Texas 2009 - 81st Regular

Texas House Bill HB1578 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	81R629 KCR-D
2	2	By: Isett H.B. No. 1578
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the establishment of a medical reinsurance system and
8	8	to certain insurance reforms necessary to the efficient operation
9	9	of that system; providing an administrative penalty.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	SECTION 1. The heading to Subtitle F, Title 4, Insurance
12	12	Code, is amended to read as follows:
13	13	SUBTITLE F. REINSURANCE; STOP-LOSS INSURANCE
14	14	SECTION 2. Subtitle F, Title 4, Insurance Code, is amended
15	15	by adding Chapter 495 to read as follows:
16	16	CHAPTER 495. STOP-LOSS INSURANCE FOR CERTAIN SELF-FUNDED ENTITIES
17	17	Sec. 495.001. DEFINITIONS. In this chapter:
18	18	(1) "Aggregate stop-loss insurance" means stop-loss
19	19	insurance in which the issuer responds after a self-funded health
20	20	benefit plan has covered:
21	21	(A) claims that total a specified dollar amount;
22	22	or
23	23	(B) a specified percentage of expected claims,
24	24	which may be modified to account for any applicable individual
25	25	stop-loss insurance coverage.
26	26	(2) "Health benefit plan" means a plan that provides
27	27	benefits for hospital, medical, surgical, or other treatment
28	28	expenses incurred as a result of a health condition, an accident, or
29	29	sickness, including a group health insurance policy, a group
30	30	hospital service contract, a group evidence of coverage, or any
31	31	other similar coverage document that:
32	32	(A) is issued, entered into, or provided by:
33	33	(i) an insurance company;
34	34	(ii) a group hospital service corporation
35	35	operating under Chapter 842;
36	36	(iii) a health maintenance organization
37	37	operating under Chapter 843;
38	38	(iv) a multiple employer welfare
39	39	arrangement that holds a certificate of authority under Chapter
40	40	846; or
41	41	(v) an employer, union, association,
42	42	trustee, or other self-funded or self-insured welfare or benefit
43	43	plan, program, or arrangement; and
44	44	(B) is not limited in scope to only one or more of
45	45	the following types of coverage:
46	46	(i) accident-only or disability income
47	47	insurance coverage or a combination of accident-only and disability
48	48	income insurance coverage;
49	49	(ii) credit-only insurance coverage;
50	50	(iii) disability insurance coverage;
51	51	(iv) coverage only for a specified disease
52	52	or illness;
53	53	(v) Medicare services under a federal
54	54	contract;
55	55	(vi) Medicare supplement and Medicare
56	56	Select policies regulated in accordance with federal law;
57	57	(vii) long-term care coverage or benefits,
58	58	nursing home care coverage or benefits, home health care coverage
59	59	or benefits, community-based care coverage or benefits, or any
60	60	combination of those coverages or benefits;
61	61	(viii) coverage that provides
62	62	limited-scope dental or vision benefits;
63	63	(ix) coverage for an on-site medical
64	64	clinic;
65	65	(x) liability insurance coverage,
66	66	including general liability insurance coverage, automobile
67	67	liability insurance coverage, and coverage issued as a supplement
68	68	to liability insurance coverage;
69	69	(xi) workers' compensation insurance
70	70	coverage or similar insurance coverage;
71	71	(xii) automobile medical payment insurance
72	72	coverage, including coverage issued as a supplement to automobile
73	73	medical payment insurance coverage; or
74	74	(xiii) hospital indemnity or other fixed
75	75	indemnity insurance coverage.
76	76	(3) "Individual stop-loss deductible" means the
77	77	dollar amount of claims that a self-funded health benefit plan must
78	78	cover before the issuer of an individual stop-loss insurance policy
79	79	begins to reimburse the health benefit plan for additional covered
80	80	claims for the remainder of a policy period.
