By Green H.B. No. 575
77R743 PB-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the creation and operation of a statewide risk pool to
1-3 provide health benefits coverage to active employees of school
1-4 districts.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. The Insurance Code is amended by adding Chapter 3B
1-7 to read as follows:
1-8 CHAPTER 3B. SCHOOL DISTRICTS HEALTH BENEFITS RISK POOL
1-9 SUBCHAPTER A. GENERAL PROVISIONS
1-10 Art. 3B.001. POOL PURPOSE. The purpose of this chapter is
1-11 to create a statewide pool to provide school district employees
1-12 access to quality group health benefits coverage at minimum cost to
1-13 school districts and their active employees.
1-14 Art. 3B.002. DEFINITIONS. In this chapter:
1-15 (1) "Board" means the board of directors of the pool.
1-16 (2) "Employee" means an individual who is employed to
1-17 work at least 20 hours a week for a school district during the
1-18 school district's school year.
1-19 (3) "Health benefit plan provider" means an entity
1-20 that provides health benefit plan coverage in this state, including
1-21 stop-loss or excess loss insurance. The term includes:
1-22 (A) an insurance company;
1-23 (B) a group hospital service corporation
1-24 operating under Chapter 20 of this code;
2-1 (C) a stipulated premium insurance company
2-2 operating under Chapter 22 of this code;
2-3 (D) a health maintenance organization;
2-4 (E) a multiple employer welfare arrangement
2-5 subject to Subchapter I, Chapter 3, of this code;
2-6 (F) an approved nonprofit health corporation
2-7 that holds a certificate of authority under Article 21.52F of this
2-8 code; and
2-9 (G) any other entity providing a plan of health
2-10 insurance or health benefits subject to state insurance regulation.
2-11 (4) "Health maintenance organization" means an entity
2-12 that holds a certificate of authority to operate under the Texas
2-13 Health Maintenance Organization Act (Chapter 20A, Vernon's Texas
2-14 Insurance Code).
2-15 (5) "Hospital" means a hospital for which a license is
2-16 issued under Chapter 241, Health and Safety Code, or that is owned
2-17 or operated by the federal or state government.
2-18 (6) "Physician" means a person licensed to practice
2-19 medicine in this state under Subtitle B, Title 3, Occupations Code.
2-20 (7) "Pool" means the Texas School Districts Health
2-21 Benefits Risk Pool.
2-22 Art. 3B.003. HEALTH BENEFIT PLAN DEFINED. (a) In this
2-23 chapter, "health benefit plan" means a group health benefit plan
2-24 that provides benefits for medical or surgical expenses incurred as
2-25 a result of a health condition, accident, or sickness, including a
2-26 group insurance policy, a group hospital service contract, or a
2-27 group evidence of coverage or similar coverage document that is
3-1 offered by a health benefit plan provider.
3-2 (b) "Health benefit plan" does not include:
3-3 (1) a plan that provides coverage:
3-4 (A) only for benefits for a specified disease or
3-5 for another limited benefit;
3-6 (B) only for accidental death or dismemberment;
3-7 (C) for wages or payments in lieu of wages for a
3-8 period during which an employee is absent from work because of
3-9 sickness or injury;
3-10 (D) as a supplement to a liability insurance
3-11 policy;
3-12 (E) for credit insurance;
3-13 (F) only for dental or vision care;
3-14 (G) only for hospital expenses; or
3-15 (H) only for indemnity for hospital confinement;
3-16 (2) a small employer health benefit plan written under
3-17 Chapter 26 of this code;
3-18 (3) a Medicare supplemental policy as defined by
3-19 Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss),
3-20 as amended;
3-21 (4) a workers' compensation insurance policy;
3-22 (5) medical payment insurance coverage provided under
3-23 a motor vehicle insurance policy; or
3-24 (6) a long-term care insurance policy, including a
3-25 nursing home fixed indemnity policy, unless the commissioner
3-26 determines that the policy provides benefit coverage so
3-27 comprehensive that the policy is a health benefit plan as described
4-1 by Subsection (a) of this article.
4-2 Art. 3B.004. DEPENDENT DEFINED. For purposes of this
4-3 chapter, an individual is a dependent of another if the individual
4-4 is the other individual's:
4-5 (1) resident spouse or unmarried child under 18 years
4-6 of age; or
4-7 (2) child and:
4-8 (A) is a full-time student under 23 years of age
4-9 who is financially dependent on the other individual;
4-10 (B) is over 18 years of age and is an individual
4-11 for whom the other individual may be obligated to pay child
4-12 support; or
4-13 (C) regardless of the age of the child, is
4-14 disabled and dependent on the other individual.
4-15 Art. 3B.005. STATE AUDIT OF POOL. (a) The state auditor
4-16 shall annually conduct a special audit of the pool under Chapter
4-17 321, Government Code. The special audit must include a financial
4-18 audit and an economy and efficiency audit.
4-19 (b) The state auditor shall report the cost of each audit
4-20 conducted under this section to the board and the comptroller. The
4-21 board shall remit that amount to the comptroller.
4-22 Art. 3B.006. RULES. The commissioner may adopt rules
4-23 necessary to implement this chapter.
4-24 Art. 3B.007. COMPLAINT PROCEDURES. (a) An applicant for or
4-25 participant in coverage from the pool is entitled to have
4-26 complaints against the pool reviewed by a grievance committee
4-27 appointed by the board.
5-1 (b) The grievance committee shall report to the board after
5-2 completion of the review of each complaint.
5-3 (c) The board shall retain each written complaint concerning
5-4 the pool at least until the third anniversary of the date the pool
5-5 received the complaint.
