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
1-10 by 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 article, "insurer" includes
3-4 but is 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 code;
3-11 a surplus lines carrier; an insurer providing stop-loss or excess
3-12 loss insurance to physicians, health care providers, hospitals, or
3-13 to any benefit arrangements to the extent permitted by Section 3,
3-14 Employee Retirement Income Security Act of 1974 (29 U.S.C. Section
3-15 1002); and any other entity providing a plan of health insurance or
3-16 health benefits subject to state insurance regulation.
3-17 (12) "Insurance arrangement" means a plan, program,
3-18 contract, or other arrangement through which health care services
3-19 are provided by an employer to its officers, employees, or other
3-20 personnel but does not include health care services covered through
3-21 an insurer.
3-22 (13) "Medicare" means coverage provided by Part A and
3-23 Part B, Title XVIII, Social Security Act (42 U.S.C. Section 1395c
3-24 et seq.).
3-25 (14) "Physician" means a person licensed to practice
3-26 medicine in this state under the Medical Practice Act (Article
3-27 4495b, Vernon's Texas Civil Statutes).
4-1 (15) "Plan of operation" means the plan of operation
4-2 of the pool and includes the articles, bylaws, and operating rules
4-3 of the pool that are adopted by the board under Section 5 of this
4-4 article.
4-5 (16) "Pool" means the Texas Health Insurance Risk
4-6 Pool.
4-7 (17) "Resident" means:
4-8 (A) an individual who has been legally domiciled
4-9 in Texas for a minimum of 30 days for persons eligible for
4-10 enrollment in the pool under Section 10(a)(1), (2), (3), or (5) of
4-11 this article; or
4-12 (B) an individual who is legally domiciled in
4-13 Texas for persons eligible for enrollment in the pool under Section
4-14 10(a)(4) of this article.
4-15 [(1) "Pool" means the Texas Health Insurance Risk
4-16 Pool.]
4-17 [(2) "Board" means the board of directors of the pool.]
4-18 [(3) "Insurance board" means the State Board of
4-19 Insurance.]
4-20 [(4) "Commissioner" means the commissioner of
4-21 insurance.]
4-22 [(5) "Insured" means a person who is a resident of
4-23 this state and who is eligible to receive benefits from an insurer
4-24 or insurance arrangement.]
4-25 [(6) "Insurer" means an insurance company authorized
4-26 to transact a health insurance business in this state, including a
4-27 group hospital service corporation subject to Chapter 20 of this
5-1 code and a health maintenance organization operating under the
5-2 Texas Health Maintenance Organization Act (Chapter 20A, Vernon's
5-3 Texas Insurance Code).]
5-4 [(7) "Insurance arrangement" means a plan, program,
5-5 contract, or other arrangement through which health care services
5-6 are provided by an employer to its officers, employees, or other
5-7 personnel but does not include health care services covered through
5-8 an insurer.]
5-9 [(8) "Health insurance" means individual or group
5-10 health insurance coverage and includes a medical expense incurred
5-11 or hospital insurance coverage, or coverage by a group hospital
5-12 service plan or health maintenance organization. "Health
5-13 insurance" does not include short-term insurance, accident-only
5-14 insurance, coverage that is supplemental to liability insurance, or
5-15 workers' compensation insurance.]
5-16 [(9) "Medicare" means coverage provided by Part A and
5-17 Part B, Title XVII, Social Security Act (42 U.S.C. Section 1395 et
5-18 seq.).]
5-19 [(10) "Physician" means a person licensed to practice
5-20 medicine in this state under the Medical Practice Act (Article
5-21 4495b, Vernon's Texas Civil Statutes).]
5-22 [(11) "Hospital" means a licensed public or private
5-23 institution as defined by the Texas Hospital Licensing Law Chapter
5-24 241, Health and Safety Code and any hospital owned or operated by
5-25 the federal or state government.]
5-26 [(12) "Health maintenance organization" means a health
5-27 maintenance organization that has a certificate of authority to
6-1 operate in this state under the Texas Health Maintenance
6-2 Organization Act (Chapter 20A, Vernon's Texas Insurance Code).]
6-3 [(13) "Plan of operation" means the plan of operation
6-4 of the pool and includes the articles, bylaws, and operating rules
6-5 of the pool that are adopted by the board under Section 5 of this
6-6 article.]
6-7 [(14) "Benefits plan" means coverage to be offered by
6-8 the pool to eligible persons under Section 11 of this article.]
6-9 [(15) "Net premiums" means premiums charged by the
6-10 pool less administrative expense allowances.]
6-11 SECTION 1.02. Section 4, Article 3.77, Insurance Code, is
6-12 amended by amending Subsections (b)-(e) and (g) and by adding
6-13 Subsection (h) to read as follows:
6-14 (b) The commissioner [insurance board] shall appoint members
6-15 of the board for staggered six-year terms as provided by this
6-16 section.
6-17 (c) The board shall be [is] composed of:
6-18 (1) at least two persons [one person] affiliated with
6-19 an insurer [insurance company] admitted and authorized to write
6-20 health insurance in this state, but no more than four such persons;
6-21 (2) at least two persons who are insureds or parents
6-22 of insureds or who are reasonably expected to qualify for coverage
6-23 by the pool [one person affiliated with a group hospital service
6-24 corporation operating under Chapter 20 of this code];
6-25 (3) the remaining members of the board may be selected
6-26 from individuals such as a [one] physician licensed to practice in
6-27 this state by the Texas State Board of Medical Examiners, a[;]
7-1 [(4) one] hospital administrator, an[;]
7-2 [(5) one] advanced nurse practitioner, or[; and]
7-3 [(6) four] representatives of the general public who
7-4 are not employed by or affiliated with an insurance company or
7-5 plan, group hospital service corporation, or health maintenance
7-6 organization or licensed as or employed by or affiliated with a
7-7 physician, hospital, or other health care provider. A
7-8 [(d) The limitation on who may be a] representative of the
7-9 general public does [not] include a person whose only affiliation
7-10 with an insurance company or plan, group hospital service
7-11 corporation, or health maintenance organization is as an insured or
7-12 person who has coverage through a plan provided by the corporation
7-13 or organization.
7-14 (d) For purposes of this section, an individual required to
7-15 register with the secretary of state under Chapter 305, Government
7-16 Code, because of the individual's activities with respect to health
7-17 insurance-related matters is a person affiliated with an insurer.
7-18 (e) If a vacancy occurs on the board, the commissioner
7-19 [insurance board] shall fill the vacancy for the unexpired term
7-20 with a person who has the appropriate qualifications to fill that
7-21 position on the board.
7-22 (g) The commissioner [insurance board] shall designate one
7-23 of the commissioner's [its] appointees to the board to serve as
7-24 chairman. The chairman serves in that capacity at the pleasure of
7-25 the commissioner [insurance board].
7-26 (h) A member of the board of directors is not liable for an
7-27 action or omission performed in good faith in the performance of
8-1 powers and duties under this article, and cause of action does not
8-2 arise against a member for the action or omission.
