1-1 By: Averitt (Senate Sponsor - Sibley) H.B. No. 710
1-2 (In the Senate - Received from the House April 14, 1997;
1-3 April 18, 1997, read first time and referred to Committee on
1-4 Economic Development; May 6, 1997, reported adversely, with
1-5 favorable Committee Substitute by the following vote: Yeas 8, Nays
1-6 0; May 6, 1997, sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR H.B. No. 710 By: Sibley
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to the implementation of federal reforms and the Texas
1-11 Health Insurance Risk Pool.
1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13 PART 1. HEALTH INSURANCE RISK POOL
1-14 SECTION 1.01. Section 2, Article 3.77, Insurance Code, is
1-15 amended to read as follows:
1-16 Sec. 2. DEFINITIONS. In this article:
1-17 (1) "Benefits plan" means coverage to be offered
1-18 by the pool to eligible persons under Section 11 of this article.
1-19 (2) "Board" means the board of directors of the pool.
1-20 (3) "Commissioner" means the Commissioner of
1-21 Insurance.
1-22 (4) "Department" means the Texas Department of
1-23 Insurance.
1-24 (5) "Dependent" means a resident spouse or unmarried
1-25 child under the age of 18 years, a child who is a full-time student
1-26 under the age of 23 years and who is financially dependent upon the
1-27 parent, a child who is over 18 years of age and for whom a person
1-28 may be obligated to pay child support, or a child of any age who is
1-29 disabled and dependent upon the parent.
1-30 (6) "Family member" means a parent, grandparent,
1-31 brother, sister, or child of a dependent residing with the insured.
1-32 (7) "Health insurance" means individual or group
1-33 health insurance and includes any hospital and medical expense
1-34 incurred policy, a fraternal benefit society, a stipulated premium
1-35 company, an approved nonprofit health corporation, health
1-36 maintenance organization subscriber contract, coverage by a group
1-37 hospital service plan, a multiple employer welfare arrangement
1-38 subject to Subchapter I of this chapter, or any other health care
1-39 plan or arrangement that pays for or furnishes medical or health
1-40 care services whether by insurance or otherwise. The term does not
1-41 include short-term, accident, dental-only, vision-only, fixed
1-42 indemnity, credit insurance or other limited benefit insurance,
1-43 coverage issued as a supplement to liability insurance, insurance
1-44 arising out of a workers' compensation or similar law, automobile
1-45 medical-payment insurance, or insurance under which benefits are
1-46 payable with or without regard to fault and which is statutorily
1-47 required to be contained in any liability insurance policy or
1-48 equivalent self-insurance.
1-49 (8) "Health maintenance organization" means a health
1-50 maintenance organization that has a certificate of authority to
1-51 operate in this state under the Texas Health Maintenance
1-52 Organization Act (Chapter 20A, Vernon's Texas Insurance Code).
1-53 (9) "Hospital" means a licensed public or private
1-54 institution as defined by Chapter 241, Health and Safety Code, and
1-55 any hospital owned or operated by the federal or state government.
1-56 (10) "Insured" means a person who is a resident of
1-57 this state and a citizen of the United States and who is eligible
1-58 to receive benefits from the pool. The term "insured" may include
1-59 dependents and family members.
1-60 (11) "Insurer" means any entity that provides health
1-61 insurance in this state, including stop-loss or excess loss
1-62 insurance. For the purposes of this Act, insurer includes but is
1-63 not limited to an insurance company; a health maintenance
1-64 organization operating under the Texas Health Maintenance
2-1 Organization Act (Chapter 20A, Vernon's Texas Insurance Code); an
2-2 approved nonprofit health corporation; a fraternal benefit society;
2-3 a stipulated premium insurance company; a group hospital service
2-4 corporation subject to Chapter 20 of this code; a multiple employer
2-5 welfare arrangement subject to Article 3.95-1, et seq. of this
2-6 code; a surplus lines carrier; an insurer providing stop-loss or
2-7 excess loss insurance to physicians, health care providers,
2-8 hospitals, or to any benefit arrangements to the extent permitted
2-9 by Section 3, Employee Retirement Income Security Act of 1974 (29
2-10 U.S.C. Section 1002); and any other entity providing a plan of
2-11 health insurance or health benefits subject to state insurance
2-12 regulation.
2-13 (12) "Insurance arrangement" means a plan, program,
2-14 contract, or other arrangement through which health care services
2-15 are provided by an employer to its officers, employees, or other
2-16 personnel but does not include health care services covered through
2-17 an insurer.
2-18 (13) "Medicare" means coverage provided by Part A and
2-19 Part B, Title XVII, Social Security Act (42 U.S.C. Section 1395 et
2-20 seq.).
2-21 (14) "Physician" means a person licensed to practice
2-22 medicine in this state under the Medical Practice Act (Article
2-23 4495b, Vernon's Texas Civil Statutes).
2-24 (15) "Plan of operation" means the plan of operation
2-25 of the pool and includes the articles, bylaws, and operating rules
2-26 of the pool that are adopted by the board under Section 5 of this
2-27 article.
2-28 (16) "Pool" means the Texas Health Insurance Risk
2-29 Pool.
2-30 (17) "Resident" means:
2-31 (a) an individual who has been legally domiciled
2-32 in Texas for a minimum of 30 days for persons eligible for
2-33 enrollment in the Pool under Section 10(a)(1), (2), (3), or (5) of
2-34 this article; or
2-35 (b) an individual who is legally domiciled in
2-36 Texas for persons eligible for enrollment in the Pool under Section
2-37 10(a)(4) of this article.
2-38 [(1) "Pool" means the Texas Health Insurance Risk
2-39 Pool.]
2-40 [(2) "Board" means the board of directors of the pool.]
2-41 [(3) "Insurance board" means the State Board of
2-42 Insurance.]
2-43 [(4) "Commissioner" means the commissioner of
2-44 insurance.]
2-45 [(5) "Insured" means a person who is a resident of
2-46 this state and who is eligible to receive benefits from an insurer
2-47 or insurance arrangement.]
2-48 [(6) "Insurer" means an insurance company authorized
2-49 to transact a health insurance business in this state, including a
2-50 group hospital service corporation subject to Chapter 20 of this
2-51 code and a health maintenance organization operating under the
2-52 Texas Health Maintenance Organization Act (Chapter 20A, Vernon's
2-53 Texas Insurance Code).]
2-54 [(7) "Insurance arrangement" means a plan, program,
2-55 contract, or other arrangement through which health care services
2-56 are provided by an employer to its officers, employees, or other
2-57 personnel but does not include health care services covered through
2-58 an insurer.]
2-59 [(8) "Health insurance" means individual or group
2-60 health insurance coverage and includes a medical expense incurred
2-61 or hospital insurance coverage, or coverage by a group hospital
2-62 service plan or health maintenance organization. "Health
2-63 insurance" does not include short-term insurance, accident-only
2-64 insurance, coverage that is supplemental to liability insurance, or
2-65 workers' compensation insurance.]
2-66 [(9) "Medicare" means coverage provided by Part A and
2-67 Part B, Title XVII, Social Security Act (42 U.S.C. Section 1395 et
2-68 seq.)].
2-69 [(10) "Physician" means a person licensed to practice
3-1 medicine in this state under the Medical Practice Act (Article
3-2 4495b, Vernon's Texas Civil Statutes).]
