of Title XI, Public Health Service Act (42 U.S.C.
36-23 Section 300e et seq.) and rules adopted under that Act.
36-24 Art. 26.49. PREEXISTING CONDITION PROVISIONS. (a) Except
36-25 as provided by Article 26.21(f) of this code, a preexisting
37-1 condition provision in a small employer health benefit plan may not
37-2 apply to expenses incurred after the first anniversary of the
37-3 effective date of coverage.
37-4 (b) A preexisting condition provision in a small employer
37-5 health benefit plan may not apply to coverage for a disease or
37-6 condition other than a disease or condition:
37-7 (1) for which medical advice, diagnosis, care, or
37-8 treatment was recommended or received during the six months before
37-9 the effective date of coverage; or
37-10 (2) that would have caused an ordinary, prudent person
37-11 to seek medical advice, diagnosis, care, or treatment during the
37-12 six months before the effective date of coverage.
37-13 (c) A preexisting condition provision in a small employer
37-14 health benefit plan may not apply to an individual who was
37-15 continuously covered for a minimum period of 12 months by a health
37-16 benefit plan that was in effect up to a date not more than two
37-17 months before the effective date of coverage under the small
37-18 employer health benefit plan.
37-19 (d) A preexisting condition provision may exclude coverage
37-20 for a pregnancy existing on the effective date of the coverage,
37-21 except as provided by Subsection (c) of this article.
37-22 (e) In determining whether a preexisting condition provision
37-23 applies to an individual covered by a small employer health benefit
37-24 plan, the small employer carrier shall credit the time the
37-25 individual was covered under a previous health benefit plan if the
38-1 previous coverage was in effect at any time during the 12 months
38-2 preceding the effective date of coverage under a small employer
38-3 health benefit plan. If the previous coverage was issued by a
38-4 health maintenance organization, any waiting period that applied
38-5 before that coverage became effective also shall be credited
38-6 against the preexisting condition provision period.
38-7 Art. 26.50. COORDINATION WITH FEDERAL LAW. The board by
38-8 rule may modify a small employer benefit plan described by this
38-9 subchapter or adopt a substitute for that plan to the extent
38-10 required to comply with federal law applicable to the plan. The
38-11 board shall use the Texas Health Benefits Purchasing Cooperative in
38-12 the implementation of this article.
38-13 SUBCHAPTER F. REINSURANCE
38-14 Art. 26.51. ELECTION TO BE RISK-ASSUMING OR REINSURED
38-15 CARRIER; NOTICE TO COMMISSIONER. (a) Each small employer carrier
38-16 shall notify the commissioner of the carrier's election to operate
38-17 as a risk-assuming carrier or a reinsured carrier. A small
38-18 employer carrier seeking to operate as a risk-assuming carrier
38-19 shall make an application under Article 26.52 of this code.
38-20 (b) A small employer carrier's election under Subsection (a)
38-21 of this article is effective until the fifth anniversary of the
38-22 election. The commissioner may permit a small employer carrier to
38-23 modify its decision at any time for good cause shown.
38-24 (c) The commissioner shall establish an application process
38-25 for small employer carriers seeking to change their status under
39-1 this article.
39-2 (d) A reinsured carrier that elects to change its status to
39-3 operate as a risk-assuming carrier may not continue to reinsure a
39-4 small employer health benefit plan with the system. The carrier
39-5 shall pay a prorated assessment based on business issued as a
39-6 reinsured carrier for any portion of the year that the business was
39-7 reinsured.
39-8 Art. 26.52. APPLICATION TO BECOME A RISK-ASSUMING CARRIER.
39-9 (a) A small employer carrier may apply to become a risk-assuming
39-10 carrier by filing an application with the commissioner in a form
39-11 and manner prescribed by the commissioner.
39-12 (b) In evaluating an application filed under Subsection (a)
39-13 of this article, the commissioner shall consider the small employer
39-14 carrier's:
39-15 (1) financial condition;
39-16 (2) history of rating and underwriting small employer
39-17 groups;
39-18 (3) commitment to market fairly to all small employers
39-19 in the state or in its established geographic service area; and
39-20 (4) experience managing the risk of small employer
39-21 groups.
39-22 (c) The commissioner shall provide public notice of an
39-23 application by a small employer carrier to be a risk-assuming
39-24 carrier and shall provide at least a 60-day period for public
39-25 comment before making a decision on the application. If the
40-1 application is not acted on before the 90th day after the date the
40-2 commissioner received the application, the carrier may request and
40-3 the commissioner shall grant a hearing.
40-4 (d) The commissioner, after notice and hearing, may rescind
40-5 the approval granted to a risk-assuming carrier under this article
40-6 if the commissioner finds that the carrier:
40-7 (1) is not financially able to support the assumption
40-8 of risk from issuing coverage to small employers without the
40-9 protection afforded by the system;
40-10 (2) has failed to market fairly to all small employers
40-11 in the state or its established geographic service area; or
40-12 (3) has failed to provide coverage to eligible small
40-13 employers.
40-14 Art. 26.53. TEXAS HEALTH REINSURANCE SYSTEM. (a) The Texas
40-15 Health Reinsurance System is created as a nonprofit entity.
40-16 (b) The system is administered by a board of directors and
40-17 operates subject to the supervision and control of the
40-18 commissioner.
40-19 Art. 26.54. BOARD OF DIRECTORS. (a) The board of directors
40-20 is composed of nine members appointed by the commissioner. The
40-21 commissioner or the commissioner's representative shall serve as an
40-22 ex officio member. Five members must be representatives of
40-23 reinsured carriers selected from individuals nominated by small
40-24 employer carriers in this state according to procedures developed
40-25 by the commissioner. Four members must represent the general
41-1 public. A member representing the general public may not be:
41-2 (1) an officer, director, or employee of an insurance
41-3 company, agency, agent, broker, solicitor, or adjuster or any other
41-4 business entity regulated by the department;
41-5 (2) a person required to register with the Texas
41-6 Ethics Commission under Chapter 305, Government Code; or
41-7 (3) related to a person described by Subdivision (1)
41-8 or (2) of this subsection within the second degree of affinity or
41-9 consanguinity.
41-10 (b) The members appointed by the commissioner serve two-year
41-11 terms. The terms expire on December 31 of each odd-numbered year.
41-12 A member's term continues until a successor is appointed.
