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78R8613 PB-D
By: Zedler H.B. No. 2830
A BILL TO BE ENTITLED
AN ACT
relating to the creation and operation of a statewide risk pool to
provide health benefits coverage to active employees of school
districts.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle H, Title 8, Insurance Code, is amended
by adding Chapter 1579 to read as follows:
CHAPTER 1579. SCHOOL DISTRICTS HEALTH BENEFITS RISK POOL
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1579.001. POOL PURPOSE. The purpose of this chapter is
to create a statewide pool to provide school district employees
access to quality group health benefits coverage at minimum cost to
school districts and their active employees.
Sec. 1579.002. DEFINITIONS. In this chapter:
(1) "Board" means the board of directors of the pool.
(2) "Employee" means an individual who is employed to
work at least 20 hours a week for a school district during the
school district's school year.
(3) "Health benefit plan provider" means an entity
that provides health benefit plan coverage in this state, including
stop-loss or excess loss insurance. The term includes:
(A) an insurance company;
(B) a group hospital service corporation
operating under Chapter 842;
(C) a stipulated premium insurance company
operating under Chapter 884;
(D) a health maintenance organization;
(E) a multiple employer welfare arrangement
subject to Chapter 846;
(F) an approved nonprofit health corporation
that holds a certificate of authority under Chapter 844; and
(G) any other entity providing a plan of health
insurance or health benefits subject to state insurance regulation.
(4) "Health maintenance organization" means an entity
that holds a certificate of authority to operate under Chapter 843
of this code.
(5) "Hospital" means a hospital for which a license is
issued under Chapter 241, Health and Safety Code, or that is owned
or operated by the federal or state government.
(6) "Physician" means a person licensed to practice
medicine in this state under Subtitle B, Title 3, Occupations Code.
(7) "Pool" means the Texas School Districts Health
Benefits Risk Pool.
Sec. 1579.003. HEALTH BENEFIT PLAN DEFINED. (a) In this
chapter, "health benefit plan" means a group health benefit plan
that provides benefits for medical or surgical expenses incurred as
a result of a health condition, accident, or sickness, including a
group insurance policy, a group hospital service contract, or a
group evidence of coverage or similar coverage document that is
offered by a health benefit plan provider.
(b) "Health benefit plan" does not include:
(1) a plan that provides coverage:
(A) only for benefits for a specified disease or
for another limited benefit;
(B) only for accidental death or dismemberment;
(C) for wages or payments in lieu of wages for a
period during which an employee is absent from work because of
sickness or injury;
(D) as a supplement to a liability insurance
policy;
(E) for credit insurance;
(F) only for dental or vision care;
(G) only for hospital expenses; or
(H) only for indemnity for hospital confinement;
(2) a small employer health benefit plan written under
Chapter 26 of this code;
(3) a Medicare supplemental policy as defined by
Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss),
as amended;
(4) a workers' compensation insurance policy;
(5) medical payment insurance coverage provided under
a motor vehicle insurance policy; or
(6) a long-term care insurance policy, including a
nursing home fixed indemnity policy, unless the commissioner
determines that the policy provides benefit coverage so
comprehensive that the policy is a health benefit plan as described
by Subsection (a) of this article.
Sec. 1579.004. DEPENDENT DEFINED. For purposes of this
chapter, an individual is a dependent of another if the individual
is the other individual's:
(1) resident spouse or unmarried child under 18 years
of age; or
(2) child and:
(A) is a full-time student under 23 years of age
who is financially dependent on the other individual;
(B) is over 18 years of age and is an individual
for whom the other individual may be obligated to pay child support;
or
(C) regardless of the age of the child, is
disabled and dependent on the other individual.
Sec. 1579.005. STATE AUDIT OF POOL. (a) The state auditor
shall annually conduct a special audit of the pool under Chapter
321, Government Code. The special audit must include a financial
audit and an economy and efficiency audit.
(b) The state auditor shall report the cost of each audit
conducted under this section to the board and the comptroller. The
board shall remit that amount to the comptroller.
Sec. 1579.006. RULES. The commissioner may adopt rules
necessary to implement this chapter.