3-3 [(11) "Hospital" means a licensed public or private
3-4 institution as defined by the Texas Hospital Licensing Law Chapter
3-5 241, Health and Safety Code and any hospital owned or operated by
3-6 the federal or state government.]
3-7 [(12) "Health maintenance organization" means a health
3-8 maintenance organization that has a certificate of authority to
3-9 operate in this state under the Texas Health Maintenance
3-10 Organization Act (Chapter 20A, Vernon's Texas Insurance Code).]
3-11 [(13) "Plan of operation" means the plan of operation
3-12 of the pool and includes the articles, bylaws, and operating rules
3-13 of the pool that are adopted by the board under Section 5 of this
3-14 article.]
3-15 [(14) "Benefits plan" means coverage to be offered by
3-16 the pool to eligible persons under Section 11 of this article.]
3-17 [(15) "Net premiums" means premiums charged by the
3-18 pool less administrative expense allowances.]
3-19 SECTION 1.02. Section 4, Article 3.77, Insurance Code, is
3-20 amended by amending Subsections (b)-(e) and (g) and by adding
3-21 Subsection (h) to read as follows:
3-22 (b) The commissioner [insurance board] shall appoint members
3-23 of the board for staggered six-year terms as provided by this
3-24 section.
3-25 (c) The board shall be [is] composed of:
3-26 (1) at least two persons [one person] affiliated with
3-27 an insurer [insurance company] admitted and authorized to write
3-28 health insurance in this state, but no more than four such persons;
3-29 (2) at least two persons who are insureds or parents
3-30 of insureds or who are reasonably expected to qualify for coverage
3-31 by the pool; [one person affiliated with a group hospital service
3-32 corporation operating under Chapter 20 of this code;]
3-33 (3) the remaining members of the board may be selected
3-34 from individuals such as a [one] physician licensed to practice in
3-35 this state by the Texas State Board of Medical Examiners, a [;
3-36 (4) one] hospital administrator, an [; (5) one] advanced nurse
3-37 practitioner, or[; and (6) four] representatives of the general
3-38 public who are not employed by or affiliated with an insurance
3-39 company or plan, group hospital service corporation, or health
3-40 maintenance organization or licensed as or employed by or
3-41 affiliated with a physician, hospital, or other health care
3-42 provider. A [(d) The limitation on who may be a] representative
3-43 of the general public does [not] include a person whose only
3-44 affiliation with an insurance company or plan, group hospital
3-45 service corporation, or health maintenance organization is as an
3-46 insured or person who has coverage through a plan provided by the
3-47 corporation or organization.
3-48 (d) For purposes of this section, an individual required to
3-49 register with the secretary of state under Chapter 305, Government
3-50 Code, because of the individual's activities with respect to health
3-51 insurance-related matters is a person affiliated with an insurer.
3-52 (e) If a vacancy occurs on the board, the commissioner
3-53 [insurance board] shall fill the vacancy for the unexpired term
3-54 with a person who has the appropriate qualifications to fill that
3-55 position on the board.
3-56 (g) The commissioner [insurance board] shall designate one
3-57 of its appointees to the board to serve as chairman. The chairman
3-58 serves in that capacity at the pleasure of the commissioner
3-59 [insurance board].
3-60 (h) A member of the board of directors is not liable for an
3-61 action or omission performed in good faith in the performance of
3-62 powers and duties under this article, and cause of action does not
3-63 arise against a member for the action or omission.
3-64 SECTION 1.03. Section 5, Article 3.77, Insurance Code, is
3-65 amended to read as follows:
3-66 Sec. 5. Plan of Operation. (a) The pool's initial board
3-67 shall submit to the commissioner [insurance board] a plan of
3-68 operation for the pool that will assure the fair, reasonable, and
3-69 equitable administration of the pool.
4-1 (b) In addition to the other requirements of this article,
4-2 the plan of operation must include procedures for:
4-3 (1) operation of the pool;
4-4 (2) selecting an administrator as provided under
4-5 Section 7 of this article;
4-6 (3) creating a fund, under management of the board,
4-7 for administrative expenses;
4-8 (4) handling, [and] accounting, and auditing of [for]
4-9 money and other assets of the pool; [and]
4-10 (5) [(2)] developing and implementing a program to
4-11 publicize [provide public information regarding] the existence of
4-12 the pool, the eligibility requirements for coverage under the pool,
4-13 [and] enrollment procedures, and to foster public awareness of the
4-14 plan;
4-15 (6) creation of a grievance committee to review
4-16 complaints presented by applicants for coverage from the pool and
4-17 insureds who receive coverage from the pool; and
4-18 (7) other matters as may be necessary and proper for
4-19 the execution of the board's powers, duties, and obligations under
4-20 this article.
4-21 (c) After notice and hearing, the commissioner [insurance
4-22 board] shall approve the plan of operation if it is determined
4-23 [determines] that the plan is suitable to assure the fair,
4-24 reasonable, and equitable administration of the pool.
4-25 (d) The plan of operation takes effect on the date it is
4-26 approved by commissioner [insurance board] order.
4-27 (e) If the initial board fails to submit a suitable plan of
4-28 operation before the 180th day following the appointment of the
4-29 initial board, the commissioner [insurance board], after notice and
4-30 hearing, may adopt all necessary and reasonable rules to provide a
4-31 plan for the pool. The rules adopted under this subsection shall
4-32 continue in effect until the initial board submits, and the
4-33 commissioner [insurance board] approves, a plan of operation under
4-34 this section.
4-35 (f) The board shall amend the plan of operation as necessary
4-36 to carry out this article. Amendments to the plan of operation
4-37 must be approved by the commissioner [insurance board] before they
4-38 become part of the plan.
4-39 SECTION 1.04. Section 6, Article 3.77, Insurance Code, is
4-40 amended to read as follows:
4-41 Sec. 6. Authority of the Pool. (a) The pool may exercise
4-42 any of the authority that an insurance company authorized to write
4-43 health insurance in this state may exercise under the law of this
4-44 state[, except the pool may not provide group insurance coverage].
4-45 (b) As part of its authority, the pool may:
4-46 (1) provide [individual] health benefits coverage to
4-47 persons who are eligible for that coverage under this article;
4-48 (2) enter into contracts that are necessary to carry
4-49 out this article including, with the approval of the commissioner,
4-50 entering into contracts with similar pools in other states for the
4-51 joint performance of common administrative functions or with other
4-52 organizations for the performance of administrative functions;
4-53 (3) sue or be sued, including taking any legal actions
4-54 necessary or proper to recover or collect assessments due the pool;
4-55 (4) institute any legal action necessary to avoid
4-56 payment of improper claims against the pool or the coverage
4-57 provided by or through the pool to recover any amounts erroneously
4-58 or improperly paid by the pool, to recover any amounts paid by the
4-59 pool as a mistake of fact or law, and to recover other amounts due
4-60 the pool;
4-61 (5) establish appropriate rates, rate schedules, rate
4-62 adjustments, expense allowances, agents' referral fees, and claim
4-63 reserve formulas and perform any actuarial functions appropriate to
4-64 the operation of the pool;
4-65 (6) adopt policy forms, endorsements, and riders and
4-66 applications for coverage;
4-67 (7) issue insurance policies subject to this article
4-68 and the plan of operation;
4-69 (8) appoint appropriate legal, actuarial, and other
5-1 committees that are necessary to provide technical assistance in
5-2 operating the pool and performing any of the functions of the pool;
5-3 [and]
5-4 (9) employ and set the compensation of any persons
5-5 necessary to assist the pool in carrying out its responsibilities
5-6 and functions;
5-7 (10) contract for stop-loss insurance for risks
5-8 incurred by the pool;
5-9 (11) recover or collect assessments imposed under
5-10 Section 13 of this article;
5-11 (12) borrow money as necessary to implement the
5-12 purposes of the pool;
5-13 (13) issue additional types of health insurance
5-14 policies to provide optional coverages which comply with applicable
5-15 provisions of state and federal law, including Medicare
5-16 supplemental health insurance;
5-17 (14) provide for and employ cost containment measures
5-18 and requirements including, but not limited to, preadmission
5-19 screening, second surgical opinion, concurrent utilization review
5-20 subject to Article 21.58A of this code, and individual case
5-21 management for the purpose of making the benefit plans more cost
5-22 effective;
5-23 (15) design, utilize, contract, or otherwise arrange
5-24 for the delivery of cost-effective health care services, including
5-25 establishing or contracting with preferred provider organizations
5-26 and health maintenance organizations; and
5-27 (16) provide for reinsurance on either a facultative
5-28 or treaty basis or both.
