By Wohlgemuth                                         H.B. No. 2632
         77R8964 PB-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to adoption of a medical savings account program for
 1-3     active employees of school districts.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5                 ARTICLE 1.  MEDICAL SAVINGS ACCOUNT PROGRAM
 1-6           SECTION 1.01. Title 1, Insurance Code, is amended by adding
 1-7     Chapter 3A to read as follows:
 1-8         CHAPTER 3A.  TEXAS PUBLIC SCHOOL EMPLOYEES MEDICAL SAVINGS
 1-9                               ACCOUNT PROGRAM
1-10                      SUBCHAPTER A.  GENERAL PROVISIONS
1-11           Art. 3A.001.  GENERAL DEFINITIONS. In this chapter:
1-12                 (1)  "Account" means a medical savings account
1-13     established under this chapter for a participating employee.
1-14                 (2)  "Account administrator" means a person qualified
1-15     to act as an account administrator under Article 3A.054 of this
1-16     code.
1-17                 (3)  "Benefit options" include:
1-18                       (A)  long-term care coverage;
1-19                       (B)  long-term disability coverage;
1-20                       (C)  short-term disability coverage;
1-21                       (D)  accidental death and dismemberment coverage;
1-22                       (E)  group term life insurance coverage;
1-23                       (F)  vision care coverage;
1-24                       (G)  dental coverage;
 2-1                       (H)  prescription drug coverage;
 2-2                       (I)  prosthetic device coverage;
 2-3                       (J)  obstetrical coverage; and
 2-4                       (K)  any other supplemental coverage considered
 2-5     appropriate by the board of trustees.
 2-6                 (4)  "Board of trustees" means the board of trustees of
 2-7     the Teachers Retirement System of Texas.
 2-8                 (5)  "Dependent" means:
 2-9                       (A)  the spouse of a person;
2-10                       (B)  an unmarried child of the person if that
2-11     child is under 25 years of age, including:
2-12                             (i)  an adopted child;
2-13                             (ii)  a stepchild, foster child, or other
2-14     child who has a regular parent-child relationship with the person;
2-15     or
2-16                             (iii)  a recognized natural child; or
2-17                       (C)  the person's recognized natural child,
2-18     adopted child, foster child, stepchild, or other child who has a
2-19     regular parent-child relationship with the participating employee,
2-20     without regard to the age of the child, if the child lives with or
2-21     has care provided by the person on a regular basis and is mentally
2-22     retarded or physically incapacitated to an extent that the child is
2-23     dependent on the person for care or support, as determined by the
2-24     board of trustees.
2-25                 (6)  "District" means a public school district of this
2-26     state.
2-27                 (7)  "Employee" means an individual who is employed by
 3-1     a school district and who is not covered by a group insurance
 3-2     program under the Texas Employees Uniform Group Insurance Benefits
 3-3     Act (Article 3.50-2, Vernon's Texas Insurance Code) or the Texas
 3-4     State College and University Employees Uniform Insurance Benefits
 3-5     Act (Article 3.50-3, Vernon's Texas Insurance Code).  The term does
 3-6     not include an individual performing personal services for a school
 3-7     district as an independent contractor.
 3-8                 (8)  "Health benefits plan" means a plan designed to
 3-9     provide, pay for, or reimburse expenses for health care services.
3-10     The term includes:
3-11                       (A)  a group insurance policy, contract, or
3-12     certificate;
3-13                       (B)  a medical or hospital service agreement; or
3-14                       (C)  a similar group arrangement, including
3-15     coverage through a health maintenance organization regulated under
3-16     the Texas Health Maintenance Organization Act (Chapter 20A,
3-17     Vernon's Texas Insurance Code).
3-18                 (9)  "Health benefits plan provider" means an entity
3-19     that provides health benefits plan coverage in this state. The term
3-20     includes:
3-21                       (A)  an insurance company authorized to do
3-22     business in this state;
3-23                       (B)  a group hospital service corporation
3-24     operating under Chapter 20 of this code;
3-25                       (C)  a health maintenance organization regulated
3-26     under the Texas Health Maintenance Organization Act (Chapter 20A,
3-27     Vernon's Texas Insurance Code);
 4-1                       (D)  a stipulated premium insurance company
 4-2     operating under Chapter 22 of this code;
 4-3                       (E)  a multiple employer welfare arrangement
 4-4     subject to Subchapter I, Chapter 3, of this code;
 4-5                       (F)  an approved nonprofit health corporation
 4-6     that holds a certificate of authority issued under Article 21.52F
 4-7     of this code; or
 4-8                       (G)  any other entity providing a plan of health
 4-9     insurance or health benefits coverage subject to state regulation
4-10     by the department.