Sec. 1579.007. COMPLAINT PROCEDURES. (a) An applicant for
or participant in coverage from the pool is entitled to have
complaints against the pool reviewed by a grievance committee
appointed by the board.
(b) The grievance committee shall report to the board after
completion of the review of each complaint.
(c) The board shall retain each written complaint
concerning the pool at least until the third anniversary of the date
the pool received the complaint.
[Sections 1579.008-1579.050 reserved for expansion]
SUBCHAPTER B. BOARD OF DIRECTORS
Sec. 1579.051. GOVERNANCE OF POOL; BOARD MEMBERSHIP. (a)
The pool is governed by a board of directors.
(b) The board consists of nine members appointed by the
commissioner as follows:
(1) two members must be individuals who are affiliated
with a health benefit plan provider authorized to write health
benefit plans in this state;
(2) three members must be school district employees;
(3) three members must be school district
administrators; and
(4) one member must be a physician.
Sec. 1579.052. PRESIDING OFFICER. The commissioner shall
designate one member of the board to serve as presiding officer who
serves in that capacity at the pleasure of the commissioner.
Sec. 1579.053. TERMS; VACANCY. (a) Members of the board
serve staggered six-year terms with the terms of three members
expiring February 1 of each odd-numbered year.
(b) The commissioner shall fill a vacancy on the board by
appointing, for the unexpired term, an individual who has the
appropriate qualifications to fill that position.
Sec. 1579.054. PER DIEM; REIMBURSEMENT. A member of the
board is entitled to:
(1) a per diem in the amount provided by the General
Appropriations Act for state officials for each day the member
performs duties as a board member; and
(2) reimbursement of expenses incurred while
performing duties as a board member as provided by Chapter 660,
Government Code, and the General Appropriations Act.
Sec. 1579.055. MEMBER'S IMMUNITY. (a) A member of the
board is not liable for an act or omission made in good faith in the
performance of powers and duties under this chapter.
(b) A cause of action does not arise against a member of the
board for an act or omission described by Subsection (a).
Sec. 1579.056. ADJUSTMENTS. (a) The board may adjust
deductibles, the amounts of excess loss coverage, and the periods
governing preexisting conditions under Section 1579.154 to
preserve the financial integrity of the pool.
(b) Not later than the 30th day after the date the board
makes an adjustment under this section, the board shall submit to
the commissioner a written report containing a description of and
the reasons for the adjustment.
Sec. 1579.057. ANNUAL REPORT OF POOL'S ACTIVITIES. (a) Not
later than June 1 of each year, the board shall submit a report to
the governor, the lieutenant governor, the speaker of the house of
representatives, and the commissioner.
(b) The report must summarize the activities of the pool in
the calendar year preceding the year in which the report is
submitted and must include information relating to net written and
earned premiums, plan enrollment, administration expenses, and
paid and incurred losses.
Sec. 1579.058. ADDITIONAL POWERS AND DUTIES. The
commissioner by rule may establish powers and duties of the board in
addition to those provided by this chapter.
[Sections 1579.059-1579.100 reserved for expansion]
SUBCHAPTER C. POWERS AND DUTIES OF POOL
Sec. 1579.101. REQUIRED PARTICIPATION BY SCHOOL DISTRICTS;
INFORMATION ABOUT POOL. (a) Each school district shall provide its
employees access to health benefit plan coverage.
(b) A school district shall provide to each employee notice
as prescribed by the commissioner relating to the existence of the
pool that contains the address from which an employee may obtain
information about:
(1) the coverage offered by the pool;
(2) the eligibility for and cost of that coverage; and
(3) other information that allows the employee to
compare the coverage offered by the pool with any other coverage for
which the employee may be eligible.
Sec. 1579.102. STAFF; COMMITTEES. (a) The pool may employ
and set the compensation of any staff necessary to assist the pool
in carrying out its responsibilities and functions.
(b) The pool may appoint appropriate legal, actuarial, and
other committees necessary to provide technical assistance in
operating the pool and performing any of the functions of the pool.