81	81	(4) "Individual stop-loss insurance" means stop-loss
82	82	insurance in which the issuer responds when the self-funded health
83	83	benefit plan covered by the insurance has covered claims that
84	84	exceed the applicable individual stop-loss deductible for one
85	85	enrollee in the health benefit plan.
86	86	(5) "Reinsurance" means a contractual arrangement
87	87	between a ceding insurer and an assuming insurer in accordance with
88	88	Chapter 492.
89	89	(6) "Self-funded health benefit plan" means a health
90	90	benefit plan that:
91	91	(A) is established as an employee welfare benefit
92	92	plan under the Employee Retirement Income Security Act of 1974 (29
93	93	U.S.C. Section 1001 et seq.) or offered by an entity, agency, or
94	94	political subdivision of this state under Subtitle H, Title 8;
95	95	(B) holds the initial obligation to pay claims
96	96	under the plan; and
97	97	(C) is exempt under state or federal law from the
98	98	licensing requirements of this code.
99	99	(7) "Stop-loss insurance" means an insurance policy
100	100	covering a self-funded health benefit plan. The term includes
101	101	aggregate stop-loss insurance and individual stop-loss insurance.
102	102	Sec. 495.002. REINSURANCE PROHIBITED; STOP-LOSS INSURANCE
103	103	REQUIRED. (a) An insurer authorized to write reinsurance in this
104	104	state may not issue a reinsurance policy covering a self-funded
105	105	health benefit plan.
106	106	(b) Subject to Section 495.003, an insurer authorized to
107	107	write stop-loss insurance in this state may issue a stop-loss
108	108	insurance policy covering a self-funded health benefit plan.
109	109	Sec. 495.003. PRIOR APPROVAL OF POLICIES. (a) An insurer
110	110	authorized to write stop-loss insurance in this state may not issue
111	111	or issue for delivery a stop-loss insurance policy in this state
112	112	until the policy has been filed with the department and approved by
113	113	the commissioner. The commissioner may not approve an individual
114	114	stop-loss insurance policy filed under this section if the
115	115	individual stop-loss deductible is less than $5,000 or exceeds
116	116	$100,000.
117	117	(b) The commissioner shall adopt rules under Section 37.001
118	118	to govern the approval of policies filed under this section.
119	119	(c) If the commissioner disapproves a policy filed under
120	120	this section, the disapproval is subject to judicial review under
121	121	Subchapter D, Chapter 36.
122	122	(d) In the commissioner's order approving or disapproving a
123	123	policy filed under this section, the commissioner shall state
124	124	whether the stop-loss policy is subject to Chapters 1675 and 1676.
125	125	Sec. 495.004. REPORTS CONCERNING INDIVIDUAL STOP-LOSS
126	126	INSURANCE. An insurer that issues individual stop-loss insurance
127	127	in this state shall annually file with the department a report that
128	128	contains the annualized gross premium and annual individual
129	129	stop-loss deductible for each individual stop-loss insurance
130	130	policy issued in this state.
131	131	SECTION 3. Title 8, Insurance Code, is amended by adding
132	132	Subtitle K to read as follows:
133	133	SUBTITLE K. TEXAS MEDICAL REINSURANCE SYSTEM
134	134	CHAPTER 1675. TEXAS MEDICAL REINSURANCE SYSTEM
135	135	Sec. 1675.001. DEFINITIONS. In this chapter:
136	136	(1) "Affiliate" means a person or entity classified as
137	137	an affiliate under Section 823.003.
138	138	(2) "Aggregate stop-loss insurance" has the meaning
139	139	assigned by Section 495.001.
140	140	(3) "Board" means the board of directors of the Texas
141	141	Medical Reinsurance System.
142	142	(4) "Health benefit plan" has the meaning assigned by
143	143	Section 495.001.
144	144	(5) "Health benefit plan issuer" means an entity that
145	145	issues a health benefit plan.
146	146	(6) "Independent auditor" means the auditor with whom
147	147	the board contracts under Section 1675.006 to audit the
148	148	administration, management, and operation of the system.
