H.B. No. 2055
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 appropriate industry classification as
2-12 determined by the small employer carrier, the number of employees
2-13 and dependents, and other objective criteria as established by the
2-14 small employer carrier that are considered by the small employer
2-15 carrier in setting premium rates for that small employer. The term
2-16 does not include claim experience, health status, duration of
2-17 coverage since the date of issuance of a health benefit plan, or
2-18 whether a covered person is or may become pregnant.
2-19 (6) "Class of business" means all small employers or a
2-20 separate grouping of small employers established under this
2-21 chapter.
2-22 (7) "Dependent" means:
2-23 (A) a spouse;
2-24 (B) a newborn child;
2-25 (C) a child under the age of 19 years;
3-1 (D) a child who is a full-time student under the
3-2 age of 23 years and who is financially dependent on the parent;
3-3 (E) a child of any age who is medically
3-4 certified as disabled and dependent on the parent; and
3-5 (F) any person who must be covered under:
3-6 (i) Section 3D or 3E, Article 3.51-6, of
3-7 this code; or
3-8 (ii) Section 2(L), Chapter 397, Acts of
3-9 the 54th Legislature, Regular Session, 1955 (Article 3.70-2,
3-10 Vernon's Texas Insurance Code).
3-11 (8) "Eligible employee" means an employee who works on
3-12 a full-time basis and who usually works at least 30 hours a week.
3-13 The term includes a sole proprietor, a partner, and an independent
3-14 contractor, if the sole proprietor, partner, or independent
3-15 contractor is included as an employee under a health benefit plan
3-16 of a small employer. The term does not include:
3-17 (A) an employee who works on a part-time,
3-18 temporary, or substitute basis; or
3-19 (B) an employee who is covered under:
3-20 (i) another health benefit plan; or
3-21 (ii) an employee welfare benefit plan that
3-22 provides health benefits and that is established in accordance with
3-23 the Employee Retirement Income Security Act of 1974 (29 U.S.C.
3-24 Section 1001 et seq.).
3-25 (9) "Health benefit plan" means a group, blanket, or
4-1 franchise insurance policy, a certificate issued under a group
4-2 policy, a group hospital service contract, or a group subscriber
4-3 contract or evidence of coverage issued by a health maintenance
4-4 organization that provides benefits for health care services. The
4-5 term does not include:
4-6 (A) accident-only insurance coverage;
4-7 (B) credit insurance coverage;
4-8 (C) disability insurance coverage;
4-9 (D) specified disease coverage or other limited
4-10 benefit policies;
4-11 (E) coverage of Medicare services under a
4-12 federal contract;
4-13 (F) Medicare supplement and Medicare Select
4-14 policies regulated in accordance with federal law;
4-15 (G) long-term care insurance coverage;
4-16 (H) coverage limited to dental care;
4-17 (I) coverage limited to care of vision;
4-18 (J) coverage provided by a single service health
4-19 maintenance organization;
4-20 (K) insurance coverage issued as a supplement to
4-21 liability insurance;
4-22 (L) insurance coverage arising out of a workers'
4-23 compensation system or similar statutory system;
4-24 (M) automobile medical payment insurance
4-25 coverage;
5-1 (N) jointly managed trusts authorized under 29
5-2 U.S.C. Section 141 et seq. that contain a plan of benefits for
5-3 employees that is negotiated in a collective bargaining agreement
5-4 governing wages, hours, and working conditions of the employees
5-5 that is authorized under 29 U.S.C. Section 157;
5-6 (O) hospital confinement indemnity coverage; or
5-7 (P) reinsurance contracts issued on a stop-loss,
5-8 quota-share, or similar basis.
5-9 (10) "Health carrier" means any entity authorized
5-10 under this code or another insurance law of this state that
5-11 provides health insurance or health benefits in this state,
5-12 including an insurance company, a group hospital service
5-13 corporation under Chapter 20 of this code, a health maintenance
5-14 organization under the Texas Health Maintenance Organization Act
5-15 (Chapter 20A, Vernon's Texas Insurance Code), and a stipulated
5-16 premium company under Chapter 22 of this code.
5-17 (11) "Index rate" means, for each class of business as
5-18 to a rating period for small employers with similar case
5-19 characteristics, the arithmetic average of the applicable base
5-20 premium rate and corresponding highest premium rate.
5-21 (12) "Late enrollee" means an eligible employee or
5-22 dependent who requests enrollment in a small employer's health
5-23 benefit plan after the expiration of the initial enrollment period
5-24 established under the terms of the first plan for which that
5-25 employee or dependent was eligible through the small employer. An
6-1 eligible employee or dependent is not a late enrollee if:
6-2 (A) the individual:
6-3 (i) was covered under another employer
6-4 health benefit plan at the time the individual was eligible to
6-5 enroll;
6-6 (ii) declines in writing, at the time of
6-7 the initial eligibility, stating that coverage under another
6-8 employer health benefit plan was the reason for declining
6-9 enrollment;
6-10 (iii) has lost coverage under another
6-11 employer health benefit plan as a result of the termination of
6-12 employment, the termination of the other plan's coverage, the death
6-13 of a spouse, or divorce; and
6-14 (iv) requests enrollment not later than
6-15 the 31st day after the date on which coverage under another
6-16 employer health benefit plan terminates;
6-17 (B) the individual is employed by an employer
6-18 who offers multiple health benefit plans and the individual elects
6-19 a different health benefit plan during an open enrollment period;
6-20 or
6-21 (C) a court has ordered coverage to be provided
6-22 for a spouse or minor child under a covered employee's plan and
6-23 request for enrollment is made not later than the 31st day after
6-24 issuance of the date on which the court order is issued.
6-25 (13) "New business premium rate" means, for each class
7-1 of business as to a rating period, the lowest premium rate that is
7-2 charged or offered or that could be charged or offered by the small
7-3 employer carrier to small employers with similar case
7-4 characteristics for newly issued small employer health benefit
7-5 plans that provide the same or similar coverage.
7-6 (14) "Person" means an individual, corporation,
7-7 partnership, association, or other private legal entity.
7-8 (15) "Plan of operation" means the plan of operation
7-9 of the system established under Article 26.55 of this code.
7-10 (16) "Preexisting condition provision" means a
7-11 provision that denies, excludes, or limits coverage as to a disease
7-12 or condition for a specified period after the effective date of
7-13 coverage.
7-14 (17) "Premium" means all amounts paid by a small
7-15 employer and eligible employees as a condition of receiving
7-16 coverage from a small employer carrier, including any fees or
7-17 other contributions associated with a health benefit plan.
7-18 (18) "Rating period" means a calendar period for which
7-19 premium rates established by a small employer carrier are assumed
7-20 to be in effect.
7-21 (19) "Reinsured carrier" means a small employer
7-22 carrier participating in the system.
7-23 (20) "Risk-assuming carrier" means a small employer
7-24 carrier that elects not to participate in the system.
7-25 (21) "Small employer" means a person that is actively
8-1 engaged in business and that, on at least 50 percent of its working
8-2 days during the preceding calendar year, employed at least three
8-3 but not more than 50 eligible employees, including the employees of
8-4 an affiliated employer, the majority of whom were employed in this
8-5 state.
8-6 (22) "Small employer carrier" means a health carrier,
8-7 to the extent that that carrier is offering, delivering, issuing
8-8 for delivery, or renewing health benefit plans subject to this
8-9 chapter under Article 26.06(a) of this code.
8-10 (23) "Small employer health benefit plan" means the
8-11 preventive and primary care benefit plan, the in-hospital benefit
8-12 plan, or the standard health benefit plan described by Subchapter E
8-13 of this chapter or any other health benefit plan offered to a small
8-14 employer in accordance with Article 26.42(d) of this code.
8-15 (24) "System" means the Texas Health Reinsurance
8-16 System established under Subchapter F of this chapter.
8-17 Art. 26.03. AFFILIATED CARRIERS. (a) For purposes of this
8-18 chapter, health carriers that are affiliates or that are eligible
8-19 to file a consolidated tax return are considered to be one carrier,
8-20 and a restriction imposed by this chapter applies as if the health
8-21 benefit plans delivered or issued for delivery to small employers
8-22 in this state by the affiliates were issued by one carrier.
8-23 (b) An affiliate that is a health maintenance organization
8-24 is considered to be a separate health carrier for purposes of this
8-25 chapter.
9-1 (c) In this article, "affiliate" has the meaning assigned by
9-2 Article 21.49-1 of this code.
9-3 Art. 26.04. RULES. The board shall adopt rules to implement
9-4 this chapter.
9-5 Art. 26.05. STATUTORY REFERENCES. A reference in this
9-6 chapter to a statutory provision applies to all reenactments,
9-7 revisions, or amendments of that statutory provision.
9-8 Art. 26.06. APPLICABILITY. (a) An individual or group
9-9 health benefit plan is subject to this chapter if it provides
9-10 health care benefits covering three or more eligible employees of a
9-11 small employer and if it meets any one of the following conditions:
9-12 (1) a portion of the premium or benefits is paid by or
9-13 on behalf of a small employer;
9-14 (2) a covered individual is reimbursed, whether
9-15 through wage adjustments or otherwise, by or on behalf of a small
9-16 employer for a portion of the premium; or
9-17 (3) the health benefit plan is treated by the employer
9-18 or by a covered individual as part of a plan or program for the
9-19 purposes of Section 106 or 162, Internal Revenue Code of 1986 (26
9-20 U.S.C. Section 106 or 162).
9-21 (b) Except as provided by Subsection (a) of this article,
9-22 this chapter does not apply to an individual health insurance
9-23 policy that is underwritten individually.
9-24 (c) Except as expressly provided in this chapter, a small
9-25 employer health benefit plan is not subject to a law that requires
10-1 coverage or the offer of coverage of a health care service or
10-2 benefit.
10-3 Art. 26.07. CERTIFICATION. (a) Not later than March 1 of
10-4 each year, each health carrier shall certify to the commissioner
10-5 whether, as of January 1 of that year, it is offering a health
10-6 benefit plan subject to this chapter under Article 26.06(a) of this
10-7 code.
10-8 (b) The certification shall list each other health insurance
10-9 coverage that:
10-10 (1) the health carrier is offering, delivering,
10-11 issuing for delivery, or renewing to or through small employers in
10-12 this state; and
10-13 (2) is not subject to this chapter because it is
10-14 listed as excluded from the definition of a health benefit plan
10-15 under Article 26.02 of this code.
10-16 (c) The certification shall include a statement that the
10-17 carrier is not offering or marketing to small employers as a health
10-18 benefit plan the coverage listed under Subsection (b) of this
10-19 article and that the health carrier is complying with this chapter
10-20 to the extent it is applicable to the carrier.
10-21 Art. 26.08. COST CONTAINMENT. (a) A small employer carrier
10-22 may use cost containment and managed care features in a small
10-23 employer health benefit plan, including:
10-24 (1) utilization review of health care services,
10-25 including review of the medical necessity of hospital and physician
11-1 services;
11-2 (2) case management, including discharge planning and
11-3 review of stays in hospitals or other health care facilities;
11-4 (3) selective contracting with hospitals, physicians,
11-5 and other health care providers;
11-6 (4) reasonable benefit differentials applicable to
11-7 health care providers that participate or do not participate in
11-8 restricted network arrangements;
11-9 (5) precertification or preauthorization for certain
11-10 covered services; and
11-11 (6) coordination of benefits.
11-12 (b) A provision of a small employer health benefit plan that
11-13 provides for coordination of benefits must comply with this chapter
11-14 and guidelines established by the commissioner.
11-15 (c) Utilization review performed for any cost containment,
11-16 case management, or managed care arrangement must comply with
11-17 Article 21.58A of this code.
