ADOPTED RULES An agency may take final action on a section 30 days after a proposal has been published in the Texas Register. The section becomes effective 20 days after the agency files the correct document with the Texas Register, unless a later date is specified or unless a federal statute or regulation requires implementation of the action on shorter notice. If an agency adopts the section without any changes to the proposed text, only the preamble of the notice and statement of legal authority will be published. If an agency adopts the section with changes to the proposed text, the proposal will be republished with the changes. TITLE 13. CULTURAL RESOURCES Part VII. State Preservation Board Chapter 111. Rules and Regulations of the Board 13 TAC sec.111.15 The State Preservation Board adopts an amendment to sec.111.15, concerning Use of the Capitol, Capitol Extension, Capitol Grounds, and General Land Office for Film or Video Production, with one minor change but otherwise as published in the December 26, 1995, issue of the Texas Register (20 TexReg 11081). The amendment allows the State Preservation Board to modify rules regarding the approval of film or video production activities, the scheduling of film or video production activities, and the use of the Capitol Building for such activities. Two comments were received by the General Land Office; one suggested that the reference to the "General Land Office" in the title should be changed to read "General Land Office Building." The State Preservation Board concurs with this change. The other comment received by the General Land Office suggested that the rules, as written, could also affect use of the affected areas by governmental production units and proposed changing the wording in the second sentence in sec.111.15(a)(1) to include activities by state government entities. The State Preservation Board takes exception to this inclusion because any filming that takes place in the buildings or on the grounds should still go through the application and approval process, in order to ensure that the impact on the buildings or their occupants is minimized and that the proposed activities are appropriate within a public building. The amendment is adopted under Texas Government Code, Chapter 443, which provides the State Preservation Board with the authority to adopt administrative policies. sec.111.15. Use of the Capitol, Capitol Extension, Capitol Grounds, and General Land Office for Film or Video Production. (a) Definition and approval of film or video production. (1) A film or video production is the type of production which uses a film or video medium. The rules listed in this section do not apply to news gathering by the press. (2) All film or video production must be approved by the office of the State Preservation Board. The office of the State Preservation Board reserves the right to deny use of the Capitol for reasons involving security, preservation of the Capitol as a national historic landmark, impact on the buildings or their occupants, and the appropriateness of the proposed activities within a public building. A decision will be made after a careful review of the content, purpose, and impact on the buildings. (3) Film or video production for commercial advertising purposes is strictly prohibited. (b) Scheduling of film or video production. (1) The office of the State Preservation Board will be responsible for scheduling production dates. (2) All production companies will be required to fill out an application and submit a letter of intent to proceed with production. (3) The office of the State Preservation Board will require production walk- throughs to discuss security, parking, electrical, and other special needs. (4) All production companies will be required to enter into a location agreement which outlines a production schedule, shot-sheet, liability for damages and injury, proof of insurance, preparation work, and post-production clean-up. (5) The State Preservation Board may charge a fee, in an amount set by the executive director, for use of the Capitol, Capitol Extension, or General Land Office Building. Income from fees under this paragraph shall be used for preservation of the buildings. (6) The State Preservation Board shall be reimbursed for staff time allocated to any filming or videoing activity, including benefits and support costs. (7) Production activities will generally be prohibited during standard business hours (8:00 a.m. to 5:30 p.m. Weekdays) and during Legislative sessions. (c) Use of the Capitol (1) Film or video production activities must be compatible with the preservation of the historic preservation of the Capitol. (2) Construction in the Capitol for production purposes is strictly prohibited. (3) Film or video production is prohibited in the Historically Significant spaces listed below: House Chamber, Senate Chamber, Original Governor's Office, Treasury, Legislative Library, Supreme Courtroom, Appeals Courtroom, Agricultural Museum Room, Secretary of State's Office, Governor's Reception Room. The Texas House of Representatives and the Texas Senate may authorize the use of video in the House Chamber or Senate Chamber for governmental purposes or special activities scheduled by the House or Senate. (4) Attachments to or contact with furnishings, artwork, or architectural surfaces is strictly prohibited. (5) Any film or video production aids or equipment must be freestanding with a stable base. 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. Issued in Austin, Texas on March 7, 1996. TRD-9603627 Rick Crawford Executive Director State Preservation Board Effective date: April 4, 1996 Proposal publication date: December 26, 1995 For further information, please call: (512) 463-5495 13 TAC sec.111.29 The State Preservation Board adopts new sec.111.29, concerning Capitol Complex Visitors Center Texas Gift Shop Product Selection Policies and Procedures, without changes to the proposed text as published in the December 26, 1995, issue of the Texas Register (20 TexReg 11081). This new section establishes policies and procedures for product selection for resale in the Capitol Complex Visitors Center Texas Gift Shop. No comments were received regarding adoption of the new section. The new section is adopted under Texas Government Code, Chapter 443, which provides the State Preservation Board with the authority to adopt administrative policies. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas on March 7, 1996. TRD-9603928 Rick Crawford Executive Director State Preservation Board Effective date: April 4, 1996 Proposal publication date: December 26, 1995 For further information, please call: (512) 463-5495 13 TAC sec.111.30 The State Preservation Board adopts new sec.111.30, concerning Rules and Regulations of the Board without changes to the proposed text as published in the December 26, 1995, issue of the Texas Register (20 TexReg 11081). This new section establishes policies and procedures for responses to public information requests presented to the Board. No comments were received regarding adoption of the new rule. The new rule is adopted under Texas Government Code, Chapter 443, which provides the State Preservation Board with the authority to adopt administrative policies. 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. Issued in Austin, Texas on March 7, 1996. TRD-9603929 Rick Crawford Executive Director State Preservation Board Effective date: April 4, 1996 Proposal publication date: December 26, 1995 For further information, please call: (512) 463-5495 TITLE 25. HEALTH SERVICES Part II. Texas Department of Mental Health and Mental Retardation Chapter 405. Client (Patient) Care Subchapter C. Life-Sustaining Treatment 25 TAC sec.sec.405.51-405.62 The Texas Department of Mental Health and Mental Retardation (TDMHMR) adopts the repeal of sec.sec.405.51-405.62 of Chapter 405, Subchapter C, concerning life-sustaining treatment, without changes to the proposed text as published in the January 12, 1996, issue of the Texas Register (21 TexReg 296). The adoption of new sec.sec.405.51-405.63, concerning the same, is published contemporaneously in this issue of the Texas Register. The repeal allows for the adoption of new sections. No comment were received regarding adoption of the repeals. The repeals are adopted under the Texas Health and Safety Code, Title 7, sec.532.015, which provides the Texas Board of Mental Health and Mental Retardation with rulemaking powers. 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. Issued in Austin, Texas, on March 22, 1996. TRD-9603977 Ann Utley Chairman, Texas MHMR Board Texas Department of Mental Health and Mental Retardation Effective date: April 12, 1996 Proposal publication date: January 12, 1996 For further information, please call: (512) 206-4516 25 TAC sec.sec.405.51-405.63 The Texas Department of Mental Health and Mental Retardation (TDMHMR) adopts new sec.sec.405.51-405.63 of Chapter 405, Subchapter C, concerning life- sustaining treatment. Sections 405.51-405.55, 405.57, 405.59, 405.60, and 405.63 are adopted with changes to the proposed text as published in the January 12, 1996, issue of the Texas Register (21 TexReg 297). Sections sec.sec.405.56, 405.58, 405.61, and 405.62 are adopted without changes to the proposed text and will not be republished. The repeal of existing sec.sec.405. 51-405.62, concerning the same, is published contemporaneously in this issue of the Texas Register. Grammatical and punctuation corrections were made throughout the subchapter as well as the addition of minor clarifying language. Language was added to Category III of the definition of "resuscitative status" which called for the elimination of pain if possible. Clarifying language was added to sec.405.54(b) (4) regarding Category II designation and a new subsection was added to sec.405. 54 describing documentation of treatment decisions and consultations with an individual, family, and/or legal guardian. Clarifying language was added to sec.405.55(a) regarding when the initial determination of resuscitative status should occur. The membership of the ethics committee in sec.405.60 was modified to include representation from a family members' group, rather than a parents' group; deleted the specific credentials for the facility social worker; and allowed the addition of another facility registered nurse and other knowledgeable persons as appropriate. Advocacy organizations were added to sec.405.63. Public comment was received from a chaplain at a general hospital, a parent of an individual served by the department, and a private citizen. One commenter stated that making a reasonable effort to transfer an individual to another physician when the attending physician refuses to comply with a directive was insufficient. The commenter suggested requiring transfer to another physician or requiring review by the facility ethics committee. Another commenter suggested that the attending physician attempt to transfer the individual to every other physician at the facility. The department responds that it cannot guarantee that any other facility physician will agree to comply with the individual's directive; therefore, it cannot require transfer to another physician. The law requires that the attending physician make a reasonable effort to transfer the individual, this would mean approaching every physician at the facility. The department is unwilling to place an additional burden on its physicians when its accomplishment may be impossible. Regarding the suggested requirement for review by the facility ethics committee, the facility ethics committee has no enforcement authority. It is responsible only for providing advice and consultation and making recommendations; the physician has the option of accepting or rejecting the recommendations of the committee. Another commenter suggested language be modified in sec.405.57(a)(2) so as not to imply that witnesses are responsible for documentation in the individual's record. The department concurs and the language has been modified. One commenter requested that language be added to the definition of "directive" stating that a guardian of an incompetent person may execute a directive on the person's behalf. The commenter stated that the policy allowed for this in sec.405.57(b). The department responds that a guardian of an incompetent adult person may not execute a directive on the person's behalf. The language in sec.405.57(b) refers to a guardian having the ability to execute a directive only for an incompetent minor . The same commenter objected to the ethics committee providing advice and consultation to guardians and stated that it should only be done if the guardian wants advice and consultation. The commenter also wanted the definition of "ethics committee" to pertain to resuscitative status. The department responds that it is implied that guardians are not required to listen nor take advice from the ethics committee. Regarding the inclusion of resuscitative status, it is unnecessary to include in the definition what is outlined in sec.405.55(a)(3) and (5), and sec.405.60(c). A commenter disagreed that a resuscitative status of an individual is an integral part of the overall evaluation of the medical care of the individual. The commenter stated that when members of the general public go to a new physician for a evaluation of medical care, that they do not receive a resuscitative status. The department responds that individuals, as defined by the rule, are those receiving 24-hour residential services from a residential facility; they cannot be compared to members of the general public. It is very appropriate to include resuscitative status as part of the evaluation of their medical care. The same commenter disagreed that resuscitative status should be discussed before a medical emergency. The commenter also did not agree that the physician should be a part of the resuscitative status decision. The department responds that it is very appropriate to discuss resuscitative status before a medical emergency. Discussing resuscitative status before a medical emergency of an individual with a qualifying condition provides the physician with direction when treating the medical emergency. The physician's provides valuable medical information as his/her part in deciding resuscitative status; sec.405.55(a)(2) and (3) clearly states that the individual/spouse/guardian/family actually determine resuscitative status. The commenter argued that sec.405.54(b)(1) did not allow a legal guardian the right to determine resuscitative status for an incompetent individual. The department responds that the language in sec.405.54(b)(1) states that the decision of resuscitative status is made with the consultation and consent of the legal guardian, this means that the legal guardian must be consulted and must consent to a resuscitative status before it is documented in the individual's record. Language has been modified for further clarification. The same commenter argued that sec.405.54(b)(6) did not allow a legal guardian the right to determine resuscitative status for an incompetent individual. The commenter interpreted the paragraph to mean that in problematic cases, when the legal guardian and family disagreed, the matter would be referred to the ethics committee. The department responds that the problematic cases referenced in the paragraph describes situations in which there is no legal guardian or family. The commenter did not agree that resuscitative status should be determined at the time of admission or even within a year of admission. The commenter stated that a determination of resuscitative status should only be made if there is a significant change in the individual's clinical condition because the family/guardian has a difficult situation to deal with without having to determined resuscitative status. The department responds that all individuals without a qualifying condition are placed in resuscitative status Category I and the individual/family/guardian is not required to participate in that decision. However, if an individual with a qualifying condition were being admitted, then it would be most appropriate to have the individual/family/guardian determine resuscitative status Category II or III. The same commenter expressed concern that when resuscitative status is reviewed at annual staffings that the physician has the authority to change it without consent from the individual/family/guardian. The department responds that resuscitative status is initially determined and revised using the procedures described in sec.405.54. The commenter argued that physicians do not have the authority to make decisions within the Natural Death Act, therefore, department physicians should not have decision-making authority either. The department responds that the Natural Death Act provides physicians with decision-making authority to determine qualifying condition, this is the same decision-making authority that department physicians have. After an individual has been determined as having a qualifying condition, then the decision regarding life-sustaining treatment is made by the individual/family/guardian. The commenter questioned the language in sec.405.57(a)(3) which allows for a directive to be revoked by the individual at any time regardless of the individual's mental state or competency. The commenter stated that it was nonsense and ignored the guardian's rights. The department responds that the language comes directly from the Natural Death Act. The department also notes that a guardian may not execute a directive on behalf of an adult individual, competent or incompetent. The commenter objected to providing information regarding executing a directive to individuals who are incompetent because it may frighten, upset, or confuse the individual. The commenter also stated that if the guardian requested that the individual not be given the information, then the individual should not be provided the information. The department responds that federal law (The Omnibus Budget Reconciliation Act of 1990 (OBRA 90)) requires that health care providers give patients information upon admission about their rights to make their own health care decision as well as to inform them of their right to execute advance directive as allowed by state law. The same commenter requested that language be included in the title of sec.405.59 which acknowledges guardians who have executed a directive. The department responds that this is implied in the title of the section. The department also notes that guardians may only execute a directive on behalf of an individual who is an incompetent minor. The commenter questioned how a physician would know if an individual's directive did not reflect the present desires of the individual if that individual were unable to communicate, as stated in sec.405.59(b). The department responds that it does not attempt to delve into all of the possible ways a physician would have of knowing such information, the language comes from the Natural Death Act. The commenter suggested changing the term "parents' group" to "family members' group" in sec.405.60(b) to be more inclusive. The commenter also suggested not using a representative of an advocacy group until all family members of individuals residing in the facility had had an opportunity to decline to serve on the ethics committee. The department responds by changing the term to "family members' group." Regarding notifying all family members of individual's before appointing a representative of an advocacy organization, the intent is to incorporate views from an organization that represents a group of families; a single family member's opinion would not accomplish this intent. The commenter argued that the ethics committee did not have the right to make decisions. The department responds that the language in the definition of "ethics committee" and in sec.405.60 states that the ethics committee's purpose is for consultation and recommendations. The committee is not responsible for making decisions. The same commenter requested that advocacy organizations be added to sec.405. 63. The department agrees and has added the requested language. The new sections are adopted under the Texas Health and Safety Code, Title 7, sec.532.015, which provides the Texas Board of Mental Health and Mental Retardation with rulemaking powers. sec.405.51. Purpose. The purpose of this subchapter is to provide procedures for: (1) delineating the treatment and resuscitative status of individuals; (2) implementing the Natural Death Act, Texas Health and Safety Code, Chapter 672, which provides statutory authority for decision-making with regard to withholding or withdrawal of life-sustaining treatment; and (3) implementing a durable power of attorney for health care, as outlined in the Civil Practice and Remedies Code, Chapter 135, which provides for the designation of an agent with the authority to make health care decisions. sec.405.52. Application. This subchapter applies to all campus-based residential facilities of the Texas Department of Mental Health and Mental Retardation. sec.405.53. Definitions. The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise. Competent-Possessing the ability, based on reasonable medical judgment, to understand and appreciate the nature and consequences of a treatment decision, including the significant benefits and harms of and reasonable alternatives to any proposed treatment decision. Consulting-The descriptor for persons not employed by the Texas Department of Mental Health and Mental Retardation who serve on an ethics committee on a voluntary basis, i.e., without monetary or other tangible compensation. Directive-Written or oral expression by a competent adult of his or her desires regarding life-sustaining treatment in the event of an occurrence of a terminal condition as certified by two physicians, one of whom is the attending physician, which meets the legal requirements of the Natural Death Act. Types of advance directives include the "Directive to Physicians/Living Will" and the "Durable Power of Attorney for Health Care Decisions." Ethics committee -An advisory committee of facility staff, consulting professionals, and advocates, whose purpose is to provide advice and consultation to physicians, parents, guardians, and family members regarding treatment decisions concerning individuals who may have a qualifying condition. Facility-Any state hospital, state school for persons with mental retardation, state center, or other institution of the Texas Department of Mental Health and Mental Retardation, and any organizational entity that hereafter may be made a part of the department. Family-The spouse, reasonably available adult children, parent(s), sibling(s), or nearest relative of the individual, in that priority. Incompetent-Lacking the ability, based on reasonable medical judgment, to understand and appreciate the nature and consequences of a treatment decision, including the significant benefits and harms of and reasonable alternatives to any proposed treatment decision. Individual-A person receiving campus-based residential services from a residential facility of the Texas Department of Mental Health and Mental Retardation. Legal guardian -The person who, under court order, is the guardian of the person of the individual. Life-sustaining treatment -A medical procedure or intervention which utilizes mechanical or other artificial means to sustain, restore, or supplant a vital function. Qualifying condition -A terminal condition that has been certified by the attending physician and one other physician who has personally examined the individual. Residential facility -All state hospitals, state schools, and state centers providing 24-hour campus-based residential services to persons with mental retardation or mental illness. Resuscitation-Act of reviving from apparent death or unconsciousness. Resuscitative status categories-Categories of intervention for individuals, as follows: (A) Category I: Maximum therapeutic effort-Intervention in which everything reasonably necessary will be done to reduce mortality and morbidity (illness), including transfer to a medical facility for additional services; (B) Category II: Therapeutic effort with no heroics -Intervention in which conservative therapeutic and supportive measures will be performed to reduce mortality and morbidity, excluding initiation of endotracheal intubation and external cardiac massage. Defibrillation, surgical intervention, hyperalimentation, or implementation of other measures deemed extraordinary may be restricted or excluded. This category of intervention is designated only for individuals with a qualifying condition; and (C) Category III: Palliative measures only-Intervention in which measures directed toward reducing or eliminating pain, if possible, and enhancing the comfort and dignity of the individual will be maintained. However, no resuscitative measures will be performed. This category of intervention is designated only for individuals with a qualifying condition. Terminal condition -An incurable or irreversible condition caused by injury, disease, or illness that would produce death without the application of life-sustaining procedures, according to reasonable medical judgement, and in which the application of life-sustaining procedures would serve only to postpone the moment of the individual's death. sec.405.54. Resuscitative Status Policy. (a) The resuscitative status of an individual is an integral part of the overall evaluation of the medical care of the individual. An order for Category II or III is given only for individuals with a qualifying condition and should be based on a judgment that resuscitation is an ethically extraordinary and non- obligatory procedure for prolonging life. (b) Resuscitative status should be discussed with the individual (or legal guardian) and his or her family in advance of a medical emergency. When a determination of that status is being made by the individual (or legal guardian), family, and physician, the following considerations are recommended: (1) The competent individual must be allowed the right to determine resuscitative status. If the individual is incompetent (as defined in this subchapter), comatose, or incapable of communication, the decision is made with the consultation and consent of his or her legal guardian, if any, or family. Because the wishes of the individual, if known, are to be honored, an expression of those wishes made when he or she was competent and capable of communication, e.g., in a directive issued in accordance with the Natural Death Act or the Durable Power of Attorney for Health Care, should be respected and followed. (2) Individuals who are comatose are living human beings whose lives are to be valued; however, this does not mean that all technologies for prolonging life are appropriate or obligatory. (3) Age, handicaps, economic status, or incompetency should not be determinants of resuscitative status. (4) Category II status normally reflects a decision to pursue a conservative therapeutic effort in the face of a qualifying condition. However, there may be