82R9143 KCR-D
By: Perry H.B. No. 2165
A BILL TO BE ENTITLED
AN ACT
relating to the establishment of a medical reinsurance system and
to certain insurance reforms necessary to the efficient operation
of that system; providing an administrative penalty.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The heading to Subtitle F, Title 4, Insurance
Code, is amended to read as follows:
SUBTITLE F. REINSURANCE; STOP-LOSS INSURANCE
SECTION 2. Subtitle F, Title 4, Insurance Code, is amended
by adding Chapter 495 to read as follows:
CHAPTER 495. STOP-LOSS INSURANCE FOR CERTAIN SELF-FUNDED ENTITIES
Sec. 495.001. DEFINITIONS. In this chapter:
(1) "Aggregate stop-loss insurance" means stop-loss
insurance in which the issuer responds after a self-funded health
benefit plan has covered:
(A) claims that total a specified dollar amount;
or
(B) a specified percentage of expected claims,
which may be modified to account for any applicable individual
stop-loss insurance coverage.
(2) "Health benefit plan" means a plan that provides
benefits for hospital, medical, surgical, or other treatment
expenses incurred as a result of a health condition, an accident, or
sickness, including a group health insurance policy, a group
hospital service contract, a group evidence of coverage, or any
other similar coverage document that:
(A) is issued, entered into, or provided by:
(i) an insurance company;
(ii) a group hospital service corporation
operating under Chapter 842;
(iii) a health maintenance organization
operating under Chapter 843;
(iv) a multiple employer welfare
arrangement that holds a certificate of authority under Chapter
846; or
(v) an employer, union, association,
trustee, or other self-funded or self-insured welfare or benefit
plan, program, or arrangement; and
(B) is not limited in scope to only one or more of
the following types of coverage:
(i) accident-only or disability income
insurance coverage or a combination of accident-only and disability
income insurance coverage;
(ii) credit-only insurance coverage;
(iii) disability insurance coverage;
(iv) coverage only for a specified disease
or illness;
(v) Medicare services under a federal
contract;
(vi) Medicare supplement and Medicare
Select policies regulated in accordance with federal law;
(vii) long-term care coverage or benefits,
nursing home care coverage or benefits, home health care coverage
or benefits, community-based care coverage or benefits, or any
combination of those coverages or benefits;
(viii) coverage that provides
limited-scope dental or vision benefits;
(ix) coverage for an on-site medical
clinic;
(x) liability insurance coverage,
including general liability insurance coverage, automobile
liability insurance coverage, and coverage issued as a supplement
to liability insurance coverage;
(xi) workers' compensation insurance
coverage or similar insurance coverage;
(xii) automobile medical payment insurance
coverage, including coverage issued as a supplement to automobile
medical payment insurance coverage; or
(xiii) hospital indemnity or other fixed
indemnity insurance coverage.
(3) "Individual stop-loss deductible" means the
dollar amount of claims that a self-funded health benefit plan must
cover before the issuer of an individual stop-loss insurance policy
begins to reimburse the health benefit plan for additional covered
claims for the remainder of a policy period.
(4) "Individual stop-loss insurance" means stop-loss
insurance in which the issuer responds when the self-funded health
benefit plan covered by the insurance has covered claims that
exceed the applicable individual stop-loss deductible for one
enrollee in the health benefit plan.
(5) "Reinsurance" means a contractual arrangement
between a ceding insurer and an assuming insurer in accordance with
Chapter 492.
(6) "Self-funded health benefit plan" means a health
benefit plan that:
(A) is established as an employee welfare benefit
plan under the Employee Retirement Income Security Act of 1974 (29
U.S.C. Section 1001 et seq.) or offered by an entity, agency, or
political subdivision of this state under Subtitle H, Title 8;
(B) holds the initial obligation to pay claims
under the plan; and
(C) is exempt under state or federal law from the
licensing requirements of this code.
(7) "Stop-loss insurance" means an insurance policy
covering a self-funded health benefit plan. The term includes
aggregate stop-loss insurance and individual stop-loss insurance.
Sec. 495.002. REINSURANCE PROHIBITED; STOP-LOSS INSURANCE
REQUIRED. (a) An insurer authorized to write reinsurance in this
state may not issue a reinsurance policy covering a self-funded
health benefit plan.
