Texas 2009 - 81st Regular

Texas Senate Bill SB1257 Compare Versions

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1	1	By: Averitt, et al. S.B. No. 1257
2	2
3	3
4	4	A BILL TO BE ENTITLED
5	5	AN ACT
6	6	relating to the regulation of certain market conduct activities of
7	7	certain life, accident, and health insurers and health benefit plan
8	8	issuers; providing civil liability and administrative and criminal
9	9	penalties.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	ARTICLE 1. RESCISSION OF HEALTH BENEFIT PLAN
12	12	SECTION 1.001. Subchapter B, Chapter 541, Insurance Code,
13	13	is amended by adding Section 541.062 to read as follows:
14	14	Sec. 541.062. BAD FAITH RESCISSION. (a) For purposes of
15	15	this section, "rescission" has the meaning assigned by Section
16	16	1202.101.
17	17	(b) It is an unfair method of competition or an unfair or
18	18	deceptive act or practice for a health benefit plan issuer to:
19	19	(1) set rescission goals, quotas, or targets;
20	20	(2) pay compensation of any kind, including a bonus or
21	21	award, that varies according to the number of rescissions;
22	22	(3) set, as a condition of employment, a number or
23	23	volume of rescissions to be achieved; or
24	24	(4) set a performance standard, for employees or by
25	25	contract with another entity, based on the number or volume of
26	26	rescissions.
27	27	SECTION 1.002. Chapter 1202, Insurance Code, is amended by
28	28	adding Subchapter C to read as follows:
29	29	SUBCHAPTER C. INDEPENDENT REVIEW OF CERTAIN RESCISSION DECISIONS
30	30	Sec. 1202.101. DEFINITIONS. In this subchapter:
31	31	(1) "Affected individual" means an individual who is
32	32	otherwise entitled to benefits under a health benefit plan that is
33	33	subject to a decision to rescind.
34	34	(2) "Independent review organization" means an
35	35	organization certified under Chapter 4202.
36	36	(3) "Rescission" means the termination of an insurance
37	37	agreement, contract, evidence of coverage, insurance policy, or
38	38	other similar coverage document in which the health benefit plan
39	39	issuer refunds premium payments or, if applicable, demands the
40	40	restitution of any benefit paid under the plan, on the ground that
41	41	the issuer is entitled to restoration of the issuer's
42	42	precontractual position.
43	43	(4) "Screening criteria" means the elements or factors
44	44	used in a determination of whether to subject an issued health
45	45	benefit plan to additional review for possible rescission,
46	46	including any applicable dollar amount or number of claims
47	47	submitted.
48	48	Sec. 1202.102. APPLICABILITY. (a) This subchapter
49	49	applies only to a health benefit plan, including a small or large
50	50	employer health benefit plan written under Chapter 1501, that
51	51	provides benefits for medical or surgical expenses incurred as a
52	52	result of a health condition, accident, or sickness, including an
53	53	individual, group, blanket, or franchise insurance policy or
54	54	insurance agreement, a group hospital service contract, or an
55	55	individual or group evidence of coverage or similar coverage
56	56	document that is offered by:
57	57	(1) an insurance company;
58	58	(2) a group hospital service corporation operating
59	59	under Chapter 842;
60	60	(3) a fraternal benefit society operating under
61	61	Chapter 885;
62	62	(4) a stipulated premium company operating under
63	63	Chapter 884;
64	64	(5) a reciprocal exchange operating under Chapter 942;
65	65	(6) a Lloyd's plan operating under Chapter 941;
66	66	(7) a health maintenance organization operating under
67	67	Chapter 843;
68	68	(8) a multiple employer welfare arrangement that holds
69	69	a certificate of authority under Chapter 846; or
70	70	(9) an approved nonprofit health corporation that
71	71	holds a certificate of authority under Chapter 844.
72	72	(b) This subchapter does not apply to:
73	73	(1) a health benefit plan that provides coverage:
74	74	(A) only for a specified disease or for another
75	75	limited benefit other than an accident policy;
76	76	(B) only for accidental death or dismemberment;
77	77	(C) for wages or payments in lieu of wages for a
78	78	period during which an employee is absent from work because of
79	79	sickness or injury;
80	80	(D) as a supplement to a liability insurance
81	81	policy;
82	82	(E) for credit insurance;
83	83	(F) only for dental or vision care;
84	84	(G) only for hospital expenses; or
85	85	(H) only for indemnity for hospital confinement;
86	86	(2) a Medicare supplemental policy as defined by
87	87	Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss),
88	88	as amended;
89	89	(3) a workers' compensation insurance policy;
90	90	(4) medical payment insurance coverage provided under
91	91	a motor vehicle insurance policy;
92	92	(5) a long-term care insurance policy, including a
93	93	nursing home fixed indemnity policy, unless the commissioner
94	94	determines that the policy provides benefit coverage so
95	95	comprehensive that the policy is a health benefit plan described by
96	96	Subsection (a);
97	97	(6) a Medicaid managed care plan offered under Chapter
98	98	533, Government Code;
99	99	(7) any policy or contract of insurance with a state
100	100	agency, department, or board providing health services to eligible
101	101	individuals under Chapter 32, Human Resources Code; or
102	102	(8) a child health plan offered under Chapter 62,
103	103	Health and Safety Code, or a health benefits plan offered under
104	104	Chapter 63, Health and Safety Code.
105	105	Sec. 1202.103. RESCISSION FOR MISREPRESENTATION OR
106	106	PREEXISTING CONDITION. Notwithstanding any other law, a health
107	107	benefit plan issuer may not rescind a health benefit plan on the
108	108	basis of a misrepresentation or a preexisting condition except as
109	109	provided by this subchapter.
