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A BILL TO BE ENTITLED
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AN ACT
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relating to regulation of health benefit plan rates. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Title 8, Insurance Code, is amended by adding |
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Subtitle K to read as follows: |
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SUBTITLE K. RATEMAKING IN GENERAL |
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CHAPTER 1670. RATES |
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SUBCHAPTER A. GENERAL PROVISIONS |
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Sec. 1670.001. APPLICABILITY OF CHAPTER. (a) This chapter |
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applies only to a health benefit plan that provides benefits for |
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medical or surgical expenses incurred as a result of a health |
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condition, accident, or sickness, including an individual, group, |
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blanket, or franchise insurance policy or insurance agreement, a |
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group hospital service contract, or an individual or group evidence |
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of coverage or similar coverage document 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; |
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(6) a health maintenance organization operating under |
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Chapter 843; |
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(7) a multiple employer welfare arrangement that holds |
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a certificate of authority under Chapter 846; or |
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(8) an approved nonprofit health corporation that |
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holds a certificate of authority under Chapter 844. |
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(b) 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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Sec. 1670.002. 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) This chapter does not apply to: |
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(1) coverage provided through the Texas Health |
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Insurance Risk Pool subject to Section 1506.105; or |
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(2) coverage provided under Subtitle H. |
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Sec. 1670.003. APPLICABILITY OF OTHER LAWS GOVERNING RATES. |
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The requirements of this chapter are in addition to any other |
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provision of this code governing health benefit plan rates. Except |
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as otherwise provided by this chapter, in the case of a conflict |
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between this chapter and another provision of this code, this |
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chapter controls. |
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Sec. 1670.004. NOTICE OF RATE INCREASE. (a) In addition |
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to any notice required to be provided under Section 1254.001, a |
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health benefit plan issuer shall notify each person responsible for |
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paying any part of an individual's premium or charge for coverage |
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under the health benefit plan, other than a person who receives |
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notice under Section 1254.001, of a rate increase scheduled to take |
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effect on the renewal of the individual's coverage that will result |
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in a total premium or charge amount for covering that individual |
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that is at least 10 percent greater than the lesser of: |
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(1) the total premium or charge amount paid for the |
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individual's coverage under the health benefit plan during the |
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12-month period preceding the coverage's renewal date; or |
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(2) the total premium or charge amount paid for the |
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individual's coverage under the health benefit plan during the |
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policy or contract period preceding the coverage's renewal date. |
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(b) A health benefit plan issuer shall send the notice |
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required by Subsection (a) before the renewal date and not later |
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than the 30th day before the date the rate increase is scheduled to |
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take effect. |
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(c) The commissioner by rule may exempt a health benefit |
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plan issuer from the notice requirements of this section for a |
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short-term policy, contract, or evidence of coverage, as defined by |
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the commissioner, that is issued by the plan issuer. |
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Sec. 1670.005. CONSIDERATION OF CERTAIN OTHER LAW. In |
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reviewing rates under this chapter, the commissioner shall consider |
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any state or federal law that may affect rates for health benefit |
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plan coverage included in a policy, contract, or evidence of |
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coverage subject to this chapter. |
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Sec. 1670.006. ADMINISTRATIVE PROCEDURE ACT APPLICABLE. |
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Chapter 2001, Government Code, applies to all rate hearings under |
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this chapter. |
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Sec. 1670.007. QUARTERLY REPORT OF PLAN ISSUER; LEGISLATIVE |
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REPORT. (a) The commissioner shall require each health benefit |
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plan issuer subject to this chapter to quarterly file with the |
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commissioner information relating to changes in losses, premiums or |
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other charges for coverage, and market share since January 1, |
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2010. The commissioner may require a health benefit plan issuer |
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subject to this chapter to report to the commissioner, in the form |
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and in the time required by the commissioner, any other information |
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the commissioner determines is necessary to comply with this |
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section. |
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(b) Quarterly, the commissioner shall report to the |
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governor, the lieutenant governor, the speaker of the house of |
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representatives, the legislature, and the public regarding: |
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(1) the information provided to the commissioner, |
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other than information made confidential by law, in the health |
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benefit plan issuers' reports under Subsection (a); and |