11-18 SUBCHAPTER B. PURCHASING COOPERATIVES
11-19 Art. 26.11. DEFINITIONS. In this subchapter:
11-20 (1) "Board of trustees" means the board of trustees of
11-21 the Texas cooperative.
11-22 (2) "Board of directors" means the board of directors
11-23 elected by a private purchasing cooperative.
11-24 (3) "Cooperative" means a purchasing cooperative
11-25 established under this subchapter.
12-1 (4) "Texas cooperative" means the Texas Health
12-2 Benefits Purchasing Cooperative established under Article 26.13 of
12-3 this code.
12-4 Art. 26.12. APPLICABILITY OF OTHER LAWS. (a) Section 1(a),
12-5 Article 3.51-6, of this code, does not limit the type of group that
12-6 may be covered by a group health benefit plan issued through a
12-7 cooperative.
12-8 (b) The Texas cooperative is subject to the open records
12-9 law, Chapter 424, Acts of the 63rd Legislature, Regular Session,
12-10 1973 (Article 6252-17a, Vernon's Texas Civil Statutes).
12-11 Art. 26.13. TEXAS HEALTH BENEFITS PURCHASING COOPERATIVE.
12-12 (a) The Texas Health Benefits Purchasing Cooperative is a
12-13 nonprofit organization established to make health care coverage
12-14 available to small employers and their eligible employees and
12-15 eligible employees' dependents.
12-16 (b) The Texas cooperative is administered by a six-member
12-17 board of trustees appointed by the governor with the advice and
12-18 consent of the senate. Three members must represent employers, two
12-19 members must represent employees, and one member must represent the
12-20 public. The executive director of the Texas Department of Commerce
12-21 shall serve as a nonvoting ex officio member of the board of
12-22 trustees.
12-23 (c) The appointed members of the board of trustees serve
12-24 staggered six-year terms, with the terms of two members expiring
12-25 February 1 of each odd-numbered year.
13-1 (d) A member of the board of trustees may not be compensated
13-2 for serving on the board of trustees but is entitled to
13-3 reimbursement for actual expenses incurred in performing functions
13-4 as a member of the board of trustees as provided by the General
13-5 Appropriations Act.
13-6 (e) The board of trustees shall employ an executive
13-7 director. The executive director may hire other employees as
13-8 necessary.
13-9 (f) The board of trustees may develop regional subdivisions
13-10 of the Texas cooperative and may authorize each subdivision to
13-11 separately exercise the powers and duties of a cooperative.
13-12 (g) Salaries for employees of the Texas cooperative and
13-13 related costs may be paid from administrative fees collected from
13-14 employers and participating carriers or other sources of funding
13-15 arranged by the Texas cooperative.
13-16 (h) A member of the board of trustees, the executive
13-17 director, and an employee or agent of the Texas cooperative are not
13-18 liable for an act performed in good faith in the execution of
13-19 duties in connection with the Texas cooperative.
13-20 (i) The Texas cooperative may not use money appropriated by
13-21 the state to pay or otherwise subsidize any portion of the premium
13-22 for a small employer insured through the cooperative.
13-23 Art. 26.14. PRIVATE PURCHASING COOPERATIVE. (a) Two or
13-24 more small employers may form a cooperative for the purchase of
13-25 small employer health benefit plans. A cooperative must be
14-1 organized as a nonprofit corporation and has the rights and duties
14-2 provided by the Texas Non-Profit Corporation Act (Article 1396-1.01
14-3 et seq., Vernon's Texas Civil Statutes).
14-4 (b) The board of directors shall file annually with the
14-5 commissioner a statement of all amounts collected and expenses
14-6 incurred for each of the preceding three years.
14-7 Art. 26.15. POWERS AND DUTIES OF TEXAS HEALTH BENEFITS
14-8 PURCHASING COOPERATIVE AND PRIVATE PURCHASING COOPERATIVES. (a) A
14-9 cooperative:
14-10 (1) shall arrange for small employer health benefit
14-11 plan coverage for small employer groups who participate in the
14-12 cooperative by contracting with small employer carriers who meet
14-13 the criteria established by Subsection (b) of this article;
14-14 (2) shall collect premiums to cover the cost of:
14-15 (A) small employer health benefit plan coverage
14-16 purchased through the cooperative; and
14-17 (B) the cooperative's administrative expenses;
14-18 (3) may contract with agents to market coverage issued
14-19 through the cooperative;
14-20 (4) shall establish administrative and accounting
14-21 procedures for the operation of the cooperative;
14-22 (5) shall establish procedures under which an
14-23 applicant for or participant in coverage issued through the
14-24 cooperative may have a grievance reviewed by an impartial person;
14-25 (6) may contract with a small employer carrier or
15-1 third-party administrator to provide administrative services to the
15-2 cooperative;
15-3 (7) shall contract with small employer carriers for
15-4 the provision of services to small employers covered through the
15-5 cooperative;
15-6 (8) shall develop and implement a plan to maintain
15-7 public 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 (9) may negotiate the premiums paid by its members.
15-11 (b) A cooperative may contract only with small employer
15-12 carriers who desire to offer coverage through the cooperative and
15-13 who demonstrate:
15-14 (1) that the carrier is a health carrier or health
15-15 maintenance organization licensed and in good standing with the
15-16 department;
15-17 (2) the capacity to administer the health benefit
15-18 plans;
15-19 (3) the ability to monitor and evaluate the quality
15-20 and cost effectiveness of care and applicable procedures;
15-21 (4) the ability to conduct utilization management and
15-22 applicable procedures and policies;
15-23 (5) the ability to assure enrollees adequate access to
15-24 health care providers, including adequate numbers and types of
15-25 providers;
16-1 (6) a satisfactory grievance procedure and the ability
16-2 to respond to enrollees' calls, questions, and complaints; and
16-3 (7) financial capacity, either through financial
16-4 solvency standards as applied by the commissioner or through
16-5 appropriate reinsurance or other risk-sharing mechanisms.
16-6 (c) A cooperative may not self-insure or self-fund any
16-7 health benefit plan or portion of a plan.
16-8 (d) A cooperative shall comply with federal laws applicable
16-9 to cooperatives and health benefit plans issued through
16-10 cooperatives.
16-11 Art. 26.16. COOPERATIVE NOT INSURER. (a) A cooperative is
16-12 not an insurer and the employees of the cooperative are not
16-13 required to be licensed under Section 15 or 15A, Texas Health
16-14 Maintenance Organization Act (Article 20A.15 or 20A.15A, Vernon's
16-15 Texas Insurance Code), or Subchapter A, Chapter 21, of this code.
16-16 (b) An agent or third-party administrator used and
16-17 compensated by the cooperative must be licensed as required by
16-18 Section 15 or 15A, Texas Health Maintenance Organization Act
16-19 (Article 20A.15 or 20A.15A, Vernon's Texas Insurance Code), or
16-20 Subchapter A, Chapter 21, of this code.
16-21 SUBCHAPTER C. GUARANTEED ISSUE AND RENEWABILITY
16-22 Art. 26.21. SMALL EMPLOYER HEALTH BENEFIT PLANS; EMPLOYER
16-23 ELECTION. (a) Each small employer carrier shall provide the small
16-24 employer health benefit plans without regard to claim experience,
16-25 health status, or medical history. Each small employer carrier
17-1 shall issue the plan chosen by the small employer to each small
17-2 employer that elects to be covered under that plan, agrees to make
17-3 the required premium payments, and agrees to satisfy the other
17-4 requirements of the plan.
17-5 (b) Coverage under a small employer health benefit plan is
17-6 not available to a small employer unless the small employer pays at
17-7 least 75 percent of the insurance premium for its eligible
17-8 employees who elect to be covered by at least one of the small
17-9 employer health benefit plans selected by the small employer.
17-10 Coverage is available under a small employer health benefit plan if
17-11 at least 90 percent of a small employer's eligible employees elect
17-12 to be covered. A small employer is not required to pay any amount
17-13 with respect to an employee who elects not to be covered. The
17-14 small employer may elect to pay the premium cost for additional
17-15 coverage. This chapter does not require a small employer to
17-16 purchase health insurance coverage for the employer's employees.
17-17 (c) An eligible employee may obtain coverage in addition to
17-18 coverage purchased by the employer if at least 40 percent of the
17-19 eligible employees elect to obtain the same additional coverage.
17-20 Subject to insurability, any number of eligible employees may
17-21 otherwise obtain coverage in addition to coverage purchased by the
17-22 employer. The additional coverage may be paid for by the employer,
17-23 the employee, or both.
17-24 (d) The initial enrollment period for the employees and
17-25 their dependents must be at least 30 days.
18-1 (e) A small employer may establish a waiting period during
18-2 which a new employee is not eligible for coverage. A waiting
18-3 period established as provided by this subsection may not exceed 90
18-4 days from the first day of employment.
18-5 (f) A new employee of a covered small employer and the
18-6 dependents of that employee may not be denied coverage if the
18-7 application for coverage is received by the small employer carrier
18-8 not later than the 31st day after the date on which the employment
18-9 begins.
18-10 (g) A late enrollee may be excluded from coverage for 18
18-11 months from the date of application or may be subject to a 12-month
18-12 preexisting condition provision as described by Articles 26.49(b),
18-13 (c), (d), and (e) of this code. If both a period of exclusion from
18-14 coverage and a preexisting condition provision are applicable to a
18-15 late enrollee, the combined period of exclusion may not exceed 18
18-16 months from the date of the late application.
18-17 (h) A small employer carrier may not exclude any eligible
18-18 employee or dependent, including a late enrollee, who would
18-19 otherwise be covered under a small employer group.
18-20 (i) A small employer health benefit plan issued by a small
18-21 employer carrier may not limit or exclude, by use of a rider or
18-22 amendment applicable to a specific individual, coverage by type of
18-23 illness, treatment, medical condition, or accident, except for
18-24 preexisting conditions or diseases as permitted under Article 26.49
18-25 of this code.
19-1 (j) A small employer health benefit plan may not limit or
19-2 exclude initial coverage of a newborn child of a covered employee.
19-3 Any coverage of a newborn child of an employee under this
19-4 subsection terminates on the 31st day after the date of the birth
19-5 of the child unless:
19-6 (1) dependent children are eligible for coverage; and
19-7 (2) notification of the birth and any required
19-8 additional premium are received by the small employer carrier not
19-9 later than the 30th day after the date of birth.
19-10 (k) If the Consolidated Omnibus Budget Reconciliation Act of
19-11 1985 (Pub. L. No. 99-272, 100 Stat. 222) does not require
19-12 continuation or conversion coverage for dependents of an employee,
19-13 a dependent who has been covered by that small employer for at
19-14 least one year or is under one year of age may elect to continue
19-15 coverage under a small employer health benefit plan, if the
19-16 dependent loses eligibility for coverage because of the death,
19-17 divorce, or retirement of the employee, as required by Section 3B,
19-18 Article 3.51-6, of this code.
19-19 Art. 26.22. GEOGRAPHIC SERVICE AREA. (a) A small employer
19-20 carrier is not required to offer or issue the small employer health
19-21 benefit plans:
19-22 (1) to a small employer that is not located within a
19-23 geographic service area of the small employer carrier;
19-24 (2) to an employee of a small employer who neither
19-25 resides nor works in the geographic service area of the small
20-1 employer carrier; or
20-2 (3) to a small employer located within a geographic
20-3 service area with respect to which the small employer carrier
20-4 demonstrates to the satisfaction of the commissioner that the small
20-5 employer carrier reasonably anticipates that it will not have the
20-6 capacity to deliver services adequately because of obligations to
20-7 existing covered individuals.
