Part I. Texas Department of Insurance
Chapter 3.
Subchapter HH. Standards for Reasonable Cost
Control and Utilization Review for Chemical Dependency
Treatment Centers
The Commissioner of Insurance adopts amendments and new
sections to Chapter 3, Subchapter HH, concerning utilization review
for chemical dependency treatment centers, by amending
§§3.8001-3.8002, 3.8004-3.8005, 3.8007, 3.8019 and 3.8022,
and adding new §§3.8023-3.8030. Sections 3.8001, 3.8005
and 3.8007 are adopted with changes to the proposed text as
published in the December 4, 1998 issue of the Texas Register (23 TexReg 12172).
Sections 3.8002, 3.8004, 3.8019, and
3.8022-3.8030 are adopted without changes and will not be republished.
In conjunction with these adopted amendments and
new sections, the commissioner has adopted the repeal of existing
§3.8006. Notice of the repeal is published elsewhere in
this issue of the Texas Register.
The amendments and new sections are necessary to make utilization
review standards for chemical dependency treatment
consistent with broader standards promulgated pursuant to Insurance
Code Article 21.58A, relating to health care utilization
review agents, which was amended by Acts 1997, 75th Legislature,
Chapter 163, §§2, 3, & 4 and Chapter 1025, §§1, 2,
3, 4, 5, 6, 7, 8, 9, & 10. These amendments and new sections
are also necessary to update oversight of the utilization
review process, expand the pool of professionals capable of
making mental health decisions, define emergency procedures
in accord with new statutory standards, and update the range
of treatment modes by adopting standards for outpatient chemical
dependency treatment. These amendments will bring Texas
into accord with national standards for clinical and social prevention,
intervention and treatment and will promote the delivery
of quality health care in a cost-effective manner by requiring
utilization review agents to adhere to such standards when
conducting reviews. The amendments will further facilitate consistent
and appropriate utilization management decisions by insurers
and health maintenance organizations (HMOs) regarding
the type and duration of individual services, assure that utilization
review agents adhere to reasonable standards for conducting
utilization reviews, and foster greater coordination and cooperation
between health care providers and utilization review
agents. Finally, the amendments will improve communications
and knowledge of benefits among all parties concerned before
expenses are incurred. These new sections will outline the benefit
package and utilization review criteria for use by insurance
companies, HMOs, and limited service HMOs in Texas. These
sections provide comprehensive length-of-stay, placement, and
discharge guidelines.
In response to public comment on the proposed amendments,
the department deleted language from §3.8007 that prohibited
payors from requiring an otherwise qualified individual to have
failed an episode of outpatient detoxification therapy as a
qualification for admission to inpatient detoxification therapy.
The department added language to §3.8005(c) to broaden that
prohibition so that payors cannot require an otherwise qualified
individual to have failed an episode of any outpatient therapy
as a qualification for admission to any inpatient therapy. All
other changes are made to correct punctuation, grammatical,
or typographical errors.
New definitions for intensive outpatient services and qualified
credentialed counselor are added to §3.8001. The adoption
also amends the existing definitions of chemical dependency
treatment center and partial hospitalization. The amendment to
§3.8002 makes a minor revision for clarification. The amendment
to §3.8004 enables qualified credentialed counselors to
authorize admission to certain treatment regimens. The amendment
to §3.8005 substitutes qualified credentialed counselor for
physician, incorporates the provisions of 28 TAC Chapter 19,
Subchapter R (relating to Utilization Review Agents) into this
subchapter, and prohibits payors from requiring an otherwise
qualified individual to have failed an episode of outpatient therapy
as a qualification for admission to inpatient therapy. The
amendment to §3.8007 adds an additional qualifying condition
for inpatient detoxification services. The amendment to
§3.8019 redefines intensive outpatient rehabilitation/treatment
service. The amendment to §3.8022 alters the recommended
length of stay for intensive outpatient rehabilitation treatment
service. New §§3.8023-3.8030 add provisions outlining admission
criteria, continued stay criteria, discharge criteria, and recommended
length of stay for outpatient treatment service and
outpatient detoxification treatment service.
General. A commenter urged that inpatient residential treatment
should remain an option for those who qualify.
Agency Response: The department agrees that inpatient residential
treatment is an important chemical dependency treatment
option. These amendments do not alter the inpatient residential
treatment standards in force; they merely add standards
for outpatient residential treatment to complement the therapies
currently available.
Comment: A commenter expressed concern about misuse
and abuse of the rule’s standards, particularly in light of the
uncertain future of Independent Review Organizations (IROs).
The commenter suggested that the Texas Commission on
Alcohol and Drug Abuse, in light of the rule’s direction to report
such misuse or abuse to that agency, take a more active role
in mediating claims of abuse of the clinical criteria concerning
medical necessity of treatment.
Agency Response: While there are legal actions pending which
make the continued stability of IROs uncertain, the department
believes it would be appropriate to defer any suggested changes
to the rule pending further judicial or legislative direction.
Comment: A commenter reported that payors are viewing
the criteria established by the rules as mere "guidelines" and
generating and applying additional, more restrictive criteria in
addition to those listed in the rule. The commenter suggested
that the department change the rule to prohibit this practice.
Agency Response: The department appreciates the commenter’s
concern. The commenter is correct that the criteria
in this rule are to be enforced as written. Nothing in this rule
authorizes a payor or any other entity to impose criteria more
restrictive than those set out in this subchapter. The department
believes that, rather than adding emphasis to the language of
the rule, it is more appropriate and will be more effective to
address this problem through additional compliance monitoring
and enforcement efforts.
General, §3.8004, §3.8005. A commenter stated that these
rules will increase access to needed health services for qualified
chemically dependent patients. Another commenter supported
the rule’s acknowledgement of detoxification standards and
qualified credentialed counselors.
Agency Response: The department appreciates and agrees
with these comments. §§3.8007, 3.8011, and 3.8019. Commenters
supported the proposed revision of the sections. One
commenter suggested that the department add the prohibition
on requiring failure of outpatient detoxification for admission to
inpatient treatment to §3.8011, relating to admission criteria for
inpatient rehabilitation services.
Agency Response: The department agrees and, for consistency
and clarity, has adopted this standard for inpatient residential
as well as all other levels of inpatient treatment by deleting
the following in §3.8007: "An individual who otherwise meets
the clinical criteria for inpatient detoxification must not be required
to fail outpatient detoxification to qualify for inpatient services"
and adding similar language in a new subsection (c) to
§3.8005.
3.3015. A commenter reported that many payors are refusing
to authorize admission to partial hospitalization therapy unless
it is performed in the individual’s home community.
Agency Response: The department appreciates the commenter’s
concern but believes the existing admission criteria
for partial hospitalization therapy prohibit payors from imposing
a uniform requirement that the individual reside at home during
the treatment episode. The department believes it is thus
more appropriate to address this problem through enforcement
mechanisms rather than a rule change. §§3.8023 and 3.8027.
A commenter supported the addition of standards for outpatient
treatment services and outpatient detoxification services
as needed and beneficial. The commenter recommends the
establishment of standards for "non-intensive" inpatient treatment.
Agency Response: The department agrees that the addition
of outpatient standards will be beneficial to all concerned.
While the department recognizes the need for the type of
"non-intensive" inpatient treatment the commenter describes, it
does not agree with the suggestion that the department adopt
standards for this treatment. This type of treatment is a social
model rather than a medical model and medical payors have
not traditionally covered it.
For: The Association of Substance Abuse Programs, Office of
Public Insurance Counsel.
For with changes: La Hacienda, Drug and Alcohol Abuse
Recovery Center, The Freeman Center.
The sections are adopted under Insurance Code Articles
21.58A, 3.51-9, and 1.03A. Insurance Code Article 21.58A,
§13 provides that the commissioner of insurance may adopt
rules to regulate the conduct and activities of health care
utilization review agents. Insurance Code Article 3.51-9, §2A
authorizes and requires the Texas Department of Insurance to
adopt rules with standards for the reasonable control of costs
necessary for treatment of chemical dependency. Insurance
Code Article 1.03A provides that the commissioner of insurance
may adopt rules and regulations to execute the duties and
functions of the Texas Department of Insurance as authorized
by statute.
§3.8001. Definitions.
The following words and terms, when used in this subchapter, shall
have the following meanings, unless the context clearly indicates
otherwise.
(1) Abusable glue or aerosol paint–Glue or aerosol paint
that is:
(A) packaged in a container holding a pint or less by
volume or less than two pounds by weight; and
(B) labeled in accordance with the labeling requirements
concerning precautions against inhalation established under the
Federal Hazardous Substances Act (15 United States Code §1261, et
seq.), and under regulations adopted under that Act.
(2) Adolescent–A person who is 17 years of age or
younger.
(3) Advanced clinical practitioner–An individual certified
as an advanced clinical practitioner by the Texas Department of
Human Services.
(4) Aerosol paint–An aerosol paint product, including a
clear or pigmented lacquer or finish.
(5) Certified social worker–An individual who is certified
as a certified social worker by the Texas Department of Human
Services.
(6) Chemical dependency–The abuse of, or the psychological
or physical dependence on, or the addiction to, alcohol or a
controlled substance.
(7) Chemical dependency counselor–A person who is
licensed by the Texas Commission on Alcohol and Drug Abuse.
(8) Chemical dependency treatment center–A facility
which provides a program for the treatment of chemical dependency
pursuant to a written treatment plan approved and monitored by
a physician or qualified credentialed counselor and which facility
also meets one of the qualifications in subparagraphs (A)-(D) of this
paragraph:
(A) affiliated with a hospital under a contractual agreement
with an established system for patient referral;
(B) accredited as such a facility by the Joint Commission
on Accreditation of Hospitals;
(C) licensed as a chemical dependency treatment program
by the Texas Commission on Alcohol and Drug Abuse; or
(D) licensed, certified, or approved as a chemical
dependency treatment program or center by any other state agency
having legal authority to so license, certify, or approve.
(9) Controlled substance–A toxic inhalant, or a substance
designated as a controlled substance in the Texas Controlled Substances
Act (the Health and Safety Code, §481.002(5)).
(10) Facility–An individual program, entity, organization,
or other provider of chemical dependency treatment services.
(11) Glue–An adhesive substance intended to be used to
join two surfaces.
(12) Intensive outpatient services–An organized non-residential
service providing structured group and individual therapy,
educational services, and life skills training which consists of at least
10 hours per week for four to 12 weeks, but less than 24 hours per
day.
(13) Licensed professional counselor–An individual licensed
as a professional counselor by the Texas State Board of Examiners
of Professional Counselors.
(14) Licensed vocational nurse–A nurse licensed by the
Texas State Board of Vocational Nurse Examiners.
(15) Partial hospitalization–The provision of treatment for
chemical dependency for persons who require care or support or both
in a hospital or chemical dependency treatment center but who do not
require 24-hour supervision at least 20 hours per week up to 8 weeks.