4-11                 (10)  "Participant" means a person enrolled in the
4-12     program.
4-13                 (11)  "Program" means the Texas public school employees
4-14     medical savings account program established by this chapter.
4-15                 (12)  "Qualified health care expense" means an expense
4-16     paid by a participating employee for medical care, as defined by 26
4-17     U.S.C. Section 213(d), as amended, for the employee or the
4-18     employee's dependents, as defined by 26 U.S.C. Section 152, as
4-19     amended.
4-20           Art. 3A.002.  APPLICABILITY OF OTHER LAW. This chapter does
4-21     not prohibit a district from providing additional or supplemental
4-22     insurance coverage under Article 3.51 or 26.036 of this code or
4-23     Section 22.005, Education Code.
4-24           SUBCHAPTER B.  ESTABLISHMENT OF MEDICAL SAVINGS ACCOUNT
4-25               PROGRAM; POWERS AND DUTIES OF BOARD OF TRUSTEES
4-26           Art. 3A.051.  CREATION OF PROGRAM; ADMINISTRATION; RULES. (a)
4-27     The Texas public school employees medical savings account program
 5-1     is established for the benefit of public school employees and those
 5-2     employees' dependents.
 5-3           (b)  The board of trustees is the trustee for the program and
 5-4     shall administer the program.
 5-5           (c)  The board of trustees shall adopt rules, plans, and
 5-6     procedures as necessary for the administration of the medical
 5-7     savings account program adopted under this chapter.
 5-8           Art. 3A.052.  CONTRACTS. On a competitive bid basis, the
 5-9     board of trustees shall, as necessary to implement this article,
5-10     contract with:
5-11                 (1)  a qualified, experienced firm of group insurance
5-12     specialists;
5-13                 (2)  a qualified, experienced firm of specialists in
5-14     any of the benefit options authorized under this chapter; and
5-15                 (3)  an administering firm to act for the board of
5-16     trustees in the capacity of account administrator.
5-17           Art. 3A.053.  REQUIREMENTS FOR MEDICAL SAVINGS ACCOUNTS.
5-18     (a)  The board of trustees shall request in writing a ruling or
5-19     opinion from the Internal Revenue Service as to whether the medical
5-20     savings accounts adopted under this chapter and the state rules
5-21     governing those accounts qualify the accounts for appropriate
5-22     federal tax exemptions.  Based on the response of the Internal
5-23     Revenue Service, the board of trustees shall:
5-24                 (1)  modify the rules, plans, and procedures adopted
5-25     under Article 3A.051 of this code as necessary to ensure the
5-26     qualification of those accounts for appropriate federal tax
5-27     exemptions; and
 6-1                 (2)  certify the information regarding federal tax
 6-2     qualifications to the comptroller.
 6-3           (b)  Once finalized rules, plans, and procedures are adopted
 6-4     by the board of trustees and approved by the Internal Revenue
 6-5     Service, the board of trustees shall:
 6-6                 (1)  solicit bids for the development and establishment
 6-7     of the medical savings account program; and
 6-8                 (2)  provide information to participating employees
 6-9     regarding the operation of the medical savings accounts  adopted
6-10     under this chapter.
6-11           Art. 3A.054.  ACCOUNT ADMINISTRATOR. (a)  The following
6-12     persons may act as an account administrator under this chapter:
6-13                 (1)  a bank, savings and loan association, savings
6-14     bank, or credit union chartered under the laws of this state or the
6-15     United States;
6-16                 (2)  a trust company authorized to act as a fiduciary;
6-17                 (3)  an insurance company authorized under this chapter
6-18     to engage in business in this state, a group hospital service
6-19     corporation authorized under Chapter 20 of this code to engage in
6-20     business in this state, or a health maintenance organization
6-21     authorized under the Texas Health Maintenance Organization Act
6-22     (Chapter 20A, Vernon's Texas Insurance Code) to engage in business
6-23     in this state;
6-24                 (4)  a third-party administrator holding a certificate
6-25     of authority issued under Article 21.07-6 of this code; or
6-26                 (5)  a certified public accountant licensed by the
6-27     Texas State Board of Public Accountancy.
