TITLE insurance

Part I. Texas Department of Insurance

Chapter 21. Trade Practices

Subchapter R. Diabetes

28 TAC §§21.2601-21.2607

The Commissioner of Insurance adopts new Subchapter R, §§21.2601 - 21.2607, concerning minimum standards for benefits provided to enrollees with diabetes in health benefit plans and coverage under health benefit plans for equipment and supplies and self-management training associated with the treatment of diabetes. The sections are adopted with changes to the proposed text as published in the December 4, 1998, issue of the Texas Register (23 TexReg 12184).

The new sections are necessary to implement legislation enacted by the 75th Legislature in Senate Bills 162 and 163, amending Chapter 21, Subchapter E by adding Article 21.53D, Guidelines for Diabetes Care, which requires the Commissioner by rule to adopt minimum standards for benefits provided to enrollees with diabetes in health benefit plans, and Article 21.53G, Coverage for Supplies and Services Associated with Treatment of Diabetes, which requires coverage under health benefit plans for equipment and supplies and self-management training associated with the treatment of diabetes. After receiving public comments on the proposed rules, the department has made changes based upon the public comments, as well as for clarification, punctuation, and consistency. The following revisions to the referenced sections were made: the definitions of diabetes equipment, set forth in §21.2601(4), and diabetes supplies, set forth in §21.2601(5), were clarified by deleting the phrase "includes but is not limited to" and adding a reference to §21.2605 as part of the definitions of both equipment and supplies.

Subsection (d) was added to §21.2602 to clarify that review of medical necessity of benefits provided under this subchapter is permitted. Section 21.2603 was changed by deleting subsection (b), which stated that basic benefits shall not be subject to dollar limitations other than the plan's lifetime maximum benefit amounts. Section 21.2605(11) was changed to require that prescription medication provided under that section was limited to items which bear the legend "Caution: Federal Law prohibits dispensing without a prescription."

Concerns were expressed that the coverage or provision of self-management training to caretakers of insureds who, due to their age or other circumstances, could not participate in self-management training, was a provision of benefits beyond those required by the statute. Accordingly, §21.2606 was changed to limit coverage for self-management training provided to an insured's caretaker to the same circumstances coverage for training would ordinarily be provided to an insured, and only then if the training was being provided to a caretaker instead of the insured. Additionally, subsections (e)(4) and (e)(5) were omitted and language contained in those sections which address the administration of medications was moved to §21.2606(e). Sections 21.2606(e)(2) and (e)(3) were changed to require coverage for training only if a physician or practitioner orders the training in writing.

Comments were received regarding the failure to include licensed health care providers with recent approved continuing education in diabetes, educational principles and behavioral strategies who are not Certified Diabetes Educators (CDEs) in the rules as a source of self-management training. This source of training, which is recognized in the standards for self-management training promulgated by the American Diabetes Association (ADA), was not included in the proposed rules because, unlike the ADA, neither TDI nor an insurance company has the means or expertise to evaluate each individual provider's assertion of sufficient continuing education and experience to provide self-management training or to approve the education and experience relied upon by the provider. Some commenters argued that licensure of a provider was sufficient evidence that the provider was competent to provide self-management training. However, the ADA in its comments concerning self-management training indicated that the scope of practice of a licensed health care provider, such as a dietician, often prevents such a provider from acquiring the depth of knowledge required to manage the intricacies of a chronic disease such as diabetes. Therefore, licensure as a health care provider alone is not indicative that the provider meets the national standards for self-management training. A fourth paragraph was added to §21.2606(a), requiring coverage for self-management training from, "a licensed health care professional, including a physician, a physician assistant, an advance practice nurse, a registered nurse, a licensed or registered dietician, or a pharmacist, who has been determined by his or her licensing board to have recent didactic and experiential preparation in diabetes clinical and educational issues." This language permits a provider to seek a determination from his or her licensing board that the provider has received sufficient, relevant continuing education and experience to enable the provider to provide diabetes self-management training. It should be noted that none of the licensing boards currently provide such determinations, and it is not the intention of the rule to suggest that these licensing boards should issue them. However, the rule recognizes that recent didactic education and experience can qualify a provider to perform self-management training and that the provider's board is in the best position to evaluate the type and extent of education and experience received by its licensees.

In response to comments that the rules seem to place undue emphasis on the certified diabetes educator (CDE) as a source of self-management training, the order of paragraphs (1) and (3) of §21.2606(a) was transposed. Additionally, in response to numerous comments that the phrase, "a multidisciplinary team directed by a CDE" implied a supervisory relationship, §21.2606(a)(2) was changed to "a multidisciplinary team coordinated by a CDE."

The requirement that self-management training plans be "regularly updated" was deleted from §21.2606(c) in response to comments that the self-management training requirements in the proposed rule appeared to usurp the role of the dietician in providing ongoing medical nutritional counseling by dieticians.

The two year phase-in period before the training requirements in §21.2606 was extended for an additional year to facilitate coverage of self-management training while allowing providers to meet the requirements. Accordingly, all references to the date 1/1/2001 in §21.2607 and elsewhere in the rules in which §21.2607 is cited were changed to 1/1/2002.

All other changes in the rules reflect alterations required by the changes discussed above, or to correct punctuation, grammatical, or typographical errors.

New §21.2601 defines terms used in this subchapter. New §21.2602 describes in general the requirements for coverage provided by Articles 21.53D and 21.53G. New §21.2603 sets forth how benefits required under this subchapter are to be made, subject to deductible, copayment, or coinsurance requirements. New §21.2604 sets forth minimum standards for benefits, services, and care to be provided to insured individuals with diabetes, including self-management training. New §21.2605 sets forth the type of supplies and equipment to be covered as required benefits, as well as the circumstances under which additional equipment and supplies will become required benefits as improvements occur in the treatment, monitoring, equipment, and supplies associated with diabetes. New §21.2606 sets forth the standards for self-management training to be covered or provided and sets forth the requirements for health care practitioners who provide the training that is covered or provided. New §21.2607 sets forth a phase-in period until January 1, 2002 to allow coverage for self-management training obtained from certain providers by individuals who live in areas that are currently underserved by providers who meet the requirements set forth in new §21.2606.

Medical Necessity. A commenter stated that the rules do not allow for the review of medical necessity.

Agency Response: The proposed rules did not prohibit the application of medical necessity. However, to clarify that a review of medical necessity is permitted, language specifically permitting it was added at §21.2602(d). Such review can be performed only if the health benefit plan generally provides for medical necessity review and is subject to all laws and rules applicable to medical necessity determinations. Distinction between HMO and Indemnity Requirements. A commenter was puzzled by the distinction between HMOs and insurers in these rules, as the underlying statute, Article 21.53G, makes no such distinction. The commenter was concerned that the administrative burden on HMOs seems disproportionate to that required by insurers and is not supported by the statute.

Agency Response: The rules implement two statutes, Articles 21.53D and 21.53G. The department is aware that these rules may impact HMO and indemnity plans differently. The distinction between HMO plans and indemnity plans is due to the inherent differences between such plans and other statutes applicable to each. Indemnity plans provide for reimbursement for care received from any qualified provider chosen by the insured while HMOs provide health care services through a network of qualified contracting providers and thus HMO plans have administrative responsibilities that indemnity plans do not. These rules reflect, but do not cause, that distinction. §§21.2601(2) and 21.2606(e)(4) and (5). Commenters stated the rules appear to require coverage for the training of a caretaker of an insured, which constitutes an additional benefit not authorized by Article 21.53G. The commenters also believed this was an unprecedented provision of benefits to an individual other than the insured. The commenters proposed that the definition of caretaker be amended and that §21.2606(e)(4) be amended to permit coverage for a caretaker only where the caretaker was a member of the same plan as the insured.