(16) Payor–An insurer writing health insurance policies;
any preferred provider organization, health maintenance organization,
self-insurance plan; or any other person or entity which provides,
offers to provide, or administers hospital, outpatient, medical, or other
health benefits to persons treated by a health care provider in this state
pursuant to any policy, plan or contract.
(17) Physician – A licensed doctor of medicine or a doctor
of osteopathy.
(18) Program–A particular type or level of service that is
organizationally distinct within a facility.
(19) Psychiatrist–An individual who is licensed in the
State of Texas to practice psychiatry, who is eligible for, or has
received, board certification, and who has hospital affiliation and
experience in appropriate use of psychotropic drugs.
(20) Psychologist–An individual licensed as a psychologist
by the Texas State Board of Examiners of Psychologists.
(21) Qualified credentialed counselor–An individual who:
(A) meets the definition established by the Texas
Commission on Alcohol and Drug Abuse; or
(B) is employed outside the State of Texas and licensed,
certified, or registered in a profession corresponding to those
described in the definition of Qualified Credentialed Counselor established
by the Texas Commission on Alcohol and Drug Abuse.
(22) Toxic inhalant–A volatile chemical under this section
or under the Health and Safety Code, §484.002, or abusable glue or
aerosol paint under this section or under the Health and Safety Code,
§485.001.
(23) Treatment provider–Any "chemical dependency
treatment center" as defined in this section or in the Insurance Code
Article 3.51-9, §2A, and also any certified or licensed practitioner or
facility licensed to provide treatment for chemical dependency.
(24) Utilization review–A system for prospective or concurrent
review of the appropriateness of health care services being
provided or proposed to be provided in this state.
(25) Volatile chemical–A chemical or an isomer of a
chemical listed in subparagraphs (A)-(X) of this definition, as follows:
(A) acetone;
(B) aliphatic hydrocarbons;
(C) amyl nitrite;
(D) butyl nitrite;
(E) carbon tetrachloride;
(F) chlorinated hydrocarbons;
(G) chlorofluorocarbons;
(H) chloroform;
(I) cyclohexanone;
(J) diethyl ether;
(K) ethyl acetate;
(L) glycol ether inter solvent;
(M) glycol ether solvent;
(N) hexane;
(O) ketone solvent;
(P) methanol;
(Q) methyl cellosolve acetate;
(R) methyl ethyl ketone;
(S) methyl isobutyl ketone;
(T) petroleum distillate;
(U) toluene;
(V) trichloroethane;
(W) trichloroethylene; and
(X) xylol or xylene.
§3.8005. Utilization Review.
(a) Treatment providers and payors shall provide for utilization
review in accordance with the provisions of this subchapter and
of Chapter 19, Subchapter R of this title (relating to Utilization Review
Agents). Both payor and treatment provider shall make available
a qualified credentialed counselor to discuss the appropriateness of
treatment, including levels of care, should this become necessary.
(b) Since utilization review as proposed in these standards
must be accomplished in a timely manner, information provided
telephonically must be supported by documentation in the patient
record and available on request for review.
(c) A payor shall not require an individual to have failed
an episode of outpatient therapy as a qualification for admission to
inpatient therapy if the individual otherwise meets the criteria for
admission to inpatient therapy.
§3.8007. Admission Criteria for Inpatient (Hospital or 24-hour
Residential) Detoxification Services.
An individual is considered eligible for inpatient (hospital or 24-hour
residential) admission for detoxification services when the individual
either meets the conditions of paragraphs (1) and (2) of this section
or fails two previous treatment episodes of outpatient detoxifications.
(1) Diagnosis. The diagnosis must meet the criteria for
the definition of chemical dependence, as detailed in either the most
current revision of the international classification of diseases, or the
most current revision of the diagnostic and statistical manual for
professional practitioners.
(2) Other factors for admission to inpatient (hospital or
24-hour residential) treatment for detoxification. Once the diagnostic
criteria for chemical dependency have been met, the conditions
of at least one subparagraph out of subparagraphs (A)-(C) of this
paragraph must also be met. Determination of whether treatment
should be provided for an individual patient in a hospital or in an
other-treatment-center-based program shall depend on the category
or categories of dysfunction explained in subparagraphs (A)-(C) of
this paragraph.
(A) Category 1: chemical substance withdrawal. The
individual must meet the conditions in one of the clauses (i)-(vi) of
this subparagraph, as follows:
(i) impaired neurological functions as evidenced by:
(I) extreme depression (e.g., suicidal); and/or
(II) altered mental state with or without delirium
as manifested by:
(-a-) disorientation to self;
(-b-) alcoholic hallucinosis;
(-c-) toxic psychosis;
(-d-) altered level of consciousness, as manifested
by clinically significant obtundation, stupor, or coma; and/or
(III) history of recent seizures or past history of
seizures on withdrawal; and/or
(IV) presence of any presumed new asymmetric
and/or focal findings (i.e., limb weakness, clonus, spasticity, unequal
pupils, facial asymmetry, eye ocular movement paresis, papilledema,
or localized cerebellar dysfunction, as reflected in asymmetrical limb
incoordination);
(ii) unstable vital signs combined with a history of
past acute withdrawal syndromes, that are interpreted by a physician
to be indication of acute alcohol/drug withdrawal;
(iii) evidence of coexisting serious injury or systemic
illness, newly discovered or progressive;
(iv) clinical condition (e.g., agitation, intoxication,
or confusion) which prevents satisfactory assessment of items cited
in clauses (i)-(iii) of this subparagraph, indicating placement in an
inpatient service may be justified;
(v) neuropsychiatric changes of a severity and nature
that place the patient at imminent risk of harming self or others
(e.g., pathological intoxication or alcohol idiosyncratic intoxication,
etc.);
(vi) serious disulfiram-alcohol (Antabuse) reaction
with hypothermia, chest pains arrhythmia, or hypotension.
(B) Category 2: medical complications. The individual
must present a documented condition or disorder which, in combination
with alcohol and/or drug use, presents a physician-determined
health risk (e.g., GI bleeding; gastritis; anemia, severe; diabetes mellitus,
uncontrolled; hepatitis; malnutrition; cardiac disease, hypertension,
etc.).
(C) Category 3: major psychiatric illness. The individual
must meet the conditions of at least one clause out of clauses
(i)-(v) of this subparagraph, as follows:
(i) a documented DSM III-R AXIS I condition
or disorder which, in combination with alcohol and/or drug use,
compounds a pre-existing or concurrent emotional or behavioral
disorder and presents a major risk to the individual;
(ii) severe neurological and psychological symptoms:
(e.g., anguish; mood fluctuations; overreactions to stress, lowered
stress tolerance; impaired ability to concentrate; limited attention
span; high level of distractibility; extreme negative emotions; extreme
anxiety);
(iii) danger to others and/or homicidal;
(iv) uncontrolled behavior endangering self or others,
or documented neuropsychiatric changes of a severity and nature
that place the individual at imminent risk of harming self or others;
(v) mental confusion and/or fluctuating orientation.
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 January 25,
1999.
TRD-9900532
Lynda H. Nesenholtz
General Counsel and Chief Clerk
Texas Department of Insurance
Effective date: February 14, 1999
Proposal publication date: December 4, 1998
For further information, please call: (512) 463-6327
The Commissioner of Insurance adopts the repeal of §3.8006,
concerning utilization review disputes. The repeal is adopted
without changes to the proposal as published in the December
4, 1998 issue of the Texas Register (23 TexReg 12178).
Repeal of this section is necessary because the department has
adopted mandatory standards for the resolution of utilization
review disputes.
The purpose and objective of this repeal is to delete an admonition
to resolve chemical dependency treatment disputes expeditiously,
as the department is adopting contemporaneously
a mandatory framework for such dispute resolution. Simultaneous
to this repeal, adopted amendments to §3.8005 are published
elsewhere in this issue of the Texas Register which incorporate
the provisions of 28 TAC Chapter 19, Subchapter R
(relating to Utilization Review Agents) into this subchapter.
No comments were received.
Repeal of §3.8006 is adopted pursuant to the Insurance Code
Articles 21.58A, 3.51-9, and 1.03A. Insurance Code Article
21.58A, §13 provides that the Commissioner of Insurance may
adopt rules and regulations to implement the provisions of that
article. Insurance Code Article 3.51-9, §2A authorizes and
requires the Texas Department of Insurance to adopt rules with
standards for the reasonable control of costs necessary for
the treatment of chemical dependency. Insurance Code Article
1.03A provides that the Commissioner of Insurance may adopt
rules and regulations to execute the duties and functions of the
Texas Department of Insurance as authorized by statute.
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 January 25,
1999.
TRD-9900517
Lynda H. Nesenholtz
General Counsel and Chief Clerk
Texas Department of Insurance
Effective date: February 14, 1999
Proposal publication date: December 4, 1998
For further information, please call: (512) 463-6327
Subchapter A. Examination and Financial Analysis
The commissioner of insurance adopts new §7.68 concerning
annual and quarterly statement blanks, other reporting forms,
diskettes or electronic filings with the NAIC via the internet and
instructions to be used by insurers and certain other entities
regulated by the Texas Department of Insurance when reporting
in 1999 their financial condition and business operations and
activities, during the 1998 and 1999 calendar years, and the
requirement to file such completed statement blanks and other
reporting forms, including diskettes or electronic filings with
the NAIC via the internet, with changes to the proposed text
published in the December 18, 1998, issue of the Texas
Register (23 TexReg 12857). A public hearing was held on
January 13, 1999. The new section replaces repealed §7.68,
concerning the adoption of the 1989 annual statement filings
which was repealed in the October 15, 1996, issue of the Texas
Register (21 TexReg 10212).
The annual and quarterly statement blanks, other reporting
forms, and diskettes adopted by reference by the section are
required by statute for reporting, in 1999, the financial condition
and business operations and activities conducted by insurers
and other entities regulated by the department during the
1998 and 1999 calendar years. The information provided is
necessary for the department to monitor the solvency, business
activities and statutory compliance of the insurers and other
entities regulated by the department. Most of the forms adopted
by reference by the section have been promulgated by the
National Association of Insurance Commissioners and are used
by other state insurance regulators. The use of these forms
promotes uniformity and efficiency in the regulation of insurance
companies and other entities regulated by the department.
In addition to these standard forms, there are other forms
adopted by reference by the section that are used only by the
department. These forms are reviewed each year to assure
that the information required to complete the form is necessary
for the department to perform its duties. Subsection (d)(4)(C)
was changed in response to a comment by adding clarifying
language concerning the reporting requirements of plans that
only provide administrative services.
The new section defines terms relevant to the statement blanks
and reporting forms; provides the dates by which certain reports
are to be filed; and adopts by reference the annual and quarterly
statement blanks, other reporting forms, and instructions for
reporting the financial condition and business operations and
activities; and requires insurance companies and certain other
regulated entities to file such annual and quarterly statements
and other reporting forms with the department and/or the
National Association of Insurance Commissioners as directed.