5-29 (c) The board shall promulgate a list of medical or health
5-30 conditions for which a person shall be eligible for pool coverage
5-31 without applying for health insurance. The list shall be effective
5-32 on the first day of the operation of the pool and may be amended
5-33 from time to time as may be appropriate.
5-34 (d) Not later than June 1 of each year, the board shall make
5-35 an annual report to the governor, the lieutenant governor, the
5-36 speaker of the house of representatives, and the commissioner. The
5-37 report shall summarize the activities of the pool in the preceding
5-38 calendar year, including information regarding net written and
5-39 earned premiums, plan enrollment, administration expenses, and paid
5-40 and incurred losses.
5-41 SECTION 1.05. Section 7, Article 3.77, Insurance Code, is
5-42 amended by amending the heading and Subsections (a), (b), and (e)
5-43 to read as follows:
5-44 Sec. 7. ADMINISTRATOR [ADMINISTERING INSURER]. (a) After
5-45 completing a competitive bidding process as provided by the plan of
5-46 operation, the board may [shall] select one or more insurers or a
5-47 third party administrator certified by the department [State Board
5-48 of Insurance] to administer the pool.
5-49 (b) The board shall establish criteria for evaluating the
5-50 bids submitted. The criteria must include:
5-51 (1) an insurer's or third party administrator's proven
5-52 ability to handle individual accident and health insurance;
5-53 (2) the efficiency of an insurer's or third party
5-54 administrator's claims paying procedures;
5-55 (3) an estimate of total charges for administering the
5-56 pool; [and]
5-57 (4) an insurer's or third party administrator's
5-58 ability to administer the pool in a cost-efficient manner; and
5-59 (5) the financial condition and stability of the
5-60 insurer or third party administrator.
5-61 (e) The administering insurer or third party administrator
5-62 shall perform such functions relating to the pool as may be
5-63 assigned to it, including:
5-64 (1) perform eligibility and administrative claims
5-65 payment functions for the pool;
5-66 (2) establish a billing procedure for collection of
5-67 premiums from persons insured by the pool;
5-68 (3) perform functions necessary to assure timely
5-69 payment of benefits to persons covered under the pool, including:
6-1 (A) providing information relating to the proper
6-2 manner of submitting a claim for benefits to the pool and
6-3 distributing claim forms; and
6-4 (B) evaluating the eligibility of each claim for
6-5 payment by the pool;
6-6 (4) submit regular reports to the board relating to
6-7 the operation of the pool; and
6-8 (5) determine after the close of each calendar year
6-9 the net written and earned premiums, expense of administration, and
6-10 paid and incurred losses of the pool for that calendar year and
6-11 report this information to the board and the commissioner
6-12 [insurance board] on forms prescribed by the commissioner.
6-13 SECTION 1.06. Section 8, Article 3.77, Insurance Code, is
6-14 amended to read as follows:
6-15 Sec. 8. RULES [RULEMAKING AUTHORITY]. The commissioner may
6-16 by rule establish additional powers and duties of the board and may
6-17 adopt other rules as are necessary and proper to implement this
6-18 article. The commissioner by rule shall provide the procedures,
6-19 criteria, and forms necessary to implement, collect, and deposit
6-20 assessments made and collected under Section 13. [The board may
6-21 adopt rules it determines necessary to carry out this article and
6-22 other laws of this state under which it is authorized to operate.]
6-23 SECTION 1.07. Sections 9(b), (d), and (e), Article 3.77,
6-24 Insurance Code, are amended to read as follows:
6-25 (b) Rates and rate schedules may be adjusted for appropriate
6-26 risk factors including age and variation in claim costs, and the
6-27 board may consider [shall take into consideration] appropriate risk
6-28 factors in accordance with established actuarial and underwriting
6-29 practices.
6-30 (d) The pool shall determine the standard risk rate by
6-31 considering the premium rates charged by other insurers offering
6-32 health insurance coverage to individuals. The standard risk rate
6-33 shall be established using reasonable actuarial techniques, and
6-34 shall reflect anticipated experience and expenses for such
6-35 coverage. Initial pool rates may not be less than 125 percent and
6-36 may not exceed 150 percent of rates established as applicable for
6-37 individual standard rates. Subsequent rates [calculating the
6-38 average individual standard rate charged by the five largest
6-39 insurers offering coverage in this state comparable to the pool
6-40 coverage. If five insurers do not offer comparable coverage, the
6-41 standard risk rate shall be established using reasonable current
6-42 actuarial techniques and shall reflect anticipated experience and
6-43 expenses for that type of coverage. Rates] shall be established to
6-44 provide fully for the expected costs of claims including recovery
6-45 of prior losses, expenses of operation, investment income of claim
6-46 reserves, and any other cost factors subject to the limitations
6-47 described in this subsection. In no event shall pool [Pool] rates
6-48 [may not be less than 150 percent, and may not] exceed 200
6-49 percent[,] of rates applicable to individual standard risks.
6-50 (e) All rates and rate schedules shall be submitted to the
6-51 commissioner [insurance board] for approval, and the commissioner
6-52 [insurance board] must approve the rates and rate schedules of the
6-53 pool before they are used by the pool. The commissioner [insurance
6-54 board] in evaluating the rates and rate schedules of the pool shall
6-55 consider the factors provided by this section. [The insurance board
6-56 by rule may adopt necessary procedures, criteria, and forms for the
6-57 submission and approval of the pool's rates and rate schedules.]
6-58 SECTION 1.08. Section 10, Article 3.77, Insurance Code, is
6-59 amended to read as follows:
6-60 Sec. 10. ELIGIBILITY FOR COVERAGE. (a) Any individual
6-61 person who is and continues to be a resident of Texas and a citizen
6-62 of the United States shall be eligible for coverage from the pool
6-63 if evidence is provided of:
6-64 (1) a notice of rejection or refusal to issue
6-65 substantially similar insurance for health reasons by two insurers.