Agency Response: The department disagrees. Although Article 21.53G does not specifically address the provision of training to a family member or significant other who provides care to an insured who is a diabetic, it clearly supports coverage for training of the caretaker of a child or person otherwise unable to manage their own care. The statute requires that all insureds receive benefits, including training, that will assist the insured in managing the disease. The department anticipates that the cost of training a caretaker is the same as for an insured. Coverage for training of a caretaker of an insured who cannot perform his or her own diabetes management will ensure that the condition of the insured will be effectively managed and advances the legislative intent behind Article 21.53G, which is to reduce costs associated with complications caused by inadequate treatment and control of diabetes. However, the department agrees that the statute does not authorize coverage for a caretaker beyond coverage that would be provided for self-management training to the insured. Accordingly, the department has modified the language of §21.2606(e) to require coverage for self-management training provided to a caretaker only under the same circumstances in which self-management training to an insured would be covered. This language, along with the definition of caretaker at §21.2601(2), allows a caretaker to undergo self-management training in lieu of, rather than in addition to, the insured. The department has also changed the language of §§21.2606(e)(2), and (e)(3) to clarify that coverage for training is required only if a physician or practitioner orders the training in writing. §21.2601(4) and (5). A commenter stated the language "includes but is not limited to" should be stricken from the rule as Article 21.53G(1) is very specific in its definition of diabetes equipment and supplies.

Agency Response: Article 21.53G(1) does not contain the sole definition of diabetes equipment and supplies. Article 21.53G(5) also requires carriers to cover new or improved diabetes equipment and supplies, upon approval by the FDA. Additionally, §21.2605 clarifies the definition of diabetes equipment by describing the various types of insulin pumps and the specific associated appurtenances as well as podiatric appliances. The department has further clarified this section by deleting the language "includes but is not limited to" as requested and adding a reference to §21.2605 as part of each definition. §21.2601(7). A commenter proposed that the definition of health benefit plan be amended to specifically state that disability insurance is exempt from application of the rules.

Agency Response: The department disagrees that a change is needed. The language of §21.2601(7)(C)(i)(III) tracks the language of Insurance Code Articles 21.53D and 21.53G. While the term "disability insurance" is not used, the language of the statutes and the rule defines disability insurance and clearly exclude disability policies from the application of the statute and the rules. §21.2601(8). A commenter stated the rules do not clearly apply only to insureds with diabetes. The commenter suggested that throughout the rule the word "insured" be replaced with "insureds with diabetes."

Agency Response: The term "insured" for purposes of this subchapter is defined in §21.2601(8) as a person enrolled in a health benefit plan who has been diagnosed with insulin dependent or noninsulin dependent diabetes, elevated blood glucose levels induced by pregnancy or another medical condition associated with elevated glucose levels. The department believes this definition adequately addresses the commenter's concerns. §21.2603(b). A commenter stated this section requires that basic benefits shall not be subject to dollar limitations other than the plan's lifetime maximum benefit amounts. The comment believes this section of the rule exceeds the scope of Article 21.53G(6).

Agency Response: The department agrees that Article 21.53G does not specifically require this particular subsection and has therefore deleted the section as proposed. The department does not believe that Article 21.53G allows carriers to place dollar limits on diabetes equipment and supplies required to be covered by a health benefit plan. Article 21.53G(6) prohibits a plan from imposing a deductible, copayment or coinsurance that exceeds a deductible, copayment or coinsurance required by the plan for treatment of other analogous chronic medical conditions. It must also be noted that testimony at the public hearing on the rules from the American Diabetes Association and research conducted by the department indicates that there is no other condition or disease analogous to diabetes in terms of the efficacy of early, effective treatment and management in minimizing the long term, debilitating effects on an insured.

§21.2604.A commenter stated that the statute does not require many of the items listed as minimum standards. Another commenter stated that the minimum standards in the rule reflect that Article 21.53G requires minimum standards based on standards adopted and implemented by the Texas Diabetes Council whose standards are based on the clinical practice recommendations of the American Diabetes Association.

Agency Response: This portion of the rule is implementing Insurance Code Article 21.53D. This article does not list specific benefits to be provided; instead, it directs the Commissioner in consultation with the Texas Diabetes Council to adopt minimum standards for benefits to be provided to insureds with diabetes. The minimum standards in §21.2604 reflect standards developed by the Texas Diabetes Council, which are based on national standards of the American Diabetes Association (ADA). §21.2604(b). A commenter requested confirmation that complications involving two or more body systems is not an additional mandate to cover pharmaceuticals for treatment of these conditions when, for example, such pharmaceuticals are not contained in a particular evidence of coverage.

Agency Response. It is not possible for the department to respond to the commenter's question about complications involving "two or more body systems" without more information about the commenter's particular concerns. However, the department does confirm that Article 21.53G requires that equipment and supplies associated with the treatment of diabetes must be provided under this subchapter as part of a plan's basic benefits, regardless of the existence of pharmacy or durable medical equipment riders in the evidence of coverage relating to the plan. §21.604(b) & (c). A commenter was concerned that the requirements of (21.2604 necessitate additional reporting requirements.

Agency Response. The language of this section does not specify additional reporting requirements or processes beyond those with which that all carriers are already required to comply under other applicable provisions of the Insurance Code and rules promulgated by the department. §21.2604(d). Two commenters stated that the rule requires health benefit plans other than HMOs to provide coverage for certain childhood immunizations under Article 21.53F including immunizations for influenza and pneumococcus, while Article 21.53G does not require coverage for immunizations.

Agency Response: The department acknowledges that immunizations are not listed in Insurance Code Article 21.53G; however, §21.2604 implements Article 21.53D, which requires the Commissioner, in consultation with the Texas Diabetes Council to adopt minimum standards for benefits, rather than Article 21.53G. Immunizations are included in the minimum standards set by the Texas Diabetes Counsel and the department believes this benefit should be provided as immunizations give effect to the intent of the Legislature to reduce complications in insureds that would result in more costly care and benefits. §21.2604(d)(1). A commenter stated that the language "appropriate specialists" is not defined in the rules and should be replaced with the term "licensed health care practitioners" since both the rules and Article 21.53G utilize that term.

Agency Response: The department disagrees. Section 21.2604(d)(1) requires coverage of office visits and consultation with appropriate specialists. These appropriate specialists are known in the medical community and are experts in their area of specialization. An insured with diabetes should have coverage and access to a full range of specialists if determined medically necessary by their treating practitioner or physician. As an example, an insured because of diabetes may require the care of a nephrologist for renal disease, a cardiologist for vascular disease, or an exam by a therapeutic optometrist due to diabetes. This minimum standard reflects the standards developed by the Texas Diabetes Council for treating diabetes.

§21.2605. A commenter expressed concern about a carrier's ability to control coverage of costs of equipment when the physician or practitioner has not specified a certain piece of equipment, and inquired whether the section requires coverage for the most expensive piece of equipment when a lesser priced piece would suffice.

Agency Response. The intent of Article 21.53G is to permit the insured's physician or practitioner to determine the particular type and amount of equipment and supplies necessary to manage and control the insured's diabetes. Therefore, the rules defer to the expertise of the physician or practitioner in determining whether to require coverage of a specific type of equipment or supplies. The department also included language in §21.2602 that clarifies that medical necessity determinations may be applied to any benefits covered pursuant to this subchapter. However, in making these determinations, it should be noted that Article 21.53D requires that the minimum standards set forth in §21.2604 apply to benefits provided to insureds with diabetes pursuant to a health benefit plan. §21.2605(a)(11). A commenter provided suggested language to prevent the writing of prescriptions for over-the-counter foodstuffs.