The required documents will provide financial information to
the public and regulatory agencies, and will be used by the
department to monitor the financial condition of insurers and
other regulated entities licensed in Texas to assure financial
solvency and compliance with applicable laws and accounting
requirements. The new section adopts several changes from
the section adopting the forms for reporting in 1998. All
companies subject to the section are directed to describe the
status of their program to address issues arising with the
year 2000 and their computer systems in the Management
Discussion and Analysis. Information concerning Medicare
supplement insurance experience and insurance options and
futures have been moved from the annual statement form
to supplemental filings in the adopted section. The HMO
reporting forms have been reorganized and HMOs will be
required to provide information to assist the department in
monitoring the statutory deposits of an HMO on a quarterly
basis. Certain life insurance companies will be required
to report administrative services revenue (ASO business) as
fees instead of premiums. Fraternal insurance companies
will be required to file schedule DS if they include equity in
undistributed income of unconsolidated subsidiaries in net gain
from operations. The section clarifies the requirement for a
title company to provide an actuarial opinion with its annual
statement. The actuarial opinion is required by Insurance Code,
Article 1.11 but has not previously been specified in previous
rules adopting these forms. The phase out of the allowance
of reserve discounts for property and casualty companies was
completed last year and is not included in the section for
this year. Form ALT/P/WC, Application for Alternative Excess
Statutory Over Statement Reserves for workers’ compensation
insurance is omitted from this year’s forms and property and
casualty insurers will apply to the Chief Property and Casualty
Actuary in the Financial Program for an exemption or alternative
calculation for these reserves. The adopted section also
requires the Texas Health Insurance Risk Pool to report its cash
and special deposits in a Schedule E in addition to the other
reports that were required last year. Finally, the section provides
instructions to all companies that complete certain sections of
Schedule D, Investments to file a paper copy of Schedule D with
the department. The annual and quarterly statement blanks,
other reporting forms, and manuals which are adopted by this
section have been filed with the Office of the Secretary of State,
Texas Register Division. Copies are available for inspection
in the office of the Financial Monitoring Activity of the Texas
Department of Insurance, William P. Hobby, Jr. State Office
Building, 333 Guadalupe, Building 3, Third Floor, Austin, Texas.
One commenter requested clarification of the reporting for
administrative services only plans. In response to the comment,
clarifying language was added to subsection (d)(4)(C) of the
adopted section.
Huges & Luce, L.L.P. commented against subsection (d)(4)(C)
of the section as proposed.
The new section is adopted under the Insurance Code, Articles
1.03A, 1.10, 1.11, 3.07, 3.20-1, 3.27-2, 3.77, 6.11, 6.12, 8.07,
8.08, 8.21, 8.24, 9.22, 9.47, 10.30, 11.06, 11.19, 14.15, 14.39,
15.15, 15.16, 16.18, 16.24, 17.22, 17.25, 18.12, 19.08, 20.02,
20A.10, 20A.22, 21.39, 21.43, 21.49, 21.52F, 21.54, 22.06,
23.02, and 23.26. Article 1.11 authorizes the commissioner to
make changes in the forms of the annual statements required of
insurance companies of any kind, as shall seem best adapted to
elicit a true exhibit of their condition and methods of transacting
business, and requires certain insurers to make filings with
the National Association of Insurance Commissioners. Article
1.10(9), requires the department to furnish the statement
blanks and other reporting forms necessary for companies
to comply with the filing requirements. Articles 3.07, 3.20-
1, 3.27-2, 3.77, 6.11, 6.12, 8.07, 8.08, 8.21, 8.24, 9.22,
9.47, 10.30, 11.06, 11.19, 14.15, 14.39, 15.15, 15.16, 16.18,
16.24, 17.22, 17.25, 18.12, 19.08, 20.02, 20A.10, 20A.22,
21.49, 21.54, 22.06, 23.02, and 23.26, require the filing
of financial reports and other information by insurers and
other regulated entities, and specify particular rule-making
authority of the commissioner relating to those insurers and
other regulated entities. Article 21.39 requires insurers to
establish adequate reserves and provides for the adoption of
each current formula for establishing reserves applicable to
each line of insurance. Article 21.43 provides the conditions
under which foreign insurers are permitted to do business in
this state and requires foreign insurers to comply with the
provisions of the Insurance Code. Article 21.52F authorizes
the commissioner to adopt rules to implement the regulation of
nonprofit health corporations holding a certificate of authority
under the article. Article 1.03A provides that the commissioner
may adopt rules for the conduct and execution of the duties and
functions of the department as authorized by statute for general
and uniform application.
§7.68. Requirements for Filing the 1998 Annual and 1999 Quarterly
Statements, Other Reporting Forms, and Diskettes or electronic filings
with the NAIC via the Internet.
(a) Scope. This section provides insurers and other regulated
entities with the requirements for the 1998 annual statement, 1999
quarterly statements, other reporting forms, and diskettes or electronic
filings with the NAIC via the internet necessary to report information
concerning the financial condition and business operations and
activities of insurers. This section applies to all insurers and other
regulated entities authorized to do the business of insurance in this
state and includes, but is not limited to, life insurers; accident insurers;
life and accident insurers; life and health insurers; accident and
health insurers; life, accident and health insurers; mutual life insurers;
stipulated premium insurers; group hospital service corporations;
fire insurers; fire and marine insurers; general casualty insurers; fire
and casualty insurers; mutual insurers other than life; county mutual
insurers; Lloyd’s plans; reciprocal and inter-insurance exchanges; domestic
risk retention groups; domestic joint underwriting associations;
title insurers; fraternal benefit societies; local mutual aid associations;
statewide mutual assessment companies; mutual burial associations;
exempt associations; farm mutual insurers; health maintenance organizations;
nonprofit health corporations; nonprofit legal services corporations;
the Texas Health Insurance Risk Pool; the Texas Workers’
Compensation Insurance Fund, and the Texas Windstorm Insurance
Association. The commissioner adopts by reference the 1998 annual
and 1999 quarterly statement blanks, instruction manuals, and other
reporting forms specified in this section. The annual and quarterly
statement blanks and other reporting forms are available from the
department, Financial Monitoring Activity, Mail Code 303-1A, P. O.
Box 149099, Austin, Texas 78714-9099. Insurers and other regulated
entities shall properly report to the Texas Department of Insurance and
the NAIC by completing the appropriate annual and quarterly statement
blanks, prepared with laser quality print (hand written copies
must be prepared legibly using black ink), other reporting forms, and
diskettes or electronic filings with NAIC via the internet following
the applicable instructions as outlined in subsections (d) - (m) of this
section.
(b) Conflicts with Other Laws. In the event of a conflict
between the Insurance Code, any currently existing departmental
rule, form, instructions, or any specific requirement of this section
and the NAIC manuals or instruction listed in the subsections listed
below, then and in that event, the Insurance Code, the department’s
promulgated rule, form, instruction, or the specific requirement of
subsections (d) - (m) of this section shall take precedence and in all
respects control.
(c) Definitions. The following words and terms, when used
in this section, shall have the following meanings, unless the context
clearly indicates otherwise.
(1) Association edition - Blanks and forms promulgated
by the National Association of Insurance Commissioners.
(2) Commissioner - The commissioner of insurance appointed
under the Texas Insurance Code, Article 1.09.
(3) Department - The Texas Department of Insurance.
(4) Insurer - A person or business entity legally organized
in and authorized by its domiciliary jurisdiction to do the business of
insurance.
(5) NAIC - The National Association of Insurance Commissioners.
(6) Texas edition - Blanks and forms promulgated by the
commissioner of insurance.
(d) Filing requirements for life, accident and health insurers.
Each life, life and accident, life and health, accident and health,
mutual life, or life, accident and health insurance company, stipulated
premium insurance company, group hospital services corporation and
the Texas Health Insurance Risk Pool (Article 3.77) shall complete
and file the following blanks, forms, diskettes or electronic filings
with the NAIC via the internet for the 1998 calendar year and the
first three quarters of the 1999 calendar year. The forms and reports
identified in paragraphs (1)(A)-(E); (2)(A),(B), (H); and (3)(A)-(K) of
this subsection shall be completed in accordance with the 1998 NAIC
Annual Statement Instructions, Life, Accident and Health, except as
provided by subsection (b) of this section. The diskettes or electronic
filings with the NAIC via the internet identified in paragraph (3)(L)
and (M) of this subsection shall be completed in accordance with
the 1998 NAIC Annual Statement Diskette Filing Specifications-Life,
Accident & Health, except as provided by paragraph (4) of
this subsection.
(1) Reports to be filed both with the department and the
NAIC include the following:
(A) Annual Statement (association edition, with a blue
colored cover made of minimum 65lb. paper), the 9 inch by 14 inch
size, to be filed on or before March 1, 1999 (stipulated premium
insurance companies, April 1, 1999);
(B) Annual Statement of the Separate Accounts (association
edition, with a green colored cover made of minimum 65lb.
paper) (required of companies maintaining separate accounts), the 9
inch by 14 inch size, to be filed on or before March 1, 1999 (stipulated
premium insurance companies, April 1, 1999);
(C) Management’s Discussion and Analysis (MD&A)
(a narrative document setting forth information which enables regulators
to enhance their understanding of the insurer’s financial position,
results of operations, changes in capital and surplus accounts
and cash ow), to be filed on or before April 1, 1999 (stipulated
premium insurance companies, May 1, 1999). The department has
taken initiatives to promote awareness of the potential for serious and
widespread problems, company readiness, and consequences of not
planning or addressing the Year 2000 Issue. The department considers
the Year 2000 Computer Issue material and relevant to the
continuing operations of insurance companies and related entities to
ensure uninterrupted policyholder service. As a material and relevant
matter that would have an impact on the future operations of the
company, the Year 2000 Issue should be discussed in the MD & A.
At a minimum, the company should include a general description of
the Year 2000 Issue as it relates to their organization, the company’s
state of readiness and the company’s contingency plans, i.e. plans to
handle the most reasonably likely worst case scenarios;
(D) Life and Accident and Health Quarterly Statement
(association edition) the 9 inch by 14 inch size, to be filed on or before
May 15, August 15, and November 15, 1999. However, a Texas
stipulated premium insurance company, unless specifically requested
to do so by the department, is not required to file quarterly statements
with the department or the NAIC if it meets all three of the following
conditions:
(i) it is authorized to write only life insurance on
its certificate of authority;
(ii) it collected premiums in the prior calendar year
of less than $1 million; and
(iii) it had a profit from operations in the prior two
calendar years.
(E) Actuarial Opinion (the statement of a qualified
actuary, setting forth his or her opinion relating to policy reserves and
other actuarial items; required of all companies), to be attached to
the annual statement required by paragraph (1)(A) of this subsection.