 7-1           (b)  An account administrator may charge a fee for services
 7-2     performed as the administrator of an account.  The amount of the
 7-3     fee shall be established in the contract between the account
 7-4     administrator and the board of trustees.
 7-5           (c)  The account administrator is the fiduciary of the
 7-6     participating employee who has an account under this chapter.
 7-7           Art. 3A.055.  PERSONNEL. The board of trustees may employ
 7-8     persons as necessary to assist the board of trustees in
 7-9     administering this chapter.
7-10           Art. 3A.056.  ANNUAL REPORT OF PROGRAM ACTIVITIES. (a)  Not
7-11     later than June 1 of each year, the board of trustees shall submit
7-12     a report to the governor, the lieutenant governor, the speaker of
7-13     the house of representatives, and the commissioner.
7-14           (b)  The report must summarize the activities of the program
7-15     in the calendar year preceding the year in which the report is
7-16     submitted.
7-17              SUBCHAPTER C. PROGRAM PARTICIPATION AND COVERAGE
7-18           Art. 3A.101.  REQUIRED PARTICIPATION BY DISTRICTS;
7-19     PARTICIPATION OBLIGATIONS. (a)  Each district shall participate in
7-20     the program as provided by this subchapter.
7-21           (b)  Participation in the program includes:
7-22                 (1)  paying the required district contributions to the
7-23     accounts as provided by Article 3A.202 of this code; and
7-24                 (2)  providing a notice to each employee as prescribed
7-25     by the board of trustees relating to the existence of the program
7-26     that contains the address from which an employee may obtain
7-27     information about:
 8-1                       (A)  the coverage offered by the program;
 8-2                       (B)  eligibility requirements for and costs of
 8-3     that coverage;
 8-4                       (C)  the contribution that the employee is
 8-5     eligible to receive from the state and the employing school
 8-6     district for the costs of the coverage; and
 8-7                       (D)  other information considered useful by the
 8-8     board of trustees.
 8-9           Art. 3A.102.  PROVISION OF COVERAGE. The program shall
8-10     provide, through the medical savings accounts, group health
8-11     benefits plan coverage as provided by this chapter to an employee
8-12     who is eligible for that coverage under this chapter and, as
8-13     provided by this chapter, to that employee's dependents.
8-14           Art. 3A.103.  COVERAGE PLANS. (a)  The program must include:
8-15                 (1)  a primary care coverage plan comparable in scope
8-16     and, to the greatest extent possible, in cost to the basic coverage
8-17     for health care provided to state employees under the Texas
8-18     Employees Uniform Group Insurance Benefits Act (Article 3.50-2,
8-19     Vernon's Texas Insurance Code); and
8-20                 (2)  a catastrophic care coverage plan.
8-21           (b)  The catastrophic care coverage plan must be less
8-22     expensive for employee-only and employee and dependents coverage
8-23     than the primary care coverage plan.
8-24           Art. 3A.104.  PARTICIPATION BY EMPLOYEES. (a)  Each employee
8-25     is eligible to participate in the program established under this
8-26     chapter.  An employee who elects to participate shall be enrolled
8-27     in the primary care coverage plan unless the employee elects in
 9-1     writing to participate only in the catastrophic care coverage plan.
 9-2           (b)  Participation in the program qualifies an employee to
 9-3     receive a contribution to the employee's account as authorized
 9-4     under Subchapter D of this chapter.  An employee who elects not to
 9-5     participate in the program is ineligible to receive a contribution.
 9-6           Art. 3A.105. COVERAGE FOR DEPENDENTS. (a)  A participating
 9-7     employee is entitled to obtain for a dependent of the participating
 9-8     employee coverage in the plan selected by the employee in the
 9-9     manner determined by the board of trustees.
9-10           (b)  The participating employee shall make any required
9-11     additional contribution payments for the dependent coverage in the
9-12     manner prescribed by the board of trustees.
9-13           (c)  A district is not prohibited by this chapter from
9-14     contributing to the cost of dependent coverage.