individuals with such severe recurring complications of a chronic disabling illness that resuscitation would be contraindicated even though they are not in the final stages of a single, defined terminal condition. The physician, with the consultation and consent of the individual, or, if the individual is unable to participate in decision-making, his or her legal guardian, if any, or family, may order the further restriction of other measures. In such cases, although treating the intervening illness remains the primary goal, full resuscitation could be considered non-obligatory and a Category II order would be appropriate. (5) A Category III order does not indicate withdrawal of palliative procedures. An individual for whom such an order has been written will receive all the usual care given to enhance comfort, dignity, safety, and a sense of well-being. (6) In any problematic case involving a Category II or III designation or when an individual with a Category II or III designation has no legal guardian and/or family, consultation with the facility ethics committee should be sought. (c) Documentation supporting treatment decisions and consultations with the individual, family, and/or legal guardian should be in the attending physician's progress notes. (d) In the event an individual has executed a directive as outlined in sec.405.57 of this title (relating to Legal Expression through Directive under the Natural Death Act), the provisions regarding life-sustaining treatment outlined in the directive supersedes any resuscitative status category. sec.405.55. Determination and Implementation of Resuscitative Status Order. (a) All individuals will be initially evaluated on an individual basis as to resuscitative status by the attending physician. Normally this evaluation will be made on admission to services or at the initial staffing, but in all cases within 30 days of the initial staffing. (1) If the attending physician does not categorize an individual, then the individual will automatically be considered Category I. (2) If an individual with a qualifying condition is competent and wishes to be classified Category II or III, then the request will be honored. (3) If an individual with a qualifying condition is incompetent, comatose, or incapable of communication, then the wishes of the legal guardian and family will be honored, provided the attending physician concurs. If there is disagreement between the legal guardian and family, within the family, or between the legal guardian or family and physician, then the individual will be designated a resuscitative status according to the wishes of the legal guardian, if available, or family member in the following priority: the patient's spouse; a majority of the patient's reasonably available adult children; the patient's parents; or the patient's nearest living relative. Consultation with the facility ethics committee may be sought. (4) If an individual with a qualifying condition is incompetent, comatose, or incapable of communication and does not have a legal guardian, then one of the following persons, in order of priority, as available, along with the attending physician, can determine resuscitative status: the spouse, a majority of the reasonably available adult children, the parents, or the nearest living relative of the individual. (5) If an individual with a qualifying condition is incompetent, comatose, or incapable of communication and has no legal guardian and does not have family or such family is unavailable or unwilling to participate in decision-making, then the facility should seek the appointment of a legal guardian to the extent authorized by law or the attending physician(s) should seek consultation with the facility ethics committee before designating a Category II or III resuscitative status for the individual. (b) If the condition of an individual deteriorates subsequent to initial categorization, and this contingency has not been previously addressed, the individual may be reclassified by following the procedure described in subsection (a) of this section. (c) The attending physician will note in the medical record that the individual or his or her legal guardian, if any, or family have been consulted and agree with the designated status (or redesignation) as outlined in subsection (a) of this section, and its corresponding treatment plan. Such consultations should be witnessed and documented. (d) The resuscitative status category of every individual must be reviewed and documented at least annually by the attending physician, preferably at the annual staffing, and should be reevaluated when there is a significant change in the individual's clinical condition. (e) When the physician has documented the need and written an order for a Category II or III designation, a form specified by the department will be placed as the first page of the individual's chart. This form will have appropriate spaces for documentation of the annual review. sec.405.57. Legal Expression through Directive Under the Natural Death Act. (a) When an adult individual is competent to make a decision regarding life- sustaining treatment and it is clinically appropriate to do so, the individual should be informed of the provisions of the Natural Death Act and provided with a copy of the Directive to Physicians form, referenced in sec.405.61 of this title (relating to Exhibits) as Exhibit B. The desires expressed by the competent individual should be observed. (1) The Directive to Physicians may be made in writing at any time that the individual is competent to make such a decision. (2) The Directive to Physicians may also be made by a nonwritten means of communication and documented by appropriate witnesses. (3) The Directive to Physicians may be revoked by the individual at any time, without regard to the individual's mental state or competency. (4) The present desire of the competent individual shall, at all times, supersede a Directive to Physicians. (5) A competent adult individual can designate a person to make treatment decisions in the event that the individual becomes comatose, incompetent, or otherwise mentally or physically incapable of communication. (b) A Directive to Physicians may be made on behalf of an individual with a qualifying condition who is under 18 years of age by his or her spouse, if the spouse is an adult, the parent(s), or legal guardian of the individual. However, such a directive can be overridden by the contrary desire of a competent individual, even if he or she is under 18 years of age. (c) Although only a competent individual may execute a Directive to Physicians, all individuals shall receive information about the right to execute a Directive to Physicians upon admission. sec.405.59. Decision-making under the Natural Death Act and Durable Power of Attorney for Health Care for Individuals Who Have Issued Directives. (a) If an individual has executed an advance directive, then the directive is attached to the individual's chart and/or medical record. Directives are evidence of the individual's wishes if/when he or she develops a qualifying condition. Directives are not necessarily related to resuscitative status. Should an individual develop a qualifying condition, the directive shall be honored and the resuscitative status shall reflect the directive. (b) If an individual is unable to communicate and has previously issued a directive without designating a person to make treatment decisions, then the attending physician shall comply with the directive unless the physician believes that the directive does not reflect the present desire of the individual. (c) To the extent that a Durable Power of Attorney for Health Care conflicts with a Directive to Physicians under the Natural Death Act, the instrument executed later in time controls. sec.405.60. Ethics Committee. (a) An ethics committee must be established by each facility. The committee may be established multi-institutionally in cooperation with other health care providers, e.g., local hospitals, serving the same geographical area. (b) The ethics committee must minimally consist of one facility physician; one consulting physician; one facility registered nurse from the individual's unit who has knowledge of the individual and his or her condition; a member of the clergy; an attorney not affiliated with the facility or TDMHMR; a facility social worker; and a representative of a family members' group or a representative of an advocacy group. The committee may also include the following additional members as available: additional consulting physician; additional facility registered nurse; medical support staff, such as a physical therapist, clinical pharmacist, clinical psychologist, or occupational therapist; a consulting social worker; a rights representative; additional representation by family members' and or advocacy organizations; and other knowledgeable persons as appropriate. (c) Consultation with the ethics committee may be sought for any treatment decision, but should be sought as follows: (1) when an individual is unable to give direction regarding the withholding or withdrawal of life-sustaining treatment, has no legal guardian, and has no person legally designated to make such a decision according to provisions of the Natural Death Act; and (2) when a decision regarding the withholding or withdrawal of life-sustaining treatment is to be made and there is a conflict between or among the decision- makers. (d) Decision-making concerning recommendations to be made by the ethics committee shall be by consensus. Each consultation with the ethics committee shall be documented in the individual's record. sec.405.63. Distribution. (a) This subchapter shall be distributed to the commissioner, and executive, management, and program staff of Central Office; superintendents/directors of all TDMHMR facilities; and advocacy organizations. (b) The superintendent/director will ensure distribution of this subchapter to all appropriate staff. 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. Issued in Austin, Texas, on March 22, 1996. TRD-9603976 Ann Utley Chairman, Texas MHMR Board Texas Department of Mental Health and Mental Retardation Effective date: April 12, 1996 Proposal publication date: January 12, 1996 For further information, please call: (512) 206-4516 TITLE 28. INSURANCE Part I. Texas Department of Insurance Chapter 26. Small Employer Health Insurance Regulations 28 TAC sec.sec.26.1, 26.4-26.11, 26.13-26.22, 26.27 The Commissioner of Insurance adopts amendments to sec. sec.26.1, 26.4-26.11, 26.13, and 26.19-26.22 and new sec. sec.26.14-26.18 and 26.27, concerning small employer health benefit plans. Sections 26.4-26.7, 26.11, 26.13-26.15, 26. 18- 26.20, 26.22 and 26.27 are adopted with changes to the proposed text as published in the November 24, 1995, issue of the Texas Register (20 TexReg 9811). Sections 26.1, 26.8, 26.10, 26.16, 26.17, and 26.21 are adopted without changes and will not be republished. The amendments to these sections and new sections are necessary to add guaranteed issue requirements for small employer health benefit plans, to make new standard benefit plans available to small employer carriers and small employers, to address the minimum requirements for participation by eligible employees and for premium contributions by employers, to establish enrollment requirements and to implement legislation enacted by the 74th Legislature in House Bill 369 relating to the operation and funding of small employer health benefit plans. Simultaneous to the adoption of the amendments and new sec.sec.26. 14-26.18 and 26.27, the Commissioner is adopting the repeal of existing sec.sec.26. 14-26.18 and 26.27. The sections as adopted differ in some respects from the proposed sections based on further study generated by the comments received. Changes have been made to sec.sec.26.4, 26.6, 26.11, 26.18, 26.20, and 26.22 for clarification and/or grammatical purposes. The agency has added language to sec.26.27(b), Figure 42 so that carriers can indicate if they wish to change their status with regard to being risk assuming or reinsured carriers. The agency's response to comments, including the specific changes to the sections and reasoned justification for the changes, are addressed in the paragraphs that follow. Section 26.1 amends the statement of purpose to delete the reference to three prototype plans required by the rules prior to these amendments. Amended sec.26.4 adds definitions of affiliation period and point-of-service contract and amends the definitions of eligible employee, late enrollee, small employer health benefit plan and standard benefit plan. The definition of late enrollee is intended to, among other things, implement legislation enacted by the 74th Legislature in Senate Bill 793 relating to the enforcement of certain child support and medical support obligations. Amendments to sec.26.5 modify the applicability and scope of the chapter, describe the plans to which these amended sections apply by date of issue or renewal, provide for early voluntary compliance with the amended sections, and require notification to certain small employers of the new standard benefit plans. Section 26.6 is amended to update references to form numbers and statutes. Amendments to sec.26. 7 delete the requirement for additional coverage upon employee election, extend the enrollment period by one day for new entrants and require a small employer carrier to determine small employer eligibility within a specified time. Section 26.8 has been retitled "Guaranteed Issue; Contribution and Participation Requirements" and is amended to include requirements relating to the guaranteed issue provisions of Insurance Code, Chapter 26 which became effective September 1, 1995. The section also deletes the 75% employer premium contribution requirement and allows a health carrier to require a premium contribution in accordance with its usual and customary practices, if applied uniformly to each small employer, or to use the contribution requirement established by a purchasing cooperative if the carrier is participating in the cooperative. The amended section also lowers the participation requirement from 90% of eligible employees to 75%, allows a small employer carrier to offer a lower participation level if the carrier permits the same percentage of participation as the qualifying percentage for each benefit plan offered by that carrier and allows the carrier to offer a participation level that is lower than the carrier's qualifying participation level in limited circumstances. Amended sec.26.9 provides that late enrollees may be excluded from coverage until the next annual enrollment period and may be subject to a 12-month pre-existing condition provision. The section also allows carriers who do not use a pre-existing condition provision to impose an affiliation period of no more than 90 days for new entrants and no more than 180 days for late enrollees during which premiums are not collected and issued coverage is not effective and it provides that imposition of an affiliation period does not preclude application of a small employer waiting period applicable to all new entrants. Amended sec.26.10 prohibits the establishment of a separate class of business based on participation requirements or whether coverage is provided on a guaranteed issue basis. Section 26.11 is amended to allow a health maintenance organization (HMO) participating in a purchasing cooperative that has established a separate class of business and a separate line of business to use rating methods used by other carriers in the cooperative, including rating by age and gender. Amendments to sec.26.13 change references to the standard benefit plans established by the Commissioner of Insurance to the new standard plans and requires small employer carriers to give to each small employer that inquires about purchasing a health benefit plan a written summary of the standard benefit plans which includes a description of the items listed in the section. The amended section also requires a small employer carrier to offer each of the standard benefit plans to each small employer who inquires about purchasing a small employer health benefit plan and to explain the plans to the employer upon request. The section also requires a small employer carrier to give written reasons to the small employer if coverage is denied on any basis. New sec.26.14 contains the coverage provisions for the new standard benefit plans required to be offered by small employer carriers to small employers as a condition of transacting business in the state. New sec.26.15 contains requirements for renewability of coverage and cancellation. This section provides that misrepresentations of a material fact by a small employer or eligible employee or dependent shall not include misrepresentations related to health status. New sec.26.16 describes the circumstances under which a small employer carrier may refuse to renew coverage, prohibits a carrier that has refused to renew coverage from writing small employer health benefit plans in the state or geographic area for a period of five years and establishes a procedure for reentry into the market after five years. New sec.26.17 prescribes the notice to covered persons for termination of coverage. New sec.26.18 sets forth the procedures for filing an election or application to be a risk-assuming or reinsured carrier. Amendments to sec.26.19 provide references to the new standard benefit plans, change references to form numbers and sets forth additional requirements for filing forms, contracts and certificates and evidences of coverage. Section 26.20 deletes outdated requirements relating to gross premium filings and provides for an annual filing of this information. The section further requires reporting of the number of standard benefit plans issued and the number of lives covered under these plans. An amendment to sec.26.21 deletes a statement that HMOs are not subject to Insurance Code, Article 21.52B based upon an amendment to Article 21.52B by the 74th Legislature in Senate Bill 628. Amended sec.26.22 requires a purchasing cooperative to file with the Commissioner of Insurance notification of the receipt of a certificate of incorporation or authority from the Secretary of State. New sec.26.27 is an appendix containing the new standard benefit plans (the Basic Coverage Benefit Plan, the Catastrophic Care Benefit Plan and the Small Employer Group Health Benefit Plan for HMOs) and other forms for use by small employer carriers. Copies of these forms and complete sets of prototype plans may be obtained from the Texas Department of Insurance, Publications Department, MC 108-5A, P. O. Box 149104, Austin, Texas 78714-9104. Most commenters expressed general support for the rules as proposed. A commenter supported the sections as proposed without changes. Other commenters offered comments or concerns with regard to specific sections. Some commenters stated that the changes to the rules resulting from the enactment of House Bill 369 will create better access and affordability of health benefit plans for an important segment of the Texas business community. Other commenters stated that the sections and the new standard benefit plans the department has developed reflect the intent of House Bill 369. The commenters stated that the new standard plans are marketable and affordable. One of these commenters urged the agency to monitor the pricing and availability of the standard benefit plans to ensure their usefulness to the small employer. Agency Response: The agency appreciates the comments it has received and the information provided at the public hearing. The agency intends for the changes to these sections to increase the affordability and availability of health benefit plans for small employers and their employees and believes that the adopted sections meet the legislative intent. The agency specifically designed the new standard benefit plans to be more affordable and marketable for the benefit of small employers and their employees. The agency will monitor the pricing and availability of the standard benefit plans as recommended by the commenter. The data which the department will use in the monitoring of the marketing of these plans is required to be reported to the department by sec.26. 19 and sec.26.20. Section 26.4, Definition of Eligible Employee. A commenter stated that the definition of "eligible employee" which appears in this section and in sec.26. 27, Figures 16, 21 and 33 may allow an employer with more than 50 employees to exclude certain employees to come within the definition of a small employer or may allow an employer with a self-funded ERISA plan to exclude a group of seriously ill persons and place that group of people in a fully insured small group guaranteed issue plan. The commenter suggested amending the definition to clarify that a self-funded plan must be the plan of another unrelated employer. Agency Response: The agency disagrees. The definition of "eligible employee" is the same as that in Insurance Code, Article 26.02(8). Section 26.5, Applicability and scope. A few commenters requested clarification of the applicability of Chapter 26 and the rules to group and individual policies under circumstances in which the employer may increase salaries to assist its employees in purchasing health insurance for the purpose of enabling its employees to purchase health insurance or remits to the carrier the premium collected through a payroll deduction. One of these commenters requested the addition of new subsection (a)(3) to track the language in Insurance Code, Article 26.06(b). Another of these commenters stated that the purpose of the amendment to Insurance Code, Article 26.06 was to allow medical savings accounts to be established by employers under circumstances in which the employer would not stipulate how the funds would be used by an employee (that is, the funds would be used by the employee to obtain an individual policy of insurance to pay medical expenses directly). Another commenter stated that the intent in amending Article 26.06 was to provide that any individual policies must be paid for by the individual insured themselves, without any reimbursement or subsidy from employers to prevent "cherry picking" and to encourage more employers to opt for group policies, thereby increasing the number of insureds in the small business "pool." Some commenters requested that the section be amended to create a "safe harbor" for carriers under circumstances when an employer may make misrepresentations to the carrier concerning the applicability of Chapter 26. One commenter suggested that sec.26.5(g) should be changed to require that if a small employer currently covered by a small employer health benefit plan requests a change in benefits, the summary for the standard plans must be given to the small employer because Insurance Code, Article 26.17 states that each small employer "purchasing" a small employer health benefit plan must be given the summary. Agency Response: The agency believes that Chapter 26 was intended to apply to all small employer groups with benefit plans. The chapter applies to these plans whether the small employer pays a portion of the premium or benefit directly or indirectly. Insurance Code, Article 26.06(b) contains a qualified exception to the application of Chapter 26 for an individual policy that is subject to individual underwriting. Thus, if an employer gives its employees a salary increase and leaves it up to the individual employee to decide whether to use that salary increase to purchase an individual policy or to opt not to purchase a policy, Chapter 26 would not apply. The agency agrees that a paragraph containing the language in Insurance Code, Article 26.06(b) should be added to be consistent with the statutory language and has added new subsection (b) to incorporate this language. The agency disagrees that language creating a "safe harbor" should be added to the section. A carrier may cancel or non-renew coverage under Insurance Code, Article 26.23 and sec.26.15 for employer misrepresentations concerning the applicability of Chapter 26. Agency enforcement is unlikely against a carrier making a good faith determination about the applicability of the chapter based upon representations by an employer which later prove to be incorrect. Section 26.13 already requires certain information to be obtained to make this determination. The agency disagrees that subsection (g) should be changed. The provisions of sec.26.5 were intended to facilitate the transition from one set of standard benefit plans promulgated by the department to another, rather than to prescribe marketing practices. For clarification and to emphasize the agency's intent, the word "beginning" has been deleted from the first sentence of subsection (g). Section 26.7, Requirement to insure entire groups. A few commenters stated that the requirement in sec.26.7(c) for a carrier to determine small employer eligibility within five days of receipt of any requested documentation is too short because holidays can make it impossible to make a decision within that time period. These commenters recommended that the requirement should be "five business days." A commenter requested additional language to clarify the intent of sec.26.7(h)(1) concerning the 31-day enrollment period and waiting period. The commenter would add "at least 31 days after" between the words "or if the waiting period exceeds 31 days" and "the date the new entrant becomes eligible for coverage." Another commenter requested deletion of language from sec.26.7(h)(3) extending enrollment for 31 days beyond the end of the waiting period, stating that Article 26.21(j) requires the application to be received no later than the 31st day after employment begins or upon completion of the waiting period. Agency Response: The agency agrees that the requirement for making a determination of eligibility should be changed to five business days and has made that change. The agency agrees that language should be added clarifying the intent to extend the enrollment period at least 31 days after the date the new entrant becomes eligible for coverage after the expiration of the waiting period. Section 26.7(h)(1) has been changed accordingly. The agency disagrees with the commenter who recommended a change to subsection (h) (3). The agency believes that the intent of House Bill 369 was to extend the date for enrollment 31 days beyond the date of employment or, if a waiting period extends beyond 31 days, 31 days beyond the end of the waiting period. Section 26.8, Guaranteed Issue; contribution and participation requirements. A commenter asked whether the language allowing a health carrier to require an employer premium contribution in accordance with the carrier's usual and customary practices "for all employer group health insurance plans in the state" means for all small employer group plans. Another commenter asked whether new employees to a group for which an employer's participation level is below 75% may be subject to medical underwriting. This commenter also asked whether, for a group that is