Agency Response. The department agrees with the commenter that Article 21.53G was not intended to cover prescriptions for over-the-counter foodstuffs. The department believes that the language of §21.2605(a) as proposed addresses this concern. The department worked with the Texas State Board of Pharmacy in developing the language relating to medications available without a prescription to eliminate non-medications such as foodstuffs and has retained this language. However, the department has incorporated the commenter's language limiting prescription medications to those that fit the definition of Federal Legend Drugs. §21.2605(b). A commenter stated that the coverage for new and improved treatment and monitoring equipment and supplies is reasonable; however, the rule should require that such equipment and supplies be safe and effective, not experimental, and be medically necessary and appropriate. The commenter stated that FDA approval does not necessarily guarantee that the new drug or device is safe or effective for all patients.

Agency Response: The department disagrees. Section 21.2605(b) directly tracks the language of Article 21.53G(5), "on approval [of the FDA] of new or improved diabetes equipment or diabetes supplies, each benefit plan subject to this article must include coverage of the new or improved equipment and supplies if medically necessary and appropriate as determined by a physician or other health care provider." §21.2605(c). A commenter stated this provision, which requires "dispensed as written" coverage of diabetes medications and equipment, undermines a drug formulary and interferes with an HMO's ability to reduce medical costs and control premiums. Another commenter requested verification that if a drug formulary is utilized by a carrier an HMO can impose otherwise applicable formularies.

Agency Response: The department disagrees that the rule will increase costs for HMOs. Applicable drug formularies may be utilized provided that the insureds' practitioner has not indicated that medication must be dispensed as written and the formularies are imposed in conformity with all applicable rules promulgated by TDI relating to drug formularies. Scientific literature supports the need for some diabetics to receive specific brands of insulin. Changing brands of insulin due to formulary requirements can result in decreased control of blood sugar with subsequent complications. Medical literature supports the cost effectiveness of good blood sugar control. The department believes that the long term cost of care will be reduced, not increased, by this requirement. §§21.2604 and 21.2606. A commenter suggested the rules include minimum standards for meal planning and food education.

Agency Response: The minimum standards set forth in §21.2604 include access by each insured to diabetes self-management training which requires an individualized plan for each insured based on his or her own particular needs and conditions. This may include, if necessary, meal planning and food education, which would be part of the nutritional counseling which is required by the statute and the rule. Therefore, the rules ensure that the type of training requested by the commenter is available for any insured to whom it would apply.

§21.2606.A commenter applauded the proposed section's utilization of the National Standards for Diabetes Self-Management Education Programs which incorporates the consensus opinion and recommendations of the varied diabetes-related organizations called upon to improve diabetes treatment outcomes in the 1993 National Diabetes Advisory Board task force and the resulting recommendations. The commenter states that in adhering to these national standards, the rule emphasizes the importance of a qualified, multi-faceted approach to diabetes care. All health care team members are collectively qualified to teach the required program areas while focusing on program structure, process and outcomes to achieve a quality medical intervention effort.

Agency Response: The department agrees and appreciates these comments.

Comment. A commenter believed that the structure of §21.2606 violates the standards of the American Diabetes Association (ADA) regarding self-management training in that it is more restrictive and in conflict with the diabetes self-management training standards for the ADA particularly in its requirement that dieticians work under the direction of a Certified Diabetes Educator (CDE). Other commenters believed §21.2606(a) violates recognized standards of health care by requiring that self-management training be provided by a CDE or through a multidisciplinary team under the direction of a CDE. Commenters believe that the term "direction" is not adequate to provide guidance and that CDEs alone cannot provide the medical nutrition therapy nor can they direct another better educated and trained health professional in providing it.

Agency Response: As proposed, §21.2606(a)(2) did not require that licensed dieticians be supervised by a CDE. The rule required, for coverage of diabetes self-management training only, that licensed health care practitioners, which includes pharmacists, nurses, physicians and dieticians, who were not certified as CDEs, could provide self-management training required by the statute and rules as long as the practitioners had recent didactic and experiential preparation in diabetes clinical and educational issues and that they affiliate themselves either with a treatment team directed by a CDE or an ADA recognized program. To clarify this issue, §21.2606(a)(2) has been changed by replacing "under the direction of" to "coordinated by" a CDE. The adopted rules also include a new paragraph (a)(4), that allows coverage for self-management training provided by a licensed health care professional, including a physician, a physician assistant, an advance practice nurse, a registered nurse, a licensed or registered dietician, or a pharmacist, who has been determined by his or her licensing board to have recent didactic and experiential preparation in diabetes clinical and educational issues.

Comment. Several commenters stated that while recognizing that a CDE is needed for comprehensive self-management training, many diabetics need only nutritional counseling that can be provided by a dietician alone. One commenter believes that the rules establish an inferior standard for self-management training and do not ensure quality. Another commenter wanted the rules to cover nutritional counseling by registered or licensed dieticians without requiring supervision or direction by a CDE. Another commenter stated the proposed rules will no longer allow registered dieticians to be part of the Diabetic Management Team or to treat and train diabetics and believes that this is a disservice to the medical community.

Agency Response: These comments reflect that some confusion may exist about the difference between diabetes self-management training and the provision of on-going services to an insured for management of diabetes. The department recognizes the importance of a properly trained dietician in the management of diabetes and that many insureds may need primarily, or even at times, only nutritional counseling. The rules do not restrict or prohibit the provision of nutritional counseling by a dietician nor are they intended to restrict an insured's right to select a practitioner under a health benefit plan that provides coverage for nutritional counseling or to restrict a dietician from being involved in self-management training. Article 21.53G requires a plan to provide coverage for diabetes supplies and equipment and self-management training. Self-management training is provided or covered only upon initial diagnosis of diabetes or when a change in the condition of the insured or treatment modalities affecting the insured occurs and involves comprehensive training about all aspects of the nature of diabetes and the effect of and interactions among such factors as other illnesses, stress and medications, as well as diet and nutrition, upon the insured. The statute does address coverage of on-going monitoring associated with medical nutrition therapy or counseling. Although self-management training does include a nutritional counseling component, it is not comparable to or intended to be a substitute for medical nutrition therapy or counseling. An insured initially diagnosed with diabetes requires self-management training that meets the overall educational needs of an insured that are broader than nutritional counseling alone. Self-management training is narrowly defined at §21.2601(6) as instruction enabling an insured or a caretaker to understand the care and management of diabetes, including nutritional counseling and proper use of diabetes equipment and supplies. The rules assure coordination of all of these educational needs. No member of the team delineated in §21.2606(a)(2) is excluded from providing training in their area of expertise, although the rules reflect the highest standard for comprehensive diabetic self-management training. The department has changed the phrase "directed" to "coordinated" to clarify that the CDE's role is to assure that an insured receives all required aspects of self-management training rather than to supervise or instruct other team members in carrying out the training that they are providing under their respective professional licenses. The department has also omitted the phrase "and regularly updated" from §21.2606(c), which requires the development of an individualized management plan. The inclusion of this phrase, which was inadvertent, may have created the false impression that self-management training involved on-going monitoring of an insured which would include nutritional counseling.

Comments. Commenters believed this section will increase medical costs and discourage some diabetics from seeking medical education and counseling.