Sec. 1579.103. PROVIDING COVERAGE. The pool shall provide
health benefit plan coverage to an employee who is eligible for that
coverage under this chapter and to that employee's dependents. The
pool coverage is subject to this chapter and the pool's plan of
operation adopted under Section 1579.201.
Sec. 1579.104. CHARGES, FORMULAS, AND FORMS. (a) The pool
may establish appropriate rates, rate schedules, rate adjustments,
expense allowances, agents' referral fees, and claim reserve
formulas and perform actuarial functions appropriate to the
operation of the pool.
(b) The pool shall adopt policy forms, endorsements, and
riders and applications for coverage as necessary to implement this
chapter.
Sec. 1579.105. PREMIUM RATES. (a) The pool may not charge
premium rates that are unreasonable in relation to the benefits
provided, the risk experience, and the reasonable expenses of
providing the coverage.
(b) The pool may adjust premium rates and premium rate
schedules for appropriate risk factors, including age and variation
in claim costs. The board may consider appropriate risk factors in
accordance with established actuarial and underwriting practices.
(c) The pool shall establish the rates used by the pool. In
establishing the rates, the pool shall use reasonable actuarial
techniques and consider the premium rates charged by other health
benefit plan providers offering health benefit plan coverage to
individuals. The rate must reflect anticipated experience and
expenses for health benefit coverage.
(d) The pool shall submit each rate and rate schedule to the
commissioner for approval. The pool may not use a rate or rate
schedule before the rate or schedule is approved by the
commissioner. In evaluating a rate or rate schedule of the pool,
the commissioner shall consider the factors provided by this
section.
Sec. 1579.106. EXCESS LOSS COVERAGE; REINSURANCE. The pool
may purchase excess loss coverage or reinsurance to insure the pool
against financial losses that the pool determines might place the
solvency of the pool in financial jeopardy.
Sec. 1579.107. CONTRACTS. The pool may enter into
contracts as necessary to implement this chapter.
Sec. 1579.108. LEGAL ACTION. (a) The pool may sue or be
sued.
(b) The pool may take any legal action necessary to:
(1) avoid payment of improper claims against the pool
or the coverage provided by or through the pool; or
(2) recover or collect amounts due the pool,
including:
(A) assessments due the pool;
(B) amounts erroneously or improperly paid by the
pool; and
(C) amounts paid by the pool as a mistake of fact
or law.
Sec. 1579.109. COST CONTAINMENT. (a) The pool may provide
for and use cost containment measures and requirements, including
preadmission screening, the requirement of a second surgical
opinion, and concurrent utilization review subject to Article
21.58A.
(b) The pool may design, use, contract for, or otherwise
arrange for the delivery of cost-effective health care services,
including establishing or contracting with preferred provider
organizations and health maintenance organizations.
Sec. 1579.110. BORROWING. The pool may borrow money as
necessary to implement the purposes of the pool.
Sec. 1579.111. ADDITIONAL AUTHORITY. In addition to the
other powers granted to the pool under this chapter, the pool may
exercise any of the authority that a health benefit plan provider
authorized to write health benefit plans in this state may exercise
under the law of this state.
[Sections 1579.112-1579.150 reserved for expansion]
SUBCHAPTER D. POOL COVERAGE AND BENEFITS
Sec. 1579.151. MINIMUM POOL COVERAGE. (a) The pool shall
offer coverage that provides benefits at least consistent with
major medical expense coverage to each eligible employee.
(b) The board, with the approval of the commissioner, shall
establish:
(1) the coverages to be provided by the pool;
(2) the applicable schedules of benefits; and
(3) any exclusions or other limitations to coverage.
(c) The benefits provisions of the pool's coverage must
include:
(1) all required or applicable definitions;
(2) a description of covered services;
(3) a list of any exclusions or limitations to
coverage; and
(4) the deductibles, coinsurance options, and
copayment options that are required or permitted.
Sec. 1579.152. ELIGIBILITY FOR COVERAGE; PREMIUMS.
(a) Each employee shall be covered by the pool unless the employee
rejects the coverage in a signed written statement made to the
governing body of the school district.
