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 1. ADMINISTRATION PART 5. General Services Commission CHAPTER 113. Central Purchasing Division Purchasing 1 TAC sec.113.19 General Services Commission adopts an amendment to sec.113.19, concerning the catalog purchase procedure for automated information systems. The amendment is adopted without changes to the proposed text as published in the September 6, 1996, issue of the Texas Register (21 TexReg 8557. The amendment to sec.113.19 change the statutory citations in subsection (d), (n) and (o) to conform with their recodification under the Texas Government Code and deletes subsection (p) to enable contracting agencies to address catalog appeals in the manner appropriate to their circumstances. The amendment will delete obsolete citations and burdensome language. No comments were received. The amendment is adopted under the Texas Government Code, Title 10, Subtitle D, sec.2157.126, which provides the General Services Commission with the authority to promulgate rules consistent with the Code. 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 October 16, 1996. TRD-9615200 Judy Ponder General Counsel General Services Commission Effective date: November 6, 1996 Proposal publication date: September 6, 1996 For further information, please call: (512) 463-3960 TITLE 13. CULTURAL RESOURCES PART I. Texas State Library and Archives Commission CHAPTER 1.Library Development Library Services Construction Act Annual Program and Long Range Plan 13 TAC sec.1.21 The Texas State Library and Archives Commission adopts an amendment to sec.1.21, without changes to the proposed text as published in the May 10, 1996, issue of the Texas Register (21 TexReg 3995). The amendments concern the approval of the federal Library Services and Construction Act Long Range Plan and Annual Program by the Texas State Library and Archives Commission. The documents describe the types of financial assistance and services available to libraries and systems of libraries and the qualifications and procedures for receiving, administering and reporting on these funds. The Commission has adopted an updated long range plan for fiscal years 1996-1999 and annual program for fiscal year 1997 by reference. The Library Services and Construction Act Annual Program, 1997, and Long Range Plan 1996-1999 (revised July 1996) includes changes from the program and plan as follows: federal forms showing final budget amounts, more extensive narrative descriptions of the individual grant projects, and deletion of project descriptions that were not funded. No comments were received regarding the adoption of the amendment. The amendment is adopted under the Government Code, sec.441.009 that provides Texas State Library and Archives Commission with authority to adopt a state plan for improving library services in Texas. Government Code sec.1.21 is affected by the amendments. sec.1.21.Library Services and Construction Act Application for Federal Funding. The Texas State Library and Archives Commission adopts by reference the Library Services and Construction Act Annual Program, 1997, and Long Range Plan 1996- 1999 (revised July 1996). Copies may be obtained from the Library Development Division of the Texas State Library, P.O. Box 12927, Austin Texas 78711. 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 October 17, 1996. TRD-9615233 Raymond Hitt Assistant State Librarian Texas State Library and Archives Commission Effective date: November 8, 1996 Proposal publication date: May 10, 1996 For further information, please call: (512) 463-5460 TITLE 16. ECONOMIC REGULATION PART II. Public Utility Commission of Texas CHAPTER 22. Practice and Procedure SUBCHAPTER D. Notice 16 TAC sec.22.51, sec.22.52 The Public Utility Commission of Texas adopts amendments to sec.22.51, relating to Notice for Public Utility Regulatory Act sec.2.211, sec.2.212, sec.3.210, and sec.3.211, Proceedings; and sec.22.52, relating to Notice in Licensing Proceedings, without amendments to the proposed text as published in the September 3, 1996, issue of the Texas Register (21 TexReg 8365). The adopted amendments revise the Commission's mailing address and telephone numbers, and are necessitated by the late September, 1996, relocation of the Commission's offices. The Commission received no written comments on the proposed amendments. These amendments are adopted under the Public Utility Regulatory Act of 1995, sec.1.101, S.B. 319, 74th Leg., R.S. 1995, which provides the Public Utility Commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction, including rules of practice and procedure. Cross Index to Statutes: PURA sec.sec.1.101. 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 October 21, 1996. TRD-9615394 Paula Mueller Secretary of the Commission Public Utility Commission Effective date: November 11, 1996 Proposal publication date: September 3, 1996 For further information, please call: (512) 458-0100 CHAPTER 23. Substantive Rules The Public Utility Commission of Texas adopts amendments to sec.23.23, relating to Rate Design; sec.23.26, relating to New and Experimental Services; sec.23.28, relating to Promotional Rates for LEC Services; sec.23.33, relating to Telephone Solicitation; sec.23.69, relating to Integrated Services Digital Network (ISDN); and sec.23.99, relating to Unbundling, without amendments to the proposed text as published in the August 27, 1996, issue of the Texas Register (21 TexReg 8071). The adopted amendments revise the commission's mailing address and telephone numbers, and are necessitated by the late September, 1996, relocation of the commission's offices. The commission received no written comments on the proposed amendments. Rates 16 TAC sec.sec.23.23, 23.26, 23.28 These amendments are adopted under the Public Utility Regulatory Act of 1995, sec.1.101, S.B. 319, 74th Leg., R.S. 1995, which provides the Public Utility Commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction, including rules of practice and procedure. Cross Index to Statutes: PURA sec.sec.1.101. 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 October 28, 1996. TRD-9615339 Paula Mueller Secretary of the Commission Public Utility Commission Effective date: November 8, 1996 Proposal publication date: August 27, 1996 For further information, please call: (512) 936-7150 Certification 16 TAC sec.23.33 The amendment is adopted under the Public Utility Regulatory Act of 1995, sec.1.101, S.B. 319, 74th Leg., R.S. 1995, which provides the Public Utility Commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction. Cross Index to Statutes: PURA sec.sec.1.101. 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 September 18, 1996. TRD-9615340 Paula Mueller Secretary of the Commission Public Utility Commission Effective date: November 8, 1996 Proposal publication date: August 27, 1996 For further information, please call: (512) 936-7150 Quality of Service 16 TAC sec.23.69 The amendment is adopted under the Public Utility Regulatory Act of 1995, sec.1.101, S.B. 319, 74th Leg., R.S. 1995, which provides the Public Utility Commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction. Cross Index to Statutes: PURA sec.sec.1.101. 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 September 18, 1996. TRD-9615341 Paula Mueller Secretary of the Commission Public Utility Commission Effective date: November 8, 1996 Proposal publication date: August 27, 1996 For further information, please call: (512) 936-7150 Telephone 16 TAC sec.23.99 The amendment is adopted under the Public Utility Regulatory Act of 1995, sec.1.101, S.B. 319, 74th Leg., R.S. 1995, which provides the Public Utility Commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction. Cross Index to Statutes: PURA sec.sec.1.101. 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 September 18, 1996. TRD-9615342 Paula Mueller Secretary of the Commission Public Utility Commission Effective date: November 8, 1996 Proposal publication date: August 27, 1996 For further information, please call: (512) 936-7150 PART IX. Texas Lottery Commission CHAPTER 401.Administration of State Lottery Act 16 TAC sec.401.305 The Texas Lottery Commission adopts an amendment to sec.401.305, concerning "Lotto Texas" On-line Game Rule, with changes to the proposed text as published in the September 10, 1996, issue of the Texas Register (21 TexReg 8643). Clause (ii) of subsection (e)(3)(A) is changed to add the sentence, "The executive director shall, in his/her sole discretion, establish the implementation date of the cash value option." The amendment creates a cash value option on the jackpot prize by the player at the time the player purchases a Lotto Texas ticket. Some of the amendment ensures consistency with current agency practice. The amendment allows a player to make an election at the time the player purchases a ticket to be paid the net present value of the player's share of the jackpot, in the event the player has a valid winning jackpot ticket. The option is an election to be paid the net present value of the player's share of the jackpot, as opposed to being paid in 25 annual installments, because players have requested this feature. Other states have implemented this feature and it has been received well by the players. In the event of a prize winner who does not select the cash value option, the prize winner's share of the jackpot shall be paid in 25 annual installments. Also, the amendment clarifies, consistent with current agency practice, that it is the executive director who may increase the indirect prize category of each prize tier. Further, the amendment makes clear that the Lotto Texas prize reserve fund may be used to pay Lotto Texas prizes. The change to subsection (e)(3)(A)(ii) is necessary because the logistics of implementing the cash value option are multifaceted and to a great extent, dynamic in nature, thereby making it difficult to ascertain an implementation date as the effective date of the rule, as amended. For example, the on-line terminals must be modified to add a "cash value option" feature, software changes must be made to accommodate this option and new playslips must be printed and distributed to Texas Lottery retailers. As a result of the many activities that must be undertaken to implement the cash value option, it is imperative that the executive director have the discretion to establish an implementation date. No comments were received regarding the adoption of the amendments. The amendment is adopted under Texas Government Code sec.466.015 and sec.467.102 which provides the Texas Lottery Commission with the authority to adopt rules necessary to administer and enforce the State Lottery Act. sec.401.305."Lotto Texas" On-Line Game Rule. (a) Lotto Texas. A Texas Lottery on-line game to be known as "Lotto Texas" is authorized to be conducted by the executive director under the following rules and under such further instructions and directives as the executive director may issue in furtherance thereof. If a conflict arises between this section and sec.401.304 of this title (relating to On-Line Game Rules (General)), this section shall have precedence. (b) Definitions. In addition to the definitions provided in sec.401.304 of this title (relating to On-Line Game Rules (General)), and unless the context in this section otherwise requires, the following definitions apply. (1) Cash value option-an election a player makes at the time the player purchases a ticket to be paid the net present value of the player's share of the jackpot, in the event the player has a valid winning jackpot ticket. (2) Number-Any play integer from one through 50 inclusive. (3) Play-The six numbers selected on each play board and printed on the ticket. (4) Play board-A field of the 50 numbers found on the playslip. (5) Playslip-An optically readable card issued by the Texas Lottery used by players of Lotto Texas to select plays. There shall be five play boards on each play slip identified at A, B, C, D, and E. A playslip has no pecuniary value and shall not constitute evidence of ticket purchase or of numbers selected. (c)-(d) (No change.) (e) Prizes for lotto. (1)-(2) (No change.) (3) Prize categories. (A) First prize (jackpot). (i) In the event of a prize winner who does not select the cash value option, the prize winner's share of the jackpot shall be paid in 25 installments. To determine the annuitized future value of each share (prize amount), the annuitized future value of the prize category is divided by the shares. A share is the matching combination, in one play, of all six numbers drawn (in any order). Each share will be paid in 25 installments. The initial payment shall be paid only upon completion of all internal validation procedures. The subsequent 24 payments shall be paid annually by monies generated by the purchase of securities which shall be purchased through the Comptroller of Public Accounts- Treasury Operations, State of Texas, after each drawing for which lottery records reflect the sale of one or more winning Lotto Texas six of six plays, and the value of the 24 installments shall be determined by the face or market value of said securities at purchase. Annual installment payments shall be based on the annual maturity value of the securities purchased. The payment of annual annuities will be made on the fifteenth day of the anniversary of the month in which the ticket won. If the cash value of each share is equal to or greater than the amount required to pay an initial first-year cash installment and 24 subsequent annuitized annual installments yielding total payments of $2 million or greater, each share shall be paid in 25 installments in the same manner as described in this paragraph. If the cash value of each share is less than the amount required to pay an initial first-year cash installment and 24 subsequent installments yielding total payments of $2 million, each share shall be paid the cash value of each share in one payment. (ii) In the event of a prize winner who selects the cash value option, the prize winner's share will be paid in a single, lump sum payment based on the discounted, present cash value of the prize winner's share of the jackpot on the next business day after the drawing. The player must make the election of the cash value option at the time of purchasing a Lotto ticket. If the player does not make any election at the time of purchasing a Lotto ticket, the share will be paid in accordance with clause (i) of this subparagraph. The executive director shall, in his/her sole discretion, establish the implementation date of the cash value option. (iii) The six of six jackpot prize must be claimed at the Austin claim center. The total prize category contribution for a drawing will include the following. (I) The direct prize category contribution may be 64% of the prize pool for the drawing. (II) The indirect prize category contribution, which may be increased by the executive director, will include the roll-over from the previous drawing, if any. (B) Second Prize. The prize amount shall be calculated by dividing the prize category contributions by the number of shares for the prize category. A share is the matching combination, in one play, of any five of the six numbers drawn (in any order). The total prize category contribution will include the following. (i) (No change.) (ii) The indirect prize category contribution, which may be increased by the executive director, will include the roll-over from the previous drawing, if any (C) Third prize. The prize amount shall be calculated by dividing the prize category contributions by the number of shares for the prize category. A share is the matching combination, in one play, of any four of the six numbers drawn (in any order). The total prize category contribution will include the following. (i) (No change.) (ii) The indirect prize category contribution, which may be increased by the executive director, will include the roll-over from the previous drawing, if any. (D) Fourth prize. The prize amount is a guaranteed minimum $3.00. Any roll-over amounts shall be added to the prize reserve fund. The total prize category contribution will include the following: (i) The direct prize category contribution shall be 11% of the prize pool for the drawing. (ii) The indirect prize category contribution as determined by the executive director. (4) Prize reserve fund. (A) (No change.) (B) The Lotto Texas prize reserve fund may be increased or decreased by any amounts allocated to the prize pool and not paid to the winners. For example, rounding down, paying Lotto Texas prizes, and roll-over amounts from the fourth prize. (f) Ticket purchases. (1) (No change.) (2) Lotto tickets shall show the player's selection of number or Quick Pick (QP) numbers, boards played, drawing date, jackpot payment option, and validation and reference numbers. (3)-(4) (No change.) (g) Drawings. (1) The Lotto Texas drawings shall be held each week on Wednesday and Saturday evenings at 9:59 p.m. Central Time except that the drawing schedule may be changed by the executive director, if necessary. (2)-(6) (No change.) (h) Announcement of incentive or bonus program. The executive director shall announce each incentive or bonus program prior to its commencement. The announcement shall specify the beginning and ending time, if applicable, of the incentive or bonus program and the value for the award(s). 