5-6 (Arts. 3B.008-3B.050 reserved for expansion
5-7 SUBCHAPTER B. BOARD OF DIRECTORS
5-8 Art. 3B.051. GOVERNANCE OF POOL; BOARD MEMBERSHIP. (a) The
5-9 pool is governed by a board of directors.
5-10 (b) The board consists of nine members appointed by the
5-11 commissioner as follows:
5-12 (1) two members must be individuals who are affiliated
5-13 with a health benefit plan provider authorized to write health
5-14 benefit plans in this state;
5-15 (2) three members must be school district employees;
5-16 (3) three members must be school district
5-17 administrators; and
5-18 (4) one member must be a physician.
5-19 Art. 3B.052. PRESIDING OFFICER. The commissioner shall
5-20 designate one member of the board to serve as presiding officer who
5-21 serves in that capacity at the pleasure of the commissioner.
5-22 Art. 3B.053. TERMS; VACANCY. (a) Members of the board serve
5-23 staggered six-year terms with the terms of three members expiring
5-24 February 1 of each odd-numbered year.
5-25 (b) The commissioner shall fill a vacancy on the board by
5-26 appointing, for the unexpired term, an individual who has the
5-27 appropriate qualifications to fill that position.
6-1 Art. 3B.054. PER DIEM; REIMBURSEMENT. A member of the board
6-2 is entitled to:
6-3 (1) a per diem in the amount provided by the General
6-4 Appropriations Act for state officials for each day the member
6-5 performs duties as a board member; and
6-6 (2) reimbursement of expenses incurred while
6-7 performing duties as a board member as provided by Chapter 660,
6-8 Government Code, and the General Appropriations Act.
6-9 Art. 3B.055. MEMBER'S IMMUNITY. (a) A member of the board
6-10 is not liable for an act or omission made in good faith in the
6-11 performance of powers and duties under this chapter.
6-12 (b) A cause of action does not arise against a member of the
6-13 board for an act or omission described by Subsection (a) of this
6-14 article.
6-15 Art. 3B.056. ADJUSTMENTS. (a) The board may adjust
6-16 deductibles, the amounts of excess loss coverage, and the periods
6-17 governing preexisting conditions under Article 3B.154 of this code
6-18 to preserve the financial integrity of the pool.
6-19 (b) Not later than the 30th day after the date the board
6-20 makes an adjustment under this section, the board shall submit to
6-21 the commissioner a written report containing a description of and
6-22 the reasons for the adjustment.
6-23 Art. 3B.057. ANNUAL REPORT OF POOL'S ACTIVITIES. (a) Not
6-24 later than June 1 of each year, the board shall submit a report to
6-25 the governor, the lieutenant governor, the speaker of the house of
6-26 representatives, and the commissioner.
6-27 (b) The report must summarize the activities of the pool in
7-1 the calendar year preceding the year in which the report is
7-2 submitted and must include information relating to net written and
7-3 earned premiums, plan enrollment, administration expenses, and paid
7-4 and incurred losses.
7-5 Art. 3B.058. ADDITIONAL POWERS AND DUTIES. The commissioner
7-6 by rule may establish powers and duties of the board in addition to
7-7 those provided by this chapter.
7-8 (Arts. 3B.059-3B.100 reserved for expansion
7-9 SUBCHAPTER C. POWERS AND DUTIES OF POOL
7-10 Art. 3B.101. REQUIRED PARTICIPATION BY SCHOOL DISTRICTS;
7-11 INFORMATION ABOUT POOL. (a) Each school district shall provide its
7-12 employees access to health benefit plan coverage.
7-13 (b) A school district shall provide to each employee notice
7-14 as prescribed by the commissioner relating to the existence of the
7-15 pool that contains the address from which an employee may obtain
7-16 information about:
7-17 (1) the coverage offered by the pool;
7-18 (2) the eligibility for and cost of that coverage; and
7-19 (3) other information that allows the employee to
7-20 compare the coverage offered by the pool with any other coverage
7-21 for which the employee may be eligible.
7-22 Art. 3B.102. STAFF; COMMITTEES. (a) The pool may employ and
7-23 set the compensation of any staff necessary to assist the pool in
7-24 carrying out its responsibilities and functions.
7-25 (b) The pool may appoint appropriate legal, actuarial, and
7-26 other committees necessary to provide technical assistance in
7-27 operating the pool and performing any of the functions of the pool.
8-1 Art. 3B.103. PROVIDING COVERAGE. The pool shall provide
8-2 health benefit plan coverage to an employee who is eligible for
8-3 that coverage under this chapter and to that employee's
8-4 dependents. The pool coverage is subject to this chapter and the
8-5 pool's plan of operation adopted under Article 3B.201 of this code.
8-6 Art. 3B.104. CHARGES, FORMULAS, AND FORMS. (a) The pool may
8-7 establish appropriate rates, rate schedules, rate adjustments,
8-8 expense allowances, agents' referral fees, and claim reserve
8-9 formulas and perform actuarial functions appropriate to the
8-10 operation of the pool.
8-11 (b) The pool shall adopt policy forms, endorsements, and
8-12 riders and applications for coverage as necessary to implement this
8-13 chapter.
8-14 Art. 3B.105. PREMIUM RATES. (a) The pool may not charge
8-15 premium rates that are unreasonable in relation to the benefits
8-16 provided, the risk experience, and the reasonable expenses of
8-17 providing the coverage.
8-18 (b) The pool may adjust premium rates and premium rate
8-19 schedules for appropriate risk factors, including age and variation
8-20 in claim costs. The board may consider appropriate risk factors in
8-21 accordance with established actuarial and underwriting practices.
