81R6824 TJS-D

By: Deuell S.B. No. 900

A BILL TO BE ENTITLED

AN ACT

relating to the collection and use of certain information by health benefit plan issuers; providing administrative penalties.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subtitle C, Title 6, Insurance Code, is amended by adding Chapter 849 to read as follows:

CHAPTER 849. DATA MINING AND PATTERN RECOGNITION BY HEALTH BENEFIT

PLAN ISSUERS

Sec. 849.001. DEFINITION. In this chapter, "health benefit plan issuer" means an insurer or other organization that issues a health benefit plan that provides benefits for medical or surgical expenses incurred as a result of a health condition, accident, or sickness, including an individual, group, blanket, or franchise insurance policy or insurance agreement, a group hospital service contract, or an individual or group evidence of coverage or similar coverage document issued by:

(1) a group hospital service corporation operating under Chapter 842;

(2) a fraternal benefit society operating under Chapter 885;

(3) a stipulated premium company operating under Chapter 884;

(4) a reciprocal exchange operating under Chapter 942;

(5) a health maintenance organization operating under Chapter 843;

(6) a multiple employer welfare arrangement that holds a certificate of authority under Chapter 846; or

(7) an approved nonprofit health corporation that holds a certificate of authority under Chapter 844.

Sec. 849.002. COLLECTION OF INFORMATION CONCERNING DATA MINING AND PATTERN RECOGNITION. (a) The commissioner by rule may require a health benefit plan issuer to report to the department concerning:

(1) technologies to be used by the health benefit plan issuer to identify relationships among variables that are used to predict differences in expected losses of covered persons or applicants for coverage or are otherwise used in the activities of regulated entities; and

(2) the manner in which the health benefit plan issuer intends to use the relationships derived from the technologies described by Subdivision (1) in:

(A) underwriting and creating and defining risk classifications;

(B) setting rates and premiums, as applicable;

(C) detecting fraudulent claims;

(D) identifying subrogation opportunities;

(E) improving marketing; or

(F) performing other activities identified by the commissioner.

(b) In exercising the commissioner's authority under this section, the commissioner may require that health benefit plan issuers report with respect to selected segments of the market and may limit the reporting to specific uses of relationships derived from the technologies.

(c) Underwriting guidelines and related information obtained by the commissioner under this section are subject to Section 38.003. Other information obtained under this section is commercial information not subject to the disclosure requirements of Chapter 552, Government Code.

Sec. 849.003. ADMINISTRATIVE PENALTIES. If the department determines that a health benefit plan issuer has violated this chapter or a rule adopted under this chapter, the department shall assess administrative penalties against the health benefit plan issuer in the manner provided by Chapter 84. The amount of an administrative penalty imposed under this section shall be based on:

(1) the seriousness of the violation, including the nature, circumstances, extent, or gravity of the violation; and

(2) the economic harm caused by the violation.

Sec. 849.004. REPORT TO LEGISLATURE. The department shall include in its biennial report to the legislature under Section 32.022 information concerning the use of relationships derived from the technologies described by Section 849.002 by health benefit plan issuers. The information must include the impact of the use of those relationships on insurance and other coverage to covered persons and applicants for coverage in this state. The report must include, as applicable, recommendations for proposed legislation appropriate to regulate the use of relationships derived from the technologies and means to facilitate availability of insurance in underserved markets.

SECTION 2. 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, 2009.