110	110	Sec. 1202.104. NOTICE OF INTENT TO RESCIND. (a) A health
111	111	benefit plan issuer may not rescind a health benefit plan on the
112	112	basis of a misrepresentation or a preexisting condition without
113	113	first notifying an affected individual in writing of the issuer's
114	114	intent to rescind the health benefit plan and the individual's
115	115	entitlement to an independent review.
116	116	(b) The notice required under Subsection (a) must include,
117	117	as applicable:
118	118	(1) the principal reasons for the decision to rescind
119	119	the health benefit plan;
120	120	(2) the clinical basis for a determination that a
121	121	preexisting condition exists;
122	122	(3) a description of any general screening criteria
123	123	used to evaluate issued health benefit plans and determine
124	124	eligibility for a decision to rescind;
125	125	(4) a statement that the individual is entitled to
126	126	appeal a rescission decision to an independent review organization;
127	127	(5) a statement that the individual has at least 45
128	128	days in which to appeal the rescission decision to an independent
129	129	review organization, and a description of the consequences of
130	130	failure to appeal within that time limit;
131	131	(6) a statement that there is no cost to the individual
132	132	to appeal the rescission decision to an independent review
133	133	organization; and
134	134	(7) a description of the independent review process
135	135	under Chapters 4201 and 4202.
136	136	Sec. 1202.105. INDEPENDENT REVIEW PROCESS; PAYMENT OF
137	137	CLAIMS. (a) An affected individual may appeal a health benefit
138	138	plan issuer's rescission decision to an independent review
139	139	organization not later than the 45th day after the date the
140	140	individual receives notice under Section 1202.104.
141	141	(b) A health benefit plan issuer shall comply with all
142	142	requests for information made by the independent review
143	143	organization and with the independent review organization's
144	144	determination regarding the appropriateness of the issuer's
145	145	decision to rescind.
146	146	(c) A health benefit plan issuer shall pay all otherwise
147	147	valid medical claims under an individual's plan until the later of:
148	148	(1) the date on which an independent review
149	149	organization determines that the decision to rescind is
150	150	appropriate; or
151	151	(2) the time to appeal to an independent review
152	152	organization has expired without an affected individual initiating
153	153	an appeal.
154	154	Sec. 1202.106. RESCISSION AUTHORIZED; RECOVERY OF CLAIMS
155	155	PAID. (a) A health benefit plan issuer may rescind a health
156	156	benefit plan covering an affected individual on the later of:
157	157	(1) the date an independent review organization
158	158	determines that rescission is appropriate; or
159	159	(2) the 45th day after the date an affected individual
160	160	receives notice under Section 1202.104, if the individual has not
161	161	initiated an appeal.
162	162	(b) An issuer that rescinds a health benefit plan under this
163	163	section may seek to recover from an affected individual amounts
164	164	paid for the individual's medical claims under the rescinded health
165	165	benefit plan.
166	166	(c) An issuer that rescinds a health benefit plan under this
167	167	section may not offset against or recoup or recover from a physician
168	168	or health care provider amounts paid for medical claims under a
169	169	rescinded health benefit plan. This subsection may not be waived,
170	170	voided, or modified by contract.
171	171	Sec. 1202.107. RESCISSION RELATED TO PREEXISTING
172	172	CONDITION; STANDARDS. (a) For purposes of this subchapter, a
173	173	rescission for a preexisting condition is appropriate if, within
174	174	the 18-month period immediately preceding the date on which an
175	175	application for coverage under a health benefit plan is made, an
176	176	affected individual received or was advised by a physician or
177	177	health care provider to seek medical advice, diagnosis, care, or
178	178	treatment for a physical or mental condition, regardless of the
179	179	cause, and the individual's failure to disclose the condition:
180	180	(1) affects the risks assumed under the health benefit
181	181	plan; and
182	182	(2) is undertaken with the intent to deceive the
183	183	health benefit plan issuer.
184	184	(b) A health benefit plan issuer may not rescind a health
185	185	benefit plan based on a preexisting condition of a newborn
186	186	delivered after the application for coverage is made or as may
187	187	otherwise be prohibited by law.
188	188	Sec. 1202.108. RESCISSION FOR MISREPRESENTATION;
189	189	STANDARDS. For purposes of this subchapter, a rescission for a
190	190	misrepresentation not related to a preexisting condition is
191	191	inappropriate unless the misrepresentation:
192	192	(1) is of a material fact;
193	193	(2) affects the risks assumed under the health benefit
194	194	plan; and
195	195	(3) is made with the intent to deceive the health
196	196	benefit plan issuer.
197	197	Sec. 1202.109. REMEDIES NOT EXCLUSIVE. The remedies
198	198	provided by this subchapter are not exclusive and are in addition to
199	199	any other remedy or procedure provided by law or at common law.
200	200	Sec. 1202.110. RULES. The commissioner shall adopt rules
201	201	necessary to implement and administer this subchapter.
202	202	Sec. 1202.111. SANCTIONS AND PENALTIES. A health benefit
203	203	plan issuer that violates this subchapter commits an unfair
204	204	practice in violation of Chapter 541 and is subject to sanctions and
205	205	penalties under Chapter 82.
206	206	Sec. 1202.112. CONFIDENTIALITY. (a) A record, report, or
207	207	other information received or maintained by a health benefit plan
208	208	issuer, including any material received or developed during a
209	209	review of a rescission decision under this subchapter, is
210	210	confidential.
211	211	(b) A health benefit plan issuer may not disclose the
212	212	identity of an individual or a decision to rescind an individual's
213	213	health benefit plan unless:
214	214	(1) an independent review organization determines the
215	215	decision to rescind is appropriate; or
216	216	(2) the time to appeal has expired without an affected
217	217	individual initiating an appeal.
