83R6529 TJS-D
By: Turner of Harris H.B. No. 2853
A BILL TO BE ENTITLED
AN ACT
relating to regulation of health benefit plan rates.
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. RATEMAKING IN GENERAL
CHAPTER 1670. RATES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1670.001. APPLICABILITY OF CHAPTER. (a) This chapter
applies only to a health benefit plan that provides benefits for
medical or surgical expenses incurred as a result of a health
condition, accident, or sickness, including an individual, group,
blanket, or franchise insurance policy or insurance agreement, a
group hospital service contract, or an individual or group evidence
of coverage or similar coverage document that is offered by:
(1) an insurance company;
(2) a group hospital service corporation operating
under Chapter 842;
(3) a fraternal benefit society operating under
Chapter 885;
(4) a stipulated premium company operating under
Chapter 884;
(5) an exchange operating under Chapter 942;
(6) a health maintenance organization operating under
Chapter 843;
(7) a multiple employer welfare arrangement that holds
a certificate of authority under Chapter 846; or
(8) an approved nonprofit health corporation that
holds a certificate of authority under Chapter 844.
(b) Notwithstanding any other law, this chapter applies to a
health benefit plan issuer with respect to a standard health
benefit plan provided under Chapter 1507.
Sec. 1670.002. EXCEPTION. (a) This chapter does not apply
with respect to:
(1) a plan that provides coverage:
(A) for wages or payments in lieu of wages for a
period during which an employee is absent from work because of
sickness or injury;
(B) as a supplement to a liability insurance
policy;
(C) for credit insurance;
(D) only for dental or vision care;
(E) only for hospital expenses; or
(F) only for indemnity for hospital confinement;
(2) a Medicare supplemental policy as defined by
Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss);
(3) a workers' compensation insurance policy; or
(4) medical payment insurance coverage provided under
a motor vehicle insurance policy.
(b) This chapter does not apply to:
(1) coverage provided through the Texas Health
Insurance Pool subject to Section 1506.105; or
(2) coverage provided under Subtitle H.
Sec. 1670.003. 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.
Sec. 1670.004. NOTICE OF RATE INCREASE. (a) In addition
to any notice required to be provided under Section 1254.001, a
health benefit plan issuer shall notify each person responsible for
paying any part of an individual's premium or charge for coverage
under the health benefit plan, other than a person who receives
notice under Section 1254.001, of a rate increase scheduled to take
effect on the renewal of the individual's coverage that will result
in a total premium or charge amount for covering that individual
that is at least 10 percent greater than the lesser of:
(1) the total premium or charge amount paid for the
individual's coverage under the health benefit plan during the
12-month period preceding the coverage's renewal date; or
(2) the total premium or charge amount paid for the
individual's coverage under the health benefit plan during the
policy or contract period preceding the coverage's renewal date.
(b) A health benefit plan issuer shall send the notice
required by Subsection (a) before the renewal date and not later
than the 30th day before the date the rate increase is scheduled to
take effect.
(c) The commissioner by rule may exempt a health benefit
plan issuer from the notice requirements of this section for a
short-term policy, contract, or evidence of coverage, as defined by
the commissioner, that is issued by the plan issuer.
Sec. 1670.005. CONSIDERATION OF CERTAIN OTHER LAW. In
reviewing rates under this chapter, the commissioner shall consider
any state or federal law that may affect rates for health benefit
plan coverage included in a policy, contract, or evidence of
coverage subject to this chapter.
Sec. 1670.006. ADMINISTRATIVE PROCEDURE ACT APPLICABLE.
Chapter 2001, Government Code, applies to all rate hearings under
this chapter.
Sec. 1670.007. QUARTERLY REPORT OF PLAN ISSUER; LEGISLATIVE
REPORT. (a) The commissioner shall require each health benefit
plan issuer subject to this chapter to file quarterly with the
commissioner information relating to changes in losses, premiums or
other charges for coverage, and market share since January 1,
2014. The commissioner may require a health benefit plan issuer
subject to this chapter to report to the commissioner, in the form
and in the time required by the commissioner, any other information
the commissioner determines is necessary to comply with this
section.
(b) Quarterly, the commissioner shall report to the
governor, the lieutenant governor, the speaker of the house of
representatives, the legislature, and the public regarding:
(1) the information provided to the commissioner,
other than information made confidential by law, in the health
benefit plan issuers' reports under Subsection (a); and
(2) market conduct, including rates and consumer
complaints.