medically underwritten, an employee who by affidavit has chosen not to be covered but later wants to enroll during a subsequent enrollment period may be subject to underwriting. The commenter also requested that the section be changed to allow an employer to contribute different levels of premium for different categories of employees as long as the differentiation between employee premium is not based on health status or other types of improper discrimination such as age or sex. The categories suggested by the commenter would be length of service and/or type of job. A commenter requested that subsection (i) be changed so that in determining whether an employer has the required percentage of participation of eligible employees if the percentage of eligible employees is not a whole number, the result of applying the percentage to the number of eligible employees would be rounded up to the nearest whole number rather than rounded down. According to the commenter, rounding down as in the example given in the subsection would result in a participation level that is lower than the 75% minimum. Agency Response: The agency believes that the premium contribution must be consistent with a carrier's usual and customary practices for all employer group health insurance plans in the state rather than just for the carrier's small employer group plans. Prior to the amendments to Chapter 26, a 75% contribution level was mandatory. House Bill 369 amended the chapter to eliminate this mandatory contribution level and allowed carriers to require a premium contribution in accordance with the carrier's usual and customary practices "on all employer group health plans in the state." Because of the prior law, a 75% contribution level would currently constitute the usual and customary practice for small groups. To comply with the amendment, "group health insurance plans in the state" must be interpreted broadly rather than meaning only small group plans. The agency believes that new employees and existing enrollees who wish to enroll during a later enrollment period cannot be medically underwritten. Pursuant to Insurance Code, Article 26.21(d)<< and this section, medical underwriting of the group can occur only under certain limited circumstances if the participation level is below the carrier's qualifying participation level. Once the carrier has accepted a group, the provisions of Chapter 26 apply and new entrants cannot be medically underwritten. Other provisions of Chapter 26, as amended, for example those contained in Article 26.21, were intended to address late entrants to a plan. The sections as adopted do not allow an employer to contribute different levels of premium for different categories of employees. The agency agrees with the commenter that rules cannot allow employers to create contribution categories based on discriminatory factors or categories that would undermine the intent behind Chapter 26. The agency will consider the commenter's suggestion for different contribution levels in future rulemaking. Such a rule would be outside the scope of the present rulemaking but the agency will consider the suggestion to determine whether an additional rule incorporating it would be appropriate. The agency disagrees with the commenter's requested change to subsection (i). Under the formula recommended by the commenter, the required participation level would be significantly higher than 75% for a group of five eligible employees. This would frustrate the intent of House Bill 369 to reduce the maximum required participation level for small groups to 75%. Section 26.9, Waiting periods. A commenter stated that waiting periods as discussed in this section and sec.26.14(g)(5)(B) do not clarify when the employee's coverage will be effective. The statute is silent on this matter. The commenter stated that coverage for an employee can be effective on the first premium due date following satisfaction of the waiting period or on the date after the waiting period has been satisfied. According to the commenter, the first method is easier to administer, easier to explain to employers and less costly. Agency Response: The agency agrees that after a waiting period established by the small employer coverage must be effective no later than the next premium due date following completion of the waiting period and receipt of the completed application. Carriers and small employers may provide for an earlier effective date, however. Language has been added to subsection (a)(8) for clarification of this point. No change is necessary to sec.26.14. Section 26.13, Rules relating to fair marketing. A commenter stated that for clarification purposes, the second sentence of subsection (c) should have the words "if requested" added to the beginning of the sentence so that a carrier would have to offer and explain the standard benefit plans to a small employer only upon request. Agency Response: The agency disagrees. The agency believes that the intent of Insurance Code, Article 26.71 was to require a small employer carrier to offer the standard benefit plans to each small employer who inquires about purchasing such a plan and to explain the plans upon request by the small employer. The language of this subsection as proposed makes this intent clear and no change is needed. The change to subsection (b) is addressed in the response to sec.26.27(b), Figure 41. Section 26.14, Coverage. A commenter stated that the Basic Coverage Benefit Plan appears to allow health carriers the opportunity to provide an additional small employer product or products, separate from the prototype. Another commenter stated that subsection (a) appears to allow a small employer carrier who elects to offer the two standard plans prior to June 1, 1996, to cease offering the three standard plans required prior to the amendments to House Bill 369. A commenter requested that the definition of "policyholder" in subsections (h)(1)(C)(vii) and (h)(2)(C)(vii) be revised to include a "cooperative." A commenter stated that sec.26.14(h)(3), which requires the mandated offering of certain riders may cause antiselection, is difficult to administer because of the possibility of the number of different plans (with four riders required to be offered with the Basic Coverage Benefit Plan there is a possibility of 16 different plans and with three riders required to be offered with the four required Catastrophic Care Benefit Plan benefit levels, there is a possibility of 32 different plans), and may drive up costs. Another commenter stated that the fact that the agency has reduced the number of riders down to four in the Basic Coverage Benefit Plan will help keep costs down. Agency Response: Insurance Code, Article 26.42(c) permits a small employer carrier to offer to small employers any health benefit plan which complies with the Insurance Code, Chapter 26, in addition to the mandated benefit plans. Subsections (h)(1)(A)(i) and (h)(1)B)(ii) require specified deductible, coinsurance and percentage payable amounts to be offered for the Basic Coverage Benefit Plan. In addition to the mandated offer, the rules allow a small employer carrier to make available within the standard benefit plans other deductible, coinsurance and percentage payable amounts provided the amounts do not exceed the maximums allowed by subsections (h)(1)(A)(i) and (h)(1)(B)(iii). The agency agrees with the commenter's interpretation of subsection (a). The agency has revised the definition of "policyholder" in subsections (h)(1)(C)(vii) and (h)(2)(C)(vii) and Figures 16 and 21 to include cooperatives. The agency disagrees that there should not be a mandated offering of certain riders. The riders were developed to provide the employer with alternatives to benefits that are currently available in the market. The benefits are limited and should provide a lower cost alternative to small employers. The agency does not agree that the offering of these riders will be unusually difficult to administer. Most of the carriers offering small employer coverage are also offering coverage in the general group market. In the group market there are at least five mandated offers that the carriers must administer. In addition to these mandated offers, companies offer optional riders and various coinsurance amounts and deductibles for groups to choose from. Since companies can administratively handle these mandated offers and the resulting different plans along with optional riders and varying coinsurance and deductibles, the required offerings of riders in Chapter 26 should not be overly administratively burdensome or costly. Section 26.15, Renewability of coverage and cancellation. Some commenters stated that language in sec.26.15(a)(3) and (b) concerning nonrenewal based upon a fraudulent misrepresentation about health status is not appropriate in a guaranteed issue setting. The health history of individual employees is not material to acceptance of the risk but only to the rate charged and the purchase of reinsurance. One of these commenters stated that Insurance Code, Article 26.23, which sets forth the circumstances under which carriers can nonrenew coverage, applies to circumstances in which an employer or employee may misrepresent employment status of a person, may attempt to cover an ineligible person, may refuse to cover eligible persons or refuse to pay premiums under the plan. Agency Response: The agency agrees that in a guaranteed issue market, carriers cannot nonrenew for misrepresentations based on health status. The words "unless it is a fraudulent misrepresentation made by the small employer during the initial application for coverage" have been deleted from subsection (a)(3) and a similar provision has been deleted from subsection (b). New subsection (d) has been added, however, to clarify that a carrier may have other remedies for fraudulent misrepresentations outside the operation of these sections, for example, a remedy based upon contract law which the carrier may pursue in court. The remaining subsections have been renumbered accordingly. Section 26.19, Filing Requirements. A commenter stated that the requirement for Form Number 369 CERT ANN LIST-OTH/SEHBP to be sent to the department as soon as reasonably possible after January 1, 1994, should be changed to June 1, 1996, or an earlier date as elected by the small employer carrier. Agency Response: The agency disagrees. The passage of House Bill 369 with an effective date of June 1, 1996, required no statutory change to this rule. Changes made are the form number (that is, after the adoption of these rules, a carrier should submit form "369" CERT ANN LIST-OTHER/SEHBP instead of form "2055" CERT ANN LIST- OTHER/SEHBP) and consolidation of reporting requirements. Existing forms should be used prior to the effective date of these sections. Section 26.27(b), Appendix. A commenter stated that as a matter of policy, all of the standard benefit plans should contain a core of basic coverages that are commonly sought after and purchased. The costs of the plans should be controlled primarily by variable deductibles, copayments and annual out-of-pocket maximums, rather than by eliminating common benefits. The commenter stated that careful consideration should be given to better coordination of the benefits of the Basic Coverage and Catastrophic Care Benefit Plans. This commenter also stated that the Small Employer Group Health Benefit Plan for HMOs should be at least as flexible as health benefit plans for HMOs that are federally qualified and which can be more cost effective. Agency Response: The agency has coordinated the benefits in the Basic Coverage and Catastrophic Care Benefit Plans to the greatest extent possible in light of the differences arising out of the different nature of these two plans. The agency has also attempted to make the HMO Plan as flexible as possible in light of federal requirements for HMOs. In fact, features are contained within the "state-approved" prescribed prototype for HMOs which provide greater flexibility with respect to plan development than would be permitted in a federally qualified plan. Section 26.27(b), Figures 1-32. A commenter suggested several non-substantive changes to the standard benefit plans involving changes in punctuation and capitalization. Agency Response: The agency agrees and has made the non- substantive changes where necessary. In addition, the agency identified a typographical error in the form number for Figure 13 and has changed the title from Form Number 399 ACC to Form Number 369 ACC. Section 26.27(b), Figures 11, 32 and 33. A commenter recommended that the dates for court ordered coverage for a child and court ordered coverage for a spouse should be the same: the date of the court order. Currently the figures provide for court ordered coverage of a minor child to begin automatically when the employer receives notification of the court order. For a spouse, however, coverage begins on the date on which the employer receives the court order. Agency Response: The agency disagrees. The provisions as worded comply with changes to the Family Code as enacted by the 74th Legislature in Senate Bill 793. Chapter 26 requires enrollment of a child and a spouse and also addresses exceptions for "late enrollment." The Family Code, sec.154.184 requires automatic coverage for children and Senate Bill 793 identifies the effective date of coverage to be from notification for dependent children. However, changes have been made to the referenced figures to further clarify the applicability of spouse and child provisions. Section 26.27(b), Figures 12, 32, 33 and 45. A commenter requested that a two- year incontestability provision be included in the Basic Coverage Benefit Plan and the Catastrophic Care Benefit Plan stating that Insurance Code, Article 3.51-6(d)(2)(ii) requires a two-year incontestability clause in all group health policies. The commenter also stated that the incontestability clause in the Small Employer Group Health Benefit Plan for HMOs should contain the two-year time limit for contestability. This commenter further stated that the incontestability provisions in all of the standard plans should state explicitly that coverage for individual subscribers is not contestable for statements related to health status. Agency Response: The agency agrees and an incontestability provision similar to that suggested by the commenter has been added to Figures 12, 32 and 33. Figures 12 and 32 will incorporate a variable provision, however, for guaranteed issue or medically underwritten plans and sec.26.14 has been changed to address the variabilities. Additionally, a question for streamlining efforts and data collection has been added to Figure 45 for carriers to indicate whether small employer carriers will issue medically underwritten plans and the language in sec.26.19(b)(2)(E) was changed. Section 26.27(b), Figures 16 and 21. A commenter stated that the proposed definition of "provider" expands the list of providers which must be recognized under Insurance Code, Article 21.52. The commenter requests that the definition be limited to the types of providers named in the Insurance Code provision. Another commenter proposed the addition of coverage for "health services provided through clinical trials." A commenter questioned why the definition of "employer" and "small employer" are the same and suggested that only one definition is needed. Another commenter stated that the language used in the definition of "child" in items 2 and 3 of these figures would extend coverage to an adopted child of a dependent child. Agency Response: The definition does encompass types of providers not listed in Insurance Code, Article 21.52. The definition is not intended, however, to require insurers to provide coverage for services by providers beyond those listed in Article 21. 52. The definition is intended as a cost containment measure by allowing insurers to provide coverage for services by other licensed providers. The definition is consistent with a generic definition generally appearing in policies (and included in the original prototypes). Insurers are still only required, pursuant to Article 21.52, to provide coverage for covered services performed by the types of providers listed in that article. The agency acknowledges the comment concerning coverage for clinical trials, but does not believe that this issue can be addressed in these plans. The definition of "Experimental or Investigational" remains consistent with other plans currently available in the marketplace. The agency will monitor this issue, however, and evaluate for possible changes to the sections in the future. The agency agrees that the definitions of "employer" and "small employer" are essentially the same; however, since both terms are used throughout the prototypes, the two terms have been combined into one definition entitled "Employer and/or Small Employer." The agency agrees that the definition of child needs clarification and has changed the language to only extend coverage to an adopted child of the "employee" or "employee's spouse." Section 26.27(b), Figure 17. Some commenters suggested that the Basic Coverage Benefit Plan provide benefits for organ transplants. Another commenter suggested that an inside dollar limit be placed on this benefit to keep the cost of the plan down. One commenter stated that many people may purchase this coverage because the deductible is lower and not realize the coverage is not as comprehensive. Agency Response: The agency does not agree that the Basic Coverage Benefit Plan should include an organ transplant benefit. Insurance Code, Article 26.44A(c) states that benefits provided by the basic plan are to be limited to basic care requirements for illness and injury. Additionally, carriers can offer organ transplant coverage to employers through a rider as allowed by Insurance Code, Article 26.42(b). The agency agrees that employers should be fully aware that the Basic Coverage Benefit Plan does not cover organ transplants and has bolded the language outlining this difference in the Summary of the Standard Small Employer Health Benefit Plans (Figure 41) which is required by sec.26.13(b) to be given to a small employer who requests information regarding the purchase of any small employer health benefit plan. Section 26.13(b) has also been changed to require the carrier, if it does not elect to use Figure 41, to clearly identify that the basic plan does not include transplant coverage in bold print. Small employee carriers must use the bolded language in any forms they reproduce. Figure 41 does not apply to HMOs. The employer can refer to the application for information regarding covered benefits. Section 26.27(b), Figures 17 and 22. A commenter stated that the Basic Coverage Benefit Plan should not limit home health services to 30 visits per policy year. This commenter also stated that the standard benefit plans originally promulgated under Insurance Code, Chapter 26 allowed a small employer carrier to waive the limit on home health services if the waiver would result in less expensive treatment and that the new standard benefit plans should also include this provision. Another commenter stated that Figure 17 (369 BEN.BASC) Item 16 should be changed to cover skilled nursing care by a registered nurse or licensed vocational nurse under the supervision of a registered nurse or physician. The commenter further stated that the Medicare Conditions of Participation allow qualified therapists (physical, occupational, and speech therapists) to supervise the services provided by home health aides. A commenter found an inconsistency in the definition of "coinsurance" in Figures 17 and 22. Agency Response: The agency disagrees that the 30-visit per year limit on home health services should be changed. This benefit achieves the requirement of Insurance Code, Article 26.44A(c) by providing basic care requirements for illness and injury and also provides a cost containment measure making the coverage more economical. The agency agrees with the commenter concerning waiver of the limit; this language was inadvertently omitted. A paragraph has been added to Figures 17 and 22 allowing a carrier to waive the limit on home health services if the waiver would result in less expensive treatment. The agency disagrees that Figure 17, Item 16 should be changed. The language in the item provides a benefit for skilled nursing care by a licensed vocational nurse be under the supervision of a registered nurse and a physician. This portion of Figure 17 also provides a benefit for services of a home health aide under the supervision of a registered nurse. The language complies with Insurance Code, Article 3.70-3B relating to benefits for home health services and is consistent with benefits currently required in other health benefit plans. The agency has deleted the word "not" from the definition of "coinsurance" to make that definition in Figures 17 and 22 consistent. Section 26.27(b), Figures 17 and 41. A commenter stated that the Basic Coverage Benefit Plan should include the benefits for oxygen and the rental of equipment for its administration that are included in the Catastrophic Care Benefit Plan. Agency Response: The agency agrees that these benefits should be added to the Basic Coverage Benefit Plan because oxygen is essential to the basic care of illness and injury and is also a cost containment benefit. Figures 17 and 41 have been revised to include these benefits. Section 26.27(b), Figure 17, 18, 22 and 23. Some commenters requested clarification of the definition of "immediate family" that appears in the limitations and exclusions sections of the figures. Agency Response: The agency agrees and the term has been changed to include "you, your spouse, your parent, brother or sister, including the parent, brother or sister of your spouse." Section 26.27(b) Figures 24 and 33. A commenter proposed a rider to be required for the small employer to elect a benefit for "optional coverage for smoking cessation treatments for group or individual counseling up to five or ten visits, and a pharmacological treatment under the supervision of a physician but not to exceed five or ten weeks." Agency Response: Although the agency is concerned about the effect of smoking on the population, the agency does not agree that a smoking cessation rider should be required to be offered. Also, the definition of Chemical Dependency in Insurance Code, Article 3.51-9 does not include tobacco products. Carriers can voluntarily offer a smoking cessation rider through an optional rider under Insurance Code, Article 26. 42(b). Section 26.27(b), Figures 24, 25, 26, and 27. A commenter stated that cost of the optional riders could be reduced by adding a statement that "copayments do not apply towards the base policy Copayment Maximum." Agency Response: The agency believes no change is necessary to the four indemnity plan riders. Three of the riders for the indemnity plans include a statement that the rider is subject to the same coinsurance, deductibles and lifetime maximum as the policy. The statement is optional and may be included or omitted or modified as desired. The Prescription Drug Rider permits a variable reimbursement rate of no less than 50% which allows carriers and employers to control costs through the reimbursement percentage offered. Section 26.27(b), Figures 25, 33 and 39. A commenter stated that the definition of Crisis Stabilization Unit in the Mental Health Benefit Rider, which refers to a 24-hour residential program, should be expanded to include mobile or non- facility based crisis stabilization units which are currently available. A commenter asked whether the variable paragraph for coinsurance, deductibles and lifetime maximum applies only to outpatient mental health visits or to both inpatient and outpatient benefits. Agency Response: The agency disagrees that the definition should be changed. The definition is consistent with the definition promulgated by Article 3.72, Insurance Code, relating to Alternative Mental Health Treatment Benefits. Since the objective under Chapter 26 is to offer a more affordable alternative to the current mandate, it is not desirable to expand or broaden any coverage addressed under an existing legislative mandate. Carriers can elect to provide such coverage via an optional rider to achieve additional cost containment if desired. A heading has been added to clarify that the variable paragraph for coinsurance, deductibles and lifetime maximum applies to both inpatient and outpatient benefits. Section 26.27(b), Figure 33. A commenter asked whether the word "eligible employee" on page 8 of this figure has the same meaning as "eligible employee" in the definitions section of the contract. The commenter suggested including an exclusion for infertility services "unless provided by rider." This commenter also suggested including an exclusion on drug and alcohol abuse services "unless provided by rider." Agency Response: "Eligible employee" has the same meaning in this figure as in the definitions section of the contract. An exclusion for Infertility Services "Unless Provided by Rider" is already in the HMO Plan. Refer to Figure 33, under "Services Not Covered," Exclusion Number 11. The agency agrees that an exclusion for drug and alcohol abuse services "unless such coverage is provided by rider" is necessary and has revised the HMO Plan accordingly. Section 26.27(b), Figure 34. A commenter suggested that the HMO Plan provide for a range of contract year copayments maximums because this would make the plan more cost effective. This commenter also recommended specific levels of coverage for Hospice Care and Skilled Nursing Care to be added to the HMO Plan as alternatives to hospitalization and that definitions for these benefits be included. Agency Response: The agency agrees that a range of contract year copayment maximums makes the HMO Plan more flexible and has revised the HMO Plan accordingly. The agency disagrees with requiring certain levels of coverage for Hospice Care and Skilled Nursing Care. These benefits may be added to the HMO Plan by rider pursuant to sec.26.14(i)(3)(D). The agency deleted a sentence from Item H in this figure relating to payment for emergency care services to make the provision consistent with sec.11.204(20) of this title (relating to Contents of an Application for Certificate of Authority). Section 26.27(b), Figures 36, 37, 38 and 39. A commenter stated that a way to keep cost of the HMO Plan down is to add a clause to all four riders as follows: "Copayment(s) do not apply toward the basic policy Copayment Maximum. " Agency Response: The agency agrees and has made this change. Section 26.27(b), Figure 36. A commenter suggested that the copayment maximum for the Prescription Drugs Rider be increased from $15 to $20. Agency Response: The agency disagrees. The agency believes that a copayment increase in the Prescription Drugs Rider would result in a proportionately larger reduction in this benefit so that the benefit realized would be less favorable. Section 26.27(b), Figure 37. A commenter requested that the Drug and Alcohol Abuse Benefit Rider establish inpatient treatment limits ranging from five-15 days per contract year and outpatient limits ranging from five-ten visits per contract year. The commenter also suggested that the Drug and Alcohol Abuse Benefit Rider should provide for alternatives to inpatient hospital treatment consisting of care received in either an approved residential drug or alcohol abuse treatment program or in an approved drug and or alcohol day treatment program. Agency Response: The agency disagrees. Additional limits for inpatient and outpatient benefits are not needed in this rider, as this language would give rise to differential benefit levels for inpatient and outpatient services. Small employer carriers are not precluded, however, from offering coverage for such services which are more favorable than the benefits available under the HMO Plan by rider, pursuant to Insurance Code, Article 26.42(b). Section 26.27(b), Figure 38. A commenter suggests that a contract year maximum benefit of $5,000 should be added to the Infertility Benefit Rider for the HMO Small Employer Prototype. Agency Response: The agency agrees that a maximum benefit should be added. Research suggests that the costs for diagnostic testing ranges from $3,000 to $5,000 and that costs for in vitro fertilization services range from $5,000 to $10,000 per occurrence. As such, the agency has revised the Infertility Benefit Rider to provide a maximum benefit of $10,000 per contract year. Section 26.27(b), Figure 39. Some commenters suggested that individuals covered by the HMO Plan should not receive more restrictive mental health benefits than individuals covered by the indemnity plans and requested that the Mental Health Benefit Rider be expanded to provide the same coverage for medically necessary outpatient and inpatient treatment of mental illness that is provided by the indemnity plan rider. Agency Response: The agency agrees and has revised the Mental Health Benefit Rider to be consistent with the mental health benefits made available through the indemnity plans. For: Individual commenter. For with changes: American National Insurance Company, Blue Cross Blue Shield of Texas, Business Insurance Consumers Association of Texas, Harris Methodist Health System, Insurance Alliance of America, Kaiser Permanente, Office of Public Insurance Counsel, Pan American Life Insurance Company, Small Business United, Texas Association for Home Health Care, Texas Association of Health Underwriters, Texas Association of Insurance Officials, and The Disability Policy Consortium. The amendments and new sections are adopted under the Insurance Code, Chapter 26; Articles 1.03A and 3.96-3 and the Government Code, sec.sec.2001.004 et seq (Administrative Procedure Act). Insurance Code, Chapter 26, as amended by the 74th Legislature, establishes the requirements for small employer health benefit plans, including, but not limited to, guaranteed issue and renewability of such health plans; contribution and participation; rating , disclosure, filing and reporting requirements; mandated policy provisions; standard benefit plans; exclusions and limitations; waiting and affiliation periods; pre-existing conditions and fair marketing provisions. Insurance Code, Article 26.04 authorizes the Commissioner of Insurance to adopt rules to implement Chapter 26. Insurance Code, Article 26.75 authorizes the commissioner to adopt rules setting forth additional standards to provide for the fair marketing and broad availability of small employer health benefit plans. Insurance Code, Article 3.96-3, as enacted by the 74th Legislature in Senate Bill 793 establishes requirements for the enrollment of a child whose parent, eligible for dependent health coverage, is required by a court or administrative order to provide health coverage for the child. 