218	218	SECTION 1.003. Subtitle G, Title 8, Insurance Code, is
219	219	amended by adding Chapter 1515 to read as follows:
220	220	CHAPTER 1515. INFORMATION CONCERNING RESCINDED HEALTH BENEFIT
221	221	PLANS
222	222	Sec. 1515.001. DEFINITION. In this chapter, "coverage
223	223	document" means a policy or certificate evidencing the coverage of
224	224	an individual or group under a health benefit plan described by
225	225	Section 1515.002.
226	226	Sec. 1515.002. APPLICABILITY. (a) This chapter applies
227	227	only to a health benefit plan, including a small or large employer
228	228	health benefit plan written under Chapter 1501, that provides
229	229	benefits for medical or surgical expenses incurred as a result of a
230	230	health condition, accident, or sickness, including an individual,
231	231	group, blanket, or franchise insurance policy or insurance
232	232	agreement, a group hospital service contract, or an individual or
233	233	group evidence of coverage or similar coverage document that is
234	234	offered by:
235	235	(1) an insurance company;
236	236	(2) a group hospital service corporation operating
237	237	under Chapter 842;
238	238	(3) a fraternal benefit society operating under
239	239	Chapter 885;
240	240	(4) a stipulated premium company operating under
241	241	Chapter 884;
242	242	(5) a reciprocal exchange operating under Chapter 942;
243	243	(6) a Lloyd's plan operating under Chapter 941;
244	244	(7) a health maintenance organization operating under
245	245	Chapter 843;
246	246	(8) a multiple employer welfare arrangement that holds
247	247	a certificate of authority under Chapter 846; or
248	248	(9) an approved nonprofit health corporation that
249	249	holds a certificate of authority under Chapter 844.
250	250	(b) This chapter does not apply to:
251	251	(1) a health benefit plan that provides coverage only:
252	252	(A) for a specified disease or diseases or under
253	253	an individual limited benefit policy;
254	254	(B) for accidental death or dismemberment;
255	255	(C) as a supplement to a liability insurance
256	256	policy; or
257	257	(D) for dental or vision care;
258	258	(2) disability income insurance coverage or a
259	259	combination of accident only and disability income insurance
260	260	coverage;
261	261	(3) credit insurance coverage;
262	262	(4) a hospital confinement indemnity policy;
263	263	(5) a Medicare supplemental policy as defined by
264	264	Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss),
265	265	as amended;
266	266	(6) a workers' compensation insurance policy;
267	267	(7) medical payment insurance coverage provided under
268	268	a motor vehicle insurance policy; or
269	269	(8) a long-term care insurance policy, including a
270	270	nursing home fixed indemnity policy, unless the commissioner
271	271	determines that the policy provides benefits so comprehensive that
272	272	the policy is a health benefit plan described by Subsection (a) and
273	273	is not exempted from the application of this chapter.
274	274	Sec. 1515.003. REPORT. (a) Each health benefit plan
275	275	issuer authorized to issue coverage documents in this state shall
276	276	submit a report to the department containing the rescission rates
277	277	of coverage documents issued by the issuer.
278	278	(b) In addition to the rescission rates described by
279	279	Subsection (a), the report must contain:
280	280	(1) the number of individuals whose coverage document
281	281	was rescinded by the health benefit plan issuer during the
282	282	reporting period for each type of health benefit plan to which this
283	283	chapter applies;
284	284	(2) the total number of enrollees that were covered by
285	285	rescinded coverage documents before those documents were
286	286	rescinded; and
287	287	(3) the reasons for rescission of rescinded coverage
288	288	documents for each type of health benefit plan to which this chapter
289	289	applies.
290	290	(c) The commissioner shall adopt rules necessary to
291	291	implement this section, including rules concerning any applicable
292	292	reporting period and the form of the report required under
293	293	Subsection (a).
294	294	Sec. 1515.004. INTERNET POSTING; CONSUMER HOTLINE.
295	295	(a) The department shall post on the department's Internet
296	296	website:
297	297	(1) the information contained in the reports received
298	298	under Section 1515.003 that is not confidential or proprietary; and
299	299	(2) a form through which consumers may report
300	300	rescission of a health benefit plan and complaints or suspected
301	301	violations of the law governing the rescission of health benefit
302	302	plans.
303	303	(b) For purposes of Subsection (a), aggregated information
304	304	regarding a health benefit plan issuer's rescission rates is not
305	305	confidential or proprietary.
306	306	(c) The department shall operate a toll-free telephone
307	307	hotline to:
308	308	(1) respond to consumer inquiries concerning the
309	309	rescission of health benefit plans; and
310	310	(2) provide information to consumers concerning the
311	311	rescission of health benefit plans and technical assistance with
312	312	the completion of the form described by Subsection (a)(2).
313	313	SECTION 1.004. Section 4202.002, Insurance Code, is amended
314	314	to read as follows:
315	315	Sec. 4202.002. ADOPTION OF STANDARDS FOR INDEPENDENT REVIEW
316	316	ORGANIZATIONS. (a) The commissioner shall adopt standards and
317	317	rules for:
318	318	(1) the certification, selection, and operation of
319	319	independent review organizations to perform independent review
320	320	described by Subchapter C, Chapter 1202, or Subchapter I, Chapter
321	321	4201; and
322	322	(2) the suspension and revocation of the
323	323	certification.
324	324	(b) The standards adopted under this section must ensure:
325	325	(1) the timely response of an independent review
326	326	organization selected under this chapter;
327	327	(2) the confidentiality of medical records
328	328	transmitted to an independent review organization for use in
329	329	conducting an independent review;
330	330	(3) the qualifications and independence of each
331	331	physician or other health care provider making a review
332	332	determination for an independent review organization;
333	333	(4) the fairness of the procedures used by an
334	334	independent review organization in making review determinations;
335	335	[and]
336	336	(5) the timely notice to an enrollee of the results of
337	337	an independent review, including the clinical basis for the review
338	338	determination; and
339	339	(6) that review of a rescission decision based on a
340	340	preexisting condition be conducted under the direction of a
341	341	physician.