(c) The report required by Subsection (b) must:
(1) cover a calendar quarter;
(2) for each health benefit plan issuer that writes a
line of health benefit plan coverage subject to this chapter,
state:
(A) the plan issuer's market share;
(B) the plan issuer's profits and losses;
(C) the plan issuer's average medical loss ratio;
and
(D) whether the plan issuer submitted a rate
filing during the quarter covered in the report; and
(3) for each rate filing described by Subdivision
(2)(D), indicate any significant impact on holders of policies,
contracts, or evidences of coverage, the overall rate change from
the rate previously used by the plan issuer stated as a percentage,
and any rate changes for the previous 12, 24, and 36 months.
(d) Except as provided by Subsection (e), the quarterly
report required by Subsection (b) must be made available to the
governor, lieutenant governor, speaker of the house of
representatives, legislature, and public not later than the 90th
day after the last day of the calendar quarter covered by the
report.
(e) If the commissioner determines that it is not feasible
to provide the report required by this section within the period
specified by Subsection (d) for all types of health benefit plan
coverage subject to this chapter, the department:
(1) shall make the quarterly report, as applicable to
individual health benefit plan coverage, available within the
period specified by Subsection (d); and
(2) may delay publication of the quarterly report as
it relates to other types of health benefit plan coverage subject to
this chapter until a date specified by the commissioner.
SUBCHAPTER B. RATE STANDARDS
Sec. 1670.051. 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
(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.
Sec. 1670.052. RATE STANDARDS. (a) In setting rates, a
health benefit plan issuer shall consider:
(1) past and prospective loss experience:
(A) inside this state; and
(B) outside this state if the data from this
state are not credible;
(2) the peculiar hazards and experiences of individual
risks, past and prospective, inside and outside this state, except
to the extent specifically prohibited by law;
(3) the plan issuer's actuarially credible historical
premium or charge, exposure, loss, and expense experience;
(4) catastrophe hazards in this state;
(5) operating expenses, excluding disallowed
expenses;
(6) investment income;
(7) a reasonable margin for profit; and
(8) any other factors inside and outside this state:
(A) determined to be relevant by the health
benefit plan issuer; and
(B) not disallowed by the commissioner.
(b) A rate may not be excessive, inadequate, or unfairly
discriminatory for the risks to which the rate applies.
(c) Except to the extent limited by other law, the health
benefit plan issuer may:
(1) group risks by classification to establish rates
and minimum premiums or charges for coverage; and
(2) modify classification rates to produce rates for
individual risks in accordance with rating plans that establish
standards for measuring variations in those risks on the basis of
any factor listed in Subsection (a).
(d) In setting rates that apply only to holders of policies,
contracts, or evidences of coverage in this state, a health benefit
plan issuer shall use available premium or charge, loss, claim, and
exposure information from this state to the full extent of the
actuarial credibility of that information. The plan issuer may use
experience from outside this state as necessary to supplement
information from this state that is not actuarially credible.
(e) In determining rating territories and territorial
rates, an insurer shall use methods based on sound actuarial
principles.
(f) Rates for a small employer health benefit plan subject
to Chapter 1501 must comply with this chapter and Chapter 1501. In
the case of a conflict between this chapter and Chapter 1501,
Chapter 1501 controls.
SUBCHAPTER C. RATE FILINGS
Sec. 1670.101. RATE FILINGS AND SUPPORTING INFORMATION.
(a) Except as provided by Subchapter D, for risks written in this
state, each health benefit plan issuer shall file with the
commissioner all rates, applicable rating manuals, supplementary
rating information, and additional information as required by the
commissioner or another provision of this code.
(b) The commissioner by rule shall determine the
information required to be included in the filing, including:
(1) categories of supporting information and
supplementary rating information;
(2) statistics or other information to support the
rates to be used by the health benefit plan issuer, including
information necessary to evidence that the computation of the rate
does not include disallowed expenses; and
(3) information concerning policy fees, service fees,
and other fees that are charged or collected by the plan issuer
under Section 550.001.
Sec. 1670.102. FILING REQUIREMENTS FOR PLAN ISSUERS WITH
LESS THAN FIVE PERCENT OF MARKET. In determining filing
requirements under Section 1670.101 for a health benefit plan
issuer with less than five percent of the market, the commissioner
shall consider specific attributes of the plan issuer and the plan
issuer's market, as applicable. The commissioner shall determine
filing requirements for those plan issuers accordingly to
accommodate premium or charge volume and loss experience, targeted
markets, limitations on coverage, and any potential barriers to
market entry or growth.