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(2) market conduct, especially rates and consumer |
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complaints. |
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(c) The report required by Subsection (b) must: |
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(1) cover a calendar quarter; |
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(2) for each health benefit plan issuer that writes a |
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line of health benefit plan coverage subject to this chapter, |
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state: |
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(A) the plan issuer's market share; |
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(B) the plan issuer's profits and losses; |
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(C) the plan issuer's average medical loss ratio; |
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and |
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(D) whether the plan issuer submitted a rate |
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filing during the quarter covered in the report; and |
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(3) for each rate filing described by Subdivision |
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(2)(D), indicate any significant impact on holders of policies, |
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contracts, or evidences of coverage, the overall rate change from |
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the rate previously used by the plan issuer stated as a percentage, |
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and any rate changes for the previous 12, 24, and 36 months. |
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(d) Except as provided by Subsection (e), the quarterly |
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report required by Subsection (b) must be made available to the |
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governor, lieutenant governor, speaker of the house of |
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representatives, legislature, and public not later than the 90th |
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day after the last day of the calendar quarter covered by the |
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report. |
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(e) If the commissioner determines that it is not feasible |
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to provide the report required by this section within the period |
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specified by Subsection (d) for all types of health benefit plan |
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coverage subject to this chapter, the department: |
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(1) shall make the quarterly report, as applicable to |
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individual health benefit plan coverage, available within the |
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period specified by Subsection (d); and |
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(2) may delay publication of the quarterly report as |
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it relates to other types of health benefit plan coverage subject to |
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this chapter until a date specified by the commissioner. |
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[Sections 1670.008-1670.050 reserved for expansion] |
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SUBCHAPTER B. RATE STANDARDS |
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Sec. 1670.051. EXCESSIVE, INADEQUATE, AND UNFAIRLY |
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DISCRIMINATORY RATES. (a) A rate is excessive, inadequate, or |
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unfairly discriminatory for purposes of this chapter as provided by |
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this section. |
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(b) A rate is excessive if the rate is likely to produce a |
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long-term profit that is unreasonably high in relation to the |
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health benefit plan coverage provided. |
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(c) A rate is inadequate if: |
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(1) the rate is insufficient to sustain projected |
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losses and expenses to which the rate applies; and |
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(2) continued use of the rate: |
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(A) endangers the solvency of a health benefit |
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plan issuer using the rate; or |
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(B) has the effect of substantially lessening |
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competition or creating a monopoly in a market. |
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(d) A rate is unfairly discriminatory if the rate: |
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(1) is not based on sound actuarial principles; |
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(2) does not bear a reasonable relationship to the |
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expected loss and expense experience among risks; or |
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(3) is based wholly or partly on the race, creed, |
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color, ethnicity, or national origin of an individual or group |
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sponsoring coverage under or covered by the health benefit plan. |
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Sec. 1670.052. RATE STANDARDS. (a) In setting rates, a |
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health benefit plan issuer shall consider: |
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(1) past and prospective loss experience: |
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(A) inside this state; and |
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(B) outside this state if the data from this |
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state are not credible; |
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(2) the peculiar hazards and experiences of individual |
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risks, past and prospective, inside and outside this state, except |
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to the extent specifically prohibited by law; |
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(3) the plan issuer's actuarially credible historical |
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premium or charge, exposure, loss, and expense experience; |
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(4) catastrophe hazards in this state; |
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(5) operating expenses, excluding disallowed |
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expenses; |
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(6) investment income; |
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(7) a reasonable margin for profit; and |
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(8) any other factors inside and outside this state: |
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(A) determined to be relevant by the health |
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benefit plan issuer; and |
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(B) not disallowed by the commissioner. |
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(b) A rate may not be excessive, inadequate, or unfairly |
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discriminatory for the risks to which the rate applies. |
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(c) Except to the extent limited by other law, the health |
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benefit plan issuer may: |
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(1) group risks by classification to establish rates |
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and minimum premiums or charges for coverage; and |