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. The Government Code, sec.sec.2001.004 et seq authorizes and requires each state agency to adopt rules of practice setting forth the nature and requirement of available procedures and prescribes the procedures for adoption of rules by a state administrative agency. sec.26.4. Definitions. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. Actuary-A qualified actuary who is a member in good standing of the American Academy of Actuaries. Affiliated employer -A person connected by commonality of ownership with a small employer. The term includes a person that owns a small employer, shares directors with a small employer, or is eligible to file a consolidated tax return with a small employer. Affiliation period -A period of time established by a small employer carrier not to exceed 90 days for new enrollees and not to exceed 180 days for late enrollees during which premiums are not collected and the issued coverage is not effective. Agent-A person who may act as an agent for the sale of a health benefit plan under a license issued under the Insurance Code, Article 20A.15 or 20A.15A, or under the Insurance Code, Chapter 21, Subchapter A. Base premium rate-For each class of business and for a specific rating period, the lowest premium rate that is charged or that could be charged under a rating system for that class of business by the small employer carrier to small employers with similar case characteristics for small employer health benefit plans with the same or similar coverage. Case characteristics -With respect to a small employer, the geographic area in which that employer's employees reside, the age and gender of the individual employees and their dependents, the appropriate industry classification as determined by the small employer carrier, the number of employees and dependents, and other objective criteria as established by the small employer carrier that are considered by the small employer carrier in setting premium rates for that small employer. The term does not include claim experience, health status, duration of coverage since the date of issuance of a health benefit plan, or whether a covered person is or may become pregnant. Child-An unmarried natural child of the employee, including a newborn child; adopted child, including a child whom the employee is seeking to adopt; natural child or adopted child of the employee's spouse, provided that the child resides with the employee. Class of business -All small employers or a separate grouping of small employers established under the Insurance Code, Chapter 26. Commissioner-The commissioner of insurance. Department-The Texas Department of Insurance. Dependent-A spouse; newborn child; child under the age of 19 years; child who is a full-time student under the age of 23 years and who is financially dependent on the parent; child of any age who is medically certified as disabled and dependent on the parent; and any person who must be covered under the Insurance Code, Article 3.51-6, sec.3D or sec.3E, or the Insurance Code, Article 3.70-2(L). Eligible employee -An employee who works on a full-time basis and who usually works at least 30 hours a week. The term includes a sole proprietor, a partner, and an independent contractor, if the sole proprietor, partner, or independent contractor is included as an employee under a health benefit plan of a small employer. The term does not include: (A) an employee who works on a part-time, temporary, seasonal or substitute basis; or (B) an employee who is covered under: (i) another health benefit plan; (ii) a self-funded or self-insured employee welfare benefit plan that provides health benefits and that is established in accordance with the Employee Retirement Income Security Act of 1974 (29 United States Code, sec.sec.1001, et seq); (iii) the Medicaid program if the employee elects not to be covered; (iv) another federal program, including the CHAMPUS program or Medicare program, if the employee elects not to be covered; or (v) a benefit plan established in another country if the employee elects not to be covered. Franchise insurance policy-An individual health benefit plan under which a number of individual policies are offered to a selected group of a small employer. The rates for such a policy may differ from the rate applicable to individually solicited policies of the same type and may differ from the rate applicable to individuals of essentially the same class. HMO-A health maintenance organization subject to Insurance Code, Chapter 20A. Health benefit plan-A group, blanket, or franchise 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 maintenance organization that provides benefits for health care services. The term does not include the plans or coverage excluded under the Insurance Code, Article 26.02(9)(A)(P), as follows: (A) accident-only insurance coverage; (B) credit insurance coverage; (C) disability insurance coverage; (D) specified disease coverage or other limited benefit policies; (E) coverage of Medicare services under a federal contract; (F) Medicare supplement and Medicare Select policies regulated in accordance with federal law; (G) long-term care insurance coverage; (H) coverage limited to dental care; (I) coverage limited to care of vision; (J) coverage provided by a single-service health maintenance organization; (K) insurance coverage issued as a supplement to liability insurance; (L) insurance coverage arising out of a workers' compensation system or similar statutory system; (M) automobile medical payment insurance coverage; (N) jointly managed trusts authorized under 29 United States Code, sec.sec.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, sec.157; (O) hospital confinement indemnity coverage; or (P) reinsurance contracts issued on a stop-loss, quota-share, or similar basis. Health carrier -Any entity authorized under the Insurance Code or another insurance law of this state that provides health insurance or health benefits in this state including an insurance company, a group hospital service corporation under the Insurance Code, Chapter 20, a health maintenance organization under the Texas Health Maintenance Organization Act (the Insurance Code, Chapter 20A), and a stipulated premium company under the Insurance Code, Chapter 22. Index rate-For each class of business as to a rating period for small employers with similar case characteristics, the arithmetic average of the applicable base premium rate and corresponding highest premium rate. Late enrollee-An eligible employee or dependent who requests enrollment in a small employer's health benefit plan after the expiration of the initial enrollment period established under the terms of the first plan for which that employee or dependent was eligible through the small employer or after the expiration of an open enrollment period under Insurance Code, Article 26.21(h). An eligible employee or dependent is not a late enrollee if: (A) the individual: (i) was covered under another employer health benefit plan at the time the individual was eligible to enroll; (ii) declines in writing, at the time of initial eligibility, stating that coverage under another employer health benefit plan was the reason for declining enrollment; (iii) has lost coverage under another employer health benefit plan as a result of the termination of employment, the termination of the other plan's coverage, the death of a spouse, or divorce; and (iv) requests enrollment not later than the 31st day after the date on which coverage under another employer health benefit plan terminates; (B) the individual is employed by an employer who offers multiple health benefit plans and the individual elects a different health benefit plan during an open enrollment period; or (C) a court has ordered coverage to be provided for a spouse or minor child under a covered employee's plan; and (i) for coverage to be provided for a spouse, a request for enrollment is made not later than the 31st day after the date on which the court order is issued; or (ii) for coverage to be provided for a child, a request for enrollment is made not later than the 31st day after the date the employer receives notification of the court order. Limited benefit policy-For purposes of this chapter and the Insurance Code, Chapter 26, only, this term means a policy of accident and sickness insurance: (A) that provides for payment of benefits only upon the occurrence of certain contingencies, such as cancer or other specified disease, in contrast to policies covering all contingencies other than those excluded, or coverage, including, but not limited to, CHAMPUS supplements or intensive care, sold to supplement other coverage in force; or (B) that provides only the type of coverage set forth in sec.3.3071 of this title (relating to Minimum Standards for Basic Hospital Expense Coverage), sec.3.3072 of this title (relating to Minimum Standards for Basic Medical Surgical Expense Coverage), or sec.3.3075 of this title (relating to Minimum Standards for Disability Income Protection Coverage), where the policy fails to meet the minimum standards as provided in those sections; and (C) a policy will not be deemed to be a limited benefit policy: (i) solely due to a deductible in excess of the minimum standard provided in sec.3.3071(4) of this title (relating to Minimum Standards for Basic Hospital Expense Coverage); or (ii) if it provides any coverage or benefit in addition to or other than the coverage and benefits set out respectively in sec.sec.3.3071, 3.3072, or 3.3075 of this title. New entrant-An eligible employee, or the dependent of an eligible employee, who becomes part of a small employer group after the initial period for enrollment in a health benefit plan. After the initial enrollment period, this includes any employee or dependent who becomes eligible for coverage and who is not a late enrollee. New business premium rate-For each class of business as to a rating period, the lowest premium rate that is charged or offered or that could be charged or offered by the small employer carrier to small employers with similar case characteristics for newly issued small employer health benefit plans that provide the same or similar coverage. Person-An individual, corporation, partnership, association, or other private legal entity. Point-of-service contract -A benefit plan offered through a health maintenance organization that: (A) includes corresponding indemnity benefits in addition to benefits relating to out-of-area or emergency services provided through insurers or group hospital corporations; and (B) permits the insured to obtain coverage under either the health maintenance organization conventional plan or the indemnity plan as determined in accordance with the terms of the contract. Policy year-For purposes of the Insurance Code, Chapter 26, and this chapter, a 365-day period that begins on the policy's effective date or a period of one full calendar-year, under a health benefit plan providing coverage to small employers and their employees, as defined in the policy. Small employer carriers must use the same definition of policy year in all small employer health benefit plans. Pre-existing condition provision-A provision that denies, excludes, or limits coverage as to a disease or condition for a specified period after the effective date of coverage. Premium-All amounts paid by a small employer and eligible employees as a condition of receiving coverage from a small employer carrier, including any fees or other contributions associated with a health benefit plan. Rating period-A calendar period for which premium rates established by a small employer carrier are assumed to be in effect. Renewal date-For each small employer's health benefit plan, the earlier of the date (if any) specified in such plan (contract) for renewal; the policy anniversary date; or the date on which the small employer's plan is changed. A change in the premium rate due solely to the addition or deletion of an employee or dependent if the deletion is due to a request by the employee, death or retirement of the employee or dependent, termination of employment of the employee, or because a dependent is no longer eligible is not considered a renewal date. For association or multiple employer trusts group health benefit plans, small employer carriers may use the date specified for renewal or the policy anniversary date, of either the master contract or the contract or certificate of coverage of each small employer in the association or trust, in determining the renewal date. Small employer carriers must use the same method of determining renewal dates for all small employer health benefit plans. Risk characteristic -The health status, claims experience, duration of coverage, or any similar characteristic related to the health status or experience of a small employer group or of any member of a small employer group. Risk load-The percentage above the applicable base premium rate that is charged by a small employer carrier to a small employer to reflect the risk characteristics of the small employer group. Small employer -A person that is actively engaged in business and that, on at least 50% of its working days during the preceding calendar year, employed at least three but not more than 50 eligible employees, including the employees of an affiliated employer, the majority of whom were employed in this state. Small employer carrier-A health carrier, to the extent that health carrier is offering, delivering, issuing for delivery, or renewing health benefit plans subject to the Insurance Code, Chapter 26, under Article 26.06(a). Small employer health benefit plan-A plan developed by the commissioner under the Insurance Code, Chapter 26, Subchapter E, or any other health benefit plan offered to a small employer under the Insurance Code, Article 26.42(c) or Article 26.48; Standard benefit plans-The basic coverage benefit plan and the catastrophic care benefit plan required to be offered by health carriers, excluding HMOs, under the Insurance Code, Chapter 26, Subchapter E. For HMOs, the standard benefit plan means the prototype small employer group health benefit plan that may be offered by an HMO, as provided under the Insurance Code, Chapter 26, Subchapter E. Waiting period -A period of time, established by a small employer, during which a new employee is not eligible for coverage and which cannot exceed 90 days from the first day of employment. sec.26.5. Applicability and Scope. (a) Except as otherwise provided in this chapter, this chapter shall apply to any health benefit plan providing health care benefits covering three or more eligible employees of a small employer, whether provided on a group or individual franchise basis, regardless of whether the policy was issued in this state, if the plan: (1) meets one of the following conditions: (A) a portion of the premium or benefits is paid by a small employer; or (B) the health plan is treated by the employer or by a covered individual as part of a plan or program for the purposes of 26 United States Code, sec.106 or sec.162; (2) is issued on or after September 1, 1993. (b) Except as provided by Insurance Code, Article 26.06(a) or subsection (a) of this section, this chapter does not apply to an individual health insurance policy that is subject to individual underwriting, even if the premium is remitted through a payroll deduction method. (c) Health benefit plans issued prior to September 1, 1993, to small employers and/or employees of a small employer, including franchise insurance policies, shall not be required to be amended to comply with the provisions of the Insurance Code, Chapter 26, and this chapter; except that a premium rate for a rating period may only exceed the ranges set forth in the Insurance Code, Articles 26.32 and 26.33, until September 1, 1995, and such rate shall be calculated, as provided in the Insurance Code, Article 26.34. (d) While franchise insurance policies issued prior to September 1, 1993, to small employers and/or their employees do not have to comply with the provisions of the Insurance Code, Chapter 26, and this chapter, other than the provisions relating to rates referred to in subsection (b) of this section; policies written for individuals after that date must comply with the provisions of the Insurance Code, Chapter 26, and this chapter, even if the employer has an existing franchise policy. (e) Health benefit plans issued to small employers and their employees on or after September 1, 1993, and prior to January 1, 1994: (1) that are specifically offered, marketed, represented, issued, or delivered as "small employer health benefit plans" during this timeframe shall comply with all provisions of the Insurance Code, Chapter 26, when issued or renewed, and shall be amended to comply with all provisions of this chapter no later than January 1, 1994; (2) that are not specifically offered, marketed, represented, issued or delivered as "small employer health benefit plans" during this timeframe shall be amended to comply with all provisions of the Insurance Code, Chapter 26, and this chapter, on the first renewal date occurring on or after January 1, 1994. (f) Health benefit plans that are offered, marketed, represented, issued, or delivered for issue to small employers and their employees, on and after January 1, 1994, shall comply with all provisions of the Insurance Code, Chapter 26, and this chapter beginning January 1, 1994. (g) Health benefit plans that are offered, marketed, represented, issued or delivered for issue to small employers and their employees on or after September 1, 1993 but before June 1, 1996, must comply with Insurance Code, Chapter 26 as amended by the 74th Legislature and with amendments to this chapter to be adopted January 1, 1996, beginning on the first renewal date of the health benefit plan following June 1, 1996. Small employer carriers may voluntarily comply with the amendments to Insurance Code, Chapter 26 and to this chapter for health benefit plans offered, marketed, represented, issued or delivered for issue or renewed after the effective date of the amendments to this chapter but before June 1, 1996. This section does not permit a small employer carrier to cancel or nonrenew a small employer health benefit plan, including a standard benefit plan, issued before June 1, 1996; however, if the small employer currently was issued a standard benefit plan, the small employer carrier shall give the small employer notice of the standard benefit plans provided for by this chapter as amended at least 30 days prior to the first renewal date. Small employer carriers may use Form Number 369 SUMM provided at Figure 41 of sec.26.27(b) of this title (relating to Appendix) to provide the required notice. (h) Beginning on June 1, 1996, health benefit plans that are offered, marketed, represented, issued or delivered for issue to small employers and their employees on or after June 1, 1996, shall comply with all provisions of the Insurance Code, Chapter 26 as amended by the 74th Legislature, and with amendments to this chapter to be adopted January 1, 1996. (i) If a health carrier continues to provide coverage to small employers and their employees under existing health benefit plans and elects not to continue to offer, deliver, or issue for delivery health benefit plans to small employers and their employees, the health carrier will only be considered a small employer carrier for purposes of renewing such existing plans. In this case, the health carrier shall notify the small employer of certain information. The notice shall be provided at least 30 days prior to the first renewal date occurring on or after January 1, 1994, except for renewal dates occurring prior to March 1, 1994, and for those renewal dates, the notice shall be given as soon as possible before the renewal date. The notice shall state that: (1) the health carrier (the current health carrier of the small employer's employee health benefit plans) has elected not to continue to offer new health benefit plans in the small employer market; and (2) other health benefit plans may be available to the small employer through other small employer carriers and that such other plans should be compared against existing plans to determine which plan is more beneficial. (j) If a health carrier continues to provide coverage to small employers and their employees under existing health benefit plans and elects to continue to offer, issue, and issue for delivery health benefit plans to small employers and their employees, the health carrier shall notify the small employer of certain information. The notice shall be provided at least 30 days prior to the first renewal date occurring on or after January 1, 1994, except for renewal dates occurring prior to March 1, 1994, and for those renewal dates, the notice shall be given as soon as possible before the renewal date. The notice shall: (1) offer the small employer the option of continuing the existing health benefit plan or plans or purchasing new small employer benefit plans in accordance with the Insurance Code, Chapter 26, and this chapter; and (2) provide notice that such other plans should be compared against existing plans to determine which plan is more beneficial. (k) The provisions of the Insurance Code, Chapter 26, and this chapter shall apply to a health benefit plan provided to a small employer or to the employees of a small employer without regard to whether the health benefit plan is offered under or provided through a group policy or trust arrangement of any size sponsored by an association or discretionary group. (l) If a small employer or the employees of a small employer are issued a health benefit plan under the provisions of the Insurance Code, Chapter 26, and this chapter, and the small employer subsequently employs more than 50 eligible employees or less than three eligible employees, the provisions of the Insurance Code, Chapter 26, and this chapter shall continue to apply to that particular health plan. A health carrier providing coverage to such an employer shall, within 60 days of becoming aware that the employer has more than 50 eligible employees or less than three eligible employees, but not later than the first renewal date occurring after the small employer has ceased to be a small employer, notify the employer that the protections provided under the Insurance Code, Chapter 26, and this chapter shall cease to apply to the employer, if such employer fails to renew its current health benefit plans or elects to enroll in a different health benefit plan. (m) If a health benefit plan is issued on or after September 1, 1993, to an employer that is not a small employer as defined in the Insurance Code, Chapter 26, but subsequently the employer becomes a small employer, the provisions of the Insurance Code, Chapter 26, and this chapter shall apply to the health benefit plan on the first renewal date on or after January 1, 1994. An employer may become a small employer due to several reasons, including, but not limited to, the loss or change of work status of one or more employees, or the employer has moved to this state from another state and has a health benefit plan that was issued in the other state. The health carrier providing a health benefit plan to such an employer: (1) shall not be considered to have elected to