Texas 2009 - 81st Regular

Texas House Bill HB1748 Compare Versions

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

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1	1	81R3755 TJS-F
2	2	By: Smith of Tarrant H.B. No. 1748
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the cancellation of a health benefit plan on the basis
8	8	of misrepresentation or a preexisting condition; providing
9	9	penalties.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	SECTION 1. Subchapter B, Chapter 541, Insurance Code, is
12	12	amended by adding Section 541.062 to read as follows:
13	13	Sec. 541.062. BAD FAITH CANCELLATION. It is an unfair
14	14	method of competition or an unfair or deceptive act or practice for
15	15	a health benefit plan issuer to:
16	16	(1) set cancellation goals, quotas, or targets;
17	17	(2) pay compensation of any kind, including a bonus or
18	18	award, that varies according to the number of cancellations;
19	19	(3) set, as a condition of employment, a number or
20	20	volume of cancellations to be achieved; or
21	21	(4) set a performance standard, for employees or by
22	22	contract with another entity, based on the number or volume of
23	23	cancellations.
24	24	SECTION 2. Chapter 1202, Insurance Code, is amended by
25	25	adding Subchapter C to read as follows:
26	26	SUBCHAPTER C. INDEPENDENT REVIEW OF CERTAIN CANCELLATION DECISIONS
27	27	Sec. 1202.101. DEFINITIONS. In this subchapter:
28	28	(1) "Affected individual" means an individual who is
29	29	otherwise entitled to benefits under a health benefit plan that is
30	30	subject to a decision to cancel.
31	31	(2) "Independent review organization" means an
32	32	organization certified under Chapter 4202.
33	33	(3) "Screening criteria" means the elements or factors
34	34	used in a determination of whether to subject an issued health
35	35	benefit plan to additional review for possible cancellation,
36	36	including any applicable dollar amount or number of claims
37	37	submitted.
38	38	Sec. 1202.102. APPLICABILITY. (a) This subchapter applies
39	39	only to a health benefit plan, including a small or large employer
40	40	health benefit plan written under Chapter 1501, that provides
41	41	benefits for medical or surgical expenses incurred as a result of a
42	42	health condition, accident, or sickness, including an individual,
43	43	group, blanket, or franchise insurance policy or insurance
44	44	agreement, a group hospital service contract, or an individual or
45	45	group evidence of coverage or similar coverage document that is
46	46	offered by:
47	47	(1) an insurance company;
48	48	(2) a group hospital service corporation operating
49	49	under Chapter 842;
50	50	(3) a fraternal benefit society operating under
51	51	Chapter 885;
52	52	(4) a stipulated premium company operating under
53	53	Chapter 884;
54	54	(5) a reciprocal exchange operating under Chapter 942;
55	55	(6) a Lloyd's plan operating under Chapter 941;
56	56	(7) a health maintenance organization operating under
57	57	Chapter 843;
58	58	(8) a multiple employer welfare arrangement that holds
59	59	a certificate of authority under Chapter 846; or
60	60	(9) an approved nonprofit health corporation that
61	61	holds a certificate of authority under Chapter 844.
62	62	(b) This subchapter does not apply to:
63	63	(1) a health benefit plan that provides coverage:
64	64	(A) only for a specified disease or for another
65	65	limited benefit other than an accident policy;
66	66	(B) only for accidental death or dismemberment;
67	67	(C) for wages or payments in lieu of wages for a
68	68	period during which an employee is absent from work because of
69	69	sickness or injury;
70	70	(D) as a supplement to a liability insurance
71	71	policy;
72	72	(E) for credit insurance;
73	73	(F) only for dental or vision care;
74	74	(G) only for hospital expenses; or
75	75	(H) only for indemnity for hospital confinement;
76	76	(2) a Medicare supplemental policy as defined by
77	77	Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss),
78	78	as amended;
79	79	(3) a workers' compensation insurance policy;
80	80	(4) medical payment insurance coverage provided under
81	81	a motor vehicle insurance policy; or
82	82	(5) a long-term care insurance policy, including a
83	83	nursing home fixed indemnity policy, unless the commissioner
84	84	determines that the policy provides benefit coverage so
85	85	comprehensive that the policy is a health benefit plan described by
86	86	Subsection (a).
