Texas 2009 - 81st Regular

Texas Senate Bill SB1158 Compare Versions

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1	1	81R7739 AJA-D
2	2	By: Davis, Wendy S.B. No. 1158
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to regulation of health benefit plan rates.
8	8	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
9	9	SECTION 1. Title 8, Insurance Code, is amended by adding
10	10	Subtitle K to read as follows:
11	11	SUBTITLE K. RATEMAKING IN GENERAL
12	12	CHAPTER 1670. RATES
13	13	SUBCHAPTER A. GENERAL PROVISIONS
14	14	Sec. 1670.001. APPLICABILITY OF CHAPTER. (a) This chapter
15	15	applies only to a health benefit plan that provides benefits for
16	16	medical or surgical expenses incurred as a result of a health
17	17	condition, accident, or sickness, including an individual, group,
18	18	blanket, or franchise insurance policy or insurance agreement, a
19	19	group hospital service contract, or an individual or group evidence
20	20	of coverage or similar coverage document that is offered by:
21	21	(1) an insurance company;
22	22	(2) a group hospital service corporation operating
23	23	under Chapter 842;
24	24	(3) a fraternal benefit society operating under
25	25	Chapter 885;
26	26	(4) a stipulated premium company operating under
27	27	Chapter 884;
28	28	(5) an exchange operating under Chapter 942;
29	29	(6) a health maintenance organization operating under
30	30	Chapter 843;
31	31	(7) a multiple employer welfare arrangement that holds
32	32	a certificate of authority under Chapter 846; or
33	33	(8) an approved nonprofit health corporation that
34	34	holds a certificate of authority under Chapter 844.
35	35	(b) Notwithstanding any other law, this chapter applies to a
36	36	health benefit plan issuer with respect to a standard health
37	37	benefit plan provided under Chapter 1507.
38	38	Sec. 1670.002. EXCEPTION. (a) This chapter does not apply
39	39	with respect to:
40	40	(1) a plan that provides coverage:
41	41	(A) for wages or payments in lieu of wages for a
42	42	period during which an employee is absent from work because of
43	43	sickness or injury;
44	44	(B) as a supplement to a liability insurance
45	45	policy;
46	46	(C) for credit insurance;
47	47	(D) only for dental or vision care;
48	48	(E) only for hospital expenses; or
49	49	(F) only for indemnity for hospital confinement;
50	50	(2) a Medicare supplemental policy as defined by
51	51	Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss);
52	52	(3) a workers' compensation insurance policy; or
53	53	(4) medical payment insurance coverage provided under
54	54	a motor vehicle insurance policy.
55	55	(b) This chapter does not apply to:
56	56	(1) coverage provided through the Texas Health
57	57	Insurance Risk Pool subject to Section 1506.105; or
58	58	(2) coverage provided under Subtitle H.
59	59	Sec. 1670.003. APPLICABILITY OF OTHER LAWS GOVERNING RATES.
60	60	The requirements of this chapter are in addition to any other
61	61	provision of this code governing health benefit plan rates. Except
62	62	as otherwise provided by this chapter, in the case of a conflict
63	63	between this chapter and another provision of this code, this
64	64	chapter controls.
65	65	Sec. 1670.004. NOTICE OF RATE INCREASE. (a) In addition
66	66	to any notice required to be provided under Section 1254.001, a
67	67	health benefit plan issuer shall notify each person responsible for
68	68	paying any part of an individual's premium or charge for coverage
69	69	under the health benefit plan, other than a person who receives
70	70	notice under Section 1254.001, of a rate increase scheduled to take
71	71	effect on the renewal of the individual's coverage that will result
72	72	in a total premium or charge amount for covering that individual
73	73	that is at least 10 percent greater than the lesser of:
74	74	(1) the total premium or charge amount paid for the
75	75	individual's coverage under the health benefit plan during the
76	76	12-month period preceding the coverage's renewal date; or
77	77	(2) the total premium or charge amount paid for the
78	78	individual's coverage under the health benefit plan during the
79	79	policy or contract period preceding the coverage's renewal date.