9-15           Art. 3A.106.  IDENTIFICATION CARDS. (a)  The account
9-16     administrator shall issue to each participating employee an
9-17     identification card indicating:
9-18                 (1)  the name of the employee and any dependent of the
9-19     employee for whom eligible expenses may be paid under the program;
9-20                 (2)  the name, address, and phone number of the account
9-21     administrator; and
9-22                 (3)  a description of the coverage plan in which the
9-23     employee is participating.
9-24           (b)  The account administrator shall issue a duplicate
9-25     identification card to each of the employee's dependents for whom
9-26     eligible expenses may be paid under the program.
9-27           Art. 3A.107.  USE OF ACCOUNT. (a)  The account administrator
 10-1    shall use money in an employee's account to pay:
 10-2                (1)  the costs of the health benefit plan coverage
 10-3    selected by the employee for the employee and the employee's
 10-4    dependents; and
 10-5                (2)  any additional eligible medical expenses of the
 10-6    participating employee or the employee's dependents or to reimburse
 10-7    the employee for those expenses.
 10-8          (b)  A medical expense is eligible for payment or
 10-9    reimbursement under Subsection (a)(2) of this article if:
10-10                (1)  it is a medical expense described under Section
10-11    213(d), Internal Revenue Code of 1986 (26 U.S.C. Section 213(d)),
10-12    as amended; and
10-13                (2)  payment or reimbursement for the expense is not
10-14    otherwise provided for under the coverage plan selected by the
10-15    employee or under another insurance policy, including a motor
10-16    vehicle or workers' compensation insurance policy.
10-17          Art. 3A.108.  PROMPT PAYMENT OF CLAIMS. (a)  Except as
10-18    provided by Subsection (b) of this article, the account
10-19    administrator shall pay a claim for an expense that is eligible for
10-20    payment or reimbursement from the account not later than the 30th
10-21    day after the date the claim is submitted to the account
10-22    administrator.
10-23          (b)  The account administrator may request documents
10-24    necessary to verify whether an expense is eligible for payment or
10-25    reimbursement from the account. If the account administrator makes
10-26    a request under this subsection, the account administrator shall
10-27    pay a claim for an expense that is eligible for payment or
 11-1    reimbursement from the account not later than the 30th day after
 11-2    the date the documents are received by the account administrator.
 11-3                        SUBCHAPTER D. CONTRIBUTIONS
 11-4          Art. 3A.201.  STATE CONTRIBUTION. For each participating
 11-5    employee, the state shall annually contribute $1,500 to the medical
 11-6    savings account established for that employee for the payment of
 11-7    qualified health care expenses if the board of trustees has
 11-8    determined that those accounts meet the requirements described by
 11-9    Article 3A.053 of this chapter.
11-10          Art. 3A.202.  DISTRICT AND EMPLOYEE CONTRIBUTIONS. (a)  For
11-11    each participating district employee, the employing school district
11-12    and the employee shall annually contribute to the medical savings
11-13    account established for that employee:
11-14                (1)  $2,000 for employee-only coverage; or
11-15                (2)  if the participating employee is also covering
11-16    dependents, $3,000.
11-17          (b)  The district shall pay two-thirds of the contribution
11-18    required under Subsection (a)  of this article.
11-19          (c)  The participating employee shall pay:
11-20                (1)  the balance of the contribution required under
11-21    Subsection (a)  of this article; and
11-22                (2)  any additional amounts required to cover benefit
11-23    options selected by the employee.
11-24          (d)  The participating employee shall remit the employee's
11-25    contribution in monthly installments to the district in the manner
11-26    prescribed by the district.  The district shall remit its
11-27    contribution and the contributions made by its employees to the
 12-1    board of trustees in the manner prescribed by the board of trustees
 12-2    for transmittal to the account administrator.
 12-3            SUBCHAPTER E. RECORDS, PROCEEDINGS, AND ACCOUNTING;
 12-4                           INVESTMENT AUTHORITY
 12-5          Art. 3A.251.  CONFIDENTIALITY OF RECORDS. (a)  Section
 12-6    825.507, Government Code, applies to information in records
 12-7    relating to an employee or other participant under the program.
 12-8          (b)  The program may disclose to a health benefits plan
 12-9    provider information in the records of an individual that the board
12-10    of trustees determines is necessary to administer the program.
12-11          Art. 3A.252.  CLAIM DENIAL; EXPULSION FROM PROGRAM. (a)  A
12-12    participant may appeal a claim denial or expulsion from the program
12-13    to the board of trustees.
