S.B. No. 10 




AN ACT
relating to the creation of employer health benefit plan groups. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: SECTION 1. Article 26.11, Insurance Code, is amended by amending Subdivisions (2) and (3) and adding Subdivision (5) to read as follows: (2) "Board of directors" means the board of directors elected by a private purchasing cooperative or a health group cooperative. (3) "Cooperative" means a private purchasing cooperative or a health group cooperative established under this subchapter. (5) "Expanded service area" means any area larger than one county in which a health group cooperative offers coverage. SECTION 2. The heading to Article 26.14, Insurance Code, is amended to read as follows: Art. 26.14. PRIVATE PURCHASING COOPERATIVES AND HEALTH GROUP COOPERATIVES [COOPERATIVE]. SECTION 3. Article 26.14, Insurance Code, is amended by amending Subsections (a) and (d) and adding Subsections (e) and (f) to read as follows: (a) Two or more small or large employers may form a purchasing cooperative for the purchase of small or large employer health benefit plans. Subject to Subsection (f) of this article, a person may form a health group cooperative for the purchase of employer health benefit plans. A cooperative must be organized as a nonprofit corporation and has the rights and duties provided by the Texas Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's Texas Civil Statutes). (d) A purchasing cooperative, a health group cooperative, or a member of the board of directors, the executive director, or an employee or agent of a purchasing cooperative or a health group cooperative is not liable for: (1) an act performed in good faith in the execution of duties in connection with the purchasing cooperative or health group cooperative; or (2) an independent action of a small or large employer insurance carrier or a person who provides health care services under a health benefit plan. (e) A health group cooperative or a member of the board of directors, the executive director, or an employee or agent of a health group cooperative is not liable for failure to arrange for coverage of any particular illness, disease, or health condition. (f) A health carrier may not form, or be a member of, a health group cooperative. A health carrier may associate with a sponsoring entity, such as a business association, chamber of commerce, or other organization representing employers or serving an analogous function, to assist the sponsoring entity in forming a health group cooperative. SECTION 4. Subchapter B, Chapter 26, Insurance Code, is amended by adding Article 26.14A to read as follows: Art. 26.14A. SPECIAL PROVISIONS RELATING TO HEALTH GROUP COOPERATIVES. (a) The membership of a health group cooperative may consist only of small employers or may, at the option of the health group cooperative, consist of both small and large employers. To participate as a member of a health group cooperative, an employer must be a small or large employer as described by this chapter. (b) Subject to the requirements of Article 26.22 of this code, a health group cooperative: (1) shall allow a small employer to join the health group cooperative and enroll in health benefit plan coverage; and (2) may allow a large employer to join the health group cooperative and enroll in health benefit plan coverage. (c) A health group cooperative shall allow any small employer to join the health group cooperative and enroll in the cooperative's health benefit plan coverage during the initial enrollment and annual open enrollment periods. (d) A sponsoring entity of a health group cooperative may inform the members of the entity about the cooperative and the health benefit plans offered by the cooperative. Coverage issued through the cooperative must be issued through a licensed agent marketing the coverage in accordance with Article 26.15(a)(3) of this code. (e) The commissioner shall adopt rules that govern the manner in which an employer may terminate, because of a financial hardship affecting the employer, participation in a health group cooperative. (f) An employer's participation in a health group cooperative is voluntary, but an employer electing to participate in a health group cooperative must commit to purchasing coverage through the health group cooperative for two years, except as provided by Subsection (e) of this article. (g) A health carrier issuing coverage to a health group cooperative: (1) shall use a standard presentation form, prescribed by the commissioner by rule, to market health benefit plan coverage through the health group cooperative; (2) may contract to provide health benefit plan coverage with only one health group cooperative in any county, except that a health carrier may contract with additional health group cooperatives if it is providing health benefit plan coverage in an expanded service area in accordance with Subsection (l) of this article; (3) shall allow enrollment in health benefit plan coverage in compliance with Subsection (c) of this article and with the health carrier's agreement with the health group cooperative; (4) is exempt from the premium tax imposed by Article 4.11 of this code or the tax on revenues imposed under Section 33, Texas Health Maintenance Organization Act (Article 20A.33, Vernon's Texas Insurance Code), and the retaliatory tax under Article 21.46 of this code for two years, with respect to the premiums or revenues received for coverage provided to each uninsured employee or dependent as defined by the commissioner in accordance with Subsection (h) of this article; and (5) shall maintain documentation to be provided by health group cooperatives to ensure compliance with the rules adopted by the commissioner under Subsection (h) of this article with respect to uninsured employees or dependents. (h) The commissioner by rule shall determine who constitutes an uninsured employee or dependent for purposes of Subsection (g)(4) of this article. (i) Notwithstanding any other law, and except as provided by Subsection (n) of this article, a health benefit plan issued by a health carrier to provide coverage with a health group cooperative is not subject to a state law, including a rule, that: (1) relates to a particular illness, disease, or treatment; or (2) regulates the differences in rates applicable to services provided within a health benefit plan network or outside the network. (j) The commissioner by rule shall implement the exemption authorized by Subsection (i) of this article. (k) A health group cooperative may offer more than one health benefit plan, but each plan offered must be made available to all employees covered by the