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(2) modify classification rates to produce rates for |
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individual risks in accordance with rating plans that establish |
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standards for measuring variations in those risks on the basis of |
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any factor listed in Subsection (a). |
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(d) In setting rates that apply only to holders of policies, |
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contracts, or evidences of coverage in this state, a health benefit |
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plan issuer shall use available premium or charge, loss, claim, and |
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exposure information from this state to the full extent of the |
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actuarial credibility of that information. The plan issuer may use |
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experience from outside this state as necessary to supplement |
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information from this state that is not actuarially credible. |
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(e) In determining rating territories and territorial |
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rates, an insurer shall use methods based on sound actuarial |
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principles. |
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(f) Rates for a small employer health benefit plan subject |
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to Chapter 1501 must comply with this chapter and Chapter 1501. In |
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the case of a conflict between this chapter and Chapter 1501, |
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Chapter 1501 controls. |
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[Sections 1670.053-1670.100 reserved for expansion] |
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SUBCHAPTER C. RATE FILINGS |
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Sec. 1670.101. RATE FILINGS AND SUPPORTING INFORMATION. |
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(a) Except as provided by Subchapter D, for risks written in this |
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state, each health benefit plan issuer shall file with the |
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commissioner all rates, applicable rating manuals, supplementary |
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rating information, and additional information as required by the |
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commissioner or another provision of this code. |
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(b) The commissioner by rule shall determine the |
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information required to be included in the filing, including: |
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(1) categories of supporting information and |
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supplementary rating information; |
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(2) statistics or other information to support the |
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rates to be used by the health benefit plan issuer, including |
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information necessary to evidence that the computation of the rate |
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does not include disallowed expenses; and |
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(3) information concerning policy fees, service fees, |
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and other fees that are charged or collected by the plan issuer |
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under Section 550.001. |
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Sec. 1670.102. FILING REQUIREMENTS FOR PLAN ISSUERS WITH |
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LESS THAN FIVE PERCENT OF MARKET. In determining filing |
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requirements under Section 1670.101 for a health benefit plan |
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issuer with less than five percent of the market, the commissioner |
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shall consider specific attributes of the plan issuer and the plan |
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issuer's market, as applicable. The commissioner shall determine |
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filing requirements for those plan issuers accordingly to |
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accommodate premium or charge volume and loss experience, targeted |
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markets, limitations on coverage, and any potential barriers to |
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market entry or growth. |
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Sec. 1670.103. DISAPPROVAL OF RATE IN RATE FILING; HEARING. |
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(a) The commissioner shall disapprove a rate if the commissioner |
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determines that the rate filing made under this chapter does not |
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meet the standards established under Subchapter B or another |
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provision of this code governing the setting of rates by the health |
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benefit plan issuer. |
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(b) If the commissioner disapproves a filing, the |
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commissioner shall issue an order specifying in what respects the |
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filing fails to meet the requirements of this chapter or another |
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provision of this code governing the setting of rates by the health |
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benefit plan issuer. |
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(c) The filer is entitled to a hearing on written request |
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made to the commissioner not later than the 30th day after the date |
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the order disapproving the rate filing takes effect. |
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Sec. 1670.104. DISAPPROVAL OF RATE IN EFFECT; HEARING. |
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(a) The commissioner may disapprove a rate that is in effect only |
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after a hearing. The commissioner shall provide the filer at least |
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20 days' written notice. |
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(b) The commissioner must issue an order disapproving a rate |
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under Subsection (a) not later than the 15th day after the close of |
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the hearing. The order must: |
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(1) specify in what respects the rate fails to meet the |
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requirements of this chapter or another provision of this code |
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governing the setting of rates by the health benefit plan issuer; |
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and |
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(2) state the date on which further use of the rate is |
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prohibited, which may not be earlier than the 45th day after the |
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close of the hearing under this section. |
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Sec. 1670.105. GRIEVANCE. (a) An individual or group who |
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sponsors coverage under or is covered by a health benefit plan and |
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who is aggrieved with respect to any filing under this chapter that |
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is in effect, or the public insurance counsel, may apply to the |