20-8 (b) A small employer carrier that refuses to issue a small
20-9 employer health benefit plan in a geographic service area may not
20-10 offer a health benefit plan to a group of not more than 50
20-11 individuals in the affected service area before the fifth
20-12 anniversary of the date of the refusal.
20-13 (c) A small employer carrier must file each of its
20-14 geographic service areas with the commissioner. The commissioner
20-15 may disapprove the use of a geographic service area by a small
20-16 employer carrier.
20-17 (d) A small employer carrier that is unable to offer
20-18 coverage in a geographic service area in accordance with a
20-19 determination made by the commissioner under Subsection (a)(3) of
20-20 this article may not offer a small employer benefit plan in the
20-21 applicable geographic service area before the 180th day after the
20-22 later of:
20-23 (1) the date of the refusal; or
20-24 (2) the date the carrier demonstrates to the
20-25 satisfaction of the commissioner that it has regained the capacity
21-1 to deliver services to small employers in the geographic service
21-2 area.
21-3 (e) If the commissioner determines that requiring the
21-4 acceptance of small employers under this subchapter would place a
21-5 small employer carrier in a financially impaired condition, the
21-6 small employer carrier is not required to provide coverage to small
21-7 employers for a period to be set by the commissioner.
21-8 Art. 26.23. RENEWABILITY OF COVERAGE; CANCELLATION.
21-9 (a) Except as provided by Article 26.24 of this code, a small
21-10 employer carrier shall renew the small employer health benefit plan
21-11 for any covered small employer at the option of the small employer,
21-12 except for:
21-13 (1) nonpayment of a premium as required by the terms
21-14 of the plan;
21-15 (2) fraud or misrepresentation of a material fact by
21-16 the small employer; or
21-17 (3) noncompliance with small employer health benefit
21-18 plan provisions.
21-19 (b) A small employer carrier may refuse to renew the
21-20 coverage of an eligible employee or dependent for fraud or
21-21 misrepresentation of a material fact by that individual.
21-22 (c) A small employer carrier may not cancel a small employer
21-23 health benefit plan except for the reasons specified for refusal to
21-24 renew under Subsection (a) of this article. A small employer
21-25 carrier may not cancel the coverage of an eligible employee or
22-1 dependent except for the reasons specified for refusal to renew
22-2 under Subsection (b) of this article.
22-3 Art. 26.24. REFUSAL TO RENEW. (a) A small employer carrier
22-4 may elect to refuse to renew each small employer health benefit
22-5 plan delivered or issued for delivery by the small employer carrier
22-6 in this state or in a geographic service area approved under
22-7 Article 26.22 of this code. The small employer carrier must notify
22-8 the commissioner of the election not later than the 180th day
22-9 before the date coverage under the first small employer health
22-10 benefit plan terminates under this subsection.
22-11 (b) The small employer carrier must notify each affected
22-12 covered small employer not later than the 180th day before the date
22-13 on which coverage terminates for that small employer.
22-14 (c) A small employer carrier that elects under Subsection
22-15 (a) of this article to refuse to renew all small employer health
22-16 benefit plans in this state or in an approved geographic service
22-17 area may not write a new small employer health benefit plan in this
22-18 state or in the geographic service area, as applicable, before the
22-19 fifth anniversary of the date of notice to the commissioner under
22-20 Subsection (a) of this article.
22-21 Art. 26.25. NOTICE TO COVERED PERSONS. Not later than the
22-22 30th day before the date on which termination of coverage is
22-23 effective, a small employer carrier that cancels or refuses to
22-24 renew coverage under a small employer health benefit plan under
22-25 Article 26.23 or 26.24 of this code shall notify the small employer
23-1 of the cancellation or refusal to renew. It is the responsibility
23-2 of the small employer to notify enrollees of the cancellation or
23-3 refusal to renew the coverage.
23-4 SUBCHAPTER D. UNDERWRITING AND RATING
23-5 Art. 26.31. ESTABLISHMENT OF CLASSES OF BUSINESS. (a) A
23-6 small employer carrier may establish a separate class of business
23-7 only to reflect substantial differences in expected claim
23-8 experience or administrative costs related to the following
23-9 reasons:
23-10 (1) the small employer carrier uses more than one type
23-11 of system for the marketing and sale of small employer health
23-12 benefit plans to small employers;
23-13 (2) the small employer carrier has acquired a class of
23-14 business from another health carrier; or
23-15 (3) the small employer carrier provides coverage to
23-16 one or more employer-based association groups.
23-17 (b) A small employer carrier may establish up to nine
23-18 separate classes of business under this article.
23-19 (c) The commissioner may establish regulations to provide
23-20 for a period of transition in order for a small employer carrier to
23-21 come into compliance with Subsection (b) of this article in the
23-22 instance of acquisition of an additional class of business from
23-23 another small employer carrier.
23-24 (d) The commissioner may approve the establishment of
23-25 additional classes of business on application to the commissioner
24-1 and a finding by the commissioner that the establishment of
24-2 additional classes would enhance the efficiency and fairness of the
24-3 insurance market for small employers.
24-4 Art. 26.32. INDEX RATES. (a) The premium rates for a small
24-5 employer health benefit plan are subject to this article.
24-6 (b) The index rate for a rating period for any class of
24-7 business may not exceed the index rate for any other class of
24-8 business by more than 20 percent.
24-9 (c) For a class of business, the premium rates charged
24-10 during a rating period to small employers with similar case
24-11 characteristics for the same or similar coverage, or the rates that
24-12 could be charged to those employers under the rating system for
24-13 that class of business, may not vary from the index rate by more
24-14 than 25 percent.
24-15 Art. 26.33. PREMIUM RATES; ADJUSTMENTS. (a) The percentage
24-16 increase in the premium rate charged to a small employer for a new
24-17 rating period may not exceed the sum of:
24-18 (1) the percentage change in the new business premium
24-19 rate measured from the first day of the prior rating period to the
24-20 first day of the new rating period;
24-21 (2) any adjustment, not to exceed 15 percent annually
24-22 and adjusted pro rata for rating periods of less than one year, due
24-23 to the claim experience, health status, or duration of coverage of
24-24 the employees or dependents of the small employer as determined
24-25 from the small employer carrier's rate manual for the class of
25-1 business; and
25-2 (3) any adjustment due to change in coverage or change
25-3 in the case characteristics of the small employer as determined
25-4 from the small employer carrier's rate manual for the class of
25-5 business.
25-6 (b) Adjustments in premium rates for claim experience,
25-7 health status, or duration of coverage may not be charged to
25-8 individual employees or dependents. Such an adjustment must be
25-9 applied uniformly to the rates charged for all employees and
25-10 dependents of employees of the small employer.
25-11 (c) A health carrier may use the industry classification to
25-12 which a small employer belongs as a case characteristic in
25-13 establishing premium rates, but the highest rate factor associated
25-14 with any industry classification may not exceed the lowest rate
25-15 factor associated with any industry classification by more than 15
25-16 percent.
25-17 Art. 26.34. EFFECT OF PRIOR COVERAGE. For a health benefit
25-18 plan delivered or issued for delivery before September 1, 1993, a
25-19 premium rate for a rating period may exceed the ranges set forth in
25-20 Articles 26.32 and 26.33 of this code until September 1, 1995. The
25-21 percentage increase in the premium rate charged to a small employer
25-22 under this article for a new rating period may not exceed the sum
25-23 of:
25-24 (1) the percentage change in the new business premium
25-25 rate measured from the first day of the prior rating period to the
26-1 first day of the new rating period; and
26-2 (2) any adjustment due to change in coverage or change
26-3 in the case characteristics of the small employer as determined
26-4 from the small employer carrier's rate manual for the class of
26-5 business.
26-6 Art. 26.35. RATE ADJUSTMENT IN CLOSED PLAN. In the case of
26-7 a health benefit plan into which a small employer carrier is no
26-8 longer enrolling new small employers, the small employer carrier
26-9 shall use the percentage change in the base premium rate to adjust
26-10 rates under Articles 26.33(a)(1) and 26.34(1) of this code. The
26-11 portion of change in rates computed under those subdivisions may
26-12 not exceed, on a percentage basis, the change in the new business
26-13 premium rate for the most similar health benefit plan into which
26-14 the small employer carrier is actively enrolling new small
26-15 employers.
26-16 Art. 26.36. PREMIUM RATES; NONDISCRIMINATION. (a) A small
26-17 employer carrier shall apply rating factors, including case
26-18 characteristics, consistently with respect to all small employers
26-19 in a class of business. Rating factors shall produce premiums for
26-20 identical groups that differ only by the amounts attributable to
26-21 plan design and that do not reflect differences due to the nature
26-22 of the groups assumed to select particular health benefit plans.
26-23 (b) A small employer carrier shall treat each health
26-24 benefit plan issued or renewed in the same calendar month as having
26-25 the same rating period.
27-1 (c) A small employer carrier may not use case
27-2 characteristics without the prior approval of the commissioner
27-3 other than the geographic area in which the small employer's
27-4 employees reside, the age and gender of the individual employees
27-5 and their dependents, the appropriate industry classification, and
27-6 the number of employees and dependents.
27-7 (d) Premium rates for a small employer health benefit plan
27-8 must comply with the requirements of this chapter, notwithstanding
27-9 any assessments paid or payable by small employer carriers.
27-10 (e) The board may adopt rules to implement this article and
27-11 to ensure that rating practices used by small employer carriers are
27-12 consistent with the purposes of this chapter, including rules that
27-13 ensure that differences in rates charged for each small employer
27-14 health benefit plan are reasonable and reflect objective
27-15 differences in plan design.
27-16 (f) A small employer carrier may not transfer a small
27-17 employer involuntarily into or out of a class of business. A small
27-18 employer carrier may not offer to transfer a small employer into or
27-19 out of a class of business unless the offer is made to transfer all
27-20 small employers in that class of business without regard to case
27-21 characteristics, claim experience, health status, or duration of
27-22 coverage since the issuance of the health benefit plan.
27-23 Art. 26.37. RESTRICTED PROVIDER NETWORKS. For purposes of
27-24 this subchapter, a small employer health benefit plan may use a
27-25 restricted provider network to provide the benefits under the plan.
28-1 A plan that uses a restricted provider network does not provide
28-2 similar coverage to a small employer health benefit plan that does
28-3 not use a restricted provider network, if the use of the network
28-4 results in reduced premiums to the small employer or substantial
28-5 differences in claim costs.
28-6 Art. 26.38. HEALTH MAINTENANCE ORGANIZATION; APPROVED
28-7 HEALTH BENEFIT PLAN. The premium rates for a state-approved
28-8 health benefit plan offered by a health maintenance organization
28-9 under Article 26.48 of this code must be established in accordance
28-10 with formulas or schedules of charges filed with the department.
28-11 Art. 26.39. ENFORCEMENT. If the commissioner finds that a
28-12 small employer carrier subject to this chapter exceeds the
28-13 applicable rate established under this subchapter, the commissioner
28-14 may order restitution and assess penalties as provided by Section
28-15 7, Article 1.10, of this code.
28-16 Art. 26.40. DISCLOSURE. In connection with the offering for
28-17 sale of any small employer health benefit plan, each small employer
28-18 carrier and each agent shall make a reasonable disclosure, as part
28-19 of its solicitation and sales materials, of:
28-20 (1) the extent to which premium rates for a specific
28-21 small employer are established or adjusted based on the actual or
28-22 expected variation in claim costs or the actual or expected
28-23 variation in health status of the employees of the small employer
28-24 and their dependents;
28-25 (2) provisions concerning the small employer carrier's
29-1 right to change premium rates and the factors other than claim
29-2 experience that affect changes in premium rates;
29-3 (3) provisions relating to renewability of policies
29-4 and contracts; and
29-5 (4) any preexisting condition provision.