8-3 SECTION 1.03. Section 5, Article 3.77, Insurance Code, is
8-4 amended to read as follows:
8-5 Sec. 5. PLAN OF OPERATION. (a) The pool's initial board
8-6 shall submit to the commissioner [insurance board] a plan of
8-7 operation for the pool that will assure the fair, reasonable, and
8-8 equitable administration of the pool.
8-9 (b) In addition to the other requirements of this article,
8-10 the plan of operation must include procedures for:
8-11 (1) operation of the pool;
8-12 (2) selecting an administrator as provided under
8-13 Section 7 of this article;
8-14 (3) creating a fund, under management of the board,
8-15 for administrative expenses;
8-16 (4) handling, [and] accounting, and auditing of [for]
8-17 money and other assets of the pool; [and]
8-18 (5) [(2)] developing and implementing a program to
8-19 publicize [provide public information regarding] the existence of
8-20 the pool, the eligibility requirements for coverage under the pool,
8-21 [and] enrollment procedures, and to foster public awareness of the
8-22 plan;
8-23 (6) creation of a grievance committee to review
8-24 complaints presented by applicants for coverage from the pool and
8-25 insureds who receive coverage from the pool; and
8-26 (7) other matters as may be necessary and proper for
8-27 the execution of the board's powers, duties, and obligations under
9-1 this article.
9-2 (c) After notice and hearing, the commissioner [insurance
9-3 board] shall approve the plan of operation if it is determined
9-4 [determines] that the plan is suitable to assure the fair,
9-5 reasonable, and equitable administration of the pool.
9-6 (d) The plan of operation takes effect on the date it is
9-7 approved by commissioner [insurance board] order.
9-8 (e) If the initial board fails to submit a suitable plan of
9-9 operation before the 180th day following the appointment of the
9-10 initial board, the commissioner [insurance board], after notice and
9-11 hearing, may adopt all necessary and reasonable rules to provide a
9-12 plan for the pool. The rules adopted under this subsection shall
9-13 continue in effect until the initial board submits, and the
9-14 commissioner [insurance board] approves, a plan of operation under
9-15 this section.
9-16 (f) The board shall amend the plan of operation as necessary
9-17 to carry out this article. Amendments to the plan of operation
9-18 must be approved by the commissioner [insurance board] before they
9-19 become part of the plan.
9-20 SECTION 1.04. Section 6, Article 3.77, Insurance Code, is
9-21 amended to read as follows:
9-22 Sec. 6. AUTHORITY OF THE POOL. (a) The pool may exercise
9-23 any of the authority that an insurance company authorized to write
9-24 health insurance in this state may exercise under the law of this
9-25 state[, except the pool may not provide group insurance coverage].
9-26 (b) As part of its authority, the pool may:
9-27 (1) provide [individual] health benefits coverage to
10-1 persons who are eligible for that coverage under this article;
10-2 (2) enter into contracts that are necessary to carry
10-3 out this article including, with the approval of the commissioner,
10-4 entering into contracts with similar pools in other states for the
10-5 joint performance of common administrative functions or with other
10-6 organizations for the performance of administrative functions;
10-7 (3) sue or be sued, including taking any legal actions
10-8 necessary or proper to recover or collect assessments due the pool;
10-9 (4) institute any legal action necessary to avoid
10-10 payment of improper claims against the pool or the coverage
10-11 provided by or through the pool, to recover any amounts erroneously
10-12 or improperly paid by the pool, to recover any amounts paid by the
10-13 pool as a mistake of fact or law, and to recover other amounts due
10-14 the pool;
10-15 (5) establish appropriate rates, rate schedules, rate
10-16 adjustments, expense allowances, agents' referral fees, and claim
10-17 reserve formulas and perform any actuarial functions appropriate to
10-18 the operation of the pool;
10-19 (6) adopt policy forms, endorsements, and riders and
10-20 applications for coverage;
10-21 (7) issue insurance policies subject to this article
10-22 and the plan of operation;
10-23 (8) appoint appropriate legal, actuarial, and other
10-24 committees that are necessary to provide technical assistance in
10-25 operating the pool and performing any of the functions of the pool;
10-26 [and]
10-27 (9) employ and set the compensation of any persons
11-1 necessary to assist the pool in carrying out its responsibilities
11-2 and functions;
11-3 (10) contract for stop-loss insurance for risks
11-4 incurred by the pool;
11-5 (11) recover or collect assessments imposed under
11-6 Section 13 of this article;
11-7 (12) borrow money as necessary to implement the
11-8 purposes of the pool;
11-9 (13) issue additional types of health insurance
11-10 policies to provide optional coverages which comply with applicable
11-11 provisions of state and federal law, including Medicare
11-12 supplemental health insurance;
11-13 (14) provide for and employ cost containment measures
11-14 and requirements including, but not limited to, preadmission
11-15 screening, second surgical opinion, concurrent utilization review
11-16 subject to Article 21.58A of this code, and individual case
11-17 management for the purpose of making the benefit plans more cost
11-18 effective;
11-19 (15) design, utilize, contract, or otherwise arrange
11-20 for the delivery of cost-effective health care services, including
11-21 establishing or contracting with preferred provider organizations
11-22 and health maintenance organizations; and
11-23 (16) provide for reinsurance on either a facultative
11-24 or treaty basis or both.
11-25 (c) The board shall promulgate a list of medical or health
11-26 conditions for which a person shall be eligible for pool coverage
11-27 without applying for health insurance. The list shall be effective
12-1 on the first day of the operation of the pool and may be amended
12-2 from time to time as may be appropriate.
12-3 (d) Not later than June 1 of each year, the board shall make
12-4 an annual report to the governor, the lieutenant governor, the
12-5 speaker of the house of representatives, and the commissioner. The
12-6 report shall summarize the activities of the pool in the preceding
12-7 calendar year, including information regarding net written and
12-8 earned premiums, plan enrollment, administration expenses, and paid
12-9 and incurred losses.
12-10 SECTION 1.05. Section 7, Article 3.77, Insurance Code, is
12-11 amended by amending the heading and Subsections (a), (b), and (e)
12-12 to read as follows:
12-13 Sec. 7. ADMINISTRATOR [ADMINISTERING INSURER]. (a) After
12-14 completing a competitive bidding process as provided by the plan of
12-15 operation, the board may [shall] select one or more insurers or a
12-16 third party administrator certified by the department [State Board
12-17 of Insurance] to administer the pool.
12-18 (b) The board shall establish criteria for evaluating the
12-19 bids submitted. The criteria must include:
12-20 (1) an insurer's or third party administrator's proven
12-21 ability to handle individual accident and health insurance;
12-22 (2) the efficiency of an insurer's or third party
12-23 administrator's claims paying procedures;
12-24 (3) an estimate of total charges for administering the
12-25 pool; [and]
12-26 (4) an insurer's or third party administrator's
12-27 ability to administer the pool in a cost-efficient manner; and
13-1 (5) the financial condition and stability of the
13-2 insurer or third party administrator.