Sec. 1670.103. DISAPPROVAL OF RATE IN RATE FILING; HEARING.
(a) The commissioner shall disapprove a rate if the commissioner
determines that the rate filing made under this chapter does not
meet the standards established under Subchapter B or another
provision of this code governing the setting of rates by the health
benefit plan issuer.
(b) If the commissioner disapproves a filing, the
commissioner shall issue an order specifying in what respects the
filing fails to meet the requirements of this chapter or another
provision of this code governing the setting of rates by the health
benefit plan issuer.
(c) The filer is entitled to a hearing on written request
made to the commissioner not later than the 30th day after the date
the order disapproving the rate filing takes effect.
Sec. 1670.104. DISAPPROVAL OF RATE IN EFFECT; HEARING.
(a) The commissioner may disapprove a rate that is in effect only
after a hearing. The commissioner shall provide written notice of
the hearing to the filer not later than the 20th day before the date
of the hearing.
(b) The commissioner must issue an order disapproving a rate
under Subsection (a) not later than the 15th day after the close of
the hearing. The order must:
(1) specify in what respects the rate fails to meet the
requirements of this chapter or another provision of this code
governing the setting of rates by the health benefit plan issuer;
and
(2) state the date on which further use of the rate is
prohibited, which may not be earlier than the 45th day after the
close of the hearing under this section.
Sec. 1670.105. GRIEVANCE. (a) An individual or group who
sponsors coverage under or is covered by a health benefit plan and
who is aggrieved with respect to any filing under this chapter that
is in effect, or the public insurance counsel, may apply to the
commissioner in writing for a hearing on the filing. The
application must specify the grounds for the applicant's grievance.
(b) The commissioner shall hold a hearing on an application
filed under Subsection (a) not later than the 30th day after the
date the commissioner receives the application if the commissioner
determines that:
(1) the application is made in good faith;
(2) the applicant would be aggrieved as alleged if the
grounds specified in the application were established; and
(3) the grounds specified in the application otherwise
justify holding the hearing.
(c) The commissioner shall provide written notice of a
hearing under Subsection (b) to the applicant and each health
benefit plan issuer that made the filing not later than the 10th day
before the date of the hearing.
(d) If, after the hearing, the commissioner determines that
the filing does not meet the requirements of this chapter or another
provision of this code governing the setting of rates by the health
benefit plan issuer, the commissioner shall issue an order:
(1) specifying in what respects the filing fails to
meet those requirements; and
(2) stating the date on which the filing is no longer
in effect, which must be within a reasonable period after the order
date.
(e) The commissioner shall send copies of the order issued
under Subsection (d) to the applicant and each affected.
Sec. 1670.106. ROLE OF PUBLIC INSURANCE COUNSEL. (a) On
request to the commissioner, the public insurance counsel may
review all rate filings and additional information provided by a
health benefit plan issuer under this chapter. Confidential
information reviewed under this subsection remains confidential.
(b) The public insurance counsel, not later than the 30th
day after the date of a rate filing under this chapter, may file
with the commissioner a written objection to:
(1) a health benefit plan issuer's rate filing; or
(2) the criteria on which the plan issuer relied to
determine the rate.
(c) A written objection filed under Subsection (b) must
contain the reasons for the objection.
Sec. 1670.107. PUBLIC INSPECTION OF INFORMATION. Each
filing made, and any supporting information filed, under this
chapter is open to public inspection as of the date of the filing.
SUBCHAPTER D. PRIOR APPROVAL OF RATES UNDER CERTAIN CIRCUMSTANCES
Sec. 1670.151. REQUIREMENT TO FILE RATES FOR PRIOR APPROVAL
UNDER CERTAIN CIRCUMSTANCES. (a) The commissioner by order may
require a health benefit plan issuer to file with the department for
the commissioner's approval all rates, supplementary rating
information, and any supporting information in accordance with this
subchapter if the commissioner determines that:
(1) the plan issuer's rates require supervision
because of the plan issuer's financial condition or rating
practices; or
(2) a statewide health benefit coverage emergency
exists.
(b) If a health benefit plan issuer files a petition under
Subchapter D, Chapter 36, for judicial review of an order
disapproving a rate under this chapter, the plan issuer must use the
rates in effect for the plan issuer at the time the petition is
filed and may not file and use any higher rate for the same type of
health benefit plan coverage subject to this chapter before the
matter subject to judicial review is finally resolved unless the
health benefit plan issuer, in accordance with this subchapter,
files the new rate with the department, along with any applicable
supplementary rating information and supporting information, and
obtains the commissioner's approval of the rate.