(2) Reports to be filed only with the department:
(A) Schedule SIS, Stockholder Information Supplement
(association edition) (required of domestic stock companies
which have 100 or more stockholders), the 9 inch by 14 inch size, to
be filed on or before March 1, 1999;
(B) Supplemental Compensation Exhibit (association
edition) 9 inch by 14 inch size, (required of Texas domestic companies
only), to be filed on or before March 1, 1999 (stipulated premium
companies, April 1, 1999);
(C) Annual Statement (Texas edition, with a green
colored cover made of minimum 65lb. paper) (required of companies
writing prepaid legal business in 1998), 8 1/2 inch by 14 inch size,
to be filed on or before March 1, 1999;
(D) Affidavit in Lieu of Annual Statement (Texas edition)
(required of companies authorized to write prepaid legal business
that did not write such business in 1998), to be filed on or before
March 1, 1999;
(E) Texas Overhead Assessment Form (Texas edition)
(required of Texas domestic companies only), to be filed on or before
March 1, 1999 (stipulated premium insurance companies, April 1,
1999);
(F) Analysis of Surplus (Texas edition) for life, accident
and health insurers, to be filed on or before March 1, 1999
(stipulated premium insurance companies, April 1, 1999); and
(G) Supplemental Investment Income Exhibit (Texas
edition) (shows percent of net investment income by type of investment,
as an attachment to page ten of the annual statement as required
by paragraph (1)(A) of this subsection, to be filed on or before March
1, 1999 (stipulated premium companies, April 1, 1999).
(H) The Texas Health Insurance Risk Pool shall complete
and file the following:
(i) NAIC Annual Statement Life, Accident and
Health Annual Statement (association edition, with a blue colored
cover made of minimum 65lb. paper), the 9 inch by 14 inch size,
to be filed on or before March 1, 1999. However, only pages 1 - 5,
12, and the Notes to Financial Statements (page 31) and Schedule E
(page 72) are required to be completed and filed on or before March
1, 1999; and
(ii) Life and Accident and Health Quarterly Statement
(association edition) the 9 inch by 14 inch size, to be filed on
or before May 15, August 15, and November 15, 1999.
(3) Reports, diskettes, or electronic filings via the internet
filed only with the NAIC:
(A) Trusteed Surplus Statement (association edition),
Life, Accident and Health Supplement (required of the U. S. branch
of an alien insurer), 9 inch by 14 inch size to be filed on or before
March 1, May 15, August 15, and November 15, 1999;
(B) Medicare Supplement Insurance Experience Exhibit
(association edition) (for insurers writing medicare business), to
be filed on or before March 1, 1999;
(C) Officers and Directors Information (association
edition), to be filed on or before March 1, 1999 (stipulated premium
insurance companies, April 1, 1999);
(D) Credit Insurance Experience Exhibit (association
edition) (required of companies writing credit business), 9 inch by 14
inch size, to be filed on or before April 1, 1999;
(E) Long-Term Care Insurance Exhibit (association
edition) (required of companies writing long-term care business),
the 9 inch by 14-inch size, to be filed on or before March 1, 1999
(stipulated premium insurance companies, April 1, 1999);
(F) Long-Term Care Experience Reporting Forms (association
edition) (required of companies writing long-term care business),
the 9-inch by 14 inch size, to be filed on or before April 1,
1999;
(G) Interest Sensitive Life Insurance Products Report
(association edition) (required of companies writing interest sensitive
products), the 9 inch by 14 inch size, to be filed on or before April
1, 1999 (stipulated premium insurance companies, April 1, 1999);
(H) Life, Health and Annuity Guaranty Association
Model Act Assessment Base Reconciliation Exhibit (association
edition), the 9 inch by 14 inch size, to be filed on or before April 1,
1999;
(I) Adjustments to the Life, Health and Annuity Guaranty
Association Model Act Assessment Base Reconciliation Exhibit
(association edition), the 9 inch by 14 inch size, to be filed on or
before April 1, 1999;
(J) Schedule DC (association edition) (for insurers
engaged in insurance options and futures), the 9 inch by 14 inch
size, to be filed on or before March 1, 1999 (stipulated premium
insurance companies, April 1, 1999);
(K) Schedule DS (association edition) (required only
of companies that have included "equity in the undistributed income
of unconsolidated subsidiaries" in its "net gain from operations"),
the 9 inch by 14 inch size, to be filed on or before March 1, 1999
(stipulated premium insurance companies, April 1, 1999);
(L) diskettes containing computerized annual statement
data, to be filed on or before March 1, 1999 (stipulated premium
insurance companies, April 1, 1999); and
(M) diskettes containing computerized quarterly statement
data, to be filed on or before May 15, August 15, and November
15, 1999. A Texas stipulated premium insurance company, unless
specifically requested to do so by the department, is not required to
file quarterly diskettes with the NAIC if it meets all three of the following
conditions:
(i) it is authorized to write only life insurance on
its certificate of authority;
(ii) it collected premiums in the prior calendar year
of less than $1 million; and
(iii) it had a profit from operations in the prior two
calendar years.
(4) The following provisions shall apply to the filings
required in paragraphs (1)-(3) of this subsection.
(A) Texas domestic life, accident and health companies
with more than $30 million in direct premiums in 1998 must
establish Asset Valuation Reserves (AVR) and Interest Maintenance
Reserves (IMR) in their financial statements in accordance with the
instructions in the 1998 NAIC Annual Statement Instructions, Life,
Accident and Health Companies. Texas domestic companies with $30
million or less in direct premiums and the Texas Health Insurance
Risk Pool may establish AVR and IMR in their financial statements
in accordance with the instructions in the 1998 NAIC Annual Statement
Instructions, Life, Accident and Health Companies or they must
value bonds and preferred stocks in compliance with the provisions
of the NAIC Purposes and Procedures of the Securities Valuation Office
Manual concerning companies not maintaining an AVR or IMR.
(B) Actuarial opinions required by paragraph (1)(E) of
this subsection shall be in accordance with the following:
(i) Unless exempted, the statement of actuarial
opinion should follow the applicable provisions of §§3.1601-3.1611
of this title (relating to Actuarial Opinion and Memorandum Regulation).
(ii) For those companies exempted from §§3.1601-
3.1611 of this title (relating to Actuarial Opinion and Memorandum
Regulation), instructions 1-12, established by the NAIC, must be
followed.
(iii) Any stipulated premium company subject to
§§3.1601-3.1611 of this title (relating to Actuarial Opinion and Memorandum
Regulation) which does not insure or assume risk on contracts
with death benefits, cash value, or accumulation values on any
one life in excess of $10,000, except as permitted by Insurance Code,
Article 22.13, §1(b), is exempt from submission of a statement of actuarial
opinion is accordance with §3.1608 of this title (relating to
Statement of Actuarial Opinion Based on an Asset Adequacy Analysis),
but must submit an actuarial opinion pursuant to §3.1607 of this
title (relating to Statement of Actuarial Opinion Not Including an Asset
Adequacy Analysis)
(C) Reporting for "administrative services only"
(ASO) plans. Some insurers may act only as administrators of
accident and health plans where the plan bears all of the risk of
claims. Such plans are commonly referred to as "administrative
services only" plans and are also referred to as "uninsured plans."
The amounts received for ASO plans shall not be recorded in
premiums. Claims paid by the insurer under uninsured accident and
health plans should not be reported in the Summary of Operations.
Commissions, expenses, and taxes incurred by an insurer for
uninsured accident and health plans are to be reported on a gross
basis by type of expense. The administration fees and expense
reimbursements relating to uninsured business are deducted in the
general expense exhibit and general insurance expenses are to
be reported in the Summary of Operations net of such fees and
reimbursement. Texas domestic insurers subject to this subsection
that have reported amounts received for ASO plans as premiums
under different reporting standards for at least five years prior to
the effective date of this section may continue reporting amounts
received for ASO plans as premiums. Under such circumstances,
the insurer shall provide a general description of the source and
amounts received for ASO plans as an attachment to the Summary
of Operations and the Schedule T of the annual statement.
(D) Hard copy filing of Schedule D - Parts 1 through
5 and Schedule DA Part 1A. The annual statement instructions
provide for hard copy filing of these schedules only with the state
of domicile, the NAIC and any other state requesting such filings.
The Texas Department of Insurance is requiring filing hard copy of
these schedules for the 1998 year from both domestic and foreign
insurers.
(e) Requirements for property and casualty insurers. Each
fire, fire and marine, general casualty, fire and casualty, county mutual
insurance company, mutual insurance company other than life,
Lloyd’s plan, reciprocal or inter-insurance exchange, domestic risk
retention group, life insurance company that is licensed to write workers’
compensation, any farm mutual insurance company that filed a
property and casualty annual statement under paragraph (1)(A) of
this subsection for the 1997 calendar year or had gross written premiums
in 1998 in excess of $5,000,000, any Mexican non-life insurer
licensed under any article of the Insurance Code other than or in addition
to Insurance Code, Article 8.24, domestic joint underwriting
association, the Texas Workers’ Compensation Insurance Fund created
under Article 5.76-3, and the Texas Windstorm Insurance Association
shall complete and file the following blanks, forms, and
diskettes or electronic filings with the NAIC via the internet for the
1998 calendar year and the first three quarters of the 1999 calendar
year. The forms and reports identified in paragraphs (1)(A)-(G);
(2)(A),(B), (J); and (3)(A)-(G) of this subsection shall be completed
in accordance with the 1998 NAIC Annual Statement Instructions,
Property and Casualty, except as provided by subsection (b) of this
section. The diskettes or electronic filings with the NAIC via the
internet identified in paragraph (3)(H) - (J) of this subsection shall
be completed in accordance with the 1998 NAIC Annual Statement
Diskette Filing Specifications - Property and Casualty.
(1) Reports to be filed both with the department and the
NAIC:
(A) Annual Statement (association edition, with a
yellow colored cover made of minimum 65lb. paper), the 9 inch
by 14 inch size, to be filed on or before March 1, 1999;
(B) Management’s Discussion and Analysis (a narrative
document setting forth information which enables regulators to
enhance their understanding of the insurer’s financial position, results
of operations, changes in capital and surplus accounts and cash
ow), to be filed on or before April 1, 1999. The department has
taken initiatives to promote awareness of the potential for serious and
widespread problems, company readiness, and consequences of not
planning or addressing the Year 2000 Issue. The department considers
the Year 2000 Computer Issue material and relevant to the
continuing operations of insurance companies and related entities to
ensure uninterrupted policyholder service. As a material and relevant
matter that would have an impact on the future operations of the
company, the Year 2000 Issue should be discussed in the MD & A.