6-66 A rejection or refusal by an insurer offering only stop-loss,
6-67 excess loss, or reinsurance coverage with respect to the applicant
6-68 shall not be sufficient evidence under this subsection;
6-69 (2) an offer to issue insurance only with conditional
7-1 riders;
7-2 (3) a refusal by an insurer to issue insurance except
7-3 at a rate exceeding the pool rate;
7-4 (4) the individual has maintained health insurance
7-5 coverage for the previous 18 months with no gap in coverage greater
7-6 than 63 days of which the most recent coverage was through an
7-7 employer sponsored plan; or
7-8 (5) diagnosis of the individual with one of the
7-9 medical or health conditions listed by the board under Section 6(c)
7-10 of this article and for which a person shall be eligible for pool
7-11 coverage without applying for health insurance coverage. [Except
7-12 as provided by Subsection (b) of this section, a person who is a
7-13 resident of this state and who is diagnosed as having a condition
7-14 designated as uninsurable by the board or who provides proof
7-15 acceptable to the board from his insurer that he has been
7-16 determined to be a substandard risk for whom the insurer's premium
7-17 would exceed the premium charged by the pool is entitled to
7-18 coverage from the pool.]
7-19 (b) Each dependent of a person who is eligible for coverage
7-20 from the pool shall also be eligible for coverage from the pool.
7-21 In the instance of a child who is the primary insured, resident
7-22 family members shall also be eligible for coverage.
7-23 (c) A person may maintain pool coverage for the period of
7-24 time the person is satisfying a preexisting waiting period under
7-25 another health insurance policy or insurance arrangement intended
7-26 to replace the pool policy.
7-27 (d) A person is not eligible for coverage from the pool if
7-28 the person:
7-29 (1) has in effect on the date pool coverage takes
7-30 effect health insurance coverage from an insurer or insurance
7-31 arrangement;
7-32 (2) is eligible for other health care benefits at the
7-33 time application is made to the pool, including COBRA continuation,
7-34 except:
7-35 (A) Coverage, including COBRA continuation,
7-36 other continuation or conversion coverage, maintained for the
7-37 period of time the person is satisfying any pre-existing condition
7-38 waiting period under a pool policy; or
7-39 (B) Employer group coverage conditioned by the
7-40 limitations described by Subsections (a)(1) and (2) of this
7-41 Section; or
7-42 (C) Individual coverage conditioned by the
7-43 limitations described by Subsections (a)(1)-(3) of this Section;
7-44 (3) has terminated coverage in the pool within 12
7-45 months of the date that application is made to the pool, unless the
7-46 person demonstrates a good faith reason for the termination;
7-47 (4) [has had benefits paid by the pool on his
7-48 behalf in the amount of $500,000;]
7-49 [(5)] is confined in a county jail or imprisoned in a
7-50 state prison;
7-51 (5) the person's premiums are paid for or reimbursed
7-52 under any government sponsored program or by any government agency
7-53 or health care provider, except as an otherwise qualifying
7-54 full-time employee, or dependent thereof, of a government agency or
7-55 health care provider; or
7-56 (6) the person has not had prior coverage with the
7-57 pool terminated for nonpayment of premiums or fraud [is eligible
7-58 for benefits under Medicare, Chapter 32, Human Resources Code, or
7-59 Chapter 35, Health and Safety Code].
7-60 (e) Pool coverage shall cease:
7-61 (1) on the date a person is no longer a resident of
7-62 this state, except for a child who is a student under the age of 23
7-63 years and who is financially dependent upon the parent, a child for
7-64 whom a person may be obligated to pay child support, or a child of
7-65 any age who is disabled and dependent upon the parent;
7-66 (2) on the date a person requests coverage to
7-67 end;
7-68 (3) upon the death of the covered person;
7-69 (4) on the date state law requires cancellation of the
8-1 policy;
8-2 (5) at the option of the pool, 30 days after the pool
8-3 sends to the person any inquiry concerning the person's
8-4 eligibility, including an inquiry concerning the person's
8-5 residence, to which the person does not reply;
8-6 (6) on the 31st day after the day on which a premium
8-7 payment for pool coverage becomes due if the payment is not made
8-8 before that date; or
8-9 (7) at such time as the person ceases to meet the
8-10 eligibility requirements of this section.
8-11 (f) [(c)] A person who ceases to meet the eligibility
8-12 requirements of this section, may have his coverage terminated at
8-13 the end of the policy period.
8-14 [(d) A person whose health insurance coverage is
8-15 involuntarily terminated for any reason other than nonpayment of
8-16 premium and who is not eligible for conversion under the terminated
8-17 coverage is eligible to apply for coverage under the plan. If
8-18 application is made for the coverage not later than the 60th day
8-19 after the involuntary termination and if premiums are paid for the
8-20 entire coverage period, the effective date of coverage is the
8-21 termination date of the previous coverage.]
8-22 SECTION 1.09. Section 11, Article 3.77, Insurance Code, is
8-23 amended to read as follows:
8-24 Sec. 11. Minimum Pool Benefits. (a) The pool shall offer
8-25 pool coverage consistent with major medical expense coverage to
8-26 each eligible person who is not eligible for Medicare. The board,
8-27 with the approval of the commissioner, shall establish:
8-28 (1) the coverages to be provided by the pool;
8-29 (2) the applicable schedules of benefits; and
8-30 (3) any exclusions to coverage and other limitations.
8-31 [to each person who is eligible under Section 10 of this article.
8-32 The pool coverage shall be for covered expenses as follows:]
8-33 [(1) hospital services;]
8-34 [(2) professional services for the diagnosis or
8-35 treatment of injuries, illnesses, or conditions, other than mental
8-36 or dental, which are rendered by a physician, or by other licensed
8-37 professionals at his direction;]
8-38 [(3) drugs requiring a physician's prescription;]
8-39 [(4) services of a licensed skilled nursing facility
8-40 for not more than 120 days during a policy year;]
8-41 [(5) services of a home health agency up to a maximum
8-42 of 270 services per year;]
8-43 [(6) use of radium or other radioactive materials;]
8-44 [(7) oxygen;]
8-45 [(8) anesthetics;]
8-46 [(9) prostheses other than dental;]
8-47 [(10) rental of durable medical equipment, other than
8-48 eyeglasses and hearing aids, for which there is no personal use in
8-49 the absence of the conditions for which it is prescribed;]
8-50 [(11) diagnostic X rays and laboratory tests;]
8-51 [(12) oral surgery for excision of partially or
8-52 completely unerupted, impacted teeth or the gums and tissues of the
8-53 mouth when not performed in connection with the extraction or
8-54 repair of teeth;]
8-55 [(13) services of a licensed physical therapist;]
8-56 [(14) transportation provided by a licensed ambulance
8-57 service to the nearest facility qualified to treat the condition;
8-58 and]
8-59 [(15) services for diagnosis and treatment of mental
8-60 and nervous disorders, provided that the insured is required to
8-61 make a 50 percent copayment, and that the payment of the pool does
8-62 not exceed $4,000 for outpatient psychiatric treatment.]
8-63 (b) The benefits provisions of the pool's health benefits
8-64 coverages must include the following:
8-65 (1) all required or applicable definitions;
8-66 (2) a list of any exclusions or limitations to
8-67 coverage;
8-68 (3) a description of covered services required under
8-69 the pool; and
9-1 (4) the deductibles, coinsurance options, and
9-2 copayment options that are required or permitted under the pool.