(b) A dependent of an employee who is eligible for coverage
from the pool is also eligible for coverage from the pool.
(c) Except as provided by Subsection (d), a covered employee
shall pay 100 percent of the premiums assessed by the pool for
coverage through the pool.
(d) A school district may make contributions to the pool to
cover all or part of the premiums for its employees. The employees
shall pay 100 percent of the cost of any coverage not paid by the
school district.
Sec. 1579.153. INELIGIBILITY FOR COVERAGE.
Notwithstanding Section 1579.152, an employee is not eligible for
coverage from the pool if the employee's prior coverage with the
pool was terminated for nonpayment of premiums or fraud.
Sec. 1579.154. PREEXISTING CONDITIONS. (a) Except as
provided by this section and Section 1579.056, pool coverage
excludes charges or expenses incurred before the first anniversary
of the effective date of coverage with regard to any condition for
which medical advice, care, or treatment was recommended or
received during the six-month period preceding the effective date
of coverage.
(b) The exclusion provided by Subsection (a) does not apply
to an individual who:
(1) was continuously covered for a period of at least
12 months, excluding any waiting period, by health benefit plan
coverage that terminated after the 64th day before the effective
date of coverage under the pool; and
(2) applied for pool coverage not later than the 63rd
day after the date the health benefit plan coverage described by
Subdivision (1) terminated.
(c) If an individual was covered by health benefit plan
coverage that was in effect at any time during the 12-month period
preceding the effective date of the individual's coverage under the
pool, the pool shall subtract from the exclusion period required
under Subsection (a) the period that the individual was covered
under that health benefit plan and any waiting period that applied
before that health benefit plan coverage became effective.
Sec. 1579.155. BENEFIT REDUCTION. (a) The pool may reduce
benefits otherwise payable under pool coverage by the total amount
paid or payable through any other health benefit plan.
(b) The pool shall reduce benefits otherwise payable under
pool coverage by the total amount of hospital or medical expense
benefits paid or payable under:
(1) workers' compensation coverage;
(2) automobile insurance coverage; or
(3) a state or federal law or program.
Sec. 1579.156. RECOVERY OF CERTAIN AMOUNTS. (a) The pool
has a cause of action against an employee for the recovery of the
amount of benefits paid that are not for covered expenses.
(b) Benefits due from the pool may be reduced or refused as
an offset against an amount recoverable under this section.
Sec. 1579.157. TERMINATION OF POOL COVERAGE. (a) An
employee's pool coverage ends:
(1) on the date the employee ceases to be an employee
of a school district in this state;
(2) on the date the employee requests coverage to end;
(3) on the date the employee covered by the pool dies;
(4) at the option of the pool, on the 31st day after
the date the pool sends to the individual covered by the pool any
inquiry concerning the individual's eligibility to which the
individual does not reply;
(5) on the 31st day after the date a premium payment
for pool coverage becomes due if the payment is not made before that
day; or
(6) on the date the individual covered by the pool
ceases to meet the eligibility requirements for coverage.
(b) A dependent's pool coverage ends on the date the
dependent becomes 21 years of age, unless the individual:
(1) is the spouse of the employee; or
(2) is a child of the employee:
(A) who is a student under 23 years of age who is
financially dependent on the employee and who is covered by the
pool;
(B) for whom an employee covered by the pool may
be obligated to pay child support; or
(C) who is disabled and dependent on a parent
covered by the pool, regardless of the age of the child.
(c) Any covered individual's coverage through the pool
expires on the date state law requires cancellation of the
coverage.
(d) Notwithstanding Subsection (a), an employee who ceases
to meet the eligibility requirements for coverage may have the
individual's coverage terminated at the scheduled end of the
coverage period.
(e) An individual may maintain pool coverage for the period
the individual is satisfying a preexisting condition period or
waiting period under another health benefit plan intended to
replace the pool coverage.
[Sections 1579.158-1579.200 reserved for expansion]
SUBCHAPTER E. OPERATION OF POOL
Sec. 1579.201. PLAN OF OPERATION. (a) Operation and
management of the pool is governed by a plan of operation adopted by
the board and approved by the commissioner. The plan of operation
includes the articles, bylaws, and operating rules of the pool that
are adopted by the board.