offer, issue, or issue for delivery health benefit plans to small employers under the provisions of the Insurance Code, Chapter 26, and this chapter solely because the health carrier continues to provide coverage under the health benefit plan to the employer and employees of the employer; however, for purposes of such existing health benefit plans, the health carrier will be considered a small employer carrier; and (2) shall, within 60 days of becoming aware that the employer has 50 or fewer eligible employees, notify the small employer of the options that will be available to the small employer under the Insurance Code, Chapter 26, and this chapter, including the small employer's option to purchase a small employer health benefit plan from the employer's current health carrier, if the carrier is offering such coverage, or from any small employer carrier currently offering small employer coverage in this state. (n) If a small employer has employees in more than one state, the provisions of the Insurance Code, Chapter 26, and this chapter shall apply to a health benefit plan issued to the small employer if: (1) the majority of eligible employees of such small employer are employed in this state on the issue date or renewal date; or (2) the primary business location of the small employer is in this state on the issue date or renewal date and no state contains a majority of the eligible employees of the small employer. sec.26.6. Status of Health Carriers as Small Employer Carriers and Geographic Service Area. (a) No later than December 15, 1993, each health carrier providing health benefit plans in this state shall make a filing with the commissioner indicating whether the health carrier will or will not offer, renew, issue, or issue for delivery health benefit plans to small employers in this state as defined in the Insurance Code, Chapter 26, and this chapter. The required filing shall include the certification form provided at Figure 40 of sec.26.27(b) of this title (relating to Appendix) (Form Number 369 CERT SEHC STATUS) completed according to the carrier's status and shall at least provide a statement to the effect of one of the following: (1)-(4) (No change.) (b) After December 15, 1993, if a health carrier chooses to change its election under subsection (a)(1), (2), or (4) of this section, the health carrier shall notify the commissioner of its new election at least 30 days prior to the date the health carrier intends to begin operations under the new election. This notification shall be made on Form Number 369 CERT SEHC STATUS provided at Figure 40 of sec.26.27(b) of this title (relating to Appendix). (c) Upon election to become a small employer carrier, the health carrier shall establish geographic service areas within which the health carrier reasonably anticipates it will have the capacity to deliver services adequately to small employers in each established geographic service area. The geographic service areas shall be defined in terms of counties or zip codes, to the extent possible, and shall be submitted in conjunction with any filing of a small employer health benefit plan. If the service area cannot be defined by counties or zip code, a map which clearly shows the geographic service areas is required to be submitted in conjunction with the filing of the small employer health benefit plan. Service areas by zip code shall be defined in a non-discriminatory manner and in compliance with the Insurance Code, Articles 21.21-6 and 21.21-8 . If the geographic service area of the carrier is the entire state, the carrier shall define the service area as the State of Texas and no other definition is necessary. (d)-(e) (No change.) sec.26.7. Requirement To Insure Entire Groups. (a) A small employer carrier that offers coverage to a small employer and its employees shall offer to provide coverage to each eligible employee and to each dependent of an eligible employee. Except as provided in subsection (b) of this section, the small employer carrier shall provide the same health benefit plan to each such employee and dependent. (b) If elected by the small employer, a small employer carrier may offer the eligible employees of a small employer the option of choosing among one or more health benefit plans, provided that each eligible employee may choose any of the plans offered. Except as provided in the Insurance Code, Article 26.21 and Article 26.49 (with respect to exclusions for pre-existing conditions), the choice among benefit plans may not be limited, restricted, or conditioned based upon the risk characteristics of the eligible employees or their dependents. (c) A small employer carrier may require each small employer that applies for coverage, as part of the application process, to provide a complete list of eligible employees and dependents of eligible employees as defined in the Insurance Code, Article 26.02. If the small employer carrier requires such list, then the carrier may also require the small employer to provide reasonable and appropriate supporting documentation (such as a W-2 Summary Wage and Tax Form) to verify the information required under this subsection. A determination of eligibility shall be made within five business days of receipt of any requested documentation. (d)-(f) (No change.) (g) New entrants in a health benefit plan issued to a small employer group on or after September 1, 1993, shall be offered an opportunity to enroll in the health benefit plan currently held by such employer group or shall be offered an opportunity to enroll in the health benefit plan if the plan is provided through an individual franchise policy or more than one plan is available. If a small employer carrier has offered more than one health benefit plan to eligible employees of a small employer group pursuant to subsection (b) of this section, the new entrant shall be offered the same choice of health benefit plans as the other employees (members) in the group. A new entrant that does not exercise the opportunity to enroll in the health benefit plan within the period provided by the small employer carrier may be treated as a late enrollee by the health carrier, provided that the period provided to enroll in the health benefit plan complies with subsection (h) of this section. (h) Periods provided for enrollment in and application for any health benefit plan provided to a small employer group shall comply with the following: (1) the enrollment period extends at least 31 days after the date the new entrant begins employment or if the waiting period exceeds 31 days, at least 31 days after the date the new entrant becomes eligible for coverage; (2) the new entrant is notified of his or her opportunity to enroll at least 31 days in advance of the last date enrollment is permitted; (3) a period of at least 31 days following the date of employment, or following the date the new entrant is eligible for coverage, is provided during which the new entrant's application for coverage may be submitted and; (4) an open enrollment period of at least 31 days is provided on an annual basis. (i) A small employer carrier shall not apply a waiting period, affiliation period, elimination period, or other similar limitation of coverage (other than an exclusion for pre-existing medical conditions consistent with the Insurance Code, Article 26.21 and Article 26.49), with respect to a new entrant, that is longer than 90 days. Any waiting period applied to a new entrant shall be based on the waiting period established by the small employer. (j)-(m) (No change.) (n) The opportunity to enroll shall meet the following requirements. (1) (No change.) (2) Eligible employees and dependents of eligible employees who are provided an opportunity to enroll pursuant to this section shall be treated as new entrants. Premium rates related to such individuals shall be set in accordance with subsection (k) of this section. (3)-(4) ((No change.) sec.26.9. Exclusions, Limitations, Waiting Periods, Affiliation Periods and Pre-existing Conditions and Restrictive Riders. (a) All health benefit plans that provide coverage for small employers and their employees as defined in the Insurance Code, Article 26.02(21), and sec.26.4 of this title (relating to Definitions) shall comply with the following requirements: (1) A small employer carrier shall not exclude any eligible employee or dependent (including a late enrollee, who would otherwise be covered under a small employer's health benefit plan), except to the extent permitted under the Insurance Code, Article 26.21(k). (2) ((No change. ) (3) A small employer health benefit plan may not limit or exclude initial coverage of a newborn child of a covered employee. Any coverage of a newborn child of an employee under this subsection terminates on the 32nd day after the date of the birth of the child unless: (A) dependent children are eligible for coverage; and (B) notification of the birth and any required additional premium are received by the small employer carrier not later than the 31st day after the date of birth. A small employer carrier shall not terminate coverage of a newborn child if such carrier's billing cycle does not coincide with this 31-day premium payment requirement, until the next billing cycle has occurred and there has been nonpayment of the additional required premium, within 30 days of the due date of such premium. (4) A late enrollee may be excluded from coverage until the next annual open enrollment period and may be subject to a 12-month pre-existing condition provision as described by the Insurance Code, Article 26.49. (5) A pre-existing condition provision in a small employer health benefit plan may not apply to coverage for a disease or condition other than a disease or condition for which medical advice, diagnosis, care, or treatment was recommended or received during the six months before the effective date of coverage. (6) A pre-existing condition provision in a small employer health benefit plan shall not apply to an individual who was continuously covered for a minimum period of 12 months by a health benefit plan that was in effect up to a date not more than 60 days before the effective date of coverage under the small employer health benefit plan, excluding any waiting period. (7) (No change.) (8) A small employer may establish a waiting period that cannot exceed 90 days from the first day of employment during which a new employee is not eligible for coverage. Upon completion of the waiting period and enrollment within the time frame allowed by sec.26.7(h) of this title (relating to Requirement to Insure Entire Groups), coverage must be effective no later than the next premium due date following enrollment. Coverage may be effective at an earlier date as agreed upon by the small employer and the small employer carrier. (9) A carrier that does not use a pre-existing condition provision in any of its health benefit plans may impose an affiliation period in a small employer health benefit plan not to exceed 90 days for new entrants and not to exceed 180 days for late enrollees during which premiums are not collected and the issued coverage is not effective. (10) The imposition by a carrier of an affiliation period does not preclude application of any waiting period applicable to all new entrants under a health benefit plan; however, any affiliation period may not exceed 90 days and must be used in lieu of a pre-existing condition provision. (11) An affiliation period provision in a small employer health benefit plan shall not apply to an individual who would not be subject to a pre-existing condition limitation in accordance with paragraphs (6) and (7) of this section. (b) In order to determine if pre-existing conditions as defined in the Insurance Code, Article 26.02(16), exist, a small employer carrier shall ascertain the source of previous or existing coverage of each eligible employee and each dependent of an eligible employee at the time such employee or dependent initially enrolls into the health benefit plan provided by the small employer carrier. The small employer carrier shall have the responsibility to contact the source of such previous or existing coverage to resolve any questions about the benefits or limitations related to such previous or existing coverage. sec.26.11. Restrictions Relating to Premium Rates. (a)-(g) (No change.) (h) An HMO participating in a purchasing cooperative that provides employees of small employers a choice of benefit plans, that has established a separate class of business as provided by the Insurance Code, Article 26.31 and that has established a separate line of business as provided under the Insurance Code, Article 26.48 (a) and 42 United States Code, sec.sec.300e et seq may use rating methods in accordance with this subchapter that are used by other small employer carriers participating in the same purchasing cooperative, including rating by age and gender. This subsection applies to all employer health benefit plans offered, issued or delivered for issue to small employers and their employees on or after September 1, 1995. sec.26.13. Rules Related to Fair Marketing. (a) (No change.) (b) Each small employer that has expressed an interest in purchasing a small employer health benefit plan shall be given a written summary of the standard benefit plans. The summary shall be in a readable and understandable format and shall include a clear, complete and accurate description of these items in the following order: lifetime maximums; deductibles, coinsurance maximums and percentages payable; benefits provided; limitations and exclusions and riders that must be offered. To assure that small employers are fully aware that the Basic Coverage Benefit Plan does not cover organ transplants, small employer carriers, other than HMOs, electing not to utilize Figure 41, shall reference this difference in the summary which is prepared and shall appear in bold print. Small employer carriers other than HMOs may use Form Number 369 SUMM at Figure 41 of sec.26.27(b) of this title (relating to Appendix) to meet the requirements of this subsection. HMOs shall use the disclosure format required by sec.11.1600 of this title (relating to Information to Prospective Group Contract Holders and Enrollees) to meet the requirements of this subsection. (c) A small employer carrier shall offer the standard benefit plans to each small employer who inquires about purchasing a small employer health benefit plan and shall, upon request, explain each of the plans to the small employer. A small employer carrier, other than an HMO, shall offer and explain the basic coverage benefit plan and the catastrophic care benefit plan. An HMO shall offer and explain the small employer health benefit plans that the HMO has filed for use in the small employer market. The offer may be provided directly to the small employer or delivered through an agent. The offer shall be in writing and shall include at least the following information: (1) information describing how the small employer may enroll in the plans; and (2) information set out in the Insurance Code, Article 26.40 and sec.26.12 of this chapter. (d) A small employer carrier shall provide a price quote to a small employer (directly or through an authorized agent) within ten working days of receiving a request for a quote and such information as is necessary to provide the quote. A small employer carrier shall notify a small employer (directly or through an authorized agent) within five working days of receiving a request for a price quote of any additional information needed by the small employer carrier to provide the quote. (e) A small employer carrier, other than an HMO, shall not apply more stringent or detailed requirements related to the application process for the standard benefit plans, including the basic coverage benefit plan and the catastrophic coverage benefit plan than are applied for other health benefit plans offered by the health carrier to small employers. An HMO shall not apply more stringent or detailed requirements related to the application process for the prototype small employer group health benefit plan than are applied for other health benefit plans offered by the HMO to small employers. (f) If a small employer carrier denies coverage under a health benefit plan to a small employer on any basis, the denial shall be in writing and shall state with specificity the reasons for the denial (subject to any restrictions related to confidentiality of medical information. (g) A small employer carrier shall establish and maintain a means to provide information to small employers who request information on the availability of small employer health benefit plans in this state. The information provided to small employers shall at least include information about how to apply for coverage from the health carrier and may include the names and phone numbers of agents located geographically proximate to the caller or such other information that is reasonably designed to assist the caller to locate an authorized agent or to otherwise apply for coverage. (h) The small employer carrier shall not require a small employer to join or contribute to any association or group as a condition of being accepted for coverage by the small employer carrier, except that, if membership in an association or other group is a requirement for accepting a small employer into a particular health benefit plan, a small employer carrier may apply such requirement, subject to the requirements of the Insurance Code, Chapter 26. (i) A small employer carrier may not require, as a condition to the offer or sale of a health benefit plan to a small employer, that the small employer purchase or qualify for any other insurance product or service. (j) Health carriers offering individual and group health benefit plans in this state shall be responsible for determining whether the plans are subject to the requirements of the Insurance Code, Chapter 26, and this chapter. Health carriers shall elicit the following information from applicants for such plans at the time of application: (1) whether or not any portion of the premium will be paid by a small employer; and (2) whether or not the prospective policyholder, certificate holder, or any prospective insured individual intends to treat the health benefit plan as part of a plan or program under sec.162 or sec.106 of the United States Internal Revenue Code of 1986 (26 United States Code, sec.106 or sec.162). (k) If a health carrier fails to comply with subsection (j) of this section, the health carrier shall be deemed to be on notice of any information that could reasonably have been attained if the health carrier had complied with subsection (i) of this section. sec.26.14. Coverage. (a) Until June 1, 1996, every small employer carrier, except HMOs, shall, as a condition of transacting business in this state with small employers, offer to small employers at least three standard benefit plans, including the preventive and primary care benefit plan, the in-hospital benefit plan, and the standard health benefit plan, as provided under the Insurance Code, Articles 26.42-26.49, unless a small employer carrier elects to offer the two standard benefit plans prescribed by this chapter as amended. After June 1, 1996, every small employer carrier, except HMOs, shall, as a condition of transacting business in this state with small employers, offer to small employers two standard benefit plans, the basic coverage benefit plan and the catastrophic care benefit plan, as provided under the Insurance Code, Articles 26.42, 26.43, 26.44, 26.44A, 26. 44B, 26.48, and 26.49. (b) In addition to the standard benefit plans required to be offered to small employers as provided in the Insurance Code, Chapter 26, small employer carriers may, subject to the provisions of the Insurance Code, Article 26.42(c), and this chapter, offer other health benefit plans to small employers, as provided in the Insurance Code, Article 26.42(c). Such other health benefit plans shall comply with all provisions of the Insurance Code, Chapter 26, and this chapter, except that provisions defining the specific benefits required under the required standard benefit plans are not applicable. The Insurance Code, Article 26.06(c), does not apply to a health benefit plan offered to a small employer as provided under the Insurance Code, Article 26.42(c). (c) Instead of the standard benefit plans described by this chapter, a health maintenance organization may offer a state-approved health benefit plan that complies with the requirements of Title XIII, Public Health Service Act (42 United States Code, sec. sec.300e, et seq) and rules adopted under that Act. An HMO may also offer the prototype small employer group health benefit plan. (d) All small employer health benefit plans provided by a small employer carrier other than an HMO shall provide an option for conversion/continuation which complies with all provisions of Chapter 3, Subchapter F of this title (relating to Group Health Insurance Mandatory Conversion Privilege). An HMO shall provide coverage for conversion or continuation of any small employer health benefit plan which complies with the requirements of sec.11.506(7) or (8) of this title (relating to Mandatory Provisions: Group and Non-group Agreement and Group Certificate). (e) Each health benefit plan, certificate, policy, rider, or application used by health carriers to provide coverage to small employers and their employees shall comply with the Insurance Code, Article 26.43; be written in plain language; and meet the requirements of Chapter 3, Subchapter G of this title (relating to Plain Language Requirements). Requirements for use of plain language are not applicable to a health benefit plan group master policy or a policy application or enrollment form for a health benefit plan group master policy. (f) Every small employer carrier providing health benefit plans to small employers is required to offer dependent coverage to each employee. Dependent coverage may be paid for by the employer, the employee, or both. (g) This section contains requirements for optional prototype policy forms. The policy forms described in this subsection are adopted by reference to complete a prototype policy and/or certificate when combined with the required prescribed benefit prototype policy forms outlined in this section. The prototype policy forms have been developed to facilitate implementation of the Insurance Code, Chapter 26, and to streamline the policy approval process. Small employer carriers are encouraged to use all of the prototype policy forms as described in this subsection to expedite the approval process. The forms referenced in this section can be found in sec.26. 27(b) of this title (relating to Appendix). Each form has a unique form number appearing in the lower left- hand corner and small employer carriers may use one or any number of the prototype forms. Alternate language, except for variables indicated by brackets, must be filed for review and approval under a different form number using 369 as part of the form number. Additional filing requirements are outlined in sec.26.19 of this title (relating to Filing Requirements). (1) This paragraph describes group policy face pages. These prototype policies provide for the entire contract to include any applications, the certificate of insurance, and any attached riders. If the small employer carrier elects to use policies other than the prototype forms, this shell format shall be used with any small employer health benefit plan. Each policy face page, whether or not the prototype form is used, shall include the small employer carrier name and address; policyholder name (and industry, if used on a multiple employer trustee basis); policy number; policy effective date; provision for the entire contract to include applications, the certificate of insurance, and any attached riders; workers' compensation disclaimer notice; description of the policy in bold type as a small employer benefit plan; and the form number in the lower left hand corner. The policy face page for the prototype form shall contain the description of the plan in bold type as the Group Small Employer Basic Coverage Benefit Plan or the Group Small Employer Catastrophic Care Benefit Plan. The small employer carrier may include or omit the variable provision addressing the free look period. The group policy face pages for the prototype policies include the following: (A) Group Small Employer Basic Coverage Benefit Plan (Form Number 369 SE.BASC) for a single employer policy; (B) Group Small Employer Catastrophic Care Benefit Plan (Form Number 369 SE.CAT) for a single employer policy; (C) Group Small Employer Basic Coverage Benefit Plan (Form Number 369 ASSN.BASC) for an association policy; (D) Group Small Employer Catastrophic Care Benefit Plan (Form Number 369 ASSN.CAT) for an association policy; (E) Group Small Employer Basic Coverage Benefit Plan (Form Number 369 MET.BASC) for a multiple employer trustee policy; (F) Group Small Employer Catastrophic Care Benefit Plan (Form Number 369 MET.CAT) for a multiple employer trustee policy. (2) The Notice of Toll-Free Telephone Numbers and Information and Complaint Procedures Form (Form Number TOLLFREE) for group policies is described in this paragraph. This prototype form contains the language prescribed in sec.1.601 of this title (relating to Notice of Toll-Free Telephone Numbers and Information and Complaint Procedures) and shall be attached as the second or third page of the policy and the certificate of insurance. The variable provisions are optional only to the extent outlined in sec.1.601 of this title. (3) The group certificate of insurance face page is described in this paragraph. Each certificate of insurance face page, whether or not the prototype form is used, shall include the small employer carrier name and address; the certification provision; a provision that the certificate face page, all attached provisions, and any riders shall constitute the entire certificate of insurance; the workers' compensation disclaimer notice; a description of the plan in bold type as a small employer benefit plan; and the form number in the lower left hand corner. The certificate face page for the prototype form shall contain the description of the plan in bold type as the Group Small Employer Basic Coverage Benefit Plan or the Group Small Employer Catastrophic Care Benefit Plan. The identification information (Employee name, ID Number, Certificate Effective Date, Policyholder Name, Policy Number, Policy Effective Date, Dependent Coverage) is variable to the extent that small employer carriers may include all of the information in the certificate of insurance by any appropriate method, such as an insert or as a sticker on the face page or schedule of benefits or printed on the face page as provided in the prototype form. The dependent coverage information is variable for small employer carriers to insert a dependent coverage election. The variable replacement provision is an optional provision which carriers may include as provided in the prototype form or carriers may alter the language in any appropriate manner or