Source: http://www.tdi.texas.gov/rules/2003/1229b-059.html
Timestamp: 2017-12-18 07:02:38
Document Index: 355280936

Matched Legal Cases: ['§ 26', '§26', '§26', '§26', '§26', '§26', '§26', '§26', '§26', '§26', '§26', '§11', '§11', '§26', '§3', '§26', 'Art. 3', 'Art. 3', '§26', '§26', '§26', '§36', '§ 26', '§26', '§26', '§26', '§26', '§26', '§3', '§11', '§3', '§26', '§3', '§26', '§26']

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28 TAC §§ 26.401-26.411
The Texas Department of Insurance proposes new Subchapter D, §§26.401-26.411 concerning the establishment of, and provision of health insurance coverage to, health group cooperatives pursuant to Senate Bill (SB) 10, 78 th Regular Legislative Session. That legislation added special provisions to Chapter 26, Texas Insurance Code, allowing the formation of such cooperatives and establishing the standards by which group health insurance coverage is provided to health group cooperatives comprised of small employers or, at the option of the cooperative, both small and large employers. SB 10 is designed to address small employers´ need for access to healthcare by allowing them to join with other employers on a cooperative basis to obtain health coverage for the cooperative as a single entity. To further achieve this purpose, it also allows for greater flexibility in the plans that may be written through cooperatives by making those plans not subject to state mandated benefits relating to a particular illness, disease, or treatment, or to a state law that regulates the differences in rates applicable to services provided within or outside a health benefit plan network. These new sections are necessary to facilitate these purposes by establishing requirements governing the formation and operation of health group cooperatives, and the obligations of insurance companies and health maintenance organizations (HMOs)­hereinafter collectively "carriers"­that issue health insurance coverage for these entities.
Proposed §26.401 prescribes the requirements for establishing a health group cooperative, including organization as a nonprofit corporation under applicable law and filing certain information with the department. Proposed §26.402 contains cooperative membership requirements, including a minimum membership of 10 participating employers, and a contractual commitment by each employer to purchase coverage for two years, except where the employer can demonstrate financial hardship. The proposal states that the contract between the employer and the cooperative may define financial hardship, but in the absence of a contractual definition, financial hardship occurs when the employer demonstrates that its premium costs, as a percentage of the employer´s gross receipts, have increased by a factor of at least .50.
Proposed §26.403 allows a cooperative, and its sponsoring entity, to engage in certain marketing activities related to membership and to provide information concerning the general availability of health coverage through the cooperative; however, all coverage issued through the cooperative must be issued through a licensed insurance agent. In arranging for coverage, a cooperative or its board of directors, employees or agents are not liable for failure to arrange for coverage of any particular illness, disease, or health condition.
Proposed §26.404 provides that a health group cooperative is considered a single employer for the purposes of benefit elections and other administrative functions, and a cooperative that is composed of only small employers is considered a small employer for all purposes of Insurance Code Chapter 26 and associated rules. A cooperative that is composed of both small and large employers may elect to extend to all of the large employer members the protections of Chapter 26 and its rules, although this election does not entitle the large employer members to guaranteed issuance of coverage.
Proposed §26.405 states that a carrier providing coverage through a health group cooperative is not subject to a premium or retaliatory tax for two years for previously uninsured employees or dependents, and defines "previously uninsured" to include individuals that lacked creditable coverage for 63 days preceding the effective date of the coverage purchased through the cooperative. A carrier must maintain documentation demonstrating an insured´s qualification for the exemption. Proposed §26.406 requires a carrier offering coverage through a cooperative to use a standard presentation form for employer members that includes certain listed information about the cooperative and, if the health plan does not contain all state-mandated benefits, a written statement that lists the benefits not included, describes the nature and benefits of the plan, and provides notice that purchase of the plan may limit future coverage options.
Proposed §26.407 says that, subject to the provisions of §§26.404 and 26.410, a carrier must provide coverage to a cooperative in the carrier´s geographic service area that requests coverage. However, a carrier may decline to offer coverage to a cooperative if the carrier is actively engaged in assisting an entity with the formation of a cooperative, as evidenced by a signed letter of agreement. A cooperative must provide for coverage to all employees that elect to be covered under any benefit plan offered through the cooperative, including all employees of a large employer that is a member of the cooperative. A carrier may not impose any restrictions relating to this requirement.
