87R11198 MEW-D
By: Johnson S.B. No. 1296
A BILL TO BE ENTITLED
AN ACT
relating to the authority of the commissioner of insurance to
review and disapprove rates and 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 N to read as follows:
SUBTITLE N. RATES
CHAPTER 1698. RATES FOR CERTAIN COVERAGE
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1698.001. APPLICABILITY OF CHAPTER. 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.
Sec. 1698.002. 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. 1698.051. 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 RATES
Sec. 1698.101. REVIEW OF PREMIUM RATES. (a) In this
section:
(1) "Individual health benefit plan" means:
(A) an individual accident and health insurance
policy to which Chapter 1201 applies; or
(B) individual health maintenance organization
coverage.
(2) "Small employer health benefit plan" has the
meaning assigned by Section 1501.002.
(b) The commissioner by rule shall establish a process under
which the commissioner:
(1) reviews health benefit plan rates and 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.
(c) The rules must:
(1) require an individual or small employer health
benefit plan issuer to:
(A) submit to the commissioner a justification
for a rate increase that results in an increase equal to or greater
than 10 percent; and
(B) post information regarding the rate increase
on the health benefit plan issuer's Internet website;
(2) require the commissioner to make available to the
public information on rate increases and justifications submitted
by health benefit plan issuers under Subdivision (1);
(3) provide a mechanism for receiving public comment
on proposed rate increases; and
(4) provide for the results of rate reviews to be
reported to the Centers for Medicare and Medicaid Services.
Sec. 1698.102. DISAPPROVAL OF RATE CHANGE AUTHORIZED. (a)
In this section, "qualified health plan" has the meaning assigned
by Section 1301(a), Patient Protection and Affordable Care Act (42
U.S.C. Section 18021).
(b) The commissioner may disapprove a rate or 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.
(c) 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 or 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 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) for a rate change, 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) the covered benefits or health benefit plan design
or, for a rate change, any changes to the benefits or design;
(10) the allowable variations for case
characteristics, risk classifications, and participation in
programs promoting wellness;
(11) whether the proposed rate is necessary to
maintain the plan issuer's solvency or maintain rate stability and
prevent excessive rate increases in the future; and
(12) any other factor listed in 45 C.F.R. Section
154.301(a)(4) to the extent applicable.
(d) In making a determination under this section regarding a
proposed rate for a qualified health plan, the commissioner shall
consider, in addition to the factors under Subsection (c), the
following factors:
(1) the purchasing power of consumers who are eligible
for a premium subsidy under the Patient Protection and Affordable
Care Act (Pub. L. No. 111-148);
(2) if the plan is in the silver level, as described by
42 U.S.C. Section 18022(d), whether the rate is appropriate for the
plan in relation to the rates charged for qualified health plans
offering different levels of coverage, taking into account lack of
funding for cost-sharing reductions and the covered benefits for
each level of coverage; and
(3) whether the plan issuer utilized the induced
demand factors developed by the Centers for Medicare and Medicaid
Services for the risk adjustment program established under 42
U.S.C. Section 18063 for the level of coverage offered by the plan,
and, if the plan did not utilize those factors, whether the plan
issuer provided objective evidence showing why those factors are
inappropriate for the rate.
(e) 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. 1698.103. DISPUTE RESOLUTION. The commissioner by
rule shall establish a method for a health benefit plan issuer to
dispute the disapproval of a rate 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. 1698.104. USE OF DISAPPROVED RATE PENDING DISPUTE
RESOLUTION. (a) If the commissioner disapproves a rate 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. 1698.105. 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 N, 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,
2022. Rates for health benefit plan coverage delivered, issued for
delivery, or renewed before January 1, 2022, 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, 2021.