By: Hochberg H.B. No. 3016
A BILL TO BE ENTITLED
AN ACT
relating to the operation of the Texas Health Insurance Risk Pool.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 2, Article 3.77, Insurance Code, is
amended by amending Subsections (7) and (10) and by adding
Subsection (6-a) to read as follows:
(6-a) "Health benefit plan" means:
(A) health insurance; and
(B) a self-insured or self-funded health plan
covered by:
(i) stop-loss insurance or excess loss
insurance; or
(ii) reinsurance.
(7) "Health insurance" means individual or group
health insurance. The term [and] includes a [any] hospital and
medical expense incurred policy, coverage provided by a fraternal
benefit society, a stipulated premium company, or an approved
nonprofit health corporation, a health maintenance organization
subscriber contract, coverage by a group hospital service plan, a
multiple employer welfare arrangement subject to Chapter 846 of
this code [Subchapter I of this chapter], or any other health care
plan or arrangement that pays for or furnishes medical or health
care services whether by insurance or otherwise, including
stop-loss insurance or excess loss insurance or reinsurance for
individual or group health insurance or for any other health care
plan or arrangement. The term does not include:
(A) [short-term, accident,] dental-only
coverage;
(B) [,] vision-only coverage;
(C) [, fixed indemnity, including hospital
indemnity insurance,] credit insurance;
(D) [,] long-term care insurance;
(E) [,] disability income insurance;
(F) [, or other limited benefit insurance,
including specified disease insurance, ] coverage issued as a
supplement to liability insurance;
(G) [,] insurance arising out of a workers'
compensation law or similar law;
(H) [,] automobile medical-payment insurance;
[,] or
(I) insurance under which benefits are payable
with or without regard to fault and which is statutorily required to
be contained in any liability insurance policy or equivalent
self-insurance.
(10) "Insured" means a person who is a resident of this
state [and a citizen of the United States and] who is eligible to
receive benefits from the pool. The term "insured" may include
dependents and family members.
SECTION 2. Section 4(c), Article 3.77, Insurance Code, is
amended to read as follows:
(c) The board shall be composed of:
(1) at least two persons affiliated with an insurer
admitted and authorized to write health insurance in this state,
but no more than four such persons;
(2) at least two persons who are insureds or parents of
insureds or who are reasonably expected to qualify for coverage by
the pool; and
(3) the remaining members of the board may be selected
from individuals such as a physician licensed to practice in this
state by the Texas State Board of Medical Examiners, a hospital
administrator, an advanced nurse practitioner, or representatives
of the general public who are not employed by or affiliated with an
insurance company or plan, group hospital service corporation, or
health maintenance organization [or licensed as or employed by or
affiliated with a physician, hospital, or other health care
provider]. A representative of the general public does include a
person whose only affiliation with an insurance company or plan,
group hospital service corporation, or health maintenance
organization is as an insured or person who has coverage through a
plan provided by the corporation or organization.
SECTION 3. Section 6(b), Article 3.77, Insurance Code, is
amended to read as follows:
(b) As part of its authority, the pool may:
(1) provide health benefits coverage to persons who
are eligible for that coverage under this article;
(2) enter into contracts that are necessary to carry
out this article including, with the approval of the commissioner,
entering into contracts with similar pools in other states for the
joint performance of common administrative functions or with other
organizations for the performance of administrative functions;
(3) sue or be sued, including taking any legal actions
necessary or proper to recover or collect assessments due the pool;
(4) institute any legal action necessary to avoid
payment of improper claims against the pool or the coverage
provided by or through the pool, to recover any amounts erroneously
or improperly paid by the pool, to recover any amounts paid by the
pool as a mistake of fact or law, and to recover other amounts due
the pool;
(5) establish appropriate rates, rate schedules, rate
adjustments, expense allowances, agents' referral fees, and claim
reserve formulas and perform any actuarial functions appropriate to
the operation of the pool;
(6) adopt policy forms, endorsements, and riders and
applications for coverage;
(7) issue insurance policies subject to this article
and the plan of operation;
(8) appoint appropriate legal, actuarial, and other
committees that are necessary to provide technical assistance in
operating the pool and performing any of the functions of the pool;
(9) employ and set the compensation of any persons
necessary to assist the pool in carrying out its responsibilities
and functions;
(10) contract for stop-loss insurance for risks
incurred by the pool;
(11) recover or collect assessments imposed under
Section 13 of this article;
(12) borrow money as necessary to implement the
purposes of the pool;
(13) issue additional types of health insurance
policies to provide optional coverages which comply with applicable
provisions of state and federal law, including Medicare
supplemental health insurance for persons age 65 and older who are
eligible for Medicare;
(14) provide for and employ cost containment measures
and requirements including, but not limited to, preadmission
screening, second surgical opinion, concurrent utilization review
subject to Article 21.58A of this code, and individual case
management for the purpose of making the benefit plans more cost
effective;
(15) design, utilize, contract, or otherwise arrange
for the delivery of cost-effective health care services, including
establishing or contracting with preferred provider organizations
and health maintenance organizations; and
(16) provide for reinsurance on either a facultative
or treaty basis or both.