(b) Subject to Section 495.003, an insurer authorized to
write stop-loss insurance in this state may issue a stop-loss
insurance policy covering a self-funded health benefit plan.
Sec. 495.003. PRIOR APPROVAL OF POLICIES. (a) An insurer
authorized to write stop-loss insurance in this state may not issue
or issue for delivery a stop-loss insurance policy in this state
until the policy has been filed with the department and approved by
the commissioner. The commissioner may not approve an individual
stop-loss insurance policy filed under this section if the
individual stop-loss deductible is less than $5,000 or exceeds
$100,000.
(b) The commissioner shall adopt rules under Section 37.001
to govern the approval of policies filed under this section.
(c) If the commissioner disapproves a policy filed under
this section, the disapproval is subject to judicial review under
Subchapter D, Chapter 36.
(d) In the commissioner's order approving or disapproving a
policy filed under this section, the commissioner shall state
whether the stop-loss policy is subject to Chapters 1675 and 1676.
Sec. 495.004. REPORTS CONCERNING INDIVIDUAL STOP-LOSS
INSURANCE. An insurer that issues individual stop-loss insurance
in this state shall annually file with the department a report that
contains the annualized gross premium and annual individual
stop-loss deductible for each individual stop-loss insurance
policy issued in this state.
SECTION 3. Title 8, Insurance Code, is amended by adding
Subtitle K to read as follows:
SUBTITLE K. TEXAS MEDICAL REINSURANCE SYSTEM
CHAPTER 1675. TEXAS MEDICAL REINSURANCE SYSTEM
Sec. 1675.001. DEFINITIONS. In this chapter:
(1) "Affiliate" means a person or entity classified as
an affiliate under Section 823.003.
(2) "Aggregate stop-loss insurance" has the meaning
assigned by Section 495.001.
(3) "Board" means the board of directors of the Texas
Medical Reinsurance System.
(4) "Health benefit plan" has the meaning assigned by
Section 495.001.
(5) "Health benefit plan issuer" means an entity that
issues a health benefit plan.
(6) "Independent auditor" means the auditor with whom
the board contracts under Section 1675.006 to audit the
administration, management, and operation of the system.
(7) "Individual stop-loss insurance" has the meaning
assigned by Section 495.001.
(8) "Management company" means the entity with whom
the board contracts under Section 1675.006 to administer, manage,
and operate the system.
(9) "Plan of operation" means the plan of operation of
the system established under Section 1675.007.
(10) "Self-funded health benefit plan" has the meaning
assigned by Section 495.001.
(11) "Stop-loss insurance" has the meaning assigned by
Section 495.001.
(12) "Subsidiary" means a person classified as a
subsidiary under Section 823.003.
(13) "System" means the Texas Medical Reinsurance
System established under this chapter.
Sec. 1675.002. TEXAS MEDICAL REINSURANCE SYSTEM. The Texas
Medical Reinsurance System is an entity that is:
(1) administered by a board of directors and
management company in accordance with this chapter; and
(2) subject to the supervision and control of the
commissioner.
Sec. 1675.003. SYSTEM BOARD OF DIRECTORS. (a) The board of
directors of the system is composed of the following nine members:
(1) one member appointed by the governor, selected
from a list of candidates prepared by the lieutenant governor;
(2) one member appointed by the governor, selected
from a list of candidates prepared by the speaker of the house of
representatives;
(3) one member appointed by the governor who is a small
employer, as defined by Section 1501.002;
(4) one member appointed by the governor who is a large
employer, as defined by Section 1501.002;
(5) one member appointed by the governor who
represents the interests of political subdivisions of this state;
(6) one member appointed by the governor who
represents the interests of physicians in this state;
(7) one member appointed by the governor who
represents the interests of hospitals in this state;
(8) one member who is the executive director of the
Employees Retirement System of Texas or that executive director's
designee; and
(9) one member who is the executive director of the
Teacher Retirement System of Texas or that executive director's
designee.
(b) A board member may not:
(1) be an officer, director, or employee of a health
benefit plan issuer or an affiliate or subsidiary of a health
benefit plan issuer;
(2) be a person required to register under Chapter
305, Government Code; or
(3) be related to a person described by Subdivision
(1) or (2) within the second degree by affinity or consanguinity.