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 October 18, 1996. TRD-9615267 Kimberly L. Kiplin General Counsel Texas Lottery Commission Effective date: October 9, 1996 Proposal publication date: September 10, 1996 For further information, please call: 16 TAC sec.401.308 The Texas Lottery Commission adopts an amendment to sec.401.308, concerning "Cash 5" On-line Game Rule, without changes to the proposed text as published in the September 10, 1996, issue of the Texas Register (21 TexReg 8644). The amendment adds two additional drawing dates per week and also ensure consistency with current agency practice. The amendment adds Monday and Thursday as additional drawing dates. The amendment also clarifies, consistent with agency practice that it is the executive director who authorizes and directs the conduct of the "Cash 5" game and, further, establishes any incentive or bonus program. No comments were received regarding the adoption of the amendment. The amendment is adopted under Texas Government Code, sec.466.015 and sec.467.102 which provides the Texas Lottery Commission with the authority to adopt rules necessary to administer and enforce the State Lottery Act. 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 October 18, 1996. TRD-9615266 Kimberly L. Kiplin General Counsel Texas Lottery Commission Effective date: October 9, 1996 Proposal publication date: September 10, 1996 For further information, please call: (512) 323-3791 16 TAC sec.401.352 The Texas Lottery Commission adopts an amendment to sec.401.352, of this title (relating to Settlement Procedures), without changes to the proposed text as published in the September 10, 1996, issue of the Texas Register (21 TexReg 8643). The amendment authorizes the suspension, summary suspension and revocation of a lottery sale agent's license at each location where such licensee is licensed, upon failure of the licensee to have sufficient funds available to cover and electronic funds transfer to the Texas Lottery's account. The amendment explicitly clarifies the obligation of a licensee to turn over to the state proceeds received by the licensee from the sale of lottery tickets at all locations for which the licensee is licensed. The amendment is necessary in order to secure the timely and effective collection of lottery proceeds that have been generated by sales at all locations held by a licensee, and to avoid the anomalous result of allowing a licensee to be in default of its obligations at one location while lottery activities continue at another location owned by the same licensee. No comments were received regarding the adoption of the amendment. The amendment is adopted under Texas Government Code sec.466.015 and sec.467.102 which provides the Texas Lottery Commission with the authority to adopt rules necessary to administer and enforce the State Lottery Act. 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 October 18, 1996. TRD-9615268 Kimberly L. Kiplin General Counsel Texas Lottery Commission Effective date: October 9, 1996 Proposal publication date: September 10, 1996 For further information, please call: TITLE 25. HEALTH SERVICES PART II. Texas Department of Mental Health and Mental Retardation CHAPTER 404. Protection of Clients and Staff SUBCHAPTER H. Criminal History Clearances of Applicants for Employment 25 TAC sec.sec.404.301-404.312 The Texas Department of Mental Health and Mental Retardation (TDMHMR) adopts the repeal of sec.sec.404.301-404.312 of Chapter 404, Subchapter H, concerning criminal history clearances of applicants for employment, without changes to the proposal as published in the August 13, 1996, issue of the Texas Register (21TexReg7641). New sections which replace these are contemporaneously adopted in this issue of the Texas Register. The repeal allows for the adoption of new sections. No public comment was received on the proposed 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 October 15, 1996. TRD-9615362 Ann Utley Chairman, Texas MHMR Board Texas Department of Mental Health and Mental Retardation Effective date: November 11, 1996 Proposal publication date: August 13, 1996 For further information, please call: (512) 206-4516 SUBCHAPTER H.Criminal History Clearances 25 TAC sec.sec.404.301-404.309 The Texas Department of Mental Health and Mental Retardation (TDMHMR) adopts new sec.sec.404.301-404.309 of Chapter 404, Subchapter H, concerning criminal history clearances. Sections 404.302-404.307 were adopted with changes to the proposed text as published in the August 13, 1996, issue of the Texas Register (21 TexReg 7642-7644). Sections 404.301, 404.308, and 404.309 were adopted without changes and will not be republished. The repeal of existing sec.sec.404.301-404.312 of Chapter 404, Subchapter H, concerning criminal history clearances of applicants for employment, which the new sections replace is contemporaneously adopted in this issue of the Texas Register. Language was added to sec.404.302 stating that the subchapter did not apply to entities and providers that must otherwise conduct criminal history clearances as required by the Texas Health and Safety Code, Chapter 250. Also, a new subsection was added to sec.404.304 requiring such entities and providers to provide evidence of compliance with the statute to the facility or community with which it contracts. A definition of "professional clinical intern" was added. The definition of "Criminal History Unit" was replaced with "IS Coordinator, Criminal History Records Information (CHRI)" to reflect the revised organizational structure of the department. The abbreviation "TDMHMR" was added to the definition of "department." A new subsection was added to sec.404.304 describing the clearance procedures for professional clinical interns. Another new subsection was added to sec.404.304 allowing employers to hire applicants on a temporary or interim basis pending a criminal history clearance under certain circumstances; however, the allowance was not extended to include volunteers. The subsections within sec.404.304 have been renumbered and references throughout the subchapter have been revised to reflect the change. The term "IS Coordinator, Criminal History Records Information" replaces the term "Criminal History Unit (CHU)" throughout the subchapter. Language clarifying how providers submit criminal history requests to the department and how the department charges providers was added to sec.404.305(a) and (b). Language regarding what information was required to request an FBI clearance was deleted because it was incomplete. The information necessary for an FBI clearance is indicated on the FBI card. The term "appeal process" in sec.404.306 was deleted and language was added clarifying that facilities and community centers' written policies and procedures must include information on how an applicant can address inaccuracies of a report (i.e., the opportunity to be heard by Texas Department of Public Safety (TDPS), pursuant to Texas Health and Safety Code, sec.250.005(b)) if the applicant believes he/she has been unjustly denied employment or volunteer status as a result of an inaccurate criminal history report. Language was added to sec.404.307(b) clarifying that employers may conduct subsequent criminal history clearances on any employee or volunteer at any time it deems appropriate. Language was also added to the subsection clarifying that only facilities requesting subsequent criminal history clearances must coordinate with the director of human resource services at Central Office prior to submitting the request. Public comment was received from Life Resource, Beaumont; Tarrant County MHMR Services, Fort Worth; Abilene Regional MHMR Center, Abilene; Hospitality House, Mt. Pleasant; Tropical Texas Center for MHMR, Edinburg; Parent Association for the Retarded of Texas, Austin; Wood Care Centers, Wichita Falls; Pecan Valley MHMR Region, Stephenville; MHMR Authority of Brazos Valley, Bryan; MHMRA of Harris County, Houston; and a private citizen. Regarding the restriction from hiring persons on a temporary basis pending their criminal history clearances, four commenters expressed concern over their organizations' ability to operate under such restrictions. One commenter stated that it would be next to impossible to staff shifts adequately if the organization had to wait two or three months for the results of a criminal history request. Another commenter stated that unless her organization could receive criminal history information within 48 hours then the restriction was impractical. One commenter questioned why it was prohibited by rule when it is allowed by law. The department responds by replacing the restriction with specific guidelines when hiring persons on a temporary or interim basis pending a criminal history clearance. Another commenter objected to including robbery and aggravated robbery in the list of crimes for which conviction would bar employment. The commenter stated that if persons convicted of such crimes complete their obligation to society for the crimes, then if would be unfair to bar them from employment. The department responds that state statute mandates the bar to employment for persons convicted of robbery and aggravated robbery (Texas Health and Safety Code, sec.250.006). A commenter objected to the fiscal note indicating that there is no financial impact. The commenter stated that criminal history clearances cost money and the rule expands who must be cleared. The commenter also stated that the department has not set its fees to provide the clearances so the cost cannot be projected. The department responds that the fiscal note in the proposal stated there was no significant cost. The fee for criminal history clearances is $1 for clearances through the Texas Department of Public Safety and $24 for FBI clearances. The same commenter requested that the term "any length of time" in sec.404.- 305(d) be defined. The department responds by modifying the phrase to state "at any time." Regarding sec.404.306(b)(3), the commenter questioned who would be responsible for the appeal: TDPS, the local authority, or the provider. The department responds by modifying the language to clarify that if the applicant believes he/she has been unjustly denied employment or volunteer status as a result of an inaccurate criminal history report then the employer must provide information on how the applicant should address inaccuracies of a report (i.e., the opportunity to be heard by Texas Department of Public Safety (TDPS), pursuant to Texas Health and Safety Code, sec.250.005(b)). Regarding sec.404.306(c), the commenter questioned how soon the applicant must be notified. The department responds the applicant should be notified as soon as practicable. Regarding sec.404.307(b), the same commenter expressed concern that there were no criteria for employers to follow when electing to conduct subsequent criminal history clearances. The department responds that language, consistent with state statute, has been added stating that subsequent criminal history clearances may be conducted when deemed appropriate by the employer. Regarding sec.404.307(c)(1), the commenter questioned if deferred adjudication should be included. The department responds that deferred adjudication should not be included. Regarding sec.404.307(c)(2)(B), the same commenter requested a definition of "mitigating circumstances" and asked what action is allowable. The department responds that the concept behind mitigating circumstances is to allow maximum flexibility for the employer to consider all evidence when determining if a conviction is a contraindication to employment or volunteer status. Defining the term would only restrict the employer's flexibility. Regarding what action is allowable, the department responds that the employer may take whatever action is deemed appropriate and for which the employer is willing to be held accountable. One commenter stated that the reference to the Texas Health and Safety Code, sec.533.007(b) in sec.404.307(c)(1) was erroneous because it was repealed effective September 1, 1993, by Acts 1993, 73rd Legislature, Chapter 790, sec.46(26). The department responds that sec.533.007(b) was repealed as stated by the commenter, but the language contained in (b) was contemporaneously adopted as sec.533.007(i). The citation has been corrected. Another commenter stated that the subchapter appeared to allow the department to consider criminal offenses other than the ones listed in sec.404.304. The commenter suggested the department consider aggravated sexual assault, rape, sexual harassment, embezzlement, drug possession or distribution, as well as documented Class I client abuse. The department responds that sec.404.304(c) directs each employer to determine for itself other criminal offenses not listed in the rule for which a conviction may be considered a contraindication to employment or volunteer status with that employer. One commenter expressed concern that, as a private provider of residential services for persons with mental illness, the proposed new rules would require his organization to get two criminal history clearances for each prospective employee: one to satisfy its licensing requirement for the Department of Human Services, and another to comply with this subchapter as a contract provider. The department responds that language has been added stating the subchapter does not apply to entities that must otherwise conduct criminal history clearances as required by the Texas Health and Safety Code, Chapter 250. Language was also added requiring such entities to provide evidence of compliance with the statute to the facility or community center with which it contracts. Another commenter recommended adding the requirement for the employer to err on the side of protection of consumers when considering other criminal offenses for which a conviction would be a contraindication to employment or volunteer status. The department responds that language in state statute and this subchapter was written to allow the maximum amount of flexibility for an employer to err on the side of caution. The commenter expressed disbelief that a conviction of rape, sexual assault, other types of assaultive offenses, public lewdness, or indecent exposure was not included in the list of offenses which would bar employment. The commenter stated that wanted persons' notice, arrest warrants, temporary or permanent protective orders, and deferred adjudications, in addition to convictions should be an absolute bar to employment or volunteer status. The commenter also stated that the department should add these items to its 1997 legislative list. The department responds that the types of criminal offenses for which a conviction would bar employment is contained in state statute. State statute also allows employers to consider other offenses, such as rape, sexual assault, etc., to be a contraindication to employment. Regarding the addition of wanted persons' notice, arrest warrants, etc., the department declines to include the additional items suggested by the commenter because to do so would go beyond statutory authorization. Regarding sec.404.307(c)(2), the same commenter suggested removing the employee or volunteer from contact with consumers while he/she is rectifying the accuracy of the criminal history information. The department responds that language has been added addressing the commenter's concern. Regarding sec.404.307(c)(2), the commenter stated that there should be no consideration of mitigating circumstances. The department responds that it is implicit within the flexibility allowed by law that consideration should be given to mitigating circumstances. Another commenter asked if the rules applied to board volunteers, advisory council members, public responsibility committee members, etc. The department responds that the rules do not apply to the groups listed by the commenter. One commenter recommended that the rules apply to all contract providers that deliver direct care services. The department responds that it has only the statutory authority to require criminal history clearances of providers of residential services. Regarding sec.404.306(a), the commenter requested a timeframe that was more specific than "immediately." The department responds that it believes the timeframe is specific; immediately means that same day. 