Proposed §26.408 provides that a health benefit plan issued by an insurance carrier or an HMO through a cooperative is not subject to the state-mandated benefits as listed in the proposed section. A plan issued by an HMO must include all basic health care services as provided in §§11.508 or 11.509. Proposed amendments to §§11.508 and 11.509, which establish basic health care services pursuant to the requirements of SB 541, are published elsewhere in this issue of the Texas Register. Proposed §26.408 also states that a health plan offered by an insurer is not subject to §3.3704(a)(6) which requires that the basic level of coverage in a preferred provider plan may not be more than 30% less than the higher level of coverage. Proposed §26.409 provides for expedited approval of plans offered through health group cooperatives, allowing an insurance carrier to file and use a plan pursuant to Art. 3.42(c) and associated rules, or to submit a filing for approval under Art. 3.42(d); the department shall approve or disapprove the latter filing within 40 days of receipt. An HMO evidence of coverage must be filed pursuant to the requirements of Subchapter F, Chapter 11, of this title and shall be approved or disapproved within 20 days of receipt.
Proposed §26.410 states that a carrier may provide coverage to only one cooperative in any county, unless the carrier is providing coverage in an expanded service area. A health carrier may, by notice and certification to the department, provide health group cooperative coverage to an expanded service area that includes the entire state, and may apply for approval of an expanded service area that includes less than the entire state. The department has 60 days to approve or disapprove such filing.
Proposed §26.411 requires a health carrier that provides coverage to a cooperative to submit to the department, by April 1 of each year, certain stated information relating to coverage provided by the carrier for the previous calendar year. Such information includes number of plans issued or renewed to cooperatives during the year; number of Texas lives covered under those plans; number of small employer plans cancelled or voluntarily not renewed and the number of Texas lives covered under those plans and gross premiums received for coverage under those plans; the gross premiums received for newly issued and renewed health group cooperative health benefit plans covering Texas lives; number of cooperative plans that provided insurance to previously uninsured individuals and the number of previously uninsured persons that are covered under those plans; and the number of health benefit plans and lives covered under those plans, broken down by the first three digits of the five-digit ZIP Code of the employer´s principal place of business.
The Department will consider the adoption of the proposed new §§26.401 ­ 26.411 in a public hearing under Docket No. 2588 scheduled for February 6, 2004, at 1:30 p.m. in Room 100 of the William P. Hobby Jr. State Office Building, 333 Guadalupe Street in Austin, Texas.
Kimberly Stokes, Senior Associate Commissioner of Life, Health, and Licensing, has determined that for each year of the first five years the proposed sections will be in effect there will be no fiscal impact to local governments as a result of the enforcement or administration of the rule. There will be a fiscal impact to state government as the result of the two-year exemption from state retaliatory and premium tax for the premiums attributable to previously uninsured individuals who are covered by a health group cooperative plan; however, the decrease in revenue is dependent upon the number of insureds or enrollees who were previously uninsured, and therefore cannot be estimated. There will be no measurable effect on local employment or the local economy as a result of the proposal.
Ms. Stokes has determined that for each year of the first five years the sections are in effect, the public benefits anticipated as a result of the proposed sections will be facilitating the creation of health group cooperatives and expediting the approval of health plans designed for such cooperatives, so as to make group insurance more advantageous for small employers, as well as for some large employers, than it might otherwise be if the employers were not purchasing the insurance collectively. This will optimally induce employers to continue to provide health insurance for their employees, and may also result in coverage for previously uninsured employees. Except as provided below, any costs to persons required to comply with these sections for each year of the first five years the proposed sections will be in effect is the result of the enactment of SB 10 and not as a result of the adoption, enforcement, or administration of these sections. SB 10 requires the commissioner by rule to prescribe the standard presentation form that must be used by carriers offering coverage through a health group cooperative, and the proposed rule sets forth eight basic elements of information that must be included on the form. Because the required information is easily accessible to, or developed by, the carrier, the standard language can be developed by using a carrier´s existing resources. Adding other information is discretionary on the part of the carrier. The department estimates the cost of a form to be between $.01-.04 per page, exclusive of postage or facsimile or electronic transmission. These costs would not vary between carriers that are large businesses and those that are small or micro-businesses. It would be neither legal nor feasible to exempt small or micro-businesses from this part of the