9-3 (c) [Covered expenses under Subsection (a) of this section
9-4 do not include:]
9-5 [(1) any charge for treatment for cosmetic purposes
9-6 other than surgery for the repair or treatment of an injury or a
9-7 congenital bodily defect to restore normal bodily functions;]
9-8 [(2) care which is primarily for custodial or
9-9 domiciliary purposes;]
9-10 [(3) any charge for confinement in a private room to
9-11 the extent it is in excess of the institution's charge for its most
9-12 common semiprivate room, unless a private room is prescribed as
9-13 medically necessary by a physician;]
9-14 [(4) that part of any charge for services rendered or
9-15 articles prescribed by a physician, dentist, or other health care
9-16 personnel that exceeds the prevailing charge in the locality or for
9-17 any charge not medically necessary;]
9-18 [(5) any charge for services or articles that
9-19 provision of which is not within the scope of authorized practice
9-20 of the institution or individual providing the services or
9-21 articles;]
9-22 [(6) any expense incurred prior to the effective date
9-23 of coverage by the pool for the person on whose behalf the expense
9-24 is incurred;]
9-25 [(7) dental care except as provided in Subsection
9-26 (a)(12) of this section;]
9-27 [(8) eyeglasses and hearing aids;]
9-28 [(9) illness or injury due to acts of war;]
9-29 [(10) services of blood donors and any fee for failure
9-30 to replace the first three pints of blood provided to an eligible
9-31 person each policy year; and]
9-32 [(11) personal supplies or services provided by a
9-33 hospital or nursing home or any other nonmedical or nonprescribed
9-34 supply or service.]
9-35 [(c) Under this section, "covered expenses" includes only
9-36 those expenses for the prevailing charge in the locality for the
9-37 items listed in Subsection (a) of this section if prescribed by a
9-38 physician and determined by the pool to be medically necessary.]
9-39 [(d) In authorizing pool coverage, the board must consider
9-40 levels of health insurance provided in the state and medical
9-41 economic factors that are considered appropriate and, subject to
9-42 the limitations provided by this section, shall adopt benefit
9-43 levels, deductibles, coinsurance factors, exclusions, and
9-44 limitations determined to be generally reflective of and
9-45 commensurate with health insurance provided through a
9-46 representative number of large employers in the state.]
9-47 [(e) Pool coverage under this section shall provide both a
9-48 low deductible of not less than $250 per person and $500 per family
9-49 a year and appropriate higher deductibles to be selected by the
9-50 pool applicant. The board shall purchase stop-loss coverage for
9-51 the pool in amounts determined by the board but not more than
9-52 $2,000 per person or $4,000 per family covered by the pool.] The
9-53 board may adjust deductibles, the amounts of stop-loss coverage,
9-54 and the time periods governing preexisting conditions under Section
9-55 12 [Subsection (f)] of this article [section] to preserve the
9-56 financial integrity of the pool. If the board makes such an
9-57 adjustment it shall report in writing that adjustment together with
9-58 its reasons for the adjustment to the commissioner [insurance board
9-59 and Legislative Budget Board]. The report must be submitted not
9-60 later than the 30th day after the date the adjustment is made.
9-61 [(f) Pool coverage must exclude charges or expenses incurred
9-62 during the first six months following the effective date of
9-63 coverage with regard to any condition that during the six-month
9-64 period preceding the effective date of coverage:]
9-65 [(1) had manifested itself in a manner that would
9-66 cause an ordinarily prudent person to seek diagnosis, care, or
9-67 treatment; or]
9-68 [(2) for which medical advice, care, or treatment was
9-69 recommended or received.]
10-1 [(g) Preexisting condition exclusions shall be waived to the
10-2 extent to which similar exclusions, if any, have been satisfied
10-3 under any previous health insurance coverage, health insurance
10-4 pool, or self-insured health or welfare benefits plan that was
10-5 involuntarily terminated, if application for pool coverage is made
10-6 not later than the 31st day after involuntary termination. In that
10-7 case, coverage in the pool is effective from the date on which the
10-8 previous coverage was terminated.]
10-9 (d) [(h)] Benefits otherwise payable under pool coverage
10-10 shall be reduced by amounts paid or payable through any other
10-11 health insurance, or insurance arrangement, and by all hospital and
10-12 medical expense benefits paid or payable under any workers'
10-13 compensation coverage, automobile insurance whether provided on the
10-14 basis of fault or no-fault, and by any hospital or medical benefits
10-15 paid or payable under or provided pursuant to any state or federal
10-16 law or program.
10-17 (e) [(i)] The [insurer or the] pool has a cause of action
10-18 against an eligible person for the recovery of the amount of
10-19 benefits paid that are not for covered expenses. Benefits due from
10-20 the pool may be reduced or refused as an offset against any amount
10-21 recoverable under this subsection.
10-22 SECTION 1.10. Sections 12 and 13, Article 3.77, Insurance
10-23 Code, are amended to read as follows:
10-24 Sec. 12. PREEXISTING CONDITIONS. (a) Except as provided by
10-25 this section and Section 11(c) of this article, pool coverage shall
10-26 exclude charges or expenses incurred during the first 12 months
10-27 following the effective date of coverage with regard to any
10-28 condition for which medical advice, care, or treatment was
10-29 recommended or received during the six-month period preceding the
10-30 effective date of coverage.
10-31 (b) A preexisting condition provision shall not apply to an
10-32 individual who was continuously covered for an aggregate period of
10-33 12 months by health insurance that was in effect up to a date not
10-34 more than 63 days before the effective date of coverage under the
10-35 pool, excluding any waiting period, provided that the application
10-36 for pool coverage is made no later than 63 days following the
10-37 termination of coverage.
10-38 (c) In determining whether a preexisting condition provision
10-39 applies to an individual covered by the pool, the pool shall credit
10-40 the time the individual was previously covered under health
10-41 insurance if the previous coverage was in effect at any time during
10-42 the 12 months preceding the effective date of coverage under the
10-43 pool. Any waiting period that applied before that coverage became
10-44 effective also shall be credited against the preexisting condition
10-45 provision period.
10-46 Sec. 13. Assessments. (a) The board may assess insurers
10-47 and make advance interim assessments as reasonable and necessary
10-48 for the plan's organizational and interim operating expenses. Any
10-49 interim assessment shall be credited as offsets against any regular
10-50 assessments due following the close of the fiscal year. [If during
10-51 any state fiscal year, the pool is unable to pay its claims and
10-52 meet its other financial obligations due to a shortage of available
10-53 funds, the board shall make an estimate of the amount that will be
10-54 necessary to fund the shortage and shall notify the insurance board
10-55 of this shortage and the estimated amount of money necessary to
10-56 fund the shortage.]
10-57 (b) If assessments exceed the pool's actual losses and
10-58 administrative expenses, the excess shall be held in an
10-59 interest-bearing account and used by the board to offset future
10-60 losses or to reduce future assessments. As used in this section,
10-61 future losses includes reserves for incurred but not reported
10-62 claims. [On receiving notice under this section, the insurance
10-63 board shall direct the commissioner of insurance to impose an
10-64 assessment on each insurer authorized to write health insurance in
10-65 this state.]
10-66 (c) After the end of each fiscal year, the board shall
10-67 determine and report to the commissioner the net loss, if any, of
10-68 the pool for the previous calendar year, including administrative
10-69 expenses and incurred losses for the year, taking into account
11-1 investment income and other appropriate gains and losses. Any net
11-2 loss for the year shall be recouped by assessments on insurers.