may elect to omit the provision in its entirety. The group certificate of insurance face pages include the following: (A) Certificate of Insurance Face Page for the Group Small Employer Basic Coverage Benefit Plan (Form Number 369 CERT.BASC); (B) Certificate of Insurance Face Page for the Group Small Employer Catastrophic Care Benefit Plan (Form Number 369 CERT.CAT). (4) The table of contents for group policies (Form Number 369 TCG) is described in this paragraph. The variable items shall be included or omitted as appropriate for the policy or certificate and page numbers shall be numbered accordingly. If the prototype table of contents is not used, the format and order shall be the same as provided in the prototype. (5) The General Provisions Form for Group Policies (Form Number 369 GGP) may be used with all group small employer health benefit plans. If the prototype general provisions form is not used, each general provision with same or similar language shall be included in each policy/certificate. Variable language for the general provisions form are described as follows: (A) The definition of an Eligible Employee under the Eligibility for Coverage (Employee Coverage) provision shall add that an "Eligible Employee also includes an Employee of an Employer member of an association" when the policy is to be issued to an association. (B) The Initial Enrollment for New Eligible Employees provision under Effective Dates allows a variable for receipt of the application or enrollment form within 31 days of the: (i) date of employment; or (ii) completion of any waiting period established by the small employer. The length of time for the waiting period is also variable to allow flexibility for small employers to elect a period of time not to exceed 90 days. The reference to Affiliation Period is variable to the extent that it shall be omitted if the small employer carrier uses a pre-existing condition limitation in any of its health benefit plans or if the small employer carrier does not require an affiliation period. (C) The Newborn Children provision under Effective Dates allows a variable to be included if the small employer carrier requires a premium to be charged for the 31-day period of coverage if the insured person elects not be continue coverage for the newborn child. If no premium will be charged, this provision shall be omitted. (D) The Late Enrollees provision under Effective Dates shall include one of the two variable provisions to reflect the small employer carrier's election of either a pre-existing condition limitation or an affiliation period. The time periods are variable to allow a shorter period of time, if elected by the small employer carrier. (E) The Pre-existing Conditions provision is variable only to the extent that it shall be omitted in its entirety if the small employer carrier elects not to impose a limitation for pre-existing conditions. If a pre-existing condition limitation applies, this provision shall be included in its entirety. The time period is variable to allow a shorter period of time if elected by the small employer carrier. (F) The Affiliation Period provision is variable only to the extent that it shall be omitted in its entirety if the small employer carrier uses a pre- existing condition limitation in any of its health benefit plans or if the small employer carrier does not require an affiliation period. The time period is variable to allow a shorter period of time if elected by the small employer carrier. (G) The Eligible Employees provision under Termination of Insurance allows variables for continued coverage for an employee who is on an approved leave of absence for a specified period of time to be inserted if the provision remains. This provision shall be included or omitted as appropriate. (H) The Eligible Employees and Dependents provisions under Termination of Insurance allow a variable to be included if the policy contains a grace period. (I) The Eligible Employees and Dependents provisions under Termination of Insurance allow variables for coverage to end on either "the date the Employer terminates participation in the Trust" which may be included when the policy is to be issued to a multiple employer trust; or "the date the Employer member terminates membership in the Association" which may be included when the policy is to be issued to an association. (J) The Policyholder and Company provision under Termination of Insurance provides alternate provisions for termination by the Employer as Policyholder; termination by the Association as Policyholder; termination of participation by an Employer (member) under an Association policy, or termination of participation by an Employer under a Multiple Employer Trust policy. Provisions shall be included appropriately for a single employer policy, an association policy or a multiple employer trust policy. (K) The Policyholder and Company provision under Termination of Insurance allows a variable to be included for the exception to nonpayment of premiums if a grace period is provided. If a grace period is not provided, the variable "Coverage will end at the end of the last period for which premium payment has been made to Us" shall be included. The policy shall contain a provision allowing for termination by the small employer carrier due to fraud or misrepresentation of a material fact by the "Policyholder or" Employer. The phrase "Policyholder or" shall be used when policies are issued to an association or to a multiple employer trust. A variable is allowed to be included if the small employer carrier will terminate the employer's plan for failure to maintain the required minimum participation requirements. A variable is allowed to be included if the small employer carrier will terminate the employer's plan due to failure of the employer to maintain status as a small employer as described in sec.26.5 of this title (relating to Applicability and Scope). (6) The Group Provisions Form (Form Number 369 GRP) may be used with all group small employer health benefit plans. If the prototype Group Provisions form is not used, each provision with the same or similar language shall be included in each policy/certificate. Variable provisions for the Group Provisions form include the following: (A) A variable is provided in the Payment of Premiums provision for the mode of premium to be inserted. (B) The Time Limit on Certain Defenses provision allows a variable for Pre- existing Conditions only to the extent that it may be omitted in its entirety if the small employer carrier elects not to impose a limitation for pre-existing conditions. If a pre-existing condition limitation applies, this provision shall be included in its entirety. The time period is variable to allow a shorter period of time if elected by the small employer carrier. (C) The alternate Time Limit on Certain Defenses provision is allowed to be used in policies that are underwritten as permitted by and in accordance with the Insurance Code, Article 26.21(d). (D) The Payment to Assignee provision under Payment of Claims is variable only to the extent that Chapter 20 companies may substitute this provision for the alternate Assignment provision. (E) The Grace Period provision is a variable to be included when a grace period is provided for the specified number of days as determined by the small employer carrier. (F) Dividends, Right to Recovery/Clerical Error, and Subrogation provisions may be included, omitted, or modified by the small employer carrier. Right to Recovery/Clerical Error provisions shall be considered one provision for purposes of variability and both provisions shall be either included or omitted. (7) Alternate Cost Containment Provisions for Large Case Management and Second Opinion Requirements (Form Number 369 ACC) are provided as optional provisions for all plans. Small employer carriers may use these provisions or modifications of these provisions. The reduction in Percentage Payable is variable but cannot be more than 50%. Other alternate cost containment provisions, including precertification, pre-authorization, case management and utilization review may be used. Penalties for noncompliance with cost containment provisions shall not reduce benefits more than 50% in the aggregate. (h) Prescribed benefits are discussed in this subsection. No policy, subscriber contract or certificate shall be issued or delivered for issue in this state to a small employer by a small employer carrier as a Basic Coverage Benefit Plan or a Catastrophic Care Benefit Plan unless such policy, subscriber contract, or certificate contains the prescribed benefit provisions outlined in paragraphs (1)-(4) of this subsection. (1) The Basic Coverage Benefit Plan is discussed in this paragraph. The forms which follow shall be included in this plan as prescribed. Variable language in the prescribed forms is indicated by brackets. These forms can be found in sec.26.27(b) of this title (relating to Appendix). A small employer carrier shall provide the benefits as described in the following subparagraphs (A) and/or (B): (A) The Schedule of Benefits (Non-PPO Plan) for the Basic Coverage Benefit Plan (Form Number 369 SCH.BASC) shall be in the language and format prescribed. This Schedule of Benefits shall be used when the plan does not include preferred provider (PPO) benefits. (i) A small employer carrier shall offer and make available to the small employer the Basic Coverage Benefit Plan with a Policy Year Deductible of $500 per Insured Person, a Policy Year Coinsurance Maximum of $3, 000 per Insured Person and a Percentage Payable of 80%. The amounts are variable to allow the small employer carrier to offer other deductible, coinsurance maximum and percentage payable amounts but the Policy Year Deductible shall not exceed $1,000 per Insured Person, the Policy Year Coinsurance Maximum shall not exceed $5,000 per Insured Person and the Percentage Payable shall not be less than 70%. (ii) The Schedule of Benefits shall reflect any benefits added by riders and any penalties for failing to comply with any precertification or cost containment provisions. Any such penalties shall not reduce benefits more than 50% in the aggregate. (B) The Schedule of Benefits (PPO Plan) for the Basic Coverage Benefit Plan (Form Number 369 SCHPPO.BASC) shall be in the language and format prescribed. This Schedule of Benefits shall be used when the plan includes preferred provider benefits. (i) The terms "Policy Year Deductible", "Non-Preferred Provider Policy Year Deductible" and "Preferred Provider Policy Year Deductible" are variable to allow the same policy year deductible to apply to both preferred and non- preferred provider options or to allow a "Non-Preferred Provider Policy Year Deductible" and a "Preferred Provider Policy Year Deductible" if different deductibles will apply. A "Per Office Visit Copayment" may be used in lieu of a Preferred Provider Policy Year Deductible. The deductible may be waived for either option. (ii) If the small employer carrier elects to include preferred provider benefits, the carrier shall offer and make available to the small employer a Basic Coverage Benefit Plan with a Policy Year Deductible or Non-Preferred Provider Policy Year Deductible of $500 per Insured Person with a Preferred Provider Policy Year Deductible of $250 per Insured Person if a preferred provider deductible is chosen, a Policy Year Coinsurance Maximum of $3,000 per Insured Person and Percentages Payable of 90% for preferred providers and 70% for non-preferred providers. A Per Office Visit Copayment of $10 or $15 can be used in lieu of the Preferred Provider Policy Year Deductible. (iii) Variability is permitted to allow the small employer carrier to offer other deductible, coinsurance maximum, and percentage payable amounts within the limits set out in the following subclauses: (I) A variable amount not to exceed $1,000 for the Policy Year Deductible or the Non-Preferred Provider Policy Year Deductible may be elected by the small employer carrier or offered as an option to the small employer. The Preferred Provider Policy Year Deductible amount shall not be less than one half of the Non-Preferred Provider Policy Year Deductible. (II) In lieu of the Preferred Provider Policy Year Deductible, A Per Office Visit Copayment of $10 or $15 may be included for the preferred provider option for office visits. A carrier may use an office copayment in combination with a preferred provider policy year deductible which is applicable to other services. (III) A variable amount not to exceed $5,000 for the Policy Year Coinsurance Maximum may be elected by the small employer carrier or offered as an option to the small employer. The preferred provider and non-preferred provider amounts shall be combined for the Policy Year Coinsurance Maximum. Office visit copayments are not required to be included in the calculation of coinsurance maximums. (IV) A variable Percentage Payable of not less than 60% when non-preferred providers are utilized may be elected by the small employer carrier or offered as an option to the small employer. A variable Percentage Payable when preferred providers are utilized may not be more than 30% greater than the Percentage Payable for non-preferred providers as required by sec.3. 3704(1) of this title (relating to Preferred Provider Plans). (iv) The Schedule of Benefits shall reflect any benefits added by riders and any penalties for failing to comply with any precertification or cost containment provisions. Any such penalties shall not reduce benefits more than 50% in the aggregate. (C) The Policy Definitions for the Basic Coverage Benefit Plan (Form Number 369 DEF.BASC) shall be in the language and format prescribed. (i) The term and definition "Affiliation Period" is variable to be included or omitted as appropriate. An Affiliation Period shall be omitted if the small employer carrier uses a pre-existing condition limitation in any of its health benefit plans or if the small employer carrier does not require an Affiliation Period. (ii) The terms and definitions for "Contracting Facility" and "Noncontracting Facility" are variables to be included by Chapter 20 companies only and neither provision shall be used by other than Chapter 20 companies. (iii) The term and definition of "Employer" provides a variable to include an Employer member of an association when a policy is to be issued to an association. (iv) The term and definition of "Hospital" is variable only to allow for additional criteria for purposes of clarification or to accommodate carriers with unique operations and special statutory rights, such as Chapter 20 companies. (v) The alternate language in the definition of "Initial Enrollment Period" is included for use in a policy that contains a waiting period. (vi) The alternate definitions for the term "Policy Year" are included to allow the small employer carrier to select the definition that is consistent with the carrier's and employer's practices. The definition as selected shall be included in the policy/certificate. (vii) The term and definition of "Policyholder" shall be included in the Policy Definitions as appropriate to define the Policyholder as the Employer, the Association, the Trustee of a Multiple Employer Trust or the Cooperative. (viii) The term and definition of "Pre-existing Condition" is variable only to the extent that it may be omitted in its entirety if the small employer carrier elects not to impose a limitation for pre-existing conditions. If a pre-existing condition limitation applies, the provision shall be included in its entirety. The time period is variable to allow a shorter period of time to be elected by the small employer carrier or offered as an option to the small employer. (ix) The term and definition of "Waiting Period" is variable only to the extent that it may be omitted in its entirety if the small employer elects not to impose a waiting period. (D) The Benefits Provided for the Basic Coverage Benefit Plan (Form Number 369 BEN.BASC) shall be in the language and format prescribed. The Policy Year Coinsurance Maximum amount elected shall be inserted in this provision. Services provided by first assistant at surgery may be included as a covered service if elected by the small employer carrier or offered as an option to the small employer. (E) The Exclusions and Limitations for the Basic Coverage Benefit Plan (Form Number 369 EXC.BASC) shall be in the language and format prescribed. Exclusions of elective abortions, if any, are to be determined by an agreement between the employer and the small employer carrier and shall be included in the exclusions and limitations of the policy and the certificate. Other variable exclusions may be included by Chapter 20 companies for their Non-PPO products only. (2) The Catastrophic Care Benefit Plan is discussed in this paragraph. The forms which follow shall be included in this plan as prescribed. These forms can be found in sec.26.27(b) of this title (relating to Appendix). Variable language in the prescribed forms is indicated by brackets. A small employer carrier shall provide the benefits as described in the following subparagraphs (A) and/or (B): (A) The Schedule of Benefits (Non-PPO Plan) for the Catastrophic Care Benefit Plan (Form Number 369 SCH.CAT) shall be in the language and format prescribed. This Schedule of Benefits shall be used when the plan does not include preferred provider (PPO) benefits. (i) A small employer carrier shall offer and make available to the small employer Catastrophic Care Benefit Plans with each of the coverage options described in subclauses (I)-(IV) as follows: (I) A Policy Year Deductible in the amount of $2,500 per Insured Person with a Policy Year Coinsurance Maximum of $5,000 per Insured Person and a Percentage Payable of 80%. (II) A Policy Year Deductible in the amount of $2,500 per Insured Person with a Policy Year Coinsurance Maximum of $5,000 per Insured Person and a Percentage Payable of 90%. (III) A Policy Year Deductible in the amount of $5,000 per Insured Person with a Policy Year Coinsurance Maximum of $10,000 and a Percentage Payable of 80%. (IV) A Policy Year Deductible in the amount of $5,000 per Insured Person with a Policy Year Coinsurance Maximum of $10,000 and a Percentage Payable of 90%. (ii) Variability is permitted to allow the small employer carrier to offer additional deductible, coinsurance maximum and percentage payable amounts; but the Policy Year Deductible shall not exceed $5,000 per Insured Person, the Policy Year Coinsurance Maximum shall not exceed $10,000 per Insured Person and the Percentage Payable shall not be less than 70%. (iii) The Schedule of Benefits shall reflect any benefits added by riders and any penalties for failing to comply with any precertification or cost containment provisions. Any such penalties shall not reduce benefits more than 50% in the aggregate. (B) The Schedule of Benefits (PPO Plan) for the Catastrophic Care Benefit Plan (Form Number 369 SCHPPO.CAT) shall be in the language and format prescribed. This Schedule of Benefits shall be used when the plan includes preferred provider benefits. (i) The terms "Policy Year Deductible", "Non-Preferred Provider Policy Year Deductible" and "Preferred Provider Policy Year Deductible" are variable to allow the same policy year deductible to apply to both preferred and non- preferred provider options or to allow a "Non-Preferred Provider Policy Year Deductible" and a "Preferred Provider Policy Year Deductible" if different deductibles will apply. (ii) If the small employer carrier elects to include preferred provider benefits, the carrier shall offer and make available to the small employer the Catastrophic Care Benefit Plan with all of the coverage options described in subclauses (I) and (II) as follows: (I) A Policy Year Deductible or a Non-Preferred Provider Policy Year Deductible of $2,500 per Insured Person with a Preferred Provider Policy Year Deductible of $1,250 per Insured Person if a preferred provider deductible is chosen and a Policy Year Coinsurance Maximum of $5,000 per Insured Person. Percentages Payable shall be offered at each of the following levels: 80% for preferred providers with 60% for non-preferred providers, and 90% for preferred providers and 70% for non-preferred providers. (II) A Policy Year Deductible or a Non-Preferred Provider Policy Year Deductible of $5,000 per Insured Person, a Preferred Provider Policy Year Deductible of $2,500 per Insured Person if a preferred provider deductible is chosen, and a Policy Year Coinsurance Maximum of $10,000 per Insured Person. Percentages Payable shall be offered at each of the following levels: 80% for preferred providers with 60% for non-preferred providers, and 90% for preferred providers and 70% for non-preferred providers. (iii) Variability is permitted to allow the small employer carrier to offer other deductible, coinsurance maximum and percentage payable amounts within the limits set out in the following paragraphs. (iv) A variable amount not to exceed $10,000 for the Policy Year Deductible or the Non-Preferred Provider Policy Year Deductible may be elected by the small employer carrier or offered as an option to the small employer. The Preferred Provider Policy Year Deductible shall not be less than one half of the Non- Preferred Provider Policy Year Deductible. (v) A variable amount not to exceed $15,000 for the Policy Year Coinsurance Maximum may be elected by the small employer carrier or offered as an option to the small employer. The preferred provider and non-preferred provider amounts shall be combined for the Policy Year Coinsurance Maximum. (vi) A variable Percentage Payable of not less than 60% when non-preferred providers are utilized may be elected by the small employer carrier or offered as an option to the small employer. A variable Percentage Payable when preferred providers are utilized may not be more than 30% greater than the Percentage Payable for non-preferred providers as required by sec.3.3704(1) of this title (relating to Preferred Provider Plans). (vii) The Schedule of Benefits shall reflect any benefits added by riders and any penalties for failing to comply with any precertification or cost containment provisions. Any such penalties shall not reduce benefits more than 50% in the aggregate. (C) The Policy Definitions for the Catastrophic Care Benefit Plan (Form Number 369 DEF. CAT) shall be in the language and format prescribed. (i) The term and definition "Affiliation Period" is variable to be included or omitted as appropriate. An Affiliation Period shall be omitted if the small employer carrier uses a pre-existing condition limitation in any of its health benefit plans or if the small employer carrier does not require an Affiliation Period. (ii) The terms and definitions for "Contracting Facility" and "Noncontracting Facility" are variables to be included by Chapter 20 companies only and neither provision shall be used by other than Chapter 20 companies. (iii) The term and definition of "Employer" provides a variable to include an Employer member of an association when a policy is to be issued to an association. (iv) The term and definition of "Hospital" is variable only to allow for additional criteria for purposes of clarification or to accommodate carriers with unique operations and special statutory rights, such as Chapter 20 companies. (v) The alternate language in the definition of "Initial Enrollment Period" is included for use in a policy that contains a waiting period. (vi) The alternate definitions for the term "Policy Year" are included to allow the small employer carrier to select the definition that is consistent with the carrier's and employer's practices. The definition as selected shall be included in the policy/certificate. (vii) The term and definition of "Policyholder" shall be included in the Policy Definitions as appropriate to define the Policyholder as the Employer, the Association, the Trustee of a Multiple Employer Trust or the Cooperative. (viii) The term and definition of "Pre-existing Condition" is variable only to the extent that it may be omitted in its entirety if the small employer carrier elects not to impose a limitation for pre-existing conditions. If a pre-existing condition limitation applies, the provision shall be included in its entirety. The time period is variable to allow a shorter period of time to be elected by the small employer carrier or offered as an option to the small employer. (ix) The term and definition of "Waiting Period" is variable only to the extent that it shall be omitted in its entirety if the small employer elects not to impose a waiting period. (D) The Benefits Provided for the Catastrophic Care Benefit Plan (Form Number 369 BEN.CAT) shall be in the language and format prescribed. The Policy Year Coinsurance Maximum amount shall be inserted in this provision. Services provided by first assistant at surgery may be included as a covered service if elected by the small employer carrier or offered as an option to the small employer. (E) The Exclusions and Limitations for the Catastrophic Care Benefit Plan (Form Number 369 EXC.CAT) shall be in the language and format prescribed. Exclusions of elective abortions, if any, are to be determined by an agreement between the employer and the small employer carrier and shall be included in the exclusions and limitations of the policy and the certificate. Other variable exclusions may be included by Chapter 20 companies for their Non-PPO products only. (3) Riders are discussed in this paragraph. The small employer carrier shall offer and make available to the small employer the riders described in (A)-(D). Any benefits added by riders shall be reflected on the Schedule of Benefits. (A) The Alcohol and Drug Abuse Benefit Rider (Form Number 369 ADB) is required to be offered with the Basic Coverage Benefit Plan and the Catastrophic Care Benefit Plan. Variable amounts of five or ten days of care per Insured Person per Policy Year are allowed to be elected by the small employer carrier or offered as an option to the small employer. The coinsurance and deductible amounts are variable. (B) The Mental Health Benefit Rider (Form Number 369 MHB) is required to be offered with the Basic Coverage Benefit Plan and the Catastrophic Care Benefit Plan. The 30 days of inpatient benefits and the 20 outpatient treatments per Insured Person per Policy Year are variable to allow longer periods of time to be elected by the small employer carrier or offered as an option to the small employer. The coinsurance and deductible amounts are variable. (C) The Prescription Drug Benefit Rider (Form Number 369 RX) is required to be offered with the Basic Coverage Benefit Plan and the Catastrophic Care Benefit Plan. Benefits shall be provided at a Percentage Payable of at least 50% but may be provided at a greater Percentage Payable to be elected by the small employer carrier or offered as an option to the small employer. In the alternative the small employer carrier may elect to provide the prescription drug benefit through a prescription drug card program with a copayment not to exceed $8.00 per prescription or refill