41-13 (c) A member of the board of directors may not be
41-14 compensated for serving on the board of directors but is entitled
41-15 to reimbursement for actual expenses incurred in performing
41-16 functions as a member of the board of trustees as provided in the
41-17 General Appropriations Act.
41-18 (d) The board of directors is subject to the open meetings
41-19 law, Chapter 271, Acts of the 60th Legislature, Regular Session,
41-20 1967 (Article 6252-17, Vernon's Texas Civil Statutes), and the open
41-21 records law, Chapter 424, Acts of the 63rd Legislature, Regular
41-22 Session, 1973 (Article 6252-17a, Vernon's Texas Civil Statutes).
41-23 Art. 26.55. PLAN OF OPERATION. (a) Not later than the
41-24 180th day after the date on which a majority of the members of the
41-25 board of directors have been appointed, the board of directors
42-1 shall submit to the commissioner a plan of operation and thereafter
42-2 any amendments necessary or suitable to ensure the fair,
42-3 reasonable, and equitable administration of the system. The
42-4 commissioner, after notice and hearing, may approve the plan of
42-5 operation if the commissioner determines the plan is suitable to
42-6 ensure the fair, reasonable, and equitable administration of the
42-7 system and provides for the sharing of system gains or losses on an
42-8 equitable and proportionate basis in accordance with the provisions
42-9 of this subchapter. The plan of operation is effective on the
42-10 written approval of the commissioner.
42-11 (b) If the board of directors fails to timely submit a
42-12 suitable plan of operation, the commissioner, after notice and
42-13 hearing, shall adopt a temporary plan of operation. The
42-14 commissioner shall amend or rescind any plan adopted under this
42-15 subsection at the time a plan of operation is submitted by the
42-16 board of directors and approved by the commissioner.
42-17 (c) The plan of operation must:
42-18 (1) establish procedures for the handling and
42-19 accounting of system assets and money and for an annual fiscal
42-20 report to the commissioner;
42-21 (2) establish procedures for the selection of an
42-22 administering carrier or third-party administrator and establish
42-23 the powers and duties of that administering carrier or third-party
42-24 administrator;
42-25 (3) establish procedures for reinsuring risks in
43-1 accordance with the provisions of this article;
43-2 (4) establish procedures for collecting assessments
43-3 from reinsured carriers to fund claims and administrative expenses
43-4 incurred or estimated to be incurred by the system, including the
43-5 imposition of penalties for late payment of an assessment; and
43-6 (5) provide for any additional matters necessary for
43-7 the implementation and administration of the system.
43-8 Art. 26.56. POWERS AND DUTIES OF SYSTEM. The system has the
43-9 general powers and authority granted under the laws of this state
43-10 to insurance companies and health maintenance organizations
43-11 licensed to transact business, except that the system may not
43-12 directly issue health benefit plans. The system is exempt from all
43-13 taxes. The system may:
43-14 (1) enter into contracts necessary or proper to carry
43-15 out the provisions and purposes of this subchapter and may, with
43-16 the approval of the commissioner, enter into contracts with similar
43-17 programs of other states for the joint performance of common
43-18 functions or with persons or other organizations for the
43-19 performance of administrative functions;
43-20 (2) sue or be sued, including taking legal actions
43-21 necessary or proper to recover assessments and penalties for, on
43-22 behalf of, or against the system or a reinsured carrier;
43-23 (3) take legal action necessary to avoid the payment
43-24 of improper claims against the system;
43-25 (4) issue reinsurance contracts in accordance with the
44-1 requirements of this subchapter;
44-2 (5) establish guidelines, conditions, and procedures
44-3 for reinsuring risks under the plan of operation;
44-4 (6) establish actuarial functions as appropriate for
44-5 the operation of the system;
44-6 (7) assess reinsured carriers in accordance with the
44-7 provisions of Article 26.60 of this code and make advance interim
44-8 assessments as may be reasonable and necessary for organizational
44-9 and interim operating expenses, provided that any interim
44-10 assessments shall be credited as offsets against regular
44-11 assessments due after the close of the fiscal year;
44-12 (8) appoint appropriate legal, actuarial, and other
44-13 committees as necessary to provide technical assistance in the
44-14 operation of the system, policy and other contract design, and any
44-15 other function within the authority of the system; and
44-16 (9) borrow money for a period not to exceed one year
44-17 to effect the purposes of the system, provided that any notes or
44-18 other evidence of indebtedness of the system not in default shall
44-19 be legal investments for small employer carriers and may be carried
44-20 as admitted assets.
44-21 Art. 26.57. AUDIT BY STATE AUDITOR. (a) The state auditor
44-22 shall conduct annually a special audit of the system under Chapter
44-23 321, Government Code. The state auditor's report shall include a
44-24 financial audit and an economy and efficiency audit.
44-25 (b) The state auditor shall report the cost of each audit
45-1 conducted under this article to the board of directors and the
45-2 comptroller, and the board of directors shall remit that amount to
45-3 the comptroller for deposit to the general revenue fund.
45-4 Art. 26.58. REINSURANCE. (a) A small employer carrier may
45-5 reinsure risks covered under the small employer health benefit
45-6 plans with the system as provided by this article.
45-7 (b) The system shall reinsure the level of coverage provided
45-8 under the small employer health benefit plans.
45-9 (c) A small employer carrier may reinsure an entire small
45-10 employer group not later than the 60th day after the date on which
45-11 the group's coverage under the small employer health benefit plans
45-12 takes effect. A small employer carrier may reinsure an eligible
45-13 employee of a small employer or the employee's dependent not later
45-14 than the 60th day after the date on which that individual's
45-15 coverage takes effect. A newly eligible employee or dependent of a
45-16 reinsured small employer group or an individual covered under the
45-17 small employer health benefit plans may be reinsured not later than
45-18 the 60th day after the date on which that individual's coverage
45-19 takes effect.
45-20 (d) The system may not reimburse a reinsured carrier for the
45-21 claims of any reinsured individual until the carrier has incurred
45-22 an initial level of claims for that individual in a calendar year
45-23 of $5,000 for benefits covered by the system. In addition, the
45-24 reinsured carrier is responsible for 10 percent of the next $50,000
45-25 of benefit payments during a calendar year, and the system shall
46-1 reinsure the remainder. A reinsured carrier's liability to any
46-2 insured individual may not exceed a maximum of $10,000 in any one
46-3 calendar year for that individual.