(c) Members of the board appointed by the governor serve
two-year terms expiring December 31 of each odd-numbered year. A
member's term continues until a successor is appointed.
(d) A member of the board may not be compensated for serving
on the board but is entitled to reimbursement for actual expenses
incurred in performing functions as a member of the board as
provided by the General Appropriations Act.
Sec. 1675.004. OPEN MEETINGS; PUBLIC INFORMATION. The
board is subject to:
(1) the open meetings law, Chapter 551, Government
Code; and
(2) the public information law, Chapter 552,
Government Code.
Sec. 1675.005. BOARD MEMBER IMMUNITY. (a) A member of the
board is not liable for an act performed, or omission made, in good
faith in the performance of powers and duties under this chapter.
(b) A cause of action does not arise against a member of the
board for an act or omission described by Subsection (a).
Sec. 1675.006. SELECTION OF MANAGEMENT COMPANY AND
INDEPENDENT AUDITOR. (a) The board shall contract with:
(1) an entity that is qualified to administer, manage,
and operate the system; and
(2) an entity that is qualified to audit the manner in
which the entity described by Subdivision (1) performs its duties.
(b) An entity with whom the board contracts under Subsection
(a) may not be a health benefit plan issuer or an affiliate or
subsidiary of a health benefit plan issuer.
(c) A management company with whom the board contracts under
Subsection (a)(1) must have the capability to gather, compile, and
securely store information received from health benefit plan
issuers and health care providers with whom health benefit plan
issuers contract in a manner that allows the management company to
prepare reports as requested by the board.
Sec. 1675.007. SYSTEM PLAN OF OPERATION. (a) The
management company shall submit to the commissioner a plan of
operation and any amendments to that plan necessary or suitable to
ensure the fair, reasonable, and equitable administration of the
system.
(b) The commissioner, after notice and hearing, may approve
the plan of operation if the commissioner determines the plan:
(1) is suitable to ensure the fair, reasonable, and
equitable administration of the system; and
(2) provides for the sharing of system gains or losses
on an equitable and proportionate basis in accordance with this
chapter.
(c) The plan of operation is effective on the written
approval of the commissioner.
Sec. 1675.008. SYSTEM POWERS AND DUTIES. (a) The system,
through the board and the management company, has the general
powers and authority granted under state law to an insurer or a
health maintenance organization authorized to engage in business,
except that the system may not directly issue a health benefit plan.
(b) The system may:
(1) enter into contracts necessary or proper to
implement this chapter, including, with the commissioner's
approval, contracts with similar programs of other states for the
joint performance of common functions or with persons or other
organizations for the performance of administrative functions;
(2) sue or be sued, including taking legal action
necessary or proper to recover assessments and penalties for, on
behalf of, or against the system or a reinsured health benefit plan
issuer;
(3) take legal action necessary to avoid the payment
of improper claims against the system;
(4) issue reinsurance contracts in accordance with
this chapter;
(5) establish guidelines, conditions, and procedures
for reinsuring risks under the plan of operation;
(6) establish actuarial and underwriting functions as
appropriate for the operation of the system;
(7) appoint appropriate legal, actuarial, and other
committees necessary to provide technical assistance in:
(A) the operation of the system;
(B) policy and other contract design; and
(C) any other function within the authority of
the system; and
(8) assess health benefit plan issuers and stop-loss
insurers in accordance with Section 1675.012.
Sec. 1675.009. SYSTEM AUDIT; INDEPENDENT AUDIT AND STATE
AUDIT. (a) The transactions of the system are subject to audit by
the state auditor in accordance with Chapter 321, Government Code.
The state auditor shall report the cost of each audit conducted
under this subsection to the board, the management company, and the
comptroller, and the board shall remit that amount to the
comptroller.
(b) The independent auditor shall annually audit the
transactions of the system and the manner in which the management
company is performing the management company's duties. The
independent auditor shall deliver to the board the results of an
audit conducted under this subsection. An independent audit
conducted under this subsection must include a budgetary and
accounting analysis of the system's operation.