11-3 Each insurer's assessment shall be determined annually by the board
11-4 based on annual statements and other reports required by the board
11-5 and filed with the board. [The total amount of assessments to be
11-6 collected by the commissioner shall be in an amount that is
11-7 sufficient to fund the pool's shortage.]
11-8 (d) The assessment imposed against each insurer shall be in
11-9 an amount that is equal to the ratio of the gross premiums
11-10 collected by the insurer for health insurance in this state during
11-11 the preceding calendar year, except for Medicare supplement
11-12 premiums subject to Article 3.74 and small group health insurance
11-13 premiums subject to Articles 26.01 through 26.76, to the gross
11-14 premiums collected by all insurers for health insurance, except for
11-15 Medicare supplement premiums subject to Article 3.74 and small
11-16 group health insurance premiums subject to Articles 26.01 through
11-17 26.76, in this state during the preceding calendar year.
11-18 (e) An insurer may petition the commissioner for an
11-19 abatement or deferment of all or part of an assessment imposed by
11-20 the board. The commissioner may abate or defer, in whole or in
11-21 part, such assessment if the commissioner determines that the
11-22 payment of the assessment would endanger the ability of the
11-23 participating insurer to fulfill its contractual obligations. If
11-24 an assessment against an insurer is abated or deferred in whole or
11-25 in part, the amount by which such assessment is abated or deferred
11-26 shall be assessed against the other insurers in a manner consistent
11-27 with the basis for assessments set forth in this subsection. The
11-28 insurer receiving such abatement or deferment shall remain liable
11-29 to the pool for the deficiency. The total of all assessments on an
11-30 insurer may not exceed one-half of one percent of the insurer's
11-31 collected premiums for health insurance in this state. This
11-32 subsection expires January 1, 2000. [The insurance board by rule
11-33 shall provide the procedures, criteria, and forms necessary to
11-34 implement, collect, and deposit assessments made and collected
11-35 under this section.]
11-36 [(f) Each insurer that pays an assessment under this section
11-37 is entitled to reimbursement by the state in an amount equal to the
11-38 amount of the assessment paid under this section. The state shall
11-39 reimburse an insurer not earlier than September 1 but not later
11-40 than September 15 of the first year of the first state biennium
11-41 that begins after the date on which the assessment is paid. The
11-42 comptroller of public accounts by rule shall establish a procedure
11-43 under which claims for reimbursement under this section may be
11-44 submitted and paid.]
11-45 [Sec. 13. MANAGED CARE, ETC. The board as part of the
11-46 pool's program may adopt rules providing for quality of care,
11-47 management of costs and benefits, and managed care.]
11-48 SECTION 1.11. Article 3.77, Insurance Code, is amended by
11-49 adding Sections 14 and 15 to read as follows:
11-50 Sec. 14. COMPLAINT PROCEDURES. An applicant or participant
11-51 in coverage from the pool is entitled to have complaints against
11-52 the pool reviewed by a grievance committee appointed by the board.
11-53 The grievance committee shall report to the board after completion
11-54 of the review of each complaint. The board shall retain all
11-55 written complaints regarding the pool at least until the third
11-56 anniversary of the date the pool received the complaint.
11-57 Sec. 15. AUDIT. (a) The state auditor shall conduct
11-58 annually a special audit of the pool under Chapter 321, Government
11-59 Code. The state auditor's report shall include a financial audit
11-60 and an economy and efficiency audit.
11-61 (b) The state auditor shall report the cost of each audit
11-62 conducted under this article to the board and the comptroller, and
11-63 the board shall remit that amount to the comptroller for deposit to
11-64 the general revenue fund.
11-65 PART 2. GROUP COVERAGES
11-66 SECTION 2.01. Section 1(d)(3), Article 3.51-6, Insurance
11-67 Code, is amended to read as follows:
11-68 (3) Any insurer or group hospital service corporation
11-69 subject to Chapter 20, Insurance Code, who issues policies which
12-1 provide hospital, surgical, or major medical expense insurance or
12-2 any combination of these coverages on an expense incurred basis,
12-3 but not a policy which provides benefits for specified disease or
12-4 for accident only, shall provide a [conversion or] group
12-5 continuation privilege as required by this subsection. Any
12-6 employee, member, or dependent whose insurance under the group
12-7 policy has been terminated for any reason except involuntary
12-8 termination for cause, including discontinuance of the group policy
12-9 in its entirety or with respect to an insured class, and who has
12-10 been continuously insured under the group policy and under any
12-11 group policy providing similar benefits which it replaces for at
12-12 least three consecutive months immediately prior to termination
12-13 shall be entitled to such privilege as outlined in Paragraph (A)
12-14 [(B), or (C)] below. Involuntary termination for cause does not
12-15 include termination for any health-related cause.
12-16 (A)(i) Policies subject to this section shall
12-17 provide continuation of group coverage for employees or members and
12-18 their eligible dependents subject to the eligibility provisions.
12-19 [An insurer shall first offer to each employee, member, or
12-20 dependent a conversion policy without evidence of insurability if
12-21 written application for and payment of the first premium is made
12-22 not later than the 31st day after the date of the termination. The
12-23 converted policy shall provide similar coverage and benefits as
12-24 provided under the group policy or plan. The lifetime maximum
12-25 benefits shall be computed from the initial date of the employee's,
12-26 member's, or dependent's coverage with the group. An insurer shall
12-27 offer and an employee, member, or dependent may elect lesser
12-28 coverage and benefits. An employee, member, or dependent shall not
12-29 be entitled to have a converted policy or plan issued if
12-30 termination of the insurance occurred because: (aa) such person
12-31 failed to pay any required premium; or (bb) any discontinued group
12-32 coverage was replaced by similar group coverage within 31 days.]
12-33 [(ii) An insurer shall not be required to
12-34 issue a converted policy covering any person if: (aa) such person
12-35 is or could be covered by Medicare; (bb) such person is covered for
12-36 similar benefits by another hospital, surgical, medical, or major
12-37 medical expense insurance policy or hospital or medical service
12-38 subscriber contract or medical practice or other prepayment plan or
12-39 by any other plan or program; (cc) such person is eligible for
12-40 similar benefits whether or not covered therefor under any
12-41 arrangement of coverage for individuals in a group, whether on an
12-42 insured or uninsured basis; or (dd) similar benefits are provided
12-43 for or available to such person, pursuant to or in accordance with
12-44 the requirements of any state or federal law. The board shall issue
12-45 rules and regulations to establish minimum standards for benefits
12-46 under policies issued pursuant to this subsection.]
12-47 [(B)(i) Policies subject to Paragraph (A) above
12-48 shall provide at the option of the employee, member, or dependent
12-49 in lieu of the requirements of Paragraph (A) continuation of group
12-50 coverage for employees or members and their eligible dependents
12-51 subject to the eligibility provisions of Paragraph (A).]
12-52 (ii) Continuation of group coverage must
12-53 be requested in writing within 31 days following the later of:
12-54 (aa) the date the group coverage would otherwise terminate; or (bb)
12-55 the date the employee, member, or dependent is given notice in a
12-56 format prescribed by the commissioner of the right of continuation
12-57 by either the employer or the group policyholder.