13-3 (e) The administering insurer or third party administrator
13-4 shall perform such functions relating to the pool as may be
13-5 assigned to it, including:
13-6 (1) perform eligibility and administrative claims
13-7 payment functions for the pool;
13-8 (2) establish a billing procedure for collection of
13-9 premiums from persons insured by the pool;
13-10 (3) perform functions necessary to assure timely
13-11 payment of benefits to persons covered under the pool, including:
13-12 (A) providing information relating to the proper
13-13 manner of submitting a claim for benefits to the pool and
13-14 distributing claim forms; and
13-15 (B) evaluating the eligibility of each claim for
13-16 payment by the pool;
13-17 (4) submit regular reports to the board relating to
13-18 the operation of the pool; and
13-19 (5) determine after the close of each calendar year
13-20 the net written and earned premiums, expense of administration, and
13-21 paid and incurred losses of the pool for that calendar year and
13-22 report this information to the board and the commissioner
13-23 [insurance board] on forms prescribed by the commissioner.
13-24 SECTION 1.06. Section 8, Article 3.77, Insurance Code, is
13-25 amended to read as follows:
13-26 Sec. 8. RULES [RULEMAKING AUTHORITY]. The commissioner may
13-27 by rule establish additional powers and duties of the board and may
14-1 adopt other rules as are necessary and proper to implement this
14-2 article. The commissioner by rule shall provide the procedures,
14-3 criteria, and forms necessary to implement, collect, and deposit
14-4 assessments made and collected under Section 13. [The board may
14-5 adopt rules it determines necessary to carry out this article and
14-6 other laws of this state under which it is authorized to operate.]
14-7 SECTION 1.07. Sections 9(b), (d), and (e), Article 3.77,
14-8 Insurance Code, are amended to read as follows:
14-9 (b) Rates and rate schedules may be adjusted for appropriate
14-10 risk factors including age and variation in claim costs, and the
14-11 board may consider [shall take into consideration] appropriate risk
14-12 factors in accordance with established actuarial and underwriting
14-13 practices.
14-14 (d) The pool shall determine the standard risk rate by
14-15 considering the premium rates charged by other insurers offering
14-16 health insurance coverage to individuals. The standard risk rate
14-17 shall be established using reasonable actuarial techniques, and
14-18 shall reflect anticipated experience and expenses for such
14-19 coverage. Initial pool rates may not be less than 125 percent and
14-20 may not exceed 150 percent of rates established as applicable for
14-21 individual standard rates. Subsequent rates [calculating the
14-22 average individual standard rate charged by the five largest
14-23 insurers offering coverage in this state comparable to the pool
14-24 coverage. If five insurers do not offer comparable coverage, the
14-25 standard risk rate shall be established using reasonable current
14-26 actuarial techniques and shall reflect anticipated experience and
14-27 expenses for that type of coverage. Rates] shall be established to
15-1 provide fully for the expected costs of claims including recovery
15-2 of prior losses, expenses of operation, investment income of claim
15-3 reserves, and any other cost factors subject to the limitations
15-4 described in this subsection. In no event shall pool [Pool] rates
15-5 [may not be less than 150 percent, and may not] exceed 200
15-6 percent[,] of rates applicable to individual standard risks.
15-7 (e) All rates and rate schedules shall be submitted to the
15-8 commissioner [insurance board] for approval, and the commissioner
15-9 [insurance board] must approve the rates and rate schedules of the
15-10 pool before they are used by the pool. The commissioner [insurance
15-11 board] in evaluating the rates and rate schedules of the pool shall
15-12 consider the factors provided by this section. [The insurance board
15-13 by rule may adopt necessary procedures, criteria, and forms for the
15-14 submission and approval of the pool's rates and rate schedules.]
15-15 SECTION 1.08. Section 10, Article 3.77, Insurance Code, is
15-16 amended to read as follows:
15-17 Sec. 10. ELIGIBILITY FOR COVERAGE. (a) Any individual
15-18 person who is and continues to be a resident of Texas and a citizen
15-19 of the United States shall be eligible for coverage from the pool
15-20 if evidence is provided of:
15-21 (1) a notice of rejection or refusal to issue
15-22 substantially similar insurance for health reasons by two insurers.
15-23 A rejection or refusal by an insurer offering only stop-loss,
15-24 excess loss, or reinsurance coverage with respect to the applicant
15-25 shall not be sufficient evidence under this subsection;
15-26 (2) an offer to issue insurance only with conditional
15-27 riders;
16-1 (3) a refusal by an insurer to issue insurance except
16-2 at a rate exceeding the pool rate;
16-3 (4) the individual's maintenance of health insurance
16-4 coverage for the previous 18 months with no gap in coverage greater
16-5 than 63 days of which the most recent coverage was through an
16-6 employer sponsored plan; or
16-7 (5) diagnosis of the individual with one of the
16-8 medical or health conditions listed by the board under Section 6(c)
16-9 of this article and for which a person shall be eligible for pool
16-10 coverage without applying for health insurance coverage. [Except
16-11 as provided by Subsection (b) of this section, a person who is a
16-12 resident of this state and who is diagnosed as having a condition
16-13 designated as uninsurable by the board or who provides proof
16-14 acceptable to the board from his insurer that he has been
16-15 determined to be a substandard risk for whom the insurer's premium
16-16 would exceed the premium charged by the pool is entitled to
16-17 coverage from the pool.]
16-18 (b) Each dependent of a person who is eligible for coverage
16-19 from the pool shall also be eligible for coverage from the pool.
16-20 In the instance of a child who is the primary insured, resident
16-21 family members shall also be eligible for coverage.
16-22 (c) A person may maintain pool coverage for the period of
16-23 time the person is satisfying a preexisting waiting period under
16-24 another health insurance policy or insurance arrangement intended
16-25 to replace the pool policy.
16-26 (d) A person is not eligible for coverage from the pool if
16-27 the person:
17-1 (1) has in effect on the date pool coverage takes
17-2 effect health insurance coverage from an insurer or insurance
17-3 arrangement;
17-4 (2) is eligible for other health care benefits at the
17-5 time application is made to the pool, including COBRA continuation,
17-6 except:
17-7 (A) coverage, including COBRA continuation,
17-8 other continuation or conversion coverage, maintained for the
17-9 period of time the person is satisfying any pre-existing condition
17-10 waiting period under a pool policy; or
17-11 (B) employer group coverage conditioned by the
17-12 limitations described by Subsections (a)(1) and (2) of this
17-13 section; or
17-14 (C) individual coverage conditioned by the
17-15 limitations described by Subsections (a)(1)-(3) of this section;
17-16 (3) has terminated coverage in the pool within 12
17-17 months of the date that application is made to the pool, unless the
17-18 person demonstrates a good faith reason for the termination;
17-19 (4) [has had benefits paid by the pool on his behalf
17-20 in the amount of $500,000;]
17-21 [(5)] is confined in a county jail or imprisoned in a
17-22 state prison;
17-23 (5) has premiums that are paid for or reimbursed under
17-24 any government sponsored program or by any government agency or
17-25 health care provider, except as an otherwise qualifying full-time
17-26 employee, or dependent thereof, of a government agency or health
17-27 care provider; or
18-1 (6) has not had prior coverage with the pool
18-2 terminated for nonpayment of premiums or fraud [is eligible for
18-3 benefits under Medicare, Chapter 32, Human Resources Code, or
18-4 Chapter 35, Health and Safety Code].