8-22 (c) The pool shall establish the rates used by the pool. In
8-23 establishing the rates, the pool shall use reasonable actuarial
8-24 techniques and consider the premium rates charged by other health
8-25 benefit plan providers offering health benefit plan coverage to
8-26 individuals. The rate must reflect anticipated experience and
8-27 expenses for health benefit coverage.
9-1 (d) The pool shall submit each rate and rate schedule to the
9-2 commissioner for approval. The pool may not use a rate or rate
9-3 schedule before the rate or schedule is approved by the
9-4 commissioner. In evaluating a rate or rate schedule of the pool,
9-5 the commissioner shall consider the factors provided by this
9-6 article.
9-7 Art. 3B.106. EXCESS LOSS COVERAGE; REINSURANCE. The pool
9-8 may purchase excess loss coverage or reinsurance to insure the pool
9-9 against financial losses that the pool determines might place the
9-10 solvency of the pool in financial jeopardy.
9-11 Art. 3B.107. CONTRACTS. The pool may enter into contracts
9-12 as necessary to implement this chapter.
9-13 Art. 3B.108. LEGAL ACTION. (a) The pool may sue or be sued.
9-14 (b) The pool may take any legal action necessary to:
9-15 (1) avoid payment of improper claims against the pool
9-16 or the coverage provided by or through the pool; or
9-17 (2) recover or collect amounts due the pool,
9-18 including:
9-19 (A) assessments due the pool;
9-20 (B) amounts erroneously or improperly paid by
9-21 the pool; and
9-22 (C) amounts paid by the pool as a mistake of
9-23 fact or law.
9-24 Art. 3B.109. COST CONTAINMENT. (a) The pool may provide for
9-25 and use cost containment measures and requirements, including
9-26 preadmission screening, the requirement of a second surgical
9-27 opinion, and concurrent utilization review subject to Article
10-1 21.58A of this code.
10-2 (b) The pool may design, use, contract for, or otherwise
10-3 arrange for the delivery of cost-effective health care services,
10-4 including establishing or contracting with preferred provider
10-5 organizations and health maintenance organizations.
10-6 Art. 3B.110. BORROWING. The pool may borrow money as
10-7 necessary to implement the purposes of the pool.
10-8 Art. 3B.111. ADDITIONAL AUTHORITY. In addition to the other
10-9 powers granted to the pool under this chapter, the pool may
10-10 exercise any of the authority that a health benefit plan provider
10-11 authorized to write health benefit plans in this state may exercise
10-12 under the law of this state.
10-13 (Arts. 3B.112-3B.150 reserved for expansion
10-14 SUBCHAPTER D. POOL COVERAGE AND BENEFITS
10-15 Art. 3B.151. MINIMUM POOL COVERAGE. (a) The pool shall
10-16 offer coverage that provides benefits at least consistent with
10-17 major medical expense coverage to each eligible employee.
10-18 (b) The board, with the approval of the commissioner, shall
10-19 establish:
10-20 (1) the coverages to be provided by the pool;
10-21 (2) the applicable schedules of benefits; and
10-22 (3) any exclusions or other limitations to coverage.
10-23 (c) The benefits provisions of the pool's coverage must
10-24 include:
10-25 (1) all required or applicable definitions;
10-26 (2) a description of covered services;
10-27 (3) a list of any exclusions or limitations to
11-1 coverage; and
11-2 (4) the deductibles, coinsurance options, and
11-3 copayment options that are required or permitted.
11-4 Art. 3B.152. ELIGIBILITY FOR COVERAGE; PREMIUMS. (a) Each
11-5 employee shall be covered by the pool unless the employee rejects
11-6 the coverage in a signed written statement made to the governing
11-7 body of the school district.
11-8 (b) A dependent of an employee who is eligible for coverage
11-9 from the pool is also eligible for coverage from the pool.
11-10 (c) Except as provided by Subsection (d) of this article, a
11-11 covered employee shall pay 100 percent of the premiums assessed by
11-12 the pool for coverage through the pool.
11-13 (d) A school district may make contributions to the pool to
11-14 cover all or part of the premiums for its employees. The employees
11-15 shall pay 100 percent of the cost of any coverage not paid by the
11-16 school district.
11-17 Art. 3B.153. INELIGIBILITY FOR COVERAGE. Notwithstanding
11-18 Article 3B.152 of this code, an employee is not eligible for
11-19 coverage from the pool if the employee's prior coverage with the
11-20 pool was terminated for nonpayment of premiums or fraud.
11-21 Art. 3B.154. PREEXISTING CONDITIONS. (a) Except as provided
11-22 by this article and Article 3B.056 of this code, pool coverage
11-23 excludes charges or expenses incurred before the first anniversary
11-24 of the effective date of coverage with regard to any condition for
11-25 which medical advice, care, or treatment was recommended or
11-26 received during the six-month period preceding the effective date
11-27 of coverage.
12-1 (b) The exclusion provided by Subsection (a) of this article
12-2 does not apply to an individual who:
12-3 (1) was continuously covered for a period of at least
12-4 12 months, excluding any waiting period, by health benefit plan
12-5 coverage that terminated after the 64th day before the effective
12-6 date of coverage under the pool; and
12-7 (2) applied for pool coverage not later than the 63rd
12-8 day after the date the health benefit plan coverage described by
12-9 Subdivision (1) of this subsection terminated.
12-10 (c) If an individual was covered by health benefit plan
12-11 coverage that was in effect at any time during the 12-month period
12-12 preceding the effective date of the individual's coverage under the
12-13 pool, the pool shall subtract from the exclusion period required
12-14 under Subsection (a) of this article the period that the individual
12-15 was covered under that health benefit plan and any waiting period
12-16 that applied before that health benefit plan coverage became
12-17 effective.
12-18 Art. 3B.155. BENEFIT REDUCTION. (a) The pool may reduce
12-19 benefits otherwise payable under pool coverage by the total amount
12-20 paid or payable through any other health benefit plan.