12-14          (b)  Adjudication of claim disputes and expulsions from the
12-15    program are subject to the contested case provisions of Chapter
12-16    2001, Government Code.
12-17          Art. 3A.253.  HEARING EXAMINER.  The board of trustees may
12-18    delegate its authority to adjudicate claim disputes and expulsions
12-19    to a qualified hearing examiner.
12-20          Art. 3A.254.  APPEAL. (a)  A decision of the board of
12-21    trustees or hearing examiner is subject to review by a district
12-22    court in the county in which the claimant resides.
12-23          (b)  An appeal of a determination under this section is under
12-24    the substantial evidence rule.
12-25          Art. 3A.255.  ANNUAL ACCOUNTING. (a)  In this article, "plan
12-26    year" means the period beginning on September 1 and ending the
12-27    following August 31.
 13-1          (b)  Coverage purchased under this chapter must provide for
 13-2    an accounting to the board of trustees by each health benefits plan
 13-3    provider.
 13-4          (c)  The accounting must be submitted:
 13-5                (1)  not later than the 90th day after the last day of
 13-6    each plan year; and
 13-7                (2)  on a form approved by the board of trustees.
 13-8          (d)  Each health benefits plan provider shall prepare any
 13-9    other report required by rule by the board of trustees.
13-10          (e)  A health benefits plan provider may not assess an
13-11    additional charge for preparation of an accounting report.
13-12          Art. 3A.256.  ASSISTANCE. In implementing and administering
13-13    this chapter, the board of trustees may obtain the assistance of
13-14    any state agency the board considers appropriate.
13-15                ARTICLE 2.  CONFORMING AMENDMENTS; REPEALER
13-16          SECTION 2.01.  Section 1, Article 3.50-4, Insurance Code, is
13-17    amended to read as follows:
13-18          Sec. 1.  SHORT TITLE.  This article may be cited as the Texas
13-19    Public School Retired Employees Group Insurance Act.
13-20          SECTION 2.02. Sections 2(3), (4), (11), and (13), Article
13-21    3.50-4, Insurance Code, are amended to read as follows:
13-22                (3)  "Dependent" means:
13-23                      (A)  a spouse of a retiree [or active member];
13-24                      (B)  a retiree's[, an active member's,] or a
13-25    deceased active member's unmarried child who is younger than 25
13-26    years of age including:
13-27                            (i)  an adopted child;
 14-1                            (ii)  a foster child, a stepchild, or other
 14-2    child who is in a regular parent-child relationship; and
 14-3                            (iii)  a recognized natural child; and
 14-4                      (C)  a retiree's [or active member's] recognized
 14-5    natural child, adopted child, foster child, stepchild, or other
 14-6    child who is in a regular parent-child relationship and who lives
 14-7    with or whose care is provided by the retiree[, active member,] or
 14-8    surviving spouse on a regular basis, regardless of the child's age,
 14-9    if the child is mentally retarded or physically incapacitated to
14-10    such an extent as to be dependent on the retiree[, active member,]
14-11    or surviving spouse for care or support, as determined by the
14-12    trustee, or in the case of a deceased active member, a recognized
14-13    natural child, adopted child, foster child, stepchild, or other
14-14    child who was in a regular parent-child relationship and who lived
14-15    with or whose care was provided by the deceased active member on a
14-16    regular basis, regardless of the child's age, if the child is
14-17    mentally retarded or physically incapacitated to such an extent as
14-18    to have been dependent on the deceased active member or surviving
14-19    spouse for care or support, as determined by the trustee.
14-20                (4)  "Fund" means the Texas public school retired
14-21    employees group insurance fund.
14-22                (11)  "Surviving spouse" means[:]
14-23                      [(A)]  the surviving spouse of a deceased
14-24    retiree[;]
14-25                      [(B)  the surviving spouse of a deceased active
14-26    member of the Teacher Retirement System of Texas:]
14-27                            [(i)  for whom contributions have been made
 15-1    to the Texas Public School Retired Employees Group Insurance
 15-2    Program at the last place of employment of the deceased active
 15-3    member in public education in this state;]
 15-4                            [(ii)  who had 10 or more years of service
 15-5    credit in the Teacher Retirement System of Texas; and]
 15-6                            [(iii)  who died on or after September 1,
 15-7    1986].
