83R9344 MEW-D
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 does not apply to rates for coverage
provided through the Texas Health Insurance Pool.
(c) This chapter applies only to a health benefit plan rate
filed with and reviewed by the commissioner under other law. This
chapter does not create a requirement that any health benefit plan
issuer file the plan issuer's rates with the department.
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
(2) disapproves rates that do not comply with this
chapter.
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 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; and
(10) 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; ESCROW OF EXCESS PREMIUM. (a) If the commissioner
disapproves a rate change under this subchapter and the plan issuer
objects to the disapproval:
(1) the plan issuer may use the disapproved rate
pending the completion of:
(A) the dispute resolution process established
under this subchapter; and
(B) any other appeal of the disapproval
authorized by law and pursued by the plan issuer; and
(2) if the disapproved rate is an increase, beginning
on the date the rate is disapproved and continuing until the
completion of the dispute resolution process and any other appeal,
the plan issuer shall deposit into an escrow account the portion of
the premiums collected by the plan issuer under the increased rate
that exceeds the premium amount charged before the rate change
became effective.
(b) The commissioner shall adopt rules governing the escrow
of premiums under Subsection (a)(2) and establishing the conditions
under which any excess premiums will be refunded or credited to the
persons who paid the premiums if 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.