Agency Response: The department disagrees. Article 21.53G requires the department to adopt rules concerning self-management training. Section 21.2606 applies only to self-management training under specific circumstances or at certain times. Self-management training as required by the statute and rules is not on-going treatment or counseling. Coverage for training as set forth in §21.2606 will ensure that the training is coordinated and complete. The department also believes that costs will decrease and availability of competent, coordinated training will increase since insureds will not have to seek out training from different providers and separately compensate them.

Comment. Commenters believe CDEs who are not working as part of an ADA approved team provide substandard training. Commenters proposed that the coverage be provided only for ADA approved training programs unless the plan can show that an ADA recognized program is not available.

Agency Response: The department disagrees. Certification as a diabetes educator demonstrates that the individual health care professional has met standards set by peers in the specialty practice of diabetes education and validates that a professional has knowledge and expertise in diabetes education. Access to the various types of self-management training delivery varies throughout the regions of Texas. ADA recognized programs are primarily concentrated in the larger urban areas of the state. The department conferred with representatives of the Texas Diabetes Council and the ADA in determining that the highest quality diabetes self-management training can be made available to the largest number of insureds throughout Texas by proposing coverage for training delivered by multidisciplinary teams coordinated by a CDE, or a program approved by the ADA, or individuals who are CDEs. However, the department has reversed the order in which the acceptable methods of delivery of self-management training are listed in §21.2606(a), not because the rules requires that an ADA approved program should be utilized unless one is not available, but to lessen the emphasis that was apparently being placed upon the option of self-management training provided by a CDE alone. §21.2606(a)(2). A commenter stated that the rule allows diabetes self-management training to be provided by a social worker and that Article 21.53G(4) specifies that diabetes self-management training be provided by a health care provider or practitioner who is licensed, registered or certified in this state to provide appropriate health care services. The commenter believed social workers are not licensed to provide health care services and thus they request social workers be stricken from the rule.

Agency Response: The department disagrees. The department believes social workers are not excluded from providing health care services. Licensed master social workers--advanced clinical practitioners are included in Insurance Code Articles 21.52 and 3.70-2 as practitioners that are eligible for reimbursement for the provision of services which fall within the scope of their licenses. No provision of the Insurance Code defines health care services to exclude mental health care services. §21.2606(g). A commenter stated this rule appears to require insurers to direct insureds in finding or choosing a physician, that insurers are not similar to HMOs in this regard, and that individual insureds should find and access the physicians or practitioners of their own choosing.

Agency Response: It appears the commenter has misinterpreted this rule. This section of the rule does not require insurers to provide a list of providers to insureds; it requires insurers to disclose in their health benefits plans the types of individuals, as specified in §§21.2606(a) and 21.2607, for whom the insurer is required to provide coverage. §21.2606 & §21.2607 Commenters believed the rules will create a reduction in ADA approved self-management training programs. Commenters expressed concerns with a reduction in access to diabetes self-management training under the proposed rules in rural areas, noting that there are slightly over 500 CDEs in Texas and that this limited number could not serve the needs of the entire diabetic population in the state.

Agency Response: The department's research indicates that at the time of the public hearing held January 5, 1999, there were 662 CDEs in Texas, which represented an increase of 162 since May 1998. The availability of CDEs and ADA-recognized programs for insureds throughout Texas was a significant consideration in drafting the rules. Section 21.2607 has been changed in the adopted rules to provide a phase-in period until 1/1/2002. Prior to that date, self-management training will be covered when provided by the appropriate licensed provider even if that provider does not meet the requirements of §21.2606(a). The phase-in also gives eligible health care providers time to become a CDE, to affiliate himself or herself with an ADA approved program or a multidisciplinary team, or to obtain a determination from the appropriate licensing board as required by the rules. The department believes that ultimately the rules will result in a net increase in both the number and the quality of self-management training programs.

21.2607.A commenter believed that §21.2607 does not adequately address the immediate access and cost concerns of insureds and that a two year delay will not provide an adequate period to allow the various concerned parties to evaluate the quality, access and costs of the training provided during the phase-in period, possibly resulting in the substitution of the requirements of §21.2607 for those of §21.2606 on a permanent basis.

Agency Response: The department disagrees. The purpose of the phase-in period is not to permit a trial run under standards that fall below those established by the Texas Diabetes Council and the ADA. The purpose of the phase-in is to allow insureds to have access to self-management training while health care providers and industry prepare for full compliance with the requirements of §21.2606. As previously discussed, the number of CDEs and ADA recognized programs has increased since May of 1998. However, in response to comments concerning the length of time it takes to become a CDE, the department has extended the phase-in period for an additional year until 1/1/2002. §21.2607(b). A commenter questioned why §21.2607(b) applies only to HMOs whereas health benefit plans provided by insurers covers self-management training prior to 1/1/2001 (now 1/1/2002) from one of the sources named in §21.2606.

Agency Response: The commenter misinterprets §21.2607. The phase-in and rules pertaining to providers of self-management training apply to both insurers and HMOs. Subsection (b) differs from subsection (a) because the differences between indemnity and HMO systems require different implementation mechanisms. Additionally, §21.2607(b) tracks the requirements for HMOs set forth in other rules. §21.2607(e). A commenter believed language should be amended to specifically indicate that benefits provided under this subsection are subject to a deductible, co-payment or coinsurance requirement.

Agency Response: This recommendation was not incorporated by the department. Section 21.2603 indicates that all benefits provided under these rules are subject to applicable deductible, copayment or coinsurance requirements. This section applies to all benefits provided under §21.2607.

General. Commenters wanted more options for preventive health care and suggested that registered dieticians play an important role in treatment of diabetes.

Agency Response: The department agrees that a variety of options should be available to an insured seeking self-management training. The rules ensure this by providing coverage from alternative sources of training. The rules also contain a phase-in period, which was extended by the department for an additional year, until 1/1/2002, to ensure that providers have ample time to meet the requirements of (21.2606.

Comment. A commenter stated that an insured was refused coverage for training provided by a dietitian because the dietitian did not bill through a physician's office.

Agency Response: Although the department cannot comment in this order about the specific incident reported by the commenter, it encourages the commenter and/or the insured to contact the Consumer Protection Division of the department about the denial of these benefits, particularly if the services were provided pursuant to a health benefit plan issued, issued for delivery, or renewed after January 1, 1998, the effective date of Article 21.53G.

Comment. A commenter stated health insurance should reward patients with some reduction in annual insurance rates when patients achieve or maintain desirable weight and/or blood sugar levels.

Agency Response: The department acknowledges the commenter's suggestion. However, the Insurance Code does not provide the department with the authority to require such a reduction. It should be noted that Insurance Code Articles 26.33 and 26.89 allow carriers who issue plans to large and small employers to establish premium discounts and reductions in copayments or deductibles for insureds who adhere to programs for health promotion and disease prevention.

Comment. Numerous commenters stated that they support the intent behind Articles 21.53D and 21.53G, which is to increase access to care and self-management education for all insureds with diabetes and to ensure that the care received is quality care.

Agency Response: The department agrees with and appreciates these comments. The department believes that the rules accomplish the Legislature's intent to provide access to benefits and self-management training to Texans who have diabetes.

For: American Association of Diabetes Educators; American Diabetes Association; Office of Public Insurance Counsel; Texas Diabetes Council; Texas Nurses Association. For with changes: Diabetes & Glandular Disease Clinic; Health Insurance Association of America; Prudential Insurance Company of America; Texas Association of Health Plans; Texas Association of Life Health Insurers; Texas Pharmacy Association; Texas Society of Health System Pharmacists. Against: Texas Dietetic Association.

