28 TAC §§21.2701-21.2706
The Texas Department of Insurance proposes new §§21.2701
- 1.2706 concerning health benefit plans issued to associations and bona fide
associations. In order to maintain regulatory authority over health benefit
plans issued to associations and bona fide associations in the State of Texas,
the commissioner is required to implement the provisions of the Health Insurance
Portability and Accountability Act of 1996 (HIPAA) (Public Law 104-191, 42
U.S.C. 300gg et seq.). These proposed new sections are necessary to comply
with the provisions of HIPAA and the interim regulations promulgated by the
Department of Health and Human Services, Health Care Financing Administration,
as 45 CFR Subtitle A, Parts 144 and 146. These proposed new sections also
clarify the applicability of HIPAA and Texas insurance statutes and regulations
to health benefit plans issued to and made available through associations
and bona fide associations.
Proposed §21.2701 sets forth the scope of these proposed sections.
Proposed §21.2702 defines relevant terms as they appear in the sections.
The terms "association" and "bona fide association" are both defined in recognition
of the different regulatory schemes for associations under Texas law and bona
fide associations under HIPAA and the federal interim regulations. Association
is the broader term and encompasses bona fide associations. Bona fide associations
have the requirements that health status-related factors not be considered
in accepting members into the bona fide association, or in making health benefit
plans available to members of the bona fide association, and that the bona
fide association be in active existence for five years. The practical effect
of the difference between associations and bona fide associations is that
upon or after issuance of a health benefit plan to a bona fide association
all members of the bona fide association are guaranteed the right to coverage
regardless of the members' health status-related factors, whereas a health
benefit plan issued to an association is not prohibited from declining coverage
to a member based upon the health status-related factors of that member. These
definitions are consistent with HIPAA and Texas' existing statutes and regulations
regulating group health benefit plans.
Proposed §21.2703 clarifies that plans issued to associations and
bona fide associations as defined in these new sections will be governed by
statutes and regulations relating to group insurance and group HMO products
providing medical/surgical benefits or services. Proposed §21.2704 sets
forth the guaranteed renewability requirements for association and bona fide
association health benefit plans. For purposes of HIPAA, plans issued to associations,
whether bona fide or not, are subject to the renewability provisions of the
individual market provisions of HIPAA.
Proposed §21.2705 requires that health carriers that issue health
benefit plans to associations or bona fide associations provide certifications
of coverage, as this coverage is considered to be creditable coverage under
HIPAA and Texas law. Proposed §21.2706 allows a health carrier to refuse
to issue coverage to a bona fide association in accordance with the carrier's
underwriting standards and criteria. However, if a health benefit plan is
issued to a bona fide association, the health carrier must issue coverage
to all members, and dependents of members if dependent coverage is offered,
of the bona fide association that apply for coverage, regardless of health
status-related factors.
Rose Ann Reeser, Senior Associate Commissioner, Regulation and Safety,
has determined that for each year of the first five years the proposal is
in effect, there will be no fiscal implications for state or local government
as a result of enforcing or administering the proposed sections. There will
be no adverse effects on local employment or the local economy.
Ms. Reeser has determined that for each year the proposal is in effect
the public benefits anticipated as a result of the adoption of the proposal
will be clarification that coverage issued by health carriers to associations
and bona fide associations and their members is guaranteed renewable as required
by HIPAA. Furthermore, members participating in a health benefit plan issued
to a bona fide association will be assured the issuance of health coverage
regardless of their health status-related factors.
The economic cost to comply with these proposed sections is the result
of the federal enactment of HIPAA, and the federal regulations implementing
HIPAA, which require adoption of rules by the state in order to maintain state
regulatory authority over these groups insurance coverages. These proposed
sections are intended to comply with the standards for coverage issued to
association groups that have been set forth in HIPAA. These proposed sections
do not mandate any action not required by HIPAA, and therefore impose no costs
other than those imposed by the federal legislation.
Ms. Reeser has determined that there is no economic costs or adverse impact
on any small HMOs or insurers that are a result of these proposed new sections.
The sole determining factor as to whether any costs will be incurred as a
result of these proposed sections is whether a health carrier chooses to issue
coverage to associations or bona fide associations. The size of the business
has no bearing upon the applicability of these proposed sections. There is
thus no adverse economic effect upon small businesses. Furthermore, the possibility
of federal preemption forecloses the waiver of the requirements of these sections
for small businesses. The requirements of the rule should not be waived.