rule, as to do so would deprive those carriers´ insureds of important consumer information concerning health insurance provided through health group cooperatives. The proposed rule also establishes one standa rd for determining financial hardship, which would allow an employer to terminate coverage within the initial two-year period. While a particular standard for termination could conceivably have a financial impact on either a cooperative or a carrier, the proposal also provides that those parties may agree to their own standard by contract. Whether and to what extent the rule´s proposed definition would have a cost impact would depend upon a number of variables, including size of the cooperative and premium costs and gross revenues of individual employers. Because the rule is designed primarily to address the needs of small employers (those with 2-50 employees)­a great number of which may meet the definition of small or micro-businesses under Government Code Chapter 2006­it would be neither legal or feasible to waive or modify the rule´s requirements for the very groups the statute and the rule are designed to assist. Finally, the proposed reporting requirements may result in additional administrative expenses to carriers that write business through health group cooperatives. Costs will vary based upon the particular carrier's current computer system, existing method for capturing data, and types of plans offered. Despite these variances, all carriers will have to incur some initial costs to make certain changes to computer systems consistent with the reporting requirements. According to 2002 data from the U.S. Bureau of Labor Statistics Occupational Employment Statistics Survey, as reported by the Texas Workforce Commission, the mean hourly rate for a computer programmer in the insurance industry is $31.27. The amount of time necessary to implement system changes will vary based on such things as the size of the plans written by the carrier and the carrier's current data collection processes. However, as these reporting requirements are similar to those already required of employer carriers by Insurance Code Articles 26.71 and 26.91, and related rules at Texas Administrative Code &sect ;26.20, the actual cost of compliance may be lower. The same cost considerations would apply regardless of the size of the carriers; however, because of the importance of this legislation and the need for the department to collect data representing the experience of all carriers writing health plans through health group cooperatives, it is not feasible for the department to waive or establish separate reporting requirements for carriers that are small or micro businesses.
To be considered, written comments on the proposal must be submitted no later than 5:00 p.m. on February 9, 2004 to Gene C. Jarmon, General Counsel and Chief Clerk, Mail Code 113-2A, Texas Department of Insurance, P. O. Box 149104, Austin, Texas 78714-9104. An additional copy of the comment must be simultaneously submitted to Kimberly Stokes, Senior Associate Commissioner, Life, Health and Licensing Program, Mail Code 107-2A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104.
The new sections are proposed under the Insurance Code Chapter 26, Articles 26.14A and 26.16, and §36.001. Article 26.14A contains special provisions relating to health group cooperatives, and allows the commissioner to adopt rules. Chapter 26, among other things, contains provisions regarding health plans for small employers and authorizes the commissioner of insurance to adopt rules as necessary to implement this chapter. Article 26.16 also contains provisions concerning health group cooperatives and requires the department to develop an expedited approval process for health coverage arranged by a cooperative. Section 36.001 provides that the Commissioner of Insurance may adopt any rules necessary and appropriate to implement the powers and duties of the Texas Department of Insurance under the Insurance Code and other laws of this state.
§§ 26.401 -26.411 Insurance Code Chapter 26, Articles 26.14A and 26.16
(a) Subject to the requirements of this subchapter, a person may form a health group cooperative for the purchase of employer health benefit plans.
(d) On receipt of a certificate of incorporation or certificate of authority from the secretary of state, the health group cooperative shall file notification of the receipt of the certificate and a copy of the health group cooperative´s organizational documents with the department by filing the required notification and documents with the Life/Health Division, Mail Code 106-1A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104. The organizational documents shall demonstrate the health group cooperative´s compliance with Insurance Code Article 26.15.
(e) The board of directors shall file annually with the department a statement of all amounts collected and expenses incurred for each of the preceding years. The annual filing shall be made on Form Number 1212 CERT COOP provided at Figure 49 of §26.27(b)(49) of this title (relating to Forms) and shall be filed with the Life/Health Division, Mail Code 106-1A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104.
(b) To be eligible to arrange for coverage pursuant to Insurance Code Article 26.15(a)(1) a health group cooperative must, during the initial open enrollment period, have at least 10 participating employers. Thereafter, if the health group cooperative does not, at any time, have 10 participating employers, the health group cooperative must add additional members by the next open enrollment period to maintain at least 10 participating employers.