The new sections are adopted under the Insurance Code, Chapter 21, Subchapter E, as amended by the 75th Legislature in Senate Bills 162 and 163, and Article 1.03A. Insurance Code Article 21.53D(3) provides that the commissioner shall by rule adopt minimum standards for benefits to enrollees with diabetes. Article 21.53G(7) provides that the commissioner may promulgate rules and regulations as are necessary and proper to carry out the provisions of Article 21.53G. Article 1.03A provides that the Commissioner of Insurance may adopt rules necessary for the conduct and execution of the duties and functions of the Texas Department of Insurance only as authorized by a statute.

§21.2601.Definitions.

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise:

(1)

Basic benefit--Health care service or coverage, which is included in the evidence of coverage, policy, or certificate, without additional premium.

(2)

Caretaker--A family member or significant other responsible for ensuring that an insured not able to manage his or her illness (due to age or infirmity) is properly managed, including overseeing diet, administration of medications, and use of equipment and supplies.

(3)

Diabetes--Diabetes mellitus. A chronic disorder of glucose metabolism that can be characterized by an elevated blood glucose level. The terms diabetes and diabetes mellitus are synonymous.

(4)

Diabetes equipment--The term "diabetes equipment" includes items defined in Insurance Code Article 21.53 G §§1(1) and §5, and §21.2605 of this title (relating to Diabetes Equipment and Supplies).

(5)

Diabetes supplies--The term "diabetes supplies" includes items defined in Insurance Code Article 21.53 G §§1(2) and 5, and §21.2605 of this title (relating to Diabetes Equipment and Supplies).

(6)

Diabetes self-management training--Instruction enabling an insured and/or his or her caretaker to understand the care and management of diabetes, including nutritional counseling and proper use of diabetes equipment and supplies.

(7)

Health benefit plan--A health benefit plan, for purposes of this subchapter, means:

(A)

a plan that provides benefits for medical or surgical expenses incurred as a result of a health condition, accident, or sickness, including:

(i)

an individual, group, blanket, or franchise insurance policy or insurance agreement, a group hospital service contract, or an individual or group evidence of coverage that is offered by:

(I)

an insurance company;

(II)

a group hospital service corporation operating under Chapter 20 of the Texas Insurance Code;

(III)

a fraternal benefit society operating under Chapter 10 of the Texas Insurance Code;

(IV)

a stipulated premium insurance company operating under Chapter 22 of the Insurance Code;

(V)

a reciprocal exchange operating under Chapter 19 of the Texas Insurance Code; or

(VI)

a health maintenance organization (HMO) operating under the Texas Health Maintenance Organization Act (Chapter 20A, Texas Insurance Code);

(ii)

to the extent permitted by the Employee Retirement Income Security Act of 1974 (29 USC §1002), a health benefit plan that is offered by a multiple employer welfare arrangement as defined by §3, Employee Retirement Income Security Act of 1974 (29 USC §1002) that holds a certificate of authority under Insurance Code Article 3.95-2; or

(iii)

notwithstanding §172.014, Local Government Code, or any other law, health and accident coverage provided by a risk pool created under Chapter 172, Local Government Code.

(B)

A plan offered by an approved nonprofit health corporation that is certified under §5.01(a), Medical Practice Act, and that holds a certificate of authority issued by the commissioner under Insurance Code Article 21.52F.

(C)

A health benefit plan is not:

(i)

a plan that provides coverage:

(I)

only for a specified disease or other limited benefit;

(II)

only for accidental death or dismemberment;

(III)

for wages or payments in lieu of wages for a period during which an employee is absent from work because of sickness or injury;

(IV)

as a supplement to liability insurance;

(V)

for credit insurance;

(VI)

dental or vision care only; or

(VII)

hospital confinement indemnity coverage only.

(ii)

a small employer plan written under Chapter 26 of the Insurance Code;

(iii)

a Medicare supplemental policy as defined by §1882(g)(1), Social Security Act (42 USC §1395 ss);

(iv)

workers' compensation insurance coverage;

(v)

medical payment insurance issued as part of a motor vehicle insurance policy; or

(vi)

a long-term care policy, including a nursing home fixed indemnity policy, unless the commissioner determines that the policy provides benefit coverage so comprehensive that the policy is a health benefit plan as described by subparagraph (A) of this paragraph.

(8)

Insured--A person enrolled in a health benefit plan who has been diagnosed with:

(A)

insulin dependent or noninsulin dependent diabetes; or

(B)

elevated blood glucose levels induced by pregnancy or another medical condition associated with elevated glucose levels.

(9)

Physician--A Doctor of Medicine or a Doctor of Osteopathy licensed by the Texas State Board of Medical Examiners.

(10)

Practitioner--An Advanced Practice Nurse, Doctor of Dentistry, Physician Assistant, Doctor of Podiatry, or other licensed person with prescriptive authority.

§21.2602.Required Benefits for Persons with Diabetes.

(a)

Notwithstanding §172.014, Local Government Code, or any other law, health plans provided by a risk pool created under Chapter 172, Local Government Code, delivered, issued for delivery, or renewed on or after January 1, 1998, that provide benefits for the treatment of diabetes and associated conditions must provide coverage to an insured for diabetes equipment, diabetes supplies, and diabetes self-management training programs, in accordance with §21.2603 of this title (relating to Out of Pocket Expenses), §21.2605 of this title (relating to Diabetes Equipment and Supplies) and §21.2606 of this title (relating to Diabetes Self-Management Training).

(b)

Health benefit plans (other than reciprocal exchanges operating under Chapter 19 of the Texas Insurance Code) delivered, issued for delivery, or renewed on or after January 1, 1999, must provide coverage to each insured in accordance with §21.2603 of this title and §21.2604 of this title (relating to Minimum Standards for Benefits for Persons with Diabetes).

(c)

Health benefits plans delivered, issued for delivery, or renewed on or after January 1, 1998, by an entity other than an HMO, which provide coverage limited to hospitalization expenses, shall provide coverage to each insured for diabetes equipment, diabetes supplies, and diabetes self-management training programs, in accordance with §21.2603 of this title, §21.2605 of this title, and §21.2606 of this title, during hospitalization of the insured.

(d)

A determination of medical necessity may be applied to benefits required under this subchapter provided it complies with all applicable laws and regulations.

§21.2603.Out of Pocket Expenses.

(a)

The basic benefits required under this subchapter shall not be subject to a deductible, coinsurance, or copayment requirement that exceeds the applicable deductible, coinsurance, or copayment applicable to other analogous chronic medical conditions or other similar benefits provided under the plan.

(b)

No more than one copayment shall be charged for a thirty-day supply of any item of diabetes supplies listed in §21.2605 of this title (relating to Diabetes Equipment and Supplies). The amount of supplies that constitutes a thirty-day supply for an insured is the amount prescribed as a thirty-day supply by the physician or practitioner of the insured.

§21.2604.Minimum Standards for Benefits for Persons with Diabetes, Requirement for Periodic Assessment of Physician and Organizational Compliance.