Comments on the proposal must be submitted within 30 days after publication
of the proposed sections in the
Texas Register
to Lynda H. Nesenholtz, General Counsel and Chief Clerk, Mail Code 113-2A,
Texas Department of Insurance, P. O. Box 149104, Austin, Texas, 78714-9104.
Additional copies of the comment are to be submitted to Linda von Quintus,
Deputy Commissioner, Regulation and Safety, Mail Code 107-2A, Texas Department
of Insurance, P. O. Box 149104, Austin, Texas, 78714-9104. Any requests for
a public hearing should be submitted separately to the Office of the Chief
Clerk.
These new sections are proposed under the Insurance Code Articles
3.42, 3.51-6 and 20A.22; the Health Insurance Portability and Accountability
Act of 1996 (Public Law 104-191, 42 U.S.C. 300gg et seq.); the interim federal
regulations implementing HIPAA published by the Department of Health and Human
Services (62 FR 16985-17004); and Insurance Code Article 1.03A. The Insurance
Code Article 3.42(p) grants the commissioner rulemaking authority to regulate
health insurance policy forms. The Insurance Code Article 3.51-6, §5
grants the commissioner rule-making authority to regulate group insurance
products. The Insurance Code Article 20A.22(c) grants the commissioner rulemaking
authority to meet the minimum requirements of federal laws and regulations
regarding HMOs. The minimum requirements of federal law regarding association
plans are contained in HIPAA. Interim federal regulations implementing HIPAA
have been promulgated by the Department of Health and Human Services and published
in the Federal Register at 62 FR 16985-17004. 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 only as authorized
by statute.
The following articles are affected by this proposal: Insurance Code Articles
3.42, 3.51-6, 20A.22 and 42 U.S.C. §300gg et seq.
§21.2701. Scope.
Unless otherwise specified, this subchapter applies to all health carriers
that issue health benefit plans to associations or bona fide associations.
This subchapter does not apply to coverage issued to employer associations.
§21.2702. Definitions.
The following words and terms when used in this subchapter shall have
the following meanings, unless the context clearly indicates otherwise:
(1)
Association - An association (other than an employer association),
including but not limited to a labor union or organizations of such unions,
membership corporations organized or holding a certificate of authority under
the Texas Non-profit Corporation Act, and cooperatives and corporations subject
to the supervision and control of the Farm Credit Administration of the United
States of America, that:
(A)
has a constitution and bylaws;
(B)
has been actively in existence for at least 2 years; and
(C)
has been formed and maintained in good faith for purposes
other than obtaining coverage under a health benefit plan to cover members
for the benefit of persons other than the association or its officers or trustees.
(2)
Bona Fide Association - An association that,
in addition to meeting the requirements of an association in paragraphs (1)(A)
and (C) of this subsection:
(A)
has been actively in existence for at least 5 years;
(B)
does not condition membership in the association on any
health status-related factor relating to an individual (including the individual
eligible for membership or a dependent of the individual eligible for membership,
if dependent coverage is offered);
(C)
makes coverage under a health benefit plan offered through
the association available to all members, regardless of any health status-related
factor relating to the members (or dependents eligible for coverage through
a member, if dependent coverage is offered); and
(D)
does not make a health benefit plan offered through the
association available other than in connection with a member of the association.
(3)
Creditable Coverage - As defined in §21.1101
of this title (relating to Definitions).
(4)
Genetic information - Information derived from the
results of a genetic test.
(5)
Genetic test - A laboratory test of an individual's
deoxyribonucleic acid (DNA), ribonucleic acid (RNA), proteins, or chromosomes
to identify by analysis of the DNA, RNA, proteins, or chromosomes the genetic
mutations or alterations in the DNA, RNA, proteins, or chromosomes that are
associated with a predisposition for a clinically recognized disease or disorder.
The term does not include:
(A)
a routine physical examination or a routine test performed
as a part of a physical examination;
(B)
a chemical, blood or urine analysis;
(C)
a test to determine drug use; or
(D)
a test for the presence of the human immunodeficiency
virus.
(6)
HMO - A health maintenance organization as defined
in the Insurance Code Article 20A.02(n).