80	80	(b) A health benefit plan issuer shall send the notice
81	81	required by Subsection (a) before the renewal date and not later
82	82	than the 30th day before the date the rate increase is scheduled to
83	83	take effect.
84	84	(c) The commissioner by rule may exempt a health benefit
85	85	plan issuer from the notice requirements of this section for a
86	86	short-term policy, contract, or evidence of coverage, as defined by
87	87	the commissioner, that is issued by the plan issuer.
88	88	Sec. 1670.005. CONSIDERATION OF CERTAIN OTHER LAW. In
89	89	reviewing rates under this chapter, the commissioner shall consider
90	90	any state or federal law that may affect rates for health benefit
91	91	plan coverage included in a policy, contract, or evidence of
92	92	coverage subject to this chapter.
93	93	Sec. 1670.006. ADMINISTRATIVE PROCEDURE ACT APPLICABLE.
94	94	Chapter 2001, Government Code, applies to all rate hearings under
95	95	this chapter.
96	96	Sec. 1670.007. QUARTERLY REPORT OF PLAN ISSUER; LEGISLATIVE
97	97	REPORT. (a) The commissioner shall require each health benefit
98	98	plan issuer subject to this chapter to quarterly file with the
99	99	commissioner information relating to changes in losses, premiums or
100	100	other charges for coverage, and market share since January 1,
101	101	2010. The commissioner may require a health benefit plan issuer
102	102	subject to this chapter to report to the commissioner, in the form
103	103	and in the time required by the commissioner, any other information
104	104	the commissioner determines is necessary to comply with this
105	105	section.
106	106	(b) Quarterly, the commissioner shall report to the
107	107	governor, the lieutenant governor, the speaker of the house of
108	108	representatives, the legislature, and the public regarding:
109	109	(1) the information provided to the commissioner,
110	110	other than information made confidential by law, in the health
111	111	benefit plan issuers' reports under Subsection (a); and
112	112	(2) market conduct, especially rates and consumer
113	113	complaints.
114	114	(c) The report required by Subsection (b) must:
115	115	(1) cover a calendar quarter;
116	116	(2) for each health benefit plan issuer that writes a
117	117	line of health benefit plan coverage subject to this chapter,
118	118	state:
119	119	(A) the plan issuer's market share;
120	120	(B) the plan issuer's profits and losses;
121	121	(C) the plan issuer's average medical loss ratio;
122	122	and
123	123	(D) whether the plan issuer submitted a rate
124	124	filing during the quarter covered in the report; and
125	125	(3) for each rate filing described by Subdivision
126	126	(2)(D), indicate any significant impact on holders of policies,
127	127	contracts, or evidences of coverage, the overall rate change from
128	128	the rate previously used by the plan issuer stated as a percentage,
129	129	and any rate changes for the previous 12, 24, and 36 months.
130	130	(d) Except as provided by Subsection (e), the quarterly
131	131	report required by Subsection (b) must be made available to the
132	132	governor, lieutenant governor, speaker of the house of
133	133	representatives, legislature, and public not later than the 90th
134	134	day after the last day of the calendar quarter covered by the
135	135	report.
136	136	(e) If the commissioner determines that it is not feasible
137	137	to provide the report required by this section within the period
138	138	specified by Subsection (d) for all types of health benefit plan
139	139	coverage subject to this chapter, the department:
140	140	(1) shall make the quarterly report, as applicable to
141	141	individual health benefit plan coverage, available within the
142	142	period specified by Subsection (d); and
143	143	(2) may delay publication of the quarterly report as
144	144	it relates to other types of health benefit plan coverage subject to
145	145	this chapter until a date specified by the commissioner.
146	146	[Sections 1670.008-1670.050 reserved for expansion]
147	147	SUBCHAPTER B. RATE STANDARDS
148	148	Sec. 1670.051. EXCESSIVE, INADEQUATE, AND UNFAIRLY
149	149	DISCRIMINATORY RATES. (a) A rate is excessive, inadequate, or
150	150	unfairly discriminatory for purposes of this chapter as provided by
151	151	this section.
