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A BILL TO BE ENTITLED
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AN ACT
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relating to notice and prior approval 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 L to read as follows: |
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SUBTITLE L. RATES AND RATEMAKING IN GENERAL |
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CHAPTER 1691. RATES |
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SUBCHAPTER A. GENERAL PROVISIONS |
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Sec. 1691.001. 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. 1691.002. 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 |
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1395ss(g)(1)); |
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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 coverage provided under |
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Subtitle H. |
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Sec. 1691.003. 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. 1691.004. NOTICE OF RATE INCREASE; DEPARTMENT WEBSITE. |
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(a) In addition to any notice required to be provided under Section |
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1254.001, a health benefit plan issuer shall notify the department |
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and each person responsible for paying any part of an individual's |
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premium or charge for coverage under the health benefit plan, other |
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than a person who receives notice under Section 1254.001, of a rate |
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increase scheduled to take effect on the renewal of the |
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individual's coverage that will result in a total premium or charge |
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amount for covering that individual that is at least 10 percent |
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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 60th day before the date the rate increase is scheduled to |
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take effect. |
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(c) The notice required by Subsection (a) must include, in a |
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prominent manner: |
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(1) the mailing address and Internet website address |
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of the health benefit plan issuer; |
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(2) the mailing address of the department to which a |
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covered individual may submit written comments concerning the rate |
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increase and notice; and |
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(3) the Internet address of the website maintained by |
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the department under Subsection (d). |
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(d) The department, as soon as practicable after receipt of |
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the notice required by Subsection (a), shall post on an Internet |
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website maintained by the department information regarding the |
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notice, including any relevant written comments received by the |
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department concerning the notice and any filing information |
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provided by the health benefit plan issuer in support of the notice. |
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Sec. 1691.005. 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. 1691.006. 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. 1691.007. ANNUAL 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 file annually 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, 2016. |
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The commissioner may require a health benefit plan issuer subject |
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to this chapter to report to the commissioner, in the form and in |
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the time required by the commissioner, any other information the |
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commissioner determines is necessary to comply with this section. |
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(b) Annually, 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, including 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 year; |
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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 year 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 annual report |
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required by Subsection (b) must be made available to the governor, |
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lieutenant governor, speaker of the house of representatives, |
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legislature, and public not later than the 90th day after the last |
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day of the calendar year covered by the 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 annual 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 annual report as it |
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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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SUBCHAPTER B. RATE STANDARDS |
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Sec. 1691.051. 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. 1691.052. 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 plan issuer; |
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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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SUBCHAPTER C. RATE FILINGS AND APPROVAL |
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Sec. 1691.101. RATE FILINGS FOR PRIOR APPROVAL. (a) For |
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risks written in this state, each health benefit plan issuer shall |
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file with the department for the commissioner's approval all rates, |
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applicable rating manuals, supplementary rating information, and |
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additional information as required by the commissioner or another |
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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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(c) In determining filing requirements under this section, |
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for a health benefit plan issuer with less than five percent of the |
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market, the commissioner shall: |
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(1) consider specific attributes of the plan issuer |
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and the issuer's market, as applicable; and |
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(2) determine filing requirements for the plan issuer |
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to accommodate premium or charge volume and loss experience, |
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targeted markets, limitations on coverage, and any potential |
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barriers to market entry or growth. |
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Sec. 1691.102. RATE APPROVAL REQUIRED. A health benefit |
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plan issuer subject to this chapter may not use a rate until the |
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rate has been filed with the department and approved by the |
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commissioner in accordance with this chapter. |
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Sec. 1691.103. COMMISSIONER ACTION. (a) Not later than the |
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60th day after the date a rate is filed with the department under |
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this chapter, 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 a requirement of this chapter or |
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another provision of this code governing the setting of rates by the |
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plan issuer. |
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(b) For good cause, the commissioner may, on the expiration |
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of the 60-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 not |
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by agreement extend the 60-day period described by Subsection (a). |
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Sec. 1691.104. 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 information |
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from the plan issuer during the 60-day period provided by Section |
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1691.103(a) or under the 30-day period provided under Section |
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1691.103(b), the time between the date the department submits the |
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request to the plan issuer and the date the department receives the |
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information requested is not included in the computation of the |
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60-day period or the 30-day period, 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 |
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relating to the request for additional information. |
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Sec. 1691.105. NOTICE OF COMMISSIONER APPROVAL; USE OF |
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FILED RATE. If the commissioner approves a filed rate under Section |
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1691.103, 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. 1691.106. DISAPPROVAL OF FILED RATE BY COMMISSIONER; |
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HEARING. (a) If the commissioner disapproves a filed rate under |
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Section 1691.103, the commissioner shall issue an order |
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disapproving the rate. |
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(b) The order must specify in what respects the filing fails |
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to meet a requirement of this chapter or another provision of this |
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code governing the setting of rates by the health benefit plan |
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issuer. |
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(c) A health benefit plan issuer whose filed rate is |
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disapproved is entitled to a hearing on written request made to the |
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commissioner not later than the 60th day after the date the order |
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disapproving the filed rate takes effect. |
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Sec. 1691.107. DISAPPROVAL OF RATE IN EFFECT; HEARING. The |
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commissioner may disapprove a rate that is in effect only after a |
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hearing. The commissioner by rule shall establish procedures to |
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conduct a hearing required under this section. |
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Sec. 1691.108. USE OF RATE DURING FILING PERIOD OR APPEAL. |
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(a) From the date of the filing of a new rate with the department to |
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the effective date of the new rate, the health benefit plan issuer's |
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previously filed rate that is in effect on the date of the filing |
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remains in effect. |
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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 use any higher rate for the same type of health |
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benefit plan coverage subject to this chapter before the matter |
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subject to judicial review is finally resolved unless the health |
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benefit plan issuer, in accordance with this chapter, files the new |
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rate with the department, along with any applicable supplementary |
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rating information and supporting information, and obtains the |
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commissioner's approval of the rate. |
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(c) 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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SUBCHAPTER D. GRIEVANCES; PUBLIC REVIEW AND INSPECTION |
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Sec. 1691.151. 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 a requirement 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 the requirement; 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 health |
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benefit plan issuer. |
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Sec. 1691.152. 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. 1691.153. 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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SECTION 2. Sections 1507.008 and 1507.058, Insurance Code, |
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are repealed. |
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SECTION 3. Subtitle L, 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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2016. Rates for health benefit plan coverage delivered, issued for |
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delivery, or renewed before January 1, 2016, are governed by the law |
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as it existed 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, 2015. |