87	87	Sec. 1202.103. CANCELLATION FOR MISREPRESENTATION OR
88	88	PREEXISTING CONDITION. Notwithstanding any other law, a health
89	89	benefit plan issuer may not cancel a health benefit plan on the
90	90	basis of a misrepresentation or a preexisting condition except as
91	91	provided by this subchapter.
92	92	Sec. 1202.104. NOTICE OF INTENT TO CANCEL. (a) A health
93	93	benefit plan issuer may not cancel a health benefit plan on the
94	94	basis of a misrepresentation or a preexisting condition without
95	95	first notifying an affected individual in writing of the issuer's
96	96	intent to cancel the health benefit plan and the individual's
97	97	entitlement to an independent review.
98	98	(b) The notice required under Subsection (a) must include,
99	99	as applicable:
100	100	(1) the principal reasons for the decision to cancel
101	101	the health benefit plan;
102	102	(2) the clinical basis for a determination that a
103	103	preexisting condition exists;
104	104	(3) a description of any general screening criteria
105	105	used to evaluate issued health benefit plans and determine
106	106	eligibility for a decision to cancel;
107	107	(4) a statement that the individual is entitled to
108	108	appeal a cancellation decision to an independent review
109	109	organization;
110	110	(5) a statement that the individual has at least 45
111	111	days in which to appeal the cancellation decision to an independent
112	112	review organization, and a description of the consequences of
113	113	failure to appeal within that time limit;
114	114	(6) a statement that there is no cost to the individual
115	115	to appeal the cancellation decision to an independent review
116	116	organization; and
117	117	(7) a description of the independent review process
118	118	under Chapters 4201 and 4202.
119	119	Sec. 1202.105. INDEPENDENT REVIEW PROCESS; PAYMENT OF
120	120	CLAIMS. (a) An affected individual may appeal a health benefit
121	121	plan issuer's cancellation decision to an independent review
122	122	organization not later than the 45th day after the date the
123	123	individual receives notice under Section 1202.104.
124	124	(b) A health benefit plan issuer shall comply with all
125	125	requests for information made by the independent review
126	126	organization and with the independent review organization's
127	127	determination regarding the appropriateness of the issuer's
128	128	decision to cancel.
129	129	(c) A health benefit plan issuer shall pay all otherwise
130	130	valid medical claims under an individual's plan until the later of:
131	131	(1) the date on which an independent review
132	132	organization determines that the decision to cancel is appropriate;
133	133	or
134	134	(2) the time to appeal to an independent review
135	135	organization has expired without an affected individual initiating
136	136	an appeal.
137	137	Sec. 1202.106. CANCELLATION AUTHORIZED; RECOVERY OF CLAIMS
138	138	PAID. (a) A health benefit plan issuer may cancel a health benefit
139	139	plan covering an affected individual on the later of:
140	140	(1) the date an independent review organization
141	141	determines that cancellation is appropriate; or
142	142	(2) the 45th day after the date an affected individual
143	143	receives notice under Section 1202.104, if the individual has not
144	144	initiated an appeal.
145	145	(b) An issuer that cancels a health benefit plan under this
146	146	section may seek to recover from an affected individual amounts
147	147	paid for the individual's medical claims under the cancelled health
148	148	benefit plan.
149	149	(c) An issuer that cancels a health benefit plan under this
150	150	section may not offset against or recoup or recover from a physician
151	151	or health care provider amounts paid for medical claims under a
152	152	cancelled health benefit plan. This subsection may not be waived,
153	153	voided, or modified by contract.
154	154	Sec. 1202.107. CANCELLATION RELATED TO A PREEXISTING
155	155	CONDITION; STANDARDS. (a) For purposes of this subchapter, a
156	156	cancellation for a preexisting condition is appropriate if, within
157	157	the 18-month period immediately preceding the date on which an
158	158	application for coverage under a health benefit plan is made, an
159	159	affected individual received or was advised by a physician or
160	160	health care provider to seek medical advice, diagnosis, care, or
161	161	treatment for a physical or mental condition, regardless of the
162	162	cause, and the individual's failure to disclose the condition:
163	163	(1) affects the risks assumed under the health benefit
164	164	plan; and
165	165	(2) is undertaken with the intent to deceive the
166	166	health benefit plan issuer.