for a generic drug, or name brand drug if less than the generic drug, and $12 per prescription or refill for a name brand drug. Exclusions of a prescription drug card program shall not be more restrictive than the exclusions contained in Form Number 369 RX. (D) The Preventive Care Benefit Rider (Form Number 369 PCR) is required to be offered with the Basic Coverage Benefit Plan. The coinsurance and deductible amounts are variable. (E) Additional riders may be offered as elected by the small employer carrier. Any such riders must be filed in accordance with Subchapter A of Chapter 3 of this title (relating to Requirements for Filing of Policy Forms, Riders, Amendments, and Endorsements for Life, Accident and Health Insurance and Annuities). (4) Forms common to more than one health benefit plan are described in subparagraphs (A) -(C) and shall be included with the benefit provisions of each plan as specified. (A) The Continuation/Conversion Provisions (Form Number 369 CONV) shall be included with all group plans. This form shall be in the language and format prescribed in accordance with Subchapter F of Chapter 3 of this title (relating to Group Health Insurance Mandatory Conversion Privilege). The small employer carrier shall include one of the variable provisions for continuation upon policy termination. (B) The Coordination of Benefits (Form Number 369 COB) shall be included with all plans. This form shall be in the language and format prescribed. The variable insert language "This provision will only apply for the duration of your employment with the Employer" is required to be included in the individual policies. (C) The Preferred Provider Provisions (PPO) (Form Number 369 PPO) shall be included with all plans when preferred provider options are included. This form shall be in the language and format prescribed. Additional provisions may be added as necessary to disclose preferred provider information. (i) Variable provisions are allowed for the definition of service area to be in terms of counties, zip codes, in terms of a 50 mile radius from the employee's principal place of employment unless there are no providers located within the 50 mile radius, or the service area may be described in a specific document to be referenced in the policy/certificate provision. Service areas by zip codes shall be defined in a non-discriminatory manner and in compliance with the Insurance Code, Articles 21.21, sec.4 and 21.21-6. Service area definitions and descriptions shall be filed with the form filings. The small employer carrier shall obtain approval for any definition of the service area by counties or zip codes where the grouping of counties or zip codes exceed a 50 mile radius from the principal place of employment or for a different definition of a service area. (ii) Except as provided in sec.26.21 of this title (relating to Cost Containment) preferred provider arrangements shall comply with Subchapter X of Chapter 3 of this title (relating to Preferred Provider Plans). (5) Applications are discussed in this paragraph. The Texas Small Employer Group Health Benefit Plan Master Application (Form Number 369 APP) may be used by small employer carriers. Small employer carriers may use any appropriate application, enrollment or participation agreement forms in lieu of this form. (6) The Compliance Rider for House Bill 369 (Form Number 369 END) may be used as a guide for carriers to bring existing policies into compliance with the requirements of these regulations. Because of the differences in small employer health benefit plans, the compliance rider provisions may not be all encompassing and carriers should amend the rider as needed to achieve compliance with these rules and with the provisions of Chapter 26, Texas Insurance Code. Any variability that was previously discussed in these rules regarding the prototype policies shall be addressed accordingly in this rider. (7) Individual small employer benefit plans are discussed in this paragraph. Although individual prototype policies were not developed, carriers must develop their own individual small employer policies using the rules for the group small employer prototype forms, amended as necessary to comply with the statutes and regulations pertaining to individual accident and sickness insurance. Prescribed components include the Benefits, Definitions, and Exclusions and Limitations provisions as set out in sec.26.14(h)(1-4) of this title (relating to prescribed benefit provisions). All forms must be filed with the department in accordance with Subchapter A of Chapter 3 of this title (relating to Requirements for Filing of Policy Forms, Riders, Amendments, and Endorsements for Life, Accident and Health Insurance and Annuities). (i) The HMO forms are as follows: (1) Prototype contract/certificate of coverage and benefit plans have been developed to facilitate implementation of the Insurance Code, Chapter 26, and to streamline the contract approval process. The required benefit language is provided in the prototype Texas Small Employer Group Health Benefit Plan (Form Numbers 369 HMO-GRP CONT, Contract and Certificate of Coverage; 369 HMO-APP, Group Application; 369 HMO-SCHB, Schedule of Benefits; 369 HMO-RX, Prescription Drugs Benefit Rider; 369 HMO-DAA, Drug and Alcohol Abuse Benefit Rider; 369 HMO- INF, Infertility Benefit Rider; 369 HMO-MHMR, Mental Health Benefit Rider). These forms can be found at sec.26.27(b) of this title (relating to Appendix). Variable provisions in these forms are denoted in brackets. HMOs may use various options in accordance with the bracketed provisions. Exclusions of elective abortions, if any, are to be determined by an agreement between the employer and the small employer carrier and must be in the contract/certificate of coverage in the Exclusions contract provision. (2) The prototype contracts/certificates of coverage provide for the entire contract to include an application, schedule of benefits, and any attached riders. (3) If the HMO elects to be a small employer carrier and offers a health benefit plan other than the prototype benefit plan, that plan must be a state approved health benefit plan that complies with the requirements of Title XIII, Public Health Service Act (42 United States Code, sec.sec.300, et seq) and the rules adopted under the Act. (4) The following content format shall be used: (A) CONTRACT FACE PAGE This page shall contain the name, address and telephone numbers (800 number, if applicable) of the health maintenance organization. This prototype contract shall be entitled: Texas Small Employer Group Health Benefit Plan Contract/ Certificate of coverage The attached benefit plan shall be entitled: Texas Small Employer Group Health Benefit Plan (B) TOLL-FREE NUMBER PAGE. This form must contain the language prescribed in sec.1.601 of Chapter 1 of this title (relating to Notice of Toll-free Telephone Numbers and Information and Complaint Procedures) and shall be attached as the first, second or third page of the contact. (C) CONTRACT PROVISIONS. At a minimum, the contract must contain the following provisions: (i) Face Page (ii) Benefits (iii) Cancellation (iv) Claim filing procedure (v) Complaint procedure (vi) Conformity with state law (vii) Continuation of coverage for certain dependents (viii) Conversion privilege (ix) Coordination of Benefits (x) Definitions (xi) Effective date (xii) Eligibility (xiii) Emergency services (xiv) Entire contract provisions (xv) Exclusions and limitations (xvi) Grace period (xvii) Incontestability (xviii) Schedule of charges (xix) Service area (xx) Subrogation (xxi) Termination (D) RIDERS. Riders allowing for additional benefits may be attached to the state approved health benefit plan and to the Texas Small Employer Group Health Benefit Plan. sec.26.15. Renewability of Coverage and Cancellation. (a) Except as provided by the Insurance Code, Article 26.24, a small employer carrier shall renew any small employer health benefit plan for any covered small employer at the option of the small employer, except for: (1) nonpayment of a premium as required by the terms of the plan; (2) fraud or misrepresentation of a material fact by the small employer; or (3) noncompliance with small employer health benefit plan provisions. Small employer benefit plan provisions may address requirements such as the level of contribution and participation and failure of an employer to maintain status as a small employer subject to requirements of this chapter. Noncompliance with a small employer health benefit plan with respect to an HMO also includes those items set forth in sec.11.506(4)(A) of this title (relating to Mandatory Provisions: Group and Non-group Agreement and Group Certificate). On or after September 1, 1995, a misrepresentation of a material fact shall not include any misrepresentation related to health status. (b) A small employer carrier may refuse to renew the coverage of an eligible employee or dependent for fraud or misrepresentation of a material fact by that individual. The coverage is also subject to any policy or contractual provisions relating to incontestability or time limits on certain defenses. On or after September 1, 1995, a misrepresentation of a material fact shall not include any misrepresentation related to health status. (c) A small employer carrier may not cancel a small employer health benefit plan except for the reasons specified for refusal to renew under the Insurance Code, Article 26.23(a), and subsections (a) and (b) of this section. A small employer carrier may not cancel the coverage of an eligible employee or dependent except for the reasons specified for refusal to renew under the Insurance Code, Article 26.23(b), and subsections (a) and (b) of this section. (d) A carrier is not precluded from seeking any legal remedies against a person who fraudulently misrepresents health status during the initial application for coverage. Legal remedies available to a carrier do not include cancellation or nonrenewal. (e) Standard benefit plans, provided through an individual policy, shall be guaranteed renewable for life or until maximum benefits have been paid. Other small employer health benefit plans, provided through individual policies, shall be guaranteed renewable for life or until maximum benefits have been paid, or may be guaranteed renewable with the only reasons for termination being those set out in the Insurance Code, Articles 26.23 and 26.24, and this chapter, provided that such plans shall include a conversion provision which provides comparable benefits to those required under Chapter 3, Subchapter F of this title (relating to Group Health Insurance Mandatory Conversion Privilege). All other health benefit plans issued to small employers shall be renewed at the option of the small employer, but may provide for termination in accordance with the Insurance Code, Chapter 26, and this chapter. sec.26.18. Election and Application to be Risk-Assuming or Reinsured Carrier. (a) Each small employer carrier shall file with the commissioner notification of whether the carrier elects to operate as a risk-assuming or a reinsured carrier. The required filing shall use the form provided at Figure 42 of sec.26.27(b) of this title (relating to Appendix) (Form Number 369 RISK) for this purpose. (b) A small employer carrier seeking to change its status as a risk-assuming or reinsured carrier shall file an application with the commissioner. The required filing shall include a completed certification form provided at Figure 42 of sec.26.27(b) of this title (relating to Appendix) (Form Number 369 RISK) and shall provide information demonstrating good cause why the carrier should be allowed to change its status. (c) A small employer carrier applying to become a risk-assuming carrier shall file an application with the commissioner. A completed certification form provided at Figure 42 of sec.26.27(b) of this title (relating to Appendix) (Form Number 369 RISK) shall accompany each application. sec.26.19. Filing Requirements. (a) Each health carrier shall file each form, including, but not limited to, each policy, contract, certificate, agreement, evidence of coverage, endorsement, amendment, enrollment form, and application that will be used to provide a health benefit plan in the small employer market, with the department in accordance with the Insurance Code, Article 3.42, and Chapter 3, Subchapter A of this title (relating to Requirements for Filing of Policy Forms, Riders, Amendments, and Endorsements for Life, Accident and Health Insurance and Annuities), or the Insurance Code, Article 20A.09, and sec.11.301(4) of this title (relating to Filing Requirements) or sec.11.302(6) of this title (relating to Service Area Expansion Requests), as applicable, except as provided in subsection (b) of this section. A health carrier desiring to use existing forms to provide a health benefit plan in the small employer market shall file a certification stating which previously approved forms the health carrier intends to use in that market. The form provided at Figure 43 of sec.26.27(b) of this title (relating to Appendix) (Form Number 369 CERT ANN LIST-OTHER/SEHBP) may be used for this purpose. The previously approved forms should be listed in Provision E of that form. The certification shall be forwarded to the department as soon as reasonably possible after January 1, 1994. (b) The following certification forms providing information relating to prototype policy forms, marketing in the small employer market and/or other markets, and geographic service areas shall accompany each health benefit plan form filing submitted for use in the small employer market. (1) A geographic service area certification provided at Figure 44 of sec.26.27(b) of this title (relating to Appendix) (Form Number 369 CERT GEOG) shall be submitted by each health carrier providing health benefit plans to small employers and shall define the geographic service areas within which the small employer carrier will operate as a small employer carrier. (A)-(B) (No change.) (2) A prototype certification form provided at Figure 45 of sec.26.27(b) of this title (relating to Appendix) (Form Number 369 CERT PROTOTYPES/MRKT) shall accompany each policy form filing and/or certification filing. A small employer carrier other than an HMO shall complete the certification form indicating: (A) which of the prototype policy forms will be used ; (B) alternate forms which will be used, where permitted, and their Flesch score. If a small employer health carrier, other than an HMO, utilizes the prototype forms and only uses variations permitted in the prescribed and/or adopted forms, the certification with the description of the variations will suffice and policy forms will not be required to be submitted for review and approval. Approval of the use of the prototype forms based on the certification and the description of the variations will be communicated via an approval letter; (C) define the market in which the form will be used, such as, for use only in the small employer market or in all employer markets or other markets; (D) the type of group filing, if applicable; (E) the small employer carrier's required participation amount; the required employer contribution amount; election or non-election of a grace period and the number of days; termination for failure of employer to maintain participation requirements and status as a small employer (for group); election of Policy Year definition, Prescription Drug Benefit Rider or Prescription Drug Card Program, election to issue or not issue medically underwritten plans, Affiliation period or preexisting condition Limitation provision including the time period for the affiliation period or the preexisting limitation; description of PPO service area, if applicable; election or non-election of reduction in benefits for failure to pre-certify and the reduction amount; form numbers, approval dates and description of any riders that will be offered with the standard benefit plans; and description of additional percentages payable, deductibles and coinsurance amounts the small employer carrier will offer. (3) A prototype certification form provided at Figure 46 of sec.26.27(b) of this title (relating to Appendix) (Form Number 369 HMO-CERT) with elections for HMO small employer plans shall accompany the contract form filing for HMOs. The HMO small employer carrier shall complete the certification form for variable provisions of the prototype form. (c) Each health carrier, other than an HMO, shall use a policy shell format for any group or individual health benefit plan form used to provide a health benefit plan in the small employer market. To expedite the review and approval process, all group and individual health benefit plan form filings (excluding HMO filings which are covered in subsection (d) of this section) shall be submitted as follows: (1)-(6) (No change.) (7) for the standard benefit forms, which include the Basic Coverage Benefit Plan and the Catastrophic Care Benefit Plan, an insert of the required benefits section that includes the schedule of benefits, definitions, benefits provided, alternate cost containment and preferred provider provisions, if any, exclusions and limitations, continuation/conversion provisions, coordination of benefits, and riders; (8)-(13) (No change.) (14) the rate schedule applicable to any individual health benefit plan, as required by Subchapter A of Chapter 3 of this title (relating to Requirements for Filing of Policy Forms Riders, Amendments, and Endorsements for Life, Accident, and Health Insurance and Annuities). (d) (No change.) sec.26.20. Reporting Requirements. (a) Small employer health carriers offering a small employer health benefit plan shall file annually, not later than March 1 of each year, an actuarial certification provided at Figure 47 of sec.26.27(b) of this title (relating to Appendix) 369 CERT ACTUARIAL stating that the underwriting and rating methods of the small employer carrier: (1) comply with accepted actuarial practices; (2) are uniformly applied to each small employer health benefit plan covering a small employer; and (3) comply with the provisions of the Insurance Code, Chapter 26, and this chapter. (b) Not later than March 1 of each calendar year, each health carrier shall file a certification provided at figure 43 of sec.26.27(b) of this title (relating to Appendix) 369 CERT ANN LIST-OTHER/SEHBP with the commissioner, stating whether the health carrier is offering any health benefit plan to small employers that is subject to the Insurance Code, Article 26.06(a). The certification shall: (1) list each other health insurance coverage (including the form number, approval date, and a very brief description of the type of coverage) that the health carrier is offering, delivering, issuing for delivery, or renewing to or through small employers in this state; and is not subject to this chapter because it is listed as excluded from the definition of a health benefit plan under the Insurance Code, Article 26.02, and sec.26.4 of this title (relating to Definitions); (2) include a statement that the health carrier is not offering or marketing to small employers as a health benefit plan the coverage listed under the Insurance Code, Article 26.07(b) and paragraph (1) of this subsection, and the health carrier is complying with the provisions of the Insurance Code, Chapter 26, and this chapter to the extent it is applicable to the health carrier; (3) list each health benefit plan along with riders (including the form number and approval date) previously filed with the department (or filed through the certification process) which the health carrier is no longer marketing to small employers in the state. If the health carrier no longer wishes to offer the plan, a formal withdrawal of the plan shall be filed and can be accomplished by marking the appropriate blank on the certification provided at Figure 43 of sec.26.27(b) of this title (relating to Appendix) (Form Number 369 CERT ANN LIST-OTHER/SEHBP); and (4) list each health benefit plan and rider (including the form number and approval date) previously filed with the department which the health carrier plans to continue marketing to small employers in the state. (c) Not later than March 1 of each calendar year, a small employer carrier shall file with the commissioner Form Number 369 CERT DATA provided at Figure 48 of sec.26.27(b) of this title (relating to Appendix), the following information related to health benefit plans issued by the small employer carrier to small employers in this state: (1) the number of small employers that were issued and the number of lives that were covered under health benefit plans in the previous calendar year (separated as to newly issued plans and renewals); (2) the number of small employers that were issued and the number of lives that were covered under the preventive and primary care benefit plan, the in- hospital benefit plan, the standard health benefit plan, basic coverage benefit plan, catastrophic care benefit plan, HMO preventive and primary care benefit plan, HMO group standard benefit plan and HMO small employer group health benefit plan in the previous calendar year (separated as to newly issued plans and renewals and to class of business); (3) the number of small employers that were issued and the number of lives that were covered under a prescription drug rider with the preventive and primary care benefit plan, a preventive and primary care benefit rider with the in-hospital benefit plan, an alcohol and drug abuse rider with the basic coverage and catastrophic benefit plans, a mental health benefit rider with the basic coverage and catastrophic care benefit plans, a prescription drug rider with the basic coverage and catastrophic care benefit plans, and a preventive care rider with the basic coverage benefit plan (separately listed as to newly issued plans and renewals, type of rider and type of benefit plan); (4) the number of small employer health benefit plans in force and the number of lives covered under those plans. This information should be broken down by the zip code of the small employers' principal place of business in the State of Texas; (5) the number of small employer health benefit plans that were voluntarily not renewed by small employers in the previous calendar year; (6) the number of small employer health benefit plans that were terminated or nonrenewed (for reasons other than nonpayment of premium) by the health carrier in the previous calendar year; (7) the number of small employer health benefit plans that were issued to small employers that were uninsured for at least the two months prior to issue; and (8) the health carrier's gross premiums derived from health benefit plans delivered, issued for delivery, or renewed to small employers in the previous calendar year. For purposes of this subsection, gross premiums shall be the total amount of monies collected by the health carrier for health benefit plans during the applicable calendar year or the applicable calendar quarter. Gross premiums shall include premiums collected for individual and group health benefit plans issued to small employers or their employees. Gross premiums shall also include premiums collected under certificates issued or delivered to employees (in this state) of small employers, regardless of where the policy is issued or delivered. sec.26.22. Private Purchasing Cooperatives. (a) Two or more small employers may form a cooperative for the purchase of small employer health benefit plans. A cooperative must be organized as a nonprofit corporation and has the rights and duties provided by the Texas Non- profit Corporation Act, Texas Civil Statutes, Articles 1396-1.01, et seq. (b) On receipt of a certificate of incorporation or certificate of authority from the secretary of state, the purchasing cooperative shall file notification of the receipt of the certificate and a copy of the cooperative's organizational documents with the commissioner by filing the required notification and documents with the Life/Health Group, Mail Code 106-1D, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104. (c) The board of directors shall file annually with the commissioner a statement of all amounts collected and expenses incurred for each of the preceding years. The annual filing shall be made on Form Number 369 CERT COOP provided at Figure 49 of sec.26.27(b) of this title (relating to Appendix) and shall be mailed to the Life/Health Group, Mail Code 106-1D, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104. sec.26.27. Appendix. (a) The forms adopted and incorporated in sec.26.2 of this title (relating to Forms Adopted and Incorporated by Reference) are included in the appendix to these sections. The following index refers to the form number, its description, and the figure number in the appendix. Figure No. 1: 28 TAC sec.26.27(a) (b) Figures No. 1-49: 28 TAC sec.26.27(b) FIGURE NO. 1: 28 TAC sec.26.27(b) FIGURE NO. 2: 28 TAC sec.26.27(b) FIGURE NO. 3: 28 TAC sec.26.27(b) FIGURE NO. 4: 28 TAC sec.26.27(b) FIGURE NO. 5: 28 TAC sec.26.27(b) FIGURE NO. 6: 28 TAC sec.26.27(b) FIGURE NO. 7: 28 TAC sec.26.27(b) FIGURE NO. 8: 28 TAC sec.26.27(b) FIGURE NO. 9: 28 TAC sec.26.27(b) FIGURE NO. 10: 28 TAC sec.26.27(b) FIGURE NO. 11: 28 TAC sec.26.27(b) FIGURE NO. 12: 28 TAC sec.26.27(b) FIGURE NO. 13: 28 TAC sec.26.27(b) FIGURE NO. 14: 28 TAC sec.26.27(b) FIGURE NO. 15: 28 TAC sec.26.27(b) FIGURE NO. 16: 28 TAC sec.26.27(b) FIGURE NO. 17: 28 TAC sec.26.27(b) FIGURE NO. 18: 28 TAC sec.26.27(b) FIGURE NO. 19: 28 TAC sec.26.27(b) FIGURE NO. 20: 28 TAC sec.26.27(b) FIGURE NO. 21: 28 TAC sec.26.27(b) FIGURE NO. 22: 28 TAC sec.26.27(b) FIGURE NO. 23: 28 TAC sec.26.27(b) FIGURE NO. 24: 28 TAC sec.26.27(b) FIGURE NO. 25: 28 TAC sec.26.27(b) FIGURE NO. 26: 28 TAC sec.26.27(b) FIGURE NO. 27: 28 TAC sec.26.27(b) FIGURE NO. 28: 28 TAC sec.26.27(b) FIGURE NO. 29: 28 TAC sec.26.27(b) FIGURE NO. 30: 28 TAC sec.26.27(b) FIGURE NO. 31: 28 TAC sec.26.27(b) FIGURE NO. 32: 28 TAC sec.26.27(b) FIGURE NO. 33: 28 TAC sec.26.27(b) FIGURE NO. 34: 28 TAC sec.26.27(b) FIGURE NO. 35: 28 TAC sec.26.27(b) FIGURE NO. 36: 28 TAC sec.26.27(b) FIGURE NO. 37: 28 TAC sec.26.27(b) FIGURE NO. 38: 28 TAC sec.26.27(b) FIGURE NO. 39: 28 TAC sec.26.27(b) FIGURE NO. 40: 28 TAC sec.26.27(b) FIGURE NO. 41: 28 TAC sec.26.27(b) FIGURE NO. 42: 28 TAC sec.26.27(b) FIGURE NO. 43: 28 TAC sec.26.27(b) FIGURE NO. 44: 28 TAC sec.26.27(b) FIGURE NO. 45: 28 TAC sec.26.27(b) FIGURE NO. 46: 28 TAC sec.26.27(b) FIGURE NO. 47: 28 TAC sec.26.27(b) FIGURE NO. 48: 28 TAC sec.26.27(b) FIGURE NO. 49: 28 TAC sec.26.27(b) This agency certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 19,1996. TRD-9603870 Alicia M. Fechtel General Counsel and Chief Clerk Texas Department of Insurance Effective date: April 9, 1996 Proposal publication date: November 24, 1995 For further information, please call: (512) 463-6327 Subchapter A. Small Employer Health Insurance Availability Act Regulation 28 TAC sec.sec.26.14-26.18, 26.27 The Commissioner of Insurance adopts the repeal of sec. sec.26.14-26.18 and sec.26.27, concerning small employer health benefit plans, without changes to the proposed text as published in the November 24, 1995, issue of the Texas Register (20 TexReg 9827). Section 26.14 and sec.26.27 concern the coverage for standard benefit plans and the prototype standard benefit plans required to be offered by small employer carriers to small employers as a condition of transacting business in the state. Repeal of the sections is necessary because new sec.26.14 establishes coverage requirements for the standard benefit plans and new sec.26. 