At a minimum, the company should include a general description of
the Year 2000 Issue as it relates to their organization, the company’s
state of readiness and the company’s contingency plans, i.e. plans to
handle the most reasonably likely worst case scenarios;
(C) Financial Guaranty Insurance Exhibit (association
edition) (required of companies writing financial guaranty business),
the 9 inch by 14 inch size, to be filed on or before March 1, 1999;
(D) Supplement "A" to Schedule T, Exhibit of Medical
Malpractice Premiums Written (association edition) (required of
companies writing medical malpractice business), the 9 inch by 14-
inch size, to be filed on or before March 1, 1999;
(E) Property and Casualty Quarterly Statement (association
edition) the 9 inch by 14 inch size, to be filed on or before
May 15, August 15, and November 15, 1999;
(F) Actuarial Opinion (the statement of a qualified
actuary, setting forth his or her opinion relating to policy reserves and
other actuarial items; required of all companies), to be attached to
the annual statement required by subparagraph (A) of this paragraph;
and
(G) Combined Property/Casualty Annual Statement
(association edition, with a yellow colored cover made of minimum
65lb. paper), the 9 inch by 14-inch size, to be filed on or before
May 1, 1999, including the Insurance Expense Exhibit. This form is
required only for those affiliated insurers that wrote more than $35
million in direct premiums as a group, in 1998 as defined in Schedule
T of the Annual Statement.
(2) Reports to be filed only with the department:
(A) Schedule SIS, Stockholder Information Supplement
(association edition) (required of domestic stock companies
which have 100 or more stockholders), the 9 inch by 14 inch size, to
be filed on or before March 1, 1999;
(B) Supplemental Compensation Exhibit (association
edition) 9 inch by 14 inch size, (required of Texas domestic companies
only), to be filed on or before March 1, 1999;
(C) Supplemental Investment Income Exhibit (Texas
edition) (shows percent of net investment income by type of investment,
as an attachment to page six of the annual statement required
by paragraph (1)(A) of this subsection, to be filed on or before March
1, 1999;
(D) Annual Statement (Texas edition, with a green
colored cover made of minimum 65lb. paper) (required of companies
writing prepaid legal business in 1998), 8-1/2 inch by 14-inch size,
to be filed on or before March 1, 1999;
(E) Affidavit in Lieu of Annual Statement (Texas
edition) (required of companies authorized to write prepaid legal
business that did not write such business in 1998), to be filed on
or before March 1, 1999;
(F) Texas Overhead Assessment Form (Texas edition)
(required of Texas domestic companies only), to be filed on or before
March 1, 1999;
(G) Analysis of Surplus (Texas edition) for property
and casualty insurers (required of all licensed companies, except
Texas domestic county mutual companies), to be filed on or before
March 1, 1999;
(H) Supplement for County Mutuals (Texas edition)
(required of Texas domestic county mutual companies, as an attachment
to page seventeen of the annual statement as required by paragraph
(1)(A) of this subsection), to be filed on or before March 1,
1999; and
(I) Texas Supplemental A for County Mutuals (Texas
edition) (required of Texas domestic county mutual companies, as
an attachment to page nine of the annual statement as required by
paragraph (1)(A) of this subsection, to be filed on or before March
1, 1999.
(J) The Texas Windstorm Insurance Association (Insurance
Code Article §21.49) shall complete and file the following:
(i) Annual Statement, (association edition, with a
yellow colored cover made of minimum 65lb. paper), the 9 inch
by 14 inch size, to be filed on or before March 1, 1999, except as
provided by subsection (b) of this section;
(ii) Property and Casualty Quarterly Statement (association
edition), the 9 inch by 14 inch size, to be filed on or before
May 15, August 15, and November 15, 1999; and
(iii) Management’s Discussion and Analysis (a narrative
document setting forth information which enables regulators to
enhance their understanding of the insurer’s financial position, results
of operations, changes in capital and surplus accounts and cash
ow), to be filed on or before April 1, 1999. The department has
taken initiatives to promote awareness of the potential for serious and
widespread problems, company readiness, and consequences of not
planning or addressing the Year 2000 Issue. The department considers
the Year 2000 Computer Issue material and relevant to the
continuing operations of insurance companies and related entities to
ensure uninterrupted policyholder service. As a material and relevant
matter that would have an impact on the future operations of the
company, the Year 2000 Issue should be discussed in the MD & A.
At a minimum the company should include a general description of
the Year 2000 Issue as it relates to their organization, the company’s
state of readiness and the company’s contingency plans, i.e. plans to
handle the most reasonably likely worst case scenarios.
(3) Reports, diskettes, or electronic filings via the internet
filed only with the NAIC:
(A) Trusteed Surplus Statement (association edition,
Property and Casualty Supplement) (required of the U. S. branch of
an alien insurer), 9 inch by 14-inch size to be filed on or before
March 1, May 15, August 15, and November 15, 1999;
(B) Medicare Supplement Insurance Experience Exhibit
(association edition) (for insurers writing medicare business) to
be filed on or before March 1, 1999;
(C) Officers and Directors Information (association
edition), to be filed on or before March 1, 1999;
(D) Insurance Expense Exhibit (association edition),
the 9 inch by 14 inch size, to be filed on or before April 1, 1999;
(E) Credit Insurance Experience Exhibit (association
edition) (required of companies writing credit accident and/or health
business), 9 inch by 14 inch size, to be filed on or before April 1,
1999;
(F) Long-Term Care Experience Reporting Forms (association
edition) (required of companies writing long-term care business),
the 9-inch by 14 inch size, to be filed on or before April 1,
1999;
(G) Schedule DC (association edition) (for insurers
engaged in insurance options and futures), the 9 inch by 14 inch
size, to be filed on or before March 1, 1999;
(H) diskettes containing computerized annual statement
data, to be filed on or before March 1, 1999;
(I) diskettes containing combined annual statement
data, to be filed on or before May 1, 1999; and
(J) diskettes containing computerized quarterly statement
data, to be filed on or before May 15, August 15, and November
15, 1999.
(4) The following provisions shall apply to all filings
required by paragraphs (1) - (3) of this subsection.
(A) No loss reserve discounts, other than as respects
fixed and determinable payments such as those emanating from
workers’ compensation tabular indemnity reserves and long-term
disability claims for which specific segregated investments have been
established, shall be allowed. The commissioner shall have the
authority to determine the appropriateness of, and may disallow such
discounts.
(B) The commissioner shall have the authority to
determine the appropriateness of, and may disallow anticipated
salvage and subrogation.
(C) Texas domestic insurers that write only in Texas
may apply for an alternative basis of calculating the excess of
statutory reserves over statement reserves, also know as the Schedule
P penalty reserve, by submitting a request to the Chief Property
and Casualty Actuary of the Financial Program which outlines the
reasons and basis for such request. The request should be mailed
to the Chief Property and Casualty Actuary, Texas Department of
Insurance, Financial Program, MC 305-3A P.O. Box 149104, Austin,
Texas 78714-9104. Requests must be submitted to the department on
or before December 31, 1998.
(D) Hard copy filing of Schedule D - Parts 1 through
5 and Schedule DA Part 1A. The annual statement instructions
provide for hard copy filing of these schedules only with the state
of domicile, the NAIC and any other state requesting such filings.
The Texas Department of Insurance is requiring filing hard copy of
these schedules for the 1998 year from both domestic and foreign
insurers.
(f) Requirements for fraternal benefit societies. Each fraternal
benefit society shall complete and file the following blanks, forms,
and diskettes or electronic filings for the 1998 calendar year and the
first three quarters of the 1999 calendar year. The forms, reports, and
diskettes identified in paragraphs (1)(A)-(E); (2)(A),(D); and (3)(A)-(
F),(H) of this subsection shall be completed in accordance with the
1998 NAIC Annual Statement Instructions, Fraternal, except as provided
by subsection (b) of this section. The diskettes or electronic
filings identified in paragraph (3)(G) of this subsection shall be completed
in accordance with the 1998 NAIC Annual Statement Diskette
Filing Specifications-Fraternal, except as provided by subsection (b)of
this section.
(1) Reports to be filed both with the department and the
NAIC:
(A) Annual Statement (association edition, with a
brown colored cover made of minimum 65lb. paper), the 9 inch
by 14 inch size, to be filed on or before March 1, 1999;
(B) Annual Statement of the Separate Accounts (association
edition, with a green colored cover made of minimum 65lb.
paper) (required of companies maintaining separate accounts), the 9
inch by 14-inch size, to be filed on or before March 1, 1999;
(C) Fraternal Quarterly Statement (association edition),
the 9 inch by 14 inch size, to be filed on or before May 15,
August 15, and November 15, 1999;
(D) Management’s Discussion and Analysis (a narrative
document setting forth information which enables regulators to
enhance their understanding of the insurer’s financial position, results
of operations, changes in capital and surplus accounts and cash
ow), to be filed on or before April 1, 1999. The department has
taken initiatives to promote awareness of the potential for serious and
widespread problems, company readiness, and consequences of not
planning or addressing the Year 2000 Issue. The department considers
the Year 2000 Computer Issue material and relevant to the
continuing operations of insurance companies and related entities to
ensure uninterrupted policyholder service. As a material and relevant
matter that would have an impact on the future operations of the
company, the Year 2000 Issue should be discussed in the MD & A.
At a minimum, the company should include a general description of
the Year 2000 Issue as it relates to their organization, the company’s
state of readiness and the company’s contingency plans, i.e. plans to
handle the most reasonably likely worst case scenarios; and
(E) Actuarial Opinion (the statement of a qualified
actuary, setting forth his or her opinion relating to policy reserves and
other actuarial items; to be filed by all companies), to be attached to
the annual statement required by subparagraph (A) of this paragraph.
(2) Reports to be filed only with the department:
(A) Supplemental Compensation Exhibit (association
edition) 9 inch by 14 inch size, (required of Texas domestic companies
only), to be filed on or before March 1, 1999;
(B) Texas Overhead Assessment Form (Texas edition)
(required of Texas domestic companies only), to be filed on or before
March 1, 1999;
(C) Analysis of Surplus (Texas edition) for fraternal
benefit societies, to be filed on or before March 1, 1999;
(D) Fraternal Benefit Societies Supplement to Valuation
Report (Association edition) to be filed on or before June 30,
1999; and
(E) Supplemental Investment Income Exhibit (Texas
edition) (shows percent of net investment income by type of investment,
as an attachment to page ten of the annual statement as required
by paragraph (1)(A) of this subsection, to be filed on or before March
1, 1999.
(3) Reports and diskettes or electronic filings via the
internet to be filed only with the NAIC:
(A) Trusteed Surplus Statement (association edition,
Fraternal Supplement) (required of the U. S. branch of an alien
insurer), 9 inch by 14-inch size to be filed on or before March 1,
May 15, August 15, and November 15, 1999;
(B) Medicare Supplement Insurance Exhibit (association
edition) (for insurers writing medicare business) to be filed on
or before March 1, 1999;
(C) Officers and Directors Information (association
edition), to be filed on or before March 1, 1999;
(D) Long-Term Care Insurance Exhibit (association
edition) (required of companies writing long-term care business), the
9 inch by 14 inch size, to be filed on or before March 1, 1999;
(E) Schedule DS (association edition) (required only
of companies that have included "equity in the undistributed income
of the subsidiary" in "net gain from operations"), the 9 inch by 14 in
size, to be filed on or before March 1, 1999;
(F) Long-Term Care Experience Reporting Forms (association
edition) (required of companies writing long-term care
business), the 9-inch by 14-inch size, to be filed on or before April 1,
1999;
(G) diskettes containing computerized annual statement
data, to be filed on or before March 1, 1999; and
(H) Fraternal Interest Sensitive Life Insurance Products
Report (association edition) (required of companies writing interest
sensitive products), the 9 inch by 14 inch size, to be filed on
or before April 1, 1999.
