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A BILL TO BE ENTITLED
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AN ACT
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relating to medical loss ratios of certain health benefit plan |
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issuers. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subtitle A, Title 8, Insurance Code, is amended |
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by adding Chapter 1222 to read as follows: |
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CHAPTER 1222. MEDICAL LOSS RATIO AND HEALTH BENEFIT PLAN PREMIUMS |
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Sec. 1222.001. DEFINITIONS. In this chapter: |
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(1) "Direct losses incurred" means the sum of direct |
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losses paid plus an estimate of losses to be paid in the future for |
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all claims arising from the current reporting period and all prior |
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periods, minus the corresponding estimate made at the close of |
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business for the preceding period. This amount does not include |
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home office and overhead costs, advertising costs, commissions and |
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other acquisition costs, taxes, capital costs, administrative |
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costs, utilization review costs, or claims processing costs. |
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(2) "Direct losses paid" means the sum of all payments |
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made during the period for claimants under a health benefit plan |
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before reinsurance has been ceded or assumed. This amount does not |
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include home office and overhead costs, advertising costs, |
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commissions and other acquisition costs, taxes, capital costs, |
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administrative costs, utilization review costs, or claims |
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processing costs. |
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(3) "Direct premiums earned" means the amount of |
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premium attributable to the coverage already provided in a given |
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period before reinsurance has been ceded or assumed. |
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(4) "Medical loss ratio" means direct losses incurred |
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divided by direct premiums earned. |
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Sec. 1222.002. APPLICABILITY OF CHAPTER. (a) This chapter |
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applies to the issuer of a health benefit plan that provides |
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benefits for medical or surgical expenses incurred as a result of a |
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health condition, accident, or sickness, including an individual, |
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group, blanket, or franchise insurance policy or insurance |
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agreement or a group hospital service contract, that is offered by: |
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(1) an insurance company; |
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(2) a group hospital service corporation operating |
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under Chapter 842; |
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(3) a fraternal benefit society operating under |
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Chapter 885; |
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(4) a stipulated premium company operating under |
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Chapter 884; |
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(5) an exchange operating under Chapter 942; or |
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(6) a multiple employer welfare arrangement that holds |
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a certificate of authority under Chapter 846. |
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(b) Notwithstanding any provision in Chapter 1551, 1575, |
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1579, or 1601 or any other law, this chapter applies to a health |
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benefit plan issuer with respect to: |
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(1) a basic coverage plan under Chapter 1551; |
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(2) a basic plan under Chapter 1575; |
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(3) a primary care coverage plan under Chapter 1579; |
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and |
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(4) basic coverage under Chapter 1601. |
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(c) Notwithstanding any other law, this chapter applies to a |
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health benefit plan issuer with respect to a standard health |
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benefit plan provided under Chapter 1507. |
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(d) Notwithstanding Section 1501.251 or any other law, this |
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chapter applies to a health benefit plan issuer with respect to |
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coverage under a small employer health benefit plan subject to |
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Chapter 1501. |
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Sec. 1222.003. EXCEPTION. (a) This chapter does not apply |
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with respect to: |
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(1) a plan that provides coverage: |
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(A) for wages or payments in lieu of wages for a |
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period during which an employee is absent from work because of |
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sickness or injury; |
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(B) as a supplement to a liability insurance |
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policy; |
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(C) for credit insurance; |
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(D) only for dental or vision care; |
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(E) only for hospital expenses; or |
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(F) only for indemnity for hospital confinement; |
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(2) a Medicare supplemental policy as defined by |
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Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss); |
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(3) a workers' compensation insurance policy; or |
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(4) medical payment insurance coverage provided under |
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a motor vehicle insurance policy. |
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(b) Notwithstanding Section 1222.002, this chapter does not |
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apply with respect to a health maintenance organization plan. |
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Sec. 1222.004. MEDICAL LOSS RATIO REPORTING. The |
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commissioner by rule shall require each health benefit plan issuer |
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to annually report the health benefit plan issuer's medical loss |
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ratio for the preceding year for each health benefit plan issued. |
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Sec. 1222.005. MINIMUM RATIO. (a) Except as provided by |
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Subsections (b) and (c), the minimum medical loss ratio for a health |
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benefit plan is 75 percent. |
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(b) The minimum medical loss ratio for a large employer |
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health benefit plan subject to Chapter 1501 is 80 percent. |
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(c) The minimum medical loss ratio for an individually |
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underwritten health benefit plan is 65 percent. |
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(d) A health benefit plan whose annual medical loss ratio |
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falls below the minimum established under this section shall, |
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before the end of the year in which the ratio is reported, issue |
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rebates to each enrollee or plan sponsor who paid premiums during |
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the year for which the ratio was computed. The rebate paid must be a |
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percentage of the premiums paid equal to the number of percentage |
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points by which the ratio falls below the required minimum. |
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SECTION 2. Not later than January 1, 2010, the commissioner |
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of insurance shall adopt all rules necessary to implement Chapter |
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1222, Insurance Code, as added by this Act. The first 12-month |
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reporting period adopted under that chapter may not cover any |
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period before January 1, 2010. |
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SECTION 3. This Act takes effect September 1, 2009. |