Texas 2013 - 83rd Regular

Texas House Bill HB2782 Compare Versions

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1	1	83R9344 MEW-D
2	2	By: Smithee H.B. No. 2782
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the authority of the commissioner of insurance to
8	8	disapprove rate changes for certain health benefit plans.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Title 8, Insurance Code, is amended by adding
11	11	Subtitle K to read as follows:
12	12	SUBTITLE K. RATES
13	13	CHAPTER 1671. RATES FOR CERTAIN COVERAGE
14	14	SUBCHAPTER A. GENERAL PROVISIONS
15	15	Sec. 1671.001. APPLICABILITY OF CHAPTER. (a) This chapter
16	16	applies only to rates for the following health benefit plans:
17	17	(1) an individual major medical expense insurance
18	18	policy to which Chapter 1201 applies;
19	19	(2) individual health maintenance organization
20	20	coverage;
21	21	(3) a group accident and health insurance policy
22	22	issued to an association under Section 1251.052;
23	23	(4) a blanket accident and health insurance policy
24	24	issued to an association under Section 1251.358;
25	25	(5) group health maintenance organization coverage
26	26	issued to an association described by Section 1251.052 or 1251.358;
27	27	or
28	28	(6) a small employer health benefit plan provided
29	29	under Chapter 1501.
30	30	(b) This chapter does not apply to rates for coverage
31	31	provided through the Texas Health Insurance Pool.
32	32	(c) This chapter applies only to a health benefit plan rate
33	33	filed with and reviewed by the commissioner under other law. This
34	34	chapter does not create a requirement that any health benefit plan
35	35	issuer file the plan issuer's rates with the department.
36	36	Sec. 1671.002. APPLICABILITY OF OTHER LAWS GOVERNING RATES.
37	37	The requirements of this chapter are in addition to any other
38	38	provision of this code governing health benefit plan rates. Except
39	39	as otherwise provided by this chapter, in the case of a conflict
40	40	between this chapter and another provision of this code, this
41	41	chapter controls.
42	42	SUBCHAPTER B. RATE STANDARDS
43	43	Sec. 1671.051. EXCESSIVE, INADEQUATE, AND UNFAIRLY
44	44	DISCRIMINATORY RATES. (a) A rate is excessive, inadequate, or
45	45	unfairly discriminatory for purposes of this chapter as provided by
46	46	this section.
47	47	(b) A rate is excessive if the rate is likely to produce a
48	48	long-term profit that is unreasonably high in relation to the
49	49	health benefit plan coverage provided.
50	50	(c) A rate is inadequate if:
51	51	(1) the rate is insufficient to sustain projected
52	52	losses and expenses to which the rate applies; and
53	53	(2) continued use of the rate:
54	54	(A) endangers the solvency of a health benefit
55	55	plan issuer using the rate; or
56	56	(B) has the effect of substantially lessening
57	57	competition or creating a monopoly in a market.
58	58	(d) A rate is unfairly discriminatory if the rate:
59	59	(1) is not based on sound actuarial principles;
60	60	(2) does not bear a reasonable relationship to the
61	61	expected loss and expense experience among risks or is based on
62	62	unreasonable administrative expenses; or
63	63	(3) is based wholly or partly on the race, creed,
64	64	color, ethnicity, or national origin of an individual or group
65	65	sponsoring coverage under or covered by the health benefit plan.
66	66	SUBCHAPTER C. DISAPPROVAL OF RATE CHANGES
67	67	Sec. 1671.101. REVIEW OF PREMIUM RATE CHANGES. The
68	68	commissioner by rule shall establish a process under which the
69	69	commissioner:
70	70	(1) reviews health benefit plan rate changes for
71	71	compliance with this chapter; and
72	72	(2) disapproves rates that do not comply with this
73	73	chapter.
74	74	Sec. 1671.102. DISAPPROVAL OF RATE CHANGE AUTHORIZED. (a)
75	75	The commissioner may disapprove a rate change filed with the
76	76	department by a health benefit plan issuer if:
77	77	(1) the commissioner determines that the proposed rate
78	78	is excessive, inadequate, or unfairly discriminatory; or
79	79	(2) the required rate filing is incomplete.