29-6 Art. 26.41. REPORTING REQUIREMENTS. (a) Compliance with
29-7 the underwriting and rating requirements of this chapter shall be
29-8 demonstrated through actuarial certification. Small employer
29-9 carriers offering a small employer health benefit plan shall file
29-10 annually with the commissioner an actuarial certification stating
29-11 that the underwriting and rating methods of the small employer
29-12 carrier:
29-13 (1) comply with accepted actuarial practices;
29-14 (2) are uniformly applied to each small employer
29-15 health benefit plan covering a small employer; and
29-16 (3) comply with the provisions of this chapter.
29-17 (b) Each small employer carrier shall maintain at its
29-18 principal place of business a complete and detailed description of
29-19 its rating practices and renewal underwriting practices, including
29-20 information and documentation that demonstrate that its rating
29-21 methods and practices are based on commonly accepted actuarial
29-22 assumptions and are in accordance with sound actuarial principles.
29-23 (c) A small employer carrier shall make the information and
29-24 documentation described in Subsection (b) of this article
29-25 available to the commissioner on request. Except in cases of
30-1 violations of this chapter, the information shall be considered
30-2 proprietary and trade secret information and shall not be subject
30-3 to disclosure by the commissioner to persons outside the department
30-4 except as agreed to by the small employer carrier or as ordered by
30-5 a court of competent jurisdiction.
30-6 SUBCHAPTER E. COVERAGE
30-7 Art. 26.42. SMALL EMPLOYER HEALTH BENEFIT PLANS. (a) A
30-8 small employer carrier shall offer the following three health
30-9 benefit plans:
30-10 (1) the preventive and primary care benefit plan;
30-11 (2) the in-hospital benefit plan; and
30-12 (3) the standard health benefit plan.
30-13 (b) A small employer carrier may offer to a small employer
30-14 additional benefit riders to the standard health benefit plan.
30-15 (c) A small employer carrier may not offer to a small
30-16 employer benefit riders to:
30-17 (1) the preventive and primary care benefit plan,
30-18 except as provided by Article 26.45(d) of this code; or
30-19 (2) the in-hospital benefit plan, except as provided
30-20 by Article 26.46(e) of this code.
30-21 (d) Subject to the provisions of this chapter, a small
30-22 employer carrier may also offer to small employers any other health
30-23 benefit plan authorized under this code. Article 26.06(c) does not
30-24 apply to a health benefit plan offered to a small employer under
30-25 this subsection.
31-1 Art. 26.43. POLICY FORMS. (a) The commissioner shall
31-2 promulgate the benefits section of the preventive and primary
31-3 benefit plan, the in-hospital benefit plan, and the standard health
31-4 benefit plan policy forms. For all other portions of these policy
31-5 forms, a small employer carrier shall comply with Article 3.42 of
31-6 this code as it relates to policy form approval. A small employer
31-7 carrier may not offer these three benefit plans through a policy
31-8 form that does not comply with this article.
31-9 (b) A health carrier may not issue and the commissioner may
31-10 not approve a health benefit plan certificate or policy or a rider
31-11 to a health benefit plan certificate or policy unless it is written
31-12 in plain language.
31-13 (c) Each provision of a health benefit plan certificate or
31-14 policy or a rider to a health benefit plan certificate or policy
31-15 relating to renewal of coverage, conditions of coverage, or per
31-16 occurrence or aggregate dollar limitations on coverage must be
31-17 clearly explained in plain language.
31-18 (d) A health carrier may not use and the commissioner may
31-19 not approve a health benefit plan application form unless it is in
31-20 plain language.
31-21 (e) Subsections (b) through (d) of this article do not apply
31-22 if the specific language to be used is mandated by federal law or
31-23 state statute or by rules implementing federal law.
31-24 (f) For purposes of Subsections (b) through (e) of this
31-25 article, a health benefit plan certificate or policy, a rider to or
32-1 a provision of a health benefit plan certificate or policy, or a
32-2 health benefit plan application form is written in plain language
32-3 if it achieves the minimum score established by the commissioner on
32-4 the Flesch reading ease test or an equivalent test selected by the
32-5 commissioner.
32-6 (g) The provisions of Subsections (b) through (f) of this
32-7 article requiring the use of plain language do not apply to a
32-8 health benefit plan group master policy or to a policy application
32-9 or enrollment form for a health benefit plan group master policy.
32-10 Art. 26.44. RIDERS; FILING WITH COMMISSIONER. (a) A small
32-11 employer carrier shall file with the commissioner, in a form and
32-12 manner prescribed by the commissioner, riders to the small employer
32-13 health benefit plans as allowed under Article 26.42 of this code to
32-14 be used by the small employer carrier. A small employer carrier
32-15 may use a rider filed under this article after the 30th day after
32-16 the date the rider is filed unless the commissioner disapproves its
32-17 use.
32-18 (b) The commissioner, after notice and an opportunity for a
32-19 hearing, may disapprove the continued use by a small employer
32-20 carrier of a rider if the rider does not meet the requirements of
32-21 this chapter and other applicable statutes.
32-22 Art. 26.45. PREVENTIVE AND PRIMARY CARE BENEFIT PLAN.
32-23 (a) The preventive and primary care benefit plan must include
32-24 coverage for the health services described by Subsections (b) and
32-25 (c) of this article when those services are provided within the
33-1 scope of their practice by a physician, physician assistant,
33-2 advanced nurse practitioner, or another licensed practitioner,
33-3 including any practitioner required to be covered under Article
33-4 21.52 of this code or under Section 2, Chapter 397, Acts of the
33-5 54th Legislature, Regular Session, l955 (Article 3.70-2, Vernon's
33-6 Texas Insurance Code).
33-7 (b) Coverage for the following preventive care must be
33-8 provided on an appropriate medical schedule without copayment or
33-9 deductible:
33-10 (1) childhood immunizations;
33-11 (2) Pap tests;
33-12 (3) mammography, as required by Section 2, Chapter
33-13 397, Acts of the 54th Legislature, Regular Session, l955 (Article
33-14 3.70-2, Vernon's Texas Insurance Code);
33-15 (4) colo-rectal screening;
33-16 (5) prostate cancer screening; and
33-17 (6) vision and hearing tests for children under 19
33-18 years of age.
33-19 (c) Coverage must include the following:
33-20 (1) outpatient hospital care and up to five days per
33-21 policy year of inpatient hospital care;
33-22 (2) emergency care, as defined by Section 2, Chapter
33-23 397, Acts of the 54th Legislature, 1955 (Article 3.70-2, Vernon's
33-24 Texas Insurance Code), and Section 2(t), Texas Health Maintenance
33-25 Organization Act (Article 20A.02, Vernon's Texas Insurance Code);
34-1 (3) maternity-related care, including prenatal,
34-2 delivery, and postnatal care and high-risk pregnancy care;
34-3 (4) well-child care, as defined by the Texas
34-4 Department of Health based on the standards of the American Academy
34-5 of Pediatrics or its successor organization;
34-6 (5) outpatient clinic or office visits for treatment
34-7 of illness or injury;
34-8 (6) one physical examination per policy year;
34-9 (7) diagnostic examinations and laboratory and X-ray
34-10 services, with a limit of $5,000 per policy year;
34-11 (8) mental health services, including outpatient
34-12 evaluation, crisis intervention, and services for treatment of
34-13 serious mental illness as described by Section 1, Article 3.51-14,
34-14 of this code, for five days of inpatient services and 40 outpatient
34-15 visits per policy year;
34-16 (9) evaluation and treatment for the abuse of or
34-17 addiction to alcohol or drugs, for five days of inpatient services
34-18 and 40 outpatient visits per policy year;
34-19 (10) home health services, as defined by Section 1,
34-20 Article 3.70-3B, of this code subject to a maximum of 40 visits per
34-21 policy year; and
34-22 (11) physical therapy performed by a qualified
34-23 licensed physical therapist, occupational therapy performed by a
34-24 qualified licensed occupational therapist, or speech-language
34-25 therapy performed by a qualified licensed speech-language
35-1 pathologist, including outpatient diagnostic services and 40
35-2 outpatient treatment visits per policy year.
35-3 (d) A preventive and primary care benefit plan may include a
35-4 rider for coverage of prescription drugs but may not include any
35-5 other rider.
35-6 (e) A preventive and primary care benefit plan must include
35-7 a total benefit cap of $15,000 per policy year.
35-8 (f) Except as provided by Subsection (b) of this article, a
35-9 preventive and primary care benefit plan may require a deductible
35-10 of not more than $250 per policy year and must pay at least 80
35-11 percent of covered charges after the deductible has been satisfied.
35-12 After an insured's copayments have reached $1,000 in a policy year,
35-13 the plan must pay 100 percent of covered charges for the remainder
35-14 of that policy year.
35-15 (g) A small employer carrier may waive the limit on home
35-16 health services if the waiver will result in less expensive
35-17 treatment.
35-18 Art. 26.46. IN-HOSPITAL BENEFIT PLAN. (a) The in-hospital
35-19 benefit plan must include coverage for:
35-20 (1) diagnostic, treatment, and rehabilitative services
35-21 provided through inpatient hospital services; and
35-22 (2) outpatient care necessary as a follow-up to the
35-23 inpatient hospital services until the 90th day after the date of
35-24 discharge from the hospital.
35-25 (b) The in-hospital benefit plan is not subject to any law
36-1 requiring the reimbursement, use, or consideration of a specific
36-2 category of a licensed or certified health care practitioner.
36-3 (c) The in-hospital benefit plan must provide lifetime
36-4 benefits of $1 million with a total benefit cap of $100,000 per
36-5 policy year.
36-6 (d) The in-hospital benefit plan may include deductible and
36-7 copayment requirements.
36-8 (e) The in-hospital benefit plan may include a primary and
36-9 preventive care rider that includes the coverage required by
36-10 Article 26.45 of this code other than the coverage required by
36-11 Subsection (c)(1) of that article. The in-hospital benefit plan
36-12 may also include a supplementary accident benefit plan, but may not
36-13 include other riders or supplementary benefit plans.
36-14 Art. 26.47. STANDARD HEALTH BENEFIT PLAN. (a) The standard
36-15 health benefit plan shall include coverage for:
36-16 (1) health care services, including consulting and
36-17 referral services, provided within the scope of their practice by a
36-18 physician, a physician assistant, an advanced nurse practitioner,
36-19 or another licensed practitioner, including any practitioner
36-20 required to be covered under Article 21.52 of this code or under
36-21 Section 2, Chapter 397, Acts of the 54th Legislature, Regular
36-22 Session, 1955 (Article 3.70-2, Vernon's Texas Insurance Code);
36-23 (2) care in the following facilities:
36-24 (A) inpatient hospitals;
36-25 (B) outpatient hospitals;
37-1 (C) skilled nursing facilities, subject to a
37-2 maximum benefit of $10,000 per policy year; and
37-3 (D) hospice facilities, subject to a maximum
37-4 lifetime benefit of $10,000;
37-5 (3) emergency care, as defined by Section 2, Chapter
37-6 397, Acts of the 54th Legislature, 1955 (Article 3.70-2, Vernon's
37-7 Texas Insurance Code), and Section 2(t), Texas Health Maintenance
37-8 Organization Act (Article 20A.02, Vernon's Texas Insurance Code);
37-9 (4) maternity-related care, including prenatal,
37-10 delivery, and postnatal care and high-risk pregnancy care;
37-11 (5) well-child care, as defined by the Texas
37-12 Department of Health based on the standards of the American Academy
37-13 of Pediatrics or its successor organization;
37-14 (6) outpatient clinic or office visits for treatment
37-15 of illness or injury;
37-16 (7) one physical examination per policy year;
37-17 (8) mental health services, including coverage
37-18 described by Section 2(F), Chapter 397, Acts of the 54th
37-19 Legislature, 1955 (Article 3.70-2, Vernon's Texas Insurance Code),
37-20 and Article 3.72 of this code, subject to a limit of:
37-21 (A) 90 days of inpatient psychiatric care per
37-22 policy year; and
37-23 (B) 40 outpatient visits per policy year,
37-24 subject to a maximum benefit of $100 for each visit;
37-25 (9) medical treatment and referral services for the
38-1 abuse of or addiction to alcohol or drugs, as required by Article
38-2 3.51-9 of this code;
38-3 (10) inpatient and outpatient evaluation, crisis
38-4 intervention, and other treatment for serious mental illness as
38-5 described by Section 1, Article 3.51-14, of this code;
38-6 (11) diagnostic examinations and laboratory and X-ray
38-7 services;
38-8 (12) physical therapy performed by a qualified
38-9 licensed physical therapist, occupational therapy performed by a
38-10 qualified licensed occupational therapist, or speech-language
38-11 therapy performed by a qualified licensed speech-language
38-12 pathologist, subject to a maximum benefit of $10,000 per policy
38-13 year;
38-14 (13) home health services as required by Article
38-15 3.70-3B of this code, subject to a maximum limit of $10,000 per
38-16 policy year; and
38-17 (14) prescription drugs subject to a copayment of not
38-18 more than 50 percent.