cooperative. (l) A health carrier may, with notice to the commissioner, provide health benefit plan coverage to an expanded service area that includes the entire state. A health carrier may apply for approval of an expanded service area that comprises less than the entire state by filing with the commissioner an application, in a form and manner prescribed by the commissioner, at least 60 days before the date the health carrier issues coverage to the health group cooperative in the expanded service area. At the expiration of 60 days after the date of receipt by the department of a filed application, the application shall be deemed approved by the department unless, before that date, the application was either affirmatively approved or disapproved by written order of the commissioner. The commissioner, after notice and opportunity for hearing, may rescind an approval granted to a health carrier under this subsection if the commissioner finds that the health carrier has failed to market fairly to all eligible employers in the state or the expanded service area. (m) The provisions of this article shall not serve to limit or restrict a small or large employer's access to health benefit plans under this chapter. (n) A health benefit plan provided through a health group cooperative must provide coverage for diabetes equipment, supplies, and services as required by Article 21.53G of this code. SECTION 5. The heading to Article 26.15, Insurance Code, is amended to read as follows: Art. 26.15. POWERS AND DUTIES OF TEXAS HEALTH BENEFITS PURCHASING COOPERATIVE, [AND] PRIVATE PURCHASING COOPERATIVES, AND HEALTH GROUP COOPERATIVES. SECTION 6. Article 26.15, Insurance Code, is amended by amending Subsection (d) and adding Subsection (e) to read as follows: (d) A cooperative shall comply with federal laws applicable to cooperatives and health benefit plans issued through cooperatives, to the extent required by state law or rules adopted by the commissioner of insurance. A cooperative shall comply with state laws applicable to cooperatives and health benefit plans issued through cooperatives. A cooperative may not limit, restrict, or condition an employer's or employee's membership in the cooperative or choice among benefit plans based on the risk characteristics of a group or of any member of a group. (e) To be eligible to exercise the authority granted under Subsection (a)(1) of this article, a health group cooperative must have at least 10 participating employers. SECTION 7. Subsections (a), (b), and (d), Article 26.16, Insurance Code, are amended to read as follows: (a) A cooperative is not an insurer and the employees of the cooperative are not required to be licensed under [Section 15 or 15A, Texas Health Maintenance Organization Act (Article 20A.15 or 20A.15A, Vernon's Texas Insurance Code), or] Subchapter A, Chapter 21, of this code. This exemption from licensure includes a health group cooperative that acts to provide information about and to solicit membership in the cooperative, subject to Article 26.14A(d) of this code. (b) A private purchasing cooperative is considered an employer solely for the purposes of benefit elections under the code. A health group cooperative that is composed only of small employers is considered a single employer under this code and shall be treated in the same manner as a small employer for the purposes of this chapter, including for the purposes of any provision relating to premium rates and issuance and renewal of coverage. A health group cooperative that is composed of small and large employers is considered a single employer under this code and, in relation to the small employers that are members of the cooperative, shall be treated in the same manner as a small employer. A health group cooperative that is composed of small and large employers may elect to extend the protections of this chapter that are applicable to small employer groups to the large employer groups that participate in the cooperative. A health group cooperative shall have sole authority to make benefit elections and perform other administrative functions under the code for the cooperative's participating employers. The department shall develop an expedited approval process for health benefit plan coverage arranged by a health group cooperative. (d) A licensed agent used and compensated by the cooperative need not be appointed by each small or large employer carrier participating in the cooperative in order to market the products and services sponsored by the cooperative. However, a licensed agent may not market any other non-sponsored product or service of a participating small or large employer carrier without first being appointed by the small or large employer carrier. SECTION 8. Subdivision (1), Section 1, Article 21.53G, Insurance Code, is amended to read as follows: (1) "Diabetes equipment" means: (A) blood glucose monitors, including noninvasive glucose monitors and monitors designed to be used by blind individuals; (B) insulin pumps and associated appurtenances; (C) insulin infusion devices; and (D) podiatric appliances for the prevention of complications associated with diabetes. SECTION 9. (a) Except for the tax exemption in Subdivision (4), Subsection (g), Article 26.14A, Insurance Code, as added by this Act, not later than January 1, 2004, the commissioner of insurance shall adopt rules as necessary to implement the changes in law made by this Act. (b) With respect to the tax exemption in Subdivision (4), Subsection (g), Article 26.14A, Insurance Code, as added by this Act, the comptroller of public accounts shall adopt rules or procedures as necessary to implement the exemption. SECTION 10. This Act takes effect September 1, 2003, and applies to a health benefit plan that is delivered, issued for delivery, amended, or renewed on or after January 1, 2004. A plan that is delivered, issued for delivery, amended, or renewed before January 1, 2004, is governed by the law as it existed immediately before the effective date of this Act, and that law is continued in effect for that purpose.
______________________________ ______________________________ President of the Senate Speaker of the House
I hereby certify that S.B. No. 10 passed the Senate on April 9, 2003, by a viva-voce vote; and that the Senate concurred in House amendments on May 29, 2003, by a viva-voce vote. ______________________________ Secretary of the Senate I hereby certify that S.B. No. 10 passed the House, with amendments, on May 26, 2003, by a non-record vote. ______________________________ Chief Clerk of the House Approved: ______________________________ Date ______________________________ Governor