(7)
Health benefit plan - A group insurance policy, a
certificate issued under a group policy, a group hospital service contract,
or a group subscriber contract or evidence of coverage issued by a health
carrier that provides benefits for health care benefits or services. The term
does not include the following plans of coverage:
(A)
Under all circumstances:
(i)
coverage only for accident;
(ii)
credit-only insurance;
(iii)
disability insurance coverage;
(iv)
Medicare services under a federal contract;
(v)
coverage issued as a supplement to liability insurance;
(vi)
insurance coverage arising out of workers' compensation
or similar insurance;
(vii)
automobile medical payment insurance coverage;
(viii)
jointly managed trusts authorized under 29 United States
Code §§141 et seq. that contain a plan of benefits for employees
that is negotiated in a collective bargaining agreement governing wages, hours,
and working conditions of the employees that is authorized under 29 United
States Code §157;
(ix)
short-term limited duration insurance as defined in this
section;
(x)
liability insurance, including general liability insurance
and automobile liability insurance; or
(xi)
coverage for onsite medical clinics.
(B)
Only if the benefits are provided under a separate policy
or contract of insurance or evidence of coverage:
(i)
coverage for a specified disease or illness;
(ii)
Medicare supplement and Medicare Select policies regulated
in accordance with federal law;
(iii)
long-term care coverage or benefits, nursing home care
coverage or benefits, home health care coverage or benefits, community-based
care coverage or benefits, or any combination of those coverages or benefits;
(iv)
coverage that provides limited-scope dental or vision
benefits;
(v)
coverage provided by a single-service HMO;
(vi)
hospital indemnity or other fixed indemnity insurance;
(vii)
coverage supplemental to the coverage provided under
Chapter 55, Title 10 of the United States Code (also know as CHAMPUS supplemental
programs);
(viii)
coverage that provides other limited benefits specified
by federal regulations; or
(ix)
other coverage that is:
(I)
similar to the coverage described in subparagraphs (A)
and (B) of this paragraph under which benefits for medical care are secondary
or incidental to other insurance benefits; and
(II)
specified in federal regulations.
(8)
Health carrier - Any entity authorized
under the Texas Insurance Code or another insurance law of this state that
provides health benefit plans in this state including an insurance company;
a group hospital service corporation operating under Insurance Code, Chapter
20; a stipulated premium insurance company operating under Insurance Code,
Chapter 22; an approved nonprofit health corporation that is certified under
Section 5.01(a), Medical Practice Act (Article 4495b, Vernon's Texas Civil
Statutes) and that holds a certificate of authority issued by the commissioner
under Insurance Code Article 21.52F, or an HMO.
(9)
Health status-related factor - Any of the following
in relation to an individual:
(A)
health status;
(B)
medical condition, including both physical and mental
illness;
(C)
claims experience;
(D)
receipt of health care;
(E)
medical history;
(F)
genetic information;
(G)
evidence of insurability, including conditions arising
out of acts of domestic violence, including family violence as defined by
the Insurance Code Article 21.21-5; or
(H)
disability.
(10)
Short-term limited duration coverage - Health
coverage provided under a contract with a health carrier that has an expiration
date specified in the contract (taking into account any extensions that may
be elected by the policyholder without the health carrier's consent) that
is within 12 months of the date the contract becomes effective.
§21.2703. Health Care Plans Issued to Associations and Bona Fide Associations.
A health benefit plan issued to an association or a bona fide association
is considered a group product, and shall comply with the statutes and regulations
applicable to coverages and benefits relating to group products.
§21.2704. Mandatory Guaranteed Renewability Provisions for Health Benefit Plans Issued to Members of an Association or Bona Fide Association.
(a)
Except as provided by subsection (d) of this section,
a health carrier shall renew a health benefit plan issued to an association,
or a bona fide association, at the option of the association or bona fide
association, unless:
(1)
the association or bona fide association has failed to
pay premiums or contributions in accordance with the terms of the health benefit
plan, including any timeliness requirements;
(2)
the association or bona fide association has performed
an act or practice that constitutes fraud, or has made an intentional misrepresentation
of material fact, relating in any way to the health benefit plan, including
claims for benefits under the health benefit plan;
(3)
in regards only to a health benefit plan offered
by an HMO or a group hospital service plan issued under the Insurance Code
Chapter 20, the association or bona fide association ceases to have any covered
members who reside, live, or work in the service area of the HMO or group
hospital service plan, but only if coverage is terminated uniformly without
regard to any health status-related factor of covered members or dependents
of covered members, if dependent coverage is offered; or
(4)
the health carrier is ceasing to offer health benefit
plan coverage in the association market in accordance with subsection (d)
of this section.