38-19 (b) Coverage for the following preventive care must be
38-20 provided without copayment or deductible:
38-21 (1) childhood immunizations;
38-22 (2) Pap tests;
38-23 (3) mammography, as required by Section 2, Chapter
38-24 397, Acts of the 54th Legislature, Regular Session, 1955 (Article
38-25 3.70-2, Vernon's Texas Insurance Code);
39-1 (4) colo-rectal screening;
39-2 (5) prostate cancer screening; and
39-3 (6) vision and hearing tests for children under 19
39-4 years of age.
39-5 (c) The standard health benefit plan shall provide lifetime
39-6 benefits of $1 million with a total benefit cap of at least
39-7 $250,000 per policy year.
39-8 (d) Except for services excluded from deductible and
39-9 copayment requirements by Subsection (b) of this article, a
39-10 standard health benefit plan may include deductible and copayment
39-11 requirements.
39-12 (e) A small employer carrier may waive the limit on home
39-13 health services if the waiver will result in less expensive
39-14 treatment.
39-15 (f) The board may adopt rules to implement this article.
39-16 Art. 26.47A. ALCOHOL AND SUBSTANCE ABUSE BENEFITS. The
39-17 employees of a small employer group may accept and small employer
39-18 carriers may offer the preventive and primary care benefit plan or
39-19 the standard health benefit plan without providing coverage for
39-20 alcohol and substance abuse benefits if:
39-21 (1) at least 50 percent of the employees waive, in
39-22 writing, the benefits, and indicate in writing that they have
39-23 undergone alcoholism or substance abuse treatment or counseling
39-24 within the last three years; and
39-25 (2) the exclusion from coverage of alcohol and
40-1 substance abuse applies only to those employees.
40-2 Art. 26.48. HEALTH MAINTENANCE ORGANIZATION PLANS. Instead
40-3 of the small employer health benefit plans described by this
40-4 subchapter, a health maintenance organization may offer a
40-5 state-approved health benefit plan that complies with the
40-6 requirements of Title XI, Public Health Service Act (42 U.S.C.
40-7 Section 300e et seq.) and rules adopted under that Act.
40-8 Art. 26.49. PREEXISTING CONDITION PROVISIONS. (a) Except
40-9 as provided by Article 26.21(g) of this code, a preexisting
40-10 condition provision in a small employer health benefit plan may not
40-11 apply to expenses incurred after the first anniversary of the
40-12 effective date of coverage.
40-13 (b) A preexisting condition provision in a small employer
40-14 health benefit plan may not apply to coverage for a disease or
40-15 condition other than a disease or condition:
40-16 (1) for which medical advice, diagnosis, care, or
40-17 treatment was recommended or received during the six months before
40-18 the effective date of coverage; or
40-19 (2) that would have caused an ordinary, prudent person
40-20 to seek medical advice, diagnosis, care, or treatment during the
40-21 six months before the effective date of coverage.
40-22 (c) A preexisting condition provision in a small employer
40-23 health benefit plan may not apply to an individual who was
40-24 continuously covered for a minimum period of 12 months by a health
40-25 benefit plan that was in effect up to a date not more than 60 days
41-1 before the effective date of coverage under the small employer
41-2 health benefit plan.
41-3 (d) A preexisting condition provision may exclude coverage
41-4 for a pregnancy existing on the effective date of the coverage,
41-5 except as provided by Subsection (c) of this article.
41-6 (e) In determining whether a preexisting condition provision
41-7 applies to an individual covered by a small employer health benefit
41-8 plan, the small employer carrier shall credit the time the
41-9 individual was covered under a previous health benefit plan if the
41-10 previous coverage was in effect at any time during the 12 months
41-11 preceding the effective date of coverage under a small employer
41-12 health benefit plan. If the previous coverage was issued by a
41-13 health maintenance organization, any waiting period that applied
41-14 before that coverage became effective also shall be credited
41-15 against the preexisting condition provision period.
41-16 Art. 26.50. COORDINATION WITH FEDERAL LAW. The board by
41-17 rule may modify a small employer benefit plan described by this
41-18 subchapter or adopt a substitute for that plan to the extent
41-19 required to comply with federal law applicable to the plan. The
41-20 board shall use the Texas Health Benefits Purchasing Cooperative in
41-21 the implementation of this article.
41-22 SUBCHAPTER F. REINSURANCE
41-23 Art. 26.51. ELECTION TO BE RISK-ASSUMING OR REINSURED
41-24 CARRIER; NOTICE TO COMMISSIONER. (a) Each small employer carrier
41-25 shall notify the commissioner of the carrier's election to operate
42-1 as a risk-assuming carrier or a reinsured carrier. A small
42-2 employer carrier seeking to operate as a risk-assuming carrier
42-3 shall make an application under Article 26.52 of this code.
42-4 (b) A small employer carrier's election under Subsection (a)
42-5 of this article is effective until the fifth anniversary of the
42-6 election. The commissioner may permit a small employer carrier to
42-7 modify its decision at any time for good cause shown.
42-8 (c) The commissioner shall establish an application process
42-9 for small employer carriers seeking to change their status under
42-10 this article.
42-11 (d) A reinsured carrier that elects to change its status to
42-12 operate as a risk-assuming carrier may not continue to reinsure a
42-13 small employer health benefit plan with the system. The carrier
42-14 shall pay a prorated assessment based on business issued as a
42-15 reinsured carrier for any portion of the year that the business was
42-16 reinsured.
42-17 Art. 26.52. APPLICATION TO BECOME A RISK-ASSUMING CARRIER.
42-18 (a) A small employer carrier may apply to become a risk-assuming
42-19 carrier by filing an application with the commissioner in a form
42-20 and manner prescribed by the commissioner.
42-21 (b) In evaluating an application filed under Subsection (a)
42-22 of this article, the commissioner shall consider the small employer
42-23 carrier's:
42-24 (1) financial condition;
42-25 (2) history of rating and underwriting small employer
43-1 groups;
43-2 (3) commitment to market fairly to all small employers
43-3 in the state or in its established geographic service area; and
43-4 (4) experience managing the risk of small employer
43-5 groups.
43-6 (c) The commissioner shall provide public notice of an
43-7 application by a small employer carrier to be a risk-assuming
43-8 carrier and shall provide at least a 60-day period for public
43-9 comment before making a decision on the application. If the
43-10 application is not acted on before the 90th day after the date the
43-11 commissioner received the application, the carrier may request and
43-12 the commissioner shall grant a hearing.
43-13 (d) The commissioner, after notice and hearing, may rescind
43-14 the approval granted to a risk-assuming carrier under this article
43-15 if the commissioner finds that the carrier:
43-16 (1) is not financially able to support the assumption
43-17 of risk from issuing coverage to small employers without the
43-18 protection afforded by the system;
43-19 (2) has failed to market fairly to all small employers
43-20 in the state or its established geographic service area; or
43-21 (3) has failed to provide coverage to eligible small
43-22 employers.
43-23 Art. 26.53. TEXAS HEALTH REINSURANCE SYSTEM. (a) The Texas
43-24 Health Reinsurance System is created as a nonprofit entity.
43-25 (b) The system is administered by a board of directors and
44-1 operates subject to the supervision and control of the
44-2 commissioner.
44-3 Art. 26.54. BOARD OF DIRECTORS. (a) The board of directors
44-4 is composed of nine members appointed by the commissioner. The
44-5 commissioner or the commissioner's representative shall serve as an
44-6 ex officio member. Five members must be representatives of
44-7 reinsured carriers selected from individuals nominated by small
44-8 employer carriers in this state according to procedures developed
44-9 by the commissioner. Four members must represent the general
44-10 public. A member representing the general public may not be:
44-11 (1) an officer, director, or employee of an insurance
44-12 company, agency, agent, broker, solicitor, or adjuster or any other
44-13 business entity regulated by the department;
44-14 (2) a person required to register with the Texas
44-15 Ethics Commission under Chapter 305, Government Code; or
44-16 (3) related to a person described by Subdivision (1)
44-17 or (2) of this subsection within the second degree of affinity or
44-18 consanguinity.
44-19 (b) The members appointed by the commissioner serve two-year
44-20 terms. The terms expire on December 31 of each odd-numbered year.
44-21 A member's term continues until a successor is appointed.
44-22 (c) A member of the board of directors may not be
44-23 compensated for serving on the board of directors but is entitled
44-24 to reimbursement for actual expenses incurred in performing
44-25 functions as a member of the board of trustees as provided in the
45-1 General Appropriations Act.
45-2 (d) The board of directors is subject to the open meetings
45-3 law, Chapter 271, Acts of the 60th Legislature, Regular Session,
45-4 1967 (Article 6252-17, Vernon's Texas Civil Statutes), and the open
45-5 records law, Chapter 424, Acts of the 63rd Legislature, Regular
45-6 Session, 1973 (Article 6252-17a, Vernon's Texas Civil Statutes).
45-7 Art. 26.55. PLAN OF OPERATION. (a) Not later than the
45-8 180th day after the date on which a majority of the members of the
45-9 board of directors have been appointed, the board of directors
45-10 shall submit to the commissioner a plan of operation and thereafter
45-11 any amendments necessary or suitable to ensure the fair,
45-12 reasonable, and equitable administration of the system. The
45-13 commissioner, after notice and hearing, may approve the plan of
45-14 operation if the commissioner determines the plan is suitable to
45-15 ensure the fair, reasonable, and equitable administration of the
45-16 system and provides for the sharing of system gains or losses on an
45-17 equitable and proportionate basis in accordance with the provisions
45-18 of this subchapter. The plan of operation is effective on the
45-19 written approval of the commissioner.
45-20 (b) If the board of directors fails to timely submit a
45-21 suitable plan of operation, the commissioner, after notice and
45-22 hearing, shall adopt a temporary plan of operation. The
45-23 commissioner shall amend or rescind any plan adopted under this
45-24 subsection at the time a plan of operation is submitted by the
45-25 board of directors and approved by the commissioner.