342	342	SECTION 1.005. Sections 4202.003, 4202.004, and 4202.006,
343	343	Insurance Code, are amended to read as follows:
344	344	Sec. 4202.003. REQUIREMENTS REGARDING TIMELINESS OF
345	345	DETERMINATION. The standards adopted under Section 4202.002 must
346	346	require each independent review organization to make the
347	347	organization's determination:
348	348	(1) for a life-threatening condition as defined by
349	349	Section 4201.002, not later than the earlier of:
350	350	(A) the fifth day after the date the organization
351	351	receives the information necessary to make the determination; or
352	352	(B) the eighth day after the date the
353	353	organization receives the request that the determination be made;
354	354	and
355	355	(2) for a condition other than a life-threatening
356	356	condition or of the appropriateness of a rescission under
357	357	Subchapter C, Chapter 1202, not later than the earlier of:
358	358	(A) the 15th day after the date the organization
359	359	receives the information necessary to make the determination; or
360	360	(B) the 20th day after the date the organization
361	361	receives the request that the determination be made.
362	362	Sec. 4202.004. CERTIFICATION. To be certified as an
363	363	independent review organization under this chapter, an
364	364	organization must submit to the commissioner an application in the
365	365	form required by the commissioner. The application must include:
366	366	(1) for an applicant that is publicly held, the name of
367	367	each shareholder or owner of more than five percent of any of the
368	368	applicant's stock or options;
369	369	(2) the name of any holder of the applicant's bonds or
370	370	notes that exceed $100,000;
371	371	(3) the name and type of business of each corporation
372	372	or other organization that the applicant controls or is affiliated
373	373	with and the nature and extent of the control or affiliation;
374	374	(4) the name and a biographical sketch of each
375	375	director, officer, and executive of the applicant and of any entity
376	376	listed under Subdivision (3) and a description of any relationship
377	377	the named individual has with:
378	378	(A) a health benefit plan;
379	379	(B) a health maintenance organization;
380	380	(C) an insurer;
381	381	(D) a utilization review agent;
382	382	(E) a nonprofit health corporation;
383	383	(F) a payor;
384	384	(G) a health care provider; or
385	385	(H) a group representing any of the entities
386	386	described by Paragraphs (A) through (G);
387	387	(5) the percentage of the applicant's revenues that
388	388	are anticipated to be derived from independent reviews conducted
389	389	under Subchapter I, Chapter 4201;
390	390	(6) a description of the areas of expertise of the
391	391	physicians or other health care providers making review
392	392	determinations for the applicant; and
393	393	(7) the procedures to be used by the applicant in
394	394	making independent review determinations under Subchapter C,
395	395	Chapter 1202, or Subchapter I, Chapter 4201.
396	396	Sec. 4202.006. PAYORS FEES. (a) The commissioner shall
397	397	charge payors fees in accordance with this chapter as necessary to
398	398	fund the operations of independent review organizations.
399	399	(b) A health benefit plan issuer shall pay for an
400	400	independent review of a rescission decision under Subchapter C,
401	401	Chapter 1202.
402	402	SECTION 1.006. Section 4202.009, Insurance Code, is amended
403	403	to read as follows:
404	404	Sec. 4202.009. CONFIDENTIAL INFORMATION. (a) Information
405	405	that reveals the identity of a physician or other individual health
406	406	care provider who makes a review determination for an independent
407	407	review organization is confidential.
408	408	(b) A record, report, or other information received or
409	409	maintained by an independent review organization, including any
410	410	material received or developed during a review of a rescission
411	411	decision under Subchapter C, Chapter 1202, is confidential.
412	412	(c) An independent review organization may not disclose the
413	413	identity of an affected individual or an issuer's decision to
414	414	rescind a health benefit plan under Subchapter C, Chapter 1202,
415	415	unless:
416	416	(1) an independent review organization determines the
417	417	decision to rescind is appropriate; or
418	418	(2) the time to appeal a rescission under that
419	419	subchapter has expired without an affected individual initiating an
420	420	appeal.
421	421	SECTION 1.007. Subsection (a), Section 4202.010, Insurance
422	422	Code, is amended to read as follows:
423	423	(a) An independent review organization conducting an
424	424	independent review under Subchapter C, Chapter 1202, or Subchapter
425	425	I, Chapter 4201, is not liable for damages arising from the review
426	426	determination made by the organization.
427	427	SECTION 1.008. The commissioner of insurance shall adopt
428	428	rules under Subsection (c), Section 1515.003, Insurance Code, as
429	429	added by this article, not later than January 1, 2010. The rules
430	430	must require health benefit plan issuers to submit the first report
431	431	under Section 1515.003, Insurance Code, as added by this article,
432	432	not later than April 1, 2010.
433	433	SECTION 1.009. The change in law made by this article
434	434	applies only to an insurance policy that is delivered, issued for
435	435	delivery, or renewed on or after the effective date of this Act. An
436	436	insurance policy that is delivered, issued for delivery, or renewed
437	437	before the effective date of this Act is governed by the law as it
438	438	existed before the effective date of this Act, and that law is
439	439	continued in effect for that purpose.
440	440	ARTICLE 2. MEDICAL LOSS RATIO
441	441	SECTION 2.001. Subtitle A, Title 8, Insurance Code, is
442	442	amended by adding Chapter 1223 to read as follows:
443	443	CHAPTER 1223. MEDICAL LOSS RATIO
444	444	Sec. 1223.001. DEFINITIONS. In this chapter:
445	445	(1) "Enrollee" has the meaning assigned by Section
446	446	1457.001.
447	447	(2) "Evidence of coverage" has the meaning assigned by
448	448	Section 843.002.