(4) The following provisions shall apply to the filings
required in paragraph (1) - (3) of this subsection.
(A) Texas domestic fraternal companies with more
than $30 million in direct premiums in 1998 must establish Asset
Valuation Reserves and Interest Maintenance Reserves in their
financial statements in accordance with the instructions in the 1998
NAIC Annual Statement Instructions Fraternal. Texas domestic
fraternal companies with $30 million or less in direct premiums may
establish Asset Valuation Reserves and Interest Maintenance Reserves
in their financial statements in accordance with the instructions in the
1998 NAIC Annual Statement Instructions Fraternal or they must
value bonds and preferred stocks in compliance with the provisions
of §7.16 of this title (relating to NAIC Purposes and Procedures
of the Securities Valuation Office Manual) concerning companies
not maintaining an Asset Valuation Reserve or Interest Maintenance
Reserve.
(B) Since fraternals are not subject to Article 3.28
Section 2A, Texas Insurance Code, the statement of actuarial opinion
for fraternals should follow instructions 1 - 12, established by the
NAIC.
(g) Requirements for title insurers. Each title insurance
company shall complete and file the following blanks and forms
for the 1998 calendar year and the first three quarters of the 1999
calendar year. The reports and forms identified in paragraphs (1)(A)-(
D); (2)(A) and (E); and (3)(A) of this subsection shall be completed
in accordance with the 1998 NAIC Annual Statement Instructions,
Title, except as otherwise provided by subsection (b)of this section.
The diskette identified in paragraph (3)(B) of this subsection shall
be completed in accordance with the 1998 NAIC Annual Statement
Diskette Filing Specifications- Title, except as provided by subsection
(b) of this section.
(1) Reports to be filed with the department and the NAIC:
(A) Annual Statement (association edition, with a
salmon colored cover made of minimum 65lb. paper), the 9 inch
by 14 inch size, to be filed on or before March 1, 1999;
(B) Management’s Discussion and Analysis (a narrative
document setting forth information which enables regulators to
enhance their understanding of the insurer’s financial position, results
of operations, changes in capital and surplus accounts and cash
ow), to be filed on or before April 1, 1999. The department has
taken initiatives to promote awareness of the potential for serious and
widespread problems, company readiness, and consequences of not
planning or addressing the Year 2000 Issue. The department considers
the Year 2000 Computer Issue material and relevant to the
continuing operations of insurance companies and related entities to
ensure uninterrupted policyholder service. As a material and relevant
matter that would have an impact on the future operations of the
company, the Year 2000 Issue should be discussed in the MD & A.
At a minimum, the company should include a general description of
the Year 2000 Issue as it relates to their organization, the company’s
state of readiness and the company’s contingency plans, i.e. plans to
handle the most reasonably likely worst case scenarios;
(C) Actuarial Opinion (the statement of a qualified
actuary, setting forth his or her opinion relating to policy reserves
and other actuarial items; required of all companies), to be attached
to the annual statement required; and
(D) Title Quarterly Statement (association edition), the
9 inch by 14 inch size, to be filed on or before May 15, August 15,
and November 15, 1999.
(2) Reports to be filed only with the department:
(A) Supplemental Compensation Exhibit (association
edition), 9 inch by 14 inch size, (required of Texas domestic
companies only), to be filed on or before March 1, 1999;
(B) Texas Overhead Assessment Form (Texas edition)
(required of Texas domestic companies only), to be filed on or before
March 1, 1999;
(C) Analysis of Surplus (Texas edition) for title insurers
to be filed on or before March 1, 1999;
(D) Supplemental Investment Income Exhibit (Texas
edition) (shows percent of net investment income by type of investment,
as an attachment to page six of the annual statement as required
in paragraph (1)(A) of this subsection, to be filed on or before March
1, 1999; and
(E) Schedule SIS, Stockholder Information Supplement
(association edition) (required of domestic stock companies
which have 100 or more stockholders), the 9 inch by 14 inch size, to
be filed on or before March 1, 1999.
(3) Reports to be filed only with the NAIC.
(A) Officers and Directors Information (association
edition), to be filed on or before March 1, 1999;
(B) diskettes or electronic filings via the internet
containing computerized annual statement data, to be filed on or
before March 1, 1999.
(4) Hard copy filing of Schedule D - Parts 1 through
5 and Schedule DA Part 1A. The annual statement instructions
provide for hard copy filing of these schedules only with the state
of domicile, the NAIC and any other state requesting such filings.
The Texas Department of Insurance is requiring filing hard copy of
these schedules for the 1998 year from both domestic and foreign
insurers.
(h) Requirements for health maintenance organizations. Each
health maintenance organization and non-profit health corporation
shall complete and file the following blanks and forms, and diskettes
for the 1998 calendar year and the first three quarters of the
1999 calendar year. The forms, reports and diskettes identified
in paragraphs (1)(A)-(D) and (2)(A),(B) of this subsection shall
be completed in accordance with the NAIC Annual Statement
Instructions, Health Maintenance Organizations. The forms, reports
and diskettes identified in paragraphs (1)(A), (2)(B), (C), (E) and
(F) of this subsection shall be completed in accordance with Annual
and Quarterly HMO Supplement Instructions (provided by the
department). The diskettes or electronic filings identified in paragraph
(3) of this subsection shall be completed in accordance with the 1998
NAIC Annual Diskette Filing Specifications - Health Maintenance
Organization.
(1) Reports to be filed both with the department and the
NAIC:
(A) Annual Statement (association edition, with an
orange colored cover made of minimum 65lb. paper), 8 1/2 inch
by 14 inch size, to be filed on or before March 1, 1999;
(B) Management’s Discussion and Analysis, (a narrative
document setting forth information which enables regulators to
enhance their understanding of the insurer’s financial position, results
of operations, changes in capital and surplus accounts and cash
ow), to be filed on or before April 1, 1999. The department has
taken initiatives to promote awareness of the potential for serious and
widespread problems, company readiness, and consequences of not
planning or addressing the Year 2000 Issue. The department considers
the Year 2000 Computer Issue material and relevant to the
continuing operations of insurance companies and related entities to
ensure uninterrupted policyholder service. As a material and relevant
matter that would have an impact on the future operations of the
company, the Year 2000 Issue should be discussed in the MD & A.
At a minimum, the company should include a general description of
the Year 2000 Issue as it relates to their organization, the company’s
state of readiness and the company’s contingency plans, i.e. plans to
handle the most reasonably likely worst case scenarios;
(C) Actuarial Opinion (the statement of a qualified
actuary, setting forth his or her opinion relating to policy reserves
and other actuarial items; to be filed by all health maintenance
organizations), to be attached to the annual statement required by
subparagraph (A) of this paragraph; and the
(D) Medicare Supplement Insurance Experience Exhibit
(association edition) (for insurers writing medicare business) to
be filed on or before March 1, 1999.
(2) Reports to be filed only with the department:
(A) Supplemental Compensation Exhibit (association
edition), 9 inch by 14 inch size, (required of Texas domestic
companies only), to be filed on or before March 1, 1999;
(B) HMO Quarterly Statement (association edition), 8
1/2 inch by 14 inch size, together with quarterly data of Schedule E
- Part 2 - Special Deposits, from the NAIC HMO Annual Statement
Blank to be filed on or before May 15, August 15, and November
15, 1999;
(C) HMO Supplement (Texas edition), 8 1/2 inch by
14 inch size, to be filed on or before March 1, 1999. Exhibit II and
Exhibit VI of the HMO Supplement are to be filed quarterly on or
before March 1, 1999 and May 15, August 15, November 15, 1999;
(D) Texas Overhead Assessment Form (Texas edition)
(required of Texas domestic companies only), to be filed on or before
March 1, 1999;
(E) Department formatted diskettes containing annual
statement data (diskettes provided by the department for entering of
health maintenance organization or non-profit health corporation financial
statement data), to be completed according to the instructions
provided by the department and filed with the department on or before
March 1, 1999; and
(F) Department formatted diskettes containing quarterly
statement data (diskettes provided by the department for entering
of health maintenance organization or non-profit health corporation
financial statement data), to be completed according to the instructions
provided by the department and filed with the department on or
before May 15, August 15, and November 15, 1999.
(3) Reports and diskettes or electronic filings via the
internet to be filed only with the NAIC. The diskettes containing
computerized annual statement data must be filed on or before March
1, 1999;
(4) Hard copy filing of Schedule D - Parts 1 through
5 and Schedule DA Part 1A. The annual statement instructions
provide for hard copy filing of these schedules only with the state
of domicile, the NAIC and any other state requesting such filings.
The Texas Department of Insurance is requiring filing hard copy of
these schedules for the 1998 year from both domestic and foreign
insurers.
(i) Requirements for farm mutual insurers not subject to the
provisions of subsection (e) of this section relating to requirements for
property and casualty insurers. Each farm mutual insurance company
shall file the following completed blanks and forms for the 1998
calendar year with the department only:
(1) Annual statement (Texas edition, with a tan colored
cover made of minimum 65lb. paper), 8 1/2 inch by 14 inch size, to
be filed on or before March 1, 1999;
(2) Texas Overhead Assessment Form (Texas edition), to
be filed on or before March 1, 1999;
(3) Actuarial Opinion (the statement of a qualified actuary,
setting forth his or her opinion relating to policy reserves and other
actuarial items), to be attached to the annual statement required by
paragraph (1) of this subsection, unless otherwise exempted.
(j) Requirements for mutual assessment companies, mutual
aid and mutual burial associations, and exempt companies. Each
statewide mutual assessment company, local mutual aid association,
local mutual burial association, and exempt company shall file the
following completed blanks and forms for the 1998 calendar year
with the department only:
(1) Annual Statement (Texas edition, with an orange
colored cover made of minimum 65lb. paper), 8 1/2 inch by 14
inch size, to be filed on or before April 1, 1999, provided, however,
exempt companies are not required to complete lines 22, 23, 24, 25,
and 26 on page 3, the special instructions at the bottom of page 3,
and pages 4, 5, 6, and 7. All other pages are required;
(2) Texas Overhead Assessment Form (Texas edition), to
be filed on or before April 1, 1999;
(3) Release of Contributions Form (Texas edition), to be
filed on or before April 1, 1999;
(4) 3 1/2 % Chamberlain Reserve Table (Reserve Valuation)
(Texas edition), to be filed on or before April 1, 1999;
(5) Reserve Summary (1956 Chamberlain Table 3 1/2%)
(Texas edition), to be filed on or before April 1, 1999;
(6) Inventory of Insurance in Force by Age of Issue or
Reserving Year (Texas edition) to be filed on or before April 1, 1999;
and
(7) Summary of Inventory of Insurance in Force by Age
and Calculation of Net Premiums (Texas edition), to be filed on or
before April 1, 1999.