46-4 (e) The board of directors annually shall adjust the initial
46-5 level of claims and the maximum to be retained by the carrier
46-6 established under Subsection (d) of this article to reflect
46-7 increases in costs and in use for small employer health benefit
46-8 plans in this state. The adjustment may not be less than the
46-9 annual change in the medical component of the Consumer Price Index
46-10 for All Urban Consumers published by the Bureau of Labor Statistics
46-11 of the United States Department of Labor unless the board of
46-12 directors proposes and the commissioner approves a lower adjustment
46-13 factor.
46-14 (f) A small employer carrier may terminate reinsurance with
46-15 the system for one or more of the reinsured employees or dependents
46-16 of employees of a small employer on a contract anniversary of the
46-17 small employer health benefit plans.
46-18 (g) Except as provided in the plan of operation, a reinsured
46-19 carrier shall apply consistently with respect to reinsured and
46-20 nonreinsured business all managed care procedures, including
46-21 utilization review, individual case management, preferred provider
46-22 provisions, and other managed care provisions or methods of
46-23 operation.
46-24 Art. 26.59. PREMIUM RATES. (a) As part of the plan of
46-25 operation, the board of directors shall adopt a method to determine
47-1 premium rates to be charged by the system for reinsuring small
47-2 employer groups and individuals under this subchapter.
47-3 (b) The method adopted must include classification systems
47-4 for small employer groups that reflect the variations in premium
47-5 rates allowed in this chapter and must provide for the development
47-6 of base reinsurance premium rates that reflect the allowable
47-7 variations. The base reinsurance premium rates shall be
47-8 established by the board of directors, subject to the approval of
47-9 the board, and shall be set at levels that reasonably approximate
47-10 the gross premiums charged to small employers by small employer
47-11 carriers for the small employer health benefit plans, adjusted to
47-12 reflect retention levels required under this subchapter. The board
47-13 of directors periodically shall review the method adopted under
47-14 this subsection, including the classification system and any rating
47-15 factors, to ensure that the method reasonably reflects the claim
47-16 experience of the system. The board of directors may propose
47-17 changes to the method. The changes are subject to the approval of
47-18 the board.
47-19 (c) An entire small employer group may be reinsured at a
47-20 rate that is 1-1/2 times the base reinsurance premium rate for that
47-21 group. An eligible employee of a small employer or the employee's
47-22 dependent covered under the small employer health benefit plans may
47-23 be reinsured at a rate that is five times the base reinsurance
47-24 premium rate for that individual.
47-25 (d) The board of directors may consider adjustments to the
48-1 premium rates charged by the system to reflect the use of effective
48-2 cost containment and managed care arrangements.
48-3 Art. 26.60. ASSESSMENTS. (a) Not later than March 1 of
48-4 each year, the board of directors shall determine and report to the
48-5 commissioner the system net loss for the previous calendar year,
48-6 including administrative expenses and incurred losses for the year,
48-7 taking into account investment income and other appropriate gains
48-8 and losses. Any net loss for the year must be recouped by
48-9 assessments on reinsured carriers. Each reinsured carrier's
48-10 assessment shall be determined annually by the board of directors
48-11 based on annual statements and other reports required by the board
48-12 of directors and filed with that board. The board of directors
48-13 shall establish, as part of the plan of operation, a formula by
48-14 which to make assessments against reinsured carriers. With the
48-15 approval of the commissioner, the board of directors may change the
48-16 assessment formula from time to time as appropriate. The board of
48-17 directors shall base the assessment formula on each reinsured
48-18 carrier's share of:
48-19 (1) the total premiums earned in the preceding
48-20 calendar year from the small employer health benefit plans
48-21 delivered or issued for delivery by reinsured carriers to small
48-22 employer groups in this state; and
48-23 (2) the premiums earned in the preceding calendar year
48-24 from newly issued small employer health benefit plans delivered or
48-25 issued for delivery during the calendar year by reinsured carriers
49-1 to small employer groups in this state.
49-2 (b) The formula established under Subsection (a) of this
49-3 article may not result in an assessment share for a reinsured
49-4 carrier that is less than 50 percent or more than 150 percent of an
49-5 amount based on the proportion of the total premium earned in the
49-6 preceding calendar year from the small employer health benefit
49-7 plans delivered or issued for delivery to small employer groups in
49-8 this state by that reinsured carrier to the total premiums earned
49-9 in the preceding calendar year from standard small employer health
49-10 benefit plans delivered or issued for delivery to small employer
49-11 groups in this state by all reinsured carriers. Premiums earned by
49-12 a reinsured carrier that are less than an amount determined by the
49-13 board of directors to justify the cost of collection of an
49-14 assessment based on those premiums may not be considered by the
49-15 board of directors in determining assessments.
49-16 (c) With the approval of the commissioner, the board of
49-17 directors may adjust the assessment formula for reinsured carriers
49-18 that are approved health maintenance organizations that are
49-19 federally qualified under Subchapter XI, Public Health Service Act
49-20 (42 U.S.C. Section 300e et seq.), to the extent that any
49-21 restrictions are imposed on those health maintenance organizations
49-22 that are not imposed on other health carriers.
49-23 Art. 26.61. EVALUATION OF SYSTEM. (a) Not later than March
49-24 1 of each year, the board of directors shall file with the
49-25 commissioner an estimate of the assessments necessary to fund the
50-1 losses for small employer groups incurred by the system during the
50-2 previous calendar year.
50-3 (b) If the board of directors determines that the necessary
50-4 assessments exceed five percent of the total premiums earned in the
50-5 previous calendar year from small employer health benefit plans
50-6 delivered or issued for delivery by reinsured carriers to small
50-7 employer groups in this state, the board of directors shall
50-8 evaluate the operation of the system and shall report its findings,
50-9 including any recommendations for changes to the plan of operation,
50-10 to the commissioner not later than April 1 of the year following
50-11 the calendar year in which the losses were incurred. The
50-12 evaluation must include an estimate of future assessments and must
50-13 consider the administrative costs of the system, the
50-14 appropriateness of the premiums charged, the level of insurer
50-15 retention under the system, and the costs of coverage for small
50-16 employer groups.
50-17 (c) If the board of directors fails to timely file a report,
50-18 the commissioner may evaluate the operations of the system and may
50-19 implement amendments to the plan of operation as considered
50-20 necessary by the commissioner to reduce future losses and
50-21 assessments.
50-22 (d) Reinsured carriers may not write small employer health
50-23 benefit plans on a guaranteed issue basis during a calendar year if
50-24 the assessment amount payable for the previous calendar year is at
50-25 least five percent of the total premiums earned in that calendar
51-1 year from small employer health benefit plans delivered or issued
51-2 for delivery by reinsured carriers in this state.
51-3 (e) Reinsured carriers may not write small employer health
51-4 benefit plans on a guaranteed issue basis after the board of
51-5 directors determines that the expected loss from the reinsurance
51-6 system for a year will exceed the total amount of assessments
51-7 payable at a rate of five percent of the total premiums earned for
51-8 the previous calendar year. Reinsured carriers may not resume
51-9 writing small employer health benefit plans on a guaranteed issue
51-10 basis until the board of directors determines that the expected
51-11 loss will be less than the maximum established by this subsection.
51-12 (f) The maximum assessment amount payable for a calendar
51-13 year may not exceed five percent of the total premiums earned in
51-14 the preceding calendar year from small employer health benefit
51-15 plans delivered or issued for delivery by reinsured carriers in
51-16 this state.
51-17 Art. 26.62. DEFERMENT OF ASSESSMENT. (a) A reinsured
51-18 carrier may petition the commissioner for a deferment in whole or
51-19 in part of an assessment imposed by the board of directors.
51-20 (b) The commissioner may defer all or part of the assessment
51-21 of a reinsured carrier if the commissioner determines that the
51-22 payment of the assessment would endanger the ability of the
51-23 reinsured carrier to fulfill its contractual obligations.
51-24 (c) If an assessment against a reinsured carrier is
51-25 deferred, the amount deferred shall be assessed against the other
52-1 reinsured carriers in a manner consistent with the basis for
52-2 assessment established by this subchapter.
52-3 (d) A reinsured carrier receiving a deferment is liable to
52-4 the system for the amount deferred and is prohibited from
52-5 marketing, delivering, or issuing for delivery a small employer
52-6 health benefit plan or reinsuring any individual or group with the
52-7 system until it pays the outstanding assessment.
52-8 SUBCHAPTER G. MARKETING
52-9 Art. 26.71. FAIR MARKETING. (a) Each small employer
52-10 carrier shall actively market the small employer health benefit
52-11 plan through properly licensed agents to eligible small employers
52-12 in this state. Each small employer purchasing a small employer
52-13 health benefit plan must affirm that the agent who sold the plan
52-14 offered and explained all three plans to that employer.
52-15 (b) The department shall require periodic demonstration by
52-16 small employer carriers and agents that those carriers and agents
52-17 are marketing or issuing small employer health benefit plans to
52-18 small employers in fulfillment of the purposes of this article.
52-19 (c) The department may require periodic reports by small
52-20 employer carriers and agents regarding small employer health
52-21 benefit plans issued by those carriers and agents. The reporting
52-22 requirements shall include information regarding case
52-23 characteristics and the numbers of small employer health benefit
52-24 plans in various categories that are marketed or issued to small
52-25 employers.
53-1 Art. 26.72. HEALTH STATUS AND CLAIMS EXPERIENCE; PROHIBITED
53-2 ACTS. (a) A small employer carrier or agent may not, directly or
53-3 indirectly:
53-4 (1) encourage or direct a small employer to refrain
53-5 from applying for coverage with the small employer carrier because
53-6 of health status or claim experience; or
53-7 (2) encourage or direct a small employer to seek
53-8 coverage from another health carrier because of health status or
53-9 claim experience.
53-10 (b) A small employer carrier may not, directly or
53-11 indirectly, enter into an agreement or arrangement with an agent
53-12 that provides for or results in the compensation paid to an agent
53-13 for the sale of the small employer health benefit plans to be
53-14 varied because of health status or claim experience.
53-15 (c) Subsection (b) of this article does not apply to an
53-16 arrangement that provides compensation to an agent on the basis of
53-17 percentage of premium, provided that the percentage may not vary
53-18 because of health status or claim experience.
53-19 (d) A small employer carrier or agent may not encourage a
53-20 small employer to exclude an eligible employee from health coverage
53-21 provided in connection with the employee's employment.
53-22 Art. 26.73. AGENTS. (a) A small employer carrier shall pay
53-23 the same commission, percentage of premium or other amount to an
53-24 agent for renewal of a small employer health benefit plan as the
53-25 carrier paid for original placement of the plan. Compensation for
54-1 renewal of a plan may be adjusted upward to reflect an increase in
54-2 the cost of living or similar factors.
54-3 (b) A small employer carrier may not terminate, fail to
54-4 renew, or limit its contract or agreement of representation with an
54-5 agent for any reason related to the health status or claim
54-6 experience of a small employer group placed by the agent with the
54-7 carrier.
54-8 Art. 26.74. WRITTEN STATEMENT OF DENIAL, CANCELLATION, OR
54-9 REFUSAL TO RENEW. Denial by a small employer carrier of an
54-10 application for coverage from a small employer or a cancellation or
54-11 refusal to renew must be in writing and must state the reason or
54-12 reasons for the denial, cancellation, or refusal.
54-13 Art. 26.75. RULES. The board may adopt rules setting forth
54-14 additional standards to provide for the fair marketing and broad
54-15 availability of small employer health benefit plans to small
54-16 employers in this state.
54-17 Art. 26.76. VIOLATION. (a) A violation of Article 26.72 of
54-18 this code by a small employer carrier or an agent is an unfair
54-19 method of competition and an unfair or deceptive act or practice
54-20 under Article 21.21 of this code.
54-21 (b) If a small employer carrier enters into an agreement
54-22 with a third-party administrator to provide administrative,
54-23 marketing, or other services related to the offering of small
54-24 employer health benefit plans to small employers in this state, the
54-25 third-party administrator is subject to this subchapter.
55-1 SECTION 2. Subchapter E, Chapter 21, Insurance Code, is
55-2 amended by adding Article 21.52C to read as follows:
55-3 Art. 21.52C. UNIFORM CLAIM BILLING FORMS. (a) In this
55-4 article:
55-5 (1) "Health benefit plan" means a group, blanket, or
55-6 franchise insurance policy, a group hospital service contract, or a
55-7 group subscriber contract or evidence of coverage issued by a
55-8 health maintenance organization that provides benefits for health
55-9 care services.
55-10 (2) "Health carrier" means any entity authorized under
55-11 this code or another insurance law of this state that provides
55-12 health insurance or health benefits in this state, including an
55-13 insurance company, a group hospital service corporation under
55-14 Chapter 20 of this code, a health maintenance organization under
55-15 the Texas Health Maintenance Organization Act (Chapter 20A,
55-16 Vernon's Texas Insurance Code), and a stipulated premium company
55-17 authorized under Chapter 22 of this code.
55-18 (3) "Provider" means a person who provides health care
55-19 under a license issued by this state, including a person listed in
55-20 Section 2(B), Chapter 397, Acts of the 54th Legislature, Regular
55-21 Session, 1955 (Article 3.70-2, Vernon's Texas Insurance Code), or
55-22 in Article 21.52 of this code.
55-23 (b) A provider seeking payment or reimbursement under a
55-24 health benefit plan and the health carrier that issued that plan
55-25 must use uniform claim billing form UB-82/HCFA or HCFA 1500, or
56-1 their successors, as developed by the National Uniform Billing
56-2 Committee or its successor.
56-3 SECTION 3. Section 1(d)(3), Article 3.51-6, Insurance Code,
56-4 is amended to read as follows:
56-5 (3) Any insurer or group hospital service corporation
56-6 subject to Chapter 20, Insurance Code, who issues policies which
56-7 provide hospital, surgical, or major medical expense insurance or
56-8 any combination of these coverages on an expense incurred basis,
56-9 but not a policy which provides benefits for specified disease or
56-10 for accident only, shall provide a conversion or group continuation
56-11 privilege as required by this subsection. Any employee, member, or
56-12 dependent whose insurance under the group policy has been
56-13 terminated for any reason except involuntary termination for cause,
56-14 including discontinuance of the group policy in its entirety or
56-15 with respect to an insured class, and who has been continuously
56-16 insured under the group policy and under any group policy providing
56-17 similar benefits which it replaces for at least three consecutive
56-18 months immediately prior to termination shall be entitled to such
56-19 privilege as outlined in Paragraph (A), (B), or (C) below.
56-20 Involuntary termination for cause does not include termination for
56-21 any health-related cause.
56-22 (A)(i) An insurer shall offer to each employee,
56-23 member, or dependent a conversion policy without evidence of
56-24 insurability if written application for and payment of the first
56-25 premium is made not later than the 31st day after the date of the
57-1 termination. The converted policy shall provide the same coverage
57-2 and benefits as provided under the group policy or plan. The
57-3 lifetime maximum benefits shall be computed from the initial date
57-4 of the employee's, member's, or dependent's coverage with the
57-5 group. An employee, member, or dependent may elect lesser coverage
57-6 and benefits. <Coverage under an individual policy or group
57-7 conversion policy of accident and health insurance without evidence
57-8 of insurability if written application and payment of the first
57-9 premium is made within 31 days after such termination.> An
57-10 employee, member, or dependent shall not be entitled to have a
57-11 converted policy or plan issued if termination of the insurance
57-12 <under the group policy> occurred because: (aa) such person failed
57-13 to pay any required premium; or (bb) any discontinued group
57-14 coverage was replaced by similar group coverage within 31 days.
57-15 (ii) An insurer shall not be required to
57-16 issue a converted policy covering any person if: (aa) such person
57-17 is or could be covered by Medicare; (bb) such person is covered for
57-18 similar benefits by another hospital, surgical, medical, or major
57-19 medical expense insurance policy or hospital or medical service
57-20 subscriber contract or medical practice or other prepayment plan or
57-21 by any other plan or program; (cc) such person is eligible for
57-22 similar benefits whether or not covered therefor under any
57-23 arrangement of coverage for individuals in a group, whether on an
57-24 insured or uninsured basis; or (dd) similar benefits are provided
57-25 for or available to such person, pursuant to or in accordance with
58-1 the requirements of any state or federal law<; or (ee) the benefits
58-2 provided under the sources herein enumerated, together with the
58-3 benefits provided by the converted policy, would result in
58-4 overinsurance according to the insurer's standards. The insurer's
58-5 standards must bear some reasonable relationship to actual health
58-6 care costs in the area in which the insured lives at the time of
58-7 conversion and must be filed with the commissioner of insurance
58-8 prior to their use in denying coverage>. The board shall issue
58-9 rules and regulations to establish minimum standards for benefits
58-10 under policies issued pursuant to this subsection.
58-11 (B)(i) Policies subject to Paragraph (A) above
58-12 shall provide at the <insurer's> option of the employee, member, or
58-13 dependent in lieu of the requirements of Paragraph (A) continuation
58-14 of group coverage for employees or members and their eligible
58-15 dependents subject to the eligibility provisions of Paragraph (A).
58-16 (ii) Continuation of group coverage <need
58-17 not include dental, vision care, or prescription drug benefits and>
58-18 must be requested in writing within 21 days following the later of:
58-19 (aa) the date the group coverage would otherwise terminate; or (bb)
58-20 the date the employee is given notice of the right of continuation
58-21 by either the employer or the group policyholder.
58-22 (iii) In no event may the employee or
58-23 member elect continuation more than 31 days after the date of such
58-24 termination.
58-25 (iv) An employee or member electing
59-1 continuation must pay to the group policyholder or employer, on a
59-2 monthly basis in advance, the amount of contribution required by
59-3 the policyholder or employer, plus two percent of <but not more
59-4 than> the group rate for the insurance being continued under the
59-5 group policy on the due date of each payment.
59-6 (v) The employee's or member's written
59-7 election of continuation, together with the first contribution
59-8 required to establish contributions on a monthly basis in advance,
59-9 must be given to the policyholder or employer within 31 days of the
59-10 date coverage would otherwise terminate.
59-11 (vi) Continuation may not terminate until
59-12 the earliest of: (aa) six months after the date the election is
59-13 made; (bb) failure to make timely payments; (cc) the date on which
59-14 the group coverage terminates in its entirety; (dd) or one of the
59-15 conditions specified in items (aa) through (dd) <(ee)> of
59-16 Subparagraph (ii), Paragraph (A) above is met by the covered
59-17 individual.
59-18 (C) The insurer may elect to provide the
59-19 conversion coverage on an individual or group basis <group
59-20 insurance coverage in lieu of the issuance of a converted policy
59-21 under Paragraph (A) above>.
59-22 The premium for the converted policy issued under Paragraph
59-23 (A) of this subdivision shall <or the group coverage under
59-24 Paragraph (C) of this subdivision, should> be determined in
59-25 accordance with the insurer's table of premium rates for coverage
60-1 that was provided under the group policy or plan <applicable to the
60-2 age and class of risk of each person to be covered under that
60-3 policy and the type and amount of insurance provided>. The premium
60-4 may be based on the age and geographic location of each person to
60-5 be covered and the type of converted policy. The premium for the
60-6 same coverage and benefits under a converted policy may not exceed
60-7 200 percent of the premium determined in accordance with this
60-8 paragraph. The premium must be based on the type of converted
60-9 policy and the coverage provided by the policy.
60-10 SECTION 4. Subchapter B, Chapter 21, Insurance Code, is
60-11 amended by adding Article 21.21-6 to read as follows:
60-12 Art. 21.21-6. OVERPAYMENT BY HEALTH INSURER
60-13 Sec. 1. SCOPE. This article applies to the payment of
60-14 benefits under an individual or group policy of accident and
60-15 sickness insurance that is delivered, issued for delivery, or
60-16 renewed in this state, including insurance written by a company
60-17 subject to Chapter 20, Insurance Code.
60-18 Sec. 2. DEFINITION. In this article, "health care provider"
60-19 includes a person licensed to practice medicine in this state and
60-20 any person or organization licensed to provide health care or
60-21 mental health care as an audiologist, certified social
60-22 worker-advanced clinical practitioner, chiropractor, dentist,
60-23 dietician, marriage and family therapist, nurse, optometrist,
60-24 pharmacist, podiatrist, professional counselor, psychologist,
60-25 speech-language pathologist, blood bank, hospital, kidney dialysis
61-1 center, or nursing home.
61-2 Sec. 3. DUTIES OF INSURER. (a) An insurer may not suspend
61-3 or delay payment of benefits for a claim or claims on behalf of an
61-4 insured solely because the insurer has not received reimbursement
61-5 from a provider for overpayment of benefits for a claim or claims
61-6 on behalf of that insured, except that nothing in this section
61-7 shall require an insurer to pay benefits in excess of policy
61-8 limits.
61-9 (b) This section does not apply if the insurer and the
61-10 health care provider to which payment on behalf of an insured is to
61-11 be made have entered into a written agreement authorizing the
61-12 suspension or delay of payment for the reason described by
61-13 Subsection (a) of this section.
61-14 (c) This section does not apply if the benefits previously
61-15 paid by the insurer were paid directly to the insured.
61-16 Sec. 4. DUTIES OF HEALTH CARE PROVIDER. (a) Except as
61-17 provided by Subsection (b) of this section, a health care provider
61-18 that has received a payment from an insurer for services rendered
61-19 by the provider to an insured shall refund to the insurer any
61-20 amount of the payment that exceeded the amount the insurer was
61-21 required to pay under the policy for that claim.
61-22 (b) If the health care provider disputes that a refund is
61-23 owed, or disputes the amount of any refund, the provider may pay
61-24 the disputed amount to the commissioner for deposit in an
61-25 interest-bearing escrow account. The commissioner shall distribute
62-1 the amount in the escrow account in accordance with a final
62-2 judicial order regarding the dispute or, if no final judicial order
62-3 is entered, in accordance with a written agreement between the
62-4 provider and the insurer.
62-5 (c) A health care provider shall make the refund or payment
62-6 required by Subsection (a) or (b) of this section not later than
62-7 the 30th day after the date the insurer notifies the health care
62-8 provider of the overpayment.
62-9 (d) A health care provider that violates this section is
62-10 subject to professional discipline in accordance with the law
62-11 governing the licensing and regulation of the provider and any
62-12 rules adopted by the appropriate licensing agency.
62-13 Sec. 5. RULES. The board may adopt rules to implement this
62-14 article.
62-15 SECTION 5. Subchapter E, Chapter 21, Insurance Code, is
62-16 amended by adding Article 21.52D to read as follows:
62-17 Art. 21.52D. REVIEW OF MANDATED COVERAGE IN HEALTH BENEFIT
62-18 PLANS
62-19 Sec. 1. DEFINITIONS. In this article:
62-20 (1) "Commissioner" means the commissioner of
62-21 insurance.
62-22 (2) "Health benefit plan" means:
62-23 (A) an individual, group, blanket, or franchise
62-24 insurance policy, insurance agreement, or group hospital service
62-25 contract that provides benefits for medical or surgical expenses
63-1 incurred as a result of an accident or sickness; or
63-2 (B) an evidence of coverage or group subscriber
63-3 contract issued by a health maintenance organization.
63-4 (3) "Mandated benefit provision" means a provision of
63-5 law that requires a health benefit plan to:
63-6 (A) cover a particular health care service or
63-7 provide a particular benefit;
63-8 (B) cover a particular class of persons; or
63-9 (C) provide for the reimbursement, use, or
63-10 consideration of a particular category of health care
63-11 practitioners.
63-12 (4) "Panel" means the mandated benefit review panel
63-13 appointed under this article.
63-14 (5) "Sponsor's report" means the report filed with the
63-15 panel under Section 4 of this article.
63-16 Sec. 2. MANDATED BENEFIT REVIEW PANEL. (a) The mandated
63-17 benefit review panel is composed of three senior researchers
63-18 appointed by the commissioner. Two members of the panel must be
63-19 experts in health research or biostatistics and must serve on the
63-20 faculty of a university located in this state.
63-21 (b) Members of the panel serve staggered six-year terms,
63-22 with the term of one member expiring February 1 of each
63-23 odd-numbered year. If there is a vacancy during a term, the
63-24 commissioner shall appoint a replacement who meets the
63-25 qualifications of the vacated office to fill the unexpired term.
64-1 (c) A member of the panel is not entitled to compensation
64-2 but is entitled to reimbursement for actual and necessary expenses
64-3 incurred in performing duties as a member of the panel at the rate
64-4 provided for that reimbursement by the General Appropriations Act.
64-5 (d) The department shall provide staff for the panel in
64-6 accordance with legislative appropriation.
64-7 Sec. 3. REFERRAL OF BILL. The presiding officer of either
64-8 house of the legislature shall refer a bill proposing a mandated
64-9 benefit provision or an amendment to a mandated benefit provision
64-10 to the panel for a review and report in accordance with this
64-11 article.
64-12 Sec. 4. SPONSOR'S REPORT. Not later than the fifth day
64-13 after the date a bill is referred to the panel, the sponsor of the
64-14 bill or a person designated by the sponsor shall submit to the
64-15 panel a report that meets the requirements of Section 5 of this
64-16 article.
64-17 Sec. 5. CONTENTS OF SPONSOR'S REPORT. (a) The sponsor's
64-18 report must address:
64-19 (1) the extent to which a health care service for
64-20 which coverage would be mandated is needed by, available to, and
64-21 used by the population of this state;
64-22 (2) whether coverage for the health care service is
64-23 usually provided and, if not, the extent to which the lack of
64-24 coverage results in inadequate health care or major financial
64-25 hardship;
65-1 (3) whether there is a demand for the coverage for the
65-2 health care service from members of the public or in collective
65-3 bargaining agreements;
65-4 (4) the extent to which the bill would increase or
65-5 decrease the cost of treatment;
65-6 (5) the manner in which similar mandated benefit
65-7 provisions enacted in other states have affected health care and
65-8 health insurance costs in those states;
65-9 (6) the extent to which the bill would increase the
65-10 appropriate use of a health care service or practitioner;
65-11 (7) the extent to which a service for which coverage
65-12 would be required is a substitute for any more expensive service
65-13 and for any less expensive service;
65-14 (8) the extent to which the bill would increase or
65-15 decrease the administrative expenses of companies that issue health
65-16 benefit plans and the premiums and administrative expenses charged
65-17 to persons covered under health benefit plans;
65-18 (9) the comparative value of any mandated benefit
65-19 provision that is in effect at the time the sponsor's report is
65-20 made and that provides for:
65-21 (A) coverage for a health care service that
65-22 serves a function similar to the service that would be covered
65-23 under the bill; or
65-24 (B) the reimbursement, use, or consideration of
65-25 a particular category of health care practitioners authorized to
66-1 provide services that would be provided by the category of health
66-2 care practitioners required to be reimbursed, used, or considered
66-3 under the bill;
66-4 (10) the financial impact of the bill on small-,
66-5 medium-, and large-sized employers; and
66-6 (11) the impact of the bill on the total cost of
66-7 health care.
66-8 (b) The sponsor's report must include research evidencing
66-9 the medical efficacy of the health care service.
66-10 (c) If the bill would require coverage for a particular
66-11 therapy, the research reported under Subsection (b) of this section
66-12 must include:
66-13 (1) the results of at least one professionally
66-14 acceptable controlled trial demonstrating the medical consequences
66-15 of that therapy compared to not applying any therapy and to
66-16 alternative therapies; and
66-17 (2) the results of any other relevant research.
66-18 (d) If the bill would require the reimbursement, use, or
66-19 consideration of a particular category of health care
66-20 practitioners, the research reported under Subsection (b) of this
66-21 section must include:
66-22 (1) the results of at least one professionally
66-23 acceptable controlled trial demonstrating the medical results
66-24 achieved by that category of practitioners in relation to
66-25 practitioners who already are reimbursed under health benefit
67-1 plans; and
67-2 (2) the results of any other relevant research.
67-3 Sec. 6. PANEL'S REPORT. (a) Not later than the 30th day
67-4 after the date the bill is referred to the panel, the panel shall
67-5 issue a report on the sponsor's report in accordance with
67-6 Subsection (c) of this section.
67-7 (b) The panel shall provide a copy of the panel's report to
67-8 the presiding officer of each house of the legislature and to the
67-9 commissioner.
67-10 (c) The panel's report must state whether:
67-11 (1) the sponsor's report is complete and addresses
67-12 each item required under Section 5 of this article;
67-13 (2) research cited in the sponsor's report meets
67-14 professional standards;
67-15 (3) the sponsor's report cites all relevant research;
67-16 and
67-17 (4) the conclusions and interpretations drawn in the
67-18 sponsor's report are consistent with the information presented in
67-19 the sponsor's report.
67-20 (d) If the panel finds the sponsor's report is deficient,
67-21 the panel's report must identify the deficiencies.
67-22 (e) The panel's report may not comment on the merits or
67-23 desirability of the bill.
67-24 Sec. 7. REPORT ON EXISTING MANDATED BENEFIT PROVISIONS. (a)
67-25 Not later than February 1 of each odd-numbered year, the panel
68-1 shall issue a report in accordance with Subsection (c) of this
68-2 section on each mandated benefit provision that is in effect on the
68-3 date the report is issued.
68-4 (b) The panel shall provide a copy of the panel's report to
68-5 the presiding officer of each house of the legislature and to the
68-6 commissioner.
68-7 (c) The panel's report issued under this section must
68-8 address:
68-9 (1) the extent to which the health care service for
68-10 which coverage is mandated is needed by, available to, and used by
68-11 the population of this state;
68-12 (2) the extent to which the mandated benefit provision
68-13 increases or decreases the cost of treatment;
68-14 (3) the extent to which the mandated benefit provision
68-15 increases the appropriate use of a health care service or
68-16 practitioner;
68-17 (4) the extent to which a service for which coverage
68-18 is required is a substitute for any more expensive service and for
68-19 any less expensive service;
68-20 (5) the extent to which the mandated benefit provision
68-21 increases or decreases the administrative expenses of companies
68-22 that issue health benefit plans and the premiums and administrative
68-23 expenses charged to persons covered under health benefit plans;
68-24 (6) the comparative value of any other mandated
68-25 benefit provision that is in effect at the time the panel's report
69-1 is made and that provides for:
69-2 (A) coverage for a health care service that
69-3 serves a function similar to the service that is covered under the
69-4 mandated benefit provision; or
69-5 (B) the reimbursement, use, or consideration of
69-6 a particular category of health care practitioners authorized to
69-7 provide services that would be provided by the category of health
69-8 care practitioners required to be reimbursed, used, or considered
69-9 under the mandated benefit provision;
69-10 (7) the financial impact of the mandated benefit
69-11 provision on small-, medium-, and large-sized employers; and
69-12 (8) the impact of the mandated benefit provision on
69-13 the total cost of health care.
69-14 (d) The panel's report must include research evidencing the
69-15 medical efficacy of the health care service.
69-16 (e) If the mandated benefit provision requires coverage for
69-17 a particular therapy, the research reported under Subsection (d) of
69-18 this section must include:
69-19 (1) the results of at least one professionally
69-20 acceptable controlled trial demonstrating the medical consequences
69-21 of that therapy compared to not applying any therapy and to
69-22 alternative therapies; and
69-23 (2) the results of any other relevant research.
69-24 (f) If the mandated benefit provision requires the
69-25 reimbursement, use, or consideration of a particular category of
70-1 health care practitioners, the research reported under Subsection
70-2 (d) of this section must include:
70-3 (1) the results of at least one professionally
70-4 acceptable controlled trial demonstrating the medical results
70-5 achieved by that category of practitioners in relation to
70-6 practitioners who already are reimbursed under health benefit
70-7 plans; and
70-8 (2) the results of any other relevant research.
70-9 SECTION 6. HEALTH INSURANCE ACCESS STUDY. (a) A
70-10 comprehensive study of guaranteed issue as a feature of health
70-11 insurance reform shall be conducted on behalf of the legislature.
70-12 The study shall be conducted by a committee composed of:
70-13 (1) two members of the senate appointed by the
70-14 lieutenant governor;
70-15 (2) two members of the house of representatives
70-16 appointed by the speaker of the house of representatives;
70-17 (3) a representative of the business community in this
70-18 state appointed by the lieutenant governor;
70-19 (4) a representative of the business community in this
70-20 state appointed by the speaker of the house of representatives; and
70-21 (5) a representative of the insurance industry jointly
70-22 appointed by the lieutenant governor and the speaker of the house
70-23 of representatives.
70-24 (b) The committee shall:
70-25 (1) investigate and evaluate the experience of other
71-1 jurisdictions in which guaranteed issue of health benefit plans has
71-2 been required;
71-3 (2) collect and evaluate data regarding the effect of
71-4 guaranteed issue requirements on health insurance availability and
71-5 accessibility; and
71-6 (3) collect and evaluate data regarding the effect of
71-7 guaranteed issue requirements on health insurance rates.
71-8 (c) Not later than January 1, 1995, the committee shall
71-9 prepare and present a report to the governor, lieutenant governor,
71-10 and speaker of the house of representatives.
71-11 (d) An appointment made under this section expires January
71-12 2, 1995.
71-13 SECTION 7. REINSURANCE STUDY. (a) The Texas Department of
71-14 Insurance shall initiate a comprehensive study into the future
71-15 solvency of the reinsurance system established by Subchapter F,
71-16 Chapter 26, Insurance Code, as added by this Act.
71-17 (b) The department shall review and analyze, from an
71-18 actuarial standpoint, the potential cost of catastrophic losses to
71-19 the system and recommend funding methods to adequately finance any
71-20 anticipated losses to the system. The department shall also
71-21 develop an actuarial model to assess the system's future operation.
71-22 The department shall fully investigate the experience of other
71-23 states with health reinsurance systems.
71-24 (c) The department shall report its findings to the
71-25 governor, lieutenant governor, and speaker of the house of
72-1 representatives not later than January 1, 1995.
72-2 SECTION 8. (a) Not later than November 1, 1993, each health
72-3 carrier subject to Chapter 26, Insurance Code, as added by this
72-4 Act, shall file a report with the commissioner that states the
72-5 carrier's gross premiums derived from health benefit plans
72-6 delivered, issued for delivery, or renewed to small employers in
72-7 1992.
72-8 (b) Not later than November 1, 1994, each health carrier
72-9 subject to Chapter 26, Insurance Code, as added by this Act, shall
72-10 file with the commissioner an update to the report required by
72-11 Subsection (a) of this section.
72-12 SECTION 9. Not later than July 1, 1995, a small employer
72-13 carrier subject to Chapter 26, Insurance Code, as added by this
72-14 Act, shall notify the commissioner of its initial election to
72-15 operate as a risk-assuming or reinsured carrier under Article
72-16 26.51, Insurance Code, as added by this Act.
72-17 SECTION 10. In making the initial appointments to the board
72-18 of trustees of the Texas Health Benefits Purchasing Cooperative
72-19 established under Subchapter B, Chapter 26, Insurance Code, as
72-20 added by this Act, the governor shall appoint two members for terms
72-21 expiring February 1, 1995, two members for terms expiring February
72-22 1, 1997, and two members for terms expiring February 1, 1999.
72-23 SECTION 11. (a) Except as otherwise provided by this
72-24 section, this Act takes effect September 1, 1993.
72-25 (b) A health carrier is not required to offer, deliver, or
73-1 issue for delivery a small employer health benefit plan, as
73-2 required by Subchapter E, Chapter 26, Insurance Code, as added by
73-3 this Act, before January 1, 1994.
73-4 (c) The Texas Health Reinsurance System may not reinsure a
73-5 risk in accordance with Subchapter F, Chapter 26, Insurance Code,
73-6 as added by this Act, before September 1, 1995.
73-7 (d) Article 21.52C, Insurance Code, as added by this Act,
73-8 applies only to the use of a claim billing form on or after January
73-9 1, 1994.
73-10 (e) Section 1(d)(3), Article 3.51-6, Insurance Code, as
73-11 amended by this Act, applies only to conversion of a policy
73-12 delivered, issued for delivery, or renewed on or after January 1,
73-13 1994. Conversion of a policy that was delivered, issued for
73-14 delivery, or renewed before January 1, 1994, is governed by the law
73-15 in effect immediately before the effective date of this Act, and
73-16 that law is continued in effect for this purpose.
73-17 (f) Article 26.21(a), Insurance Code, as added by this Act,
73-18 is effective September 1, 1995.
73-19 (g) Section 2, Article 21.21-6, Insurance Code, as added by
73-20 this Act, applies only to a claim for benefits received by an
73-21 insurer on or after January 1, 1994. A claim received before
73-22 January 1, 1994, is governed by the law in effect immediately
73-23 before the effective date of this Act, and that law is continued in
73-24 effect for that purpose.
73-25 (h) Section 3, Article 21.21-6, Insurance Code, as added by
74-1 this Act, applies only to a payment received by a health care
74-2 provider on or after January 1, 1994. A payment received before
74-3 January 1, 1994, is governed by the law in effect immediately
74-4 before the effective date of this Act, and that law is continued in
74-5 effect for that purpose.
74-6 SECTION 12. In making the initial appointments to the
74-7 mandated benefit review panel created under Article 21.52D,
74-8 Insurance Code, as added by this Act, the commissioner of insurance
74-9 shall appoint one member for a term expiring February 1, 1995, one
74-10 member for a term expiring February 1, 1997, and one member for a
74-11 term expiring February 1, 1999.
74-12 SECTION 13. The importance of this legislation and the
74-13 crowded condition of the calendars in both houses create an
74-14 emergency and an imperative public necessity that the
74-15 constitutional rule requiring bills to be read on three several
74-16 days in each house be suspended, and this rule is hereby suspended.