449	449	(3) "Market segment" means, as applicable, one of the
450	450	following categories of health benefit plans issued by a health
451	451	benefit plan issuer:
452	452	(A) individual evidences of coverage issued by a
453	453	health maintenance organization;
454	454	(B) individual preferred provider benefit plans;
455	455	(C) evidences of coverage issued by a health
456	456	maintenance organization to small employers as defined by Section
457	457	1501.002;
458	458	(D) preferred provider benefit plans issued to
459	459	small employers as defined by Section 1501.002;
460	460	(E) evidences of coverage issued by a health
461	461	maintenance organization to large employers as defined by Section
462	462	1501.002; and
463	463	(F) preferred provider benefit plans issued to
464	464	large employers as defined by Section 1501.002.
465	465	(4) "Medical loss ratio" means direct losses incurred
466	466	for all preferred provider benefit plans issued by an insurer
467	467	divided by direct premiums earned for all preferred provider
468	468	benefit plans issued by that insurer. This amount may not include
469	469	home office and overhead costs, advertising costs, network
470	470	development costs, commissions and other acquisition costs, taxes,
471	471	capital costs, administrative costs, utilization review costs, or
472	472	claims processing costs.
473	473	Sec. 1223.002. APPLICABILITY OF CHAPTER. (a) This chapter
474	474	applies to a health benefit plan issuer that provides benefits for
475	475	medical or surgical expenses incurred as a result of a health
476	476	condition, accident, or sickness, including an individual, group,
477	477	blanket, or franchise insurance policy or insurance agreement, a
478	478	group hospital service contract, or an individual or group evidence
479	479	of coverage or similar coverage document that is offered by:
480	480	(1) an insurance company;
481	481	(2) a group hospital service corporation operating
482	482	under Chapter 842;
483	483	(3) a fraternal benefit society operating under
484	484	Chapter 885;
485	485	(4) a stipulated premium company operating under
486	486	Chapter 884;
487	487	(5) an exchange operating under Chapter 942;
488	488	(6) a health maintenance organization operating under
489	489	Chapter 843;
490	490	(7) a multiple employer welfare arrangement that holds
491	491	a certificate of authority under Chapter 846; or
492	492	(8) an approved nonprofit health corporation that
493	493	holds a certificate of authority under Chapter 844.
494	494	(b) Notwithstanding any other law, this chapter applies to a
495	495	health benefit plan issuer with respect to a standard health
496	496	benefit plan provided under Chapter 1507.
497	497	(c) Notwithstanding Section 1501.251 or any other law, this
498	498	chapter applies to a health benefit plan issuer with respect to
499	499	coverage under a small employer health benefit plan subject to
500	500	Chapter 1501.
501	501	Sec. 1223.003. EXCEPTIONS. This chapter does not apply
502	502	with respect to:
503	503	(1) a plan that provides coverage:
504	504	(A) for wages or payments in lieu of wages for a
505	505	period during which an employee is absent from work because of
506	506	sickness or injury;
507	507	(B) as a supplement to a liability insurance
508	508	policy;
509	509	(C) for credit insurance;
510	510	(D) only for dental or vision care;
511	511	(E) only for hospital expenses; or
512	512	(F) only for indemnity for hospital confinement;
513	513	(2) a Medicare supplemental policy as defined by
514	514	Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss);
515	515	(3) a Medicaid managed care program operated under
516	516	Chapter 533, Government Code;
517	517	(4) Medicaid programs operated under Chapter 32, Human
518	518	Resources Code;
519	519	(5) the state child health plan operated under Chapter
520	520	62 or 63, Health and Safety Code;
521	521	(6) a workers' compensation insurance policy; or
522	522	(7) medical payment insurance coverage provided under
523	523	a motor vehicle insurance policy.
524	524	Sec. 1223.004. NOTIFICATION OF MEDICAL LOSS RATIO, MEDICAL
525	525	COST MANAGEMENT, AND HEALTH EDUCATION COST. (a) A health benefit
526	526	plan issuer shall report its medical loss ratio for each market
527	527	segment, as applicable, with the annual report required under
528	528	Section 843.155 or 1301.009. Beginning in the fourth year during
529	529	which a health benefit plan issuer is required to make a report
530	530	under this section, the issuer may report the medical loss ratio as
531	531	a three-year rolling average.
532	532	(b) Each health benefit plan issuer shall include in the
533	533	report described by Subsection (a), for each market segment, a
534	534	separate report of costs attributed to medical cost management and
535	535	health education. The commissioner by rule shall prescribe the
536	536	reporting requirements for the costs, which may include:
537	537	(1) case management activities;
538	538	(2) utilization review;
539	539	(3) detection and prevention of payment of fraudulent
540	540	requests for reimbursement;
541	541	(4) network access fees to preferred provider
542	542	organizations and other network-based health benefit plans,
543	543	including prescription drug networks, and allocated internal
544	544	salaries and related costs associated with network development or
545	545	provider contracting;
546	546	(5) consumer education solely relating to health
547	547	improvement and relying on the direct involvement of health
548	548	personnel, including smoking cessation and disease management
549	549	programs and other programs that involve medical education;
550	550	(6) telephone hotlines, including nurse hotlines,
551	551	that provide enrollees health information and advice regarding
552	552	medical care; and
553	553	(7) expenses for internal and external appeals
554	554	processes.
555	555	(c) The department shall post on the department's Internet
556	556	website or another website maintained by the department for the
557	557	benefit of consumers or enrollees:
558	558	(1) the information received under Subsections (a) and
559	559	(b);
560	560	(2) an explanation of the meaning of the term "medical
561	561	loss ratio," how the medical loss ratio is calculated, and how the
562	562	ratio may affect consumers or enrollees; and
563	563	(3) an explanation of the types of activities and
564	564	services classified as medical cost management and health
565	565	education, how the costs for these activities and services are
566	566	calculated, what those costs, when aggregated with a medical loss
567	567	ratio, mean, and how the costs might affect consumers or enrollees.