12-21 (b) The pool shall reduce benefits otherwise payable under
12-22 pool coverage by the total amount of hospital or medical expense
12-23 benefits paid or payable under:
12-24 (1) workers' compensation coverage;
12-25 (2) automobile insurance coverage; or
12-26 (3) a state or federal law or program.
12-27 Art. 3B.156. RECOVERY OF CERTAIN AMOUNTS. (a) The pool has
13-1 a cause of action against an employee for the recovery of the
13-2 amount of benefits paid that are not for covered expenses.
13-3 (b) Benefits due from the pool may be reduced or refused as
13-4 an offset against an amount recoverable under this section.
13-5 Art. 3B.157. TERMINATION OF POOL COVERAGE. (a) An
13-6 employee's pool coverage ends:
13-7 (1) on the date the employee ceases to be an employee
13-8 of a school district in this state;
13-9 (2) on the date the employee requests coverage to end;
13-10 (3) on the date the employee covered by the pool dies;
13-11 (4) at the option of the pool, on the 31st day after
13-12 the date the pool sends to the individual covered by the pool any
13-13 inquiry concerning the individual's eligibility to which the
13-14 individual does not reply;
13-15 (5) on the 31st day after the date a premium payment
13-16 for pool coverage becomes due if the payment is not made before
13-17 that day; or
13-18 (6) on the date the individual covered by the pool
13-19 ceases to meet the eligibility requirements for coverage.
13-20 (b) A dependent's pool coverage ends on the date the
13-21 dependent becomes 21 years of age, unless the individual:
13-22 (1) is the spouse of the employee; or
13-23 (2) is a child of the employee:
13-24 (A) who is a student under 23 years of age who
13-25 is financially dependent on the employee and who is covered by the
13-26 pool;
13-27 (B) for whom an employee covered by the pool may
14-1 be obligated to pay child support; or
14-2 (C) who is disabled and dependent on a parent
14-3 covered by the pool, regardless of the age of the child.
14-4 (c) Any covered individual's coverage through the pool
14-5 expires on the date state law requires cancellation of the
14-6 coverage.
14-7 (d) Notwithstanding Subsection (a) of this article, an
14-8 employee who ceases to meet the eligibility requirements for
14-9 coverage may have the individual's coverage terminated at the
14-10 scheduled end of the coverage period.
14-11 (e) An individual may maintain pool coverage for the period
14-12 the individual is satisfying a preexisting condition period or
14-13 waiting period under another health benefit plan intended to
14-14 replace the pool coverage.
14-15 (Arts. 3B.158-3B.200 reserved for expansion
14-16 SUBCHAPTER E. OPERATION OF POOL
14-17 Art. 3B.201. PLAN OF OPERATION. (a) Operation and
14-18 management of the pool is governed by a plan of operation adopted
14-19 by the board and approved by the commissioner. The plan of
14-20 operation includes the articles, bylaws, and operating rules of the
14-21 pool that are adopted by the board.
14-22 (b) The plan of operation must ensure the fair, reasonable,
14-23 and equitable administration of the pool.
14-24 (c) In addition to complying with the other requirements of
14-25 this chapter, the plan of operation must include procedures for:
14-26 (1) operation of the pool;
14-27 (2) selection of an administrator as provided by
15-1 Article 3B.202 of this code;
15-2 (3) creation of a fund, under management of the board,
15-3 for administrative expenses;
15-4 (4) handling, accounting, and auditing of money and
15-5 other assets of the pool;
15-6 (5) development and implementation of a program to:
15-7 (A) publicize the existence of the pool, the
15-8 eligibility requirements for coverage under the pool, and
15-9 enrollment procedures; and
15-10 (B) foster public awareness of the pool;
15-11 (6) creation of a grievance committee to review
15-12 complaints presented by applicants for coverage from the pool and
15-13 persons who are covered by the pool; and
15-14 (7) other matters as may be necessary for the
15-15 execution of the board's powers, duties, and obligations under this
15-16 chapter.
15-17 (d) The board shall amend the plan of operation as necessary
15-18 to carry out this chapter. An amendment to the plan of operation
15-19 must be approved by the commissioner before it becomes a part of
15-20 the plan.
15-21 Art. 3B.202. POOL ADMINISTRATOR. (a) The board may select
15-22 one or more health benefit plan providers or a third party
15-23 administrator certified by the department to administer the pool.
15-24 The selection must be made under a competitive bidding process in
15-25 accordance with the plan of operation.
15-26 (b) The board shall establish criteria for evaluating the
15-27 bids submitted under this section. The criteria must include:
16-1 (1) the bidder's proven ability to handle individual
16-2 health benefit plans;
16-3 (2) the bidder's efficiency of claims paying
16-4 procedures;
16-5 (3) an estimate of total charges for administering the
16-6 pool;
16-7 (4) the bidder's ability to administer the pool in a
16-8 cost-efficient manner; and
16-9 (5) the bidder's financial condition and stability.
16-10 Art. 3B.203. ADMINISTRATOR'S TERM; SUCCEEDING TERM. (a) A
16-11 person selected as a pool administrator serves in that capacity for
16-12 a three-year term beginning on the date the board issues its order
16-13 making the selection.
16-14 (b) Not later than one year before the expiration of a pool
16-15 administrator's term, the board shall invite all health benefit
16-16 plan providers, including the pool administrator, to submit bids to
16-17 serve as a pool administrator for the succeeding administration
16-18 period. The selection of the succeeding pool administrator must be
16-19 made not later than the sixth calendar month preceding the month in
16-20 which the pool administrator's term expires.
