SRC-JXG H.B. 1498 76(R)   BILL ANALYSIS


Senate Research Center   H.B. 1498
By: Janek (Sibley)
Economic Development
5/10/1999
Engrossed


DIGEST 

Currently, employees who are provided health care coverage through a health
maintenance organization (HMO) paid for by their employer must select a
primary care physician within the plan's network and use the services and
specialists within that network.  H.B. 1498 would require HMOs to offer,
through employer-sponsored health plans, an option allowing enrollees to
access outof-network services and providers, and would permit an HMO to
offer a point-of-service plan, a preferred provider plan, or any other
means by which enrollees may go out-of-network.  H.B. 1498 would also allow
HMOs to offer, under a single contract, indemnity and HMO benefits without
obtaining a separate license. 

PURPOSE

As proposed, H.B. 1498 sets forth provisions regarding the availability of
health benefit coverage options for health maintenance organization
eligible enrollees. 

RULEMAKING AUTHORITY

Rulemaking authority is granted to the commissioner of insurance in SECTION
2 (Article 3.64(f), V.T.C.S.) of this bill. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Chapter 26A, Insurance Code, by adding Article 26.09, as
follows: 

Art. 26.09.  AVAILABILITY OF HEALTH BENEFIT COVERAGE OPTIONS.  (a) Defines
"non-network plan," "point-of-service plan," and "preferred provider
benefit plan." 

(b) Requires each health maintenance organization (HMO) offering coverage
under the employer's health benefit plan to offer to all eligible employees
the opportunity to obtain health benefit coverage through a non-network
plan at the time of enrollment and at least annually, unless all HMOs
offering coverage under the employer's health benefit plan enter into an
agreement designating one or more of those HMOs to offer that coverage, if
the only health benefit coverage offered under an employer's health benefit
plan is a network-based delivery system of coverage offered by one or more
HMOs.  Authorizes the coverage required under this subsection to be
provided through a point-of-service contract, a preferred provider benefit
plan, or any coverage arrangement that allows an enrollee to access
services outside an HMO or limited provider network's delivery  network. 

(c) Requires the premium for coverage required to be offered under this
article to be based on the actuarial value of that coverage and to be
different than the premium for the HMO coverage. 

(d) Authorizes different cost-sharing provisions to be imposed for a
point-of-service contract offered under this article and to be higher than
cost-sharing provisions for in-network HMO coverage.  Authorizes higher
cost sharing to be imposed only when obtaining benefits or services outside
the HMO delivery network, for enrollees in limited provider networks.  

(e) Provides that any additional costs for the non-network plan are the
responsibility of the  employee who chooses the non-network plan, and the
employer may impose a reasonable administrative cost for providing the
non-network plan option. 

 (f) Provides that this article does not apply to a small employer health
benefit plan. 

SECTION 2. Amends Chapter 3F, Insurance Code, by adding Article 3.64, as
follows: 

Art. 3.64.  CONTRACTS BETWEEN HEALTH MAINTENANCE ORGANIZATIONS AND
INSURERS.  (a) Defines "blended contract," "health maintenance
organization," "insurance carrier," and "point-of-service plan."  

(b) Authorizes an insurance carrier to contract with an HMO to provide
benefits under a point-of-service plan, including optional coverage for
out-of-area services or out-of-network care. 

(c) Authorizes an insurance carrier and an HMO to offer a blended contract
if indemnity benefits are combined with HMO benefits.  Provides that the
use of a blended contract is limited to point-of-service arrangements
between an insurance carrier and an HMO. 

(d) Provides that a blended contract delivered, issued, or used in this
state is subject to and must  be filed with the Texas Department of
Insurance (DOI) for approval as provided by Article 3.42 of this code and
Section 9(a)(5), Article 20A.09, Insurance Code, Texas Health Maintenance
Organization Act.  

(e) Authorizes indemnity benefits and services provided under a
point-of-service plan to be limited to those services as defined by the
blended contract and to be subject to different cost-sharing provisions.
Authorizes the cost-sharing provisions for the indemnity benefits to be
higher than cost-sharing provisions for in-network HMO coverage.
Authorizes higher cost sharing to be imposed only when obtaining benefits
or services outside the HMO delivery network, for enrollees in limited
provider networks. 

(f) Authorizes the commissioner of insurance (commissioner) to adopt rules
to implement this article.  

SECTION 3. Amends Section 2, Article 20A.02, Insurance Code (Texas Health
Maintenance Organization Act), by amending Subsection (i) and by adding
Subsections (aa) and (bb), to define "evidence of coverage," "blended
contract," and "point-of-service plan." 

SECTION 4. Amends Section 6, Article 20A.06, Insurance Code, by amending
Subsection (a) and adding Subsection (c), as follows: 

(a) Provides that the powers of an HMO include, but are not limited to, the
offering of a point-of-service plan under Article 3.64, Insurance Code, or
a point-of-service rider under Subsection (c) of this section.  Makes a
nonsubstantive change. 

(c) Authorizes an HMO to offer a point-of-service rider for out-of-network
coverage without obtaining a separate insurance carrier license if the
expenses incurred under the point-ofservice rider do not exceed 10 percent
of the total medical hospital expenses incurred for all health plan
products sold.  Requires HMOs to cease issuing new point-of-service riders
until those expenses fall below 10 percent or until the HMO obtains an
insurance carrier license under this Act, if the expenses incurred by an
HMO under a point-of-service rider exceed 10 percent of the total medical
and hospital expenses incurred for all health plan products sold.
Authorizes indemnity benefits and services provided under a
point-of-service rider to be limited to those services defined in the
evidence of coverage and to be subject to different cost-sharing
provisions.  Authorizes the cost-sharing provisions for indemnity benefits
to be higher than the cost-sharing provisions for in-network HMO coverage.
Authorizes the higher cost sharing to be imposed only when obtaining
benefits or services outside the HMO delivery network, for enrollees in
limited provider networks.  Requires an HMO that issues a point-of-service
rider under this section to meet the net worth requirements promulgated  by
the commissioner based on the actuarial relation of the amount of insurance
risk assumed through the issuance of the point-of-service rider in relation
to the amount of solvency and reserve requirements already required of the
HMO.  

SECTION 5. Effective date: September 1, 1999.
           Makes application of this Act prospective to January 1, 2000.

SECTION 6. Emergency clause.