568	568	(d) A health benefit plan issuer shall provide each enrollee
569	569	or the plan sponsor, as applicable, with the Internet website
570	570	address at which the enrollee or plan sponsor may access the
571	571	information described by Subsection (c). A health benefit plan
572	572	issuer must provide the information required under this subsection:
573	573	(1) to an enrollee, at the time of the initial
574	574	enrollment of the enrollee in a health benefit plan issued by the
575	575	health benefit plan issuer; and
576	576	(2) at the time of renewal of a health benefit plan to:
577	577	(A) each enrollee, if the health benefit plan is
578	578	an individual health benefit plan; or
579	579	(B) the plan sponsor, if the health benefit plan
580	580	is a group health benefit plan.
581	581	(e) The commissioner shall adopt rules necessary to
582	582	implement this section.
583	583	SECTION 2.002. The change in law made by this article
584	584	applies only to a health benefit plan that is delivered, issued for
585	585	delivery, or renewed on or after January 1, 2011. A health benefit
586	586	plan that is delivered, issued for delivery, or renewed before
587	587	January 1, 2011, is covered by the law in effect at the time the
588	588	health benefit plan was delivered, issued for delivery, or renewed,
589	589	and that law is continued in effect for that purpose.
590	590	ARTICLE 3. PREMIUM RATE INCREASES FOR SMALL EMPLOYER HEALTH
591	591	BENEFIT PLANS
592	592	SECTION 3.001. Subchapter D, Chapter 501, Insurance Code,
593	593	is amended by amending Sections 501.151 and 501.153 and adding
594	594	Section 501.160 to read as follows:
595	595	Sec. 501.151. POWERS AND DUTIES OF OFFICE. (a) The
596	596	office:
597	597	(1) may assess the impact of insurance rates, rules,
598	598	and forms on insurance consumers in this state; [and]
599	599	(2) shall advocate in the office's own name positions
600	600	determined by the public counsel to be most advantageous to a
601	601	substantial number of insurance consumers; and
602	602	(3) shall accept from a small employer, an eligible
603	603	employee, or an eligible employee's dependent and, if appropriate,
604	604	refer to the commissioner, a complaint described by Section
605	605	501.160.
606	606	(b) The decision to refer a complaint to the commissioner
607	607	under Subsection (a) is at the public counsel's sole discretion.
608	608	Sec. 501.153. AUTHORITY TO APPEAR, INTERVENE, OR INITIATE.
609	609	The public counsel:
610	610	(1) may appear or intervene, as a party or otherwise,
611	611	as a matter of right before the commissioner or department on behalf
612	612	of insurance consumers, as a class, in matters involving:
613	613	(A) rates, rules, and forms affecting:
614	614	(i) property and casualty insurance;
615	615	(ii) title insurance;
616	616	(iii) credit life insurance;
617	617	(iv) credit accident and health insurance;
618	618	or
619	619	(v) any other line of insurance for which
620	620	the commissioner or department promulgates, sets, adopts, or
621	621	approves rates, rules, or forms;
622	622	(B) rules affecting life, health, or accident
623	623	insurance; or
624	624	(C) withdrawal of approval of policy forms:
625	625	(i) in proceedings initiated by the
626	626	department under Sections 1701.055 and 1701.057; or
627	627	(ii) if the public counsel presents
628	628	persuasive evidence to the department that the forms do not comply
629	629	with this code, a rule adopted under this code, or any other law;
630	630	(2) may initiate or intervene as a matter of right or
631	631	otherwise appear in a judicial proceeding involving or arising from
632	632	an action taken by an administrative agency in a proceeding in which
633	633	the public counsel previously appeared under the authority granted
634	634	by this chapter;
635	635	(3) may appear or intervene, as a party or otherwise,
636	636	as a matter of right on behalf of insurance consumers as a class in
637	637	any proceeding in which the public counsel determines that
638	638	insurance consumers are in need of representation, except that the
639	639	public counsel may not intervene in an enforcement or parens
640	640	patriae proceeding brought by the attorney general; [and]
641	641	(4) may appear or intervene before the commissioner or
642	642	department as a party or otherwise on behalf of small commercial
643	643	insurance consumers, as a class, in a matter involving rates,
644	644	rules, or forms affecting commercial insurance consumers, as a
645	645	class, in any proceeding in which the public counsel determines
646	646	that small commercial consumers are in need of representation; and
647	647	(5) may appear before the commissioner on behalf of a
648	648	small employer, eligible employee, or eligible employee's
649	649	dependent in a complaint the office refers to the commissioner
650	650	under Section 501.160.
651	651	Sec. 501.160. COMPLAINT RESOLUTION FOR CERTAIN PREMIUM RATE
652	652	INCREASES. (a) A small employer, an eligible employee, or an
653	653	eligible employee's dependent may file a complaint with the office
654	654	alleging that a rate is excessive for the risks to which the rate
655	655	applies, if the percentage increase in the premium rate charged to a
656	656	small employer under Subchapter E, Chapter 1501, for a new rating
657	657	period exceeds 20 percent.
658	658	(b) The office shall refer a complaint received under
659	659	Subsection (a) to the commissioner if the office determines that
660	660	the complaint substantially attests to a rate charged that is
661	661	excessive for the risks to which the rate applies. A rate may not be
662	662	considered excessive for the risks to which the rate applies solely
663	663	because the percentage increase in the premium rate charged exceeds
664	664	the percentage described by Subsection (a).
665	665	(c) With respect to a complaint filed under Subsection (a),
666	666	the office may issue a subpoena applicable throughout the state
667	667	that requires the production of records.