149	149	(7) "Individual stop-loss insurance" has the meaning
150	150	assigned by Section 495.001.
151	151	(8) "Management company" means the entity with whom
152	152	the board contracts under Section 1675.006 to administer, manage,
153	153	and operate the system.
154	154	(9) "Plan of operation" means the plan of operation of
155	155	the system established under Section 1675.007.
156	156	(10) "Self-funded health benefit plan" has the meaning
157	157	assigned by Section 495.001.
158	158	(11) "Stop-loss insurance" has the meaning assigned by
159	159	Section 495.001.
160	160	(12) "Subsidiary" means a person classified as a
161	161	subsidiary under Section 823.003.
162	162	(13) "System" means the Texas Medical Reinsurance
163	163	System established under this chapter.
164	164	Sec. 1675.002. TEXAS MEDICAL REINSURANCE SYSTEM. The Texas
165	165	Medical Reinsurance System is an entity that is:
166	166	(1) administered by a board of directors and
167	167	management company in accordance with this chapter; and
168	168	(2) subject to the supervision and control of the
169	169	commissioner.
170	170	Sec. 1675.003. SYSTEM BOARD OF DIRECTORS. (a) The board of
171	171	directors of the system is composed of the following nine members:
172	172	(1) one member appointed by the governor, selected
173	173	from a list of candidates prepared by the lieutenant governor;
174	174	(2) one member appointed by the governor, selected
175	175	from a list of candidates prepared by the speaker of the house of
176	176	representatives;
177	177	(3) one member appointed by the governor who is a small
178	178	employer, as defined by Section 1501.002;
179	179	(4) one member appointed by the governor who is a large
180	180	employer, as defined by Section 1501.002;
181	181	(5) one member appointed by the governor who
182	182	represents the interests of political subdivisions of this state;
183	183	(6) one member appointed by the governor who
184	184	represents the interests of physicians in this state;
185	185	(7) one member appointed by the governor who
186	186	represents the interests of hospitals in this state;
187	187	(8) one member who is the executive director of the
188	188	Employees Retirement System of Texas or that executive director's
189	189	designee; and
190	190	(9) one member who is the executive director of the
191	191	Teacher Retirement System of Texas or that executive director's
192	192	designee.
193	193	(b) A board member may not:
194	194	(1) be an officer, director, or employee of a health
195	195	benefit plan issuer or an affiliate or subsidiary of a health
196	196	benefit plan issuer;
197	197	(2) be a person required to register under Chapter
198	198	305, Government Code; or
199	199	(3) be related to a person described by Subdivision
200	200	(1) or (2) within the second degree by affinity or consanguinity.
201	201	(c) Members of the board appointed by the governor serve
202	202	two-year terms expiring December 31 of each odd-numbered year. A
203	203	member's term continues until a successor is appointed.
204	204	(d) A member of the board may not be compensated for serving
205	205	on the board but is entitled to reimbursement for actual expenses
206	206	incurred in performing functions as a member of the board as
207	207	provided by the General Appropriations Act.
208	208	Sec. 1675.004. OPEN MEETINGS; PUBLIC INFORMATION. The
209	209	board is subject to:
210	210	(1) the open meetings law, Chapter 551, Government
211	211	Code; and
212	212	(2) the public information law, Chapter 552,
213	213	Government Code.
214	214	Sec. 1675.005. BOARD MEMBER IMMUNITY. (a) A member of the
215	215	board is not liable for an act performed, or omission made, in good
216	216	faith in the performance of powers and duties under this chapter.
217	217	(b) A cause of action does not arise against a member of the
218	218	board for an act or omission described by Subsection (a).
219	219	Sec. 1675.006. SELECTION OF MANAGEMENT COMPANY AND
220	220	INDEPENDENT AUDITOR. (a) The board shall contract with:
221	221	(1) an entity that is qualified to administer, manage,
222	222	and operate the system; and
223	223	(2) an entity that is qualified to audit the manner in
224	224	which the entity described by Subdivision (1) performs its duties.