16-21 Art. 3B.204. ADMINISTRATOR'S FUNCTIONS. (a) A pool
16-22 administrator shall perform the functions relating to the pool that
16-23 are assigned to the administrator.
16-24 (b) The assigned functions may include:
16-25 (1) performing eligibility and administrative claims
16-26 payment functions for the pool;
16-27 (2) establishing a billing procedure for collection of
17-1 premiums from individuals covered by the pool;
17-2 (3) performing functions necessary to ensure timely
17-3 payment of benefits to individuals covered by the pool, including:
17-4 (A) providing information relating to the proper
17-5 manner of submitting a claim for benefits to the pool and
17-6 distributing claim forms; and
17-7 (B) evaluating the eligibility of each claim for
17-8 payment by the pool;
17-9 (4) submitting regular reports to the board relating
17-10 to the operation of the pool; and
17-11 (5) determining after each calendar year the net
17-12 written and earned premiums, expenses of administration, and paid
17-13 and incurred losses of the pool for that calendar year and
17-14 reporting that information to the board and the commissioner.
17-15 (c) The board shall determine the form, content, and time of
17-16 submission of the reports required under Subsection (b)(4) of this
17-17 article.
17-18 (d) The commissioner shall prescribe the forms to be used to
17-19 report the information under Subsection (b)(5) of this article.
17-20 (e) The board shall determine the times at which a pool
17-21 administrator is to perform the billing functions for the pool.
17-22 Art. 3B.205. PAYMENTS TO ADMINISTRATOR. The pool shall pay
17-23 a pool administrator for the administrator's expenses incurred in
17-24 performing duties and functions as provided by the plan of
17-25 operation.
17-26 SUBCHAPTER F. FUNDING
17-27 Art. 3B.251. FUND; AUDIT. (a) The Texas school districts
18-1 health benefits risk pool fund is created on the creation of the
18-2 pool.
18-3 (b) The fund is a trust fund outside the state treasury and
18-4 is composed of:
18-5 (1) premiums paid by school district employees for
18-6 coverage by the pool;
18-7 (2) contributions and other money received by the pool
18-8 from school districts and the state;
18-9 (3) investments and money earned from investments of
18-10 the fund; and
18-11 (4) any other money received by the pool.
18-12 (c) Money in the fund shall be paid from the fund, without
18-13 legislative appropriation, on vouchers approved by the board. That
18-14 money shall be held exclusively for the purposes stated in this
18-15 chapter and may not be used or appropriated for any other purpose.
18-16 (d) The pool administrator shall manage the fund under the
18-17 general supervision of the board. Administrative expenses of the
18-18 pool may be paid from the fund. Payments for administrative
18-19 expenses in any fiscal year may not exceed 10 percent of the total
18-20 amount of money in the fund during that fiscal year.
18-21 (e) The fund may not be used to pay punitive damages, fines,
18-22 or penalties for violation of a civil or criminal statute, or fines
18-23 or penalties imposed for the violation of a rule of a state agency
18-24 or an ordinance or order of a local government.
18-25 (f) The board may select one or more banks to serve as
18-26 depository for the fund. Before the deposit of fund money in a
18-27 depository bank in an amount that exceeds the maximum secured by
19-1 the Federal Deposit Insurance Corporation, the bank must provide
19-2 security in an amount sufficient to secure from loss the fund money
19-3 that exceeds the amount secured by the Federal Deposit Insurance
19-4 Corporation.
19-5 (g) The board shall require an annual audit of the capital,
19-6 surplus, and reserves of the pool to be conducted by an actuary who
19-7 is a member of the American Academy of Actuaries or a similar
19-8 national organization of actuaries recognized by the board.
19-9 Art. 3B.252. INVESTMENTS. (a) The pool administrator shall
19-10 manage and invest the fund in the manner provided by the plan of
19-11 operation.
19-12 (b) Money earned by the investment of the fund shall be
19-13 deposited in the fund or reinvested for the fund.
19-14 Art. 3B.253. INITIAL CONTRIBUTIONS. (a) Each school
19-15 district shall pay an assessment as provided by this article for
19-16 the initial expenses of the pool.
19-17 (b) The board shall determine the amount of assessments
19-18 necessary to meet the initial expenses of the pool from information
19-19 provided in the plan of operation.
19-20 (c) This article expires September 1, 2003.
19-21 SECTION 2. Effective September 1, 2002, Article 3.51,
19-22 Insurance Code, is amended to read as follows:
19-23 Art. 3.51. GROUP INSURANCE FOR EMPLOYEES OF STATE AND ITS
19-24 SUBDIVISIONS AND COLLEGES [COLLEGE AND SCHOOL EMPLOYEES]
19-25 Sec. 1. (a) The State of Texas and each of its political,
19-26 governmental and administrative subdivisions, departments,
19-27 agencies, associations of public employees, and the governing
20-1 boards and authorities of each state university or college[,
20-2 colleges, common and independent school districts or of any other
20-3 agency or subdivision of the public school system of the State of
20-4 Texas] are authorized to procure contracts with any insurance
20-5 company authorized to do business in this state insuring their
20-6 respective employees, or if an association of public employees is
20-7 the policyholder, insuring its respective members, or any class or
20-8 classes thereof under a policy or policies of group health,
20-9 accident, accidental death and dismemberment, disability income
20-10 replacement and hospital, surgical and/or medical expense insurance
20-11 or a group contract providing for annuities. The dependents of any
20-12 such employees or association members, as the case may be, may be
20-13 insured under group policies which provide hospital, surgical
20-14 and/or medical expense insurance. The insureds' contributions to
20-15 the premiums for such insurance or annuities issued to the employer
20-16 or to an association of public employees as the policyholder may be
20-17 deducted by the employer from the insureds' salaries when
20-18 authorized in writing by the respective employees so to do. The
20-19 premium for the policy or contract may be paid in whole or in part
20-20 from funds contributed by the employer or in whole or in part from
20-21 funds contributed by the insured employees. When an association of
20-22 public employees is the holder of such a policy of insurance or
20-23 contract, the premium for employees that are members of such
20-24 association may be paid in whole or in part by the State of Texas
20-25 or other agency authorized to procure contracts or policies of
20-26 insurance under this section, or in whole or in part from funds
20-27 contributed by the insured employees that are members of such
21-1 association; provided, however, that any monies or credits received
21-2 by or allowed to the policyholder or contract holder pursuant to
21-3 any participation agreement contained in or issued in connection
21-4 with the policy or contract shall be applied to the payment of
21-5 future premiums and to the pro rata abatement of the insured
21-6 employee's contribution therefor.