(c) Subject to the requirements of Insurance Code Article 26.22, a health group cooperative:
(f) A contract between an employer and a health group cooperative must allow an employer to terminate its participation in a health group cooperative before the end of the two year minimum contractual period required by subsection (e) of this section if it can demonstrate to the health group cooperative that continuing to purchase coverage through the cooperative would be a financial hardship in accordance with subsection (g) of this section.
(g) The contract between an employer and a health group cooperative may define financial hardship for the purposes of subsection (f) of this section. If the contract does not define the term, an employer may demonstrate financial hardship if it can show that at the end of the immediately preceding fiscal quarter, or upon receipt of notice of a rate increase, the premium cost to the employer, as a percentage of the employer´s gross receipts, increased by a factor of .50.
(a) A health group cooperative may engage in marketing activities related to membership in the cooperative and is not required to maintain an agent´s license for soliciting membership in the cooperative. The marketing activities must be restricted to membership in the cooperative and may include the general availability of health coverage through the cooperative. All health coverage issued through the cooperative must be issued through a licensed agent that is employed by or contracted with the cooperative.
(b) A health group cooperative that is composed of only small employers is considered a small employer for all purposes of Chapter 26 of the Insurance Code and Chapter 26 of this title.
(c) A health group cooperative that is composed of small and large employers is considered a small employer in relation to the small employer members for all purposes of the Insurance Code and Chapter 26 of this title. A health group cooperative may elect to extend to all of the large employer members of the health group cooperative the protections of Chapter 26 of the Insurance Code and Chapter 26 of this title. However, this election does not entitle the large employer members to guaranteed issuance of coverage as set forth in Article 26.21(a) of the Insurance Code or §26.8 of this title (relating to Guaranteed Issue; Contribution and Participation Requirements).
(a) In accordance with Article 26.14A of the Insurance Code, a carrier providing coverage through a health group cooperative is exempt from premium tax or retaliatory tax for two years for premiums received for a previously uninsured employee or dependent. The two year period for the exemption begins upon the first date of coverage for the previously uninsured employee or dependent.
(b) For the purposes of this section and Article 26.14A of the Insurance Code, a previously uninsured employee or dependent is an employee or the dependent of an employee of an employer member of a health group cooperative and did not have creditable coverage for the 63 days preceding the effective date of coverage purchased through the health group cooperative.
(c) A carrier shall maintain for four years documentation for each insured that demonstrates that coverage of the insured qualifies the carrier for a tax exemption pursuant to subsection (b) of this section. The documentation shall comply with any applicable rules or procedures adopted by the Comptroller of Public Accounts related to the tax exemption.
(a) A carrier offering coverage through a health group cooperative shall use a standard presentation form for employer members of the health group cooperative that includes the information listed in subsection (b) of this section. A standard presentation form may include additional information.
(3) an explanation of the employer´s eligibility to join the health group cooperative and purchase coverage without regard for membership in any other organization or the health status or claims experience of the employer and employees;
(5) a statement that coverage is available to a small employer on a guaranteed issue basis from any carrier offering coverage in the small employer market with no requirement of joining a health group cooperative;
(7) a description of the plans offered through the health group cooperative by the carrier;
(C) general description of the benefits offered by the health benefit plan;
§26.407. Guaranteed Issuance of Coverage to Health Group Cooperatives.
(a) Subject to the provisions of §§26.404 and 26.410 of this title (relating to Health Group Cooperative´s Status as Employer and Service Areas for Carriers Offering Coverage Through a Health Group Cooperative), a health carrier shall provide coverage to a health group cooperative that requests coverage in the health carrier´s geographic service area.
(b) A carrier may decline to offer coverage to a health group cooperative if the carrier is actively engaged in assisting an entity with the formation of a health group cooperative. A carrier is actively engaged in assisting an entity with the formation of a health group cooperative if the carrier has associated with the entity for the purpose of forming a health group cooperative and the parties have signed a letter of agreement that evidences that the entity intends to form a health group cooperative with the assistance of the carrier and intends to purchase coverage from the carrier. The exception to guaranteed issuance of coverage under this subsection is available for no more than 60 days from the date of the letter.
(c) A carrier that is providing coverage to an employer through a health group cooperative must provide coverage to any employee that elects to be covered under a health benefit plan that is offered through the health group cooperative.
§26.408. Health Benefit Plans Offered Through Health Group Cooperatives.