(b) The plan of operation must ensure the fair, reasonable,
and equitable administration of the pool.
(c) In addition to complying with the other requirements of
this chapter, the plan of operation must include procedures for:
(1) operation of the pool;
(2) selection of an administrator as provided by
Section 1579.202;
(3) creation of a fund, under management of the board,
for administrative expenses;
(4) handling, accounting, and auditing of money and
other assets of the pool;
(5) development and implementation of a program to:
(A) publicize the existence of the pool, the
eligibility requirements for coverage under the pool, and
enrollment procedures; and
(B) foster public awareness of the pool;
(6) creation of a grievance committee to review
complaints presented by applicants for coverage from the pool and
persons who are covered by the pool; and
(7) other matters as may be necessary for the
execution of the board's powers, duties, and obligations under this
chapter.
(d) The board shall amend the plan of operation as necessary
to carry out this chapter. An amendment to the plan of operation
must be approved by the commissioner before it becomes a part of the
plan.
Sec. 1579.202. POOL ADMINISTRATOR. (a) The board may
select one or more health benefit plan providers or a third party
administrator certified by the department to administer the pool.
The selection must be made under a competitive bidding process in
accordance with the plan of operation.
(b) The board shall establish criteria for evaluating the
bids submitted under this section. The criteria must include:
(1) the bidder's proven ability to handle individual
health benefit plans;
(2) the bidder's efficiency of claims paying
procedures;
(3) an estimate of total charges for administering the
pool;
(4) the bidder's ability to administer the pool in a
cost-efficient manner; and
(5) the bidder's financial condition and stability.
Sec. 1579.203. ADMINISTRATOR'S TERM; SUCCEEDING TERM. (a)
A person selected as a pool administrator serves in that capacity
for a three-year term beginning on the date the board issues its
order making the selection.
(b) Not later than one year before the expiration of a pool
administrator's term, the board shall invite all health benefit
plan providers, including the pool administrator, to submit bids to
serve as a pool administrator for the succeeding administration
period. The selection of the succeeding pool administrator must be
made not later than the sixth calendar month preceding the month in
which the pool administrator's term expires.
Sec. 1579.204. ADMINISTRATOR'S FUNCTIONS. (a) A pool
administrator shall perform the functions relating to the pool that
are assigned to the administrator.
(b) The assigned functions may include:
(1) performing eligibility and administrative claims
payment functions for the pool;
(2) establishing a billing procedure for collection of
premiums from individuals covered by the pool;
(3) performing functions necessary to ensure timely
payment of benefits to individuals covered by the pool, including:
(A) providing information relating to the proper
manner of submitting a claim for benefits to the pool and
distributing claim forms; and
(B) evaluating the eligibility of each claim for
payment by the pool;
(4) submitting regular reports to the board relating
to the operation of the pool; and
(5) determining after each calendar year the net
written and earned premiums, expenses of administration, and paid
and incurred losses of the pool for that calendar year and reporting
that information to the board and the commissioner.
(c) The board shall determine the form, content, and time of
submission of the reports required under Subsection (b)(4).
(d) The commissioner shall prescribe the forms to be used to
report the information under Subsection (b)(5).
(e) The board shall determine the times at which a pool
administrator is to perform the billing functions for the pool.
Sec. 1579.205. PAYMENTS TO ADMINISTRATOR. The pool shall
pay a pool administrator for the administrator's expenses incurred
in performing duties and functions as provided by the plan of
operation.
[Sections 1579.206-1579.250 reserved for expansion]
SUBCHAPTER F. FUNDING
Sec. 1579.251. FUND; AUDIT. (a) The Texas school districts
health benefits risk pool fund is created on the creation of the
pool.
(b) The fund is a trust fund outside the state treasury and
is composed of:
(1) premiums paid by school district employees for
coverage by the pool;
(2) contributions and other money received by the pool
from school districts and the state;
(3) investments and money earned from investments of
the fund; and
(4) any other money received by the pool.