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.404.302. Application. (a) The provisions of this subchapter apply to: (1) department facilities, including Central Office in Austin; (2) community centers; and (3) providers which contract with facilities or community centers to deliver residential services to individuals with a mental illness or mental retardation. (b) For residences certified by the intermediate care facilities for the mentally retarded or persons with a related condition (ICF/MR or ICF/MR/RC) program which are owned and operated by a community center, applications for criminal history clearances are submitted to the department through the community center. (c) For residences certified as ICF/MR or ICF/MR/RC which are owned by a community center but operated under contract by a private provider, the private provider is responsible for conducting criminal history clearances as provided by rules of the Texas Department of Human Services (TDHS) in 40 TAC sec.sec.76.101-76.108. (d) The provisions of this subchapter do not apply to ICF/MR or ICF/MR/RC residences which are privately owned and operated. Criminal history clearances of persons applying for employment with those entities should be conducted as provided in TDHS rules. (e) The provisions of this subchapter do not apply to entities and providers that must otherwise conduct criminal history clearances as required by the Texas Health and Safety Code, Chapter 250. sec.404.303. Definitions. The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise. Applicant - At the employer's discretion, a person: (A) who has applied for a position as an employee or volunteer; (B) who is one of a select number of final candidates for a position as an employee or volunteer; or (C) to whom the employer intends to offer a position as an employee or volunteer. Board -The Texas Board Mental Health and Mental Retardation. Community center - A community mental health and mental retardation center established under the Texas Health and Safety Code, Title 7, Chapter 534. Conviction -The adjudication of guilt, plea of guilty or nolo contendere, or the assessment of probation or community supervision for a violation of the Penal Code. Department - The Texas Department of Mental Health and Mental Retardation (TDMHMR). Facility - Any state hospital, state school, state-operated community services, or state center operated by the department, including the department's Central Office in Austin. IS Coordinator, Criminal History Record Information (CHRI) - The person responsible for receiving criminal history requests and FBI cards, processing them through the appropriate agencies, and forwarding the reports to the requestor. Provider - Any entity or person which contracts with a facility or community center to deliver residential services to individuals with a mental illness or mental retardation who have been furloughed or discharged from a department facility or community center as described in the Texas Government Code, sec.411.115(b). This does not include private ICF/MR or ICF/MR/RC providers; TDHS is responsible for conducting criminal history clearances for those entities. Professional clinical intern - A person who is enrolled in a formal clinical rotation at a university/college in a professional training program accredited by the appropriate licensing authority or board of examiners, or is engaged in a recognized graduate level, clinical professional degree program. Professional degree programs include, but are not limited to nursing, pharmacy, physical therapy, occupational therapy, medicine, clinical psychology, social work, and dentistry. sec.404.304. Pre-employment Criminal History Clearance. (a) A facility, community center, or provider must conduct a pre-employment criminal history clearance of all applicants for employment or volunteer status. (b) Providers that request criminal history record information through a private agency and providers that must otherwise conduct criminal history clearances as required by the Texas Health and Safety Code, Chapter 250, must provide evidence of compliance with the Texas Health and Safety Code, Chapter 250, to the facility or community center with which it contracts. (c) For professional clinical interns, a memorandum of understanding or affiliation agreement (MOA) must exist between the facility or community center and the university/college that specifically states that: (1) responsibility for the care of individuals receiving services is retained by the facility or community center; and (2) the university/college is responsible for conducting a reasonable background check of the person. To facilitate this check, the university/college may elect to include a provision in the MOA which requires the department to conduct a criminal history clearance. (d) An applicant who has been convicted of any of the criminal offenses listed in subsection (g) of this section may not be employed or assigned volunteer status by the facility, community center, or provider. Each facility, community center, or provider may determine other criminal offenses not listed in subsection (g) of this section for which a conviction may be considered a contraindication to employment or volunteer status at that entity. (e) The facility, community center, or provider must inform applicants in writing at the time that application is made: (1) that a pre-employment/volunteer criminal history clearance will be conducted; (2) of the types of criminal offenses for which a conviction would bar employment or volunteer status; and (3) that conviction of other types of criminal offenses may be considered a contraindication to employment or volunteer status at that entity. (f) An applicant may be employed on a temporary or interim basis without a criminal history clearance if an emergency exists in which there is a risk to the health and safety of individuals receiving services as a result of unfilled positions or in which the operations of the organization are severely impaired as determined by the chief executive officer of the facility, community center, or provider. (1) The applicant shall furnish the employer with an affidavit stating that the applicant has not been convicted of any of the criminal offenses listed in subsection (g) of this section or any criminal offense which that employer has determined is a contraindication to employment. The affidavit shall be kept in the applicant's file. A sample affidavit may be obtained by contacting Human Resource Services, TDMHMR, P.O. Box 12668, Austin, Texas 78711-2668. (2) Within 72 hours of the time the applicant is employed on a temporary or interim basis, the facility, community center, or provider shall request a criminal history clearance of that applicant as described in sec.404.305 of this title (relating to Requesting a Criminal History Clearance). (3) If the results of the criminal history clearance reveal a conviction for any of the criminal offenses listed in subsection (g) of this section or for any criminal offense which the employer has determined is a contraindication to employment, the facility, community center, or provider shall dismiss the person as unemployable immediately upon receipt of the criminal history report. (4) An applicant may not receive volunteer placement on a temporary or interim basis pending a criminal history clearance. (g) Convictions of criminal offenses which constitute an absolute bar to employment include: (1) criminal homicide (Penal Code, Chapter 19); (2) kidnaping and false imprisonment (Penal Code, Chapter 20); (3) indecency with a child (Penal Code, sec.21.11); (4) agreement to abduct from custody (Penal Code, sec.25.031); (5) sale or purchase of a child (Penal Code, sec.25.08); (6) arson (Penal Code, sec.28.02); (7) robbery (Penal Code, sec.29.02); and (8) aggravated robbery (Penal Code, sec.29.03). (h) Consistent with the Texas Government Code, sec.411.115(e), the facility, community center, or provider shall destroy conviction information from the Texas Department of Public Safety ( TDPS) or the Federal Bureau of Investigation (FBI), whether obtained through the department or a private agency, after an employment/volunteer decision has been made or personal action has been taken. sec.404.305. Requesting a Criminal History Clearance. (a) Facilities must submit criminal history clearance requests to the IS Coordinator, Criminal History Records Information (CHRI) in the department's Central Office in Austin. Community centers and providers (through the community center with which it contracts) may submit requests to the IS Coordinator, Criminal History Records Information (CHRI) or may choose to contract with a private agency, as permitted by the Texas Health and Safety Code, sec.250.002(b), to conduct criminal history checks. (b) The department may charge a fee to community centers and providers (through the community center with which it contracts) which equals the fee that TDPS or the FBI charges the department to conduct a criminal history clearance. (c) The Criminal History Record Information Request Form HR-44 is used to submit requests to the IS Coordinator, CHRI, for criminal history clearances. The request is submitted via confidential electronic mail, confidential fax, or mail. Copies of the HR-44 form may be obtained by contacting the Texas Department of Mental Health and Mental Retardation, IS Coordinator, Criminal History Records Information, P.O. Box 12668, Austin, Texas 78711-2668. The form may be duplicated. (d) Applicants who have lived outside the State of Texas at any time during the two years preceding the application for employment/volunteer status are cleared through the FBI using a complete set of fingerprints on the official FBI card which may be obtained from Human Resource Services, TDMHMR, P.O. Box 12668, Austin, Texas 78711-2668. There is a charge for obtaining this information. sec.404.306. Criminal History Report. (a) The IS Coordinator, Criminal History Records Information (CHRI) will forward criminal history reports immediately to the requesting facility or community center. (b) Facilities and community centers will have written policies and procedures consistent with this subchapter that describe how information obtained through a criminal history clearance will be processed and later destroyed. The policies and procedures must include: (1) processes that protect the confidentiality of criminal history reports pursuant to the Texas Health and Safety Code, sec.250.007; (2) the notification of an applicant if a conviction is revealed; and (3) information on how an applicant can address inaccuracies of a report (i.e., the opportunity to be heard by Texas Department of Public Safety (TDPS), pursuant to Texas Health and Safety Code, sec.250.005(b)) if the applicant believes he/she has been unjustly denied employment or volunteer status as a result of an inaccurate criminal history report. (c) An applicant whose report identifies a conviction of any of the criminal offenses listed in sec.404.304(g) of this title (relating to Pre-employment Criminal History Clearance) or a conviction of any criminal offense which the employer considers to be a contraindication to employment or volunteer status must be notified in writing: (1) of the TDPS or FBI report of the conviction; (2) of the applicant's ineligibility for employment or volunteer status because of the conviction; and (3) how to address inaccuracies of a report (i.e., the opportunity to be heard by Texas Department of Public Safety (TDPS), pursuant to Texas Health and Safety Code, sec.250.005(b)) if the applicant believes he/she has been unjustly denied employment or volunteer status as a result of an inaccurate criminal history report. sec.404.307. Self-Reporting and Subsequent Criminal History Checks. (a) After an applicant is employed by or assigned volunteer status at a facility, community center, or provider following the pre-employment/volunteer clearance mandated by this subchapter, employees and volunteers shall report to a person designated by that facility, community center, or provider any subsequent convictions or offenses for which they are charged. (b) A facility, community center, or provider may conduct criminal history checks on any employee or volunteer at any time it deems appropriate. Requests by a facility for subsequent criminal history checks must be coordinated with the director of human resource services at the department's Central Office prior to submission. (c) Each facility, community center, and provider shall develop written policies and procedures consistent with this subchapter describing how it will respond to information obtained through self-reporting and subsequent criminal history checks. (1) Pursuant to the Texas Health and Safety Code, sec.533.007(i), adverse personnel action may not be taken if the information received pertains to arrest warrants or wanted persons notices. (2) If the information reflects a conviction for an offense: (A) listed in sec.404.304(g) of this title (relating to Pre-employment Criminal History Clearance), then consideration may be given to any contention by the employee/volunteer concerning errors of fact or identity in the report. While the employee/volunteer is attempting to rectify the accuracy of the information, the employee/volunteer shall be removed from direct contact with individuals receiving services. If the employee or volunteer fails to rectify the accuracy of the information, as provided by Texas Health and Safety Code, sec.250.005(b), then the employer must terminate the employee or volunteer. (B) considered to be a contraindication to employment or volunteer status, then consideration may be given to mitigating circumstances. 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 October 15, 1996. TRD-9615361 Ann Utley Chairman, Texas MHMR Board Texas Department of Mental Health and Mental Retardation Effective date: November 11, 1996 Proposal publication date: August 13, 1996 For further information, please call: (512) 206-4516 CHAPTER 406.ICF/MR Programs SUBCHAPTER E.Eligibility and Review 25 TAC sec.406.211 The Texas Department of Mental Health and Mental Retardation (TDMHMR) adopts the repeal of sec.406.211, governing eligibility and review. A new section would replace existing sec.406.211 of Chapter 406, Subchapter E, governing eligibility and review, which is adopted contemporaneously in this issue of the Texas Register. The adoption of the repeal would allow for the adoption of a new section governing eligibility and review. A public hearing was held on July 30, 1996. There was no written or verbal comment received regarding the repeal. The repeal is adopted under the Health and Safety Code, sec.532.015(a), which provides the Texas Department Mental Health and Mental Retardation Board with broad rulemaking authority; and under the provisions of Texas Government Code, Chapter 531, sec.531.021, which provides the Texas Health and Human Services Commission with the authority to administer federal medical assistance funds. 