18-5 (e) Pool coverage shall cease:
18-6 (1) on the date a person is no longer a resident of
18-7 this state, except for a child who is a student under the age of 23
18-8 years and who is financially dependent upon the parent, a child for
18-9 whom a person may be obligated to pay child support, or a child of
18-10 any age who is disabled and dependent upon the parent;
18-11 (2) on the date a person requests coverage to
18-12 end;
18-13 (3) upon the death of the covered person;
18-14 (4) on the date state law requires cancellation of the
18-15 policy;
18-16 (5) at the option of the pool, 30 days after the pool
18-17 sends to the person any inquiry concerning the person's
18-18 eligibility, including an inquiry concerning the person's
18-19 residence, to which the person does not reply;
18-20 (6) on the 31st day after the day on which a premium
18-21 payment for pool coverage becomes due if the payment is not made
18-22 before that date; or
18-23 (7) at such time as the person ceases to meet the
18-24 eligibility requirements of this section.
18-25 (f) [(c)] A person who ceases to meet the eligibility
18-26 requirements of this section may have his coverage terminated at
18-27 the end of the policy period.
19-1 [(d) A person whose health insurance coverage is
19-2 involuntarily terminated for any reason other than nonpayment of
19-3 premium and who is not eligible for conversion under the terminated
19-4 coverage is eligible to apply for coverage under the plan. If
19-5 application is made for the coverage not later than the 60th day
19-6 after the involuntary termination and if premiums are paid for the
19-7 entire coverage period, the effective date of coverage is the
19-8 termination date of the previous coverage.]
19-9 SECTION 1.09. Section 11, Article 3.77, Insurance Code, is
19-10 amended to read as follows:
19-11 Sec. 11. MINIMUM POOL BENEFITS. (a) The pool shall offer
19-12 pool coverage consistent with major medical expense coverage to
19-13 each eligible person who is not eligible for Medicare. The board,
19-14 with the approval of the commissioner, shall establish:
19-15 (1) the coverages to be provided by the pool;
19-16 (2) the applicable schedules of benefits; and
19-17 (3) any exclusions to coverage and other limitations.
19-18 [to each person who is eligible under Section 10 of this article.
19-19 The pool coverage shall be for covered expenses as follows:]
19-20 [(1) hospital services;]
19-21 [(2) professional services for the diagnosis or
19-22 treatment of injuries, illnesses, or conditions, other than mental
19-23 or dental, which are rendered by a physician, or by other licensed
19-24 professionals at his direction;]
19-25 [(3) drugs requiring a physician's prescription;]
19-26 [(4) services of a licensed skilled nursing facility
19-27 for not more than 120 days during a policy year;]
20-1 [(5) services of a home health agency up to a maximum
20-2 of 270 services per year;]
20-3 [(6) use of radium or other radioactive materials;]
20-4 [(7) oxygen;]
20-5 [(8) anesthetics;]
20-6 [(9) prostheses other than dental;]
20-7 [(10) rental of durable medical equipment, other than
20-8 eyeglasses and hearing aids, for which there is no personal use in
20-9 the absence of the conditions for which it is prescribed;]
20-10 [(11) diagnostic X rays and laboratory tests;]
20-11 [(12) oral surgery for excision of partially or
20-12 completely unerupted, impacted teeth or the gums and tissues of the
20-13 mouth when not performed in connection with the extraction or
20-14 repair of teeth;]
20-15 [(13) services of a licensed physical therapist;]
20-16 [(14) transportation provided by a licensed ambulance
20-17 service to the nearest facility qualified to treat the condition;
20-18 and]
20-19 [(15) services for diagnosis and treatment of mental
20-20 and nervous disorders, provided that the insured is required to
20-21 make a 50 percent copayment, and that the payment of the pool does
20-22 not exceed $4,000 for outpatient psychiatric treatment.]
20-23 (b) The benefits provisions of the pool's health benefits
20-24 coverages must include the following:
20-25 (1) all required or applicable definitions;
20-26 (2) a list of any exclusions or limitations to
20-27 coverage;
21-1 (3) a description of covered services required under
21-2 the pool; and
21-3 (4) the deductibles, coinsurance options, and
21-4 copayment options that are required or permitted under the pool.
21-5 (c) [Covered expenses under Subsection (a) of this section
21-6 do not include:]
21-7 [(1) any charge for treatment for cosmetic purposes
21-8 other than surgery for the repair or treatment of an injury or a
21-9 congenital bodily defect to restore normal bodily functions;]
21-10 [(2) care which is primarily for custodial or
21-11 domiciliary purposes;]
21-12 [(3) any charge for confinement in a private room to
21-13 the extent it is in excess of the institution's charge for its most
21-14 common semiprivate room, unless a private room is prescribed as
21-15 medically necessary by a physician;]
21-16 [(4) that part of any charge for services rendered or
21-17 articles prescribed by a physician, dentist, or other health care
21-18 personnel that exceeds the prevailing charge in the locality or for
21-19 any charge not medically necessary;]
21-20 [(5) any charge for services or articles that
21-21 provision of which is not within the scope of authorized practice
21-22 of the institution or individual providing the services or
21-23 articles;]
21-24 [(6) any expense incurred prior to the effective date
21-25 of coverage by the pool for the person on whose behalf the expense
21-26 is incurred;]
21-27 [(7) dental care except as provided in Subsection
22-1 (a)(12) of this section;]
22-2 [(8) eyeglasses and hearing aids;]
22-3 [(9) illness or injury due to acts of war;]
22-4 [(10) services of blood donors and any fee for failure
22-5 to replace the first three pints of blood provided to an eligible
22-6 person each policy year; and]
22-7 [(11) personal supplies or services provided by a
22-8 hospital or nursing home or any other nonmedical or nonprescribed
22-9 supply or service.]
22-10 [(c) Under this section, "covered expenses" includes only
22-11 those expenses for the prevailing charge in the locality for the
22-12 items listed in Subsection (a) of this section if prescribed by a
22-13 physician and determined by the pool to be medically necessary.]
22-14 [(d) In authorizing pool coverage, the board must consider
22-15 levels of health insurance provided in the state and medical
22-16 economic factors that are considered appropriate and, subject to
22-17 the limitations provided by this section, shall adopt benefit
22-18 levels, deductibles, coinsurance factors, exclusions, and
22-19 limitations determined to be generally reflective of and
22-20 commensurate with health insurance provided through a
22-21 representative number of large employers in the state.]