167	167	(b) A health benefit plan issuer may not cancel a health
168	168	benefit plan based on a preexisting condition of a newborn
169	169	delivered after the application for coverage is made or as may
170	170	otherwise be prohibited by law.
171	171	Sec. 1202.108. CANCELLATION FOR MISREPRESENTATION;
172	172	STANDARDS. For purposes of this subchapter, a cancellation for a
173	173	misrepresentation not related to a preexisting condition is
174	174	inappropriate unless the misrepresentation:
175	175	(1) is of a material fact;
176	176	(2) affects the risks assumed under the health benefit
177	177	plan; and
178	178	(3) is made with the intent to deceive the health
179	179	benefit plan issuer.
180	180	Sec. 1202.109. REMEDIES NOT EXCLUSIVE. The remedies
181	181	provided by this subchapter are not exclusive and are in addition to
182	182	any other remedy or procedure provided by law or at common law.
183	183	Sec. 1202.110. RULES. The commissioner shall adopt rules
184	184	necessary to implement and administer this subchapter.
185	185	Sec. 1202.111. SANCTIONS AND PENALTIES. A health benefit
186	186	plan issuer that violates this subchapter commits an unfair
187	187	practice in violation of Chapter 541 and is subject to sanctions and
188	188	penalties under Chapter 82.
189	189	Sec. 1202.112. CONFIDENTIALITY. (a) A record, report, or
190	190	other information received or maintained by a health benefit plan
191	191	issuer, including any material received or developed during a
192	192	review of a cancellation decision under this subchapter, is
193	193	confidential.
194	194	(b) A health benefit plan issuer may not disclose the
195	195	identity of an individual or a decision to cancel an individual's
196	196	health benefit plan unless:
197	197	(1) an independent review organization determines the
198	198	decision to cancel is appropriate; or
199	199	(2) the time to appeal has expired without an affected
200	200	individual initiating an appeal.
201	201	SECTION 3. Section 4202.002, Insurance Code, is amended to
202	202	read as follows:
203	203	Sec. 4202.002. ADOPTION OF STANDARDS FOR INDEPENDENT REVIEW
204	204	ORGANIZATIONS. (a) The commissioner shall adopt standards and
205	205	rules for:
206	206	(1) the certification, selection, and operation of
207	207	independent review organizations to perform independent review
208	208	described by Subchapter C, Chapter 1202, or Subchapter I, Chapter
209	209	4201; and
210	210	(2) the suspension and revocation of the
211	211	certification.
212	212	(b) The standards adopted under this section must ensure:
213	213	(1) the timely response of an independent review
214	214	organization selected under this chapter;
215	215	(2) the confidentiality of medical records
216	216	transmitted to an independent review organization for use in
217	217	conducting an independent review;
218	218	(3) the qualifications and independence of each
219	219	physician or other health care provider making a review
220	220	determination for an independent review organization;
221	221	(4) the fairness of the procedures used by an
222	222	independent review organization in making review determinations;
223	223	[and]
224	224	(5) the timely notice to an enrollee of the results of
225	225	an independent review, including the clinical basis for the review
226	226	determination; and
227	227	(6) that review of a cancellation decision based on a
228	228	preexisting condition be conducted under the direction of a
229	229	physician.
230	230	SECTION 4. Sections 4202.003, 4202.004, and 4202.006,
231	231	Insurance Code, are amended to read as follows:
232	232	Sec. 4202.003. REQUIREMENTS REGARDING TIMELINESS OF
233	233	DETERMINATION. The standards adopted under Section 4202.002 must
234	234	require each independent review organization to make the
235	235	organization's determination:
236	236	(1) for a life-threatening condition as defined by
237	237	Section 4201.002, not later than the earlier of:
238	238	(A) the fifth day after the date the organization
239	239	receives the information necessary to make the determination; or
240	240	(B) the eighth day after the date the
241	241	organization receives the request that the determination be made;
242	242	and
243	243	(2) for a condition other than a life-threatening
244	244	condition or of the appropriateness of a cancellation under
245	245	Subchapter C, Chapter 1202, not later than the earlier of:
246	246	(A) the 15th day after the date the organization
247	247	receives the information necessary to make the determination; or
248	248	(B) the 20th day after the date the organization
249	249	receives the request that the determination be made.