SECTION 4. Section 7(g), Article 3.77, Insurance Code, is
amended to read as follows:
(g) The board shall determine the form and content of the
reports [report] required by Subsection (e)(4) of this section and
the time at which reports must be made.
SECTION 5. Section 9(d), Article 3.77, Insurance Code, is
amended to read as follows:
(d) The pool shall determine the standard risk rate by
considering the premium rates charged by other insurers offering
health insurance coverage to individuals. The standard risk rate
shall be established using reasonable actuarial techniques, and
shall reflect anticipated experience and expenses for such
coverage. The premium [Initial pool rates may not be less than 125
percent and may not exceed 150 percent of rates established as
applicable for individual standard rates. Subsequent] rates shall
be established to provide fully for the expected costs of claims
including recovery of prior losses, expenses of operation,
investment income of claim reserves, and any other cost factors
subject to the limitations described in this subsection. In no
event shall pool rates exceed 150 [200] percent of rates applicable
to individual standard risks.
SECTION 6. Sections 10(e) and (f), Article 3.77, Insurance
Code, as amended by Chapters 1027 and 1084, Acts of the 77th
Legislature, Regular Session, 2001, are reenacted and amended to
read as follows:
(e) A person is not eligible for coverage from the pool if
the person:
(1) has in effect on the date pool coverage takes
effect health insurance coverage from an insurer or insurance
arrangement;
(2) is eligible for other health care benefits at the
time application is made to the pool, including COBRA continuation,
except:
(A) coverage, including COBRA continuation,
other continuation or conversion coverage, maintained for the
period of time the person is satisfying any pre-existing condition
waiting period under a pool policy; or
(B) employer group coverage conditioned by the
type of limitations described by Subsections (b)(1) or (3) of this
section; or
(C) individual coverage conditioned by the
limitations described by Subsections (b)(3) or (4) of this section;
(3) has terminated coverage in the pool within 12
months of the date that application is made to the pool, unless the
person demonstrates a good faith reason for the termination;
(4) is confined in a county jail or imprisoned in a
state or federal prison;
(5) has premiums that are paid for or reimbursed under
any government sponsored program or by any government agency or
health care provider, except as an otherwise qualifying full-time
employee, or dependent thereof, of a government agency or health
care provider;
(6) has had prior coverage with the pool terminated
during the 12 months immediately preceding the date of application
for nonpayment of premiums; or
(7) has had prior coverage with the pool terminated
for fraud.
(f) Pool coverage shall cease:
(1) on the date a person is no longer a legally
domiciled resident of this state, unless the person is:
(A) [except for a child who is] a student under 25
[the age of 23] years of age [and] who is financially dependent upon
an individual who is:
(i) the student's parent; and
(ii) covered by the pool;
(B) [,] a child for whom an individual covered by
the pool [a person] may be obligated to pay child support; [,] or
(C) a child of any age who is disabled and
dependent upon a [the] parent covered by the pool;
(2) on the first day of the month following the date a
person requests coverage to end;
(3) upon the death of the covered person;
(4) on the date state law requires cancellation of the
policy;
(5) at the option of the pool, 30 days after the pool
sends to the person any inquiry concerning the person's
eligibility, including an inquiry concerning the person's
residence, to which the person does not reply;
(6) on the 31st day after the day on which a premium
payment for pool coverage becomes due if the payment is not made
before that date; [or]
(7) on the date that the person is 65 years of age and
eligible for coverage under Medicare, unless the coverage received
from the pool is Medicare supplement coverage issued by the pool;
or
(8) at such time as the person ceases to meet the
eligibility requirements of this section.
SECTION 7. Section 11(a), Article 3.77, Insurance Code, is
amended to read as follows:
(a) The pool shall offer pool coverage consistent with major
medical expense coverage to each eligible person who is under the
age of 65 [not eligible for Medicare]. 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 to coverage and other limitations.
