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