28 TAC §§11.2301, 11.2305, 11.2306, 11.2315
The Commissioner of Insurance adopts amendments to 28 TAC §§11.2301,
11.2305, 11.2306 and 11.2315 concerning provider sponsored organizations (PSOs).
Sections 11.2305, 11.2306 and 11.2315 are adopted with changes to the proposed
text as published in the May 2, 2003 issue of the
Texas Register
. Section 11.2301 is adopted without changes and will
not be republished.
These amendments are necessary because federal law now requires PSOs to
comply with the solvency requirements of health maintenance organizations
(HMOs). The federal Medicare+Choice program requires any entity contracting
with Centers for Medicare and Medicaid Services (CMS) to be licensed under
state law; however, federal law also provided that a PSO could obtain a waiver
of solvency requirements if a PSO could not meet state standards until November
1, 2002. Subchapter X was adopted in 1998 to comply with the federal solvency
requirements for PSOs and assure that any entity contracting with CMS under
the Medicare+Choice program would be licensed under state law. With the expiration
of the federal waiver program, it is no longer legally permissible to provide
solvency standards for PSOs that are different than the solvency standards
for HMOs. PSOs must demonstrate compliance with the provisions of 28 TAC §§11.801-11.810
by June 30, 2003. Part of the new requirements also include the filing of
a business plan with projections by year-end 2006. In addition, the adopted
amendments provide that PSOs possessing existing certificates of authority
under Subchapter X have until December 31, 2006, to comply with the solvency
requirements for HMOs. PSOs that apply for a certificate of authority after
November 1, 2002 must comply with the solvency requirements applying to HMOs.
The changes that were made to §§11.2305 and 11.2315 were to correct
the references to Insurance Code Chapter 843 due to the recodification of
Chapter 20A. A change was made to §11.2306 to clarify what is requested
to be filed.
The purpose and objective of these amendments are to comply with federal
mandates related to the Medicare+Choice program that now require all PSOs
to meet the requirements for HMOs as to licensure and operation. These requirements
include complying with the financial standards provided in 28 TAC §§11.801-11.810
by June 30, 2003, and the filing of a business plan with projections by year-end
2006. Amendments to §11.2301 specify the purpose and scope of the amendments.
The amendments to §11.2305 clarify that PSOs with certificate of authorities
issued before November 1, 2002, must come into compliance with Insurance Code
Sections 843.405 and 843.408, which are items relating to solvency protection.
In addition, the amendments in §11.2306 direct all PSOs to met the financial
requirements of §§11.801-11.810, whether licensed before or after
November 1, 2002. For PSOs licensed prior to November 1, 2002, they have until
June 30, 2003, to comply with §§11.801-11.810 unless they have filed
a business plan with the department which contains projections that they will
be in compliance with the solvency requirements by December 31, 2006. Finally,
the amendment to §11.2315 deletes the exception from solvency standards
for PSOs.
No comments were received.
These amendments are adopted under authority of the Texas Insurance
Code Sections 843.151 (formerly Article 20A.22 §(c)) and 36.001. Texas
Insurance Code Section 843.151 authorizes rules necessary to meet the requirements
of federal law, which in this instance is related to the Medicare+Choice program.
In addition, Texas Insurance Code Section 36.001 authorizes the Commissioner
of Insurance to adopt rules necessary and appropriate to implement the powers
and duties of the Texas Department of Insurance.
§11.2305.Issuance of Certificate of Authority.
The commissioner of insurance may issue a certificate of authority
for the purpose of providing health care to Medicare enrollees only to a PSO
that meets each requirement for the issuance of a certificate of authority
as a health maintenance organization imposed by the Insurance Code, Chapter
843, provided, a PSO that received a certificate of authority before November
1, 2002 does not have to comply with Sections 843.405 and 843.408, Insurance
Code until December 31, 2006 under the provisions of §11.2306 of this
title (relating to Solvency Standards).
§11.2306.Solvency Standards.
(a)
A PSO or the legal entity of which the PSO is a component
that received a certificate of authority under §11.2305 of this title
(relating to Issuance of Certificate of Authority) before November 1, 2002
must have a fiscally sound operation that meets the requirements of §11.2307-11.2310
of this title (relating to Provider Sponsored Organizations).
(b)
By June 30, 2003, a PSO described in subsection (a) of
this section must:
(1)
demonstrate that it complies with §§11.801-11.810
of this title (relating to Financial Requirements); or
(2)
file a business plan with the department that contains
quarterly projected pro forma financial statements that demonstrates that
the PSO will be in compliance with the requirements of §§11.801-11.810
of this title by December 31, 2006.
(c)
A PSO or the legal entity of which the PSO is a component
that receives a certificate of authority after November 1, 2002, must have
a fiscally sound operation that meets the requirements of §§11.801-11.810
of this title as a condition of receiving the certificate of authority.
§11.2315.Application of Other Insurance Laws.
Subject to the provisions of this subchapter, the holder of a certificate
of authority issued under this subchapter has all the powers granted to and
duties imposed on a health maintenance organization under the Texas Health
Maintenance Organization Act (Insurance Code, Chapter 843) and the insurance
laws of this state, and is subject to regulation and regulatory enforcement
under these laws in the same manner as a health maintenance organization.
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 July 25, 2003.
TRD-200304529
Gene C. Jarmon
General Counsel and Chief Clerk
Texas Department of Insurance
Effective date: August 14, 2003
Proposal publication date: May 2, 2003
For further information, please call: (512) 463-6327