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commissioner in writing for a hearing on the filing. The |
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application must specify the grounds for the applicant's grievance. |
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(b) The commissioner shall hold a hearing on an application |
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filed under Subsection (a) not later than the 30th day after the |
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date the commissioner receives the application if the commissioner |
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determines that: |
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(1) the application is made in good faith; |
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(2) the applicant would be aggrieved as alleged if the |
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grounds specified in the application were established; and |
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(3) the grounds specified in the application otherwise |
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justify holding the hearing. |
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(c) The commissioner shall provide written notice of a |
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hearing under Subsection (b) to the applicant and each health |
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benefit plan issuer that made the filing not later than the 10th day |
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before the date of the hearing. |
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(d) If, after the hearing, the commissioner determines that |
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the filing does not meet the requirements of this chapter or another |
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provision of this code governing the setting of rates by the health |
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benefit plan issuer, the commissioner shall issue an order: |
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(1) specifying in what respects the filing fails to |
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meet those requirements; and |
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(2) stating the date on which the filing is no longer |
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in effect, which must be within a reasonable period after the order |
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date. |
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(e) The commissioner shall send copies of the order issued |
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under Subsection (d) to the applicant and each affected. |
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Sec. 1670.106. ROLE OF PUBLIC INSURANCE COUNSEL. (a) On |
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request to the commissioner, the public insurance counsel may |
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review all rate filings and additional information provided by a |
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health benefit plan issuer under this chapter. Confidential |
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information reviewed under this subsection remains confidential. |
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(b) The public insurance counsel, not later than the 30th |
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day after the date of a rate filing under this chapter, may file |
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with the commissioner a written objection to: |
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(1) a health benefit plan issuer's rate filing; or |
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(2) the criteria on which the plan issuer relied to |
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determine the rate. |
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(c) A written objection filed under Subsection (b) must |
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contain the reasons for the objection. |
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Sec. 1670.107. PUBLIC INSPECTION OF INFORMATION. Each |
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filing made, and any supporting information filed, under this |
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chapter is open to public inspection as of the date of the filing. |
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[Sections 1670.108-1670.150 reserved for expansion] |
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SUBCHAPTER D. PRIOR APPROVAL OF RATES UNDER CERTAIN CIRCUMSTANCES |
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Sec. 1670.151. REQUIREMENT TO FILE RATES FOR PRIOR APPROVAL |
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UNDER CERTAIN CIRCUMSTANCES. (a) The commissioner by order may |
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require a health benefit plan issuer to file with the department for |
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the commissioner's approval all rates, supplementary rating |
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information, and any supporting information in accordance with this |
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subchapter if the commissioner determines that: |
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(1) the plan issuer's rates require supervision |
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because of the plan issuer's financial condition or rating |
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practices; or |
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(2) a statewide health benefit coverage emergency |
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exists. |
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(b) If a health benefit plan issuer files a petition under |
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Subchapter D, Chapter 36, for judicial review of an order |
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disapproving a rate under this chapter, the plan issuer must use the |
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rates in effect for the plan issuer at the time the petition is |
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filed and may not file and use any higher rate for the same type of |
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health benefit plan coverage subject to this chapter before the |
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matter subject to judicial review is finally resolved unless the |
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health benefit plan issuer, in accordance with this subchapter, |
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files the new rate with the department, along with any applicable |
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supplementary rating information and supporting information, and |
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obtains the commissioner's approval of the rate. |
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(c) From the date of the filing of the rate with the |
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department to the effective date of the new rate, the health benefit |
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plan issuer's previously filed rate that is in effect on the date of |
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the filing remains in effect. |
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(d) The commissioner may require a health benefit plan |
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issuer to file the plan issuer's rates under this section until the |
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commissioner determines that the conditions described by |
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Subsection (a) no longer exist. |
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(e) For purposes of this section, a rate is filed with the |
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department on the date the department receives the rate filing. |
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(f) If the commissioner requires a health benefit plan |
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issuer to file the plan issuer's rates under this section, the |
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commissioner shall issue an order specifying the commissioner's |