152	152	(b) A rate is excessive if the rate is likely to produce a
153	153	long-term profit that is unreasonably high in relation to the
154	154	health benefit plan coverage provided.
155	155	(c) A rate is inadequate if:
156	156	(1) the rate is insufficient to sustain projected
157	157	losses and expenses to which the rate applies; and
158	158	(2) continued use of the rate:
159	159	(A) endangers the solvency of a health benefit
160	160	plan issuer using the rate; or
161	161	(B) has the effect of substantially lessening
162	162	competition or creating a monopoly in a market.
163	163	(d) A rate is unfairly discriminatory if the rate:
164	164	(1) is not based on sound actuarial principles;
165	165	(2) does not bear a reasonable relationship to the
166	166	expected loss and expense experience among risks; or
167	167	(3) is based wholly or partly on the race, creed,
168	168	color, ethnicity, or national origin of an individual or group
169	169	sponsoring coverage under or covered by the health benefit plan.
170	170	Sec. 1670.052. RATE STANDARDS. (a) In setting rates, a
171	171	health benefit plan issuer shall consider:
172	172	(1) past and prospective loss experience:
173	173	(A) inside this state; and
174	174	(B) outside this state if the data from this
175	175	state are not credible;
176	176	(2) the peculiar hazards and experiences of individual
177	177	risks, past and prospective, inside and outside this state, except
178	178	to the extent specifically prohibited by law;
179	179	(3) the plan issuer's actuarially credible historical
180	180	premium or charge, exposure, loss, and expense experience;
181	181	(4) catastrophe hazards in this state;
182	182	(5) operating expenses, excluding disallowed
183	183	expenses;
184	184	(6) investment income;
185	185	(7) a reasonable margin for profit; and
186	186	(8) any other factors inside and outside this state:
187	187	(A) determined to be relevant by the health
188	188	benefit plan issuer; and
189	189	(B) not disallowed by the commissioner.
190	190	(b) A rate may not be excessive, inadequate, or unfairly
191	191	discriminatory for the risks to which the rate applies.
192	192	(c) Except to the extent limited by other law, the health
193	193	benefit plan issuer may:
194	194	(1) group risks by classification to establish rates
195	195	and minimum premiums or charges for coverage; and
196	196	(2) modify classification rates to produce rates for
197	197	individual risks in accordance with rating plans that establish
198	198	standards for measuring variations in those risks on the basis of
199	199	any factor listed in Subsection (a).
200	200	(d) In setting rates that apply only to holders of policies,
201	201	contracts, or evidences of coverage in this state, a health benefit
202	202	plan issuer shall use available premium or charge, loss, claim, and
203	203	exposure information from this state to the full extent of the
204	204	actuarial credibility of that information. The plan issuer may use
205	205	experience from outside this state as necessary to supplement
206	206	information from this state that is not actuarially credible.
207	207	(e) In determining rating territories and territorial
208	208	rates, an insurer shall use methods based on sound actuarial
209	209	principles.
210	210	(f) Rates for a small employer health benefit plan subject
211	211	to Chapter 1501 must comply with this chapter and Chapter 1501. In
212	212	the case of a conflict between this chapter and Chapter 1501,
213	213	Chapter 1501 controls.
214	214	[Sections 1670.053-1670.100 reserved for expansion]
215	215	SUBCHAPTER C. RATE FILINGS
216	216	Sec. 1670.101. RATE FILINGS AND SUPPORTING INFORMATION.
217	217	(a) Except as provided by Subchapter D, for risks written in this
218	218	state, each health benefit plan issuer shall file with the
219	219	commissioner all rates, applicable rating manuals, supplementary
220	220	rating information, and additional information as required by the
221	221	commissioner or another provision of this code.