27 is an appendix which contains the prototype standard benefits plans and other forms to be used by small employer carriers. Section 26.15 allows employees eligible for coverage under a small employer health benefit plan to obtain additional optional coverage if certain requirements are met. The repeal of this section is necessary to implement provisions of House Bill 369 which deleted the optional coverage provisions from the Insurance Code, Article 26.21. Sections 26.16, 26.17, and 26.18 concern renewability of coverage and cancellation, refusal to renew coverage and application to reenter the small employer market after refusal to renew coverage and notice to covered persons of cancellation or refusal to renew coverage. The repeal of these sections is necessary because new sec.26.15 sets forth requirements concerning renewability of coverage and cancellation; new sec.26.16 contains provisions concerning refusal to renew coverage and application to reenter the small employer market; new sec.26.17 establishes requirements concerning notice of termination which must be given to covered persons and new sec.26.18 sets forth procedures for filing an election or application to be a risk-assuming or reinsured carrier. The repeal of these sections will enable the Commissioner to adopt new provisions which revise, replace and/or supersede existing sections and implement legislation amending the Insurance Code, Chapter 26 enacted by the 74th Legislature in House Bill 369 relating to the operation and funding of small employer health benefit plans. Simultaneous to the adoption of this repeal, adoption of new sec.sec.26.14-26.18 and sec.26.27 is published elsewhere in this issue of the Texas Register . No comments were received regarding adoption of the repeals. The repeals are adopted pursuant to the Insurance Code, Chapter 26 and Insurance Code, Article 1.03A, and the Government Code, sec.sec.2001.004, et seq (Administrative Procedures Act). The Insurance Code, Chapter 26, establishes the requirements for small employer health plans including, but not limited to, standard benefit plans as adopted by the commissioner and required to be offered by small employer carriers to small employers. Insurance Code, Article 26.04, authorizes the commissioner to adopt rules to implement Chapter 26. Article 1.03A authorizes the commissioner of insurance to promulgate and adopt rules and regulations for the conduct and execution of the duties and functions by the department. The Government Code, sec.sec.2001.004, et seq, authorizes and requires each state agency to adopt rules of practice stating the nature and requirements of all available formal and informal procedures and prescribes the procedures for adoption of rules by a state administrative agency. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on March 19, 1996. TRD-9603944 Alicia M. Fechtel General Counsel and Chief Clerk Texas Department of Insurance Effective date: April 9, 1996 Proposal publication date: November 24, 1995 For further information, please call (512) 463-6327 TITLE 34. PUBLIC FINANCE Part V. Texas County and District Retirement System Chapter 109. Domestic Relations Orders 34 TAC sec.109.12 The Texas County and District Retirement System adopts an amendment to sec.109.12, concerning the authority of the system to make a lump-sum payment to an alternate payee at the time when an annuity would otherwise be payable, if the reserves upon which the alternate payee's annuity would be calculated are $5,000 or less. The amendment is adopted without changes to the proposed text as published in the February 20, 1996, issue of the Texas Register (21 TexReg 1374). In most instances, reserves of less than $5,000 will provide an alternate payee with a monthly annuity of less than $50 as calculated on the basis of the actuarial tables used by the system to determine benefits. However, the continuing administration of each benefit payable in the form of an annuity, as well as the preparation of each monthly retirement check, generate fixed administrative costs unrelated to the amount of the annuity. To avoid this disproportional expense of administering very small annuities that are payable to alternate payees, the board adopts this amendment authorizing the system to pay the reserves as a single sum rather than in the form of a lifetime annuity, if those reserves available to provide the alternate payee's benefit are $5, 000 or less. A payment in accordance with this amendment will not be made to an alternate payee prior to the time that the system begins paying an annuity to the participant or the participant's designated beneficiary, surviving spouse or estate. While preserving the present value of the alternate payee's benefit, the effect of this amendment will be a reduction in the costs to the system of administering small annuities and issuing monthly checks of small amounts to alternate payees. No comments were received regarding adoption of the amendment. The amendment is adopted under Government Code, sec.845.102 which provides the board of trustees of the Texas County And District Retirement System with the authority to adopt rules necessary or desirable for the effective administration of the System. 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. Issued in Austin, Texas, on March 25, 1996. TRD-9604062 Terry Horton Director Texas County and District Retirement System Effective date: April 15, 1996 Proposal publication date: February 20, 1996 For further information, please call (512) 476-6651 TITLE 37. PUBLIC SAFETY AND CORRECTIONS Part III. Texas Youth Commission Chapter 91. Discipline and Control Control 37 TAC sec.sec.91.55, 91.56, 91.59, 91.61, 91.63, 91.65, 91.75 The Texas Youth Commission (TYC) adopts the repeal of sec. sec.91.55, 91.56, 91.59, 91.61, 91.63, 91.65, and 91.75, concerning escape and apprehension, custody and supervision rating, use of force, use of chemical agents, mechanical restraint equipment, security unit, and riot control, without changes to the proposed text as published in the February 16, 1996, issue of the Texas Register (21 TexReg 1250). The justification for the repeal of the sections is the replacement of the repealed rules by new rules which encourage more efficient agency operation. The repeals will be replaced by new sections to allow changes in rules of operation which are more consistent with legislative intent and agency mission regarding committed juvenile delinquents. No comments were received regarding adoption of the repeals. The repeals are adopted under the Human Resources Code, sec.61.034, which provides the Texas Youth Commission with the authority to make rules appropriate to the accomplishment of its functions. The proposed rules implement the Human Resource Code, sec.61.034. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on March 21, 1996. TRD-9603953 Steve Robinson Executive Director Texas Youth Commission Effective date: April 11, 1996 Proposal publication date: February 16, 1996 For further information, please call: (512) 483-5244 The Texas Youth Commission (TYC) adopts new sec.sec.91.55, 91.56, 91.59, 91.61, 91.63, 91.65, and 91.75, concerning escape and apprehension, custody and supervision rating, use of force, use of chemical agents, mechanical restraint equipment, and security unit. Sections 91.55, 91.56, 91.59, 91.61, 91.63, and 91.65 are adopted with changes to the proposed text as published in the February 16, 1996, issue of the Texas Register (21 TexReg 1252). Section 91.75 is adopted without changes and will not be republished. Changes in formatting have been made to most of the rules to add subsections for "purpose" and "applicability." These changes do not alter the substance of the rule in any way. Section 91.63 and sec.91.65 contain these format changes. Other changes are: to sec.91.55 a definition for absconding has been added; to sec.91.56 specific management procedures not affecting the rule have been deleted; to sec.91.59 moves references to use of chemical agents to sec.91.61 which is more appropriate for rules affecting chemical agent usage, and deletes specific management information; to sec.91.61 rules from sec.91.59 regarding use of chemical agents have been moved into this section. The justification for the new sections is increased safety for youth, staff, and the public. New sec.91.55 provides guidelines for apprehending TYC youth who have escaped or absconded and differentiates between escape and abscond. Section 91. 56 outlines the use of the custody and supervision rating system to assess the level of supervision required to protect the youth and others when a youth must leave the institution for any reason. New sec.91.59 provides criteria for the use of physical force and outlines when the use of physical force is restricted. Section 91.61 and sec.91.63 list mechanical restraints and chemical agents and when they can be used to control violent youth. New sec.91.65 defines the use of TYC security units to segregate youth when necessary from the general population. Provisions in sec.91.75 allow use of plastic cuffs and other non- routine action to assist TYC staff to regain control and terminate a riot occurring on a TYC facility campus. No comments were received regarding adoption of the new sections. The new sections are adopted under the Human Resources Code, sec.61.075, which provides the Texas Youth Commission with the authority to permit the child liberty under supervision and on conditions it believes conducive to acceptable behavior, and order the child's confinement under conditions it believes best designed for the child's welfare and the interests of the public; and sec.612.093, which provides the Texas Youth Commission with the authority to take the child into the custody of the commission if the child has escaped or has been released under supervision and broken the conditions of release. The proposed new sections implement the Human Resource Code, sec.61.034. sec.91.55. Escape and Apprehension. (a) Purpose. The purpose of this rule is to acknowledge a relationship with TYC, law enforcement, and Texas/National Crime Information Center (TCIC/NCIC) with regard to reporting and apprehending youth in TYC custody who escape or abscond from their assignments. (b) Definition of terms used. (1) Abscond occurs when a youth assigned to a minimum or home level of restriction leaves the location without permission of staff and his/her whereabouts are unknown. (A youth who fails to report to the assigned community corrections officers but whose whereabouts are known is not an absconder.) (2) Escape occurs when a youth assigned to a medium or high level restriction facility: (A) leaves the property of a TYC facility or contract program without permission of staff; or (B) fails to return at the designated time unless excused by the facility administrator. (3) Attempted Escape occurs when a youth is seen attempting to escape, but is apprehended before he or she can leave the property of a TYC facility or contract program. (c) When a youth escapes or absconds, Texas Youth Commission (TYC) staff will make concerted efforts to apprehend the youth with assistance of law enforcement officials, staff and other affected parties. (d) Directives to Apprehend shall be issued by an agency staff according to Texas/National Crime Information Center (TCIC/NCIC) policy and procedures and DPS/FBI guidelines. sec.91.56. Custody and Supervision Rating. (a) Purpose. The purpose of this rule is to enhance the protection of the public by limiting exposure to potential harm caused by a TYC youth by establishing specific minimum staff per youth supervision requirements for certain youth in a TYC operated high restriction facility, both on and off the grounds. Higher risk ratings require increased staff supervision, restriction of youth movement, and restriction of access to unauthorized program areas and potentially harmful materials. (b) Explanation of Terms Used. (1) Custody and Supervision Rating-Is a system for assessing risk and assigning a rating which determines the level of custody and supervision necessary to minimize a TYC youth's opportunity to harm self of others. The rating of a youth's risk affects a youth's movement and activities. (2) Risk level-Is the high, medium, or low risk assessed by evaluating each youth's past history, current behavior, and length of time in residential placement since commitment. Based on the risk an equivalent rating is assigned each youth. (3) Staff supervision-Refers to supervision provided by a TYC employee or an adult serving in a capacity related to a TYC activity (e.g., an employer of TYC youth or a volunteer for a TYC sponsored activity). The supervision requirements vary. (c) Ratings. (1) A youth with a high risk rating shall not leave the grounds except for necessary medical services or emergencies. Constant supervision by staff shall be provided. (2) A youth with a medium risk rating may leave the grounds for routine activities under specific conditions recommended by the treatment team. Supervision by staff is required. Activities shall not include overnight outings. (3) A youth with a low risk rating may leave the grounds with or without direct staff supervision under specific conditions recommended by the treatment team. Activities may include overnight outings. (d) The facility administrator may allow certain activity normally restricted by the CSR rating on the basis of clinical review and recommendation, major improvement in behavior, pre-placement visits, or may request from the central office, waiver for other reasons. sec.91.59. Use of Force. (a) Purpose. The purpose of this rule is to provide: (1) criteria for using physical or mechanical force when necessary to control a volatile situation; and (2) restrictions and guidelines to promote safety of youth and staff. Force is used as a last resort and only when necessary. When use of physical force is necessary, it should be measured and progressive in nature, however, when impractical, the amount and type of force necessary to control violence should be used. Measured and progressive force may be impractical when it would likely result in injury to youth and staff. (b) Applicability. This rule does not apply to the use of chemical agents. See GOP.67.11, sec.91.61 of this title (relating to Use of Chemical Agents). (c) Explanation of Terms Used. (1) Force-Any physical contact exerted upon a person to compel or arrest bodily movement. (2) Physical Restraint-Use of a person's physical exertion to completely or partially constrain another person's bodily movement. (3) Escort-The physical force used to cause the movement of a person from one location to another. (4) Mechanical Restraint-Use of a mechanical device(s) to aid in the restriction of a person's bodily movement. (5) Full Body Restraint-The use of cloth or leather mechanical restraint devices to secure a person on a bed in the security unit, face upward (Permitted only in the TYC institutions and in contract facilities approved by the executive director or designee.) (d) Criteria for Use. Force may be used only as a last resort and only as a control measure to ensure the safety and welfare of youth and staff. The use of force (to restrain or compel movement) shall be limited to instances of: (1) protection of the youth from imminent self-harm; (Including the administration of medical treatment in a situation that is life threatening and/or youth is engaging in imminently serious self-injurious behavior). (2) self-protection from imminent harm. (3) protection of third parties from imminent harm; (including resistance to search for contraband in compliance with GOP.67.03, sec.91.53 of this title (relating to Search). (4) prevention of imminent property damage. (5) prevention of escapes or attempted escapes; (including transportation, when circumstances create a risk of escape or harm). (6) movement of a referred youth to the security/detention unit or alternative education classroom. A youth may also be moved within the security or detention unit when the youth's behavior is substantially disruptive and the youth refuses to follow a reasonable order of the security/detention staff. (e) Restrictions. (1) Force shall not be used as punishment, discipline, or as a convenience for staff. (2) Staff, not youth, shall be solely responsible for the exercise of force and restraint. (3) Staff shall use the amount and type of force necessary to control the situation except when a staff member is acting alone in which case he/she shall not be expected to use force or restraint when the risk of harm presented by the youth's conduct does not outweigh the possible risk of harm to youth or staff which would likely result if the staff acted alone. (4) When physical or mechanical restraint is employed, staff shall ensure the youth's safety by ensuring adequate respiration and circulation, providing continuous visual supervision, and providing assistance as appropriate until the restraint is terminated. (5) Physical force should be used as a last resort and only when necessary. When use of physical force is necessary, it should be measured and progressive in nature, however, when measured and progressive use is impractical, the amount and type of force necessary to control violence should be used. Physical restraint may be impractical when to do so would likely result in injury to staff. (6) A physical or mechanical restraint, other than during transportation or a riot shall be terminated within a short period of time unless the youth is exhibiting or threatening to continue behaviors which justify the use of restraint. If continued restraint is justified, restraint must be terminated when the youth's behavior ceases to pose a threat or if used during transportation, when the destination is reached. (f) Use of Restraints During Transportation. (1) Transportation by the transportation unit. Mechanical wrist and ankle restraints shall be used routinely during transportation by the transportation unit to prevent escape or violent behavior and to ensure the safety of the youth and the community. (2) Transportation by other than the transportation unit. (A) Mechanical ankle restraints shall be used during transportation when a youth is being transported to a high restriction program. (B) Mechanical wrist restraints may also be used when a youth's behavior prior to or during transportation leads staff to believe the youth is likely to attempt to escape, engage in violent behavior, or harm himself if not restrained. sec.91.61. Use of Chemical Agents. (a) Purpose: The purpose of this rule is to establish criteria and rules for the use of chemical agents by TYC staff to prevent or control an incident. (b) Applicability: (1) This rule applies to authorized institutions. (2) This rule does not apply to the use of chemical agents by TYC apprehension specialists. See GOP.68.05, sec.91.85 of this title (relating to Use of Chemical Agents). (c) Criteria For Use. (1) Chemical agents may be used only when: (A) the use of physical restraint is justified in accordance with GOP. 67.09, sec.91.59 of this title (relating to Use of Force): and (B) the use of physical restraint under the circumstances, would likely result in injury to the staff or others; and (C) verbal commands to stop are ineffective or impractical. (2) Chemical agents may not by used when the youth: (A) is physically restrained or otherwise under control; or (B) has been identified as having respiratory problems, diseases, or conditions which would make use of chemical agents dangerous, unless necessary to prevent loss of life or serious bodily injury; or (C) has been assigned to a mental health treatment program or has been identified by mental health professional as having a psychiatric condition or mental health diagnosis that would contraindicate the use of chemical agents until the mental health professional has been given the opportunity to establish control unless it is necessary to prevent loss of life, serious bodily injury. (d) Restrictions. (1) Chemical agents shall not be used as a form of punishment. Employees in violation will be subject to disciplinary action. (2) Chemical agents may be used in TYC operated facilities and only in those facilities individually authorized for use by the executive director. (3) Only TYC staff who have received appropriate training in the use of chemical agents and who have been approved by the facility administrator may use chemical agents. (4) Use of a chemical agent must be approved by the facility administrator or designee prior to application except in an emergency. In an emergency, where prior authorization is not possible, the staff member employing a chemical agent shall justify such use following the action. (5) Immediately following the incident, the medical staff will examine and if necessary, treat youth and staff exposed to the agent. sec.91.63. Mechanical Restraint Equipment (a) Texas Youth Commission (TYC) staff may use only agency approved equipment or chemical agent for the purpose of restraint and may use such equipment or agent only in a manner consistent with its intended purpose. Mechanical restraint may be employed only in compliance with GOP.67.09, sec.91. 59 of this title (relating to Use of Force). Chemical agent may be employed only in compliance with GOP.67.11, sec.91.61 of this title (relating to Use of Chemical Agents). (b) Restrictions. (1) Devices must be applied properly. A device must not be secured so tightly as to interfere with circulation nor so loosely as to permit chafing of the skin. (2) Restraint devices may not be secured to any stationary object except as provided in using full body restraint. Prohibitions include: (A) restraining in a standing position to a fixed object. (B) attaching any approved restraint equipment to any part of a vehicle during transportation. (3) Youth in restraints may not be secured to another youth. (c) Approved Equipment. The following restraint devices and chemical agents are approved for use by TYC staff. All other devices are specifically disapproved. (1) Handcuffs-Metal (not plastic) devices fastened around the wrist to restrain free movement of the hands and arms. (2) Wristlets-A cloth or leather band fastened around the wrist or arm and which may be secured to a waist belt. (3) Anklets-A cloth or leather band fastened around the ankle or leg. (4) Ankle Cuffs-Metal, cloth or leather band or device fastened around the ankle to restrain free movement of the legs. Handcuffs may not be used to cuff the ankles. (5) Plastic Cuffs-Plastic devices fastened around the wrist or legs to restrain free movement of hands, arms or legs. Use is authorized only in case of riot. See GOP.67.25, sec.91.75 of this title (relating to Riot Control). (6) Locked Waist Band-A cloth, leather, or metal band fastened around the waist. The belt is used to secure the arms to the sides or front of the body. (7) Padlocks or Key Locks-Locks used to secure handcuffs, wristlets, anklets and ankle cuffs. (8) Mittens-A cloth, plastic, foam rubber, or leather hand covering fastened around the wrist or lower arm. Acceptable fasteners include elastic, Velcro, ties, paper tape, pull strings . (9) Helmets-A plastic, foam rubber, or leather head covering. If appropriate, a face guard may be attached to the helmet. The device must be proper size for the youth, and the chin strap should not be so tight as to interfere with circulation. (10) Shield-A plastic shield normally identified as riot shields equipped with handles or holding straps. (11) Chemical Agents-Chlorobenzalmalononitrile (CS); Oleoresin Capsicum (OC), also known as pepper spray, as authorized. sec.91.65. Security Unit. (a) Purpose. The purpose of this rule is to: (1) establish criteria for segregating youth from the general population who are out of control or who request the placement. Such youth are placed into a secure setting which is controlled exclusively by staff Each TYC operated high restriction facility provides for a security unit. Placement in the security unit is a serious and extreme measure which may be imposed only in specific situations for short periods of time; and (2) establish minimum program requirements for the security unit. (b) Applicability. This rule does not apply to: (1) the use of the same or adjacent space for a longer term program for the management of assaultive behavior. See GOP.60.01, sec.88.1 of this title (relating to Special Management and Treatment Program for Assaultive Youth). (2) the use of the same or adjacent space when used specifically as a detention facility. See GOP.67.19, sec.91.69 of this title (relating to Detention). (c) Criteria for admission to the security unit. A youth may be confined in the security unit: (1) when there are reasonable grounds to believe, based upon overt acts, that the youth is a serious and continuing escape risk; or (2) when the youth is a serious and immediate physical danger to himself or herself or others and staff cannot protect the youth or others except by referring the youth to security; or (3) when the confinement is necessary to prevent imminent and substantial destruction of property; or (4) to restrain behavior that creates substantial disruption of the routine of the facility; or (5) upon the youth's own request. (d) Restrictions. (1) The security unit shall not be used for retribution at any time. (2) A youth shall not remain in security more than 24 hours solely on the basis of the behavior for which he was admitted to the security unit. (3) No minimum length of time in security shall be imposed. (4) Doors of individual security rooms will be locked following a youth's admission to the security unit and placement in an individual room. (e) Extended Stay. (1) A youth's stay in security may be extended beyond the 24 hours if there are reasonable grounds to believe that one of the admission criteria is occurring or will occur if the youth is released. (2) Extended security confinement due process protections will be provided to youth who remain in the security unit longer than 24 hours. (f) Program Requirements. (1) Youth in security shall be provided psychological, medical, and educational services as well as supervised large muscle activity. (2) Youth shall be provided the same food including snacks prepared in the same manner as for other youth except as special diets may be prescribed on an individual basis by medical personnel. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on March 21, 1996. TRD-9603954 Steve Robinson Executive Director Texas Youth Commission Effective date: April 11, 1996 Proposal publication date: February 16, 1996 For further information, please call: (512) 483-5244