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reasons for requiring the rate filing. An affected plan issuer is |
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entitled to a hearing on written request made to the commissioner |
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not later than the 30th day after the date the order is issued. |
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Sec. 1670.152. RATE APPROVAL REQUIRED; EXCEPTION. (a) A |
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health benefit plan issuer subject to this subchapter may not use a |
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rate until the rate has been filed with the department and approved |
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by the commissioner in accordance with this subchapter. |
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(b) Notwithstanding Subsection (a), after a rate filing is |
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approved under this subchapter, a health benefit plan issuer, |
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without prior approval of the commissioner, may use any rate |
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subsequently filed by the plan issuer if the subsequently filed |
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rate does not exceed the lesser of: |
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(1) 107.5 percent of the rate approved by the |
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commissioner; or |
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(2) 110 percent of any rate used by the plan issuer in |
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the previous 12-month period. |
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(c) Filed rates under Subsection (b) take effect on the date |
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specified by the insurer. |
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Sec. 1670.153. COMMISSIONER ACTION. (a) Not later than |
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the 30th day after the date a rate is filed with the department |
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under this subchapter, the commissioner shall: |
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(1) approve the rate if the commissioner determines |
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that the rate complies with the requirements of this chapter and |
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other provisions of this code governing the setting of rates by the |
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health benefit plan issuer; or |
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(2) disapprove the rate if the commissioner determines |
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that the rate does not comply with the requirements of this chapter |
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and other provisions of this code governing the setting of rates by |
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the plan issuer. |
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(b) Except as provided by Subsection (c), if a rate has not |
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been approved or disapproved by the commissioner before the |
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expiration of the 30-day period described by Subsection (a), the |
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rate is considered approved and the health benefit plan issuer may |
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use the rate unless the rate proposed in the filing represents an |
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increase of 12.5 percent or more from the plan issuer's previously |
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filed rate. |
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(c) For good cause, the commissioner may, on the expiration |
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of the 30-day period described by Subsection (a), extend the period |
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for approval or disapproval of a rate for one additional 30-day |
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period. The commissioner and the health benefit plan issuer may |
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not by agreement extend the 30-day period described by Subsection |
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(a). |
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Sec. 1670.154. ADDITIONAL INFORMATION. (a) If the |
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department determines that the information filed by a health |
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benefit plan issuer under this chapter is incomplete or otherwise |
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deficient, the department may request additional information from |
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the plan issuer. If the department requests additional |
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information from the plan issuer during the 30-day period provided |
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by Section 1670.153(a) or under a second 30-day period provided |
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under Section 1670.153(c), the time between the date the department |
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submits the request to the plan issuer and the date the department |
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receives the information requested is not included in the |
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computation of the first 30-day period or the second 30-day period, |
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as applicable. |
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(b) For purposes of this section, the date of the |
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department's submission of a request for additional information is: |
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(1) the date of the department's electronic mailing or |
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telephone call relating to the request for additional information; |
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or |
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(2) the postmarked date on the department's letter |
|
relating to the request for additional information. |
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Sec. 1670.155. NOTICE OF COMMISSIONER APPROVAL; USE OF |
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RATE. If the commissioner approves a rate filing under Section |
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1670.153, the commissioner shall provide the health benefit plan |
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issuer with a written or electronic notice of the approval. The |
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plan issuer may use the rate on receipt of the approval notice. |
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Sec. 1670.156. RATE FILING DISAPPROVAL BY COMMISSIONER; |
|
HEARING. (a) If the commissioner disapproves a rate filing under |
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Section 1670.153(a)(2), the commissioner shall issue an order |
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disapproving the filing in accordance with Section 1670.103(b). |
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(b) A health benefit plan issuer whose rate filing is |
|
disapproved is entitled to a hearing in accordance with Section |
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1670.103(c). |
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SECTION 2. Sections 1507.008 and 1507.058, Insurance Code, |
|
are repealed. |
|
SECTION 3. Subtitle K, Title 8, Insurance Code, as added by |
|
this Act, applies only to rates for health benefit plan coverage |
|
delivered, issued for delivery, or renewed on or after January 1, |
|
2010. Rates for health benefit plan coverage delivered, issued for |
|
delivery, or renewed before January 1, 2010, are governed by the law |
|
in effect immediately before the effective date of this Act, and |
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that law is continued in effect for that purpose. |
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SECTION 4. This Act takes effect September 1, 2009. |