22-22 [(e) Pool coverage under this section shall provide both a
22-23 low deductible of not less than $250 per person and $500 per family
22-24 a year and appropriate higher deductibles to be selected by the
22-25 pool applicant. The board shall purchase stop-loss coverage for
22-26 the pool in amounts determined by the board but not more than
22-27 $2,000 per person or $4,000 per family covered by the pool.] The
23-1 board may adjust deductibles, the amounts of stop-loss coverage,
23-2 and the time periods governing preexisting conditions under Section
23-3 12 [Subsection (f)] of this article [section] to preserve the
23-4 financial integrity of the pool. If the board makes such an
23-5 adjustment it shall report in writing that adjustment together with
23-6 its reasons for the adjustment to the commissioner [insurance board
23-7 and Legislative Budget Board]. The report must be submitted not
23-8 later than the 30th day after the date the adjustment is made.
23-9 [(f) Pool coverage must exclude charges or expenses incurred
23-10 during the first six months following the effective date of
23-11 coverage with regard to any condition that during the six-month
23-12 period preceding the effective date of coverage:]
23-13 [(1) had manifested itself in a manner that would
23-14 cause an ordinarily prudent person to seek diagnosis, care, or
23-15 treatment; or]
23-16 [(2) for which medical advice, care, or treatment was
23-17 recommended or received.]
23-18 [(g) Preexisting condition exclusions shall be waived to the
23-19 extent to which similar exclusions, if any, have been satisfied
23-20 under any previous health insurance coverage, health insurance
23-21 pool, or self-insured health or welfare benefits plan that was
23-22 involuntarily terminated, if application for pool coverage is made
23-23 not later than the 31st day after involuntary termination. In that
23-24 case, coverage in the pool is effective from the date on which the
23-25 previous coverage was terminated.]
23-26 (d) [(h)] Benefits otherwise payable under pool coverage
23-27 shall be reduced by amounts paid or payable through any other
24-1 health insurance, or insurance arrangement, and by all hospital and
24-2 medical expense benefits paid or payable under any workers'
24-3 compensation coverage, automobile insurance whether provided on the
24-4 basis of fault or no-fault, and by any hospital or medical benefits
24-5 paid or payable under or provided pursuant to any state or federal
24-6 law or program.
24-7 (e) [(i)] The [insurer or the] pool has a cause of action
24-8 against an eligible person for the recovery of the amount of
24-9 benefits paid that are not for covered expenses. Benefits due from
24-10 the pool may be reduced or refused as an offset against any amount
24-11 recoverable under this subsection.
24-12 SECTION 1.10. Sections 12 and 13, Article 3.77, Insurance
24-13 Code, are amended to read as follows:
24-14 Sec. 12. PREEXISTING CONDITIONS. (a) Except as provided by
24-15 this section and Section 11(c) of this article, pool coverage shall
24-16 exclude charges or expenses incurred during the first 12 months
24-17 following the effective date of coverage with regard to any
24-18 condition for which medical advice, care, or treatment was
24-19 recommended or received during the six-month period preceding the
24-20 effective date of coverage.
24-21 (b) A preexisting condition provision shall not apply to an
24-22 individual who was continuously covered for an aggregate period of
24-23 12 months by health insurance that was in effect up to a date not
24-24 more than 63 days before the effective date of coverage under the
24-25 pool, excluding any waiting period, provided that the application
24-26 for pool coverage is made no later than 63 days following the
24-27 termination of coverage.
25-1 (c) In determining whether a preexisting condition provision
25-2 applies to an individual covered by the pool, the pool shall credit
25-3 the time the individual was previously covered under health
25-4 insurance if the previous coverage was in effect at any time during
25-5 the 12 months preceding the effective date of coverage under the
25-6 pool. Any waiting period that applied before that coverage became
25-7 effective also shall be credited against the preexisting condition
25-8 provision period.
25-9 Sec. 13. ASSESSMENTS. (a) The board may assess insurers
25-10 and make advance interim assessments as reasonable and necessary
25-11 for the plan's organizational and interim operating expenses. Any
25-12 interim assessment shall be credited as offsets against any regular
25-13 assessments due following the close of the fiscal year. [If during
25-14 any state fiscal year, the pool is unable to pay its claims and
25-15 meet its other financial obligations due to a shortage of available
25-16 funds, the board shall make an estimate of the amount that will be
25-17 necessary to fund the shortage and shall notify the insurance board
25-18 of this shortage and the estimated amount of money necessary to
25-19 fund the shortage.]
25-20 (b) If assessments exceed the pool's actual losses and
25-21 administrative expenses, the excess shall be held in an
25-22 interest-bearing account and used by the board to offset future
25-23 losses or to reduce future assessments. As used in this section,
25-24 future losses includes reserves for incurred but not reported
25-25 claims. [On receiving notice under this section, the insurance
25-26 board shall direct the commissioner of insurance to impose an
25-27 assessment on each insurer authorized to write health insurance in
26-1 this state.]
26-2 (c) After the end of each fiscal year, the board shall
26-3 determine and report to the commissioner the net loss, if any, of
26-4 the pool for the previous calendar year, including administrative
26-5 expenses and incurred losses for the year, taking into account
26-6 investment income and other appropriate gains and losses. Any net
26-7 loss for the year shall be recouped by assessments on insurers.
26-8 Each insurer's assessment shall be determined annually by the board
26-9 based on annual statements and other reports required by the board
26-10 and filed with the board. [The total amount of assessments to be
26-11 collected by the commissioner shall be in an amount that is
26-12 sufficient to fund the pool's shortage.]
26-13 (d) The assessment imposed against each insurer shall be in
26-14 an amount that is equal to the ratio of the gross premiums
26-15 collected by the insurer for health insurance in this state during
26-16 the preceding calendar year, except for Medicare supplement
26-17 premiums subject to Article 3.74 and small group health insurance
26-18 premiums subject to Articles 26.01 through 26.76, to the gross
26-19 premiums collected by all insurers for health insurance, except for
26-20 Medicare supplement premiums subject to Article 3.74 and small
26-21 group health insurance premiums subject to Articles 26.01 through
26-22 26.76, in this state during the preceding calendar year.
26-23 (e) An insurer may petition the commissioner for an
26-24 abatement or deferment of all or part of an assessment imposed by
26-25 the board. The commissioner may abate or defer, in whole or in
26-26 part, such assessment if the commissioner determines that the
26-27 payment of the assessment would endanger the ability of the
27-1 participating insurer to fulfill its contractual obligations. If
27-2 an assessment against an insurer is abated or deferred in whole or
27-3 in part, the amount by which such assessment is abated or deferred
27-4 shall be assessed against the other insurers in a manner consistent
27-5 with the basis for assessments set forth in this subsection. The
27-6 insurer receiving such abatement or deferment shall remain liable
27-7 to the pool for the deficiency. The total of all assessments on an
27-8 insurer may not exceed one-half of one percent of the insurer's
27-9 collected premiums for health insurance in this state. This
27-10 subsection expires January 1, 2000. [The insurance board by rule
27-11 shall provide the procedures, criteria, and forms necessary to
27-12 implement, collect, and deposit assessments made and collected
27-13 under this section.]