46-1 (c) The plan of operation must:
46-2 (1) establish procedures for the handling and
46-3 accounting of system assets and money and for an annual fiscal
46-4 report to the commissioner;
46-5 (2) establish procedures for the selection of an
46-6 administering carrier or third-party administrator and establish
46-7 the powers and duties of that administering carrier or third-party
46-8 administrator;
46-9 (3) establish procedures for reinsuring risks in
46-10 accordance with the provisions of this article;
46-11 (4) establish procedures for collecting assessments
46-12 from reinsured carriers to fund claims and administrative expenses
46-13 incurred or estimated to be incurred by the system, including the
46-14 imposition of penalties for late payment of an assessment; and
46-15 (5) provide for any additional matters necessary for
46-16 the implementation and administration of the system.
46-17 Art. 26.56. POWERS AND DUTIES OF SYSTEM. The system has the
46-18 general powers and authority granted under the laws of this state
46-19 to insurance companies and health maintenance organizations
46-20 licensed to transact business, except that the system may not
46-21 directly issue health benefit plans. The system is exempt from all
46-22 taxes. The system may:
46-23 (1) enter into contracts necessary or proper to carry
46-24 out the provisions and purposes of this subchapter and may, with
46-25 the approval of the commissioner, enter into contracts with similar
47-1 programs of other states for the joint performance of common
47-2 functions or with persons or other organizations for the
47-3 performance of administrative functions;
47-4 (2) sue or be sued, including taking legal actions
47-5 necessary or proper to recover assessments and penalties for, on
47-6 behalf of, or against the system or a reinsured carrier;
47-7 (3) take legal action necessary to avoid the payment
47-8 of improper claims against the system;
47-9 (4) issue reinsurance contracts in accordance with the
47-10 requirements of this subchapter;
47-11 (5) establish guidelines, conditions, and procedures
47-12 for reinsuring risks under the plan of operation;
47-13 (6) establish actuarial functions as appropriate for
47-14 the operation of the system;
47-15 (7) assess reinsured carriers in accordance with the
47-16 provisions of Article 26.60 of this code and make advance interim
47-17 assessments as may be reasonable and necessary for organizational
47-18 and interim operating expenses, provided that any interim
47-19 assessments shall be credited as offsets against regular
47-20 assessments due after the close of the fiscal year;
47-21 (8) appoint appropriate legal, actuarial, and other
47-22 committees as necessary to provide technical assistance in the
47-23 operation of the system, policy and other contract design, and any
47-24 other function within the authority of the system; and
47-25 (9) borrow money for a period not to exceed one year
48-1 to effect the purposes of the system, provided that any notes or
48-2 other evidence of indebtedness of the system not in default shall
48-3 be legal investments for small employer carriers and may be carried
48-4 as admitted assets.
48-5 Art. 26.57. AUDIT BY STATE AUDITOR. (a) The state auditor
48-6 shall conduct annually a special audit of the system under Chapter
48-7 321, Government Code. The state auditor's report shall include a
48-8 financial audit and an economy and efficiency audit.
48-9 (b) The state auditor shall report the cost of each audit
48-10 conducted under this article to the board of directors and the
48-11 comptroller, and the board of directors shall remit that amount to
48-12 the comptroller for deposit to the general revenue fund.
48-13 Art. 26.58. REINSURANCE. (a) A small employer carrier may
48-14 reinsure risks covered under the small employer health benefit
48-15 plans with the system as provided by this article.
48-16 (b) The system shall reinsure the level of coverage provided
48-17 under the small employer health benefit plans.
48-18 (c) A small employer carrier may reinsure an entire small
48-19 employer group not later than the 60th day after the date on which
48-20 the group's coverage under the small employer health benefit plans
48-21 takes effect. A small employer carrier may reinsure an eligible
48-22 employee of a small employer or the employee's dependent not later
48-23 than the 60th day after the date on which that individual's
48-24 coverage takes effect. A newly eligible employee or dependent of a
48-25 reinsured small employer group or an individual covered under the
49-1 small employer health benefit plans may be reinsured not later than
49-2 the 60th day after the date on which that individual's coverage
49-3 takes effect.
49-4 (d) The system may not reimburse a reinsured carrier for the
49-5 claims of any reinsured individual until the carrier has incurred
49-6 an initial level of claims for that individual in a calendar year
49-7 of $5,000 for benefits covered by the system. In addition, the
49-8 reinsured carrier is responsible for 10 percent of the next $50,000
49-9 of benefit payments during a calendar year, and the system shall
49-10 reinsure the remainder. A reinsured carrier's liability to any
49-11 insured individual may not exceed a maximum of $10,000 in any one
49-12 calendar year for that individual.
49-13 (e) The board of directors annually shall adjust the initial
49-14 level of claims and the maximum to be retained by the carrier
49-15 established under Subsection (d) of this article to reflect
49-16 increases in costs and in use for small employer health benefit
49-17 plans in this state. The adjustment may not be less than the
49-18 annual change in the medical component of the Consumer Price Index
49-19 for All Urban Consumers published by the Bureau of Labor Statistics
49-20 of the United States Department of Labor unless the board of
49-21 directors proposes and the commissioner approves a lower adjustment
49-22 factor.
49-23 (f) A small employer carrier may terminate reinsurance with
49-24 the system for one or more of the reinsured employees or dependents
49-25 of employees of a small employer on a contract anniversary of the
50-1 small employer health benefit plans.
50-2 (g) Except as provided in the plan of operation, a reinsured
50-3 carrier shall apply consistently with respect to reinsured and
50-4 nonreinsured business all managed care procedures, including
50-5 utilization review, individual case management, preferred provider
50-6 provisions, and other managed care provisions or methods of
50-7 operation.
50-8 Art. 26.59. PREMIUM RATES. (a) As part of the plan of
50-9 operation, the board of directors shall adopt a method to determine
50-10 premium rates to be charged by the system for reinsuring small
50-11 employer groups and individuals under this subchapter.
50-12 (b) The method adopted must include classification systems
50-13 for small employer groups that reflect the variations in premium
50-14 rates allowed in this chapter and must provide for the development
50-15 of base reinsurance premium rates that reflect the allowable
50-16 variations. The base reinsurance premium rates shall be
50-17 established by the board of directors, subject to the approval of
50-18 the board, and shall be set at levels that reasonably approximate
50-19 the gross premiums charged to small employers by small employer
50-20 carriers for the small employer health benefit plans, adjusted to
50-21 reflect retention levels required under this subchapter. The board
50-22 of directors periodically shall review the method adopted under
50-23 this subsection, including the classification system and any rating
50-24 factors, to ensure that the method reasonably reflects the claim
50-25 experience of the system. The board of directors may propose
51-1 changes to the method. The changes are subject to the approval of
51-2 the board.
51-3 (c) An entire small employer group may be reinsured at a
51-4 rate that is 1-1/2 times the base reinsurance premium rate for that
51-5 group. An eligible employee of a small employer or the employee's
51-6 dependent covered under the small employer health benefit plans may
51-7 be reinsured at a rate that is five times the base reinsurance
51-8 premium rate for that individual.
51-9 (d) The board of directors may consider adjustments to the
51-10 premium rates charged by the system to reflect the use of effective
51-11 cost containment and managed care arrangements.
51-12 Art. 26.60. ASSESSMENTS. (a) Not later than March 1 of
51-13 each year, the board of directors shall determine and report to the
51-14 commissioner the system net loss for the previous calendar year,
51-15 including administrative expenses and incurred losses for the year,
51-16 taking into account investment income and other appropriate gains
51-17 and losses. Any net loss for the year must be recouped by
51-18 assessments on reinsured carriers. Each reinsured carrier's
51-19 assessment shall be determined annually by the board of directors
51-20 based on annual statements and other reports required by the board
51-21 of directors and filed with that board. The board of directors
51-22 shall establish, as part of the plan of operation, a formula by
51-23 which to make assessments against reinsured carriers. With the
51-24 approval of the commissioner, the board of directors may change the
51-25 assessment formula from time to time as appropriate. The board of
52-1 directors shall base the assessment formula on each reinsured
52-2 carrier's share of:
52-3 (1) the total premiums earned in the preceding
52-4 calendar year from the small employer health benefit plans
52-5 delivered or issued for delivery by reinsured carriers to small
52-6 employer groups in this state; and
52-7 (2) the premiums earned in the preceding calendar year
52-8 from newly issued small employer health benefit plans delivered or
52-9 issued for delivery during the calendar year by reinsured carriers
52-10 to small employer groups in this state.
52-11 (b) The formula established under Subsection (a) of this
52-12 article may not result in an assessment share for a reinsured
52-13 carrier that is less than 50 percent or more than 150 percent of an
52-14 amount based on the proportion of the total premium earned in the
52-15 preceding calendar year from the small employer health benefit
52-16 plans delivered or issued for delivery to small employer groups in
52-17 this state by that reinsured carrier to the total premiums earned
52-18 in the preceding calendar year from small employer health benefit
52-19 plans delivered or issued for delivery to small employer groups in
52-20 this state by all reinsured carriers. Premiums earned by a
52-21 reinsured carrier that are less than an amount determined by the
52-22 board of directors to justify the cost of collection of an
52-23 assessment based on those premiums may not be considered by the
52-24 board of directors in determining assessments.
52-25 (c) With the approval of the commissioner, the board of
53-1 directors may adjust the assessment formula for reinsured carriers
53-2 that are approved health maintenance organizations that are
53-3 federally qualified under Subchapter XI, Public Health Service Act
53-4 (42 U.S.C. Section 300e et seq.), to the extent that any
53-5 restrictions are imposed on those health maintenance organizations
53-6 that are not imposed on other health carriers.
53-7 Art. 26.61. EVALUATION OF SYSTEM. (a) Not later than March
53-8 1 of each year, the board of directors shall file with the
53-9 commissioner an estimate of the assessments necessary to fund the
53-10 losses for small employer groups incurred by the system during the
53-11 previous calendar year.
53-12 (b) If the board of directors determines that the necessary
53-13 assessments exceed five percent of the total premiums earned in the
53-14 previous calendar year from small employer health benefit plans
53-15 delivered or issued for delivery by reinsured carriers to small
53-16 employer groups in this state, the board of directors shall
53-17 evaluate the operation of the system and shall report its findings,
53-18 including any recommendations for changes to the plan of operation,
53-19 to the commissioner not later than April 1 of the year following
53-20 the calendar year in which the losses were incurred. The
53-21 evaluation must include an estimate of future assessments and must
53-22 consider the administrative costs of the system, the
53-23 appropriateness of the premiums charged, the level of insurer
53-24 retention under the system, and the costs of coverage for small
53-25 employer groups.
54-1 (c) If the board of directors fails to timely file a report,
54-2 the commissioner may evaluate the operations of the system and may
54-3 implement amendments to the plan of operation as considered
54-4 necessary by the commissioner to reduce future losses and
54-5 assessments.
54-6 (d) Reinsured carriers may not write small employer health
54-7 benefit plans on a guaranteed issue basis during a calendar year if
54-8 the assessment amount payable for the previous calendar year is at
54-9 least five percent of the total premiums earned in that calendar
54-10 year from small employer health benefit plans delivered or issued
54-11 for delivery by reinsured carriers in this state.
54-12 (e) Reinsured carriers may not write small employer health
54-13 benefit plans on a guaranteed issue basis after the board of
54-14 directors determines that the expected loss from the reinsurance
54-15 system for a year will exceed the total amount of assessments
54-16 payable at a rate of five percent of the total premiums earned for
54-17 the previous calendar year. Reinsured carriers may not resume
54-18 writing small employer health benefit plans on a guaranteed issue
54-19 basis until the board of directors determines that the expected
54-20 loss will be less than the maximum established by this subsection.
54-21 (f) The maximum assessment amount payable for a calendar
54-22 year may not exceed five percent of the total premiums earned in
54-23 the preceding calendar year from small employer health benefit
54-24 plans delivered or issued for delivery by reinsured carriers in
54-25 this state.