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 October 21, 1996. TRD-9615359 Ann Utley Chairman, Texas MHMR Board Texas Department of Mental Health and Mental Retardation Effective date: November 11, 1996 Proposal publication date: July 5, 1996 For further information, please call: (512) 206-4516 The Texas Department of Mental Health and Mental Retardation (TDMHMR) adopts new sec.406.211 of Chapter 406, Subchapter E, governing eligibility and review. The new section replaces existing sec.406.211 of Chapter 406, Subchapter E, governing eligibility and review, the repeal of which is adopted contemporaneously in this issue of the Texas Register. Section 406.211 is adopted with changes to the proposed text as published in the July 5, 1996, edition of the Texas Register (21 TexReg 6199-6201). The new section modifies the definition for therapeutic leave and extended therapeutic leave, adds several new definitions, and improves the organization and readability of the section. Changes to the language of sec.406.211 include modification to the documentation requirements for multiple and frequently occurring activities; clarification regarding which persons must accompany individuals participating in special activities; modification to the definition for extended therapeutic leave allowing the concurrent use of one extended therapeutic leave and one therapeutic leave per calendar year, and the addition of two new definitions. A public hearing was held on July 30, 1996. Written comments were received from 47 respondents in support of adoption of the rule; several commenters also made recommendations for improvement. Those respondents offering support for the adoption of the rule include: 13 individuals, Community Living Concepts, Cleburne, Texas 2 parents, Community Living Concepts (No address given) 24 individuals, Community Living Concepts, Keene, Texas 1 parent, Lubbock State School, Arlington, Texas 1 parent, Richardson, Texas Brenham State School, Brenham, Texas Arc of Texas, Austin, Texas Devcon Living Center, Seguin, Texas, Texas Advocates, Austin, Texas Community Living Support Group, (No address given) Community Living Support Group, Johnson County, Texas Community Living Concepts, Keene, Texas Written comment was received which suggested that using strict language in the rule may lead an overzealous auditor to deny the facility payment for a special activities leave when meal costs were donated by an outside entity such as a camp. The department responds that audit and management staff are well trained and regularly monitor audit processes regarding the application of rule language. Another commenter did not agree that a facility should be denied payment when a resident departs unauthorized from the facility. The department responds that federal regulations require all leaves to be authorized by a physician and qualified mental retardation professional. Since an unauthorized departure cannot be authorized, Medicaid payment cannot be made. One commenter asked that the required documentation regarding the need to attend multiple and frequently occurring special activities be modified to allow documentation for multiple activities to be consolidated into one general statement rather than for each specific special activity. The department agrees that the rule language should be flexible enough to allow wording which combines multiple and frequently occurring activities into one general statement. The language of the proposal has been modified to allow such combined documentation. Comment was received stating that the proposal did not allow individuals without a guardian to benefit due to language pertaining to the necessity for obtain legally authorized signatures. The department responds that, in addition to the individual, legally authorized representatives include the parents of minors, guardians, and managing conservators. A definition for legally authorized representative has been added to the rule. One commenter request a definition be added to the rule to clarify how long an individual had to stay in the facility before leaving on another therapeutic or extended therapeutic leave. The department has added a definition for the term Facility stay. Another commenter requested that the proposal be modified to allow qualified persons other than staff from individual's facility to accompany the individual on special activities. The department has modified the rule language to allow qualified persons other than staff from individual's facility to accompany the individual on special activities . One commenter requested that a definition for the term legally authorized representative be added to the rule. The department has added a definition for the term legally authorized representative to the rule. Another commenter expressed concern regarding whether an individual can depart the facility on leave after normal office hours when the persons who authorize leave are not available. The department responds that the required authorization by the physician is obtained annually, or more if needed, at the individual's interdisciplinary meetings. Authorization by a qualified mental retardation professional (on the 3659 form) is intended only to document the facility's acknowledgment of the individual's actual departure. The department does not believe that the language as proposed places a significant impediment to after-hours departures. One commenter asked whether all active treatment in the individual's IPP must be done when the individual is on special leave. The department responds that although there is a requirement that active treatment be conducted on special leave, such treatment is contingent upon the reasonable limits and practicalities of the actual leave environment. Another commenter requested that inpatient hospitalization not be classified as an unauthorized leave. The department responds that hospitalization is considered unauthorized leave under federal law because the hospital is receiving Medicaid funds and two entities cannot receive Medicaid funds at the same time for the same resident. Therefore, the individual must be discharged from the ICF/MR facility. Another commenter suggested that rule language which states that a facility can offer a bed hold charge during an unauthorized absence by the individual be modified to indicate that the facility must offer a bed hold charge. The department responds that the facility is not required to hold a bed for the individual when the individual is absent from a facility for purposes other than therapeutic leave visits or special activity. The department considers the facility option to enter into or to deny such an agreement to be within the bounds of acceptable business practice for the industry. One commenter asked if the bed hold charge criteria is applied and required for each therapeutic leave. The department responds that the criteria for a bed hold charge is applied only when an individual is absent from a facility for purposes other than therapeutic leave visits or special activity leave. One commenter requested clarification regarding who can sign the bed hold charge agreement for the facility. The department responds that the proposal language specifies that for each absence the agreement be signed and dated by the facility's administrator, qualified mental retardation professional, or designee and the individual or the individual's legal representative. The new section is adopted under the Texas Health and Safety Code, sec.532.015, which provides the Texas Mental Health and Mental Retardation Board with broad rulemaking authority, and under the provisions of Texas Government Code, Chapter 531, sec.531.021, which provides the Texas Health and Human Services Commission with the authority to administer federal medical assistance funds. The section affects Texas Human Resources Code, sec.sec.32.001-322.040, and Texas Government Code, Chapter 531, sec.531.021. sec.406.211.Payment for Absences from the Facility. (a) Definitions. The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise. (1) Day - A 24-hour period extending from midnight to midnight. For counting days of absence from a facility, the first day is the first 24-hour period beginning at midnight after the individual's departure. (2) Extended therapeutic leave - An individual's absence from a facility for therapeutic purposes for a period of time greater than three days in duration. Leave(s) must not exceed ten cumulative days annually. Combinations of leave duration are allowable (e.g., leave combinations of 5 days and 5 days; 6 days and 4 days; or 10 consecutive days). One extended therapeutic leave may be combined with one therapeutic leave per calendar year. (3) Facility stay - An individual must stay in the facility overnight before being eligible to take another therapeutic or extended therapeutic leave. (4) Legally authorized representative - A legally authorized representative means: (A) a parent or legal guardian if the client is a minor, or a legal guardian if the client has been adjudicated incompetent to manage the client's personal affairs; (B) an agent of the patient authorized under a durable power of attorney for health care; (C) an attorney ad litem appointed for the client; or (D) a parent, spouse, adult child, or personal representative if the client is deceased. (5) Therapeutic leave - An individual's absence from a facility for therapeutic purposes for not more than three consecutive days. The number of therapeutic leaves an individual may utilize is unlimited. (6) Special Leave - An individual's absence from a facility for a special activity (e.g., Special Olympics, camping). (7) Facility - An intermediate care facility for persons with mental retardation (ICF/MR). (8) Individual - A Medicaid recipient enrolled in the ICF/MR program and residing in a facility. (9) Absence - A period of time which an individual is not present in the residing facility. (10) TDHS - Texas Department of Human Services. (b) For all types of leave, the following must be met. (1) Facility staff must be available, by telephone or at the facility, to individuals during their absence, even if all residents of the facility are absent from the facility; and (2) Records must be available when the Texas Department of Mental Health and Mental Retardation (TDMHMR) or its authorized agent audits the facility to ensure the facility's documentation of all types of leave and verifies the facility's compliance with the provisions of the following subsections. (c) Payment criteria for the types of leave. (1) Therapeutic and Extended Therapeutic Leave. A facility may receive payment from TDMHMR or its authorized agent for days during which an individual is on therapeutic or extended therapeutic leave if the following criteria are met: (A) the individual's individual program plan (IPP) provides for therapeutic and/or extended therapeutic leave. (B) the following information is documented on a Texas Department of Human Services (TDHS) Form 3659, "Record of Therapeutic Leaves": (i) the name of the individual taking the leave; (ii) authorization for the leave by the individual's qualified mental retardation professional (QMRP), subject to approval by the physician; (iii) the date and time of the individual's departure from the facility; and (iv) the date and time of the individual's return to the facility. (2) Extended Therapeutic Leave. For extended therapeutic leave, the individual, or a member of the individual's family or legally authorized representative, must set forth in writing specific dates for the individual's extended therapeutic leave. (A) When an extended therapeutic leave begins in one calendar year and extends into the next, it constitutes an extended therapeutic leave for the calendar year in which it began. (B) If an individual transfers into another facility within the same year he/she has taken all ten days of his/her extended leave, then the individual is not eligible for another extended therapeutic leave until the following year. (3) Special Leave. A facility receives payment from TDMHMR or its authorized agent for days during which an individual is on special leave if the following criteria are met: (A) the need to attend the special activities is documented in the individual's IPP; (B) sufficient staff are present at the special activity to meet the requirements for direct care staff set forth in 42 Code of Federal Regulations sec.483.430(d)(2); (C) the facility continues to incur the usual costs for caring for the individual including, but not limited to, the cost of meals, lodging, and staff; and (D) the facility continues to provide the individual the active treatment program specified in the individual's IPP. (4) Unauthorized Leave. A facility may not receive payment from TDMHMR or its authorized agent for days an individual is absent from the facility and: (A) the individual is receiving inpatient hospitalization; (B) the individual has made an unauthorized departure from the facility; or (C) payment during the individual's absence is not authorized as a therapeutic, extended therapeutic, or special leave. (d) Bed Hold Charge Procedures. If an individual is absent from a facility for purposes other than therapeutic leave visits or special activity leave (as specified in (a)(2)-(4) of this section), the facility must discharge the individual by submitting a TDHS Form 3618 "Resident Transaction Notice." Additionally, the facility may choose to offer the individual a bed hold charge option. A facility may charge an individual or an individual's legal representative a bed hold charge during an individual's absence, if the following criteria are met: (1) the facility does not receive payment from TDMHMR or its authorized agent for days the facility charges to hold a bed for a resident; (2) a written agreement, signed and dated by the facility's administrator, QMRP, or designee and the individual or the individual's legal representative, is executed for each absence; (3) the facility does not charge an amount which exceeds TDMHMR's rate of reimbursement for the individual's level-of-care at the time of the individual's departure from the facility; (4) the facility documents amounts charged to hold a bed in an individual's financial record at the time the bed is held; and (5) the facility complies with sec.406.253 of this title (relating to Protection of Funds) when it collects a bed hold charge from an individual's trust fund account. 