(a) A health benefit plan issued by an HMO or an insurer through a health group cooperative is not subject to the following state mandates:
(9) the offer of home health care coverage as required by Insurance Code Article 3.70-3B;
(11) standards for proof of Alzheimer´s disease as required by Insurance Code Article 3.78;
(12) coverage for formulas necessary for the treatment of phenylketonuria as required by Insurance Code Article 3.79;
(13) continuation of coverage of certain drugs under a drug formulary as required by Insurance Code Article 21.52J;
(22) coverage of off-label drugs as required by Insurance Code Article 21.53M;
(23) coverage of acquired brain injury treatment/services as required by Insurance Code Article 21.53Q;
(24) coverage of certain tests for detection of colorectal cancer as required by Insurance Code Article 21.53S;
(25) coverage for reconstructive surgery for craniofacial abnormalities in a child as required by Insurance Code Article 21.53W;
(28) coverage of rehabilitation therapies as required by Insurance Code Article 20A.09(a)(4);
(29) limitations on differences between levels of coverage in preferred provider benefit plans as described in §3.3704(a)(6) of this title (relating to Freedom of Choice: Availability of Preferred Providers); and
(30) limitations or restrictions on copayments and deductibles imposed by §11.506(2)(A) and (B) of this title (relating to Mandatory Contractual Provisions: Group, Individual and Conversion Agreement and Group Certificate).
(c) A health benefit plan offered by an insurer through a health group cooperative is not subject to §3.3704(a)(6) of this title.
§26.409. Expedited Approval for Plans Offered Through a Health Group Cooperative.
(a) A carrier must file for approval a health benefit plan that will be offered solely to a health group cooperative and shall indicate in the filing that the health benefit plan is to be offered to a health group cooperative and is subject to review under this section.
(c) An insurer that does not elect to file for a approval under subsection (b) of this section shall file the form for approval consistent with Insurance Code Article 3.42(d) and §3.5(a)(1) of this title. The department shall approve or disapprove the filing within 40 calendar days of receipt of the complete filing.
(d) An HMO must file for approval an HMO evidence of coverage that is to be offered solely to a health group cooperative and shall indicate that review of the evidence of coverage is subject to the expedited process available under this section. The evidence of coverage shall be filed consistent with the requirements of Subchapter F of Chapter 11 of this title (relating to Evidence of Coverage) and shall be approved or disapproved by the department within 20 calendar days of receipt of a complete filing.
§26.410. Service Areas for Carriers Offering Coverage Through a Health Group Cooperative.
(b) A health carrier may provide health group cooperative coverage to an expanded service area that includes the entire state upon providing notice to the department. A health carrier properly provides notice to the department by sending a certification that the health carrier intends to provide health group cooperative coverage to an expanded service area that includes the entire state. The certification should be signed by an officer of the health carrier and sent to Filings Intake Division, Mail Code 106-1E, Texas Department of Insurance, P. O. Box 149104 , Austin , Texas 78714-9104 or 333 Guadalupe, Austin , Texas , 78701 .
(c) A health carrier may apply for an expanded service area that includes less than the entire state by submitting an application for approval to Filings Intake Division, Mail Code 106-1E, Texas Department of Insurance, P. O. Box 149104 , Austin , Texas 78714-9104 or 333 Guadalupe, Austin , Texas , 78701 . The health carrier may begin using the expanded service area upon approval or 60 days after the day the application is received by the department unless the application is disapproved by the department within that time. The application must include:
(3) service areas by zip code shall be defined in a non-discriminatory manner and in compliance with the Insurance Code, Articles 21.21-6 and 21.21-8.
(d) HMO service areas are not affected by a filing under this section and shall be established in accordance with Chapter 843 of the Insurance Code.
§26.411. Health Carrier Reporting Requirements.
(a) Health carriers offering a health benefit plan through a health group cooperative shall file information with the department, not later than April 1 of each year, in the manner prescribed and on the form provided by the department for that purpose. The form can be obtained from the Texas Department of Insurance, Filings Intake Division, MC 106-1E, P.O. Box 149104 , Austin , Texas 78714-9104 . The form can also be obtained from the department's internet web site at www.tdi.state.tx.us . The information shall include data for the previous calendar year and shall include the following:
(b) For purposes of this subsection, gross premiums shall be the total amount of monies collected by the health carrier for health benefit plans during the applicable calendar year.
(c) The information required to be filed by this section shall be filed with Filings Intake Division, MC 106-1E, P.O. Box 149104 , Austin , TX , 78714-9104