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