80	80	(b) In making a determination under this section, the
81	81	commissioner shall consider the following factors:
82	82	(1) the reasonableness and soundness of the actuarial
83	83	assumptions, calculations, projections, and other factors used by
84	84	the plan issuer to arrive at the proposed rate change;
85	85	(2) the historical trends for medical claims
86	86	experienced by the plan issuer;
87	87	(3) the reasonableness of the plan issuer's historical
88	88	and projected administrative expenses;
89	89	(4) the plan issuer's compliance with medical loss
90	90	ratio standards applicable under state or federal law;
91	91	(5) whether the rate change applies to an open or
92	92	closed block of business;
93	93	(6) whether the plan issuer has complied with all
94	94	requirements for pooling risk and participating in risk adjustment
95	95	programs in effect under state or federal law;
96	96	(7) the financial condition of the plan issuer for at
97	97	least the previous five years, or for the plan issuer's time in
98	98	existence, if less than five years, including profitability,
99	99	surplus, reserves, investment income, reinsurance, dividends, and
100	100	transfers of funds to affiliates or parent companies;
101	101	(8) the financial performance for at least the
102	102	previous five years of the block of business subject to the proposed
103	103	rate change, or for the block's time in existence, if less than five
104	104	years, including past and projected profits, surplus, reserves,
105	105	investment income, and reinsurance applicable to the block;
106	106	(9) changes to the covered benefits or health benefit
107	107	plan design; and
108	108	(10) whether the proposed rate change is necessary to
109	109	maintain the plan issuer's solvency or maintain rate stability and
110	110	prevent excessive rate increases in the future.
111	111	(c) In making a determination under this section, the
112	112	commissioner may consider the following factors:
113	113	(1) if the commissioner determines appropriate for
114	114	comparison purposes, medical claims trends reported by plan issuers
115	115	in this state or in a region of this country or the country as a
116	116	whole; and
117	117	(2) inflation indexes.
118	118	Sec. 1671.103. DISPUTE RESOLUTION. The commissioner by
119	119	rule shall establish a method for a health benefit plan issuer to
120	120	dispute the disapproval of a rate change under this subchapter,
121	121	which may include an informal method for the plan issuer and the
122	122	commissioner to reach an agreement about an appropriate rate.
123	123	Sec. 1671.104. USE OF DISAPPROVED RATE PENDING DISPUTE
124	124	RESOLUTION; ESCROW OF EXCESS PREMIUM. (a) If the commissioner
125	125	disapproves a rate change under this subchapter and the plan issuer
126	126	objects to the disapproval:
127	127	(1) the plan issuer may use the disapproved rate
128	128	pending the completion of:
129	129	(A) the dispute resolution process established
130	130	under this subchapter; and
131	131	(B) any other appeal of the disapproval
132	132	authorized by law and pursued by the plan issuer; and
133	133	(2) if the disapproved rate is an increase, beginning
134	134	on the date the rate is disapproved and continuing until the
135	135	completion of the dispute resolution process and any other appeal,
136	136	the plan issuer shall deposit into an escrow account the portion of
137	137	the premiums collected by the plan issuer under the increased rate
138	138	that exceeds the premium amount charged before the rate change
139	139	became effective.
140	140	(b) The commissioner shall adopt rules governing the escrow
141	141	of premiums under Subsection (a)(2) and establishing the conditions
142	142	under which any excess premiums will be refunded or credited to the
143	143	persons who paid the premiums if the rate dispute is not resolved in
144	144	the plan issuer's favor.
145	145	Sec. 1671.105. FEDERAL FUNDING. The commissioner shall
146	146	seek all available federal funding to cover the cost to the
147	147	department of reviewing rates and resolving rate disputes under
148	148	this subchapter.
149	149	SECTION 2. Subtitle K, Title 8, Insurance Code, as added by
150	150	this Act, applies only to rates for health benefit plan coverage
151	151	delivered, issued for delivery, or renewed on or after January 1,
152	152	2014. Rates for health benefit plan coverage delivered, issued for
153	153	delivery, or renewed before January 1, 2014, are governed by the law
154	154	in effect immediately before the effective date of this Act, and
155	155	that law is continued in effect for that purpose.
156	156	SECTION 3. This Act takes effect September 1, 2013.