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 October 21, 1996. TRD-9615360 Ann Utley Chairman, Texas MHMR Board Texas Department of Mental Health and Mental Retardation Effective date: November 11, 1996 Proposal publication date: July 5, 1996 For further information, please call: (512) 206-4516 TITLE 28. INSURANCE PART I. Texas Department of Insurance CHAPTER 3.Life, Accident, and Health Insurance and Annuities SUBCHAPTER T.Minimum Standards for Medicare Supplement Policies 28 TAC sec.sec.3.3303, 3.3304, 3.3307, 3.3308, 3.3309, 3.3316, 3.3317, 3.3319, 3.3321-3.3325 The Commissioner of Insurance adopts amendments to sec.sec.3.3303-3.3309, 3.3316, 3.3317, 3.3319, and 3.3321-3.3325, concerning minimum standards for Medicare supplement policies. Amendments to sec.sec.3.3307, 3.3309, 3.3324 and 3.3325 are adopted with changes to the proposed text as published in the May 21, 1996, issue of the Texas Register (21 TexReg 4386). Amendments to sec.sec.3.3303-3.3305, 3.3308, 3.3316, 3.3317, 3.3319, and 3.3321 through 3.3323 are adopted without changes and will not be republished. Amendment to sec.3.3306 is adopted with changes to the proposed text as published in the May 24, 1996, issue of the Texas Register (21 TexReg 4515). A public hearing was requested on the amendments as proposed and held August 21, 1996 to receive comments from interested persons. The effective date of the amendments to the sections as adopted is January 1, 1997. The amendments are necessary to provide uniformity and compliance with the federal regulations in the Medicare program, and to provide for issuance of Medicare supplement coverage to Medicare eligible persons under the age of 65. The adoption includes a change to sec.3.3306(1)(A) to correct an inadvertent grammatical error. The adoption includes a number of clarifying changes to sec.3.3307. Section 3.3307(c) is changed to provide for a definition of "in force" policies and to make it clear that once an issuer makes a decision about which definition to apply to a policy form, the decision is irrevocable. Section 3.3307(d) is changed to provide that certain information required to be filed annually is to be broken down by calendar year of issue or by policy duration, rather than and by policy duration. Adopted amendments to sec.3.3309(a)(1)(B) include a change replacing the words "multiple coverages" with "more than one type of coverage in addition to your Medicare benefits" in a disclosure to prospective Medicare supplement insureds. The adoption includes a number of clarifying changes to sec.3.3324. The amendment to sec.3.3324(b)(1)(A) includes a change reflecting a trigger date of January 1, 1997 instead of September 1, 1996, because of the change to the effective date of the amendments to the sections. The amendment to sec.3.3324(b)(2) includes a change removing the requirement for issuers to offer Plan B to individuals who qualify under subsection (b). The amendment to sec.3.3324(b)(3) includes a change to the eligibility time frame from beginning September 1, 1996 to beginning January 1, 1997, and from ending March 1, 1997 to ending July 1, 1997. The change to paragraph (3) also clarifies the open enrollment provisions and limitations by adding subparagraphs (A), (B), and (C). Section 3.3325 contains two changes. Amendments to sec.3.3325(m) include a change to clarify that if a binding arbitration procedure is included, the insured must have made an informed choice to accept binding arbitration after having been advised of the right to reject this method of dispute or claim resolution. Section 3.3325(m)(1) is changed to make it clear that in-hospital grievances should be handled in the most expeditious manner possible, and that the grievances should be addressed as quickly as possible and resolved as quickly as possible in a way that does not interrupt or otherwise interfere with the continued proper medical treatment of the patient. The amendments to sec.sec.3.3303-3.3309, 3.3316, 3.3317, 3.3319, and 3.3321- 3.3325 generally provide for uniformity and compliance with the federal regulations in the Medicare program. In sec.3.3303, the definition of "Medicare" is changed to refer more generally to the Social Security Act. In sec.3.3304(3), definitions for "Convalescent Nursing Home," "Extended Care Facility," or "Skilled Nursing Facility" are streamlined to provide only that such terms may not be more restrictively defined in the policy than they are in the Medicare program. New sec.3.3304(4) defines "Health Care Expenses". Remaining definitions are renumbered. The definition of "Hospital" is amended to provide only that it may not be more restrictively defined than in the Medicare program. The definition of "Physician" is streamlined by deleting certain references. In sec.3.3305, the word "prohibited" is removed from the caption. The amendments to sec.3.3306(1)(A) and (E) make changes to general standards resulting from passage of HR 5252. Section 3.3306(1)(A)(ii) has been added to provide that if a Medicare supplement policy or certificate replaces another policy or certificate that has been in effect for at least six months, the replacing policy shall not provide any time period applicable to preexisting conditions, waiting periods, elimination periods and probationary periods for benefits. Section 3.3306(1)(E)(ii) is amended to provide for continuation of benefits under the group plan until there are no longer any certificate holders of the group policy terminated by the group policyholder remaining who have opted for continuation of benefits under the group plan. The amendment to sec.3.3306(1)(G) deletes language dealing with the refund of premiums for retroactively determined periods of Medicaid eligibility. Amended sec.3.3306(2) and (3) make miscellaneous and conforming changes in accordance with Health Care Financing Administration recommendations for the Texas Medicare supplement certification program. Amendments to sec.3.3306(4) make miscellaneous and conforming changes to correctly identify the section of this subchapter which relates to Medicare Select Policies and Certificates, and make miscellaneous and conforming changes more clearly identifying available benefit plans. The amendment to sec.3.3306(5) more clearly states the requirements for composition of benefit plans. In sec.3.3307, the title is changed to reflect that the section also addresses refund and credit of premiums. The amendment to sec.3.3307(c) makes reference to new paragraph (4) of that subsection, which contains compliance standards for loss ratios for individual or group policies issued prior to March 1, 1992. The amendment to sec.3.3307(c) also sets out some criteria for rate revision submissions. The amendments to paragraph (2) as well as new paragraph (3) of subsection (c) set out standards and factors of credibility for purposes of rate revision filings and provide necessary definitions. The word "certificates" is added to subsection (d) and a reference to benefits is deleted. The amendment to sec.3.3307(d) also specifies the date after which policies were subject to subsection (d); indicates that the department must approve the filings; and provides that filings should be broken down by calendar year or policy duration with respect to loss ratio standards. This subsection also is amended to indicate that filing requirements relating to premium rate increases in sec.3.3323 must also be met. The amendment to sec.3.3307(e) contains an updated department address for obtaining the Medicare Supplement Refund Calculation Form, which is published as Figure 1 to the sections. The amendment to subsection (e) also adds a new paragraph (3), relating to reporting requirements and refund or credit calculations for policies or certificates issued prior to March 1, 1992. The amendment to sec.3.3308 includes a change to the reference in subsection (a)(6) from the Medicare supplement "buyer's guide", to the "Guide to Health Insurance for People with Medicare," and makes necessary miscellaneous and conforming changes to subsequent references to the "buyer's guide." A new subparagraph (A) is added to subsection (a)(6) which defines "form" for purposes of the "Guide to Health Insurance for People with Medicare." In subsection (a)(7), the phrase "Medicare Wrap-Around" is added. Subsection (c)(2) is changed to specify items which must be included in the outline of coverage in addition to items specified in the plan-specific outline-of-coverage forms. New subparagraphs (B), (C) and (D) provide that the outline of coverage must include an explanation of any limitations and exclusions, must also include a statement that the policy either does or does not contain provisions for a refund or partial refund of premium on death of an insured or surrender of the policy, and must-if a Medicare Select policy-include grievance procedure information which complies with sec.3.3325(m). Subsection (d) is deleted, and its provisions are transferred to new sec.3.3614 of this title (relating to Notice Regarding Policies or Certificates Which are not Medicare Supplement Policies). Simultaneously, subsection (e) is resequenced as subsection (d). The amendment to resequenced sec.3.3308(d)(1) deletes the requirement that the notice of modification to Medicare supplement coverage be department-promulgated. Tables outlining the plans are amended to include the word "generally" with respect to the 80% which Medicare pays for the "Remainder of "Medicare Approved Amounts" where such phrase occurs in the plans. Amended sec.3.3309(a)(1) provides for items of information to be given to prospective covered persons at the time applications for Medicare supplement coverages are taken. Amended sec.3.3309(a)(2) provides for additional information to be elicited from prospective covered persons. Amended sec.3.3309(e) provides that the notice required in subsection (d) must be printed or typed in at least 12-point type, and the notice has been reprinted in full, with amendments. Amended sec.3.3316 includes miscellaneous and conforming amendments concerning references to the Department of Insurance, the Life/Health group and issuers of group Medicare supplement insurance benefits to residents of this state. Amended sec.3.3317(c) removes the trigger for paying first-year commissions based on benefits in a replacement policy that are clearly and substantially greater than in the replaced policy. The new requirement is that all replacement policies, even with benefits that are upgraded, will earn the agent no more than the second-year commission rate. Amended sec.3.3319(c) contains instructions for the use of additional benefit designations in new paragraph (4). Amended sec.3.3321(b) provides that reports of multiple Medicare supplement policies should be made to the Consumer Protection Division of the Texas Department of Insurance. Amended sec.3.3322 adds the phrase "premium rates" to the title, provides for approval of changes to premium rates in subsection (b), and substitutes "existing" for "resultant" in subsection (g)(1). Section 3.3323 makes a miscellaneous and conforming change, replacing "board" with "commissioner," as well as providing for applicability of the section to policies and certificates issued prior to March 1, 1992. Amended sec.3.3324 provides for a six-month open enrollment period at age 65 to all individuals who are both 65 and enrolled in Medicare Part B, regardless of previous enrollment. The amendment to sec.3.3324 includes a new subsection (b), relating Medicare supplement availability to persons who qualify for Medicare before age 65. Subsection (b) contains provisions outlining the circumstances under which a person qualifies for open enrollment under its provisions and sets out that Plan A, at a minimum must be offered to qualifying individuals. The amendment to sec.3.3324 also includes a new subsection (d), requiring invitations to contract to include a statement that benefits and premiums under the Medicare supplement policy may be suspended for up to 24 months if the policyholder becomes entitled to benefits under Medicaid. The caption in sec.3.3325 is changed to include reference to plans of operation. The amendment to sec.3.3325(c) provides definitions of "emergency care", "non-network provider" and amendments to "service area." Amended sec.3.3325(e) provides that a Medicare Select issuer may not file a Medicare Select policy under the Insurance Code, Article 3.42(c), until its plan of operation has been approved by the commissioner. Amended sec.3.3325(f)(1)(B) provides that the number network providers in the service area must be documented statistically as sufficient. Amended sec.3.3325(g) requires Medicare Select issuers to file proposed changes to plans of operations at least 60 days before implementing such changes. Amended sec.3.3325(h) alters required reporting procedures in instances where there is no change to the list of network providers from one reporting period to the next. Amended sec.3.3325(k) adds a paragraph (8) requiring disclosure of provider limitations in the case where hospital network providers are utilized. Amended sec.3.3325(m) provides that if a binding arbitration procedure is included, the insured must have made an informed choice to accept binding arbitration after having been advised of the right to reject this method of dispute or claim resolution. The amendment to sec.3.3325(m)(1) requires that the in-hospital grievance procedure as part of the grievance procedure described in the policy, certificate and outline of coverage be specifically detailed separately from other grievance procedures. It also provides that in-hospital grievances should be handled in the most expeditious manner possible, and that the grievances should be addressed as quickly as possible and resolved as quickly as possible in a way that does not interrupt or otherwise interfere with the continued proper medical treatment of the patient. Minor editorial changes in spelling and punctuation have been made throughout the sections and, where appropriate, the titles to sections have been amended. The department received written comments on the amendments as published from eight sources. Two commenters, though requesting a hearing on the amendments, did not submit specific written comments on the amendments as published. A summary of those comments, comments made at the hearing, and the department response follow: Section 3.3304-Policy Definitions Comment: Amend the definition of "hospital" in sec.3.3304 to include the accreditation program of the American Osteopathic Association, since the Health Care Financing Association has granted that organization "deemed status" to conduct accreditation surveys of acute care hospitals. Response: The department does not believe a change is necessary as a result of the comment and makes none. The Health Care Financing Administration has assured the department that the proposed definition includes any entity granted "deemed status" by HCFA, including the American Osteopathic Association. Section 3.3306(1)(A)-Minimum Benefit Standards Comment: Change the phrase "because it involved" in sec.3.3306(1)(A) to "because they involved." Response: The department agrees, and this change has been made to correct an inadvertent grammatical error. Section 3.3307(c) Filing of Rates and Schedules Comment: Regarding provisions in sec.3.3307(c) addressing rating for coverage beneficiaries under age 65, these individuals should not be segregated for rating purposes, because such a practice could lead to higher rates and lower protections for people with disabilities who purchased Medicare Supplement insurance prior to OBRA-90 reforms. Response: The department disagrees that issuers should be required to pool coverage beneficiaries under age 65 with those 65 years of age or older for rating purposes and the final adoption does not include such a requirement. Current federal standards do not require such an approach. The amendments as adopted permit, but do not require, pooling of policies with similar benefits for all Medicare eligible age groups. However, once a decision by an issuer to pool a particular policy form has been made, that election is irrevocable under the amendments as adopted. The department believes that for issuers which do not pool for rating purposes, the concern expressed in the comment will be materially mitigated by the regulatory framework in sec.3.3307, which has a built-in protection and self-correcting mechanism to address rates that are too high. That mechanism, which results in refunds/credits or rate revisions, or both, would apply after the effective date to forms to which the comment was directed. Comment: One of the circumstances supporting required pooling of policies for all age groups is that insurance companies may not have a credible pool of experience for policy forms issued to Medicare eligible individuals under age 65. Response: Although the comment might make a valid point about the policy forms of some issuers, the department does not believe it is necessary to make the recommended change. The adopted amendments require that a qualified actuary certify that any rate increase request is based on credible experience. In the event that the experience is not fully credible, the amendments address such