(b)
A health carrier may refuse to renew the coverage of a
covered member or dependent if:
(1)
the member fails to pay premiums or contributions in accordance
with the terms of the health benefit plan, including any timeliness requirements;
(2)
the covered member or dependent has performed an
act or practice that constitutes fraud, or has made an intentional misrepresentation
of material fact, relating in any way to the health benefit plan, including
claims for benefits under the health benefit plan;
(3)
in regards only to coverage offered by an HMO or
a group hospital service plan issued under the Insurance Code Chapter 20,
the covered member no longer resides, lives, or works in the service area
of the HMO or group hospital service plan, but only if coverage is terminated
uniformly without regard to any health status-related factor of the covered
member or dependent; or
(4)
the health carrier is ceasing to offer health benefit
plan coverage in the association market in accordance with subsection (d)
of this section.
(c)
Medicare eligibility or entitlement is not a basis for
non-renewal or termination of a health benefit plan issued to an association
or bona fide association or members of an association or bona fide association.
(d)
A health carrier may discontinue a particular health benefit
plan pursuant to paragraph (1)of this subsection. A health carrier may discontinue
all health benefit plans pursuant to paragraph (2) of this subsection.
(1)
A health carrier may discontinue offering a particular
type of health benefit plan offered to associations or bona fide associations
only if, at least 90 days before the date coverage will be discontinued, the
health carrier:
(A)
provides notice in writing to each association or bona
fide association and each member covered under the health benefit plan being
discontinued;
(B)
offers to the association or bona fide association the
option to purchase any other health benefit plan currently being offered by
the carrier to associations or bona fide associations; and
(C)
acts uniformly without regard to any health status-related
factor of covered members or dependents, or new members or dependents who
may become eligible for the coverage.
(2)
A health carrier may discontinue offering all
health benefit plans offered to associations or bona fide associations only
if, at least 180 days before the date coverage will expire, the health carrier:
(A)
provides notice in writing to the commissioner of insurance,
each association or bona fide association, and each covered member;
(B)
discontinues and does not renew all health benefit plans
issued in this state or an approved geographic service area of an HMO or group
hospital service corporation to associations or bona fide associations; and
(C)
acts uniformly without regard to any health status-related
factor of covered members or dependents of covered members, if dependent coverage
is offered, or new members or dependents who may become eligible for coverage.
(e)
A health carrier that elects not to renew all health benefit
plans to associations or bona fide associations in accordance with subsection
(d)(2) of this section may not issue any association or bona fide association
coverage in this state, or in an approved geographic service area of an HMO
or group hospital service corporation, during the five year period beginning
on the date of discontinuation of the last such coverage not renewed.
(f)
Nothing in this section prohibits or restricts a health
carrier's ability to make changes in premium rates by classes in accordance
with applicable laws and regulations.
(g)
Nothing in this section shall be interpreted as prohibiting
a health carrier from making modifications to a health benefit plan mandated
by state or federal law.
§21.2705. Certification of Creditable Coverage.
Each health carrier that issues a health benefit plan to members of
an association or bona fide association shall provide a certification of coverage
in accordance with §§21.1103-21.1107 of this title (relating to
Notification of Creditable Coverage).
§21.2706. Coverage and Issuance Requirements to Bona Fide Associations.
(a)
A health carrier that issues a health benefit plan to
a bona fide association may refuse to provide coverage to all members, and
dependents of members if dependent coverage is offered, of a bona fide association
in accordance with the health carrier's underwriting standards and criteria.
However, on issuance to a bona fide association, each carrier shall provide
coverage to each member without regard to the member's health status-related
factors.
(b)
A health carrier that issues a health benefit plan to
members of a bona fide association shall accept or reject all members who
apply for coverage and may exclude only those members who have not applied
for coverage.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on
December 30, 1998.
TRD-9818583
Lynda H. Nesenholtz
General Counsel and Chief Clerk
Texas Department of Insurance
Earliest possible date of adoption: February 14, 1999
For further information, please call: (512) 463-6327