668	668	(d) On application of the office in the case of disobedience
669	669	of a subpoena, a district court may issue an order requiring any
670	670	individual or person, including a small employer health benefit
671	671	plan issuer described by Section 1501.002, that is subpoenaed to
672	672	obey the subpoena and produce records, if the individual or person
673	673	has refused to do so. An application under this subsection must be
674	674	made in a district court in Travis County.
675	675	SECTION 3.002. Section 1501.205, Insurance Code, is amended
676	676	by adding Subsection (d) to read as follows:
677	677	(d) On the request of a small employer, a small employer
678	678	health benefit plan issuer shall disclose the percentage change in
679	679	the risk load assessed to a small employer group to the group, along
680	680	with the percentage change attributable exclusively to any change
681	681	in case characteristics.
682	682	SECTION 3.003. Subchapter E, Chapter 1501, Insurance Code,
683	683	is amended by adding Section 1501.2131 and amending Section
684	684	1501.214 to read as follows:
685	685	Sec. 1501.2131. COMPLAINT FACILITATION FOR PREMIUM RATE
686	686	ADJUSTMENTS. If the percentage increase in the premium rate
687	687	charged to a small employer for a new rating period exceeds 20
688	688	percent, the small employer, an eligible employee, or an eligible
689	689	employee's dependent may file a complaint with the office of public
690	690	insurance counsel as provided by Section 501.160. The complaint
691	691	facilitation under this section and Chapter 501 is not exclusive
692	692	and is in addition to any other remedy or complaint procedure
693	693	provided by law or rule.
694	694	Sec. 1501.214. ENFORCEMENT. (a) Subject to Subsection
695	695	(b), if [If] the commissioner determines that a small employer
696	696	health benefit plan issuer subject to this chapter exceeds the
697	697	applicable premium rate established under this subchapter, the
698	698	commissioner may order restitution and assess penalties as provided
699	699	by Chapter 82.
700	700	(b) The commissioner shall enter an order under this section
701	701	if the commissioner makes the finding described by Section
702	702	1501.653.
703	703	SECTION 3.004. Chapter 1501, Insurance Code, is amended by
704	704	adding Subchapter N to read as follows:
705	705	SUBCHAPTER N. RESOLUTION OF CERTAIN COMPLAINTS AGAINST SMALL
706	706	EMPLOYER HEALTH BENEFIT PLAN ISSUERS
707	707	Sec. 1501.651. DEFINITIONS. In this subchapter:
708	708	(1) "Honesty-in-premium account" means the account
709	709	established under Section 1501.656.
710	710	(2) "Office" means the office of public insurance
711	711	counsel.
712	712	Sec. 1501.652. COMPLAINT RESOLUTION PROCEDURE. (a) On the
713	713	receipt of a referral of a complaint from the office of public
714	714	insurance counsel under Section 501.160, the commissioner shall
715	715	request written memoranda from the office and the small employer
716	716	health benefit plan issuer that is the subject of the complaint.
717	717	(b) After receiving the initial memoranda described by
718	718	Subsection (a), the commissioner may request one rebuttal
719	719	memorandum from the office.
720	720	(c) The commissioner may by rule limit the number of
721	721	exhibits submitted with or the time frame allowed for the submittal
722	722	of the memoranda described by Subsection (a) or (b).
723	723	Sec. 1501.653. ORDER; FINDINGS. The commissioner shall
724	724	issue an order under Section 1501.214(b) if the commissioner
725	725	determines that the rate complained of is excessive for the risks to
726	726	which the rate applies.
727	727	Sec. 1501.654. COSTS. The office may request, and the
728	728	commissioner may award to the office, reasonable costs and fees
729	729	associated with the investigation and resolution of a complaint
730	730	filed under Section 501.160 and disposed of in accordance with this
731	731	subchapter.
732	732	Sec. 1501.655. ASSESSMENT. (a) The commissioner may make
733	733	an assessment against each small employer health benefit plan
734	734	issuer in an amount that is sufficient to cover the costs of
735	735	investigating and resolving a complaint filed under Section 501.160
736	736	and disposed of in accordance with this subchapter.
737	737	(b) The commissioner shall deposit assessments collected
738	738	under this section to the credit of the honesty-in-premium account.
739	739	Sec. 1501.656. HONESTY-IN-PREMIUM ACCOUNT. (a) The
740	740	honesty-in-premium account is an account in the general revenue
741	741	fund that may be appropriated only to cover the cost associated with
742	742	the investigation and resolution of a complaint filed under Section
743	743	501.160 and disposed of in accordance with this subchapter.
744	744	(b) Interest earned on the honesty-in-premium account shall
745	745	be credited to the account. The account is exempt from the
746	746	application of Section 403.095, Government Code.
747	747	Sec. 1501.657. RATE CHANGE NOT PROHIBITED. Nothing in this
748	748	subchapter prohibits a small employer health benefit plan issuer
749	749	from, at any time, offering a different rate to the group whose rate
750	750	is the subject of a complaint.
751	751	SECTION 3.005. The change in law made by Chapter 1501,
752	752	Insurance Code, as amended by this article, applies only to a small
753	753	employer health benefit plan that is delivered, issued for
754	754	delivery, or renewed on or after January 1, 2010. A small employer
755	755	health benefit plan that is delivered, issued for delivery, or
756	756	renewed before January 1, 2010, is covered by the law in effect at
757	757	the time the health benefit plan was delivered, issued for
758	758	delivery, or renewed, and that law is continued in effect for that
759	759	purpose.