222	222	(b) The commissioner by rule shall determine the
223	223	information required to be included in the filing, including:
224	224	(1) categories of supporting information and
225	225	supplementary rating information;
226	226	(2) statistics or other information to support the
227	227	rates to be used by the health benefit plan issuer, including
228	228	information necessary to evidence that the computation of the rate
229	229	does not include disallowed expenses; and
230	230	(3) information concerning policy fees, service fees,
231	231	and other fees that are charged or collected by the plan issuer
232	232	under Section 550.001.
233	233	Sec. 1670.102. FILING REQUIREMENTS FOR PLAN ISSUERS WITH
234	234	LESS THAN FIVE PERCENT OF MARKET. In determining filing
235	235	requirements under Section 1670.101 for a health benefit plan
236	236	issuer with less than five percent of the market, the commissioner
237	237	shall consider specific attributes of the plan issuer and the plan
238	238	issuer's market, as applicable. The commissioner shall determine
239	239	filing requirements for those plan issuers accordingly to
240	240	accommodate premium or charge volume and loss experience, targeted
241	241	markets, limitations on coverage, and any potential barriers to
242	242	market entry or growth.
243	243	Sec. 1670.103. DISAPPROVAL OF RATE IN RATE FILING; HEARING.
244	244	(a) The commissioner shall disapprove a rate if the commissioner
245	245	determines that the rate filing made under this chapter does not
246	246	meet the standards established under Subchapter B or another
247	247	provision of this code governing the setting of rates by the health
248	248	benefit plan issuer.
249	249	(b) If the commissioner disapproves a filing, the
250	250	commissioner shall issue an order specifying in what respects the
251	251	filing fails to meet the requirements of this chapter or another
252	252	provision of this code governing the setting of rates by the health
253	253	benefit plan issuer.
254	254	(c) The filer is entitled to a hearing on written request
255	255	made to the commissioner not later than the 30th day after the date
256	256	the order disapproving the rate filing takes effect.
257	257	Sec. 1670.104. DISAPPROVAL OF RATE IN EFFECT; HEARING.
258	258	(a) The commissioner may disapprove a rate that is in effect only
259	259	after a hearing. The commissioner shall provide the filer at least
260	260	20 days' written notice.
261	261	(b) The commissioner must issue an order disapproving a rate
262	262	under Subsection (a) not later than the 15th day after the close of
263	263	the hearing. The order must:
264	264	(1) specify in what respects the rate fails to meet the
265	265	requirements of this chapter or another provision of this code
266	266	governing the setting of rates by the health benefit plan issuer;
267	267	and
268	268	(2) state the date on which further use of the rate is
269	269	prohibited, which may not be earlier than the 45th day after the
270	270	close of the hearing under this section.
271	271	Sec. 1670.105. GRIEVANCE. (a) An individual or group who
272	272	sponsors coverage under or is covered by a health benefit plan and
273	273	who is aggrieved with respect to any filing under this chapter that
274	274	is in effect, or the public insurance counsel, may apply to the
275	275	commissioner in writing for a hearing on the filing. The
276	276	application must specify the grounds for the applicant's grievance.
277	277	(b) The commissioner shall hold a hearing on an application
278	278	filed under Subsection (a) not later than the 30th day after the
279	279	date the commissioner receives the application if the commissioner
280	280	determines that:
281	281	(1) the application is made in good faith;
282	282	(2) the applicant would be aggrieved as alleged if the
283	283	grounds specified in the application were established; and
284	284	(3) the grounds specified in the application otherwise
285	285	justify holding the hearing.
286	286	(c) The commissioner shall provide written notice of a
287	287	hearing under Subsection (b) to the applicant and each health
288	288	benefit plan issuer that made the filing not later than the 10th day
289	289	before the date of the hearing.
290	290	(d) If, after the hearing, the commissioner determines that
291	291	the filing does not meet the requirements of this chapter or another
292	292	provision of this code governing the setting of rates by the health
293	293	benefit plan issuer, the commissioner shall issue an order:
294	294	(1) specifying in what respects the filing fails to
295	295	meet those requirements; and
296	296	(2) stating the date on which the filing is no longer
297	297	in effect, which must be within a reasonable period after the order
298	298	date.
