By: Smithee H.B. No. 2782
A BILL TO BE ENTITLED
AN ACT
relating to the authority of the commissioner of insurance to
disapprove rate changes for certain health benefit plans.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Title 8, Insurance Code, is amended by adding
Subtitle K to read as follows:
SUBTITLE K. RATES
CHAPTER 1671. RATES FOR CERTAIN COVERAGE
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1671.001. APPLICABILITY OF CHAPTER. (a) This chapter
applies only to rates for the following health benefit plans:
(1) an individual major medical expense insurance
policy to which Chapter 1201 applies;
(2) individual health maintenance organization
coverage;
(3) a group accident and health insurance policy
issued to an association under Section 1251.052;
(4) a blanket accident and health insurance policy
issued to an association under Section 1251.358;
(5) group health maintenance organization coverage
issued to an association described by Section 1251.052 or 1251.358;
or
(6) a small employer health benefit plan provided
under Chapter 1501.
(b) This chapter applies only to rates for a health benefit
plan described by Subsection (a) that provides creditable coverage
as defined by Section 1205.004(a).
(c) This chapter does not apply to rates for coverage
provided through the Texas Health Insurance Pool.
Sec. 1671.002. APPLICABILITY OF OTHER LAWS GOVERNING RATES.
The requirements of this chapter are in addition to any other
provision of this code governing health benefit plan rates. Except
as otherwise provided by this chapter, in the case of a conflict
between this chapter and another provision of this code, this
chapter controls.
SUBCHAPTER B. RATE STANDARDS
Sec. 1671.051. EXCESSIVE, INADEQUATE, AND UNFAIRLY
DISCRIMINATORY RATES. (a) A rate is excessive, inadequate, or
unfairly discriminatory for purposes of this chapter as provided by
this section.
(b) A rate is excessive if the rate is likely to produce a
long-term profit that is unreasonably high in relation to the
health benefit plan coverage provided.
(c) A rate is inadequate if:
(1) the rate is insufficient to sustain projected
losses and expenses to which the rate applies; and
(2) continued use of the rate:
(A) endangers the solvency of a health benefit
plan issuer using the rate; or
(B) has the effect of substantially lessening
competition or creating a monopoly in a market.
(d) A rate is unfairly discriminatory if the rate:
(1) is not based on sound actuarial principles;
(2) does not bear a reasonable relationship to the
expected loss and expense experience among risks or is based on
unreasonable administrative expenses; or
(3) is based wholly or partly on the race, creed,
color, ethnicity, or national origin of an individual or group
sponsoring coverage under or covered by the health benefit plan.
SUBCHAPTER C. DISAPPROVAL OF RATE CHANGES
Sec. 1671.101. REVIEW OF PREMIUM RATE CHANGES. The
commissioner by rule shall establish a process under which the
commissioner:
(1) reviews health benefit plan rate changes for
compliance with this chapter and other applicable law; and
(2) disapproves rates that do not comply with this
chapter not later than the 60th day after the date the department
receives a complete filing.
Sec. 1671.102. DISAPPROVAL OF RATE CHANGE AUTHORIZED. (a)
The commissioner may disapprove a rate change filed with the
department by a health benefit plan issuer not later than the 60th
day after the date the department receives a complete filing if:
(1) the commissioner determines that the proposed rate
is excessive, inadequate, or unfairly discriminatory; or
(2) the required rate filing is incomplete.
(b) In making a determination under this section, the
commissioner shall consider the following factors:
(1) the reasonableness and soundness of the actuarial
assumptions, calculations, projections, and other factors used by
the plan issuer to arrive at the proposed rate change;
(2) the historical trends for medical claims
experienced by the plan issuer;
(3) the reasonableness of the plan issuer's historical
and projected administrative expenses;
(4) the plan issuer's compliance with medical loss
ratio standards applicable under state or federal law;
(5) whether the rate change applies to an open or
closed block of business;
(6) whether the plan issuer has complied with all
requirements for pooling risk and participating in risk adjustment
programs in effect under state or federal law;
(7) the financial condition of the plan issuer for at
least the previous five years, or for the plan issuer's time in
existence, if less than five years, including profitability,
surplus, reserves, investment income, reinsurance, dividends, and
transfers of funds to affiliates or parent companies;
(8) the financial performance for at least the
previous five years of the block of business subject to the proposed
rate change, or for the block's time in existence, if less than five
years, including past and projected profits, surplus, reserves,
investment income, and reinsurance applicable to the block;
(9) changes to the covered benefits or health benefit
plan design;
(10) the allowable variations for case
characteristics, risk classifications, and participation in
programs promoting wellness; and
(11) whether the proposed rate change is necessary to
maintain the plan issuer's solvency or maintain rate stability and
prevent excessive rate increases in the future.
(c) In making a determination under this section, the
commissioner may consider the following factors:
(1) if the commissioner determines appropriate for
comparison purposes, medical claims trends reported by plan issuers
in this state or in a region of this country or the country as a
whole; and
(2) inflation indexes.
Sec. 1671.103. DISPUTE RESOLUTION. The commissioner by
rule shall establish a method for a health benefit plan issuer to
dispute the disapproval of a rate change under this subchapter,
which may include an informal method for the plan issuer and the
commissioner to reach an agreement about an appropriate rate.
Sec. 1671.104. USE OF DISAPPROVED RATE PENDING DISPUTE
RESOLUTION. (a) If the commissioner disapproves a rate change
under this subchapter and the plan issuer objects to the
disapproval, the plan issuer may use the disapproved rate pending
the completion of:
(1) the dispute resolution process established under
this subchapter; and
(2) any other appeal of the disapproval authorized by
law and pursued by the plan issuer.
(b) The commissioner shall adopt rules establishing the
conditions under which any excess premiums will be refunded or
credited to the persons who paid the premiums if the plan issuer
uses a disapproved rate while an appeal is pending and
the rate
dispute is not resolved in the plan issuer's favor.
Sec. 1671.105. FEDERAL FUNDING. The commissioner shall
seek all available federal funding to cover the cost to the
department of reviewing rates and resolving rate disputes under
this subchapter.
SECTION 2. Subtitle K, Title 8, Insurance Code, as added by
this Act, applies only to rates for health benefit plan coverage
delivered, issued for delivery, or renewed on or after January 1,
2014. Rates for health benefit plan coverage delivered, issued for
delivery, or renewed before January 1, 2014, are governed by the law
in effect immediately before the effective date of this Act, and
that law is continued in effect for that purpose.
SECTION 3. This Act takes effect September 1, 2013.