225	225	(b) An entity with whom the board contracts under Subsection
226	226	(a) may not be a health benefit plan issuer or an affiliate or
227	227	subsidiary of a health benefit plan issuer.
228	228	(c) A management company with whom the board contracts under
229	229	Subsection (a)(1) must have the capability to gather, compile, and
230	230	securely store information received from health benefit plan
231	231	issuers and health care providers with whom health benefit plan
232	232	issuers contract in a manner that allows the management company to
233	233	prepare reports as requested by the board.
234	234	Sec. 1675.007. SYSTEM PLAN OF OPERATION. (a) The
235	235	management company shall submit to the commissioner a plan of
236	236	operation and any amendments to that plan necessary or suitable to
237	237	ensure the fair, reasonable, and equitable administration of the
238	238	system.
239	239	(b) The commissioner, after notice and hearing, may approve
240	240	the plan of operation if the commissioner determines the plan:
241	241	(1) is suitable to ensure the fair, reasonable, and
242	242	equitable administration of the system; and
243	243	(2) provides for the sharing of system gains or losses
244	244	on an equitable and proportionate basis in accordance with this
245	245	chapter.
246	246	(c) The plan of operation is effective on the written
247	247	approval of the commissioner.
248	248	Sec. 1675.008. SYSTEM POWERS AND DUTIES. (a) The system,
249	249	through the board and the management company, has the general
250	250	powers and authority granted under state law to an insurer or a
251	251	health maintenance organization authorized to engage in business,
252	252	except that the system may not directly issue a health benefit plan.
253	253	(b) The system may:
254	254	(1) enter into contracts necessary or proper to
255	255	implement this chapter, including, with the commissioner's
256	256	approval, contracts with similar programs of other states for the
257	257	joint performance of common functions or with persons or other
258	258	organizations for the performance of administrative functions;
259	259	(2) sue or be sued, including taking legal action
260	260	necessary or proper to recover assessments and penalties for, on
261	261	behalf of, or against the system or a reinsured health benefit plan
262	262	issuer;
263	263	(3) take legal action necessary to avoid the payment
264	264	of improper claims against the system;
265	265	(4) issue reinsurance contracts in accordance with
266	266	this chapter;
267	267	(5) establish guidelines, conditions, and procedures
268	268	for reinsuring risks under the plan of operation;
269	269	(6) establish actuarial and underwriting functions as
270	270	appropriate for the operation of the system;
271	271	(7) appoint appropriate legal, actuarial, and other
272	272	committees necessary to provide technical assistance in:
273	273	(A) the operation of the system;
274	274	(B) policy and other contract design; and
275	275	(C) any other function within the authority of
276	276	the system; and
277	277	(8) assess health benefit plan issuers and stop-loss
278	278	insurers in accordance with Section 1675.012.
279	279	Sec. 1675.009. SYSTEM AUDIT; INDEPENDENT AUDIT AND STATE
280	280	AUDIT. (a) The transactions of the system are subject to audit by
281	281	the state auditor in accordance with Chapter 321, Government Code.
282	282	The state auditor shall report the cost of each audit conducted
283	283	under this subsection to the board, the management company, and the
284	284	comptroller, and the board shall remit that amount to the
285	285	comptroller.
286	286	(b) The independent auditor shall annually audit the
287	287	transactions of the system and the manner in which the management
288	288	company is performing the management company's duties. The
289	289	independent auditor shall deliver to the board the results of an
290	290	audit conducted under this subsection. An independent audit
291	291	conducted under this subsection must include a budgetary and
292	292	accounting analysis of the system's operation.