(c) From the date of the filing of the new rate with the
department until the effective date of the new rate, the health
benefit plan issuer's previously filed rate that is in effect on the
date of the filing remains in effect.
(d) The commissioner may require a health benefit plan
issuer to file the plan issuer's rates under this section until the
commissioner determines that the conditions described by
Subsection (a) no longer exist.
(e) For purposes of this section, a rate is filed with the
department on the date the department receives the rate filing.
(f) If the commissioner requires a health benefit plan
issuer to file the plan issuer's rates under this section, the
commissioner shall issue an order specifying the commissioner's
reasons for requiring the rate filing. An affected plan issuer is
entitled to a hearing on written request made to the commissioner
not later than the 30th day after the date the order is issued.
Sec. 1670.152. RATE APPROVAL REQUIRED; EXCEPTION. (a) A
health benefit plan issuer subject to this subchapter may not use a
rate until the rate has been filed with the department and approved
by the commissioner in accordance with this subchapter.
(b) Notwithstanding Subsection (a), after a rate filing is
approved under this subchapter, a health benefit plan issuer,
without prior approval of the commissioner, may use any rate
subsequently filed by the plan issuer if the subsequently filed
rate does not exceed the lesser of:
(1) 107.5 percent of the rate approved by the
commissioner; or
(2) 110 percent of any rate used by the plan issuer in
the previous 12-month period.
(c) Filed rates under Subsection (b) take effect on the date
specified by the insurer in the rate filing.
Sec. 1670.153. COMMISSIONER ACTION. (a) Not later than
the 30th day after the date a rate is filed with the department
under this subchapter, the commissioner shall:
(1) approve the rate if the commissioner determines
that the rate complies with the requirements of this chapter and
other provisions of this code governing the setting of rates by the
health benefit plan issuer; or
(2) disapprove the rate if the commissioner determines
that the rate does not comply with the requirements of this chapter
and other provisions of this code governing the setting of rates by
the plan issuer.
(b) Except as provided by Subsection (c), if a rate has not
been approved or disapproved by the commissioner before the
expiration of the 30-day period described by Subsection (a), the
rate is considered approved and the health benefit plan issuer may
use the rate unless the rate proposed in the filing represents an
increase of 12.5 percent or more from the plan issuer's previously
filed rate.
(c) For good cause, the commissioner may, on the expiration
of the 30-day period described by Subsection (a), extend the period
for approval or disapproval of a rate for one additional 30-day
period. The commissioner and the health benefit plan issuer may
not by agreement extend the 30-day period described by Subsection
(a).
Sec. 1670.154. ADDITIONAL INFORMATION. (a) If the
department determines that the information filed by a health
benefit plan issuer under this chapter is incomplete or otherwise
deficient, the department may request additional information from
the plan issuer. If the department requests additional
information from the plan issuer during the 30-day period provided
by Section 1670.153(a) or under a second 30-day period provided
under Section 1670.153(c), the time between the date the department
submits the request to the plan issuer and the date the department
receives the information requested is not included in the
computation of the first 30-day period or the second 30-day period,
as applicable.
(b) For purposes of this section, the date of the
department's submission of a request for additional information is:
(1) the date of the department's electronic mailing or
telephone call relating to the request for additional information;
or
(2) the postmarked date on the department's letter
relating to the request for additional information.
Sec. 1670.155. NOTICE OF COMMISSIONER APPROVAL; USE OF
RATE. If the commissioner approves a rate filing under Section
1670.153, the commissioner shall provide the health benefit plan
issuer with a written or electronic notice of the approval. The
plan issuer may use the rate on receipt of the approval notice.
Sec. 1670.156. RATE FILING DISAPPROVAL BY COMMISSIONER;
HEARING. (a) If the commissioner disapproves a rate filing under
Section 1670.153(a)(2), the commissioner shall issue an order
disapproving the filing in accordance with Section 1670.103(b).
(b) A health benefit plan issuer whose rate filing is
disapproved is entitled to a hearing in accordance with Section
1670.103(c).
SECTION 2. Sections 1507.008 and 1507.058, Insurance Code,
are repealed.
SECTION 3. 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 4. This Act takes effect September 1, 2013.