(a)

Health benefit plans provided by HMOs shall provide coverage for the services in paragraphs (1) through (7) of this subsection and shall contract with providers that agree to comply with the minimum practice standards outlined in subsection (b) of this section. Services to be covered include:

(1)

office visits and consultations with physicians and practitioners for monitoring and treatment of diabetes, including office visits and consultations with appropriate specialists;

(2)

immunizations required by Insurance Code Article 21.53F, Coverage for Childhood Immunizations;

(3)

immunizations for influenza and pneumococcus;

(4)

inpatient services, and physician and practitioner services when the insured is confined to:

(A)

a hospital;

(B)

a rehabilitation facility; or

(C)

a skilled nursing facility;

(5)

inpatient and outpatient laboratory and diagnostic imaging services;

(6)

diabetes equipment and supplies in accordance with §21.2605 of this title (relating to Diabetes Equipment and Supplies), except notwithstanding §172.014, Local Government Code, or any other law, this subsection does not apply to health benefits provided by a risk pool created under Chapter 172, Local Government Code; and

(7)

diabetes self-management training, in accordance with subsection (b)(1)(ii) of this section, §21.2606 of this title (relating to Diabetes Self-Management Training) or §21.2607 of this title (relating to Accessibility and Availability of Diabetes Self-Management Training Prior to January 1, 2002), except, notwithstanding §172.014, Local Government Code, or any other law, this subsection does not apply to health benefits provided by a risk pool created under Chapter 172, Local Government Code;

(b)

HMOs shall contract with providers who, at a minimum, provide care that complies with subsection (a) of this section that includes:

(1)

for all insureds:

(A)

at initial visit by the insured:

(i)

a complete history and physical including an assessment of immunization status;

(ii)

development of a management plan addressing all of the following that are applicable to the insured:

(I)

nutrition and weight evaluation;

(II)

medications;

(III)

an exercise regimen;

(IV)

glucose and lipid control;

(V)

high risk behaviors;

(VI)

frequency of hypoglycemia and hyperglycemia;

(VII)

compliance with applicable aspects of self care;

(VIII)

assessment of complications;

(IX)

follow up on any referrals;

(X)

psychological and psychosocial adjustment;

(XI)

general knowledge of diabetes; and

(XII)

self-management skills;

(iii)

diabetes self-management training given or referred by the physician or practitioner as required by §21.2606 of this title and §21.2607 of this title;

(iv)

referral for a dilated funduscopic eye exam to be performed by an ophthalmologist or therapeutic optometrist for an insured with Type 2 Diabetes.

(B)

at every visit the following:

(i)

weight and blood pressure taken,

(ii)

foot exam performed without shoes or socks, and

(iii)

dental inspection.

(C)

every six months the following:

(i)

review of the management plan, and

(ii)

glycosylated hemoglobin test.

(D)

annually the following:

(i)

lipid profile,

(ii)

microalbuminuria;

(iii)

influenza immunization;

(iv)

referral for a dilated funduscopic eye exam performed by an ophthalmologist or therapeutic optometrist; and

(v)

for insureds under eighteen years of age, a referral for a retinal camera examination to be performed by an ophthalmologist or therapeutic optometrist.

(2)

For treatment of an insured sixty-five years of age and over or an insured with complications affecting two or more body systems:

(A)

minimum practice standards as set forth in paragraph (1) of this subsection; and

(B)

specific inquiries into and consideration of treatment goals for comorbidity and polypharmacy.

(3)

For pregnant insureds with pre-existing or gestational diabetes:

(A)

minimum practice standards as set forth in paragraph (1) of this subsection; and

(B)

enhanced fetal monitoring based on the standards promulgated by the American College of Gynecologists and Obstetricians.

(4)

For insureds with Type 1 Diabetes:

(A)

minimum practice standards as set forth in paragraph (1) of this subsection;

(B)

an initial diagnosis, consideration of hospitalization due to the insured's:

(i)

age;

(ii)

physical condition;

(iii)

psychosocial circumstances; or

(iv)

lack of access to outpatient diabetes self-management training as required in §21.2606 of this title or §21.2607 of this title; and

(C)

on-going management which includes quarterly office visits at which evaluation includes:

(i)

weight;

(ii)

blood pressure;

(iii)

ophthalmologic exam;

(iv)

thyroid palpation;

(v)

cardiac exam;

(vi)

examination of pulses;

(vii)

foot exam;

(viii)

skin exam;

(ix)

neurological exam;

(x)

dental inspection;

(xi)

results of home glucose self monitoring;

(xii)

frequency and severity of hypoglycemia or hyperglycemia;

(xiii)

medical nutrition plan;

(xiv)

exercise regimen;

(xv)

adherence problems;

(xvi)

psychosocial adjustment;

(xvii)

reevaluation of short and long term self-management goals;

(xviii)

anticipatory guidance related to issues of Type 1 Diabetes;

(xix)

glycosylated hemoglobin;

(xx)

counseling for high risk behaviors; and

(xxi)

for insureds under eighteen years of age, growth assessment.

(c)

Health plans provided by HMOs shall periodically assess physician and organizational compliance with the minimum practice standards contained in subsection (b) of this section.

(d)

Health benefit plans provided by entities other than HMOs shall provide coverage at a minimum for:

(1)

office visits and consultations with physicians and practitioners for monitoring and treatment of diabetes, including office visits and consultations with appropriate specialists;

(2)

immunizations required by Insurance Code Article 21.53F, Coverage for Childhood Immunizations;

(3)

immunizations for influenza and pneumococcus;

(4)

inpatient services, physician, and practitioner services when an insured is confined to:

(A)

a hospital;

(B)

a rehabilitation facility; or

(C)

a skilled nursing facility;

(5)

inpatient and outpatient laboratory and diagnostic imaging services;

(6)

diabetes equipment and supplies in accordance with §21.2605 of this title, except notwithstanding §172.014, Local Government Code, or any other law, this subsection does not apply to health benefits provided by a risk pool created under Chapter 172, Local Government Code; and

(7)

diabetes self-management training in accordance with §21.2606 of this title or §21.2607 of this title, except, notwithstanding §172.014, Local Government Code, or any other law, this subsection does not apply to health benefits provided by a risk pool created under Chapter 172, Local Government Code.

§21.2605.Diabetes Equipment and Supplies.

(a)

A health benefit plan shall provide coverage for equipment and supplies for the treatment of diabetes for which a physician or practitioner has written an order, including:

(1)

blood glucose monitors, including those designed to be used by or adapted for the legally blind;

(2)

test strips specified for use with a corresponding glucose monitor;

(3)

lancets and lancet devices;

(4)

visual reading strips and urine testing strips and tablets which test for glucose, ketones and protein;

(5)

insulin and insulin analog preparations;

(6)

injection aids, including devices used to assist with insulin injection and needleless systems;

(7)

insulin syringes;

(8)

biohazard disposal containers;

(9)

insulin pumps, both external and implantable, and associated appurtenances, which include:

(A)

insulin infusion devices;

(B)

batteries;

(C)

skin preparation items;

(D)

adhesive supplies;

(E)

infusion sets;

(F)

insulin cartridges;

(G)

durable and disposable devices to assist in the injection of insulin; and

(H)

other required disposable supplies;

(10)

repairs and necessary maintenance of insulin pumps not otherwise provided for under a manufacturer's warranty or purchase agreement, and rental fees for pumps during the repair and necessary maintenance of insulin pumps, neither of which shall exceed the purchase price of a similar replacement pump;

(11)

prescription medications which bear the legend "Caution: Federal Law prohibits dispensing without a prescription" and medications available without a prescription for controlling the blood sugar level;

(12)

podiatric appliances, including up to two pairs of therapeutic footwear per year, for the prevention of complications associated with diabetes; and

(13)

glucagon emergency kits.

(b)

As new or improved treatment and monitoring equipment or supplies become available and are approved by the United States Food and Drug Administration, such equipment or supplies shall be covered if determined to be medically necessary and appropriate by a treating physician or other practitioner through a written order.

(c)

All supplies, including medications, and equipment for the control of diabetes shall be dispensed as written, including brand name products, unless substitution is approved by the physician or practitioner who issues the written order for the supplies or equipment.

