Texas 2009 - 81st Regular

Texas Senate Bill SB373 Compare Versions

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

Old	New	Differences
1	1	81R3612 PB-D
2	2	By: Shapleigh S.B. No. 373
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to administrative costs paid by health benefit plan
8	8	issuers.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Subtitle A, Title 8, Insurance Code, is amended
11	11	by adding Chapter 1219 to read as follows:
12	12	CHAPTER 1219. ADMINISTRATIVE COSTS AND HEALTH BENEFIT PLAN
13	13	PREMIUMS
14	14	Sec. 1219.001. DEFINITIONS. In this chapter:
15	15	(1) "Administrative costs" includes claims
16	16	processing costs, underwriting costs, advertising and marketing
17	17	costs, utilization review costs, home office and overhead costs,
18	18	and commissions and other acquisition costs.
19	19	(2) "Direct losses incurred" means the sum of direct
20	20	losses paid plus an estimate of losses to be paid in the future for
21	21	all claims arising from the current reporting period and all prior
22	22	periods, minus the corresponding estimate made at the close of
23	23	business for the preceding period. This amount does not include
24	24	taxes, capital costs, or administrative costs.
25	25	(3) "Direct losses paid" means the sum of all payments
26	26	made during the period for claimants under a health benefit plan
27	27	before reinsurance has been ceded or assumed. This amount does not
28	28	include taxes, capital costs, or administrative costs.
29	29	(4) "Direct premiums earned" means the amount of
30	30	premium attributable to the coverage already provided in a given
31	31	period before reinsurance has been ceded or assumed.
32	32	(5) "Medical loss ratio" means direct losses incurred
33	33	divided by direct premiums earned.
34	34	Sec. 1219.002. APPLICABILITY OF CHAPTER. (a) This chapter
35	35	applies to the issuer of a health benefit plan that provides
36	36	benefits for medical or surgical expenses incurred as a result of a
37	37	health condition, accident, or sickness, including an individual,
38	38	group, blanket, or franchise insurance policy or insurance
39	39	agreement, a group hospital service contract, or an individual or
40	40	group evidence of coverage or similar coverage document that is
41	41	offered by:
42	42	(1) an insurance company;
43	43	(2) a group hospital service corporation operating
44	44	under Chapter 842;
45	45	(3) a fraternal benefit society operating under
46	46	Chapter 885;
47	47	(4) a stipulated premium company operating under
48	48	Chapter 884;
49	49	(5) an exchange operating under Chapter 942;
50	50	(6) a health maintenance organization operating under
51	51	Chapter 843;
52	52	(7) a multiple employer welfare arrangement that holds
53	53	a certificate of authority under Chapter 846; or
54	54	(8) an approved nonprofit health corporation that
55	55	holds a certificate of authority under Chapter 844.
56	56	(b) Notwithstanding any provision in Chapter 1551, 1575,
57	57	1579, or 1601 or any other law, this chapter applies to a health
58	58	benefit plan issuer that contracts with the Employees Retirement
59	59	System of Texas, the Teacher Retirement System of Texas, The
60	60	University of Texas System, or The Texas A&M University System to
61	61	provide:
62	62	(1) a basic coverage plan under Chapter 1551;
63	63	(2) a basic plan under Chapter 1575;
64	64	(3) a primary care coverage plan under Chapter 1579;
65	65	and
66	66	(4) basic coverage under Chapter 1601.
67	67	(c) Notwithstanding any other law, this chapter applies to a
68	68	health benefit plan issuer with respect to a standard health
69	69	benefit plan provided under Chapter 1507.
70	70	(d) Notwithstanding Section 1501.251 or any other law, this
71	71	chapter applies to a health benefit plan issuer with respect to
72	72	coverage under a small employer health benefit plan subject to
73	73	Chapter 1501.
74	74	Sec. 1219.003. EXCEPTION. This chapter does not apply with
75	75	respect to:
76	76	(1) a plan that provides coverage:
77	77	(A) 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	(B) as a supplement to a liability insurance
81	81	policy;
82	82	(C) for credit insurance;
83	83	(D) only for dental or vision care;
84	84	(E) only for hospital expenses; or
85	85	(F) 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	(3) a workers' compensation insurance policy; or
89	89	(4) medical payment insurance coverage provided under
90	90	a motor vehicle insurance policy.
91	91	Sec. 1219.004. MEDICAL LOSS RATIO REPORTING. The
92	92	commissioner by rule shall require each health benefit plan issuer
93	93	to report at least annually the health benefit plan issuer's
94	94	medical loss ratio for the preceding year for each health benefit
95	95	plan issued.
96	96	Sec. 1219.005. LIMITATION ON ADMINISTRATIVE COSTS. (a) A
97	97	health benefit plan issuer may not spend more than 25 percent of the
98	98	direct premiums earned for health benefit plan coverage on
99	99	administrative costs.
100	100	(b) If, based on the report submitted under Section
101	101	1219.004, the commissioner determines that a health benefit plan
102	102	issuer is not in compliance with Subsection (a), the commissioner
103	103	may order the health benefit plan issuer to:
104	104	(1) implement a premium rate adjustment;
105	105	(2) issue any appropriate rebates to enrollees or plan
106	106	sponsors; or
107	107	(3) take other remedial action as determined
108	108	appropriate by the commissioner.
109	109	(c) The commissioner shall adopt rules as necessary to
110	110	implement this section, including rules regarding the frequency and
111	111	form of reporting medical loss ratios.
112	112	SECTION 2. This Act takes effect September 1, 2009.