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A BILL TO BE ENTITLED
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AN ACT
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relating to the authority of the commissioner of insurance to |
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disapprove rate changes for certain health benefit plans. |
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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. RATES |
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CHAPTER 1671. RATES FOR CERTAIN COVERAGE |
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SUBCHAPTER A. GENERAL PROVISIONS |
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Sec. 1671.001. APPLICABILITY OF CHAPTER. (a) This chapter |
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applies only to rates for the following health benefit plans: |
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(1) an individual major medical expense insurance |
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policy to which Chapter 1201 applies; |
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(2) individual health maintenance organization |
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coverage; |
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(3) a group accident and health insurance policy |
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issued to an association under Section 1251.052; |
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(4) a blanket accident and health insurance policy |
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issued to an association under Section 1251.358; |
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(5) group health maintenance organization coverage |
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issued to an association described by Section 1251.052 or 1251.358; |
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or |
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(6) a small employer health benefit plan provided |
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under Chapter 1501. |
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(b) This chapter does not apply to rates for coverage |
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provided through the Texas Health Insurance Pool. |
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(c) This chapter applies only to a health benefit plan rate |
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filed with and reviewed by the commissioner under other law. This |
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chapter does not create a requirement that any health benefit plan |
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issuer file the plan issuer's rates with the department. |
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Sec. 1671.002. 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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SUBCHAPTER B. RATE STANDARDS |
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Sec. 1671.051. 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 is based on |
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unreasonable administrative expenses; 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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SUBCHAPTER C. DISAPPROVAL OF RATE CHANGES |
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Sec. 1671.101. REVIEW OF PREMIUM RATE CHANGES. The |
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commissioner by rule shall establish a process under which the |
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commissioner: |
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(1) reviews health benefit plan rate changes for |
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compliance with this chapter; and |
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(2) disapproves rates that do not comply with this |
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chapter. |
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Sec. 1671.102. DISAPPROVAL OF RATE CHANGE AUTHORIZED. (a) |
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The commissioner may disapprove a rate change filed with the |
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department by a health benefit plan issuer if: |
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(1) the commissioner determines that the proposed rate |
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is excessive, inadequate, or unfairly discriminatory; or |
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(2) the required rate filing is incomplete. |
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(b) In making a determination under this section, the |
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commissioner shall consider the following factors: |
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(1) the reasonableness and soundness of the actuarial |
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assumptions, calculations, projections, and other factors used by |
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the plan issuer to arrive at the proposed rate change; |
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(2) the historical trends for medical claims |
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experienced by the plan issuer; |
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(3) the reasonableness of the plan issuer's historical |
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and projected administrative expenses; |
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(4) the plan issuer's compliance with medical loss |
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ratio standards applicable under state or federal law; |
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(5) whether the rate change applies to an open or |
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closed block of business; |
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(6) whether the plan issuer has complied with all |
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requirements for pooling risk and participating in risk adjustment |
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programs in effect under state or federal law; |
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(7) the financial condition of the plan issuer for at |
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least the previous five years, or for the plan issuer's time in |
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existence, if less than five years, including profitability, |
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surplus, reserves, investment income, reinsurance, dividends, and |
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transfers of funds to affiliates or parent companies; |
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(8) the financial performance for at least the |
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previous five years of the block of business subject to the proposed |
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rate change, or for the block's time in existence, if less than five |
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years, including past and projected profits, surplus, reserves, |
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investment income, and reinsurance applicable to the block; |
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(9) changes to the covered benefits or health benefit |
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plan design; and |
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(10) whether the proposed rate change is necessary to |
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maintain the plan issuer's solvency or maintain rate stability and |
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prevent excessive rate increases in the future. |
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(c) In making a determination under this section, the |
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commissioner may consider the following factors: |
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(1) if the commissioner determines appropriate for |
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comparison purposes, medical claims trends reported by plan issuers |
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in this state or in a region of this country or the country as a |
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whole; and |
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(2) inflation indexes. |
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Sec. 1671.103. DISPUTE RESOLUTION. The commissioner by |
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rule shall establish a method for a health benefit plan issuer to |
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dispute the disapproval of a rate change under this subchapter, |
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which may include an informal method for the plan issuer and the |
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commissioner to reach an agreement about an appropriate rate. |
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Sec. 1671.104. USE OF DISAPPROVED RATE PENDING DISPUTE |
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RESOLUTION; ESCROW OF EXCESS PREMIUM. (a) If the commissioner |
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disapproves a rate change under this subchapter and the plan issuer |
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objects to the disapproval: |
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(1) the plan issuer may use the disapproved rate |
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pending the completion of: |
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(A) the dispute resolution process established |
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under this subchapter; and |
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(B) any other appeal of the disapproval |
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authorized by law and pursued by the plan issuer; and |
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(2) if the disapproved rate is an increase, beginning |
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on the date the rate is disapproved and continuing until the |
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completion of the dispute resolution process and any other appeal, |
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the plan issuer shall deposit into an escrow account the portion of |
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the premiums collected by the plan issuer under the increased rate |
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that exceeds the premium amount charged before the rate change |
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became effective. |
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(b) The commissioner shall adopt rules governing the escrow |
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of premiums under Subsection (a)(2) and establishing the conditions |
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under which any excess premiums will be refunded or credited to the |
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persons who paid the premiums if the rate dispute is not resolved in |
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the plan issuer's favor. |
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Sec. 1671.105. FEDERAL FUNDING. The commissioner shall |
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seek all available federal funding to cover the cost to the |
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department of reviewing rates and resolving rate disputes under |
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this subchapter. |
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SECTION 2. Subtitle K, Title 8, Insurance Code, as added by |
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this Act, applies only to rates for health benefit plan coverage |
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delivered, issued for delivery, or renewed on or after January 1, |
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2014. Rates for health benefit plan coverage delivered, issued for |
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delivery, or renewed before January 1, 2014, are governed by the law |
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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 3. This Act takes effect September 1, 2013. |