situations to assure that any rate increases approved by the department have been appropriately derived and are not based on non credible experience. Comment: All pre-standardized Medicare Supplement policies, rather than only those policies with similar benefits, should be combined into one pool for rating purposes, as is done for refund credit calculations. Response: The department disagrees, because it believes it would be inappropriate to combine essentially different policies with distinctive and varying benefits, which is probable with pre-standardized policies. While combining all pre-standardized plans for refund calculation purposes satisfies the intent of the refund formula, which is determining retrospective refunds, such a combining is not satisfactory for prospective pricing purposes. Additionally, when an issuer does not have enough pre-standardized policies to make up a credible block, any request for rate increase will be evaluated by department staff in light of such circumstance. Comment: One comment raised three related questions: (1) If credibility is applied to the nationwide experience, what experience statistic or measure is to be used for the noncredible portion? (2) If credibility is applied to the Texas experience, what experience or statistic or measure is to be used for the noncredible portion? (3) Will the actuary performing the calculations determine the experience statistic to be applied to the noncredible percentage? Response: After a credibility factor is determined based on the provisions in sec.3.3307(c)(3), the issuer should determine a credibility weighted loss ratio. That ratio is the actual lifetime loss ratio that the company would experience if the proposed increase were not implemented, multiplied by the credibility factor, plus the product of the expected lifetime loss ratio that was originally anticipated multiplied by one minus the credibility factor. In mathematical notation: Ratio = ((actual lifetime loss ratio if proposed increase not implemented) * (credibility factor)) + ((expected lifetime ratio originally anticipated) * (1 - credibility factor)). If any block has 0% credibility, a rate increase request will be evaluated by the department in light of such circumstance. Comment: The term "in force" should be defined, either as "average in force for the experience period" or "in force as of the ending date of the experience period." Response: The department believes the intent of provisions relating to rate increases is supported by either definition. However the department also believes that whichever definition a company chooses to apply for rate revision purposes, such application should be consistent, and such decision should be irrevocable once made. For this reason, the final adoption includes a clarifying amendment to sec.3.3307(c)(3) to include that "in force" means either "average in force for the experience period used to support the need for a rate revision" or "in force as of the ending date of the experience period used to support the need for a rate revision." The amendment also makes it clear that once an issuer makes a decision as to which definition it will apply to a particular policy form, such decision is irrevocable. Comment: Regarding sec.3.3307(c)(4)(A) requirements for pre-standardized policy loss ratios, the question was posed whether allowances will be made on a case by case basis to ascertain whether the available experience and information are sufficient to meet the originally filed anticipated loss ratios for such policies, since some of the policies may have been in force for many years. Response: The department anticipates that in the instance of very old policies reviewing staff will have to evaluate compliance at times on a case by case basis. Comment: The phrase "June 1, 1996 to date" in sec.3.3307(c)(4)(B) is unclear. If the meaning is the actual experience from June 1, 1996 to the beginning of the future period in question is to be combined with experience for that future period, then the phrase "to date" should be deleted. Response: The department disagrees and for the following reasons the final adoption does not delete the words "to date." First, such expression is consistent with the drafting of the sentence in sec.3.3307(c) providing that "All filings or rates and rating schedules shall demonstrate that expected claims in relation to premiums comply with the requirements of this section when combined with actual experience to date," for which the words "to date" are essential. In addition, the department believes the presence of the two words is helpful to frame the time interval addressed in the subparagraph . Section 3.3307(d) Annual Filing of Premium Rates Comment: The language in sec.3.3307(d) relating to the annual filing of premium rates should read "broken down by calendar year of issue 'or' (not 'and') by policy duration." Response: The department agrees and the final adoption includes an editorial change to subsection (d) replacing "and" with "or." Section 3.3309 Requirements for Application Forms and Replacement Coverage Comment: In sec.3.3309(a)(1)(B), delete the words "multiple coverages," and replace them with the words "more than one insurance policy in addition to your Medicare benefits," so that the sentence reads: "If you purchase this policy, you may want to evaluate your existing health coverage and decide if you need more than one insurance policy in addition to your Medicare benefits." Response: The department agrees that the words "multiple coverages" should be deleted and replaced to improve the sentence and make it more clear. The final adoption therefore replaces the words "multiple coverages" with the words "more than one type of coverage in addition to your Medicare benefits" at the end of subparagraph (B). The HCFA has indicated agreement with this change in wording. Comment: Require inclusion in sec.3.3309 of the telephone number for the HICAP Counseling Program and TDI's toll free number. Response: The department disagrees that inclusion is necessary. While the department agrees that providing prospective insureds with the referenced phone numbers is useful and important, prospective insureds already are provided these numbers by requirements found elsewhere in this title. Specifically, the Guide to Health Insurance for People with Medicare, required by sec.3.3308(a)(6)(D) to be given to the applicant at time of application, already contains the HICAP number, along with the number for the Agencies for Aging. In addition, the complaint notice required by sec.1.601 also includes the TDI phone number. For all these reasons, the final adoption does not include any change as a result of this recommendation. Section 3.3317 Permitted Compensation Arrangements Comment: One comment urged reconsideration of permitting greater than renewal compensation on replacement if clearly and substantially greater benefits result from replacement. Response: The department has no discretion to permit such an arrangement. The federal requirement unequivocally requires that on replacement an agent commission be no greater than the renewal compensation paid by the replacing issuer on the replacement policy or certificate. Section 3.3322 Filing and Approval of Policies, Certificates and Premium Rates Comment: One comment asked if the department intends to require prior approval of Medigap rates before the initial issue of the policy, since Article 3.74, sec.4(f) appears to allow only approval or disapproval of rate increases. Response: The department disagrees with the interpretation of Article 3.74 indicated in the comment. The department is obligated to have approval mechanisms in place for both initial rates and requests for increases to Medicare supplement rates. Article 3.74, sec.4(f) provisions are mandatory by their clear language, not permissive, and the legislature enacted sec.4(f) with a provision to make certain that any rules adopted by the department under the subsection comply with provisions of 42 United States Code Section 1395ss, at a minimum. Even though Article 3.74, sec.4(f) neither expressly requires nor expressly prohibits an approval mechanism for initial rates, the legislature made an effort to assure a durable Medicare supplement statute, anticipating future changes at the federal level, by enacting Section 10. Article 3.74, sec.10 specifically provides that in addition to other rules required or authorized by the article, the department must adopt rules in accordance with federal law applicable to the regulation of Medicare supplement insurance coverage that are necessary for the state to obtain or retain certification as a state with an approved regulatory program under 42 United States Code 1395ss. Having a process in place to review and approve rates for Medicare supplement products is a current federal requirement derived pursuant to 42 United States Code 1395ss and necessary and essential to the state's continued certification as a federally approved regulatory program. Section 3.3323 Increases to Premium Rates Comment: Article 3.74 sec.4(f) makes reference at the very end to applying to policies on and after March 1, 1992, but the proposed change refers to policies before or after March 1, 1992. Response: The department notes that the current enactment of Article 3.74, sec.4(f) does not make reference to the date March 1, 1992. However, the reason future rate increases for policies issued before or after March 1, 1992 must be approved is that federal provisions require them to be, and the legislature, when it enacted Article 3.74, sec.10, evidenced a clear intention that the department continually meet all requirements necessary to retain certification as a federally approved Medicare regulatory program. Section 3.3324 Open Enrollment Comment: Several comments voiced strong support for the proposed guaranteed issuance of Medicare supplement insurance to Medicare eligible persons under the age of 65 during the first six months they are first enrolled for benefits under Medicare Part B. Response: The department believes the strong support for the proposed rule is well founded. Comment: Many comments focused on the provision to offer coverage to Medicare eligible individuals under age 65. One asked if the intent of the proposed amendments is to require companies that sell Medicare supplement coverage to persons age 65 or older to also offer Medicare supplement coverage to Medicare eligible persons under age 65. Some commenters recommended that only Plan A should be required as a minimum to persons under age 65, for a variety of reasons, including the federal requirement for minimum availability to persons 65 and over, which only requires that Plan A be offered. Another suggested that issuers be required to offer each plan offered to persons age 65 or over to Medicare eligible persons under age 65. Response: The adopted amendments provide that Medicare supplement issuers which offer coverage to persons age 65 and older must also offer, at a minimum, Plan A to persons under age 65 who are enrolled in Medicare Part B. Although the amendments as published also required issuers to offer Plan B, the department has removed the requirement to offer Plan B, based on comments received. The department believes Medicare supplement provides potentially important and vital coverage to all Medicare recipients, regardless of whether they are over or under the age of 65. While the department vigorously encourages all issuers to offer all plans to Medicare eligible persons under age 65 that are offered to persons 65 and over, the adopted amendments neither require nor prohibit such an offering. Comment: Requiring provision of a one-time six month open enrollment period to persons currently on Medicare disability is questionable in appropriateness since such a requirement goes beyond what is necessary to comply with federal requirements. If open enrollment provisions for persons under age 65 are adopted, sec.3.3324(b)(3) should be amended to clarify that the regulation is not providing a subsequent opportunity for open enrollment for certain persons who were enrolled in Medicare Part B under age 65, who have since turned 65 and therefore have been provided the opportunity for open enrollment under the federally-required open enrollment provisions found elsewhere in sec.3.3324. Response: The department realizes that the open enrollment provision for individuals under age 65 goes beyond the federal requirements. However, the department considers the provision to be an important step for providing essential coverage on a guaranteed issue basis to persons for whom such coverage is not otherwise available on that basis. Moreover, the department notes that while federal law does not require such a provision, it also does not restrict states from adopting rules that require more of Medicare supplement issuers than it does. With respect to sec.3.3324(b)(3), the department agrees that although the provisions of subsection (b)(3) are not intended to diminish the provisions of the federally-required open enrollment provisions for persons 65 and over, they likewise are not intended to give a subsequent opportunity for open enrollment to individuals who already had a chance for open enrollment under the federal provisions but failed to take advantage of it. The adopted amendment therefore includes new subparagraphs (A), (B), and (C) to paragraph (3) to clarify this point. Section 3.3325 Medicare Select Policies, Certificates and Plans of Operation Comment: sec.3.3325(m) should be amended to allow only "non-binding" arbitration procedures. Response: The department disagrees with the recommendation for a number of reasons, but makes a clarifying change to the adopted amendment to address the concern about informed decisionmaking in the dispute resolution process. First, the department historically has permitted binding arbitration so long as the insured has made an informed choice to accept binding arbitration as the preferred method of dispute or claim resolution. If the insured has been informed of the right to reject binding arbitration unless he or she considers it the best manner of dispute resolution to be pursued, the department does not believe binding arbitration should be completely precluded. Accordingly, the clarifying change to sec.3.3325(m) reflects the longstanding policy of the department with respect to binding arbitration as a possible alternative dispute resolution mechanism. Comment: Section 3.3325(m)(1) should be amended to include a one-working-day requirement for expedited resolution of in-hospital grievances. Response: The department agrees that expedited resolution of in-hospital grievances is essential, but does not agree with the precise manner of recommended amendment. For this reason the department amends sec.3.3325(m) to address the concern expressed in the comment by clarifying the intent of the language about grievances relating to ongoing treatment in a hospital. Although the department agrees that in-hospital grievances should be addressed immediately and resolved at the earliest possible time, it is not persuaded that it is necessary and essential to expressly require in the rule that every in- hospital grievance be resolved in one working day. Accordingly, the clarifying amendment to sec.3.3325(m) reflects the intent that in-hospital grievances should be handled in the most expeditious manner possible, and that the grievances should be addressed as quickly as possible and should be resolved likewise in a way that does not interrupt or otherwise interfere with the continued proper medical treatment of the patient. Effective Date Comment: Several persons recommended the effective date be no earlier than January 1, 1997. This, they urged, would allow companies time to make necessary changes and seek acceptance by the department to coincide with Medicare changes. Response: The department, after careful consideration of the comment, has determined an effective date of January 1, 1997, for all the amendments is appropriate. For this reason, the adopted amendments are to be