12-58 (iii) [In no event may the employee or
12-59 member elect continuation more than 31 days after the date of such
12-60 termination. (iv)] An employee, [or] member, or dependent
12-61 electing continuation must pay to the group policyholder or
12-62 employer, on a monthly basis in advance, the amount of contribution
12-63 required by the policyholder or employer, plus two percent of the
12-64 group rate for the insurance being continued under the group policy
12-65 on the due date of each payment.
12-66 (iv) [(v)] The employee's, [or] member's,
12-67 or dependent's written election of continuation, together with the
12-68 first contribution required to establish contributions on a monthly
12-69 basis in advance, must be given to the policyholder or employer
13-1 within the later of: (aa) 31 days of the date coverage would
13-2 otherwise terminate, or (bb) the date the employee is given notice
13-3 of the right of continuation by either the employer or the group
13-4 policyholder.
13-5 (v) [(vi)] Continuation may not terminate
13-6 until the earliest of: (aa) six months after the date the election
13-7 is made; (bb) the date on which failure to make timely payments
13-8 would terminate coverage; (cc) the date on which the group coverage
13-9 terminates in its entirety; (dd) the date on which the covered
13-10 person is or could be covered under Medicare; or one of the
13-11 conditions specified in items (aa) through (dd) of Subparagraph
13-12 (ii), Paragraph (A) above is met by the covered individual; (ee)
13-13 the date on which the covered person is covered for similar
13-14 benefits by another hospital, surgical, medical, or major medical
13-15 expense insurance policy or hospital or medical service subscriber
13-16 contract or medical practice or other prepayment plan or any other
13-17 plan or program; (ff) the date the covered person is eligible for
13-18 similar benefits whether or not covered therefor under any
13-19 arrangement of coverage for individuals in a group, whether on an
13-20 insured or uninsured basis; or (gg) similar benefits are provided
13-21 or available to such person, pursuant to or in accordance with the
13-22 requirements of any state or federal law.
13-23 (vi) Not less than 30 days before the end
13-24 of the six months after the date the employee, member, or dependent
13-25 elects continuation of the policy, the insurer shall notify the
13-26 employee, member, or dependent that he/she may be eligible for
13-27 coverage under the Texas Health Insurance Risk Pool, as provided
13-28 under Article 3.77 of this code and the insurer shall provide the
13-29 address for applying to such pool to the employee, member, or
13-30 dependent.
13-31 (B)(i) An insurer may offer to each employee,
13-32 member, or dependent a conversion policy. Such converted policy
13-33 shall be issued without evidence of insurability if written
13-34 application for and payment of the first premium is made not later
13-35 than the 31st day after the date of termination. The converted
13-36 policy shall meet the minimum standards for benefits for conversion
13-37 policies.
13-38 (ii) Conversion coverage for any insured
13-39 person may not terminate until the earliest of: (aa) the date on
13-40 which failure to make timely payments would terminate coverage; or
13-41 (bb) one of the conditions specified in items (dd) through
13-42 (gg) of Subparagraph (v), Paragraph (3)(A) above. The
13-43 commissioner shall issue rules and regulations to establish minimum
13-44 standards for benefits under policies issued pursuant to this
13-45 subsection.
13-46 (iii) [(C)] The insurer may elect to
13-47 provide the conversion coverage on an individual or group basis.
13-48 The premium for the converted policy issued under Paragraph
13-49 (B) [(A)] of this subdivision shall be determined in accordance
13-50 with the insurer's table of premium rates for coverage that was
13-51 provided under the group policy or plan. The premium may be based
13-52 on the age and geographic location of each person to be covered and
13-53 the type of converted policy. The premium for the same coverage
13-54 and benefits under a converted policy may not exceed 200 percent of
13-55 the premium determined in accordance with this paragraph. The
13-56 premium must be based on the type of converted policy and the
13-57 coverage provided by the policy.
13-58 PART 3. INDIVIDUAL COVERAGES
13-59 SECTION 3.01. Subsection (H), Section 1, Chapter 397, Acts
13-60 of the 54th Legislature, Regular Session, 1955 (Article 3.70-1,
13-61 Vernon's Texas Insurance Code), is amended by adding Subdivision
13-62 (4) to read as follows:
13-63 (4)(a) A preexisting condition provision in an
13-64 individual health insurance policy shall not apply to an individual
13-65 who was continuously covered for an aggregate period of 18 months
13-66 by creditable coverage that was in effect up to a date not more
13-67 than 63 days before the effective date of the individual coverage,
13-68 excluding any waiting period, and whose most recent creditable
13-69 coverage was under a group health plan, governmental plan, or
14-1 church plan.
14-2 (b) For purposes of this section, creditable
14-3 coverage means coverage under any of the following: coverage under
14-4 a self-funded or self-insured employee welfare benefit plan that
14-5 provides health benefits and is established in accordance with the
14-6 Employee Retirement Income Security Act of 1974 (29 U.S.C. Section
14-7 1001, et seq.); coverage under any group or individual health
14-8 benefit plan provided by a health insurance carrier or health
14-9 maintenance organization; Part A or Part B of Title XVIII of the
14-10 Social Security Act; Title XIX of the Social Security Act, other
14-11 than coverage consisting solely of benefits under Section 1928;
14-12 Chapter 55 of Title 10, United States Code; a medical care program
14-13 of the Indian Health Service or of a tribal organization; a state
14-14 health benefits risk pool; a health plan offered under Chapter 89
14-15 of Title 5, United States Code; a public health plan as defined by
14-16 federal regulations; or a health benefit plan under Section 5(e) of
14-17 the Peace Corps Act (22 U.S.C. Section 2504(e)).
14-18 (c) In determining whether a preexisting
14-19 condition provision applies to an individual, the individual
14-20 insurance carrier shall credit the time the individual was
14-21 previously covered under creditable coverage if the previous
14-22 coverage was in effect at any time during the 18 months preceding
14-23 the effective date of the individual coverage.
14-24 SECTION 3.02. Subchapter G, Chapter 3, Insurance Code, is
14-25 amended by adding Article 3.70-1A to read as follows:
14-26 Art. 3.70-1A. GUARANTEED RENEWABILITY OF CERTAIN INDIVIDUAL
14-27 HEALTH INSURANCE POLICIES. (a) Except as otherwise provided in
14-28 this article, an individual health insurance policy providing
14-29 benefits for medical care under a hospital, medical, or surgical
14-30 policy shall be renewed or continued in force at the option of the
14-31 individual.
14-32 (b) An individual health insurance policy providing benefits
14-33 for medical care under a hospital, medical, or surgical policy may
14-34 be nonrenewed or discontinued based only on one or more of the
14-35 following reasons:
14-36 (1) failure to pay premiums or contributions in
14-37 accordance with the terms of the policy;
14-38 (2) fraud or intentional misrepresentation;
14-39 (3) the insurance company is ceasing to offer coverage
14-40 in the individual market in accordance with rules established by
14-41 the commissioner;
14-42 (4) an individual no longer resides, lives, or works
14-43 in an area in which the insurer is authorized to provide coverage,
14-44 but only if such coverage is terminated under this paragraph
14-45 uniformly without regard to any health-status related factor of
14-46 covered individuals; or
14-47 (5) in accordance with applicable federal law and
14-48 regulations.
14-49 (c) The commissioner shall adopt rules necessary to
14-50 implement this article and to meet the minimum requirements of
14-51 federal law and regulations.