Sec. 1675.010. REINSURANCE REQUIRED; AMOUNT REQUIRED FOR
STOP-LOSS INSURANCE. (a) The following entities shall purchase
from the system reinsurance for the following types of health
benefit plans:
(1) a health benefit plan issuer, for each health
benefit plan issued; and
(2) an insurer that is authorized to write stop-loss
insurance in this state, for each individual stop-loss policy
covering a self-funded health benefit plan.
(b) A health benefit plan issuer required to purchase
reinsurance under Subsection (a)(1) is not required to and may not
purchase reinsurance for a health benefit plan issued that covers
exclusively Medicare services or is a Medicare supplement policy,
as applicable and as determined by federal law.
(c) An insurer required to purchase reinsurance under
Subsection (a)(2) must purchase reinsurance on each health benefit
plan and each individual stop-loss insurance policy in a manner and
amount consistent with Section 1676.002.
Sec. 1675.011. PREMIUM RATES FOR REINSURANCE. (a) As part
of the plan of operation, the management company shall adopt a
method to determine premium rates to be charged by the system for
reinsurance contracts issued under this chapter.
(b) The method adopted must:
(1) allow premium rate variations based on:
(A) demographic and geographic factors; and
(B) the level of benefits provided under a
reinsured health benefit plan;
(2) be actuarially justifiable and approved by the
commissioner under Section 1675.007 as part of the system plan of
operation; and
(3) provide for the sharing, on an equitable and
proportionate basis, of system gains or losses among health benefit
plan issuers and stop-loss insurers required to purchase
reinsurance from the system under Section 1675.010.
Sec. 1675.012. ASSESSMENTS; DEFERMENT OF ASSESSMENTS. (a)
The board shall recover any net loss of the system by assessing each
reinsured health benefit plan issuer or stop-loss insurer required
to purchase reinsurance through the system under Section 1675.010
an amount determined annually by the board based on information in
annual statements and other reports required by and filed with the
board.
(b) The board shall establish, as part of the plan of
operation, a formula by which to make assessments that are made
under Subsection (a). With the approval of the commissioner, the
board may periodically change the assessment formula as
appropriate. The board shall base the assessment formula on each
reinsured health benefit plan issuer's or stop-loss insurer's share
of the total premiums earned in the preceding calendar year from
health benefit plans and policies of individual stop-loss insurance
described by Section 1675.010.
(c) A reinsured health benefit plan issuer or stop-loss
insurer may petition the commissioner for a deferment in whole or in
part of an assessment imposed by the board.
(d) The commissioner may defer all or part of the assessment
if the commissioner determines that payment of the assessment would
endanger the ability of the reinsured health benefit plan issuer or
stop-loss insurer to fulfill its contractual obligations.
(e) The board shall assess the amount of any deferred
assessment against other reinsured health benefit plan issuers and
stop-loss insurers in a manner consistent with the basis for
assessment established by this chapter.
Sec. 1675.013. EFFECT OF DEFERRAL. A reinsured health
benefit plan issuer or stop-loss insurer that receives a deferral
under Section 1675.012(d):
(1) remains liable to the system for the amount
deferred; and
(2) until the deferred assessment is paid, may not
advertise, market, deliver, or issue for delivery:
(A) a health benefit plan or insurance policy of
the type for which the deferral is received; or
(B) any other health benefit plan or insurance
policy subject to this chapter.
Sec. 1675.014. RULES. The commissioner may adopt rules
necessary to implement this chapter.
CHAPTER 1676. CERTAIN HEALTH SERVICES AND SUPPLIES PROVIDED UNDER
REINSURED PLANS AND POLICIES
Sec. 1676.001. DEFINITIONS. (a) In this chapter:
(1) "Health benefit plan claim" means a claim
reimbursable under a reinsured plan or policy.
(2) "Health care provider" means a practitioner,
institutional provider, or other person or organization that
furnishes health care services or supplies and that is licensed or
otherwise authorized to practice in this state. The term includes a
physician.
(3) "Hospital" means a licensed public or private
institution as defined by Chapter 241, Health and Safety Code, or
Subtitle C, Title 7, Health and Safety Code.
(4) "Institutional provider" means a hospital,
nursing home, or other medical or health-related service facility
that provides care for the sick or injured or other care that may be
covered in a reinsured plan or policy.
(5) "Plan claim administrator" means the individual or
entity responsible for paying claims under a reinsured plan or
policy.