effective January 1, 1997. Within the specific text of the amendments, the adopted provisions of sec.3.3324(b)(1) state a trigger date of January 1, 1997 instead of September 1, 1996, and provisions of sec.3.3324(b)(3) contain a clarifying amendment changing the eligibility time frame from beginning September 1, 1996 to beginning January 1, 1997, and from ending March 1, 1997 to ending July 1, 1997. Comments generally in favor of the amendments were received from Advocacy Incorporated, Blue Cross Blue Shield of Texas, Disability Policy Consortium, Office of the Public Insurance Counsel, Texas Association of Insurance Officials, Texas Gray Panthers, Texas Osteopathic Medical Association and United Cerebral Palsy of Texas. However, a number of commenters had specific recommendations for change to the amendments. Insurance Alliance of America and Texas Legal Reserve Officials Association did not submit specific written comments, but requested a hearing on the amendments and provided oral comments at the hearing. The amendments are adopted under the Insurance Code, Articles 3.74 and 1.03A. Article 3.74 provides that the department shall issue reasonable rules to establish specific standards for provisions of Medicare supplement policies, including requirements that are at least equal to those required by federal law, and to establish standards to the extent necessary for the state to obtain or retain certification as a state with an approved regulatory program under 42 United States Code sec.1395ss. Article 1.03A provides that the Commissioner of Insurance may adopt rules and regulations to execute the duties and functions of the Texas Department of Insurance as authorized by statute. sec.3.3307.Loss Ratio Standards and Refund or Credit of Premiums. (a) Minimum aggregate loss ratio standard. A Medicare supplement individual or group policy form shall not be delivered or issued for delivery unless the individual or group policy form can be expected, as estimated for the entire period for which rates are computed to provide coverage, to return to policyholders and certificate holders in the form of aggregated benefits (not including anticipated refunds or credits) provided under the individual policy form or group policy form, on the basis of incurred claims experience or incurred health care expenses where coverage is provided by a health maintenance organization on a service, rather than reimbursement, basis and earned premiums for the applicable period, not including any changes in additional reserves, and in accordance with generally accepted actuarial principles and practices: (1)-(2) (No changes.) (b) Calendar year experience loss ratio standard. For the most recent calendar year, the ratio of incurred losses to earned premiums for all policies or certificates which have been in force for three years or more, as of December 31st of the most recent year, shall be equal to or greater than: (1) at least 75% in the case of group policies; and (2) at least 65% in the case of individual policies. (c) Filing of rates and rating schedules. All filings of rates and rating schedules shall demonstrate that expected claims in relation to premiums comply with the requirements of this section when combined with actual experience to date. Filings of rate revisions shall also demonstrate that the anticipated loss ratio over the entire future period for which the revised rates are computed to provide coverage can be expected to meet the appropriate loss ratio standards. For individual or group policies issued prior to March 1, 1992, the provisions of paragraph (3) of this subsection must be met with respect to expected claims in relation to premiums. For purposes of submitting a rate filing under this section, policy forms, whether for open or closed blocks of business, providing for similar benefits shall be combined. However, for purposes of the required combination set out in this section, issuers may distinguish between policy forms providing for similar benefits for individuals 65 years of age or over and policy forms providing for similar benefits for individuals under age 65. Once policy forms have been combined, they remain so for all rating purposes. When forms have been so combined, a rate revision request shall not differentiate between the experience of the individual forms. Where significant inconsistencies between rate levels exist between forms providing similar benefits, some deviation in rate revision shall be allowed to reduce the significant inconsistencies. (1) (No changes.) (2) Subsequent rate adjustment filings, except for those rate filed solely due to a change in the Part A calendar year deductible, shall also provide an actuarial memorandum, prepared by a qualified actuary, in accordance with generally accepted actuarial principles and practices, which memorandum shall contain the information in the following subparagraphs. (A)-(D) (No changes.) (E) A demonstration and certification by the qualified actuary shall be included to show that the past plus future expected experience after the rate change will result in an aggregate loss ratio equal to, or greater than, the required minimum aggregate loss ratio. (i) This rate change and demonstration shall be based on the experience of the named form in Texas only, if that experience is fully credible, as set out in paragraph (3) of this subsection. (ii) The rate change and demonstration shall be based on experience of the named form nationwide, with credibility factors as set out in paragraph (3) of this subsection applied, if the named form is used nationwide and the Texas experience is not fully credible. (iii) The rate change and demonstration shall be based on experience of the named form in Texas only, with credibility factors as set out in paragraph (3) of this subsection applied, if the named form is used in Texas only and the Texas experience is not fully credible. (3) For purposes of this subsection, if a group or individual policy form has 2,000 or more policies in force, then full credibility (100%) shall be given to the experience. If fewer than 500 policies are in force, then no credibility (0%) shall be given to the experience. The principle of linear interpolation shall be used for in-force numbers between 500 and 2,000. For group policy forms, the reference in this paragraph to the number of in-force policies means the number of in-force certificates under group policies. For purposes of this section, "in force" means either the average number of policies in force for the experience period used to support the need for a rate revision, or the number of policies in force as of the ending date of the experience period used to support the need for a rate revision. Once an issuer makes a decision as to which definition it will apply to a particular policy form, such decision is irrevocable. An issuer may submit specific alternate credibility standards to the department for consideration. In order for an alternate standard of credibility to be acceptable for application, the issuer must demonstrate that the standards are based on sound actuarial principles, and that the resulting loss ratios are in substantial compliance with the requirements of subsections (a) and (b) of this section. (4) For individual policies issued prior to March 1, 1992, the expected claims in relation to premiums shall meet: (A) the originally-filed anticipated loss ratio when combined with the actual experience since inception; (B) a loss ratio of at least 65% when combined with actual experience beginning with June 1, 1996 to date; and (C) a loss ratio of at least 65% over the entire future period for which the rates are computed to provide coverage. (d) Annual filing of premium rates required. Every issuer of Medicare supplement policies and certificates issued before or after March 1, 1992 in this state shall file annually its rates, rating schedule, and supporting documentation, including ratios of incurred losses to earned premiums for the most recent calendar year broken down by calendar year of issue or by policy duration, for purposes of demonstrating that the issuer is in compliance with the loss ratio standards, and for approval by the Department in accordance with the filing requirements of this section and the requirements of sec.3.3323 of this title (relating to Increases to Premium Rates). The supporting documentation shall also demonstrate in accordance with actuarial standards of practice using reasonable assumptions that the appropriate loss ratio standards can be expected to be met over the entire period for which rates are computed. Such demonstration shall exclude active life reserves. An expected third-year loss ratio which is greater than or equal to the applicable percentage shall be demonstrated for policies or certificates in force less than three years. The annual filing requirements in this subsection shall be as follows: (1)-(5) (No changes.) (e) Refund or credit calculation. An issuer shall collect and file with the commissioner by May 31 of each year the data contained in the "Medicare Supplement Refund Calculation Form," published as Figure 1 to this section, for each type in a standard Medicare supplement benefit plan. This form is published by the Texas Department of Insurance and copies of this form are available from the Life/Health Group, Mail Code 106-1A of the Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104. (1) (No changes.) (2) A refund or credit shall be made only when the benchmark loss ratio exceeds the adjusted experience loss ratio and the amount to be refunded or credited exceeds a de minimis level. The refund shall include interest from the end of the calendar year to the date of the refund or credit at a rate specified by the secretary of health and human services, but in no event shall it be less than the average rate of interest for 13-week treasury notes. A refund or credit against premiums due shall be made by September 30 following the experience year upon which the refund or credit is based. (3) For an individual or group policy or certificate issued prior to March 1, 1992, the issuer, for purposes of complying with this subsection, shall make the refund or credit calculation separately for all individual policies combined and all group policies combined for experience after June 1, 1996. The first such report shall be due by May 31, 1998. FIGURE 28 TAC sec.3.3307(e)(3) (f) Premium adjustments to conform with minimum standards for loss ratios. As soon as practicable, but prior to the effective date of enhancements to Medicare benefits, every issuer of Medicare supplement insurance policies, contracts, or coverage in this state shall file with the commissioner, in accordance with the applicable filing procedures of this state, the items required in paragraphs (1) and (2) of this subsection. (1) Appropriate premium adjustments necessary to produce loss ratios as anticipated for the current premium for the applicable policies or contracts shall be filed. Documents necessary to justify the adjustment shall accompany the filing. (A) Every issuer of Medicare supplement insurance or benefits to a resident of this state pursuant to the Insurance Code, Article 3.74 shall make premium adjustments: (i) necessary to product an expected loss ratio under the policy or contract as will conform with the minimum loss ratio standards for Medicare supplement policies; and (ii) expected to result in a loss ratio at least as great as that originally anticipated in the rates used to produce current premium by the issuer for the Medicare supplement insurance policies or contracts. (B)-(C) (No changes.) (2) Any appropriate riders, endorsements, or policy forms needed to accomplish the Medicare supplement insurance modifications necessary to eliminate benefit duplications with Medicare shall be filed. The riders, endorsements, or policy forms shall provide a clear description of the Medicare supplement benefits provided by the policy or contract. (g) (No changes.) sec.3.3309.Requirements for Application Forms and Replacement Coverage. (a) Application forms shall include the following information, statements and questions designed to elicit information as to whether, as of the date of the application, the applicant has another Medicare supplement or other health insurance policy or certificate in force or whether a Medicare supplement policy or certificate is intended to replace any other accident and sickness policy or certificate presently in force. A supplementary application or other form to be signed by the applicant and agent, except where the coverage is sold without an agent, containing such questions may be used. (1) The information shall be provided to prospective covered persons in statement form conforming to subparagraphs (A)-(E) of this paragraph. (A) (No changes.) (B) If you purchase this policy, you may want to evaluate your existing health coverage and decide if you need more than one type of coverage in addition to your Medicare benefits. (C) You may be eligible for benefits under Medicaid and may not need a Medicare supplement policy. (D) The benefits and premiums under your Medicare supplement policy can be suspended, if requested, during your entitlement to benefits under Medicaid for 24 months. You must request this suspension within 90 days of becoming eligible for Medicaid. If you are no longer entitled to Medicaid, your policy will be reinstituted if requested within 90 days of losing Medicaid eligibility. (E) Counseling services may be available in your state to provide advice concerning your purchase of Medicare supplement insurance and concerning medical assistance through the state Medicaid program, including benefits as a Qualified Medicare Beneficiary (QMB) and a Specified Low-Income Medicare Beneficiary (SLMB). (2) Information shall be elicited from prospective covered persons by asking the questions as provided in subparagraphs (A)-(C) of this paragraph. (A) Do you have another Medicare supplement insurance policy, certificate, or coverage in force? (i) If so, with which company? (ii) If so, do you intend to replace your current Medicare supplement policy with this policy, certificate or coverage? (B) Do you have any other health insurance policies or coverages that provide benefits similar to this Medicare supplement policy? (i)-(ii) (No changes.) (C) Are you covered for medical assistance through the state Medicaid program? (i) If so, as a Specified Low Income Medicare Beneficiary (SLMB)? (ii) If so, as a Qualified Medicare Beneficiary (QMB)? (iii) If so, for other Medicaid medical benefits? (b)-(d) (No changes.) (e) The notice required by subsection (d) of this section shall be provided in substantially the following form and shall be in a typeface no smaller than 12- point type. NOTICE TO APPLICANT REGARDING REPLACEMENT OF MEDICARE SUPPLEMENT INSURANCE (Issuer's name and address) SAVE THIS NOTICE! IT MAY BE IMPORTANT TO YOU IN THE FUTURE According to (your application) (information you have furnished), you intend to terminate existing Medicare supplement coverage and replace it with a policy to be issued by (Issuer's Name). Your new policy will provide 30 days within which you may decide without cost whether you desire to keep the policy. For your own information and protection, you should be aware of and seriously consider certain factors which may affect the insurance protection available to you under the new policy. You should review this new coverage carefully. Compare it with all accident and sickness coverage you now have. Terminate your present policy only if, after due consideration and acceptance by the replacing issuer, you find that purchase of this Medicare supplement coverage is a wise decision. You should evaluate the need for other accident and sickness coverage you have that may duplicate the benefits provided under this policy. STATEMENT TO APPLICANT BY ISSUER, (OR OTHER REPRESENTATIVE): I have reviewed your current medical or health coverage. To the best of my knowledge, this Medicare supplement policy will not duplicate your existing Medicare supplement coverage, because