27-14 [(f) Each insurer that pays an assessment under this section
27-15 is entitled to reimbursement by the state in an amount equal to the
27-16 amount of the assessment paid under this section. The state shall
27-17 reimburse an insurer not earlier than September 1 but not later
27-18 than September 15 of the first year of the first state biennium
27-19 that begins after the date on which the assessment is paid. The
27-20 comptroller of public accounts by rule shall establish a procedure
27-21 under which claims for reimbursement under this section may be
27-22 submitted and paid.]
27-23 [Sec. 13. MANAGED CARE, ETC. The board as part of the
27-24 pool's program may adopt rules providing for quality of care,
27-25 management of costs and benefits, and managed care.]
27-26 SECTION 1.11. Article 3.77, Insurance Code, is amended by
27-27 adding Sections 14 and 15 to read as follows:
28-1 Sec. 14. COMPLAINT PROCEDURES. An applicant or participant
28-2 in coverage from the pool is entitled to have complaints against
28-3 the pool reviewed by a grievance committee appointed by the board.
28-4 The grievance committee shall report to the board after completion
28-5 of the review of each complaint. The board shall retain all
28-6 written complaints regarding the pool at least until the third
28-7 anniversary of the date the pool received the complaint.
28-8 Sec. 15. AUDIT. (a) The state auditor shall conduct
28-9 annually a special audit of the pool under Chapter 321, Government
28-10 Code. The state auditor's report shall include a financial audit
28-11 and an economy and efficiency audit.
28-12 (b) The state auditor shall report the cost of each audit
28-13 conducted under this article to the board and the comptroller, and
28-14 the board shall remit that amount to the comptroller for deposit to
28-15 the general revenue fund.
28-16 PART 2. GROUP COVERAGES
28-17 SECTION 2.01. Section 1(d)(3), Article 3.51-6, Insurance
28-18 Code, is amended to read as follows:
28-19 (3) Any insurer or group hospital service corporation
28-20 subject to Chapter 20, Insurance Code, who issues policies which
28-21 provide hospital, surgical, or major medical expense insurance or
28-22 any combination of these coverages on an expense incurred basis,
28-23 but not a policy which provides benefits for specified disease or
28-24 for accident only, shall provide a [conversion or] group
28-25 continuation privilege as required by this subsection. Any
28-26 employee, member, or dependent whose insurance under the group
28-27 policy has been terminated for any reason except involuntary
29-1 termination for cause, including discontinuance of the group policy
29-2 in its entirety or with respect to an insured class, and who has
29-3 been continuously insured under the group policy and under any
29-4 group policy providing similar benefits which it replaces for at
29-5 least three consecutive months immediately prior to termination
29-6 shall be entitled to such privilege as outlined in Paragraph (A)[,
29-7 (B), or (C)] below. Involuntary termination for cause does not
29-8 include termination for any health-related cause.
29-9 (A)(i) Policies subject to this section shall
29-10 provide continuation of group coverage for employees or members and
29-11 their eligible dependents subject to the eligibility provisions.
29-12 [An insurer shall first offer to each employee, member, or
29-13 dependent a conversion policy without evidence of insurability if
29-14 written application for and payment of the first premium is made
29-15 not later than the 31st day after the date of the termination. The
29-16 converted policy shall provide similar coverage and benefits as
29-17 provided under the group policy or plan. The lifetime maximum
29-18 benefits shall be computed from the initial date of the employee's,
29-19 member's, or dependent's coverage with the group. An insurer shall
29-20 offer and an employee, member, or dependent may elect lesser
29-21 coverage and benefits. An employee, member, or dependent shall not
29-22 be entitled to have a converted policy or plan issued if
29-23 termination of the insurance occurred because: (aa) such person
29-24 failed to pay any required premium; or (bb) any discontinued group
29-25 coverage was replaced by similar group coverage within 31 days.]
29-26 [(ii) An insurer shall not be required to
29-27 issue a converted policy covering any person if: (aa) such person
30-1 is or could be covered by Medicare; (bb) such person is covered for
30-2 similar benefits by another hospital, surgical, medical, or major
30-3 medical expense insurance policy or hospital or medical service
30-4 subscriber contract or medical practice or other prepayment plan or
30-5 by any other plan or program; (cc) such person is eligible for
30-6 similar benefits whether or not covered therefor under any
30-7 arrangement of coverage for individuals in a group, whether on an
30-8 insured or uninsured basis; or (dd) similar benefits are provided
30-9 for or available to such person, pursuant to or in accordance with
30-10 the requirements of any state or federal law. The board shall issue
30-11 rules and regulations to establish minimum standards for benefits
30-12 under policies issued pursuant to this subsection.]
30-13 [(B)(i) Policies subject to Paragraph (A) above
30-14 shall provide at the option of the employee, member, or dependent
30-15 in lieu of the requirements of Paragraph (A) continuation of group
30-16 coverage for employees or members and their eligible dependents
30-17 subject to the eligibility provisions of Paragraph (A).]
30-18 (ii) Continuation of group coverage must
30-19 be requested in writing within 31 days following the later of:
30-20 (aa) the date the group coverage would otherwise terminate; or (bb)
30-21 the date the employee, member, or dependent is given notice in a
30-22 format prescribed by the commissioner of the right of continuation
30-23 by either the employer or the group policyholder.
30-24 (iii) [In no event may the employee or
30-25 member elect continuation more than 31 days after the date of such
30-26 termination.]
30-27 [(iv)] An employee, [or] member, or
31-1 dependent electing continuation must pay to the group policyholder
31-2 or employer, on a monthly basis in advance, the amount of
31-3 contribution required by the policyholder or employer, plus two
31-4 percent of the group rate for the insurance being continued under
31-5 the group policy on the due date of each payment.
31-6 (iv) [(v)] The employee's, [or] member's,
31-7 or dependent's written election of continuation, together with the
31-8 first contribution required to establish contributions on a monthly
31-9 basis in advance, must be given to the policyholder or employer
31-10 within the later of: (aa) 31 days of the date coverage would
31-11 otherwise terminate, or (bb) the date the employee is given notice
31-12 of the right of continuation by either the employer or the group
31-13 policyholder.
31-14 (v) [(vi)] Continuation may not terminate
31-15 until the earliest of: (aa) six months after the date the election
31-16 is made; (bb) the date on which failure to make timely payments
31-17 would terminate coverage; (cc) the date on which the group coverage
31-18 terminates in its entirety; (dd) the date on which the covered
31-19 person is or could be covered under Medicare; (ee) the date on
31-20 which the covered person is covered for similar benefits by another
31-21 hospital, surgical, medical, or major medical expense insurance
31-22 policy or hospital or medical service subscriber contract or
31-23 medical practice or other prepayment plan or any other plan or
31-24 program; (ff) the date the covered person is eligible for similar
31-25 benefits whether or not covered therefor under any arrangement of
31-26 coverage for individuals in a group, whether on an insured or
31-27 uninsured basis; or (gg) similar benefits are provided or available
32-1 to such person, pursuant to or in accordance with the requirements
32-2 of any state or federal law [or one of the conditions specified in
32-3 items (aa) through (dd) of Subparagraph (ii), Paragraph (A) above
32-4 is met by the covered individual].