(k) Requirements for non-profit legal service corporations.
Each non-profit legal service corporation shall file the following
completed blanks and forms for the 1998 calendar year with the
department only;
(1) Annual Statement (Texas edition with a green colored
cover made of minimum 65lb. paper), 8 1/2 inch by 14 inch size, to
be filed on or before March 1, 1999; and
(2) Texas Overhead Assessment Form, to be filed on or
before March 1, 1999.
(l) Requirements for Mexican casualty companies. Each
Mexican casualty company doing business as authorized by a
Certificate of Authority issued under Texas Insurance Code, Article
8.24, shall complete and file the following blanks and forms for the
1998 calendar year with the department only. All submissions shall
be printed or typed in English and all monetary values shall be clearly
designated in United States dollars. The form identified in paragraph
(1) of this subsection shall be completed in accordance with the 1998
NAIC Annual Statement Instructions, Property and Casualty, except
as provided by this section. An actuarial opinion is not required.
It is the express intent of this subsection that it shall not repeal or
otherwise modify or amend any department rule or the Insurance
Code. The blanks or forms are as follows:
(1) Annual Statement (association edition, with a yellow
colored cover made of minimum 65lb. paper), 9 inch by 14 inch size,
provided, however, only pages 1 - 4, 15 - 19 and 130 are required to
be completed and filed on or before March 1, 1999;
(2) A copy of the balance sheet and the statement of profit
and loss from the Mexican financial statement (printed or typed in
English), to be filed on or before March 1, 1999;
(3) A copy of the official documents issued by the
COMISION NACIONAL DE SEGUROS Y FIANZAS approving the
1998 annual statement, to be filed on or before June 30, 1999; and
(4) A copy of the current license to operate in the
Republic of Mexico, to be filed on or before March 1, 1999.
(m) Other financial reports. Nothing in this section prohibits
the department from requiring any insurer or other regulated entity
from filing other financial reports with the department.
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 January 25,
1999.
TRD-9900516
Lynda H. Nesenholtz
General Counsel and Chief Clerk
Texas Department of Insurance
Effective date: February 14, 1999
Proposal publication date: December 18, 1998
For further information, please call: (512) 463-6327
Subchapter F. Evidence of Coverage
The Commissioner of Insurance adopts amended §11.506, concerning
mandatory contractual provisions of group, individual
and conversion agreements and certificates. The section is
adopted without changes to the proposed text as published in
the December 11, 1998, issue of the Texas Register(23 TexReg
12632) and will not be republished.
This section is intended to address numerous complaints received
by the department regarding the removal of prescription
drugs from drug formularies. In some instances, enrollees
select an HMO on the basis of a specific drug appearing on its
drug formulary, only to be left without coverage for that drug
upon a change in the HMO’s formulary. Such a practice is unfair
to enrollees, and is a common source of complaints to the
department. By requiring notice of the removal of a drug from
the formulary, enrollees are given the opportunity to appeal to
continue using a drug as if it remained on the formulary without
any loss of use of the drug.
This section requires prior notification to enrollees, physicians,
and providers of the removal of a drug from an HMO’s drug
formulary and allows enrollees to appeal to continue using
such a drug by invoking the complaint and appeals process
specified in Chapter 20A and Articles 21.58A and 21.58C
of the Insurance Code. By requiring the notice 90 days
before the removal of the drug, an enrollee may appeal to
continue using the drug without incurring a lapse in use of the
prescribed medication during the pendency of the enrollee’s
appeal. Furthermore, the advance notice of removal of a drug
from the formulary allows the enrollee and physician or provider
to consider whether modification of the enrollee’s medication is
a viable alternative. If the removal of a drug from the formulary
raises issues of medical necessity, the appropriate appeal route
is via the utilization review and, if necessary, independent review
organization process.
Comment: One commenter suggested that the section be
revised to make clear that the 90 day notice requirement does
not apply to benefit plans that utilize an open formulary or
three tier benefit structure. In such cases, the enrollee still
has coverage for a drug removed from the formulary, although
it may be at a higher copayment.
Response: The department disagrees that open formulary or
three tier benefit structure plans should be exempted from the
notice requirements of the rule. Despite the continued availability
of drugs removed from the formulary in such plans, the need
for enrollees under such plans to be notified of the removal of a
drug from the formulary is not diminished. This is an important
disclosure requirement to enrollees who are chronically ill or
otherwise require many prescription medications. The advance
notice allows the enrollee and the physician time to explore
other drug options before higher copayments become effective.
Additionally, the department is allowing carriers to give notice
via newsletters and other scheduled mailings to address cost
issues. Moreover, an enrollee’s complaint and appeal rights are
not affected by the existence of an open formulary or three tier
benefit structure plan. Even with open formulary or three tier
benefit structure plans, an enrollee may pursue a complaint or
appeal upon the removal of a drug from the formulary, pursuant
to the requirements of Article 20A.12. Thus, the 90 day notice
requirement applies to open formulary and three tier benefit
plans.
Comment: One commenter supports the section as a reasonable
requirement that protects enrollees.
Response: The Department appreciates the commenter’s support.
For, and for with changes: Texas Society of Health System
Pharmacists, Blue Cross Blue Shield of Texas.
The section is adopted under the Insurance Code, Chapter
20A, Article 21.21, and Article 1.03A. Insurance Code Article
20A.22(a) provides that the commissioner may promulgate
rules and regulations as are necessary and proper to carry
out the provisions of the HMO Act (Insurance Code, Chapter
20A). Article 21.21, Section 13 authorizes the promulgation
of rules necessary to prevent unfair competition and unfair
practices under Article 21.21. 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.
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 January 19,
1999.
TRD-9900348
Lynda H. Nesenholtz
General Counsel and Chief Clerk
Texas Department of Insurance
Effective date: February 8, 1999
Proposal publication date: December 11, 1998
For further information, please call: (512) 463–6327
The Commissioner of Insurance adopts new Subchapter
Y, Limited Service HMOs, §§11.2401-11.2405, concerning
health maintenance organizations (HMOs). Sections 11.2401,
11.2404, and 11.2405 are adopted with changes to the
proposed text as published in the December 4, 1998 issue
of the Texas Register (23 TexReg 12182). Sections 11.2402
and 11.2403 are adopted without changes and will not be
republished.
This new subchapter is necessary to implement legislation
enacted by the 75th Legislature in Senate Bill 382, amending
provisions of Article 20A to provide for the creation of limited
service HMOs. Limited service HMOs will allow the growing
number of provider sponsored networks, as well as other
entities, to provide services in an HMO format for conditions that
require a broader range of treatment than is available through a
single service HMO, without requiring that the HMO provide the
extensive range of services required of basic service HMOs.
After reviewing public comment on the proposed amendments,
the department has made the following changes: Section
11.2401 was revised to clarify the definition of several terms
contained in the rule. Section 11.2404 was changed to clarify
that services provided by telephone shall not count toward the
annual outpatient visit total for mental illness treatment, and to
modify the term "basic mental illness" to "non-serious mental
illness." Section 11.2405 was revised to differentiate clearly
between services provided for mental health and services
provided for chemical dependency and to clarify that limited
service HMOs shall cover court ordered mental health/chemical
dependency treatment in accord with its standards of medical
necessity. All other changes were made to correct punctuation,
grammatical, or typographical errors.
New §11.2401 defines terms relating to limited service HMOs.
New §11.2402 describes in general the requirements for description
of coverages provided by limited service HMOs to
enrollees and the contents of limited service HMO evidences
of coverage. New §11.2403 sets forth prohibited provisions of
limited service HMO evidences of coverage. New §11.2404
sets forth prohibited practices for single service HMOs. New
§11.2405 sets forth the minimum benefits limited service mental
health care HMOs must provide.
General. A commenter recommended that the department
require limited service HMOs to disclose their benefit limits in
marketing materials to employers.
Agency Response: The department agrees that it is important
for employers to recognize benefit limits in any plan they are
considering purchasing. However, the department believes
§11.2402(a) & (b) adequately address this problem.
Comment. A commenter noted that the department did not
discuss costs with the Texas Commission on Alcohol and Drug
Abuse (TCADA) in researching the costs of this proposal.
The commenter suggested the department’s cost figures are
excessive and expressed concern that these elevated cost
estimates resulted in a lower number of covered days in the
benefit standards of the rule.
Agency Response: While the department did not obtain estimates
from TCADA, staff did consult private industry as well as
the Texas Department of Mental Health/Mental Retardation in
preparing the cost figures for this proposal. Staff did consult
TCADA throughout the development of the rule. Moreover, the
purpose of these figures is to comply with Government Code
(2001.024(5)(B) and to assist interested persons in assessing
the probable economic cost of compliance with the rule. The
cost figures have no bearing on the minimum benefit standards
set out in the rule. Finally, the cost figures for inpatient treatment
in the rule proposal represent the cost for hospital treatment.
The department recognizes that other modes of mental health/
chemical dependency treatment will cost less. The department,
however, utilized the hospital treatment figure to insure that interested
persons would not underestimate the economic cost of
compliance.
Comment. A commenter stated that the rule fails to address the
treatment needs of individuals with a dual diagnosis of mental
illness and substance abuse.
Agency Response: Rules governing chemical dependency utilization
review (28 TAC ((3.8001 et seq.) recognize that an
individual may receive a dual diagnosis. The rules provide direction
for coordination of treatment between various providers.
Since limited service HMOs must provide services in accor-dance
with these rules, the department believes the existing
regulatory framework adequately addresses individuals with a
dual diagnosis.
11.2401. A commenter noted that some terms used in the rule
are not included in the listed definitions, and that some of the
definitions presented do not relate to the rule.
Agency Response: Some of the terms in the rule for which
the commenter has requested definition/clarification are not intended
to have more than their common meaning. Other terms
were not expressly defined because there is consensus about
their meaning within the context of mental health/chemical dependency
treatment. However, the department believes it would
be beneficial to amend some of the definitions and has incorporated
the suggested revisions to acute day treatment, assessment,
case management, crisis respite, intensive outpatient,
medication administration, medication monitoring, medication
training, partial hospitalization, pharmacological management,
screening and treatment planning into the text of the rule.
§11.2404(c). A commenter inquired whether a mental health/
chemical dependency limited service HMO is expected to pay
for medical services rendered to an individual during the emergency
psychiatric treatment of the individual.