SECTION 8. Section 13, Article 3.77, Insurance Code, is
amended by amending Subsections (c) and (d) and by adding
Subsections (d-1) and (d-2) to read as follows:
(c) After the end of each fiscal year, the board shall
determine and report to the commissioner the net loss, if any, of
the pool for the previous calendar year, including administrative
expenses and incurred losses for the year, taking into account
investment income and other appropriate gains and losses. Any net
loss for the year shall be recouped by assessments on insurers.
Each insurer [insurer's assessment] shall report to [be determined
annually by] the board the number of employees or retired employees
or individual policyholders or subscribers enrolled in the
insurer's health benefit plans offered in this state, including the
number of employees or retired employees for whom a premium is paid
and coverage is provided under an excess loss, stop-loss, or
reinsurance policy issued by the insurer to an employer or group
health plan in this state, as of December 31 of the previous year.
The insurer providing stop-loss insurance, excess loss insurance,
or reinsurance may exclude from its count the number of dependents
and, from the number of employees or retired employees or
individual policyholders or subscribers, those persons who have
been counted by the primary carrier or primary reinsurer. Each
insurer's assessment shall be determined annually by the board
based on annual statements, the insurer's annual report to the
board, and any other reports required by and filed with the board
[and filed with the board].
(d) The assessment imposed against each insurer shall be
determined by the number of employees and retired employees or
individual policyholders or subscribers enrolled in the insurer's
health benefit plans offered in this state, including the number of
employees or retired employees for whom a premium is paid and
coverage is provided under an excess loss, stop-loss, or
reinsurance policy issued by the insurer to an employer or group
health plan in this state, as of December 31 of the previous year.
The assessment, if any, determined by the board shall be assessed as
follows:
(1) the total amount to be assessed shall be divided by
the total number of employees, retired employees, and individual
policyholders, and subscribers reported by all insurers, to arrive
at a per capita amount; and
(2) the amount assessed to each insurer shall be equal
to the number of employees, retired employees, and individual
policyholders, and subscribers reported by that insurer, as of the
prior December 31, multiplied by the per capita amount [in an amount
that is equal to the ratio of the gross premiums collected by the
insurer for health insurance in this state during the preceding
calendar year, except for Medicare supplement premiums subject to
Article 3.74 and small group health insurance premiums subject to
Articles 26.01 through 26.76, to the gross premiums collected by
all insurers for health insurance, except for Medicare supplement
premiums subject to Article 3.74 and small group health insurance
premiums subject to Articles 26.01 through 26.76, in this state
during the preceding calendar year].
(d-1) An assessment is due on a date specified by the board
that may not be earlier than the 30th day after the date on which
prior written notice of the assessment due is transmitted to the
insurer. Interest accrues on the unpaid amount at a rate equal to
the prime lending rate, as stated in the most recent issue of the
Wall Street Journal, plus three percent, determined as of the date
such assessment is delinquent.
(d-2) For purposes of the assessment under this section, a
health benefit plan does not include:
(1) coverage under a Medicare supplement policy
subject to Article 3.74 of this code;
(2) coverage under a small employer health benefit
plan subject to Articles 26.01 through 26.76 of this code;
(3) dental-only coverage;
(4) vision-only coverage;
(5) credit insurance;
(6) long-term care insurance;
(7) disability income insurance;
(8) coverage issued as a supplement to liability
insurance;
(9) insurance arising out of a workers' compensation
law or similar law;
(10) automobile medical-payment insurance; or
(11) insurance under which benefits are payable with
or without regard to fault and that is statutorily required to be
contained in any liability insurance policy, or equivalent
self-insurance.
SECTION 9. Section 15(a), Article 3.77, Insurance Code, is
amended to read as follows:
(a) The state auditor may [shall] conduct annually a special
audit of the pool under Chapter 321, Government Code. An audit
conducted by the [The] state auditor under this subsection may
[auditor's report shall] include a financial audit and an economy
and efficiency audit.
SECTION 10. This Act applies only to an application for
initial or renewal coverage though the Texas Health Insurance Risk
Pool under Article 3.77, Insurance Code, as amended by this Act,
that is filed with that pool on or after the effective date of this
Act. An application filed before the effective date of this Act is
governed by the law in effect on the date on which the application
was filed, and the former law is continued in effect for that
purpose.
SECTION 11. This Act takes effect immediately if it
receives a vote of two-thirds of all the members elected to each
house, as provided by Section 39, Article III, Texas Constitution.
If this Act does not receive the vote necessary for immediate
effect, this Act takes effect September 1, 2003.