§21.2606.Diabetes Self-Management Training.

(a)

A health benefit plan shall provide diabetes self-management training or coverage for diabetes self-management training for which a physician or practitioner has written an order to each insured or the caretaker of the insured from:

(1)

a diabetes self-management training program recognized by the American Diabetes Association;

(2)

a multidisciplinary team coordinated by a Certified Diabetes Educator (CDE) who is certified by the National Certification Board for Diabetes Educators. The team shall consist of at least a dietitian and a nurse educator; other team members may include a pharmacist and a social worker. Other than a social worker, all team members must have recent didactic and experiential preparation in diabetes clinical and educational issues;

(3)

a Certified Diabetes Educator (CDE); or

(4)

a licensed health care professional, including a physician, a physician assistant, a registered nurse, a licensed or registered dietician, or a pharmacist, who has been determined by his or her licensing board to have recent didactic and experiential preparation in diabetes clinical and educational issues.

(b)

All individuals providing self-management training pursuant to subsection (a) of this section must be licensed, registered, or certified in Texas to provide appropriate health care services.

(c)

Self-management training shall include the development of an individualized management plan that is created for and in collaboration with the insured and that meets the requirements of the minimum standards for benefits in accordance with §21.2604 of this title (relating to Minimum Standards for Benefits for Persons with Diabetes).

(d)

Medical nutritional counseling and instructions on the proper use of diabetes equipment and supplies shall be provided or covered as part of the training.

(e)

Diabetes self-management training shall be provided, or coverage for diabetes self-management training shall be provided to an insured or a caretaker, upon the following occurrences relating to an insured, provided that any training involving the administration of medications must comply with the applicable delegation rules from the appropriate licensing agency:

(1)

the initial diagnosis of diabetes;

(2)

the written order of a physician or practitioner indicating that a significant change in the symptoms or condition of the insured requires changes in the insured's self-management regime;

(3)

the written order of a physician or practitioner that periodic or episodic continuing education is warranted by the development of new techniques and treatment for diabetes.

(f)

An HMO shall provide oversight of its diabetes self-management training program on an ongoing basis to ensure compliance with this section.

(g)

Health benefit plans provided by entities other than HMOs shall disclose in the plan how to access providers or benefits described in subsection (a) and §21.2607 of this title (relating to Accessibility and Availability of Diabetes Self-Management Training Prior to January 1, 2002).

§21.2607.Accessibility and Availability of Diabetes Self-Management Training Prior to January 1, 2002.

(a)

Prior to January 1, 2002, an insured may obtain diabetes self-management training from a source other than the four set forth in §21.2606 of this title (relating to Diabetes Self-Management Training) under the circumstances set forth in subsections (b), (c) or (d) of this section. Until that date the components of the self-management training may be obtained from the following individuals, provided that the individual is licensed, certified or registered in Texas and has recent didactic and experiential preparation in diabetes clinical and educational issues:

(1)

a dietician shall provide any nutritional counseling component;

(2)

a pharmacist shall provide any pharmaceutical component; and

(3)

a physician, a physician assistant, a registered nurse, or an advanced practice nurse shall provide all other components of the training.

(b)

If the health benefit plan is provided by an HMO and the sources for the training set forth in §21.2606 of this title are not available within 75 miles of the site of eligibility of the insured because the sources are not located within that distance, the HMO is unable to obtain contracts after good faith attempts, or sources meeting the HMO's minimum quality of care and credentialing requirements are not located within that distance, the HMO shall submit a plan to the department for approval, at least 30 days before implementation. For purposes of this subsection, "site of eligibility" refers to the address of the location that renders the insured eligible for coverage. The plan shall include the following:

(1)

the geographic area identified by county, city, ZIP code, mileage, or other identifying data in which the diabetes self-management sources set forth in §21.2606 of this title are not available along with the reason the sources cannot be made available;

(2)

a map, with key and scale, which identifies the areas in which the diabetes self-management sources set forth in §21.2606 of this title are not available;

(3)

the HMO's general plan for making diabetes self-management training available to insureds in each identified geographic area by the individuals listed in subsection (a) of this section;

(4)

the names and addresses of the individual participating providers who are providing the diabetes self-management training through the HMO delivery network to insureds covered under the HMO's general plan required under paragraph (3) of this subsection;

(5)

the names and addresses of other individuals providing diabetes self-management training to be made available in the geographic area in addition to those providers participating in the HMO delivery network listed under paragraph (4) of this subsection; and,

(6)

any other information which is necessary to assess the HMO's plan.

(c)

If the health benefit plan is provided by an insurer through an insurance policy with preferred provider benefits and the insurer is unable to contract with the diabetes self-management training providers set forth in §21.2606 of this title, as preferred providers within the service area, the insurer may contract with the individuals set forth in subsection (a) of this section as preferred providers of diabetes self-management training. Nothing in this subsection alters the requirements of Insurance Code Article 3.70-3C, §8.

(d)

If the health plan is provided by an insurer through an insurance policy and the sources for diabetes self-management training set forth in §21.2606 of this title are not available in the geographic area in which the insured normally receives services, the insured may receive all of the training components from the individuals set forth in subsection (a) of this section.

(e)

A health benefit plan provided by an insurer under subsections (c) or (d) of this section shall reimburse an insured for training performed by individuals listed in subsection (a)(1), (a)(2), and (a)(3) of this section.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on March 24,1999.

TRD-9901767

Lynda H. Nesenholtz

General Counsel and Chief Clerk

Texas Department of Insurance

Effective date: April 13, 1999

Proposal publication date: December 4, 1998

For further information, please call: (512) 463-6327


Chapter 34. State Fire Marshal

Subchapter H. Storage and Sale of Fireworks

28 TAC §34.818, §34.826

The Commissioner of Insurance adopts amendments to Subchapter H, Storage and Sale of Fireworks, by amending §§34.818 and 34.826. Section 34.826 is adopted with changes to the proposed text as published in the December 18, 1998, issue of the Texas Register (23 TexReg 12867). Section 34.818 is adopted without changes and will not be republished.

These amendments are necessary, in part, to implement legislation enacted by the 75th Legislature in Senate Bill 371. Senate Bill 371 stated that the commissioner shall adopt by reference the provisions of two National Fire Protection Association (NFPA) standards - NFPA 1123, applicable to public fireworks displays, and NFPA 1126, applicable to pyrotechnic displays before proximate audiences. The amendments are also necessary to delete the old standard for public displays that has been replaced by the current standard, NFPA 1123. In a previous rulemaking procedure, the Commissioner adopted NFPA 1126 as an amendment to §34.826; however, it was determined at that time to consider NFPA 1123 in a separate rulemaking procedure.

On October 9, 1998 the advisory council on fireworks met and subsequently recommended that NFPA 1123 be adopted by reference, with exceptions concerning the use of high density polyethylene (HDPE) pipe and concerning mortar spacing requirements. The council also recommended adoption of NFPA 1123 without its appendices.

The amendment to §34.826 adopts by reference NFPA 1123, Code For Fireworks Display, with modifications to the proposed rule, based on comments regarding the use of equivalent material of high density polyethylene or equivalent distances where a mortar is six inches in diameter or less. The amendment also provides that the Appendix to NFPA 1123 is to be used for informational purposes only, which is stated in NFPA 1123. Additionally, as also recommended by the council, §34.818(b)(2) is amended to clarify that the point of power interruption required of retail fireworks stands may be located either inside or outside the stand.