32-5 (vi) Not less than 30 days before the end
32-6 of the six months after the date the employee, member, or dependent
32-7 elects continuation of the policy, the insurer shall notify the
32-8 employee, member, or dependent that he/she may be eligible for
32-9 coverage under the Texas Health Insurance Risk Pool, as provided
32-10 under Article 3.77 of this code, and the insurer shall provide the
32-11 address for applying to such pool to the employee, member, or
32-12 dependent.
32-13 (B)(i) An insurer may offer to each employee,
32-14 member, or dependent a conversion policy. Such a conversion policy
32-15 shall be issued without evidence of insurability if a written
32-16 application for the policy and payment of the first premium are
32-17 made not later than the 31st day after the date of termination.
32-18 The conversion policy shall meet the minimum standards for benefits
32-19 for conversion policies.
32-20 (ii) Conversion coverage for any insured
32-21 person may not terminate until the earliest of: (aa) the date on
32-22 which failure to make timely payments would terminate coverage; or
32-23 (bb) one of the conditions specified in items (dd) through (gg) of
32-24 Subparagraph (v), Paragraph (A), of this subdivision. The
32-25 commissioner shall issue rules and regulations to establish minimum
32-26 standards for benefits under policies issued pursuant to this
32-27 paragraph.
33-1 (iii) [(C)] The insurer may elect to
33-2 provide the conversion coverage on an individual or group basis.
33-3 The premium for the converted policy issued under
33-4 Paragraph (B) [(A)] of this subdivision shall be determined in
33-5 accordance with the insurer's table of premium rates for coverage
33-6 that was provided under the group policy or plan. The premium may
33-7 be based on the age and geographic location of each person to be
33-8 covered and the type of converted policy. The premium for the same
33-9 coverage and benefits under a converted policy may not exceed 200
33-10 percent of the premium determined in accordance with this
33-11 paragraph. The premium must be based on the type of converted
33-12 policy and the coverage provided by the policy.
33-13 PART 3. INDIVIDUAL COVERAGES
33-14 SECTION 3.01. Subsection (H), Section 1, Chapter 397, Acts
33-15 of the 54th Legislature, Regular Session, 1955 (Article 3.70-1,
33-16 Vernon's Texas Insurance Code), is amended by adding Subdivision
33-17 (4) to read as follows:
33-18 (4)(a) A preexisting condition provision in an
33-19 individual health insurance policy shall not apply to an individual
33-20 who was continuously covered for an aggregate period of 18 months
33-21 by creditable coverage that was in effect up to a date not more
33-22 than 63 days before the effective date of the individual coverage,
33-23 excluding any waiting period, and whose most recent creditable
33-24 coverage was under a group health plan, governmental plan, or
33-25 church plan.
33-26 (b) For purposes of this section, creditable
33-27 coverage means coverage under any of the following: a self-funded
34-1 or self-insured employee welfare benefit plan that provides health
34-2 benefits and is established in accordance with the Employee
34-3 Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et
34-4 seq.); any group or individual health benefit plan provided by a
34-5 health insurance carrier or health maintenance organization; Part A
34-6 or Part B of Title XVIII of the Social Security Act; Title XIX of
34-7 the Social Security Act, other than coverage consisting solely of
34-8 benefits under Section 1928; Chapter 55 of Title 10, United States
34-9 Code; a medical care program of the Indian Health Service or of a
34-10 tribal organization; a state health benefits risk pool; a health
34-11 plan offered under Chapter 89 of Title 5, United States Code; a
34-12 public health plan as defined by federal regulations; or a health
34-13 benefit plan under Section 5(e) of the Peace Corps Act (22 U.S.C.
34-14 Section 2504(e)).
34-15 (c) In determining whether a preexisting
34-16 condition provision applies to an individual, the individual
34-17 insurance carrier shall credit the time the individual was
34-18 previously covered under creditable coverage if the previous
34-19 coverage was in effect at any time during the 18 months preceding
34-20 the effective date of the individual coverage.
34-21 SECTION 3.02. Subchapter G, Chapter 3, Insurance Code, is
34-22 amended by adding Article 3.70-1A to read as follows:
34-23 Art. 3.70-1A. GUARANTEED RENEWABILITY OF CERTAIN INDIVIDUAL
34-24 HEALTH INSURANCE POLICIES. (a) Except as otherwise provided in
34-25 this article, an individual health insurance policy providing
34-26 benefits for medical care under a hospital, medical, or surgical
34-27 policy shall be renewed or continued in force at the option of the
35-1 individual.
35-2 (b) An individual health insurance policy providing benefits
35-3 for medical care under a hospital, medical, or surgical policy may
35-4 be nonrenewed or discontinued based only on one or more of the
35-5 following reasons:
35-6 (1) failure to pay premiums or contributions in
35-7 accordance with the terms of the policy;
35-8 (2) fraud or intentional misrepresentation;
35-9 (3) the insurance company is ceasing to offer coverage
35-10 in the individual market in accordance with rules established by
35-11 the commissioner;
35-12 (4) an individual no longer resides, lives, or works
35-13 in an area in which the insurer is authorized to provide coverage,
35-14 but only if such coverage is terminated under this subdivision
35-15 uniformly without regard to any health-status related factor of
35-16 covered individuals; or
35-17 (5) in accordance with applicable federal law and
35-18 regulations.
35-19 (c) The commissioner shall adopt rules necessary to
35-20 implement this article and to meet the minimum requirements of
35-21 federal law and regulations.
35-22 PART 4. COVERAGE THROUGH HEALTH MAINTENANCE ORGANIZATIONS
35-23 SECTION 4.01. Section 9, Texas Health Maintenance
35-24 Organization Act (Article 20A.09, Vernon's Texas Insurance Code),
35-25 is amended by adding Subsections (k) and (l) to read as follows:
35-26 (k) Continuation of Coverage and Conversion. (A) A health
35-27 maintenance organization shall provide a group continuation
36-1 privilege as required by this subsection. Any enrollee whose
36-2 coverage under the group contract has been terminated for any
36-3 reason except involuntary termination for cause, and who has been
36-4 continuously insured under the group contract and under any group
36-5 contract providing similar services and benefits which it replaces
36-6 for at least three consecutive months immediately prior to
36-7 termination shall be entitled to such privilege as outlined below.
36-8 Involuntary termination for cause does not include termination for
36-9 any health-related cause. Health maintenance organization
36-10 contracts subject to this section shall provide continuation of
36-11 group coverage for enrollees subject to the eligibility provisions
36-12 below:
36-13 (1) Continuation of group coverage must be
36-14 requested in writing within 31 days following the later
36-15 of: (aa) the date the group coverage would otherwise terminate;
36-16 or (bb) the date the enrollee is given notice of the right of
36-17 continuation by either the employer or the group contract holder.