21-7 (b) The term employees as used herein in addition to its
21-8 usual meaning shall include elective and appointive officials of
21-9 the state.
21-10 [(b) Independent School Districts procuring policies
21-11 insuring their employees under this Section may pay all or any
21-12 portion of the premiums on such policies from the local funds of
21-13 such Independent School District, but in no event shall any part of
21-14 such premiums be paid from funds paid such districts by the State
21-15 of Texas.]
21-16 Sec. 2. All group insurance contracts effected pursuant
21-17 hereto shall conform and be subject to all the provisions of any
21-18 existing or future laws concerning group insurance.
21-19 SECTION 3. Effective September 1, 2002, Section 1, Article
21-20 3.50-4, Insurance Code, is amended to read as follows:
21-21 Sec. 1. SHORT TITLE. This article may be cited as the Texas
21-22 Public School Retired Employees Group Insurance Act.
21-23 SECTION 4. Effective September 1, 2002, Sections 2(3) and
21-24 (4), Article 3.50-4, Insurance Code, are amended to read as
21-25 follows:
21-26 (3) "Dependent" means:
21-27 (A) a spouse of a retiree [or active member];
22-1 (B) a retiree's[, an active member's,] or a
22-2 deceased active member's unmarried child who is younger than 25
22-3 years of age including:
22-4 (i) an adopted child;
22-5 (ii) a foster child, a stepchild, or other
22-6 child who is in a regular parent-child relationship; and
22-7 (iii) a recognized natural child; and
22-8 (C) a retiree's [or active member's] recognized
22-9 natural child, adopted child, foster child, stepchild, or other
22-10 child who is in a regular parent-child relationship and who lives
22-11 with or whose care is provided by the retiree[, active member,] or
22-12 surviving spouse on a regular basis, regardless of the child's age,
22-13 if the child is mentally retarded or physically incapacitated to
22-14 such an extent as to be dependent on the retiree[, active member,]
22-15 or surviving spouse for care or support, as determined by the
22-16 trustee, or in the case of a deceased active member, a recognized
22-17 natural child, adopted child, foster child, stepchild, or other
22-18 child who was in a regular parent-child relationship and who lived
22-19 with or whose care was provided by the deceased active member on a
22-20 regular basis, regardless of the child's age, if the child is
22-21 mentally retarded or physically incapacitated to such an extent as
22-22 to have been dependent on the deceased active member or surviving
22-23 spouse for care or support, as determined by the trustee.
22-24 (4) "Fund" means the Texas retired public school
22-25 employees group insurance fund.
22-26 SECTION 5. Effective September 1, 2002, Section 3(a),
22-27 Article 3.50-4, Insurance Code, is amended to read as follows:
23-1 (a) The Texas Public School Retired Employees Group
23-2 Insurance Program is established to provide for an insurance plan
23-3 or plans under this article.
23-4 SECTION 6. Effective September 1, 2002, Section 5(a),
23-5 Article 3.50-4, Insurance Code, is amended to read as follows:
23-6 (a) The trustee may adopt rules, plans, procedures, and
23-7 orders reasonably necessary to implement this article, including:
23-8 (1) establishment of minimum benefit and financing
23-9 standards for group insurance coverage to be provided to all
23-10 retirees, [active employees,] dependents, surviving spouses, and
23-11 surviving dependent children;
23-12 (2) establishment of basic and optional group coverage
23-13 to be provided to retirees, [active employees,] dependents,
23-14 surviving spouses, and surviving dependent children;
23-15 (3) establishment of the procedures for contributions
23-16 and deductions;
23-17 (4) establishment of periods for enrollment and
23-18 selection of optional coverage and procedures for enrolling and
23-19 exercising options under the plan;
23-20 (5) determination of methods and procedures for claims
23-21 administration;
23-22 (6) study of the operation of all insurance coverage
23-23 provided under this article;
23-24 (7) administration of the fund;
23-25 (8) adoption of a timetable for the development of
23-26 minimum benefit and financial standards for group insurance
23-27 coverage, establishment of group insurance plans, and the taking of
24-1 bids for and awarding of contracts for insurance plans; and
24-2 (9) contracting with an independent and experienced
24-3 group insurance consultant or actuary, who does not receive
24-4 insurance commissions from any insurance company, for advice and
24-5 counsel in implementing and administering this program.
24-6 SECTION 7. Effective September 1, 2002, Section 8(e),
24-7 Article 3.50-4, Insurance Code, is amended to read as follows:
24-8 (e) The trustee may contract for and make available to all
24-9 retirees, dependents, surviving spouses, and surviving dependent
24-10 children optional group health benefit plans in addition to the
24-11 basic plans. The optional coverage may include a smaller
24-12 deductible, lower coinsurance, or additional categories of benefits
24-13 permitted under Subsection (b) of this section to provide
24-14 additional levels of coverages and benefits. The trustee may
24-15 utilize a portion of the funds received for the Texas Public School
24-16 Retired Employees Group Insurance Program to offset some portion of
24-17 costs paid by the retiree for optional coverage if such utilization
24-18 does not reduce the period the program is projected to remain
24-19 financially solvent by more than one year in a biennium. Any
24-20 additional contributions for these optional plans shall be paid for
24-21 by the retiree, surviving spouse, or surviving dependent children.