760	760	ARTICLE 4. PHYSICIAN RANKING BY HEALTH BENEFIT PLAN ISSUERS
761	761	SECTION 4.001. Subtitle F, Title 8, Insurance Code, is
762	762	amended by adding Chapter 1460 to read as follows:
763	763	CHAPTER 1460. STANDARDS REQUIRED REGARDING CERTAIN PHYSICIAN
764	764	RANKINGS BY HEALTH BENEFIT PLANS
765	765	Sec. 1460.001. DEFINITIONS. In this chapter:
766	766	(1) "Health benefit plan issuer" means an entity
767	767	authorized under this code or another insurance law of this state
768	768	that provides health insurance or health benefits in this state,
769	769	including:
770	770	(A) an insurance company;
771	771	(B) a group hospital service corporation
772	772	operating under Chapter 842;
773	773	(C) a health maintenance organization operating
774	774	under Chapter 843; and
775	775	(D) a stipulated premium company operating under
776	776	Chapter 884.
777	777	(2) "Physician" means an individual licensed to
778	778	practice medicine in this state or another state of the United
779	779	States.
780	780	Sec. 1460.002. EXEMPTION. This chapter does not apply to:
781	781	(1) a Medicaid managed care program operated under
782	782	Chapter 533, Government Code;
783	783	(2) a Medicaid program operated under Chapter 32,
784	784	Human Resources Code;
785	785	(3) the child health plan program under Chapter 62,
786	786	Health and Safety Code, or the health benefits plan for children
787	787	under Chapter 63, Health and Safety Code; or
788	788	(4) a Medicare supplement benefit plan, as defined by
789	789	Chapter 1652.
790	790	Sec. 1460.003. PHYSICIAN RANKING REQUIREMENTS. (a) A
791	791	health benefit plan issuer, including a subsidiary or affiliate,
792	792	may not rank physicians, classify physicians into tiers based on
793	793	performance, or publish physician-specific information that
794	794	includes rankings, tiers, ratings, or other comparisons of a
795	795	physician's performance against standards, measures, or other
796	796	physicians, unless:
797	797	(1) the standards used by the health benefit plan
798	798	issuer conform to nationally recognized standards and guidelines as
799	799	required by rules adopted under Section 1460.005;
800	800	(2) the standards and measurements to be used by the
801	801	health benefit plan issuer are disclosed to each affected physician
802	802	before any evaluation period used by the health benefit plan
803	803	issuer; and
804	804	(3) each affected physician is afforded, before any
805	805	publication or other public dissemination, an opportunity to
806	806	dispute the ranking or classification through a process that
807	807	includes due process protections that conform to protections
808	808	described by 42 U.S.C. Section 11112.
809	809	(b) This section does not apply to the publication of a list
810	810	of network physicians and providers if ratings or comparisons are
811	811	not made.
812	812	Sec. 1460.004. DUTIES OF PHYSICIANS. A physician may not
813	813	require or request that a patient of the physician enter into an
814	814	agreement under which the patient agrees not to:
815	815	(1) rank or otherwise evaluate the physician;
816	816	(2) participate in surveys regarding the physician; or
817	817	(3) in any way comment on the patient's opinion of the
818	818	physician.
819	819	Sec. 1460.005. RULES; STANDARDS. (a) The commissioner
820	820	shall adopt rules in the manner prescribed by Subchapter A, Chapter
821	821	36, as necessary to implement this chapter.
822	822	(b) The commissioner shall adopt rules as necessary to
823	823	ensure that a health benefit plan issuer that uses a physician
824	824	ranking system complies with the standards and guidelines described
825	825	by Subsection (c).
826	826	(c) In adopting rules under this section, the commissioner
827	827	shall consider the standards and guidelines prescribed by
828	828	nationally recognized organizations that establish or promote
829	829	guidelines and performance measures emphasizing quality of health
830	830	care, including the National Quality Forum and the AQA Alliance. If
831	831	neither the National Quality Forum nor the AQA Alliance has
832	832	established standards or guidelines regarding an issue, the
833	833	commissioner shall consider the standards and guidelines
834	834	prescribed by the National Committee for Quality Assurance and
835	835	other similar national organizations.
836	836	Sec. 1460.006. DUTIES OF HEALTH BENEFIT PLAN ISSUER. A
837	837	health benefit plan issuer shall ensure that:
838	838	(1) physicians being measured are actively involved in
839	839	the development of the standards used under this chapter; and
840	840	(2) the measures and methodology used in the
841	841	comparison programs described by Section 1460.003 are transparent
842	842	and valid.
843	843	Sec. 1460.007. SANCTIONS; DISCIPLINARY ACTIONS. (a) A
844	844	health benefit plan issuer that violates this chapter or a rule
845	845	adopted under this chapter is subject to sanctions and disciplinary
846	846	actions under Chapters 82 and 84.
847	847	(b) A violation of this chapter by a physician constitutes
848	848	grounds for disciplinary action by the Texas Medical Board,
849	849	including imposition of an administrative penalty.
850	850	SECTION 4.002. (a) A health benefit plan issuer shall
851	851	comply with Chapter 1460, Insurance Code, as added by this article,
852	852	not later than December 31, 2009.
853	853	(b) A health benefit plan issuer is not subject to sanctions
854	854	or disciplinary actions under Section 1460.007, Insurance Code, as
855	855	added by this article, before January 1, 2010.
856	856	ARTICLE 5. NO APPROPRIATION; EFFECTIVE DATE
857	857	SECTION 5.001. This Act does not make an appropriation. A
858	858	provision in this Act that creates a new governmental program,
859	859	creates a new entitlement, or imposes a new duty on a governmental
860	860	entity is not mandatory during a fiscal period for which the
861	861	legislature has not made a specific appropriation to implement the
862	862	provision.
863	863	SECTION 5.002. Except as otherwise provided by this Act,
864	864	this Act takes effect immediately if it receives a vote of
865	865	two-thirds of all the members elected to each house, as provided by
866	866	Section 39, Article III, Texas Constitution. If this Act does not
867	867	receive the vote necessary for immediate effect, this Act takes
868	868	effect September 1, 2009.