81R2559 AJA-D
By: Anchia H.B. No. 531
A BILL TO BE ENTITLED
AN ACT
relating to medical loss ratios of certain health benefit plan
issuers.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle A, Title 8, Insurance Code, is amended
by adding Chapter 1222 to read as follows:
CHAPTER 1222. MEDICAL LOSS RATIO AND HEALTH BENEFIT PLAN PREMIUMS
Sec. 1222.001. DEFINITIONS. In this chapter:
(1) "Direct losses incurred" means the sum of direct
losses paid plus an estimate of losses to be paid in the future for
all claims arising from the current reporting period and all prior
periods, minus the corresponding estimate made at the close of
business for the preceding period. This amount does not include
home office and overhead costs, advertising costs, commissions and
other acquisition costs, taxes, capital costs, administrative
costs, utilization review costs, or claims processing costs.
(2) "Direct losses paid" means the sum of all payments
made during the period for claimants under a health benefit plan
before reinsurance has been ceded or assumed. This amount does not
include home office and overhead costs, advertising costs,
commissions and other acquisition costs, taxes, capital costs,
administrative costs, utilization review costs, or claims
processing costs.
(3) "Direct premiums earned" means the amount of
premium attributable to the coverage already provided in a given
period before reinsurance has been ceded or assumed.
(4) "Medical loss ratio" means direct losses incurred
divided by direct premiums earned.
Sec. 1222.002. APPLICABILITY OF CHAPTER. (a) This chapter
applies to the issuer of a health benefit plan that provides
benefits for medical or surgical expenses incurred as a result of a
health condition, accident, or sickness, including an individual,
group, blanket, or franchise insurance policy or insurance
agreement or a group hospital service contract, that is offered by:
(1) an insurance company;
(2) a group hospital service corporation operating
under Chapter 842;
(3) a fraternal benefit society operating under
Chapter 885;
(4) a stipulated premium company operating under
Chapter 884;
(5) an exchange operating under Chapter 942; or
(6) a multiple employer welfare arrangement that holds
a certificate of authority under Chapter 846.
(b) Notwithstanding any provision in Chapter 1551, 1575,
1579, or 1601 or any other law, this chapter applies to a health
benefit plan issuer with respect to:
(1) a basic coverage plan under Chapter 1551;
(2) a basic plan under Chapter 1575;
(3) a primary care coverage plan under Chapter 1579;
and
(4) basic coverage under Chapter 1601.
(c) Notwithstanding any other law, this chapter applies to a
health benefit plan issuer with respect to a standard health
benefit plan provided under Chapter 1507.
(d) Notwithstanding Section 1501.251 or any other law, this
chapter applies to a health benefit plan issuer with respect to
coverage under a small employer health benefit plan subject to
Chapter 1501.
Sec. 1222.003. EXCEPTION. (a) This chapter does not apply
with respect to:
(1) a plan that provides coverage:
(A) for wages or payments in lieu of wages for a
period during which an employee is absent from work because of
sickness or injury;
(B) as a supplement to a liability insurance
policy;
(C) for credit insurance;
(D) only for dental or vision care;
(E) only for hospital expenses; or
(F) only for indemnity for hospital confinement;
(2) a Medicare supplemental policy as defined by
Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss);
(3) a workers' compensation insurance policy; or
(4) medical payment insurance coverage provided under
a motor vehicle insurance policy.
(b) Notwithstanding Section 1222.002, this chapter does not
apply with respect to a health maintenance organization plan.
Sec. 1222.004. MEDICAL LOSS RATIO REPORTING. The
commissioner by rule shall require each health benefit plan issuer
to annually report the health benefit plan issuer's medical loss
ratio for the preceding year for each health benefit plan issued.
Sec. 1222.005. MINIMUM RATIO. (a) Except as provided by
Subsections (b) and (c), the minimum medical loss ratio for a health
benefit plan is 75 percent.
(b) The minimum medical loss ratio for a large employer
health benefit plan subject to Chapter 1501 is 80 percent.
(c) The minimum medical loss ratio for an individually
underwritten health benefit plan is 65 percent.
(d) A health benefit plan whose annual medical loss ratio
falls below the minimum established under this section shall,
before the end of the year in which the ratio is reported, issue
rebates to each enrollee or plan sponsor who paid premiums during
the year for which the ratio was computed. The rebate paid must be a
percentage of the premiums paid equal to the number of percentage
points by which the ratio falls below the required minimum.
SECTION 2. Not later than January 1, 2010, the commissioner
of insurance shall adopt all rules necessary to implement Chapter
1222, Insurance Code, as added by this Act. The first 12-month
reporting period adopted under that chapter may not cover any
period before January 1, 2010.
SECTION 3. This Act takes effect September 1, 2009.