293	293	Sec. 1675.010. REINSURANCE REQUIRED; AMOUNT REQUIRED FOR
294	294	STOP-LOSS INSURANCE. (a) The following entities shall purchase
295	295	from the system reinsurance for the following types of health
296	296	benefit plans:
297	297	(1) a health benefit plan issuer, for each health
298	298	benefit plan issued; and
299	299	(2) an insurer that is authorized to write stop-loss
300	300	insurance in this state, for each individual stop-loss policy
301	301	covering a self-funded health benefit plan.
302	302	(b) A health benefit plan issuer required to purchase
303	303	reinsurance under Subsection (a)(1) is not required to and may not
304	304	purchase reinsurance for a health benefit plan issued that covers
305	305	exclusively Medicare services or is a Medicare supplement policy,
306	306	as applicable and as determined by federal law.
307	307	(c) An insurer required to purchase reinsurance under
308	308	Subsection (a)(2) must purchase reinsurance on each health benefit
309	309	plan and each individual stop-loss insurance policy in a manner and
310	310	amount consistent with Section 1676.002.
311	311	Sec. 1675.011. PREMIUM RATES FOR REINSURANCE. (a) As part
312	312	of the plan of operation, the management company shall adopt a
313	313	method to determine premium rates to be charged by the system for
314	314	reinsurance contracts issued under this chapter.
315	315	(b) The method adopted must:
316	316	(1) allow premium rate variations based on:
317	317	(A) demographic and geographic factors; and
318	318	(B) the level of benefits provided under a
319	319	reinsured health benefit plan;
320	320	(2) be actuarially justifiable and approved by the
321	321	commissioner under Section 1675.007 as part of the system plan of
322	322	operation; and
323	323	(3) provide for the sharing, on an equitable and
324	324	proportionate basis, of system gains or losses among health benefit
325	325	plan issuers and stop-loss insurers required to purchase
326	326	reinsurance from the system under Section 1675.010.
327	327	Sec. 1675.012. ASSESSMENTS; DEFERMENT OF ASSESSMENTS. (a)
328	328	The board shall recover any net loss of the system by assessing each
329	329	reinsured health benefit plan issuer or stop-loss insurer required
330	330	to purchase reinsurance through the system under Section 1675.010
331	331	an amount determined annually by the board based on information in
332	332	annual statements and other reports required by and filed with the
333	333	board.
334	334	(b) The board shall establish, as part of the plan of
335	335	operation, a formula by which to make assessments that are made
336	336	under Subsection (a). With the approval of the commissioner, the
337	337	board may periodically change the assessment formula as
338	338	appropriate. The board shall base the assessment formula on each
339	339	reinsured health benefit plan issuer's or stop-loss insurer's share
340	340	of the total premiums earned in the preceding calendar year from
341	341	health benefit plans and policies of individual stop-loss insurance
342	342	described by Section 1675.010.
343	343	(c) A reinsured health benefit plan issuer or stop-loss
344	344	insurer may petition the commissioner for a deferment in whole or in
345	345	part of an assessment imposed by the board.
346	346	(d) The commissioner may defer all or part of the assessment
347	347	if the commissioner determines that payment of the assessment would
348	348	endanger the ability of the reinsured health benefit plan issuer or
349	349	stop-loss insurer to fulfill its contractual obligations.
350	350	(e) The board shall assess the amount of any deferred
351	351	assessment against other reinsured health benefit plan issuers and
352	352	stop-loss insurers in a manner consistent with the basis for
353	353	assessment established by this chapter.
354	354	Sec. 1675.013. EFFECT OF DEFERRAL. A reinsured health
355	355	benefit plan issuer or stop-loss insurer that receives a deferral
356	356	under Section 1675.012(d):
357	357	(1) remains liable to the system for the amount
358	358	deferred; and
359	359	(2) until the deferred assessment is paid, may not
360	360	advertise, market, deliver, or issue for delivery:
361	361	(A) a health benefit plan or insurance policy of
362	362	the type for which the deferral is received; or
363	363	(B) any other health benefit plan or insurance
364	364	policy subject to this chapter.
365	365	Sec. 1675.014. RULES. The commissioner may adopt rules
366	366	necessary to implement this chapter.