Comment: Commenters expressed concern that the department was proposing the adoption of NFPA 1123 without the changes recommended by the fireworks advisory council. According to the commenters the modifications to NFPA 1123 recommended by the advisory council were designed in a manner to address the department's concerns of equivalency and suggested adoption of NFPA 1123 with the recommended modifications. Having served on the advisory council the commenters are convinced that the council's recommendations on modifying NFPA 1123 are reasonable and can stand alone on their merit, even though they meet the equivalency standard. A commenter states that the changes recommended by the council represent a clarification of NFPA 1123 as to what should be considered equivalent to meet the requirements of NFPA 1123. The commenter argues that the legislature would have never required adoption of rules of a private rulemaking organization without assuming that the regulatory body had the authority to make proper modification to the rules. The commenter points out that industry practice is consistent with the suggested modifications. A commenter expressed the reason for equivalency is to provide a guideline for setting up a fireworks display program which provides safety for both the viewing public and the pyrotechnic operator. The commenter also cited justification for creation of equivalency standards. Another commenter states that if the recommendations are not adopted, the rule as proposed would cause a severe impact upon firms in the fireworks industry. A commenter states that the Insurance Code Art. 5.43-4 Sec. 5B(b) gives the department two options: adopt as proposed by the fireworks advisory council, or send the rules back for further development. A commenter believes that all parties, including department personnel, agree that use of HDPE pipe is not only an acceptable industry standard material, but also a preferred alternative in many instances. Refusal to accept HDPE pipe as equivalent material would mean that Texas would be the only state not allowing use of this material for display shows. The commenter believes that the use of HDPE pipe improves the safety of the industry and that not allowing members of the industry to utilize the material would result in an unacceptable cost to those that currently utilize the material. Commenters pointed out that permission for the use of HDPE pipe and the spacing modifications to NFPA 1123 as suggested by the advisory council needs to be stated in the rules so that local authorities will have the guidelines clearly spelled out and unequal local enforcement will not result. The commenter provided suggested "equivalent" provisions to the rule. The commenter also encourages adoption of the rules without the appendix to NFPA 1123, since its inclusion is not mandated by statute, is not an official part of the rules, and is for informational and advisory purposes only. Another commenter enclosed the statement of an expert in the fireworks safety area concurring with commenter's system of equivalency.

Agency Response: At the time the rule was proposed, the department noted that NFPA 1123 provides that it is not intended to prevent the use of systems, methods or devices that provide protections equivalent to the provisions of that code, provided that equivalency can be demonstrated to the authority having jurisdiction. Because, at the time of the rule proposal, there had been no showing of equivalency the department declined to propose the changes as recommended by the council. As noted in comments responding to the proposed rule, commenters provided information and materials, including the opinion of an industry expert, concerning equivalency of HDPE pipe and the proposed alternative spacing methodology. Commenters also worked with agency staff in drafting detailed rule language that strictly prescribes the manner and method by which alternative spacing may be allowed. Based on these comments, the department believes that equivalency has been adequately demonstrated, and has changed the rule accordingly. The department also agrees, as proposed in the comments, to change the rule to state that the appendix to NFPA 1123 is to be used for informational purposes only; this is the language currently contained in NFPA 1123.

For, with changes: Atlas Enterprises, Inc., Public Strategies Inc., and the Fireworks Advisory Council.

The amendments are adopted under the Insurance Code, Articles 5.43-4 and 1.03A. The Insurance Code Article 5.43-4, section 16(a), directs the commissioner to adopt rules the commissioner considers necessary for the protection, safety, and preservation of life and property, including rules regulating: (1) the issuance of licenses and permits to persons engaged in manufacturing, selling, storing, possessing, or transporting fireworks in this state; (2) the conduct of public fireworks displays; and (3) the safe storage of Fireworks 1.4G and Fireworks 1.3G. Section 5 of Article 5.43-4 provides that the commissioner, in promulgating rules, may use standards recognized by federal law or regulation, and those published by a nationally recognized standards-making organization. Section 9 of Article 5.43-4 requires the commissioner to adopt by reference certain NFPA standards as rules governing public displays. Article 1.03A provides that the commissioner may adopt rules and regulations to execute the duties and functions of the Texas Department of Insurance only as authorized by a statute.

§34.826.Preparing and Conducting Public Displays.

(a) - (b)

(No change.)

(c)

Public display criteria. Public displays shall be conducted in accordance with the provisions of the National Fire Protection Association (NFPA) 1123, Code for Fireworks Display, 1995 Edition, except as modified by paragraphs (1) through (3) of this subsection. The Appendix to NFPA 1123 is not considered a part of the requirements of NFPA 1123 and should be used for informational purposes only.

(1)

Equivalent material. High density polyethylene (HDPE) pipe shall be a permissible equivalent material for mortars if of sufficient strength and durability to fire aerial shells safely.

(2)

Equivalent distance. The separation distance of NFPA 1123 paragraph 2-3.3.3 between mortars, buried in the ground or in a trough, shall not apply to a mortar where the mortar is 6 inches (150 mm) in diameter or less, constructed of high density polyethylene (HDPE), and shells are fired using electrical ignition.

(3)

Equivalent distance. The separation distance of NFPA 1123, paragraph 2-3.3.3.2 between a mortar and the wall of a trough shall not apply to a mortar where the mortar is 6 inches (150 mm) in diameter or less and constructed of high density polyethylene (HDPE), shells are fired using electrical ignition and the adjacent trough wall is braced with sufficient strength and durability to safely fire the shells. The trough wall bracing and support shall meet or exceed the following:

(A)

two exterior horizontal braces, one along the bottom of the trough, and a top brace at a distance above the bottom brace that is at least one half the length of the shortest mortar in the trough, but not exceeding its top, where bracing consists of angle iron, with a minimum dimension of one and one half inch by one and one half inch by three sixteenths of an inch, or other shaped steel of equivalent strength;

(B)

a vertical brace attached between the bottom and top brace spaced no greater than four feet on center along the length of the trough, where the bracing consists of angle iron, with a minimum dimension of one and one half inch by one and one half inch by three sixteenths of an inch, or other shaped steel of equivalent strength; and

(C)

a traverse support between the two walls of the trough, consisting of not less than three eighths of an inch threaded rod or equivalent material, located approximately half way up the side walls and located at least every four feet on center along the length of the trough.

(d)

Firing mortars. All firing shall be done upon order or signal of the licensed pyrotechnic operator directing the public display.

(e)

Public display safety precautions.

(1)

A display must be conducted in accordance with all local regulations and conditions prescribed by the fire prevention officer at the time of the site inspection.

(2)

During the display, at least one approved Class A type 2 1/2 gallon fire extinguisher or charged garden hose connected to a water line or equivalent means of fire protection shall be provided.

(f)

Proximate audience display criteria. Public displays before a proximate audience shall be conducted in accordance with the provisions of the National Fire Protection Association (NFPA) 1126, Standards for the Use of Pyrotechnics Before a Proximate Audience, 1996 Edition. Public displays conducted in accordance with this section shall include pyrotechnic devices, including 1.3G, 1.4G, and 1.4S, as defined in NFPA 1126, and individuals conducting such displays shall be regulated by the provisions of this subchapter as pyrotechnic operators.

(g)

Testing. Testing of fireworks and components of fireworks intended for public displays shall be performed in an area set aside for that purpose and located a safe distance from any plant building or other structure. Such testing shall be conducted under the supervision of a licensed pyrotechnic operator, and no public display permit is required.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on March 24,1999.

TRD-9901761

Lynda H. Nesenholtz

General Counsel and Chief Clerk

Texas Department of Insurance

Effective date: April 13, 1999

Proposal publication date: December 4, 1998

For further information, please call: (512) 463-6327