55-1 Art. 26.62. DEFERMENT OF ASSESSMENT. (a) A reinsured
55-2 carrier may petition the commissioner for a deferment in whole or
55-3 in part of an assessment imposed by the board of directors.
55-4 (b) The commissioner may defer all or part of the assessment
55-5 of a reinsured carrier if the commissioner determines that the
55-6 payment of the assessment would endanger the ability of the
55-7 reinsured carrier to fulfill its contractual obligations.
55-8 (c) If an assessment against a reinsured carrier is
55-9 deferred, the amount deferred shall be assessed against the other
55-10 reinsured carriers in a manner consistent with the basis for
55-11 assessment established by this subchapter.
55-12 (d) A reinsured carrier receiving a deferment is liable to
55-13 the system for the amount deferred and is prohibited from
55-14 marketing, delivering, or issuing for delivery a small employer
55-15 health benefit plan or reinsuring any individual or group with the
55-16 system until it pays the outstanding assessment.
55-17 SUBCHAPTER G. MARKETING
55-18 Art. 26.71. FAIR MARKETING. (a) Each small employer
55-19 carrier shall market the small employer health benefit plan through
55-20 properly licensed agents to eligible small employers in this state.
55-21 Each small employer purchasing a small employer health benefit plan
55-22 must affirm that the agent who sold the plan offered and explained
55-23 all three plans to that employer.
55-24 (b) The department may require periodic demonstration by
55-25 small employer carriers and agents that those carriers and agents
56-1 are marketing or issuing small employer health benefit plans to
56-2 small employers in fulfillment of the purposes of this article.
56-3 (c) The department may require periodic reports by small
56-4 employer carriers and agents regarding small employer health
56-5 benefit plans issued by those carriers and agents. The reporting
56-6 requirements shall include information regarding case
56-7 characteristics and the numbers of small employer health benefit
56-8 plans in various categories that are marketed or issued to small
56-9 employers.
56-10 Art. 26.72. HEALTH STATUS AND CLAIMS EXPERIENCE; PROHIBITED
56-11 ACTS. (a) A small employer carrier or agent may not, directly or
56-12 indirectly:
56-13 (1) encourage or direct a small employer to refrain
56-14 from applying for coverage with the small employer carrier because
56-15 of health status or claim experience of the eligible employees and
56-16 dependents of the small employer;
56-17 (2) encourage or direct a small employer to seek
56-18 coverage from another health carrier because of health status or
56-19 claim experience of the eligible employees and dependents of the
56-20 small employer; or
56-21 (3) encourage or direct a small employer to apply for
56-22 a particular small employer health benefit plan because of health
56-23 status or claim experience of the eligible employees and dependents
56-24 of the small employer.
56-25 (b) A small employer carrier may not, directly or
57-1 indirectly, enter into an agreement or arrangement with an agent
57-2 that provides for or results in the compensation paid to an agent
57-3 for the sale of the small employer health benefit plans to be
57-4 varied because of health status or claim experience.
57-5 (c) Subsection (b) of this article does not apply to an
57-6 arrangement that provides compensation to an agent on the basis of
57-7 percentage of premium, provided that the percentage may not vary
57-8 because of health status or claim experience.
57-9 (d) A small employer carrier or agent may not encourage a
57-10 small employer to exclude an eligible employee from health coverage
57-11 provided in connection with the employee's employment.
57-12 Art. 26.73. AGENTS. (a) A small employer carrier shall pay
57-13 the same commission, percentage of premium or other amount to an
57-14 agent for renewal of a small employer health benefit plan as the
57-15 carrier paid for original placement of the plan. Compensation for
57-16 renewal of a plan may be adjusted upward to reflect an increase in
57-17 the cost of living or similar factors.
57-18 (b) A small employer carrier may not terminate, fail to
57-19 renew, or limit its contract or agreement of representation with an
57-20 agent for any reason related to the health status or claim
57-21 experience of a small employer group placed by the agent with the
57-22 carrier.
57-23 Art. 26.74. WRITTEN STATEMENT OF DENIAL, CANCELLATION, OR
57-24 REFUSAL TO RENEW. Denial by a small employer carrier of an
57-25 application for coverage from a small employer or a cancellation or
58-1 refusal to renew must be in writing and must state the reason or
58-2 reasons for the denial, cancellation, or refusal.
58-3 Art. 26.75. RULES. The board may adopt rules setting forth
58-4 additional standards to provide for the fair marketing and broad
58-5 availability of small employer health benefit plans to small
58-6 employers in this state.
58-7 Art. 26.76. VIOLATION. (a) A violation of Article 26.72 of
58-8 this code by a small employer carrier or an agent is an unfair
58-9 method of competition and an unfair or deceptive act or practice
58-10 under Article 21.21 of this code.
58-11 (b) If a small employer carrier enters into an agreement
58-12 with a third-party administrator to provide administrative,
58-13 marketing, or other services related to the offering of small
58-14 employer health benefit plans to small employers in this state, the
58-15 third-party administrator is subject to this subchapter.
58-16 SECTION 2. Subchapter E, Chapter 21, Insurance Code, is
58-17 amended by adding Article 21.52C to read as follows:
58-18 Art. 21.52C. UNIFORM CLAIM BILLING FORMS. (a) In this
58-19 article:
58-20 (1) "Health benefit plan" means a group, blanket, or
58-21 franchise insurance policy, a group hospital service contract, or a
58-22 group subscriber contract or evidence of coverage issued by a
58-23 health maintenance organization that provides benefits for health
58-24 care services.
58-25 (2) "Health carrier" means any entity authorized under
59-1 this code or another insurance law of this state that provides
59-2 health insurance or health benefits in this state, including an
59-3 insurance company, a group hospital service corporation under
59-4 Chapter 20 of this code, a health maintenance organization under
59-5 the Texas Health Maintenance Organization Act (Chapter 20A,
59-6 Vernon's Texas Insurance Code), and a stipulated premium company
59-7 authorized under Chapter 22 of this code.
59-8 (3) "Provider" means a person who provides health care
59-9 under a license issued by this state, including a person listed in
59-10 Section 2(B), Chapter 397, Acts of the 54th Legislature, Regular
59-11 Session, 1955 (Article 3.70-2, Vernon's Texas Insurance Code), or
59-12 in Article 21.52 of this code.
59-13 (b) A provider seeking payment or reimbursement under a
59-14 health benefit plan and the health carrier that issued that plan
59-15 must use uniform claim billing form UB-82/HCFA or HCFA 1500, or
59-16 their successors, as developed by the National Uniform Billing
59-17 Committee or its successor.
59-18 SECTION 3. Section 1(d)(3), Article 3.51-6, Insurance Code,
59-19 is amended to read as follows:
59-20 (3) Any insurer or group hospital service corporation
59-21 subject to Chapter 20, Insurance Code, who issues policies which
59-22 provide hospital, surgical, or major medical expense insurance or
59-23 any combination of these coverages on an expense incurred basis,
59-24 but not a policy which provides benefits for specified disease or
59-25 for accident only, shall provide a conversion or group continuation
60-1 privilege as required by this subsection. Any employee, member, or
60-2 dependent whose insurance under the group policy has been
60-3 terminated for any reason except involuntary termination for cause,
60-4 including discontinuance of the group policy in its entirety or
60-5 with respect to an insured class, and who has been continuously
60-6 insured under the group policy and under any group policy providing
60-7 similar benefits which it replaces for at least three consecutive
60-8 months immediately prior to termination shall be entitled to such
60-9 privilege as outlined in Paragraph (A), (B), or (C) below.
60-10 Involuntary termination for cause does not include termination for
60-11 any health-related cause.
60-12 (A)(i) An insurer shall first offer to each
60-13 employee, member, or dependent a conversion policy without
60-14 evidence of insurability if written application for and payment of
60-15 the first premium is made not later than the 31st day after the
60-16 date of the termination. The converted policy shall provide the
60-17 same coverage and benefits as provided under the group policy or
60-18 plan. The lifetime maximum benefits shall be computed from the
60-19 initial date of the employee's, member's, or dependent's coverage
60-20 with the group. An insurer shall offer and an employee, member, or
60-21 dependent may elect lesser coverage and benefits. <Coverage under
60-22 an individual policy or group conversion policy of accident and
60-23 health insurance without evidence of insurability if written
60-24 application and payment of the first premium is made within 31 days
60-25 after such termination.> An employee, member, or dependent shall
61-1 not be entitled to have a converted policy or plan issued if
61-2 termination of the insurance <under the group policy> occurred
61-3 because: (aa) such person failed to pay any required premium; or
61-4 (bb) any discontinued group coverage was replaced by similar group
61-5 coverage within 31 days.
61-6 (ii) An insurer shall not be required to
61-7 issue a converted policy covering any person if: (aa) such person
61-8 is or could be covered by Medicare; (bb) such person is covered for
61-9 similar benefits by another hospital, surgical, medical, or major
61-10 medical expense insurance policy or hospital or medical service
61-11 subscriber contract or medical practice or other prepayment plan or
61-12 by any other plan or program; (cc) such person is eligible for
61-13 similar benefits whether or not covered therefor under any
61-14 arrangement of coverage for individuals in a group, whether on an
61-15 insured or uninsured basis; or (dd) similar benefits are provided
61-16 for or available to such person, pursuant to or in accordance with
61-17 the requirements of any state or federal law<; or (ee) the benefits
61-18 provided under the sources herein enumerated, together with the
61-19 benefits provided by the converted policy, would result in
61-20 overinsurance according to the insurer's standards. The insurer's
61-21 standards must bear some reasonable relationship to actual health
61-22 care costs in the area in which the insured lives at the time of
61-23 conversion and must be filed with the commissioner of insurance
61-24 prior to their use in denying coverage>. The board shall issue
61-25 rules and regulations to establish minimum standards for benefits
62-1 under policies issued pursuant to this subsection.
62-2 (B)(i) Policies subject to Paragraph (A) above
62-3 shall provide at the <insurer's> option of the employee, member, or
62-4 dependent in lieu of the requirements of Paragraph (A) continuation
62-5 of group coverage for employees or members and their eligible
62-6 dependents subject to the eligibility provisions of Paragraph (A).
62-7 (ii) Continuation of group coverage <need
62-8 not include dental, vision care, or prescription drug benefits and>
62-9 must be requested in writing within 31 <21> days following the
62-10 later of: (aa) the date the group coverage would otherwise
62-11 terminate; or (bb) the date the employee is given notice of the
62-12 right of continuation by either the employer or the group
62-13 policyholder.
62-14 (iii) In no event may the employee or
62-15 member elect continuation more than 31 days after the date of such
62-16 termination.
62-17 (iv) An employee or member electing
62-18 continuation must pay to the group policyholder or employer, on a
62-19 monthly basis in advance, the amount of contribution required by
62-20 the policyholder or employer, plus two percent of <but not more
62-21 than> the group rate for the insurance being continued under the
62-22 group policy on the due date of each payment.
62-23 (v) The employee's or member's written
62-24 election of continuation, together with the first contribution
62-25 required to establish contributions on a monthly basis in advance,
63-1 must be given to the policyholder or employer within 31 days of the
63-2 date coverage would otherwise terminate.
63-3 (vi) Continuation may not terminate until
63-4 the earliest of: (aa) six months after the date the election is
63-5 made; (bb) failure to make timely payments; (cc) the date on which
63-6 the group coverage terminates in its entirety; (dd) or one of the
63-7 conditions specified in items (aa) through (dd) <(ee)> of
63-8 Subparagraph (ii), Paragraph (A) above is met by the covered
63-9 individual.
63-10 (C) The insurer may elect to provide the
63-11 conversion coverage on an individual or group basis <group
63-12 insurance coverage in lieu of the issuance of a converted policy
63-13 under Paragraph (A) above>.