24-22 SECTION 8. Effective September 1, 2002, Section 9, Article
24-23 3.50-4, Insurance Code, is amended to read as follows:
24-24 Sec. 9. BENEFIT CERTIFICATES. At such times, or upon such
24-25 events, as designated by the trustee, each insurance carrier shall
24-26 issue to each retiree, [active employee,] surviving spouse, or
24-27 surviving dependent child insured under this article a certificate
25-1 of insurance that:
25-2 (1) states the benefits to which the person is
25-3 entitled;
25-4 (2) states to whom the benefits are payable;
25-5 (3) states to whom the claims must be submitted; and
25-6 (4) summarizes the provisions of the policy
25-7 principally affecting the person.
25-8 SECTION 9. Effective September 1, 2002, Section 12, Article
25-9 3.50-4, Insurance Code, is amended to read as follows:
25-10 Sec. 12. DEATH CLAIMS: BENEFICIARIES. The amount of group
25-11 life insurance and group accidental death and dismemberment
25-12 insurance covering a retiree, [active employee,] surviving spouse,
25-13 dependent, or surviving dependent child at the date of death shall
25-14 be paid, on the establishment of a valid claim, only:
25-15 (1) to the beneficiary or beneficiaries designated by
25-16 the person in a signed and witnessed written document received
25-17 before death in the trustee's office; or
25-18 (2) if no beneficiary is properly designated or in
25-19 existence, to persons in accordance with the trustee's death
25-20 benefit provisions in Subsection (b), Section 824.103, Government
25-21 Code.
25-22 SECTION 10. Effective September 1, 2002, Section 13, Article
25-23 3.50-4, Insurance Code, is amended to read as follows:
25-24 Sec. 13. AUTOMATIC COVERAGE. A retiree [or active employee]
25-25 who applies during an enrollment period may not be denied any of
25-26 the group insurance basic coverage provided under this article
25-27 unless the person has been found under Section 18A of this article
26-1 to have defrauded or attempted to defraud the Texas Public School
26-2 Retired Employees Group Insurance Program.
26-3 SECTION 11. Effective September 1, 2002, Section 15, Article
26-4 3.50-4, Insurance Code, is amended to read as follows:
26-5 Sec. 15. RETIRED SCHOOL EMPLOYERS GROUP INSURANCE FUND. (a)
26-6 The retired school employees group insurance fund is created. The
26-7 comptroller is the custodian of the fund, and the trustee shall
26-8 administer the fund. All contributions from active employees,
26-9 retirees, and the state, contributions for optional coverages,
26-10 investment income, appropriations for implementation of this
26-11 program, and other money required or authorized to be paid into the
26-12 fund shall be paid into the fund. From the fund shall be paid,
26-13 without state fiscal year limitation, the appropriate premiums to
26-14 the carrier or carriers providing group coverage under the plan or
26-15 plans under this article, claims for benefits under the group
26-16 coverage, and the amounts expended by the trustee for
26-17 administration of the program. The appropriate portion of the
26-18 contributions to the fund to provide for incurred but unreported
26-19 claim reserves and contingency reserves, as determined by the
26-20 trustee, shall be retained in the fund.
26-21 (b) The trustee shall transfer the amounts deducted from
26-22 annuities for contributions into the fund.
26-23 (c) Expenses for the development and administration of the
26-24 program shall be spent as provided by a budget adopted by the
26-25 trustee.
26-26 (d) The trustee may invest and reinvest the money in the
26-27 fund as provided by Subchapter D, Chapter 825, Government Code, for
27-1 assets of the Teacher Retirement System of Texas.
27-2 SECTION 12. Effective September 1, 2002, Section 18A,
27-3 Article 3.50-4, Insurance Code, is amended to read as follows:
27-4 Sec. 18A. EXPULSION FROM PROGRAM FOR FRAUD. (a) After
27-5 notice and hearing as provided by this section, the trustee may
27-6 expel from participation in the Texas Public School Retired
27-7 Employees Group Insurance Program any retiree, [active employee,]
27-8 surviving spouse, dependent, or surviving dependent child who
27-9 submits a fraudulent claim under, or has defrauded or attempted to
27-10 defraud, any health benefits plan offered under the program.
27-11 (b) On its motion or on the receipt of a complaint, the
27-12 trustee may call and hold a hearing to determine whether a person
27-13 has submitted a fraudulent claim under, or has defrauded or
27-14 attempted to defraud, any health benefits plan offered under the
27-15 Texas Public School Retired Employees Group Insurance Program.
27-16 (c) A proceeding under this section is a contested case
27-17 under Chapter 2001, Government Code [the Administrative Procedure
27-18 and Texas Register Act (Article 6252-13a, Vernon's Texas Civil
27-19 Statutes)].
27-20 (d) If the trustee, at the conclusion of the hearing, issues
27-21 a decision that finds that the accused submitted a fraudulent claim
27-22 or has defrauded or attempted to defraud any health benefits plan
27-23 offered under the Texas Public School Retired Employees Group
27-24 Insurance Program, the trustee shall expel the person from
27-25 participation in the program.
27-26 (e) The substantial evidence rule shall be used on any
27-27 appeal of a decision of the trustee under this section.