(6) "Policy period" means the period during which a
reinsured plan or policy provides coverage.
(7) "Practitioner" means an individual who practices a
healing art. The term includes a practitioner described by Section
1451.001 or 1451.101.
(8) "Qualified health benefit plan claim" means a
health benefit plan claim that has been repriced and adjusted by the
plan claim administrator under Section 1676.003(b).
(9) "Reinsurance attachment point" means the point at
which the system begins to reimburse a reinsured plan or policy
under Section 1676.002.
(10) "Reinsurance extension period" means the
applicable period in which the system provides reinsurance coverage
for a reinsured plan or policy under Section 1676.006.
(11) "Reinsured entity" means:
(A) for a health benefit plan claim under a plan
that is insured, the health benefit plan issuer; or
(B) for a health benefit plan claim under a
self-funded health benefit plan that is self-insured, the insurer
issuing the stop-loss insurance covering the plan.
(12) "Reinsured plan or policy" means a health benefit
plan or individual stop-loss insurance policy that is reinsured
under the system as provided by Section 1675.010.
(13) "Repricing schedule" means the schedule
established by the system under Section 1676.004 for the purpose of
determining whether a health benefit plan claim is a qualified
health benefit plan claim and, if applicable, the amount of
reimbursement to which a reinsured entity may be entitled.
(b) In this chapter, "board," "management company," and
"system" have the meanings assigned by Section 1675.001.
Sec. 1676.002. REINSURANCE ATTACHMENT POINT. (a) The
board of the system, after consulting with the management company,
shall annually establish the aggregated dollar amount of qualified
health benefit claims at which the system begins to reimburse a
reinsured entity.
(b) The system shall submit the reinsurance attachment
point to the commissioner as an amendment to the system plan of
operation for approval under Section 1675.007.
(c) The reinsurance attachment point may not be less than:
(1) $50,000 per enrollee in a policy period, if the
reinsured plan or policy is not described by Subdivision (2); and
(2) $50,000 above the individual stop-loss deductible
of an individual stop-loss insurance policy in a policy period.
Sec. 1676.003. DETERMINATION THAT CLAIM IS REINSURED;
NOTICE TO SYSTEM. (a) A plan claim administrator shall determine,
at the time of receipt of a claim under a reinsured plan or policy,
whether the claim is potentially a reinsured claim.
(b) On receipt of a potentially reinsured claim, the plan
claim administrator shall adjust the amount of the claim to the
lesser of:
(1) the amount charged for the service by the health
care provider;
(2) the amount payable for the claim, without regard
to whether it is a reinsured claim, under the reinsured plan or
policy in accordance with any contract entered into by the health
care provider; or
(3) the amount payable for the claim under the
repricing schedule established under Section 1676.004.
(c) At the end of a policy period during which a health
benefit plan claim occurs, the plan claim administrator shall
calculate the total dollar amount of qualified health benefit plan
claims for an individual.
(d) If a plan claim administrator determines that the total
dollar amount of qualified health benefit plan claims for an
individual exceeds the applicable reinsurance attachment point,
the plan claim administrator, not later than the 30th day after the
last day of the policy period, shall notify the system in writing of
that determination and submit the claim to the system.
Sec. 1676.004. REPRICING SCHEDULE. (a) The system shall
establish and maintain a repricing schedule for reinsured claims in
accordance with the plan of operation and this section.
(b) The repricing schedule established under Subsection (a)
must provide for certain reimbursement rates as follows:
(1) for a practitioner, a rate that is not less than
110 percent of Medicare reimbursement rates for the practitioner;
and
(2) for an institutional provider, a rate that is not
less than 140 percent of Medicare reimbursement rates for the
institutional provider.