14-52 PART 4. COVERAGE THROUGH HEALTH MAINTENANCE ORGANIZATIONS
14-53 SECTION 4.01. Section 9, Texas Health Maintenance
14-54 Organization Act (Article 20A.09, Vernon's Texas Insurance Code),
14-55 is amended by adding Subsections (k) and (l) to read as follows:
14-56 (k) Continuation of Coverage and Conversion.
14-57 (A) A health maintenance organization shall provide a
14-58 group continuation privilege as required by this subsection. Any
14-59 enrollee whose coverage under the group contract has been
14-60 terminated for any reason except involuntary termination for cause,
14-61 and who has been continuously insured under the group contract and
14-62 under any group contract providing similar services and benefits
14-63 which it replaces for at least three consecutive months immediately
14-64 prior to termination shall be entitled to such privilege as
14-65 outlined below. Involuntary termination for cause does not include
14-66 termination for any health-related cause. Health maintenance
14-67 organization contracts subject to this section shall provide
14-68 continuation of group coverage for enrollees subject to the
14-69 eligibility provisions below:
15-1 (1) Continuation of group coverage must be
15-2 requested in writing within 31 days following the later
15-3 of: (aa) the date the group coverage would otherwise terminate;
15-4 or (bb) the date the enrollee is given notice of the right of
15-5 continuation by either the employer or the group contractholder.
15-6 (2) An enrollee electing continuation must pay
15-7 to the group contractholder or employer on a monthly basis, in
15-8 advance, the amount of contribution required by the contractholder
15-9 or employer, plus two percent of the group rate for the coverage
15-10 being continued under the group contract, on the due date of each
15-11 payment.
15-12 (3) The enrollee's written election of
15-13 continuation, together with the first contribution required to
15-14 establish contributions on a monthly basis, in advance, must be
15-15 given to the contractholder or employer within 31 days following
15-16 the later of: (aa) the date the group coverage would otherwise
15-17 terminate; or (bb) the date the enrollee is given notice of the
15-18 right of continuation by either the employer or the group
15-19 contractholder.
15-20 (4) Continuation may not terminate until the
15-21 earliest of: (aa) six months after the date the election is made;
15-22 (bb) the date on which failure to make timely payments would
15-23 terminate coverage; (cc) the date on which the covered person is
15-24 covered for similar services and benefits by another hospital,
15-25 surgical, medical, or major medical expense insurance policy or
15-26 hospital or medical service subscriber contract or medical practice
15-27 or other prepayment plan or any other plan or program; or (dd) the
15-28 date on which the group coverage terminates in its entirety.
15-29 (5) Not less than 30 days before the end of the
15-30 six months after the date the enrollee elects continuation of the
15-31 contract, the health maintenance organization shall notify the
15-32 enrollee that he/she may be eligible for coverage under the Texas
15-33 Health Insurance Risk Pool, as provided under Article 3.77 of this
15-34 code, and the health maintenance organization shall provide the
15-35 address for applying to such pool to the enrollee.
15-36 (B) A health maintenance organization may offer to
15-37 each enrollee a conversion contract. Such conversion contract
15-38 shall be issued without evidence of insurability if written
15-39 application for and payment of the first premium is made not later
15-40 than the 31st day after the date of termination. The conversion
15-41 contract shall meet the minimum standards for services and benefits
15-42 for conversion contracts. The commissioner shall issue rules and
15-43 regulations to establish minimum standards for services and
15-44 benefits under contracts issued pursuant to this subsection.
15-45 (C) The premium for a conversion contract issued under
15-46 this Act shall be determined in accordance with the health
15-47 maintenance organization's premium rates for coverage that were
15-48 provided under the group contract or plan. The premium may be
15-49 based on geographic location of each person to be covered and the
15-50 type of conversion contract and coverage provided. The premium for
15-51 the same coverage under a conversion contract may not exceed 200
15-52 percent of the premium determined in accordance with this
15-53 paragraph. The premium must be based on the type of conversion
15-54 contract and the coverage provided by contract.
15-55 (l) Individual Health Care Plan. A health maintenance
15-56 organization may provide an individual health care plan as required
15-57 by this subsection.
15-58 (A) For purposes of this subsection, an "individual
15-59 health care plan" means:
15-60 (1) a health care plan providing health care
15-61 services for individuals and their dependents;
15-62 (2) a health care plan in which an enrollee pays
15-63 the premium and is not being covered under the contract pursuant to
15-64 continuation of services and benefits provisions applicable under
15-65 federal or state law; and
15-66 (3) a plan in which the evidence of coverage
15-67 meets the requirements of Section 2(a) of this Act.
15-68 (B) A health maintenance organization may limit its
15-69 enrollees to those who live, reside, or work within the service
16-1 area for such network plan.
16-2 (C) Renewability of Coverage. An individual health
16-3 care plan or a conversion contract providing health care services
16-4 shall be renewable with respect to an enrollee at the option of the
16-5 enrollee, and may be nonrenewed based only on one or more of the
16-6 following reasons:
16-7 (1) failure to pay premiums or contributions in
16-8 accordance with the terms of the plan or the issuer has not
16-9 received timely premium payments;
16-10 (2) fraud or intentional misrepresentation;
16-11 (3) the health maintenance organization is
16-12 ceasing to offer coverage in the individual market in accordance
16-13 with rules established by the commissioner;
16-14 (4) enrollee no longer resides, lives, or works
16-15 in the area in which the health maintenance organization is
16-16 authorized to provide coverage, but only if such coverage is
16-17 terminated under this paragraph uniformly without regard to any
16-18 health-status related factor of covered enrollees; or
16-19 (5) in accordance with applicable federal law
16-20 and regulations.
16-21 (D) The commissioner may adopt rules necessary to
16-22 implement this article and to meet the minimum requirements of
16-23 federal law and regulations.
16-24 PART 5. TRANSITION; EFFECTIVE DATE; EMERGENCY
16-25 SECTION 5.01. Except as provided in Section 5.02, this Act
16-26 applies only to an insurance policy or evidence of coverage that is
16-27 delivered, issued for delivery, or renewed on or after July 1,
16-28 1997. A policy or evidence of coverage that is delivered, issued
16-29 for delivery, or renewed before July 1, 1997, is governed by the
16-30 law as it existed immediately before the effective date of this
16-31 Act, and that law is continued in effect for that purpose.
16-32 SECTION 5.02. Coverages available under the Texas Health
16-33 Insurance Risk Pool as provided in Part 1 of this Act must be made
16-34 available not later than January 1, 1998. The provisions of this
16-35 Act as provided under Part 2, Section 2.01, apply only to an
16-36 insurance policy that is delivered, issued for delivery, or renewed
16-37 on or after January 1, 1998. A policy that is delivered, issued
16-38 for delivery, or renewed before January 1, 1998, is governed by the
16-39 law as it existed immediately before the effective date of this
16-40 Act, and that law is continued in effect for that purpose.
16-41 SECTION 5.03. This Act takes effect July 1, 1997.
16-42 SECTION 5.04. The importance of this legislation and the
16-43 crowded condition of the calendars in both houses create an
16-44 emergency and an imperative public necessity that the
16-45 constitutional rule requiring bills to be read on three several
16-46 days in each house be suspended, and this rule is hereby suspended,
16-47 and that this Act take effect and be in force according to its
16-48 terms, and it is so enacted.
16-49 * * * * *