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.