Sec. 1676.005. AMOUNT OF REINSURANCE; REINSURANCE
REIMBURSEMENT. The system must provide for the reimbursement of
aggregated qualified health benefit plan claims that exceed the
reinsurance attachment point and that are originally submitted to
the system under Section 1676.003(d), or during any applicable
reinsurance extension period, as follows:
(1) for a reinsured health benefit plan, an amount
that is equal to the lesser of:
(A) 95 percent of the aggregated dollar amount of
health benefit plan claims that exceed the reinsurance attachment
point for the respective period, before those claims have been
repriced and adjusted under Section 1676.003(b); or
(B) the aggregated dollar amount of qualified
health benefit plan claims that were submitted to the system under
Section 1676.003(d) that exceed the reinsurance attachment point
for the respective period; and
(2) for a reinsured stop-loss insurance policy, an
amount that is equal to the lesser of:
(A) 95 percent of the aggregated dollar amount of
health benefit plan claims that exceed the applicable reinsurance
attachment point for the respective period and for which the
reinsured entity is responsible under the individual stop-loss
insurance policy, before those claims have been repriced and
adjusted under Section 1676.003(b); or
(B) the aggregated dollar amount of qualified
health benefit plan claims that were submitted to the system under
Section 1676.003(d) for the respective period and for which the
insurer issuing the individual stop-loss insurance is responsible.
Sec. 1676.006. PERIOD OF REINSURANCE COVERAGE; CLAIMS
BASIS. (a) The reinsurance policy issued by the system shall cover
a reinsured plan or policy for:
(1) subject to Subsection (b), a period that is
concomitant with the policy period of the reinsured plan or policy;
and
(2) a claims basis that is consistent with the claims
basis of the reinsured plan or policy, regardless of whether the
reinsured plan or policy is an insured plan or a self-funded plan.
(b) A reinsurance policy issued by the system may not
provide coverage for an initial period that exceeds 12 months.
Sec. 1676.007. REINSURANCE EXTENSION PERIOD. (a) The
policy period that immediately follows the initial policy period
during which the aggregated dollar amount of qualified reinsurance
claims exceeds the reinsurance attachment point is the first
reinsurance extension period. A reinsurance extension period under
this subsection is automatic and applies regardless of whether a
different health benefit plan issuer is responsible for the
reinsured claims or a different stop-loss insurance carrier is
responsible for the stop-loss insurance policy.
(b) If, during the first reinsurance extension period
described by Subsection (a), the system reimburses a reinsured
entity for qualified health benefit claims that, if submitted
during the initial policy period would have exceeded the
reinsurance attachment point, the system shall extend reinsurance
coverage from the first dollar of claims to the reinsured entity for
a second reinsurance extension period.
(c) A reinsured entity may not receive a third or subsequent
reinsurance extension period, and the period following the first
reinsurance extension period is considered a new initial policy
period.
Sec. 1676.008. DATA CALL FOR REIMBURSEMENT SCHEDULE. (a)
The commissioner shall provide the system the information required
by the system to establish and maintain the repricing schedule
under Section 1676.004.
(b) The commissioner may request information necessary to
comply with this section from any individual or entity that holds a
license or certificate of authority under this code.
(c) An individual or entity that fails to comply with a
request for information under this section violates this code and
is subject to sanctions under Chapters 82, 83, and 84.
(d) Information that is obtained by the commissioner under
this section and that is exempt from disclosure under Chapter 552,
Government Code, including information exempt from disclosure
under Section 552.104 or 552.110, Government Code:
(1) may be disclosed by the commissioner only to the
system for the purposes of the reimbursement schedule; and
(2) may not be disclosed by the commissioner or the
system to any other individual or entity.
SECTION 4. Effective September 1, 2014, Subchapter G,
Chapter 1501, Insurance Code, is repealed.
SECTION 5. As soon as practicable after the effective date
of this Act, the commissioner of insurance by rule shall develop a
transition plan for implementation of Chapters 1675 and 1676,
Insurance Code, as added by this Act, and for the orderly
termination of the Texas Health Reinsurance System established
under Subchapter G, Chapter 1501, Insurance Code. The transition
plan must include a timetable with specific steps and deadlines
needed to fully implement Chapters 1675 and 1676, Insurance Code.
The transition plan must ensure that Chapters 1675 and 1676,
Insurance Code, are fully implemented not later than September 1,
2012.
SECTION 6. (a) The governor shall make the appointments
described by Section 1675.003, Insurance Code, as added by this
Act, as soon as possible after the effective date of this Act, and
in no event later than April 1, 2012.
(b) The lieutenant governor and the speaker of the house of
representatives shall submit the lists of candidates described by
Sections 1675.003(a)(1) and (2), Insurance Code, as added by this
Act, to the governor not later than January 1, 2012.
SECTION 7. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2011.