299	299	(e) The commissioner shall send copies of the order issued
300	300	under Subsection (d) to the applicant and each affected.
301	301	Sec. 1670.106. ROLE OF PUBLIC INSURANCE COUNSEL. (a) On
302	302	request to the commissioner, the public insurance counsel may
303	303	review all rate filings and additional information provided by a
304	304	health benefit plan issuer under this chapter. Confidential
305	305	information reviewed under this subsection remains confidential.
306	306	(b) The public insurance counsel, not later than the 30th
307	307	day after the date of a rate filing under this chapter, may file
308	308	with the commissioner a written objection to:
309	309	(1) a health benefit plan issuer's rate filing; or
310	310	(2) the criteria on which the plan issuer relied to
311	311	determine the rate.
312	312	(c) A written objection filed under Subsection (b) must
313	313	contain the reasons for the objection.
314	314	Sec. 1670.107. PUBLIC INSPECTION OF INFORMATION. Each
315	315	filing made, and any supporting information filed, under this
316	316	chapter is open to public inspection as of the date of the filing.
317	317	[Sections 1670.108-1670.150 reserved for expansion]
318	318	SUBCHAPTER D. PRIOR APPROVAL OF RATES UNDER CERTAIN CIRCUMSTANCES
319	319	Sec. 1670.151. REQUIREMENT TO FILE RATES FOR PRIOR APPROVAL
320	320	UNDER CERTAIN CIRCUMSTANCES. (a) The commissioner by order may
321	321	require a health benefit plan issuer to file with the department for
322	322	the commissioner's approval all rates, supplementary rating
323	323	information, and any supporting information in accordance with this
324	324	subchapter if the commissioner determines that:
325	325	(1) the plan issuer's rates require supervision
326	326	because of the plan issuer's financial condition or rating
327	327	practices; or
328	328	(2) a statewide health benefit coverage emergency
329	329	exists.
330	330	(b) If a health benefit plan issuer files a petition under
331	331	Subchapter D, Chapter 36, for judicial review of an order
332	332	disapproving a rate under this chapter, the plan issuer must use the
333	333	rates in effect for the plan issuer at the time the petition is
334	334	filed and may not file and use any higher rate for the same type of
335	335	health benefit plan coverage subject to this chapter before the
336	336	matter subject to judicial review is finally resolved unless the
337	337	health benefit plan issuer, in accordance with this subchapter,
338	338	files the new rate with the department, along with any applicable
339	339	supplementary rating information and supporting information, and
340	340	obtains the commissioner's approval of the rate.
341	341	(c) From the date of the filing of the rate with the
342	342	department to the effective date of the new rate, the health benefit
343	343	plan issuer's previously filed rate that is in effect on the date of
344	344	the filing remains in effect.
345	345	(d) The commissioner may require a health benefit plan
346	346	issuer to file the plan issuer's rates under this section until the
347	347	commissioner determines that the conditions described by
348	348	Subsection (a) no longer exist.
349	349	(e) For purposes of this section, a rate is filed with the
350	350	department on the date the department receives the rate filing.
351	351	(f) If the commissioner requires a health benefit plan
352	352	issuer to file the plan issuer's rates under this section, the
353	353	commissioner shall issue an order specifying the commissioner's
354	354	reasons for requiring the rate filing. An affected plan issuer is
355	355	entitled to a hearing on written request made to the commissioner
356	356	not later than the 30th day after the date the order is issued.
357	357	Sec. 1670.152. RATE APPROVAL REQUIRED; EXCEPTION. (a) A
358	358	health benefit plan issuer subject to this subchapter may not use a
359	359	rate until the rate has been filed with the department and approved
360	360	by the commissioner in accordance with this subchapter.
361	361	(b) Notwithstanding Subsection (a), after a rate filing is
362	362	approved under this subchapter, a health benefit plan issuer,
363	363	without prior approval of the commissioner, may use any rate
364	364	subsequently filed by the plan issuer if the subsequently filed
365	365	rate does not exceed the lesser of:
366	366	(1) 107.5 percent of the rate approved by the
367	367	commissioner; or
368	368	(2) 110 percent of any rate used by the plan issuer in
369	369	the previous 12-month period.
370	370	(c) Filed rates under Subsection (b) take effect on the date
371	371	specified by the insurer.
372	372	Sec. 1670.153. COMMISSIONER ACTION. (a) Not later than
373	373	the 30th day after the date a rate is filed with the department
374	374	under this subchapter, the commissioner shall:
375	375	(1) approve the rate if the commissioner determines
376	376	that the rate complies with the requirements of this chapter and
377	377	other provisions of this code governing the setting of rates by the
378	378	health benefit plan issuer; or
379	379	(2) disapprove the rate if the commissioner determines
380	380	that the rate does not comply with the requirements of this chapter
381	381	and other provisions of this code governing the setting of rates by
382	382	the plan issuer.
383	383	(b) Except as provided by Subsection (c), if a rate has not
384	384	been approved or disapproved by the commissioner before the
385	385	expiration of the 30-day period described by Subsection (a), the
386	386	rate is considered approved and the health benefit plan issuer may
387	387	use the rate unless the rate proposed in the filing represents an
388	388	increase of 12.5 percent or more from the plan issuer's previously
389	389	filed rate.
390	390	(c) For good cause, the commissioner may, on the expiration
391	391	of the 30-day period described by Subsection (a), extend the period
392	392	for approval or disapproval of a rate for one additional 30-day
393	393	period. The commissioner and the health benefit plan issuer may
394	394	not by agreement extend the 30-day period described by Subsection
395	395	(a).
396	396	Sec. 1670.154. ADDITIONAL INFORMATION. (a) If the
397	397	department determines that the information filed by a health
398	398	benefit plan issuer under this chapter is incomplete or otherwise
399	399	deficient, the department may request additional information from
400	400	the plan issuer. If the department requests additional
401	401	information from the plan issuer during the 30-day period provided
402	402	by Section 1670.153(a) or under a second 30-day period provided
403	403	under Section 1670.153(c), the time between the date the department
404	404	submits the request to the plan issuer and the date the department
405	405	receives the information requested is not included in the
406	406	computation of the first 30-day period or the second 30-day period,
407	407	as applicable.
408	408	(b) For purposes of this section, the date of the
409	409	department's submission of a request for additional information is:
410	410	(1) the date of the department's electronic mailing or
411	411	telephone call relating to the request for additional information;
412	412	or
413	413	(2) the postmarked date on the department's letter
414	414	relating to the request for additional information.
415	415	Sec. 1670.155. NOTICE OF COMMISSIONER APPROVAL; USE OF
416	416	RATE. If the commissioner approves a rate filing under Section
417	417	1670.153, the commissioner shall provide the health benefit plan
418	418	issuer with a written or electronic notice of the approval. The
419	419	plan issuer may use the rate on receipt of the approval notice.
420	420	Sec. 1670.156. RATE FILING DISAPPROVAL BY COMMISSIONER;
421	421	HEARING. (a) If the commissioner disapproves a rate filing under
422	422	Section 1670.153(a)(2), the commissioner shall issue an order
423	423	disapproving the filing in accordance with Section 1670.103(b).
424	424	(b) A health benefit plan issuer whose rate filing is
425	425	disapproved is entitled to a hearing in accordance with Section
426	426	1670.103(c).
427	427	SECTION 2. Sections 1507.008 and 1507.058, Insurance Code,
428	428	are repealed.
429	429	SECTION 3. Subtitle K, Title 8, Insurance Code, as added by
430	430	this Act, applies only to rates for health benefit plan coverage
431	431	delivered, issued for delivery, or renewed on or after January 1,
432	432	2010. Rates for health benefit plan coverage delivered, issued for
433	433	delivery, or renewed before January 1, 2010, are governed by the law
434	434	in effect immediately before the effective date of this Act, and
435	435	that law is continued in effect for that purpose.
436	436	SECTION 4. This Act takes effect September 1, 2009.