36-18 (2) An enrollee electing continuation must pay
36-19 to the group contract holder or employer on a monthly basis, in
36-20 advance, the amount of contribution required by the contract holder
36-21 or employer, plus two percent of the group rate for the coverage
36-22 being continued under the group contract, on the due date of each
36-23 payment.
36-24 (3) The enrollee's written election of
36-25 continuation, together with the first contribution required to
36-26 establish contributions on a monthly basis, in advance, must be
36-27 given to the contract holder or employer within 31 days following
37-1 the later of: (aa) the date the group coverage would otherwise
37-2 terminate; or (bb) the date the enrollee is given notice of the
37-3 right of continuation by either the employer or the group contract
37-4 holder.
37-5 (4) Continuation may not terminate until the
37-6 earliest of: (aa) six months after the date the election is made;
37-7 (bb) the date on which failure to make timely payments would
37-8 terminate coverage; (cc) the date on which the covered person is
37-9 covered for similar services and benefits by another hospital,
37-10 surgical, medical, or major medical expense insurance policy or
37-11 hospital or medical service subscriber contract or medical practice
37-12 or other prepayment plan or any other plan or program; or (dd) the
37-13 date on which the group coverage terminates in its entirety.
37-14 (5) Not less than 30 days before the end of the
37-15 six months after the date the enrollee elects continuation of the
37-16 contract, the health maintenance organization shall notify the
37-17 enrollee that he/she may be eligible for coverage under the Texas
37-18 Health Insurance Risk Pool, as provided under Article 3.77,
37-19 Insurance Code, and the health maintenance organization shall
37-20 provide the address for applying to such pool to the enrollee.
37-21 (B) A health maintenance organization may offer to
37-22 each enrollee a conversion contract. Such conversion contract
37-23 shall be issued without evidence of insurability if written
37-24 application for and payment of the first premium is made not later
37-25 than the 31st day after the date of termination. The conversion
37-26 contract shall meet the minimum standards for services and benefits
37-27 for conversion contracts. The commissioner shall issue rules and
38-1 regulations to establish minimum standards for services and
38-2 benefits under contracts issued pursuant to this subdivision.
38-3 (C) The premium for a conversion contract issued under
38-4 this Act shall be determined in accordance with the health
38-5 maintenance organization's premium rates for coverage that were
38-6 provided under the group contract or plan. The premium may be
38-7 based on geographic location of each person to be covered and the
38-8 type of conversion contract and coverage provided. The premium for
38-9 the same coverage under a conversion contract may not exceed 200
38-10 percent of the premium determined in accordance with this
38-11 subdivision. The premium must be based on the type of conversion
38-12 contract and the coverage provided by contract.
38-13 (l) Individual Health Care Plan. A health maintenance
38-14 organization may provide an individual health care plan as required
38-15 by this subsection.
38-16 (A) For purposes of this subsection, an "individual
38-17 health care plan" means:
38-18 (1) a health care plan providing health care
38-19 services for individuals and their dependents;
38-20 (2) a health care plan in which an enrollee pays
38-21 the premium and is not being covered under the contract pursuant to
38-22 continuation of services and benefits provisions applicable under
38-23 federal or state law; and
38-24 (3) a plan in which the evidence of coverage
38-25 meets the requirements of Section 2(a) of this Act.
38-26 (B) A health maintenance organization may limit its
38-27 enrollees to those who live, reside, or work within the service
39-1 area for such network plan.
39-2 (C) Renewability of Coverage. An individual health
39-3 care plan or a conversion contract providing health care services
39-4 shall be renewable with respect to an enrollee at the option of the
39-5 enrollee, and may be nonrenewed based only on one or more of the
39-6 following reasons:
39-7 (1) failure to pay premiums or contributions in
39-8 accordance with the terms of the plan or the issuer has not
39-9 received timely premium payments;
39-10 (2) fraud or intentional misrepresentation;
39-11 (3) the health maintenance organization is
39-12 ceasing to offer coverage in the individual market in accordance
39-13 with rules established by the commissioner;
39-14 (4) enrollee no longer resides, lives, or works
39-15 in the area in which the health maintenance organization is
39-16 authorized to provide coverage, but only if such coverage is
39-17 terminated under this paragraph uniformly without regard to any
39-18 health-status-related factor of covered enrollees; or
39-19 (5) in accordance with applicable federal law
39-20 and regulations.
39-21 (D) The commissioner may adopt rules necessary to
39-22 implement this subsection and to meet the minimum requirements of
39-23 federal law and regulations.
39-24 PART 5. TRANSITION; EFFECTIVE DATE; EMERGENCY
39-25 SECTION 5.01. Except as provided in Section 5.02, this Act
39-26 applies only to an insurance policy or evidence of coverage that is
39-27 delivered, issued for delivery, or renewed on or after July 1,
40-1 1997. A policy or evidence of coverage that is delivered, issued
40-2 for delivery, or renewed before July 1, 1997, is governed by the
40-3 law as it existed immediately before the effective date of this
40-4 Act, and that law is continued in effect for that purpose.
40-5 SECTION 5.02. Coverages available under the Texas Health
40-6 Insurance Risk Pool as provided in Part 1 of this Act must be made
40-7 available not later than January 1, 1998. The provisions of this
40-8 Act as provided under Part 2, Section 2.01, apply only to an
40-9 insurance policy that is delivered, issued for delivery, or renewed
40-10 on or after January 1, 1998. A policy that is delivered, issued
40-11 for delivery, or renewed before January 1, 1998, is governed by the
40-12 law as it existed immediately before the effective date of this
40-13 Act, and that law is continued in effect for that purpose.
40-14 SECTION 5.03. This Act takes effect July 1, 1997.
40-15 SECTION 5.04. The importance of this legislation and the
40-16 crowded condition of the calendars in both houses create an
40-17 emergency and an imperative public necessity that the
40-18 constitutional rule requiring bills to be read on three several
40-19 days in each house be suspended, and this rule is hereby suspended,
40-20 and that this Act take effect and be in force according to its
40-21 terms, and it is so enacted.
_______________________________ _______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 710 was passed by the House on April
11, 1997, by the following vote: Yeas 128, Nays 2, 1 present, not
voting; and that the House concurred in Senate amendments to H.B.
No. 710 on May 13, 1997, by the following vote: Yeas 140, Nays 0,
1 present, not voting; and that the House adopted H.C.R. No. 287
authorizing certain corrections in H.B. No. 710 on May 22, 1997, by
a non-record vote.
_______________________________
Chief Clerk of the House
I certify that H.B. No. 710 was passed by the Senate, with
amendments, on May 10, 1997, by the following vote: Yeas 30, Nays
0; and that the Senate adopted H.C.R. No. 287 authorizing certain
corrections in H.B. No. 710 on May 24, 1997, by a viva-voce vote.
_______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor