By Averitt H.B. No. 710
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the implementation of federal reforms and the Texas
1-3 Health Insurance Risk Pool.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 PART 1. HEALTH INSURANCE RISK POOL
1-6 SECTION 1.01. Section 2, Article 3.77, Insurance Code, is
1-7 amended to read as follows:
1-8 Sec. 2. DEFINITIONS. In this article:
1-9 (1) "Benefits plan" means coverage to be offered by
1-10 the pool to eligible persons under Section 11 of this article.
1-11 (2) "Board" means the board of directors of the pool.
1-12 (3) "Commissioner" means the Commissioner of
1-13 Insurance.
1-14 (4) "Department" means the Texas Department of
1-15 Insurance.
1-16 (5) "Dependent" means a resident spouse or unmarried
1-17 child under the age of 18 years, a child who is a full-time student
1-18 under the age of 23 years and who is financially dependent upon the
1-19 parent, a child who is over 18 years of age and for whom a person
1-20 may be obligated to pay child support, or a child of any age who is
1-21 disabled and dependent upon the parent.
1-22 (6) "Family member" means a parent, grandparent,
1-23 brother, sister, or child of a dependent residing with the insured.
1-24 (7) "Health insurance" means individual or group
2-1 health insurance and includes any hospital and medical expense
2-2 incurred policy, a fraternal benefit society, a stipulated premium
2-3 company, an approved nonprofit health corporation, health
2-4 maintenance organization subscriber contract, coverage by a group
2-5 hospital service plan, a multiple employer welfare arrangement
2-6 subject to Subchapter I of this chapter, or any other health care
2-7 plan or arrangement that pays for or furnishes medical or health
2-8 care services whether by insurance or otherwise. The term does not
2-9 include short-term, accident, dental-only, vision-only, fixed
2-10 indemnity, credit insurance or other limited benefit insurance,
2-11 coverage issued as a supplement to liability insurance, insurance
2-12 arising out of a workers' compensation or similar law, automobile
2-13 medical-payment insurance, or insurance under which benefits are
2-14 payable with or without regard to fault and which is statutorily
2-15 required to be contained in any liability insurance policy or
2-16 equivalent self-insurance.
2-17 (8) "Health maintenance organization" means a health
2-18 maintenance organization that has a certificate of authority to
2-19 operate in this state under the Texas Health Maintenance
2-20 Organization Act (Chapter 20A, Vernon's Texas Insurance Code).
2-21 (9) "Hospital" means a licensed public or private
2-22 institution as defined by Chapter 241, Health and Safety Code, and
2-23 any hospital owned or operated by the federal or state government.
2-24 (10) "Insured" means a person who is a resident of
2-25 this state and a citizen of the United States and who is eligible
2-26 to receive benefits from the pool. The term "insured" may include
2-27 dependents and family members.
3-1 (11) "Insurer" means any entity that provides health
3-2 insurance in this state, including stop-loss or excess loss
3-3 insurance. For the purposes of this Act, insurer includes but is
3-4 not limited to an insurance company; a health maintenance
3-5 organization operating under the Texas Health Maintenance
3-6 Organization Act (Chapter 20A, Vernon's Texas Insurance Code); an
3-7 approved nonprofit health corporation; a fraternal benefit society;
3-8 a stipulated premium insurance company; a group hospital service
3-9 corporation subject to Chapter 20 of this code; a multiple employer
3-10 welfare arrangement subject to Article 3.95-1, et seq. of this
3-11 code; a surplus lines carrier; an insurer providing stop-loss or
3-12 excess loss insurance to physicians, health care providers,
3-13 hospitals, or to any benefit arrangements to the extent permitted
3-14 by Section 3, Employee Retirement Income Security Act of 1974 (29
3-15 U.S.C. Section 1002); and any other entity providing a plan of
3-16 health insurance or health benefits subject to state insurance
3-17 regulation.
3-18 (12) "Insurance arrangement" means a plan, program,
3-19 contract, or other arrangement through which health care services
3-20 are provided by an employer to its officers, employees, or other
3-21 personnel but does not include health care services covered through
3-22 an insurer.
3-23 (13) "Medicare" means coverage provided by Part A and
3-24 Part B, Title XVII, Social Security Act (42 U.S.C. Section 1395 et
3-25 seq.).
3-26 (14) "Physician" means a person licensed to practice
3-27 medicine in this state under the Medical Practice Act (Article
4-1 4495b, Vernon's Texas Civil Statutes).
4-2 (15) "Plan of operation" means the plan of operation
4-3 of the pool and includes the articles, bylaws, and operating rules
4-4 of the pool that are adopted by the board under Section 5 of this
4-5 article.
4-6 (16) "Pool" means the Texas Health Insurance Risk
4-7 Pool.
4-8 (17) "Resident" means an individual who is legally
4-9 domiciled in Texas.
4-10 [(1) "Pool" means the Texas Health Insurance Risk
4-11 Pool.]
4-12 [(2) "Board" means the board of directors of the pool.]
4-13 [(3) "Insurance board" means the State Board of
4-14 Insurance.]
4-15 [(4) "Commissioner" means the commissioner of
4-16 insurance.]
4-17 [(5) "Insured" means a person who is a resident of
4-18 this state and who is eligible to receive benefits from an insurer
4-19 or insurance arrangement.]
4-20 [(6) "Insurer" means an insurance company authorized
4-21 to transact a health insurance business in this state, including a
4-22 group hospital service corporation subject to Chapter 20 of this
4-23 code and a health maintenance organization operating under the
4-24 Texas Health Maintenance Organization Act (Chapter 20A, Vernon's
4-25 Texas Insurance Code).]
4-26 [(7) "Insurance arrangement" means a plan, program,
4-27 contract, or other arrangement through which health care services
5-1 are provided by an employer to its officers, employees, or other
5-2 personnel but does not include health care services covered through
5-3 an insurer.]
5-4 [(8) "Health insurance" means individual or group
5-5 health insurance coverage and includes a medical expense incurred
5-6 or hospital insurance coverage, or coverage by a group hospital
5-7 service plan or health maintenance organization. "Health
5-8 insurance" does not include short-term insurance, accident-only
5-9 insurance, coverage that is supplemental to liability insurance, or
5-10 workers' compensation insurance.]
5-11 [(9) "Medicare" means coverage provided by Part A and
5-12 Part B, Title XVII, Social Security Act (42 U.S.C. Section 1395 et
5-13 seq.)].
5-14 [(10) "Physician" means a person licensed to practice
5-15 medicine in this state under the Medical Practice Act (Article
5-16 4495b, Vernon's Texas Civil Statutes).]
5-17 [(11) "Hospital" means a licensed public or private
5-18 institution as defined by the Texas Hospital Licensing Law Chapter
5-19 241, Health and Safety Code and any hospital owned or operated by
5-20 the federal or state government.]
5-21 [(12) "Health maintenance organization" means a health
5-22 maintenance organization that has a certificate of authority to
5-23 operate in this state under the Texas Health Maintenance
5-24 Organization Act (Chapter 20A, Vernon's Texas Insurance Code).]
5-25 [(13) "Plan of operation" means the plan of operation
5-26 of the pool and includes the articles, bylaws, and operating rules
5-27 of the pool that are adopted by the board under Section 5 of this
6-1 article.]
6-2 [(14) "Benefits plan" means coverage to be offered by
6-3 the pool to eligible persons under Section 11 of this article.]
6-4 [(15) "Net premiums" means premiums charged by the
6-5 pool less administrative expense allowances.]
6-6 SECTION 1.02. Section 4, Article 3.77, Insurance Code, is
6-7 amended by amending Subsections (b)-(e) and (g) and by adding
6-8 Subsection (h) to read as follows:
6-9 (b) The commissioner [insurance board] shall appoint members
6-10 of the board for staggered six-year terms as provided by this
6-11 section.
6-12 (c) The board shall be [is] composed of:
6-13 (1) at least two persons [one person] affiliated with
6-14 an insurer [insurance company] admitted and authorized to write
6-15 health insurance in this state, but no more than four such persons;
6-16 (2) at least two persons who are insureds or parents
6-17 of insureds or who are reasonably expected to qualify for coverage
6-18 by the pool; [one person affiliated with a group hospital service
6-19 corporation operating under Chapter 20 of this code;]
6-20 (3) the remaining members of the board may be selected
6-21 from individuals such as a [one] physician licensed to practice in
6-22 this state by the Texas State Board of Medical Examiners, a [;
6-23 (4) one] hospital administrator, an [; (5) one] advanced nurse
6-24 practitioner, or[; and (6) four] representatives of the general
6-25 public who are not employed by or affiliated with an insurance
6-26 company or plan, group hospital service corporation, or health
6-27 maintenance organization or licensed as or employed by or
7-1 affiliated with a physician, hospital, or other health care
7-2 provider. A [(d) The limitation on who may be a] representative
7-3 of the general public does [not] include a person whose only
7-4 affiliation with an insurance company or plan, group hospital
7-5 service corporation, or health maintenance organization is as an
7-6 insured or person who has coverage through a plan provided by the
7-7 corporation or organization.
7-8 (d) For purposes of this section, an individual required to
7-9 register with the secretary of state under Chapter 305, Government
7-10 Code, because of the individual's activities with respect to health
7-11 insurance-related matters is a person affiliated with an insurer.
7-12 (e) If a vacancy occurs on the board, the commissioner
7-13 [insurance board] shall fill the vacancy for the unexpired term
7-14 with a person who has the appropriate qualifications to fill that
7-15 position on the board.
7-16 (g) The commissioner [insurance board] shall designate one
7-17 of its appointees to the board to serve as chairman. The chairman
7-18 serves in that capacity at the pleasure of the commissioner
7-19 [insurance board].
7-20 (h) A member of the board of directors is not liable for an
7-21 action or omission performed in good faith in the performance of
7-22 powers and duties under this article, and cause of action does not
7-23 arise against a member for the action or omission.
7-24 SECTION 1.03. Section 5, Article 3.77, Insurance Code, is
7-25 amended to read as follows:
7-26 Sec. 5. Plan of Operation. (a) The pool's initial board
7-27 shall submit to the commissioner [insurance board] a plan of
8-1 operation for the pool that will assure the fair, reasonable, and
8-2 equitable administration of the pool.
8-3 (b) In addition to the other requirements of this article,
8-4 the plan of operation must include procedures for:
8-5 (1) operation of the pool;
8-6 (2) selecting an administrator as provided under
8-7 Section 7 of this article;
8-8 (3) creating a fund, under management of the board,
8-9 for administrative expenses;
8-10 (4) handling, [and] accounting, and auditing of [for]
8-11 money and other assets of the pool; [and]
8-12 (5) [(2)] developing and implementing a program to
8-13 publicize [provide public information regarding] the existence of
8-14 the pool, the eligibility requirements for coverage under the pool,
8-15 [and] enrollment procedures, and to foster public awareness of the
8-16 plan;
8-17 (6) creation of a grievance committee to review
8-18 complaints presented by applicants for coverage from the pool and
8-19 insureds who receive coverage from the pool; and
8-20 (7) other matters as may be necessary and proper for
8-21 the execution of the board's powers, duties, and obligations under
8-22 this article.
8-23 (c) After notice and hearing, the commissioner [insurance
8-24 board] shall approve the plan of operation if it is determined
8-25 [determines] that the plan is suitable to assure the fair,
8-26 reasonable, and equitable administration of the pool.
8-27 (d) The plan of operation takes effect on the date it is
9-1 approved by commissioner [insurance board] order.
9-2 (e) If the initial board fails to submit a suitable plan of
9-3 operation before the 180th day following the appointment of the
9-4 initial board, the commissioner [insurance board], after notice and
9-5 hearing, may adopt all necessary and reasonable rules to provide a
9-6 plan for the pool. The rules adopted under this subsection shall
9-7 continue in effect until the initial board submits, and the
9-8 commissioner [insurance board] approves, a plan of operation under
9-9 this section.
9-10 (f) The board shall amend the plan of operation as necessary
9-11 to carry out this article. Amendments to the plan of operation
9-12 must be approved by the commissioner [insurance board] before they
9-13 become part of the plan.
9-14 SECTION 1.04. Section 6, Article 3.77, Insurance Code, is
9-15 amended to read as follows:
9-16 Sec. 6. Authority of the Pool. (a) The pool may exercise
9-17 any of the authority that an insurance company authorized to write
9-18 health insurance in this state may exercise under the law of this
9-19 state[, except the pool may not provide group insurance coverage].
9-20 (b) As part of its authority, the pool may:
9-21 (1) provide [individual] health benefits coverage to
9-22 persons who are eligible for that coverage under this article;
9-23 (2) enter into contracts that are necessary to carry
9-24 out this article including, with the approval of the commissioner,
9-25 entering into contracts with similar pools in other states for the
9-26 joint performance of common administrative functions or with other
9-27 organizations for the performance of administrative functions;
10-1 (3) sue or be sued, including taking any legal actions
10-2 necessary or proper to recover or collect assessments due the pool;
10-3 (4) institute any legal action necessary to avoid
10-4 payment of improper claims against the pool or the coverage
10-5 provided by or through the pool to recover any amounts erroneously
10-6 or improperly paid by the pool, to recover any amounts paid by the
10-7 pool as a mistake of fact or law, and to recover other amounts due
10-8 the pool;
10-9 (5) establish appropriate rates, rate schedules, rate
10-10 adjustments, expense allowances, agents' referral fees, and claim
10-11 reserve formulas and perform any actuarial functions appropriate to
10-12 the operation of the pool;
10-13 (6) adopt policy forms, endorsements, and riders and
10-14 applications for coverage;
10-15 (7) issue insurance policies subject to this article
10-16 and the plan of operation;
10-17 (8) appoint appropriate legal, actuarial, and other
10-18 committees that are necessary to provide technical assistance in
10-19 operating the pool and performing any of the functions of the pool;
10-20 [and]
10-21 (9) employ and set the compensation of any persons
10-22 necessary to assist the pool in carrying out its responsibilities
10-23 and functions;
10-24 (10) contract for stop-loss insurance for risks
10-25 incurred by the pool;
10-26 (11) recover or collect assessments imposed under
10-27 Section 13 of this article;
11-1 (12) borrow money as necessary to implement the
11-2 purposes of the pool;
11-3 (13) issue additional types of health insurance
11-4 policies to provide optional coverages which comply with applicable
11-5 provisions of state and federal law, including Medicare
11-6 supplemental health insurance;
11-7 (14) provide for and employ cost containment measures
11-8 and requirements including, but not limited to, preadmission
11-9 screening, second surgical opinion, concurrent utilization review
11-10 subject to Article 21.58A of this code, and individual case
11-11 management for the purpose of making the benefit plans more cost
11-12 effective;
11-13 (15) design, utilize, contract, or otherwise arrange
11-14 for the delivery of cost-effective health care services, including
11-15 establishing or contracting with preferred provider organizations
11-16 and health maintenance organizations; and
11-17 (16) provide for reinsurance on either a facultative
11-18 or treaty basis or both.
11-19 (c) The board shall promulgate a list of medical or health
11-20 conditions for which a person shall be eligible for pool coverage
11-21 without applying for health insurance. The list shall be effective
11-22 on the first day of the operation of the pool and may be amended
11-23 from time to time as may be appropriate.
11-24 (d) Not later than June 1 of each year, the board shall make
11-25 an annual report to the governor, the lieutenant governor, the
11-26 speaker of the house of representatives, and the commissioner. The
11-27 report shall summarize the activities of the pool in the preceding
12-1 calendar year, including information regarding net written and
12-2 earned premiums, plan enrollment, administration expenses, and paid
12-3 and incurred losses.
12-4 SECTION 1.05. Section 7, Article 3.77, Insurance Code, is
12-5 amended by amending the heading and Subsections (a), (b), and (e)
12-6 to read as follows:
12-7 Sec. 7. ADMINISTRATOR [ADMINISTERING INSURER]. (a) After
12-8 completing a competitive bidding process as provided by the plan of
12-9 operation, the board may [shall] select one or more insurers or a
12-10 third party administrator certified by the department [State Board
12-11 of Insurance] to administer the pool.
12-12 (b) The board shall establish criteria for evaluating the
12-13 bids submitted. The criteria must include:
12-14 (1) an insurer's or third party administrator's proven
12-15 ability to handle individual accident and health insurance;
12-16 (2) the efficiency of an insurer's or third party
12-17 administrator's claims paying procedures;
12-18 (3) an estimate of total charges for administering the
12-19 pool; [and]
12-20 (4) an insurer's or third party administrator's
12-21 ability to administer the pool in a cost-efficient manner; and
12-22 (5) the financial condition and stability of the
12-23 insurer or third party administrator.
12-24 (e) The administering insurer or third party administrator
12-25 shall perform such functions relating to the pool as may be
12-26 assigned to it, including:
12-27 (1) perform eligibility and administrative claims
13-1 payment functions for the pool;
13-2 (2) establish a billing procedure for collection of
13-3 premiums from persons insured by the pool;
13-4 (3) perform functions necessary to assure timely
13-5 payment of benefits to persons covered under the pool, including:
13-6 (A) providing information relating to the proper
13-7 manner of submitting a claim for benefits to the pool and
13-8 distributing claim forms; and
13-9 (B) evaluating the eligibility of each claim for
13-10 payment by the pool;
13-11 (4) submit regular reports to the board relating to
13-12 the operation of the pool; and
13-13 (5) determine after the close of each calendar year
13-14 the net written and earned premiums, expense of administration, and
13-15 paid and incurred losses of the pool for that calendar year and
13-16 report this information to the board and the commissioner
13-17 [insurance board] on forms prescribed by the commissioner.
13-18 SECTION 1.06. Section 8, Article 3.77, Insurance Code, is
13-19 amended to read as follows:
13-20 Sec. 8. RULES [RULEMAKING AUTHORITY]. The commissioner may
13-21 by rule establish additional powers and duties of the board and may
13-22 adopt other rules as are necessary and proper to implement this
13-23 article. The commissioner by rule shall provide the procedures,
13-24 criteria, and forms necessary to implement, collect, and deposit
13-25 assessments made and collected under Section 13. [The board may
13-26 adopt rules it determines necessary to carry out this article and
13-27 other laws of this state under which it is authorized to operate.]
14-1 SECTION 1.07. Sections 9(b), (d), and (e), Article 3.77,
14-2 Insurance Code, are amended to read as follows:
14-3 (b) Rates and rate schedules may be adjusted for appropriate
14-4 risk factors including age and variation in claim costs, and the
14-5 board may consider [shall take into consideration] appropriate risk
14-6 factors in accordance with established actuarial and underwriting
14-7 practices.
14-8 (d) The pool shall determine the standard risk rate by
14-9 considering the premium rates charged by other insurers offering
14-10 health insurance coverage to individuals. The standard risk rate
14-11 shall be established using reasonable actuarial techniques, and
14-12 shall reflect anticipated experience and expenses for such
14-13 coverage. Initial pool rates may not be less than 125 percent and
14-14 may not exceed 150 percent of rates established as applicable for
14-15 individual standard rates. Subsequent rates [calculating the
14-16 average individual standard rate charged by the five largest
14-17 insurers offering coverage in this state comparable to the pool
14-18 coverage. If five insurers do not offer comparable coverage, the
14-19 standard risk rate shall be established using reasonable current
14-20 actuarial techniques and shall reflect anticipated experience and
14-21 expenses for that type of coverage. Rates] shall be established to
14-22 provide fully for the expected costs of claims including recovery
14-23 of prior losses, expenses of operation, investment income of claim
14-24 reserves, and any other cost factors subject to the limitations
14-25 described in this subsection. In no event shall pool [Pool] rates
14-26 [may not be less than 150 percent, and may not] exceed 200
14-27 percent[,] of rates applicable to individual standard risks.
15-1 (e) All rates and rate schedules shall be submitted to the
15-2 commissioner [insurance board] for approval, and the commissioner
15-3 [insurance board] must approve the rates and rate schedules of the
15-4 pool before they are used by the pool. The commissioner [insurance
15-5 board] in evaluating the rates and rate schedules of the pool shall
15-6 consider the factors provided by this section. [The insurance board
15-7 by rule may adopt necessary procedures, criteria, and forms for the
15-8 submission and approval of the pool's rates and rate schedules.]
15-9 SECTION 1.08. Section 10, Article 3.77, Insurance Code, is
15-10 amended to read as follows:
15-11 Sec. 10. ELIGIBILITY FOR COVERAGE. (a) Any individual
15-12 person who is and continues to be a resident of Texas and a citizen
15-13 of the United States shall be eligible for coverage from the pool
15-14 if evidence is provided of:
15-15 (1) a notice of rejection or refusal to issue
15-16 substantially similar insurance for health reasons by two insurers.
15-17 A rejection or refusal by an insurer offering only stop-loss,
15-18 excess loss, or reinsurance coverage with respect to the applicant
15-19 shall not be sufficient evidence under this subsection;
15-20 (2) an offer to issue insurance only with conditional
15-21 riders;
15-22 (3) a refusal by an insurer to issue insurance except
15-23 at a rate exceeding the pool rate;
15-24 (4) the individual has maintained health insurance
15-25 coverage for the previous 18 months with no gap in coverage greater
15-26 than 63 days; or
15-27 (5) diagnosis of the individual with one of the
16-1 medical or health conditions listed by the board under Section 6(c)
16-2 of this article and for which a person shall be eligible for pool
16-3 coverage without applying for health insurance coverage. [Except
16-4 as provided by Subsection (b) of this section, a person who is a
16-5 resident of this state and who is diagnosed as having a condition
16-6 designated as uninsurable by the board or who provides proof
16-7 acceptable to the board from his insurer that he has been
16-8 determined to be a substandard risk for whom the insurer's premium
16-9 would exceed the premium charged by the pool is entitled to
16-10 coverage from the pool.]
16-11 (b) Each dependent of a person who is eligible for coverage
16-12 from the pool shall also be eligible for coverage from the pool.
16-13 In the instance of a child who is the primary insured, resident
16-14 family members shall also be eligible for coverage.
16-15 (c) A person may maintain pool coverage for the period of
16-16 time the person is satisfying a preexisting waiting period under
16-17 another health insurance policy or insurance arrangement intended
16-18 to replace the pool policy.
16-19 (d) A person is not eligible for coverage from the pool if
16-20 the person:
16-21 (1) has in effect on the date pool coverage takes
16-22 effect health insurance coverage from an insurer or insurance
16-23 arrangement;
16-24 (2) is eligible for other health care benefits at the
16-25 time application is made to the pool, except for coverage
16-26 conditioned by the limitations described by Subsections (a)(1)-(3)
16-27 of this section;
17-1 (3) has terminated coverage in the pool within 12
17-2 months of the date that application is made to the pool, unless the
17-3 person demonstrates a good faith reason for the termination; or
17-4 (4) [has had benefits paid by the pool on his behalf
17-5 in the amount of $500,000;]
17-6 [(5)] is confined in a county jail or imprisoned in a
17-7 state prison[; or]
17-8 [(6) is eligible for benefits under Medicare, Chapter
17-9 32, Human Resources Code, or Chapter 35, Health and Safety Code].
17-10 (e) Pool coverage shall cease:
17-11 (1) on the date a person is no longer a resident of
17-12 this state, except for a child who is a student under the age of 23
17-13 years and who is financially dependent upon the parent, a child for
17-14 whom a person may be obligated to pay child support, or a child of
17-15 any age who is disabled and dependent upon the parent;
17-16 (2) on the date a person requests coverage to end;
17-17 (3) upon the death of the covered person;
17-18 (4) on the date state law requires cancellation of the
17-19 policy;
17-20 (5) at the option of the pool, 30 days after the pool
17-21 sends to the person any inquiry concerning the person's
17-22 eligibility, including an inquiry concerning the person's
17-23 residence, to which the person does not reply;
17-24 (6) on the 31st day after the day on which a premium
17-25 payment for pool coverage becomes due if the payment is not made
17-26 before that date; or
17-27 (7) at such time as the person ceases to meet the
18-1 eligibility requirements of this section.
18-2 (f) [(c)] A person who ceases to meet the eligibility
18-3 requirements of this section, may have his coverage terminated at
18-4 the end of the policy period.
18-5 [(d) A person whose health insurance coverage is
18-6 involuntarily terminated for any reason other than nonpayment of
18-7 premium and who is not eligible for conversion under the terminated
18-8 coverage is eligible to apply for coverage under the plan. If
18-9 application is made for the coverage not later than the 60th day
18-10 after the involuntary termination and if premiums are paid for the
18-11 entire coverage period, the effective date of coverage is the
18-12 termination date of the previous coverage.]
18-13 SECTION 1.09. Section 11, Article 3.77, Insurance Code, is
18-14 amended to read as follows:
18-15 Sec. 11. Minimum Pool Benefits. (a) The pool shall offer
18-16 pool coverage consistent with major medical expense coverage to
18-17 each eligible person who is not eligible for Medicare. The board,
18-18 with the approval of the commissioner, shall establish:
18-19 (1) the coverages to be provided by the pool;
18-20 (2) the applicable schedules of benefits; and
18-21 (3) any exclusions to coverage and other limitations.
18-22 [to each person who is eligible under Section 10 of this article.
18-23 The pool coverage shall be for covered expenses as follows:]
18-24 [(1) hospital services;]
18-25 [(2) professional services for the diagnosis or
18-26 treatment of injuries, illnesses, or conditions, other than mental
18-27 or dental, which are rendered by a physician, or by other licensed
19-1 professionals at his direction;]
19-2 [(3) drugs requiring a physician's prescription;]
19-3 [(4) services of a licensed skilled nursing facility
19-4 for not more than 120 days during a policy year;]
19-5 [(5) services of a home health agency up to a maximum
19-6 of 270 services per year;]
19-7 [(6) use of radium or other radioactive materials;]
19-8 [(7) oxygen;]
19-9 [(8) anesthetics;]
19-10 [(9) prostheses other than dental;]
19-11 [(10) rental of durable medical equipment, other than
19-12 eyeglasses and hearing aids, for which there is no personal use in
19-13 the absence of the conditions for which it is prescribed;]
19-14 [(11) diagnostic X rays and laboratory tests;]
19-15 [(12) oral surgery for excision of partially or
19-16 completely unerupted, impacted teeth or the gums and tissues of the
19-17 mouth when not performed in connection with the extraction or
19-18 repair of teeth;]
19-19 [(13) services of a licensed physical therapist;]
19-20 [(14) transportation provided by a licensed ambulance
19-21 service to the nearest facility qualified to treat the condition;
19-22 and]
19-23 [(15) services for diagnosis and treatment of mental
19-24 and nervous disorders, provided that the insured is required to
19-25 make a 50 percent copayment, and that the payment of the pool does
19-26 not exceed $4,000 for outpatient psychiatric treatment.]
19-27 (b) The benefits provisions of the pool's health benefits
20-1 coverages must include the following:
20-2 (1) all required or applicable definitions;
20-3 (2) a list of any exclusions or limitations to
20-4 coverage;
20-5 (3) a description of covered services required under
20-6 the pool; and
20-7 (4) the deductibles, coinsurance options, and
20-8 copayment options that are required or permitted under the pool.
20-9 (c) [Covered expenses under Subsection (a) of this section
20-10 do not include:]
20-11 [(1) any charge for treatment for cosmetic purposes
20-12 other than surgery for the repair or treatment of an injury or a
20-13 congenital bodily defect to restore normal bodily functions;]
20-14 [(2) care which is primarily for custodial or
20-15 domiciliary purposes;]
20-16 [(3) any charge for confinement in a private room to
20-17 the extent it is in excess of the institution's charge for its most
20-18 common semiprivate room, unless a private room is prescribed as
20-19 medically necessary by a physician;]
20-20 [(4) that part of any charge for services rendered or
20-21 articles prescribed by a physician, dentist, or other health care
20-22 personnel that exceeds the prevailing charge in the locality or for
20-23 any charge not medically necessary;]
20-24 [(5) any charge for services or articles that
20-25 provision of which is not within the scope of authorized practice
20-26 of the institution or individual providing the services or
20-27 articles;]
21-1 [(6) any expense incurred prior to the effective date
21-2 of coverage by the pool for the person on whose behalf the expense
21-3 is incurred;]
21-4 [(7) dental care except as provided in Subsection
21-5 (a)(12) of this section;]
21-6 [(8) eyeglasses and hearing aids;]
21-7 [(9) illness or injury due to acts of war;]
21-8 [(10) services of blood donors and any fee for failure
21-9 to replace the first three pints of blood provided to an eligible
21-10 person each policy year; and]
21-11 [(11) personal supplies or services provided by a
21-12 hospital or nursing home or any other nonmedical or nonprescribed
21-13 supply or service.]
21-14 [(c) Under this section, "covered expenses" includes only
21-15 those expenses for the prevailing charge in the locality for the
21-16 items listed in Subsection (a) of this section if prescribed by a
21-17 physician and determined by the pool to be medically necessary.]
21-18 [(d) In authorizing pool coverage, the board must consider
21-19 levels of health insurance provided in the state and medical
21-20 economic factors that are considered appropriate and, subject to
21-21 the limitations provided by this section, shall adopt benefit
21-22 levels, deductibles, coinsurance factors, exclusions, and
21-23 limitations determined to be generally reflective of and
21-24 commensurate with health insurance provided through a
21-25 representative number of large employers in the state.]
21-26 [(e) Pool coverage under this section shall provide both a
21-27 low deductible of not less than $250 per person and $500 per family
22-1 a year and appropriate higher deductibles to be selected by the
22-2 pool applicant. The board shall purchase stop-loss coverage for
22-3 the pool in amounts determined by the board but not more than
22-4 $2,000 per person or $4,000 per family covered by the pool.] The
22-5 board may adjust deductibles, the amounts of stop-loss coverage,
22-6 and the time periods governing preexisting conditions under Section
22-7 12 [Subsection (f)] of this article [section] to preserve the
22-8 financial integrity of the pool. If the board makes such an
22-9 adjustment it shall report in writing that adjustment together with
22-10 its reasons for the adjustment to the commissioner [insurance board
22-11 and Legislative Budget Board]. The report must be submitted not
22-12 later than the 30th day after the date the adjustment is made.
22-13 [(f) Pool coverage must exclude charges or expenses incurred
22-14 during the first six months following the effective date of
22-15 coverage with regard to any condition that during the six-month
22-16 period preceding the effective date of coverage:]
22-17 [(1) had manifested itself in a manner that would
22-18 cause an ordinarily prudent person to seek diagnosis, care, or
22-19 treatment; or]
22-20 [(2) for which medical advice, care, or treatment was
22-21 recommended or received.]
22-22 [(g) Preexisting condition exclusions shall be waived to the
22-23 extent to which similar exclusions, if any, have been satisfied
22-24 under any previous health insurance coverage, health insurance
22-25 pool, or self-insured health or welfare benefits plan that was
22-26 involuntarily terminated, if application for pool coverage is made
22-27 not later than the 31st day after involuntary termination. In that
23-1 case, coverage in the pool is effective from the date on which the
23-2 previous coverage was terminated.]
23-3 (d) [(h)] Benefits otherwise payable under pool coverage
23-4 shall be reduced by amounts paid or payable through any other
23-5 health insurance, or insurance arrangement, and by all hospital and
23-6 medical expense benefits paid or payable under any workers'
23-7 compensation coverage, automobile insurance whether provided on the
23-8 basis of fault or no-fault, and by any hospital or medical benefits
23-9 paid or payable under or provided pursuant to any state or federal
23-10 law or program.
23-11 (e) [(i)] The [insurer or the] pool has a cause of action
23-12 against an eligible person for the recovery of the amount of
23-13 benefits paid that are not for covered expenses. Benefits due from
23-14 the pool may be reduced or refused as an offset against any amount
23-15 recoverable under this subsection.
23-16 SECTION 1.10. Sections 12 and 13, Article 3.77, Insurance
23-17 Code, are amended to read as follows:
23-18 Sec. 12. PREEXISTING CONDITIONS. (a) Except as provided by
23-19 this section and Section 11(c) of this article, pool coverage shall
23-20 exclude charges or expenses incurred during the first 12 months
23-21 following the effective date of coverage with regard to any
23-22 condition for which medical advice, care, or treatment was
23-23 recommended or received during the six-month period preceding the
23-24 effective date of coverage.
23-25 (b) A preexisting condition provision shall not apply to an
23-26 individual who was continuously covered for an aggregate period of
23-27 12 months by health insurance that was in effect up to a date not
24-1 more than 63 days before the effective date of coverage under the
24-2 pool, excluding any waiting period, provided that the application
24-3 for pool coverage is made no later than 63 days following the
24-4 termination of coverage.
24-5 (c) In determining whether a preexisting condition provision
24-6 applies to an individual covered by the pool, the pool shall credit
24-7 the time the individual was previously covered under health
24-8 insurance if the previous coverage was in effect at any time during
24-9 the 12 months preceding the effective date of coverage under the
24-10 pool. Any waiting period that applied before that coverage became
24-11 effective also shall be credited against the preexisting condition
24-12 provision period.
24-13 Sec. 13. Assessments. (a) The board may assess insurers
24-14 and make advance interim assessments as reasonable and necessary
24-15 for the plan's organizational and interim operating expenses. Any
24-16 interim assessment shall be credited as offsets against any regular
24-17 assessments due following the close of the fiscal year. [If during
24-18 any state fiscal year, the pool is unable to pay its claims and
24-19 meet its other financial obligations due to a shortage of available
24-20 funds, the board shall make an estimate of the amount that will be
24-21 necessary to fund the shortage and shall notify the insurance board
24-22 of this shortage and the estimated amount of money necessary to
24-23 fund the shortage.]
24-24 (b) If assessments exceed the pool's actual losses and
24-25 administrative expenses, the excess shall be held in an
24-26 interest-bearing account and used by the board to offset future
24-27 losses or to reduce future assessments. As used in this section,
25-1 future losses includes reserves for incurred but not reported
25-2 claims. [On receiving notice under this section, the insurance
25-3 board shall direct the commissioner of insurance to impose an
25-4 assessment on each insurer authorized to write health insurance in
25-5 this state.]
25-6 (c) After the end of each fiscal year, the board shall
25-7 determine and report to the commissioner the net loss, if any, of
25-8 the pool for the previous calendar year, including administrative
25-9 expenses and incurred losses for the year, taking into account
25-10 investment income and other appropriate gains and losses. Any net
25-11 loss for the year shall be recouped by assessments on insurers.
25-12 Each insurer's assessment shall be determined annually by the board
25-13 based on annual statements and other reports required by the board
25-14 and filed with the board. [The total amount of assessments to be
25-15 collected by the commissioner shall be in an amount that is
25-16 sufficient to fund the pool's shortage.]
25-17 (d) The assessment imposed against each insurer shall be in
25-18 an amount that is equal to the ratio of the gross premiums
25-19 collected by the insurer for health insurance in this state during
25-20 the preceding calendar year, except for Medicare supplement
25-21 premiums subject to Article 3.74 and small group health insurance
25-22 premiums subject to Articles 26.01 through 26.76, to the gross
25-23 premiums collected by all insurers for health insurance, except for
25-24 Medicare supplement premiums subject to Article 3.74 and small
25-25 group health insurance premiums subject to Articles 26.01 through
25-26 26.76, in this state during the preceding calendar year.
25-27 (e) An insurer may petition the commissioner for an
26-1 abatement or deferment of all or part of an assessment imposed by
26-2 the board. The commissioner may abate or defer, in whole or in
26-3 part, such assessment if the commissioner determines that the
26-4 payment of the assessment would endanger the ability of the
26-5 participating insurer to fulfill its contractual obligations. If
26-6 an assessment against an insurer is abated or deferred in whole or
26-7 in part, the amount by which such assessment is abated or deferred
26-8 shall be assessed against the other insurers in a manner consistent
26-9 with the basis for assessments set forth in this subsection. The
26-10 insurer receiving such abatement or deferment shall remain liable
26-11 to the pool for the deficiency. [The insurance board by rule shall
26-12 provide the procedures, criteria, and forms necessary to implement,
26-13 collect, and deposit assessments made and collected under this
26-14 section.]
26-15 [(f) Each insurer that pays an assessment under this section
26-16 is entitled to reimbursement by the state in an amount equal to the
26-17 amount of the assessment paid under this section. The state shall
26-18 reimburse an insurer not earlier than September 1 but not later
26-19 than September 15 of the first year of the first state biennium
26-20 that begins after the date on which the assessment is paid. The
26-21 comptroller of public accounts by rule shall establish a procedure
26-22 under which claims for reimbursement under this section may be
26-23 submitted and paid.]
26-24 [Sec. 13. MANAGED CARE, ETC. The board as part of the
26-25 pool's program may adopt rules providing for quality of care,
26-26 management of costs and benefits, and managed care.]
26-27 SECTION 1.11. Article 3.77, Insurance Code, is amended by
27-1 adding Sections 14 and 15 to read as follows:
27-2 Sec. 14. COMPLAINT PROCEDURES. An applicant or participant
27-3 in coverage from the pool is entitled to have complaints against
27-4 the pool reviewed by a grievance committee appointed by the board.
27-5 The grievance committee shall report to the board after completion
27-6 of the review of each complaint. The board shall retain all
27-7 written complaints regarding the pool at least until the third
27-8 anniversary of the date the pool received the complaint.
27-9 Sec. 15. AUDIT. (a) The state auditor shall conduct
27-10 annually a special audit of the pool under Chapter 321, Government
27-11 Code. The state auditor's report shall include a financial audit
27-12 and an economy and efficiency audit.
27-13 (b) The state auditor shall report the cost of each audit
27-14 conducted under this article to the board and the comptroller, and
27-15 the board shall remit that amount to the comptroller for deposit to
27-16 the general revenue fund.
27-17 PART 2. GROUP COVERAGES
27-18 SECTION 2.01. Section 1(d)(3), Article 3.51-6, Insurance
27-19 Code, is amended to read as follows:
27-20 (3) Any insurer or group hospital service corporation
27-21 subject to Chapter 20, Insurance Code, who issues policies which
27-22 provide hospital, surgical, or major medical expense insurance or
27-23 any combination of these coverages on an expense incurred basis,
27-24 but not a policy which provides benefits for specified disease or
27-25 for accident only, shall provide a [conversion or] group
27-26 continuation privilege as required by this subsection. Any
27-27 employee, member, or dependent whose insurance under the group
28-1 policy has been terminated for any reason except involuntary
28-2 termination for cause, including discontinuance of the group policy
28-3 in its entirety or with respect to an insured class, and who has
28-4 been continuously insured under the group policy and under any
28-5 group policy providing similar benefits which it replaces for at
28-6 least three consecutive months immediately prior to termination
28-7 shall be entitled to such privilege as outlined in Paragraph (A)
28-8 [(B), or (C)] below. Involuntary termination for cause does not
28-9 include termination for any health-related cause.
28-10 (A)(i) Policies subject to this section shall
28-11 provide continuation of group coverage for employees or members and
28-12 their eligible dependents subject to the eligibility provisions.
28-13 [An insurer shall first offer to each employee, member, or
28-14 dependent a conversion policy without evidence of insurability if
28-15 written application for and payment of the first premium is made
28-16 not later than the 31st day after the date of the termination. The
28-17 converted policy shall provide similar coverage and benefits as
28-18 provided under the group policy or plan. The lifetime maximum
28-19 benefits shall be computed from the initial date of the employee's,
28-20 member's, or dependent's coverage with the group. An insurer shall
28-21 offer and an employee, member, or dependent may elect lesser
28-22 coverage and benefits. An employee, member, or dependent shall not
28-23 be entitled to have a converted policy or plan issued if
28-24 termination of the insurance occurred because: (aa) such person
28-25 failed to pay any required premium; or (bb) any discontinued group
28-26 coverage was replaced by similar group coverage within 31 days.]
28-27 [(ii) An insurer shall not be required to
29-1 issue a converted policy covering any person if: (aa) such person
29-2 is or could be covered by Medicare; (bb) such person is covered for
29-3 similar benefits by another hospital, surgical, medical, or major
29-4 medical expense insurance policy or hospital or medical service
29-5 subscriber contract or medical practice or other prepayment plan or
29-6 by any other plan or program; (cc) such person is eligible for
29-7 similar benefits whether or not covered therefor under any
29-8 arrangement of coverage for individuals in a group, whether on an
29-9 insured or uninsured basis; or (dd) similar benefits are provided
29-10 for or available to such person, pursuant to or in accordance with
29-11 the requirements of any state or federal law. The board shall issue
29-12 rules and regulations to establish minimum standards for benefits
29-13 under policies issued pursuant to this subsection.]
29-14 [(B)(i) Policies subject to Paragraph (A) above
29-15 shall provide at the option of the employee, member, or dependent
29-16 in lieu of the requirements of Paragraph (A) continuation of group
29-17 coverage for employees or members and their eligible dependents
29-18 subject to the eligibility provisions of Paragraph (A).]
29-19 (ii) Continuation of group coverage must
29-20 be requested in writing within 31 days following the later of:
29-21 (aa) the date the group coverage would otherwise terminate; or (bb)
29-22 the date the employee, member, or dependent is given notice in a
29-23 format prescribed by the commissioner of the right of continuation
29-24 by either the employer or the group policyholder.
29-25 (iii) [In no event may the employee or
29-26 member elect continuation more than 31 days after the date of such
29-27 termination. (iv)] An employee, [or] member, or dependent
30-1 electing continuation must pay to the group policyholder or
30-2 employer, on a monthly basis in advance, the amount of contribution
30-3 required by the policyholder or employer, plus two percent of the
30-4 group rate for the insurance being continued under the group policy
30-5 on the due date of each payment.
30-6 (iv) [(v)] The employee's, [or] member's,
30-7 or dependent's written election of continuation, together with the
30-8 first contribution required to establish contributions on a monthly
30-9 basis in advance, must be given to the policyholder or employer
30-10 within the later of: (aa) 31 days of the date coverage would
30-11 otherwise terminate, or (bb) the date the employee is given notice
30-12 of the right of continuation by either the employer or the group
30-13 policyholder.
30-14 (v) [(vi)] Continuation may not terminate
30-15 until the earliest of: (aa) six months after the date the election
30-16 is made; (bb) the date on which failure to make timely payments
30-17 would terminate coverage; (cc) the date on which the group coverage
30-18 terminates in its entirety; (dd) the date on which the covered
30-19 person is or could be covered under Medicare; or one of the
30-20 conditions specified in items (aa) through (dd) of Subparagraph
30-21 (ii), Paragraph (A) above is met by the covered individual; (ee)
30-22 the date on which the covered person is covered for similar
30-23 benefits by another hospital, surgical, medical, or major medical
30-24 expense insurance policy or hospital or medical service subscriber
30-25 contract or medical practice or other prepayment plan or any other
30-26 plan or program; (ff) the date the covered person is eligible for
30-27 similar benefits whether or not covered therefor under any
31-1 arrangement of coverage for individuals in a group, whether on an
31-2 insured or uninsured basis; or (gg) similar benefits are provided
31-3 or available to such person, pursuant to or in accordance with the
31-4 requirements of any state or federal law.
31-5 (vi) Not less than 30 days before the end
31-6 of the six months after the date the employee, member, or dependent
31-7 elects continuation of the policy, the insurer shall notify the
31-8 employee, member, or dependent that he/she may be eligible for
31-9 coverage under the Texas Health Insurance Risk Pool, as provided
31-10 under Article 3.77 of this code and the insurer shall provide the
31-11 address for applying to such pool to the employee, member, or
31-12 dependent.
31-13 (B)(i) An insurer may offer to each employee,
31-14 member, or dependent a conversion policy. Such converted policy
31-15 shall be issued without evidence of insurability if written
31-16 application for and payment of the first premium is made not later
31-17 than the 31st day after the date of termination. The converted
31-18 policy shall meet the minimum standards for benefits for conversion
31-19 policies.
31-20 (ii) Conversion coverage for any insured
31-21 person may not terminate until the earliest of: (aa) the date on
31-22 which failure to make timely payments would terminate coverage; or
31-23 (bb) one of the conditions specified in items (dd) through
31-24 (gg) of Subparagraph (v), Paragraph (3)(A) above. The
31-25 commissioner shall issue rules and regulations to establish minimum
31-26 standards for benefits under policies issued pursuant to this
31-27 subsection.
32-1 (iii) [(C)] The insurer may elect to
32-2 provide the conversion coverage on an individual or group basis.
32-3 The premium for the converted policy issued under Paragraph
32-4 (B) [(A)] of this subdivision shall be determined in accordance
32-5 with the insurer's table of premium rates for coverage that was
32-6 provided under the group policy or plan. The premium may be based
32-7 on the age and geographic location of each person to be covered and
32-8 the type of converted policy. The premium for the same coverage
32-9 and benefits under a converted policy may not exceed 200 percent of
32-10 the premium determined in accordance with this paragraph. The
32-11 premium must be based on the type of converted policy and the
32-12 coverage provided by the policy.
32-13 PART 3. INDIVIDUAL COVERAGES
32-14 SECTION 3.01. Subsection (H), Section 1, Chapter 397, Acts
32-15 of the 54th Legislature, Regular Session, 1955 (Article 3.70-1,
32-16 Vernon's Texas Insurance Code), is amended by adding Subdivision
32-17 (4) to read as follows:
32-18 (4)(a) A preexisting condition provision in an
32-19 individual health insurance policy shall not apply to an individual
32-20 who was continuously covered for an aggregate period of 18 months
32-21 by creditable coverage that was in effect up to a date not more
32-22 than 63 days before the effective date of the individual coverage,
32-23 excluding any waiting period, and whose most recent creditable
32-24 coverage was under a group health plan, governmental plan, or
32-25 church plan.
32-26 (b) For purposes of this section, creditable
32-27 coverage means coverage under any of the following: coverage under
33-1 a self-funded or self-insured employee welfare benefit plan that
33-2 provides health benefits and is established in accordance with the
33-3 Employee Retirement Income Security Act of 1974 (29 U.S.C. Section
33-4 1001, et seq.); coverage under any group or individual health
33-5 benefit plan provided by a health insurance carrier or health
33-6 maintenance organization; Part A or Part B of Title XVIII of the
33-7 Social Security Act; Title XIX of the Social Security Act, other
33-8 than coverage consisting solely of benefits under Section 1928;
33-9 Chapter 55 of Title 10, United States Code; a medical care program
33-10 of the Indian Health Service or of a tribal organization; a state
33-11 health benefits risk pool; a health plan offered under Chapter 89
33-12 of Title 5, United States Code; a public health plan as defined by
33-13 federal regulations; or a health benefit plan under Section 5(e) of
33-14 the Peace Corps Act (22 U.S.C. Section 2504(e)).
33-15 (c) In determining whether a preexisting
33-16 condition provision applies to an individual, the individual
33-17 insurance carrier shall credit the time the individual was
33-18 previously covered under creditable coverage if the previous
33-19 coverage was in effect at any time during the 18 months preceding
33-20 the effective date of the individual coverage.
33-21 SECTION 3.02. Subchapter G, Chapter 3, Insurance Code, is
33-22 amended by adding Article 3.70-1A to read as follows:
33-23 Art. 3.70-1A. GUARANTEED RENEWABILITY OF CERTAIN INDIVIDUAL
33-24 HEALTH INSURANCE POLICIES. (a) Except as otherwise provided in
33-25 this article, an individual health insurance policy providing
33-26 benefits for medical care under a hospital, medical, or surgical
33-27 policy shall be renewed or continued in force at the option of the
34-1 individual.
34-2 (b) An individual health insurance policy providing benefits
34-3 for medical care under a hospital, medical, or surgical policy may
34-4 be nonrenewed or discontinued based only on one or more of the
34-5 following reasons:
34-6 (1) failure to pay premiums or contributions in
34-7 accordance with the terms of the policy;
34-8 (2) fraud or intentional misrepresentation;
34-9 (3) the insurance company is ceasing to offer coverage
34-10 in the individual market in accordance with rules established by
34-11 the commissioner;
34-12 (4) an individual no longer resides, lives, or works
34-13 in an area in which the insurer is authorized to provide coverage,
34-14 but only if such coverage is terminated under this paragraph
34-15 uniformly without regard to any health-status related factor of
34-16 covered individuals; or
34-17 (5) in accordance with applicable federal law and
34-18 regulations.
34-19 (c) The commissioner shall adopt rules necessary to
34-20 implement this article and to meet the minimum requirements of
34-21 federal law and regulations.
34-22 PART 4. COVERAGE THROUGH HEALTH MAINTENANCE ORGANIZATIONS
34-23 SECTION 4.01. Section 9, Texas Health Maintenance
34-24 Organization Act (Article 20A.09, Vernon's Texas Insurance Code),
34-25 is amended by adding Subsections (k) and (l) to read as follows:
34-26 (k) Continuation of Coverage and Conversion.
34-27 (A) A health maintenance organization shall provide a
35-1 group continuation privilege as required by this subsection. Any
35-2 enrollee whose coverage under the group contract has been
35-3 terminated for any reason except involuntary termination for cause,
35-4 and who has been continuously insured under the group contract and
35-5 under any group contract providing similar services and benefits
35-6 which it replaces for at least three consecutive months immediately
35-7 prior to termination shall be entitled to such privilege as
35-8 outlined below. Involuntary termination for cause does not include
35-9 termination for any health-related cause. Health maintenance
35-10 organization contracts subject to this section shall provide
35-11 continuation of group coverage for enrollees subject to the
35-12 eligibility provisions below:
35-13 (1) Continuation of group coverage must be
35-14 requested in writing within 31 days following the later
35-15 of: (aa) the date the group coverage would otherwise terminate;
35-16 or (bb) the date the enrollee is given notice of the right of
35-17 continuation by either the employer or the group contractholder.
35-18 (2) An enrollee electing continuation must pay
35-19 to the group contractholder or employer on a monthly basis, in
35-20 advance, the amount of contribution required by the contractholder
35-21 or employer, plus two percent of the group rate for the coverage
35-22 being continued under the group contract, on the due date of each
35-23 payment.
35-24 (3) The enrollee's written election of
35-25 continuation, together with the first contribution required to
35-26 establish contributions on a monthly basis, in advance, must be
35-27 given to the contractholder or employer within 31 days following
36-1 the later of: (aa) the date the group coverage would otherwise
36-2 terminate; or (bb) the date the enrollee is given notice of the
36-3 right of continuation by either the employer or the group
36-4 contractholder.
36-5 (4) Continuation may not terminate until the
36-6 earliest of: (aa) six months after the date the election is made;
36-7 (bb) the date on which failure to make timely payments would
36-8 terminate coverage; (cc) the date on which the covered person is
36-9 covered for similar services and benefits by another hospital,
36-10 surgical, medical, or major medical expense insurance policy or
36-11 hospital or medical service subscriber contract or medical practice
36-12 or other prepayment plan or any other plan or program; or (dd) the
36-13 date on which the group coverage terminates in its entirety.
36-14 (5) Not less than 30 days before the end of the
36-15 six months after the date the enrollee elects continuation of the
36-16 contract, the health maintenance organization shall notify the
36-17 enrollee that he/she may be eligible for coverage under the Texas
36-18 Health Insurance Risk Pool, as provided under Article 3.77 of this
36-19 code, and the health maintenance organization shall provide the
36-20 address for applying to such pool to the enrollee.
36-21 (B) A health maintenance organization may offer to
36-22 each enrollee a conversion contract. Such conversion contract
36-23 shall be issued without evidence of insurability if written
36-24 application for and payment of the first premium is made not later
36-25 than the 31st day after the date of termination. The conversion
36-26 contract shall meet the minimum standards for services and benefits
36-27 for conversion contracts. The commissioner shall issue rules and
37-1 regulations to establish minimum standards for services and
37-2 benefits under contracts issued pursuant to this subsection.
37-3 (C) The premium for a conversion contract issued under
37-4 this Act shall be determined in accordance with the health
37-5 maintenance organization's premium rates for coverage that were
37-6 provided under the group contract or plan. The premium may be
37-7 based on geographic location of each person to be covered and the
37-8 type of conversion contract and coverage provided. The premium for
37-9 the same coverage under a conversion contract may not exceed 200
37-10 percent of the premium determined in accordance with this
37-11 paragraph. The premium must be based on the type of conversion
37-12 contract and the coverage provided by contract.
37-13 (l) Individual Health Care Plan. A health maintenance
37-14 organization may provide an individual health care plan as required
37-15 by this subsection.
37-16 (A) For purposes of this subsection, an "individual
37-17 health care plan" means:
37-18 (1) a health care plan providing health care
37-19 services for individuals and their dependents;
37-20 (2) a health care plan in which an enrollee pays
37-21 the premium and is not being covered under the contract pursuant to
37-22 continuation of services and benefits provisions applicable under
37-23 federal or state law; and
37-24 (3) a plan in which the evidence of coverage
37-25 meets the requirements of Section 2(a) of this Act.
37-26 (B) A health maintenance organization may limit its
37-27 enrollees to those who live, reside, or work within the service
38-1 area for such network plan.
38-2 (C) Renewability of Coverage. An individual health
38-3 care plan or a conversion contract providing health care services
38-4 shall be renewable with respect to an enrollee at the option of the
38-5 enrollee, and may be nonrenewed based only on one or more of the
38-6 following reasons:
38-7 (1) failure to pay premiums or contributions in
38-8 accordance with the terms of the plan or the issuer has not
38-9 received timely premium payments;
38-10 (2) fraud or intentional misrepresentation;
38-11 (3) the health maintenance organization is
38-12 ceasing to offer coverage in the individual market in accordance
38-13 with rules established by the commissioner;
38-14 (4) enrollee no longer resides, lives, or works
38-15 in the area in which the health maintenance organization is
38-16 authorized to provide coverage, but only if such coverage is
38-17 terminated under this paragraph uniformly without regard to any
38-18 health-status related factor of covered enrollees; or
38-19 (5) in accordance with applicable federal law
38-20 and regulations.
38-21 (D) The commissioner may adopt rules necessary to
38-22 implement this article and to meet the minimum requirements of
38-23 federal law and regulations.
38-24 PART 5. TRANSITION; EFFECTIVE DATE; EMERGENCY
38-25 SECTION 5.01. Except as provided in Section 5.02, this Act
38-26 applies only to an insurance policy or evidence of coverage that is
38-27 delivered, issued for delivery, or renewed on or after July 1,
39-1 1997. A policy or evidence of coverage that is delivered, issued
39-2 for delivery, or renewed before July 1, 1997, is governed by the
39-3 law as it existed immediately before the effective date of this
39-4 Act, and that law is continued in effect for that purpose.
39-5 SECTION 5.02. Coverages available under the Texas Health
39-6 Insurance Risk Pool as provided in Part 1 of this Act must be made
39-7 available not later than January 1, 1998. The provisions of this
39-8 Act as provided under Part 2, Section 2.01, apply only to an
39-9 insurance policy that is delivered, issued for delivery, or renewed
39-10 on or after January 1, 1998. A policy that is delivered, issued
39-11 for delivery, or renewed before January 1, 1998, is governed by the
39-12 law as it existed immediately before the effective date of this
39-13 Act, and that law is continued in effect for that purpose.
39-14 SECTION 5.03. This Act takes effect July 1, 1997.
39-15 SECTION 5.04. The importance of this legislation and the
39-16 crowded condition of the calendars in both houses create an
39-17 emergency and an imperative public necessity that the
39-18 constitutional rule requiring bills to be read on three several
39-19 days in each house be suspended, and this rule is hereby suspended,
39-20 and that this Act take effect and be in force according to its
39-21 terms, and it is so enacted.