367	367	CHAPTER 1676. CERTAIN HEALTH SERVICES AND SUPPLIES PROVIDED UNDER
368	368	REINSURED PLANS AND POLICIES
369	369	Sec. 1676.001. DEFINITIONS. (a) In this chapter:
370	370	(1) "Health benefit plan claim" means a claim
371	371	reimbursable under a reinsured plan or policy.
372	372	(2) "Health care provider" means a practitioner,
373	373	institutional provider, or other person or organization that
374	374	furnishes health care services or supplies and that is licensed or
375	375	otherwise authorized to practice in this state. The term includes a
376	376	physician.
377	377	(3) "Hospital" means a licensed public or private
378	378	institution as defined by Chapter 241, Health and Safety Code, or
379	379	Subtitle C, Title 7, Health and Safety Code.
380	380	(4) "Institutional provider" means a hospital,
381	381	nursing home, or other medical or health-related service facility
382	382	that provides care for the sick or injured or other care that may be
383	383	covered in a reinsured plan or policy.
384	384	(5) "Plan claim administrator" means the individual or
385	385	entity responsible for paying claims under a reinsured plan or
386	386	policy.
387	387	(6) "Policy period" means the period during which a
388	388	reinsured plan or policy provides coverage.
389	389	(7) "Practitioner" means an individual who practices a
390	390	healing art. The term includes a practitioner described by Section
391	391	1451.001 or 1451.101.
392	392	(8) "Qualified health benefit plan claim" means a
393	393	health benefit plan claim that has been repriced and adjusted by the
394	394	plan claim administrator under Section 1676.003(b).
395	395	(9) "Reinsurance attachment point" means the point at
396	396	which the system begins to reimburse a reinsured plan or policy
397	397	under Section 1676.002.
398	398	(10) "Reinsurance extension period" means the
399	399	applicable period in which the system provides reinsurance coverage
400	400	for a reinsured plan or policy under Section 1676.006.
401	401	(11) "Reinsured entity" means:
402	402	(A) for a health benefit plan claim under a plan
403	403	that is insured, the health benefit plan issuer; or
404	404	(B) for a health benefit plan claim under a
405	405	self-funded health benefit plan that is self-insured, the insurer
406	406	issuing the stop-loss insurance covering the plan.
407	407	(12) "Reinsured plan or policy" means a health benefit
408	408	plan or individual stop-loss insurance policy that is reinsured
409	409	under the system as provided by Section 1675.010.
410	410	(13) "Repricing schedule" means the schedule
411	411	established by the system under Section 1676.004 for the purpose of
412	412	determining whether a health benefit plan claim is a qualified
413	413	health benefit plan claim and, if applicable, the amount of
414	414	reimbursement to which a reinsured entity may be entitled.
415	415	(b) In this chapter, "board," "management company," and
416	416	"system" have the meanings assigned by Section 1675.001.
417	417	Sec. 1676.002. REINSURANCE ATTACHMENT POINT. (a) The
418	418	board of the system, after consulting with the management company,
419	419	shall annually establish the aggregated dollar amount of qualified
420	420	health benefit claims at which the system begins to reimburse a
421	421	reinsured entity.
422	422	(b) The system shall submit the reinsurance attachment
423	423	point to the commissioner as an amendment to the system plan of
424	424	operation for approval under Section 1675.007.
425	425	(c) The reinsurance attachment point may not be less than:
426	426	(1) $50,000 per enrollee in a policy period, if the
427	427	reinsured plan or policy is not described by Subdivision (2); and
428	428	(2) $50,000 above the individual stop-loss deductible
429	429	of an individual stop-loss insurance policy in a policy period.
430	430	Sec. 1676.003. DETERMINATION THAT CLAIM IS REINSURED;
431	431	NOTICE TO SYSTEM. (a) A plan claim administrator shall determine,
432	432	at the time of receipt of a claim under a reinsured plan or policy,
433	433	whether the claim is potentially a reinsured claim.