(c) Money in the fund shall be paid from the fund, without
legislative appropriation, on vouchers approved by the board. That
money shall be held exclusively for the purposes stated in this
chapter and may not be used or appropriated for any other purpose.
(d) The pool administrator shall manage the fund under the
general supervision of the board. Administrative expenses of the
pool may be paid from the fund. Payments for administrative
expenses in any fiscal year may not exceed 10 percent of the total
amount of money in the fund during that fiscal year.
(e) The fund may not be used to pay punitive damages, fines,
or penalties for violation of a civil or criminal statute, or fines
or penalties imposed for the violation of a rule of a state agency
or an ordinance or order of a local government.
(f) The board may select one or more banks to serve as
depository for the fund. Before the deposit of fund money in a
depository bank in an amount that exceeds the maximum secured by the
Federal Deposit Insurance Corporation, the bank must provide
security in an amount sufficient to secure from loss the fund money
that exceeds the amount secured by the Federal Deposit Insurance
Corporation.
(g) The board shall require an annual audit of the capital,
surplus, and reserves of the pool to be conducted by an actuary who
is a member of the American Academy of Actuaries or a similar
national organization of actuaries recognized by the board.
Sec. 1579.252. INVESTMENTS. (a) The pool administrator
shall manage and invest the fund in the manner provided by the plan
of operation.
(b) Money earned by the investment of the fund shall be
deposited in the fund or reinvested for the fund.
Sec. 1579.253. INITIAL CONTRIBUTIONS. (a) Each school
district shall pay an assessment as provided by this section for the
initial expenses of the pool.
(b) The board shall determine the amount of assessments
necessary to meet the initial expenses of the pool from information
provided in the plan of operation.
(c) This section expires September 1, 2005.
SECTION 2. Effective September 1, 2004, Articles 3.50-7,
3.50-8, and 3.50-9, Insurance Code, are repealed.
SECTION 3. (a) Not later than December 1, 2003, the
commissioner of insurance shall appoint the initial board of
directors of the Texas School Districts Health Benefits Risk Pool
established under Chapter 1579, Insurance Code, as added by this
Act. In making initial appointments to the board of directors, the
commissioner of insurance shall appoint three members for terms
expiring February 1, 2005, three members for terms expiring
February 1, 2007, and three members for terms expiring February 1,
2009.
(b) The initial board of directors shall adopt the plan of
operation for management of the pool as required by Section
1579.201, Insurance Code, as added by this Act, not later than March
1, 2004.
(c) Coverage under the plan or plans authorized by Chapter
1579, Insurance Code, as added by this Act, shall begin with the
2004-2005 school year but not later than September 1, 2004.
SECTION 4. (a) The Teacher Retirement System of Texas
shall, not later than September 1, 2004, transfer from the program
established under Article 3.50-7, Insurance Code, as that article
existed prior to repeal by this Act, all coverages provided under
the program for active employees and all records relating to
coverage of active employees under the program to the board of
directors of the Texas School Districts Health Benefits Risk Pool
established under Chapter 1579, Insurance Code, as added by this
Act.
(b) The comptroller shall, not later than September 1, 2004,
transfer from the fund established under Section 8, Article 3.50-7,
Insurance Code, as that article existed prior to repeal by this Act,
all assets and liabilities of that fund relating to coverage for
active employees to the fund established under Subchapter F,
Chapter 1579, Insurance Code, as added by this Act.
SECTION 5. (a) A school district that, before September 1,
2004, established a health care fund under Section 22.005,
Education Code, shall abolish the fund not later than September 1,
2004. Any unexpended balance in the fund attributable to
deductions made from the salary of district employees shall be
distributed to those employees in shares proportionate to the
amount contributed by each employee not later than December 1,
2004.
(b) A school district that, before September 1, 2004,
participated in a risk pool established under Chapter 172, Local
Government Code, shall terminate that participation on the
expiration of the term of the existing benefits contract, but not
later than September 1, 2004.
SECTION 6. (a) Except as provided by this Act, this Act
takes effect September 1, 2003.
(b) The commissioner of insurance shall adopt rules as
necessary to implement this Act not later than December 31, 2003.