 15-8                (13)  "Surviving dependent child" means[:]
 15-9                      [(A)]  the dependent child of a deceased retiree
15-10    who has survived the deceased retiree and the deceased retiree's
15-11    spouse[; or]
15-12                      [(B)  the dependent child of a deceased active
15-13    member of the Teacher Retirement System of Texas who has survived
15-14    the deceased active member and the deceased member's spouse if the
15-15    deceased active member:]
15-16                            [(i)  had contributions to the Texas Public
15-17    School Retired Employees Group Insurance Program at his last place
15-18    of employment within public education;]
15-19                            [(ii)  had 10 or more years of service
15-20    credit in the Teacher Retirement System of Texas; and]
15-21                            [(iii)  died on or after September 1,
15-22    1986].
15-23          SECTION 2.03.  Section 3(a), Article 3.50-4, Insurance Code,
15-24    is amended to read as follows:
15-25          (a)  The Texas Public School Retired Employees Group
15-26    Insurance Program is established to provide for an insurance plan
15-27    or plans under this article.
 16-1          SECTION 2.04.  Section 5(a), Article 3.50-4, Insurance Code,
 16-2    is amended to read as follows:
 16-3          (a)  The trustee may adopt rules, plans, procedures, and
 16-4    orders reasonably necessary to implement this article, including:
 16-5                (1)  establishment of minimum benefit and financing
 16-6    standards for group insurance coverage to be provided to all
 16-7    retirees, [active employees,] dependents, surviving spouses, and
 16-8    surviving dependent children;
 16-9                (2)  establishment of basic and optional group coverage
16-10    to be provided to retirees, [active employees,] dependents,
16-11    surviving spouses, and surviving dependent children;
16-12                (3)  establishment of the procedures for contributions
16-13    and deductions;
16-14                (4)  establishment of periods for enrollment and
16-15    selection of optional coverage and procedures for enrolling and
16-16    exercising options under the plan;
16-17                (5)  determination of methods and procedures for claims
16-18    administration;
16-19                (6)  study of the operation of all insurance coverage
16-20    provided under this article;
16-21                (7)  administration of the fund;
16-22                (8)  adoption of a timetable for the development of
16-23    minimum benefit and financial standards for group insurance
16-24    coverage, establishment of group insurance plans, and the taking of
16-25    bids for and awarding of contracts for insurance plans; and
16-26                (9)  contracting with an independent and experienced
16-27    group insurance consultant or actuary, who does not receive
 17-1    insurance commissions from any insurance company, for advice and
 17-2    counsel in implementing and administering this program.
 17-3          SECTION 2.05.  Section 7(a), Article 3.50-4, Insurance Code,
 17-4    is amended to read as follows:
 17-5          (a)  Each retiree must be enrolled in a basic plan offered in
 17-6    the program unless:
 17-7                (1)  the retiree rejects enrollment in the program in
 17-8    writing on a form provided by the trustee;  [or]
 17-9                (2)  the retiree is participating in the Texas public
17-10    school employees medical savings account program as provided by
17-11    Chapter 3A of this code; or
17-12                (3)  the retiree has been found under Section 18A of
17-13    this article to have defrauded or attempted to defraud the program.
17-14          SECTION 2.06.  Section 8(e), Article 3.50-4, Insurance Code,
17-15    is amended to read as follows:
17-16          (e)  The trustee may contract for and make available to all
17-17    retirees, dependents, surviving spouses, and surviving dependent
17-18    children optional group health benefit plans in addition to the
17-19    basic plans.  The optional coverage may include a smaller
17-20    deductible, lower coinsurance, or additional categories of benefits
17-21    permitted under Subsection (b) of this section to provide
17-22    additional levels of coverages and benefits.  The trustee may
17-23    utilize a portion of the funds received for the Texas Public School
17-24    Retired Employees Group Insurance Program to offset some portion of
17-25    costs paid by the retiree for optional coverage if such utilization
17-26    does not reduce the period the program is projected to remain
17-27    financially solvent by more than one year in a biennium.  Any
 18-1    additional contributions for these optional plans shall be paid for
 18-2    by the retiree, surviving spouse, or surviving dependent children.