28-1 (f) A person expelled from the Texas Public School Retired
28-2 Employees Group Insurance Program may not be insured by any health
28-3 insurance plan offered by the program for a period, to be
28-4 determined by the trustee, of up to five years from the date the
28-5 expulsion takes effect.
28-6 SECTION 13. Effective September 1, 2002, Section 18B(a),
28-7 Article 3.50-4, Insurance Code, is amended to read as follows:
28-8 (a) Section 825.507, Government Code, concerning the
28-9 confidentiality of information in records that are in the custody
28-10 of the Teacher Retirement System of Texas, applies to information
28-11 in records that are in the custody of the retirement system
28-12 regarding retirees, active employees, annuitants, or beneficiaries
28-13 under the Texas Public School Retired Employees Group Insurance
28-14 Program.
28-15 SECTION 14. Effective September 1, 2002, Sections 18C(c),
28-16 (d), and (i), Article 3.50-4, Insurance Code, are amended to read
28-17 as follows:
28-18 (c) The trustee, the Texas public school retired employees
28-19 group insurance program, the retired school employees group
28-20 insurance fund, and the board of trustees, officers, advisory
28-21 committee members, and employees of the trustee are not liable for
28-22 damages arising from the acts or omissions of health care providers
28-23 who are participating health care providers in the coordinated care
28-24 network established by the trustee. Those health care providers
28-25 are independent contractors and are responsible for their own acts
28-26 and omissions.
28-27 (d) The trustee, the Texas public school retired employees
29-1 group insurance program, the retired school employees group
29-2 insurance fund, or a member of a credentialing committee, or the
29-3 board of trustees, officers, advisory committee members, or
29-4 employees of the trustee are not liable for damages arising from
29-5 any act, statement, determination, recommendation made, or act
29-6 reported, without malice, in the course of the evaluation of the
29-7 qualifications of health care providers or of the patient care
29-8 rendered by those providers.
29-9 (i) A credentialing committee, a person participating in a
29-10 credentialing review, a health care provider, the trustee, the
29-11 Texas public school retired employees group insurance program, or
29-12 the board of trustees, officers, advisory committee members, or
29-13 employees of the trustee that are named as defendants in any civil
29-14 action filed as a result of participation in the credentialing
29-15 process may use otherwise confidential information obtained for
29-16 legitimate internal business and professional purposes, including
29-17 use in their own defense. Use of information under this subsection
29-18 does not constitute a waiver of the confidential and privileged
29-19 nature of the information.
29-20 SECTION 15. Effective September 1, 2002, Section 172.003(2),
29-21 Local Government Code, is amended to read as follows:
29-22 (2) "Political subdivision" means a county, municipality,
29-23 special district, [school district,] junior college district,
29-24 housing authority, or other political subdivision of the state.
29-25 SECTION 16. Effective September 1, 2002, the following laws
29-26 are repealed:
29-27 (1) Sections 22.004 and 22.005, Education Code;
30-1 (2) Section 7A, Article 3.50-4, Insurance Code; and
30-2 (3) Article 26.036, Insurance Code.
30-3 SECTION 17. (a) Not later than December 1, 2001, the
30-4 commissioner of insurance shall appoint the initial board of
30-5 directors of the Texas School Districts Health Benefits Risk Pool
30-6 established under Chapter 3B, Insurance Code, as added by this Act.
30-7 In making initial appointments to the board of directors, the
30-8 commissioner of insurance shall appoint three members for terms
30-9 expiring February 1, 2003, three members for terms expiring
30-10 February 1, 2005, and three members for terms expiring February 1,
30-11 2007.
30-12 (b) The initial board of directors shall adopt the plan of
30-13 operation for management of the pool as required by Article 3B.201,
30-14 Insurance Code, as added by this Act, not later than March 1, 2002.
30-15 (c) Coverage under the plan or plans authorized by Chapter
30-16 3B, Insurance Code, as added by this Act, shall begin with the
30-17 2002-2003 school year but not later than September 1, 2002.
30-18 SECTION 18. (a) The Teacher Retirement System of Texas
30-19 shall, not later than September 1, 2002, transfer from the program
30-20 established under Article 3.50-4, Insurance Code, all coverages
30-21 provided under the program for active employees and all records
30-22 relating to coverage of active employees under the program to the
30-23 board of directors of the Texas School Districts Health Benefits
30-24 Risk Pool established under Chapter 3B, Insurance Code, as added by
30-25 this Act.
30-26 (b) The comptroller shall, not later than September 1, 2002,
30-27 transfer from the fund established under Section 15, Article
31-1 3.50-4, Insurance Code, all assets and liabilities of that fund
31-2 relating to coverage for active employees to the fund established
31-3 under Subchapter F, Chapter 3B, Insurance Code, as added by this
31-4 Act.
31-5 (c) On the transfer of property described by this section,
31-6 the program provided by Section 7A, Article 3.50-4, Insurance Code,
31-7 is terminated.
31-8 SECTION 19. (a) A school district that, before September 1,
31-9 2002, established a health care fund under Section 22.005,
31-10 Education Code, shall abolish the fund not later than September 1,
31-11 2002. Any unexpended balance in the fund attributable to
31-12 deductions made from the salary of district employees shall be
31-13 distributed to those employees in shares proportionate to the
31-14 amount contributed by each employee not later than December 1,
31-15 2002.
31-16 (b) A school district that, before September 1, 2002,
31-17 participated in a risk pool established under Chapter 172, Local
31-18 Government Code, shall terminate that participation on the
31-19 expiration of the term of the existing benefits contract, but not
31-20 later than September 1, 2002.
31-21 SECTION 20. (a) Except as provided by this Act, this Act
31-22 takes effect September 1, 2001.
31-23 (b) The commissioner of insurance shall adopt rules as
31-24 necessary to implement this Act not later than December 31, 2001.