Agency Response: The purpose of limited health care service
plans, under Insurance Code Article 20A.02, is to provide, arrange,
pay for, or reimburse limited health care services. Limited
health care services under this rule are those provided
for treatment of mental health/chemical dependency. Limited
service HMOs are thus only responsible for payment of mental
health/chemical dependency services, regardless of the circumstances
giving rise to the need for treatment. §11.2404(d).
A commenter expressed concern with the provision prohibiting
limited service HMOs from counting medication related services
toward the annual outpatient visit total for serious and
non-serious mental illness.
Agency Response: Texas Insurance Code Article 3.51-14 Sec.
(3)(b) states that a health benefit plan may not count "an
outpatient visit for the purpose of medication management"
toward the required annual number of covered outpatient visits.
While this statute only applies to the treatment of serious mental
illness, the department believes it is important to apply the same
standard to non-serious mental illness to provide for consistency
of mental health treatment regardless of degree. This provision
has particular significance as the rule requires coverage of
only 30 annual outpatient visits for the treatment of non-serious
mental illness, compared to 60 for treatment of serious mental
illness. §11.2404(d). A commenter expressed concern that
the rules allow HMOs to count services provided by telephone
toward the annual number of outpatient visits.
Agency Response: The department appreciates and agrees
with the commenter’s concern. To clarify that telephone services
are not to count toward an individual’s annual covered
outpatient visit total, the department has added language prohibiting
a limited service HMO from counting services provided
by telephone toward the outpatient visit total for either serious or
non-serious mental illness. (11.2405. A commenter questioned
whether the rule excludes from coverage substance abusers
who are not chemically dependent.
Agency Response: This rule does not exclude from coverage
substance abusers who are not chemically dependent. This
rule requires limited service HMOs to provide care in accord
with the levels of care and clinical criteria specified in 28
TAC §§3.8001 et seq., which defines chemical dependency
as "the abuse of or psychological dependence on or addiction
to alcohol or a controlled substance." 11.2405. Commenters
suggested that this section needs clarification regarding its
application to chemical dependency treatment. One commenter
expressed concern that the minimum benefit standards for
chemical dependency treatment are excessively low.
Agency Response: The department agrees and has adopted
language clarifying that standards for treatment of chemical
dependency are separate standards from those governing
mental health treatment. Chemical dependency standards are
codified at 28 TAC §§3.8001 et seq. While the rule proposal
incorporated those standards at §11.2405(c), the department
has added express language to clarify that the limits on
mental health coverage do not apply to chemical dependency
treatment. §11.2405(a). A commenter inquired whether the
rule’s reference to CDT codes is intended to be CPT codes;
if so, the commenter expressed concern that the CPT is not
sufficiently extensive to meet billing needs.
Agency Response: The department agrees with the commenter’s
concerns. TCADA and TDMHMR are developing a
comprehensive list of CPT codes, and the department has
deleted this subsection pending promulgation of a suitable list
of codes. (11.2405(a). A commenter suggested the rule require
limited service HMOs to cover court ordered treatment only in
accord with the HMO’s standards of medical necessity.
Agency Response: The department agrees and has adopted
the suggested language.
For: Texas Association of Health Plans, Texas Community
Solutions.
For with changes: Austin Family House, Texas Department
of Mental Health/Mental Retardation, Texas Commission on
Alcohol and Drug Abuse, Office of Public Insurance Counsel.
The new sections are adopted under the Insurance Code, Chapter
20A, as amended by the 75th Legislature in Senate Bill 385,
and Article 1.03A. Insurance Code Article 20A.02(b) provides
that basic health care services mean health care services which
the commissioner determines an enrolled population might reasonably
require to maintain good health, including, at a minimum,
services designated as basic health services under Section
1302, Title XIII, Public Health Service Act (42 U.S.C., Section
300e - 1(1)). Insurance Code Article 20A.22(a) provides
that the commissioner may promulgate rules and regulations as
are necessary and proper to carry out the provisions of the HMO
Act (Insurance Code, Chapter 20A). Article 20A.22(b) provides
that the commissioner is specifically authorized to promulgate
rules to ensure that enrollees have adequate access to health
care services and to establish minimum physician/patient ratios,
mileage requirements for primary and specialty care, maximum
travel times, and maximum waiting times for obtaining appointments.
Article 20A.04(b) provides that the commissioner may
by rule require an operational HMO to timely notify the commissioner
when it modifies documents it submitted in applying
for a certificate of authority. Article 20A.37 provides that the
commissioner by rule may establish minimum standards and
requirements for ongoing internal quality assurance programs
for HMOs, including, but not limited to, standards for assuring
availability, accessibility, quality, and continuity of care. 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 statute.
§11.2401. Definitions.
The following words and terms, when used in this subchapter, shall
have the following meanings, unless the context clearly indicates
otherwise.
(1) Acute Day Treatment–Program-based services focused
on the short-term, acute treatment of individuals who require
multi-disciplinary treatment in order to obtain maximum control of
psychiatric symptoms. Services are provided in a highly structured
and safe environment with constant supervision. Contacts with
staff are frequent, activities and services constantly available, and
developmental and social supports encouraged and facilitated. Staff
receive specialized training in crisis management. Activities are goal
oriented, focusing on improving peer interaction, appropriate social
behavior, and stress tolerance.
(2) Assessment–The clinical process of obtaining and
evaluating historical, social, functional, psychiatric, developmental,
or other information from the individual and family seeking services
to determine, level of need (including urgency) and specific treatment
needs (including the preferences of the individual seeking services).
(3) Case Management–Case management activities are
provided to assist individuals in gaining access to medical, social,
educational, and other appropriate services that will help them achieve
a quality of life and community participation acceptable to each
individual. The role of persons who provide case management
activities is to support and assist the person in achieving goals.
(4) Crisis Hotline–A continuously available staffed telephone
service providing information, support, and referrals to callers
24 hours per day, seven days per week.
(5) Crisis Respite–Those services provided for temporary,
short term, periodic relief to individuals or their primary caregivers
during a crisis. Program-based respite services involve temporary
residential placement outside the usual living situation. Community-based
respite services involve introducing respite staff into the usual
living situation or providing a place for the individual to go during
the day or other services considered to provide respite.
(6) Crisis Services–Services including crisis hotline, crisis
intervention, and crisis respite.
(7) Intensive outpatient–An organized non-residential service
providing structured group and individual therapy, educational
services, and life skills training which is less than 24 hours per day.
(8) Medication administration–A service provided to an
individual by a licensed nurse (or other appropriately trained and
certified person under the supervision of a physician or registered
nurse as provided by state law) to ensure the direct application of
a medication to the body of the individual by any means including
handing the individual a single dose of medication to be taken orally.
(9) Medication monitoring–A service provided to an individual
and/or family member or other collateral by a licensed nurse
(or other appropriately trained and certified person under the supervision
of a physician or registered nurse as provided by state law) for
the purpose of assessment of medication actions, target symptoms,
side effects and adverse effects, potential toxicity, and the impact of
medication for the individual and family in accordance with the plan
of care.
(10) Medication training–A service to an individual and/
or family member or other collateral by a licensed nurse (or other
appropriately trained professional or paraprofessional as provided
by state law) for the purpose of teaching the knowledge and skills
needed by the individual/family/collateral in the proper administration
and monitoring of prescribed medication in accordance with the
individual’s plan of care.
(11) Medication-related services–Services including medication
administration, medication monitoring, medication training,
and pharmacological management.
(12) Partial hospitalization–The provision of treatment for
mental health care or chemical dependency for individuals who
require care or support or both in a hospital or chemical dependency
treatment center but who do not require 24-hour supervision.
(13) Pharmacological management–Service provided to
an individual or collateral by a physician or other appropriately trained
and certified professional as provided by state law for the purpose of
determining symptom remission and the medication regimen needed
to initiate and/or maintain an individual’s plan of care.
(14) Screening–Gathering triage information necessary to
determine a need for in-depth assessment. This information is
collected through interview or by phone with the individual or
collateral as part of the admission/intake process or as necessary.
(15) Treatment planning–Activities for the purpose of
medically necessary, prioritized, comprehensive, collaborative, and
measurable treatment that reflects the needs and wishes of the
individual and builds upon the strengths of the individual.
§11.2404. Prohibited Practices.
(a) A limited service HMO shall not limit or otherwise
interfere with an enrollee’s right to terminate his or her membership
in the plan before the end of the enrollment year.
(b) A limited service HMO shall not limit coverage for
emergency services under a limited health care service plan.
(c) A limited service HMO shall not charge an emergency
fee in addition to a copayment for emergency services.
(d) A limited service HMO shall not count medication related
services and services provided by telephone toward the annual
outpatient visit total for either serious or non-serious mental illness.
§11.2405. Minimum Standards, Mental Health and Chemical Dependency
Services and Benefits.
(a) Each limited service HMO evidence of coverage providing
coverage for mental health/chemical dependency services and
benefits shall cover, in accord with the limited service HMO’s standards
of medical necessity, court ordered mental health/chemical dependency
treatment and may, if clearly disclosed, require the enrollee
to have such treatment completed by a participating provider in the
Health Maintenance Organization Delivery Network, as defined under
Insurance Code Article 20A.02(w), or as otherwise arranged by
the limited service HMO.
(b) Each limited service HMO evidence of coverage providing
coverage for mental health/chemical dependency services and
benefits shall provide primary mental health/chemical dependency
services and benefits, including, but not limited to:
(1) For treatment of serious mental illness (as defined in
Texas Insurance Code Article 3.51-14), up to 45 inpatient days per
year, up to 60 outpatient visits per year, which include assessment/
screening, treatment planning, and crisis services.
(2) For treatment of non-serious mental illness, up to 30
inpatient days per year, up to 30 outpatient visits per year, which
include assessment/screening, treatment planning, and crisis services.
(3) Treatment of chemical dependency that shall be provided
in accord with the levels of care and clinical criteria specified
in 28 TAC ((3.8001 et seq. (relating to Standards for Reasonable Cost
Control and Utilization Review for Chemical Dependency Treatment
Centers).
(4) Any other services necessary and appropriate to treat
mental health/chemical dependency or required by the Insurance
Code, Health and Safety Code, and other applicable laws and
regulations of this State.
(c) Each limited service HMO evidence of coverage providing
coverage for mental health/chemical dependency services and
benefits shall demonstrate the capacity to provide, and may provide,
secondary intensive rehabilitative and community support services
for mental illness/chemical dependency, including, but not limited to,
case management, partial hospitalization, residential, acute day treatment,
intensive outpatient, ACT teams, and habilitative/rehabilitative
services for pervasive developmental disorders .
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 January 25,
1999.
TRD-9900515
Lynda H. Nesenholtz
General Counsel and Chief Clerk
Texas Department of Insurance
Effective date: February 14, 1999
Proposal publication date: December 4, 1998
For further information, please call: (512) 463-6327
28 TAC §3.8006
Chapter 7. Corporate and Financial Regulation
Chapter 11. Health Maintenance Organizations
Subchapter Y. Limited Service HMOS