 18-3          SECTION 2.07.  Section 9, Article 3.50-4, Insurance Code, is
 18-4    amended to read as follows:
 18-5          Sec. 9.  BENEFIT CERTIFICATES. At such times, or upon such
 18-6    events, as designated by the trustee, each insurance carrier shall
 18-7    issue to each retiree, [active employee,] surviving spouse, or
 18-8    surviving dependent child insured under this article a certificate
 18-9    of insurance that:
18-10                (1)  states the benefits to which the person is
18-11    entitled;
18-12                (2)  states to whom the benefits are payable;
18-13                (3)  states to whom the claims must be submitted; and
18-14                (4)  summarizes the provisions of the policy
18-15    principally affecting the person.
18-16          SECTION 2.08.  Section 12, Article 3.50-4, Insurance Code, is
18-17    amended to read as follows:
18-18          Sec. 12.  DEATH CLAIMS: BENEFICIARIES. The amount of group
18-19    life insurance and group accidental death and dismemberment
18-20    insurance covering a retiree, [active employee,] surviving spouse,
18-21    dependent, or surviving dependent child at the date of death shall
18-22    be paid, on the establishment of a valid claim, only:
18-23                (1)  to the beneficiary or beneficiaries designated by
18-24    the person in a signed and witnessed written document received
18-25    before death in the trustee's office; or
18-26                (2)  if no beneficiary is properly designated or in
18-27    existence, to persons in accordance with the trustee's death
 19-1    benefit provisions in Subsection (b), Section 824.103, Government
 19-2    Code.
 19-3          SECTION 2.09.  Section 13, Article 3.50-4, Insurance Code, is
 19-4    amended to read as follows:
 19-5          Sec. 13.  AUTOMATIC COVERAGE.  A retiree [or active employee]
 19-6    who applies during an enrollment period may not be denied any of
 19-7    the group insurance basic coverage provided under this article
 19-8    unless the person has been found under Section 18A of this article
 19-9    to have defrauded or attempted to defraud the Texas Public School
19-10    Retired Employees Group Insurance Program.
19-11          SECTION 2.10.  Section 15, Article 3.50-4, Insurance Code, is
19-12    amended to read as follows:
19-13          Sec. 15.  TEXAS PUBLIC SCHOOL RETIRED EMPLOYEES GROUP
19-14    INSURANCE FUND. (a)  The Texas public school retired employees
19-15    group insurance fund is created. The comptroller is the custodian
19-16    of the fund, and the trustee shall administer the fund.  All
19-17    contributions from active employees, retirees, and the state,
19-18    contributions for optional coverages, investment income,
19-19    appropriations for implementation of this program, and other money
19-20    required or authorized to be paid into the fund shall be paid into
19-21    the fund.    From the fund shall be paid, without state fiscal year
19-22    limitation, the appropriate premiums to the carrier or carriers
19-23    providing group coverage under the plan or plans under this
19-24    article, claims for benefits under the group coverage, and the
19-25    amounts expended by the trustee for administration of the program.
19-26    The appropriate portion of the contributions to the fund to provide
19-27    for incurred but unreported claim reserves and contingency
 20-1    reserves, as determined by the trustee, shall be retained in the
 20-2    fund.
 20-3          (b)  The trustee shall transfer the amounts deducted from
 20-4    annuities for contributions into the fund.
 20-5          (c)  Expenses for the development and administration of the
 20-6    program shall be spent as provided by a budget adopted by the
 20-7    trustee.
 20-8          (d)  The trustee may invest and reinvest the money in the
 20-9    fund as provided by Subchapter D, Chapter 825, Government Code, for
20-10    assets of the Teacher Retirement System of Texas.
20-11          SECTION 2.11.  Section 18A, Article 3.50-4, Insurance Code,
20-12    is amended to read as follows:
20-13          Sec. 18A.  EXPULSION FROM PROGRAM FOR FRAUD. (a)  After
20-14    notice and hearing as provided by this section, the trustee may
20-15    expel from participation in the Texas Public School Retired
20-16    Employees Group Insurance Program any retiree, [active employee,]
20-17    surviving spouse, dependent, or surviving dependent child who
20-18    submits a fraudulent claim under, or has defrauded or attempted to
20-19    defraud, any health benefits plan offered under the program.
20-20          (b)  On its motion or on the receipt of a complaint, the
20-21    trustee may call and hold a hearing to determine whether a person
20-22    has submitted a fraudulent claim under, or has defrauded or
20-23    attempted to defraud, any health benefits plan offered under the
20-24    Texas Public School Retired Employees Group Insurance Program.