434	434	(b) On receipt of a potentially reinsured claim, the plan
435	435	claim administrator shall adjust the amount of the claim to the
436	436	lesser of:
437	437	(1) the amount charged for the service by the health
438	438	care provider;
439	439	(2) the amount payable for the claim, without regard
440	440	to whether it is a reinsured claim, under the reinsured plan or
441	441	policy in accordance with any contract entered into by the health
442	442	care provider; or
443	443	(3) the amount payable for the claim under the
444	444	repricing schedule established under Section 1676.004.
445	445	(c) At the end of a policy period during which a health
446	446	benefit plan claim occurs, the plan claim administrator shall
447	447	calculate the total dollar amount of qualified health benefit plan
448	448	claims for an individual.
449	449	(d) If a plan claim administrator determines that the total
450	450	dollar amount of qualified health benefit plan claims for an
451	451	individual exceeds the applicable reinsurance attachment point,
452	452	the plan claim administrator, not later than the 30th day after the
453	453	last day of the policy period, shall notify the system in writing of
454	454	that determination and submit the claim to the system.
455	455	Sec. 1676.004. REPRICING SCHEDULE. (a) The system shall
456	456	establish and maintain a repricing schedule for reinsured claims in
457	457	accordance with the plan of operation and this section.
458	458	(b) The repricing schedule established under Subsection (a)
459	459	must provide for certain reimbursement rates as follows:
460	460	(1) for a practitioner, a rate that is not less than
461	461	110 percent of Medicare reimbursement rates for the practitioner;
462	462	and
463	463	(2) for an institutional provider, a rate that is not
464	464	less than 140 percent of Medicare reimbursement rates for the
465	465	institutional provider.
466	466	Sec. 1676.005. AMOUNT OF REINSURANCE; REINSURANCE
467	467	REIMBURSEMENT. The system must provide for the reimbursement of
468	468	aggregated qualified health benefit plan claims that exceed the
469	469	reinsurance attachment point and that are originally submitted to
470	470	the system under Section 1676.003(d), or during any applicable
471	471	reinsurance extension period, as follows:
472	472	(1) for a reinsured health benefit plan, an amount
473	473	that is equal to the lesser of:
474	474	(A) 95 percent of the aggregated dollar amount of
475	475	health benefit plan claims that exceed the reinsurance attachment
476	476	point for the respective period, before those claims have been
477	477	repriced and adjusted under Section 1676.003(b); or
478	478	(B) the aggregated dollar amount of qualified
479	479	health benefit plan claims that were submitted to the system under
480	480	Section 1676.003(d) that exceed the reinsurance attachment point
481	481	for the respective period; and
482	482	(2) for a reinsured stop-loss insurance policy, an
483	483	amount that is equal to the lesser of:
484	484	(A) 95 percent of the aggregated dollar amount of
485	485	health benefit plan claims that exceed the applicable reinsurance
486	486	attachment point for the respective period and for which the
487	487	reinsured entity is responsible under the individual stop-loss
488	488	insurance policy, before those claims have been repriced and
489	489	adjusted under Section 1676.003(b); or
490	490	(B) the aggregated dollar amount of qualified
491	491	health benefit plan claims that were submitted to the system under
492	492	Section 1676.003(d) for the respective period and for which the
493	493	insurer issuing the individual stop-loss insurance is responsible.
494	494	Sec. 1676.006. PERIOD OF REINSURANCE COVERAGE; CLAIMS
495	495	BASIS. (a) The reinsurance policy issued by the system shall cover
496	496	a reinsured plan or policy for:
497	497	(1) subject to Subsection (b), a period that is
498	498	concomitant with the policy period of the reinsured plan or policy;
499	499	and
500	500	(2) a claims basis that is consistent with the claims
501	501	basis of the reinsured plan or policy, regardless of whether the
502	502	reinsured plan or policy is an insured plan or a self-funded plan.