250	250	Sec. 4202.004. CERTIFICATION. To be certified as an
251	251	independent review organization under this chapter, an
252	252	organization must submit to the commissioner an application in the
253	253	form required by the commissioner. The application must include:
254	254	(1) for an applicant that is publicly held, the name of
255	255	each shareholder or owner of more than five percent of any of the
256	256	applicant's stock or options;
257	257	(2) the name of any holder of the applicant's bonds or
258	258	notes that exceed $100,000;
259	259	(3) the name and type of business of each corporation
260	260	or other organization that the applicant controls or is affiliated
261	261	with and the nature and extent of the control or affiliation;
262	262	(4) the name and a biographical sketch of each
263	263	director, officer, and executive of the applicant and of any entity
264	264	listed under Subdivision (3) and a description of any relationship
265	265	the named individual has with:
266	266	(A) a health benefit plan;
267	267	(B) a health maintenance organization;
268	268	(C) an insurer;
269	269	(D) a utilization review agent;
270	270	(E) a nonprofit health corporation;
271	271	(F) a payor;
272	272	(G) a health care provider; or
273	273	(H) a group representing any of the entities
274	274	described by Paragraphs (A) through (G);
275	275	(5) the percentage of the applicant's revenues that
276	276	are anticipated to be derived from independent reviews conducted
277	277	under Subchapter I, Chapter 4201;
278	278	(6) a description of the areas of expertise of the
279	279	physicians or other health care providers making review
280	280	determinations for the applicant; and
281	281	(7) the procedures to be used by the applicant in
282	282	making independent review determinations under Subchapter C,
283	283	Chapter 1202, or Subchapter I, Chapter 4201.
284	284	Sec. 4202.006. PAYORS FEES. (a) The commissioner shall
285	285	charge payors fees in accordance with this chapter as necessary to
286	286	fund the operations of independent review organizations.
287	287	(b) A health benefit plan issuer shall pay for an
288	288	independent review of a cancellation decision under Subchapter C,
289	289	Chapter 1202.
290	290	SECTION 5. Section 4202.009, Insurance Code, is amended to
291	291	read as follows:
292	292	Sec. 4202.009. CONFIDENTIAL INFORMATION. (a)
293	293	Information that reveals the identity of a physician or other
294	294	individual health care provider who makes a review determination
295	295	for an independent review organization is confidential.
296	296	(b) A record, report, or other information received or
297	297	maintained by an independent review organization, including any
298	298	material received or developed during a review of a cancellation
299	299	decision under Subchapter C, Chapter 1202, is confidential.
300	300	(c) An independent review organization may not disclose the
301	301	identity of an affected individual or an issuer's decision to
302	302	cancel a health benefit plan under Subchapter C, Chapter 1202,
303	303	unless:
304	304	(1) an independent review organization determines the
305	305	decision to cancel is appropriate; or
306	306	(2) the time to appeal a cancellation under that
307	307	subchapter has expired without an affected individual initiating an
308	308	appeal.
309	309	SECTION 6. Section 4202.010(a), Insurance Code, is amended
310	310	to read as follows:
311	311	(a) An independent review organization conducting an
312	312	independent review under Subchapter C, Chapter 1202, or Subchapter
313	313	I, Chapter 4201, is not liable for damages arising from the review
314	314	determination made by the organization.
315	315	SECTION 7. The change in law made by this Act applies only
316	316	to an insurance policy that is delivered, issued for delivery, or
317	317	renewed on or after the effective date of this Act. An insurance
318	318	policy that is delivered, issued for delivery, or renewed before
319	319	the effective date of this Act is governed by the law as it existed
320	320	before the effective date of this Act, and that law is continued in
321	321	effect for that purpose.
322	322	SECTION 8. This Act takes effect immediately if it receives
323	323	a vote of two-thirds of all the members elected to each house, as
324	324	provided by Section 39, Article III, Texas Constitution. If this
325	325	Act does not receive the vote necessary for immediate effect, this
326	326	Act takes effect September 1, 2009.