20-25          (c)  A proceeding under this section is a contested case
20-26    under Chapter 2001, Government Code [the Administrative Procedure
20-27    and Texas Register Act (Article 6252-13a, Vernon's Texas Civil
 21-1    Statutes)].
 21-2          (d)  If the trustee, at the conclusion of the hearing, issues
 21-3    a decision that finds that the accused submitted a fraudulent claim
 21-4    or has defrauded or attempted to defraud any health benefits plan
 21-5    offered under the Texas Public School Retired Employees Group
 21-6    Insurance Program, the trustee shall expel the person from
 21-7    participation in the program.
 21-8          (e)  The substantial evidence rule shall be used on any
 21-9    appeal of a decision of the trustee under this section.
21-10          (f)  A person expelled from the Texas Public School Retired
21-11    Employees Group Insurance Program may not be insured by any health
21-12    insurance plan offered by the program for a period, to be
21-13    determined by the trustee, of up to five years from the date the
21-14    expulsion takes effect.
21-15          SECTION 2.12.  Section 18B(a), Article 3.50-4, Insurance
21-16    Code, is amended to read as follows:
21-17          (a)  Section 825.507, Government Code, concerning the
21-18    confidentiality of information in records that are in the custody
21-19    of the Teacher Retirement System of Texas, applies to information
21-20    in records that are in the custody of the retirement system
21-21    regarding retirees, active employees, annuitants, or beneficiaries
21-22    under the Texas Public School Retired Employees Group Insurance
21-23    Program.
21-24          SECTION 2.13.  Sections 18C(c), (d), and (i), Article 3.50-4,
21-25    Insurance Code, are amended to read as follows:
21-26          (c)  The trustee, the Texas public school retired employees
21-27    group insurance program, the Texas public school retired employees
 22-1    group insurance fund, and the board of trustees, officers, advisory
 22-2    committee members, and employees of the trustee are not liable for
 22-3    damages arising from the acts or omissions of health care providers
 22-4    who are participating health care providers in the coordinated care
 22-5    network established by the trustee.  Those health care providers
 22-6    are independent contractors and are responsible for their own acts
 22-7    and omissions.
 22-8          (d)  The trustee, the Texas public school retired employees
 22-9    group insurance program, the Texas public school retired employees
22-10    group insurance fund, or a member of a credentialing committee, or
22-11    the board of trustees, officers, advisory committee members, or
22-12    employees of the trustee are not liable for damages arising from
22-13    any act, statement, determination, recommendation made, or act
22-14    reported, without malice, in the course of the evaluation of the
22-15    qualifications of health care providers or of the patient care
22-16    rendered by those providers.
22-17          (i)  A credentialing committee, a person participating in a
22-18    credentialing review, a health care provider, the trustee, the
22-19    Texas public school retired employees group insurance program, or
22-20    the board of trustees, officers, advisory committee members, or
22-21    employees of the trustee that are named as defendants in any civil
22-22    action filed as a result of participation in the credentialing
22-23    process may use otherwise confidential information obtained for
22-24    legitimate internal business and professional purposes, including
22-25    use in their own defense.  Use of information under this subsection
22-26    does not constitute a waiver of the confidential and privileged
22-27    nature of the information.
 23-1          SECTION 2.14.  The following laws are repealed:
 23-2                (1)  Section 22.004, Education Code; and
 23-3                (2)  Section 7A, Article 3.50-4, Insurance Code.
 23-4          SECTION 2.15.  This article takes effect September 1, 2002.
 23-5              ARTICLE 3.  TRANSITION; GENERAL EFFECTIVE DATE
 23-6          SECTION 3.01. (a)  During the 2001-2002 school year, the
 23-7    Teachers Retirement System of Texas shall develop the program to be
 23-8    implemented and administered under Chapter 3A, Insurance Code, as
 23-9    added by this Act.
23-10          (b)  Participation in the program authorized by Chapter 3A,
23-11    Insurance Code, as added by this Act, shall begin with the
23-12    2002-2003 school year, but not later than September 1, 2002.
23-13          SECTION 3.02.  The Employees Retirement System of Texas shall
23-14    adopt rules as necessary to implement Section 3.01 of this Act not
23-15    later than March 1, 2002.
23-16          SECTION 3.03.  Except as otherwise provided by this Act, this
23-17    Act takes effect September 1, 2001.