503	503	(b) A reinsurance policy issued by the system may not
504	504	provide coverage for an initial period that exceeds 12 months.
505	505	Sec. 1676.007. REINSURANCE EXTENSION PERIOD. (a) The
506	506	policy period that immediately follows the initial policy period
507	507	during which the aggregated dollar amount of qualified reinsurance
508	508	claims exceeds the reinsurance attachment point is the first
509	509	reinsurance extension period. A reinsurance extension period under
510	510	this subsection is automatic and applies regardless of whether a
511	511	different health benefit plan issuer is responsible for the
512	512	reinsured claims or a different stop-loss insurance carrier is
513	513	responsible for the stop-loss insurance policy.
514	514	(b) If, during the first reinsurance extension period
515	515	described by Subsection (a), the system reimburses a reinsured
516	516	entity for qualified health benefit claims that, if submitted
517	517	during the initial policy period would have exceeded the
518	518	reinsurance attachment point, the system shall extend reinsurance
519	519	coverage from the first dollar of claims to the reinsured entity for
520	520	a second reinsurance extension period.
521	521	(c) A reinsured entity may not receive a third or subsequent
522	522	reinsurance extension period, and the period following the first
523	523	reinsurance extension period is considered a new initial policy
524	524	period.
525	525	Sec. 1676.008. DATA CALL FOR REIMBURSEMENT SCHEDULE. (a)
526	526	The commissioner shall provide the system the information required
527	527	by the system to establish and maintain the repricing schedule
528	528	under Section 1676.004.
529	529	(b) The commissioner may request information necessary to
530	530	comply with this section from any individual or entity that holds a
531	531	license or certificate of authority under this code.
532	532	(c) An individual or entity that fails to comply with a
533	533	request for information under this section violates this code and
534	534	is subject to sanctions under Chapters 82, 83, and 84.
535	535	(d) Information that is obtained by the commissioner under
536	536	this section and that is exempt from disclosure under Chapter 552,
537	537	Government Code, including information exempt from disclosure
538	538	under Section 552.104 or 552.110, Government Code:
539	539	(1) may be disclosed by the commissioner only to the
540	540	system for the purposes of the reimbursement schedule; and
541	541	(2) may not be disclosed by the commissioner or the
542	542	system to any other individual or entity.
543	543	SECTION 4. Effective September 1, 2012, Subchapter G,
544	544	Chapter 1501, Insurance Code, is repealed.
545	545	SECTION 5. As soon as practicable after the effective date
546	546	of this Act, the commissioner of insurance by rule shall develop a
547	547	transition plan for implementation of Chapters 1675 and 1676,
548	548	Insurance Code, as added by this Act, and for the orderly
549	549	termination of the Texas Health Reinsurance System established
550	550	under Subchapter G, Chapter 1501, Insurance Code. The transition
551	551	plan must include a timetable with specific steps and deadlines
552	552	needed to fully implement Chapters 1675 and 1676, Insurance Code.
553	553	The transition plan must ensure that Chapters 1675 and 1676,
554	554	Insurance Code, are fully implemented not later than September 1,
555	555	2010.
556	556	SECTION 6. (a) The governor shall make the appointments
557	557	described by Section 1675.003, Insurance Code, as added by this
558	558	Act, as soon as possible after the effective date of this Act, and
559	559	in no event later than April 1, 2010.
560	560	(b) The lieutenant governor and the speaker of the house of
561	561	representatives shall submit the lists of candidates described by
562	562	Sections 1675.003(a)(1) and (2), Insurance Code, as added by this
563	563	Act, to the governor not later than January 1, 2010.
564	564	SECTION 7. This Act takes effect immediately if it receives
565	565	a vote of two-thirds of all the members elected to each house, as
566	566	provided by Section 39, Article III, Texas Constitution. If this
567	567	Act does not receive the vote necessary for immediate effect, this
568	568	Act takes effect September 1, 2009.