63-14 The premium for the converted policy issued under Paragraph
63-15 (A) of this subdivision shall <or the group coverage under
63-16 Paragraph (C) of this subdivision, should> be determined in
63-17 accordance with the insurer's table of premium rates for coverage
63-18 that was provided under the group policy or plan. The premium may
63-19 be based on the age and geographic location of each person to be
63-20 covered and the type of converted policy. The premium for the same
63-21 coverage and benefits under a converted policy may not exceed 200
63-22 percent of the premium determined in accordance with this
63-23 paragraph. The premium must be based on the type of converted
63-24 policy and the coverage provided by the policy <applicable to the
63-25 age and class of risk of each person to be covered under that
64-1 policy and the type and amount of insurance provided>.
64-2 SECTION 4. Subchapter E, Chapter 21, Insurance Code, is
64-3 amended by adding Article 21.52D to read as follows:
64-4 Art. 21.52D. REVIEW OF MANDATED COVERAGE IN HEALTH BENEFIT
64-5 PLANS
64-6 Sec. 1. DEFINITIONS. In this article:
64-7 (1) "Commissioner" means the commissioner of
64-8 insurance.
64-9 (2) "Health benefit plan" means:
64-10 (A) an individual, group, blanket, or franchise
64-11 insurance policy, insurance agreement, or group hospital service
64-12 contract that provides benefits for medical or surgical expenses
64-13 incurred as a result of an accident or sickness; or
64-14 (B) an evidence of coverage or group subscriber
64-15 contract issued by a health maintenance organization.
64-16 (3) "Mandated benefit provision" means a provision of
64-17 law that requires a health benefit plan to:
64-18 (A) cover a particular health care service or
64-19 provide a particular benefit;
64-20 (B) cover a particular class of persons; or
64-21 (C) provide for the reimbursement, use, or
64-22 consideration of a particular category of health care
64-23 practitioners.
64-24 (4) "Panel" means the mandated benefit review panel
64-25 appointed under this article.
65-1 Sec. 2. MANDATED BENEFIT REVIEW PANEL. (a) The mandated
65-2 benefit review panel is composed of three senior researchers
65-3 appointed by the commissioner. Two members of the panel must be
65-4 experts in health research or biostatistics and must serve on the
65-5 faculty of a university located in this state.
65-6 (b) Members of the panel serve staggered six-year terms,
65-7 with the term of one member expiring February 1 of each
65-8 odd-numbered year. If there is a vacancy during a term, the
65-9 commissioner shall appoint a replacement who meets the
65-10 qualifications of the vacated office to fill the unexpired term.
65-11 (c) A member of the panel is not entitled to compensation
65-12 but is entitled to reimbursement for actual and necessary expenses
65-13 incurred in performing duties as a member of the panel at the rate
65-14 provided for that reimbursement by the General Appropriations Act.
65-15 (d) The department shall provide staff for the panel in
65-16 accordance with legislative appropriation.
65-17 Sec. 3. REFERRAL OF BILL; REPORT. (a) The presiding
65-18 officer of either house of the legislature shall refer a bill
65-19 proposing a mandated benefit provision or an amendment to a
65-20 mandated benefit provision to the panel for a review and report in
65-21 accordance with this article.
65-22 (b) Not later than the 30th day after the date the bill is
65-23 referred to the panel, the panel shall issue a report.
65-24 (c) The panel shall provide a summary and copy of the
65-25 panel's report to the presiding officer of each house of the
66-1 legislature and to the commissioner.
66-2 (d) The summary must include:
66-3 (1) a brief description of the mandated benefit
66-4 provision;
66-5 (2) the panel's conclusion on the necessity, cost,
66-6 cost effectiveness, and medical efficacy of the provision;
66-7 (3) research evidencing the medical efficacy of the
66-8 health care service; and
66-9 (4) the manner in which similar mandated benefit
66-10 provisions enacted in other states have affected health care and
66-11 health insurance costs in those states.
66-12 Sec. 4. REPORT ON EXISTING MANDATED BENEFIT PROVISIONS.
66-13 (a) Not later than February 1, 1995, the panel shall issue a
66-14 report on each mandated benefit provision that is in effect on the
66-15 date the report is issued.
66-16 (b) The panel shall provide a copy of the panel's report to
66-17 the presiding officer of each house of the legislature and to the
66-18 commissioner.
66-19 (c) The panel's report under this section must include:
66-20 (1) a brief description of each mandated benefit
66-21 provision;
66-22 (2) the panel's conclusion on the necessity, cost,
66-23 cost effectiveness, and medical efficacy of each provision;
66-24 (3) research evidencing the medical efficacy of each
66-25 health care service; and
67-1 (4) the manner in which similar mandated benefit
67-2 provisions enacted in other states have affected health care and
67-3 health insurance costs in those states.
67-4 SECTION 5. HEALTH INSURANCE ACCESS STUDY. (a) A
67-5 comprehensive study of guaranteed issue as a feature of health
67-6 insurance reform shall be conducted on behalf of the legislature.
67-7 (b) The study shall be conducted by a committee composed of:
67-8 (1) two members of the senate appointed by the
67-9 lieutenant governor;
67-10 (2) two members of the house of representatives
67-11 appointed by the speaker of the house of representatives;
67-12 (3) a representative of the business community in this
67-13 state appointed by the lieutenant governor;
67-14 (4) a representative of the business community in this
67-15 state appointed by the speaker of the house of representatives;
67-16 (5) a representative of the insurance industry
67-17 appointed by the lieutenant governor;
67-18 (6) a representative of the insurance industry
67-19 appointed by the speaker of the house of representatives;
67-20 (7) a representative of health care providers
67-21 appointed by the lieutenant governor;
67-22 (8) a representative of health care providers
67-23 appointed by the speaker of the house of representatives;
67-24 (9) a representative of consumer groups appointed by
67-25 the lieutenant governor; and
68-1 (10) a representative of consumer groups appointed by
68-2 the speaker of the house of representatives.
68-3 (c) A member of the committee is entitled to reimbursement
68-4 for expenses incurred in carrying out official duties as a member
68-5 of the committee at the rate specified in the General
68-6 Appropriations Act.
68-7 (d) The committee shall:
68-8 (1) investigate and evaluate the experience of other
68-9 jurisdictions in which guaranteed issue of health benefit plans has
68-10 been required;
68-11 (2) collect and evaluate data regarding the effect of
68-12 guaranteed issue requirements on health insurance availability and
68-13 accessibility; and
68-14 (3) collect and evaluate data regarding the effect of
68-15 guaranteed issue requirements on health insurance rates.
68-16 (e) Not later than January 1, 1995, the committee shall
68-17 prepare and present its report. The report shall include
68-18 recommended statutory or rule changes to implement the committee's
68-19 recommendations. The committee shall file copies of the report
68-20 with the Legislative Reference Library, the governor's office, the
68-21 secretary of the senate, the chief clerk of the house of
68-22 representatives, the Texas Department of Insurance, and the Office
68-23 of Public Insurance Counsel.
68-24 (f) On request of the committee, the Texas Legislative
68-25 Council, senate, and house of representatives shall provide staff
69-1 as necessary to carry out the duties of the committee.
69-2 (g) The operating expenses of the committee shall be paid
69-3 from available funds of the legislature.
69-4 SECTION 6. REINSURANCE STUDY. (a) The Texas Department of
69-5 Insurance shall initiate a comprehensive study of the reinsurance
69-6 system established by Subchapter F, Chapter 26, Insurance Code, as
69-7 added by this Act.
69-8 (b) The department shall review and analyze, from an
69-9 actuarial standpoint, the potential cost of catastrophic losses to
69-10 the system and recommend funding methods to adequately finance any
69-11 anticipated losses to the system. The department shall also
69-12 develop an actuarial model for the system's operation. The
69-13 department shall fully investigate the experience of other states
69-14 with health reinsurance systems.
69-15 (c) The department shall report its findings to the
69-16 governor, lieutenant governor, and speaker of the house of
69-17 representatives not later than January 1, 1995.
69-18 SECTION 7. (a) Not later than November 1, 1993, each health
69-19 carrier subject to Chapter 26, Insurance Code, as added by this
69-20 Act, shall file a report with the commissioner that states the
69-21 carrier's gross premiums derived from health benefit plans
69-22 delivered, issued for delivery, or renewed to small employers in
69-23 1992.
69-24 (b) Not later than November 1, 1994, each health carrier
69-25 subject to Chapter 26, Insurance Code, as added by this Act, shall
70-1 file with the commissioner an update to the report required by
70-2 Subsection (a) of this section.
70-3 SECTION 8. Not later than July 1, 1995, a small employer
70-4 carrier subject to Chapter 26, Insurance Code, as added by this
70-5 Act, shall notify the commissioner of its initial election to
70-6 operate as a risk-assuming or reinsured carrier under Article
70-7 26.51, Insurance Code, as added by this Act.
70-8 SECTION 9. In making the initial appointments to the board
70-9 of trustees of the Texas Health Benefits Purchasing Cooperative
70-10 established under Subchapter B, Chapter 26, Insurance Code, as
70-11 added by this Act, the governor shall appoint two members for terms
70-12 expiring February 1, 1995, two members for terms expiring February
70-13 1, 1997, and two members for terms expiring February 1, 1999.
70-14 SECTION 10. (a) Except as otherwise provided by this
70-15 section, this Act takes effect September 1, 1993.
70-16 (b) A health carrier is not required to offer, deliver, or
70-17 issue for delivery a small employer health benefit plan, as
70-18 required by Subchapter E, Chapter 26, Insurance Code, as added by
70-19 this Act, before January 1, 1994.
70-20 (c) The Texas Health Reinsurance System may not reinsure a
70-21 risk in accordance with Subchapter F, Chapter 26, Insurance Code,
70-22 as added by this Act, before September 1, 1995.
70-23 (d) Article 21.52C, Insurance Code, as added by this Act,
70-24 applies only to the use of a claim billing form on or after January
70-25 1, 1994.
71-1 (e) Section 1(d)(3), Article 3.51-6, Insurance Code, as
71-2 amended by this Act, applies only to conversion of a policy
71-3 delivered, issued for delivery, or renewed on or after January 1,
71-4 1994. Conversion of a policy that was delivered, issued for
71-5 delivery, or renewed before January 1, 1994, is governed by the law
71-6 in effect immediately before the effective date of this Act, and
71-7 that law is continued in effect for this purpose.
71-8 (f) Article 26.21(a), Insurance Code, as added by this Act,
71-9 is effective September 1, 1995.
71-10 SECTION 11. In making the initial appointments to the
71-11 mandated benefit review panel created under Article 21.52D,
71-12 Insurance Code, as added by this Act, the commissioner of insurance
71-13 shall appoint one member for a term expiring February 1, 1995, one
71-14 member for a term expiring February 1, 1997, and one member for a
71-15 term expiring February 1, 1999.
71-16 SECTION 12. To the extent that any provision of this law
71-17 conflicts with Article 20.11, 21.52, 21.52B, or 21.53, Insurance
71-18 Code, or with Section 14, Texas Health Maintenance Organization Act
71-19 (Article 20A.14, Vernon's Texas Insurance Code), the provisions of
71-20 Article 20.11, 21.52, 21.52B, or 21.53, Insurance Code, or Section
71-21 14, Texas Health Maintenance Organization Act (Article 20A.14,
71-22 Vernon's Texas Insurance Code), as appropriate, shall prevail.
71-23 SECTION 13. The importance of this legislation and the
71-24 crowded condition of the calendars in both houses create an
71-25 emergency and an imperative public necessity that the
72-1 constitutional rule requiring bills to be read on three several
72-2 days in each house be suspended, and this rule is hereby suspended.