you intend to terminate your existing Medicare supplement coverage. The replacement policy is being purchased for the following reasons: Additional benefits, Same benefits but lower premiums, Fewer benefits and lower premiums Other (specify)________________________. I call to your attention the following items for your consideration: (1) Health conditions which you may presently have (pre-existing conditions) may not be immediately or fully covered under the new policy. This could result in denial or delay of a claim for benefits under the new policy, whereas a similar claim might have been payable under your present policy. (2) State law provides that your replacement policy or certificate may not contain new pre-existing conditions waiting periods, elimination periods, or probationary periods. The insurer will waive any time periods applicable to pre- existing conditions waiting periods, elimination periods, or probationary periods in the new policy (or coverage) to the extent such time was spent (depleted) under the original policy. (3) If you still wish to terminate your present policy and replace it with new coverage, be certain to truthfully and completely answer all questions on the application concerning your medical and health history. Failure to include all material medical information on an application may provide a basis for the issuer to deny any future claims and to refund your premium as though the policy had never been in force. After the application has been completed and before you sign it, read and review it carefully to be certain that all information has been properly recorded. (4) Do not cancel your present policy until you have received your new policy and are sure that you want to keep it. ____________________________________ Signature of Agent or other Representative _________________________________ Typed Name and Address of Issuer or Agent ________________________________ (Applicant's Signature) _________________________ (Date) (f) (No changes.) sec.3.3324.Open Enrollment. (a) No issuer shall deny or condition the issuance of effectiveness of any Medicare supplement policy or certificate available for sale in this state, nor discriminate in the pricing of such a policy or certificate because of the health status, claims experience, receipt of health care, or medical condition of an applicant where an application for a policy or certificate is submitted prior to or during the six-month period beginning with the first day of the first month in which an individual is first enrolled for benefits under Medicare Part B. No issuer shall engage in a premium rating practice which results in higher premiums for any policy solely because such policy is issued pursuant to the provisions of this section. For individuals 65 years of age or older when first enrolled for benefits under Medicare Part B who apply for Medicare supplement coverage under this subsection, each Medicare supplement policy and certificate currently available from an issuer shall be made available to all applicants without regard to age. (b) The provisions of paragraphs (1) through (3) of this subsection apply to Medicare supplement issuers with respect to persons who qualify for Medicare before attaining 65 years of age. (1) An issuer must comply with the first two sentences of subsection (a) of this section with respect to a person who: (A) qualifies for Medicare before attaining 65 years of age, who first enrolls for benefits under Medicare Part B on or after January 1, 1997 and who applies for a Medicare supplement policy or certificate during the period of eligibility described in subsection (a) of this section; or (B) enrolled in Medicare Part B before attaining 65 years of age, who applies for a Medicare supplement policy or certificate upon attaining 65 years of age, during the period of eligibility described in subsection (a) of this section that would apply if the person first enrolled in Medicare Part B upon attaining 65 years of age. (2) An issuer must make available, at a minimum, Plan A of the standard Medicare supplement plans to individuals who qualify under this subsection. (3) An issuer must comply with the provisions of this subsection with respect to a person who: (A) enrolled for Medicare Part B benefits before attaining 65 years of age during the period beginning March 1, 1992 and ending January 1, 1997; (B) was not otherwise eligible to apply for a Medicare supplement policy or certificate on a guaranteed issue basis during that time period; and (C) applies for a Medicare supplement policy or certificate during the period of eligibility beginning January 1, 1997 and ending July 1, 1997. (c) Subsection (a) of this section shall not be construed as preventing the exclusion of benefits under a policy during the first six months, based on a preexisting condition for which the policyholder or certificate holder received treatment or was otherwise diagnosed during the six months before the coverage became effective. (d) Invitation to contract advertisements, as defined in sec.21.113(b) of this title (relating to Rules Pertaining Specifically to Accident and Health Insurance Advertising and Health Maintenance Organization Advertising) shall include the following statement: "Benefits and premiums under this policy may be suspended for up to 24 months if you become entitled to benefits under Medicaid. You must request that your policy be suspended within 90 days of becoming entitled to Medicaid. If you lose (are no longer entitled to) benefits from Medicaid, this policy can be reinstated if you request reinstatement within 90 days of the loss of such benefits and pay the required premium." sec.3.3325.Medicare Select Policies, Certificates and Plans of Operation. (a) This section shall apply to Medicare Select policies, certificates and plans of operation, as defined in this section. (b) (No changes.) (c) The following words and terms, when used in this section, shall have the following meanings, unless the context indicates otherwise. These words and terms shall be defined and included in all Medicare Select policies, certificates and plans of operation. (1) (No changes.) (2) "Emergency Care"-bona fide emergency services provided after the sudden onset of a medical condition manifesting itself by acute symptoms of sufficient severity, including severe pain, such that the absence of immediate medical attention could reasonably be expected to result in (A) placing the patient's health in serious jeopardy; (B) serious impairment to bodily functions; or (C) serious dysfunction of any bodily organ or part. (3) "Grievance"-dissatisfaction expressed in writing by an individual insured under a Medicare Select policy or certificate with the administration, claims practices, or provision of services concerning a Medicare Select issuer or its network providers. (4) "Medicare Select Issuer"-an issuer offering, or seeking to offer, a Medicare Select policy or certificate. (5) "Medicare Select Policy" or "Medicare Select Certificate"-a Medicare supplement policy or certificate, respectively, that contains restricted network provisions. (6) "Network Provider"-a provider of health care, or a group of providers of health care, which has entered into a written agreement with the issuer to provide benefits covered under a Medicare Select policy. (7) "Non-network Provider"-a provider of health care, or a group of providers of health care, that has not entered into a written agreement with the issuer to provide benefits covered under a Medicare Select policy. (8) "Restricted Network Provisions"-any provision which conditions the payment of benefits, in whole or in part, on the use of network providers. (9) "Service Area"-the geographic area approved by the commissioner as part of the plan of operation or amended plan of operation, within which an issuer is authorized to offer a Medicare Select policy. (d) (No changes.) (e) A Medicare Select issuer shall not issue a Medicare Select policy or certificate in this state until its plan of operation has been approved by the commissioner. A Medicare Select issuer may not file a Medicare Select policy under the Insurance Code, Article 3.42(c), until its plan of operation has been approved by the commissioner. (f) A Medicare Select issuer shall file a proposed plan of operation with the Department, the form and content of which shall be subject to approval by the commissioner. The plan of operation shall contain, at a minimum, the information in paragraphs (1) through (7) of this subsection, and at the time of submission shall have a form number printed or typed on the lower left hand corner of the face page. (1) The plan must contain evidence that all covered services that are subject to restricted network provisions are available and accessible through network providers, including a demonstration of each of the items referenced in subparagraphs (A) through (E) of this paragraph. (A) Services can be provided by network providers with reasonable promptness with respect to geographic location, hours of operation and after-hour care. The hours of operation and availability of after-hour care shall reflect usual practice in the local area. Geographic availability shall reflect the usual travel times within the community. (B) The number of network providers in the service area must be documented by credible statistics to be sufficient, with respect to current and expected policyholders, either: (i)-(ii) (No changes.) (C) (No changes.) (D) Emergency care availability 24 hours per day and seven days a week must be demonstrated. (E) In the case of covered services that are subject to a restricted network provision and are provided on a prepaid basis, there are written agreements with network providers prohibiting the providers from billing or otherwise seeking reimbursement from or recourse against any individual covered under a Medicare Select policy or certificate. This subparagraph shall not apply to supplemental charges or coinsurance amounts as stated in the Medicare Select policy or certificate. (2)-(7) (No changes.) (g) A Medicare Select issuer shall file any proposed changes to the plan of operation, except for changes to the list of network providers, with the commissioner 60 days prior to implementing such changes. Such changes shall be considered approved by the commissioner after 30 days unless specifically disapproved or unless issuer requests an extension of the 30-day period and the commissioner grants the requested extension. (h) An updated list of network providers shall be filed with the commissioner at least quarterly. If there is no change to the list of network providers within a particular calendar quarter, correspondence indicating no change from the prior reporting period to the current reporting period must, at a minimum, be filed to meet the reporting requirements of this subchapter. (i)-(j) (No changes.) (k) A Medicare Select issuer shall make full and fair disclosure in writing of the provisions, restrictions, and limitations of the Medicare Select policy or certificate to each applicant. This disclosure shall include at least the following: (1)-(7) (No changes.) (8) For hospital network providers, the statement in 12-point bold-face type: "Only certain hospitals are network providers under this policy. Check with your physician to determine if he or she has admitting privileges at the network hospital. If he or she does not, you may be required to use another physician at time of hospitalization or you will be required to pay for all expenses." This statement shall also be included in the "invitation to contract" advertisement, as that term is defined in sec.21.113(b) of this title (relating to Rules Pertaining Specifically to Accident and Health Insurance Advertising and Health Maintenance Organization Advertising). (l) (No changes.) (m) A Medicare Select issuer shall have and use procedures for hearing complaints and resolving written grievances from the subscribers. Such procedures shall be aimed at mutual agreement for settlement and may include arbitration procedures. If a binding arbitration procedure is included, the insured must have made an informed choice to accept binding arbitration after having been advised of the right to reject this method of dispute or claim resolution. (1) The grievance procedure shall be described in the policy and certificates and in the outline of coverage. The in-hospital grievance procedure shall be outlined separately from the grievance procedures for other treatments and/or services. All grievances should be addressed immediately and resolved as soon as possible. Grievances relating to ongoing hospital treatment should be addressed immediately on receipt of any written or oral grievance, and resolved as quickly as possible in a manner which does not interfere with, obstruct or interrupt continued proper medical treatment and care of the patient. The timetable for their resolution shall comply with all applicable provisions of the Insurance Code. (2) At the time the policy or certificate is issued, the issuer shall provide detailed information to the policyholder describing how a grievance may be registered with the issuer, both during the period of care and after care. (3)-(6) (No changes.) (n) (No changes.) (o) At the request of an individual covered under a Medicare Select policy or certificate, a Medicare Select issuer shall make available to the individual covered the opportunity to purchase any Medicare supplement policy or certificate offered by the issuer which has comparable or lesser benefits and which does not contain a restricted network provision. The issuer shall make the policies or certificates available without requiring evidence of insurability after the Medicare Select policy or certificate has been in force for six months. (p)-(r) (No changes.) 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 October 17, 1996. TRD-9615259 Robert Carter Assistant General Counsel Texas Department of Insurance Effective date: January 1, 1997 Proposal publication date: May 21, 1996 For further information, please call: (512) 463-6327 28 TAC sec.3.3306 The amendment is adopted under the Insurance Code, Articles 3.74 and 1.03A. Article 3.74 provides that the department shall issue reasonable rules to establish specific standards for provisions of Medicare supplement policies, including requirements that are at least equal to those required by federal law, and to establish standards to the extent necessary for the state to obtain or retain certification as a state with an approved regulatory program under 42 U.S.C. sec.1395ss. Article 1.03A provides that the Commissioner of Insurance may adopt rules and regulations to execute the duties and functions of the Texas Department of Insurance as authorized by statute. sec.3.3306. Minimum Benefit Standards. No insurance policy, subscriber contract, certificate, or evidence of coverage may be advertised, solicited, or issued for delivery in this state as a Medicare supplement policy unless the policy, contract, certificate, or evidence of coverage meets the applicable standards in paragraphs (1) - (3) of this section. These are minimum standards and do not preclude the inclusion of other provisions or benefits which are not inconsistent with these standards. (1) General standards. The following standards apply to Medicare supplement policies and are in addition to all other requirements of this subchapter, the Insurance Code, Article 3.74, and any other applicable law. (A) A Medicare supplement policy shall not exclude or limit benefits for losses incurred more than six months from the effective date of coverage because they involved a pre-existing condition. The policy or certificate may not define a pre-existing condition more restrictively than a condition for which medical advice was given or treatment was recommended by or received from a physician within six months before the effective date of coverage. (i) If a Medicare supplement policy or certificate replaces another Medicare supplement policy or certificate, the replacing issuer shall waive any time periods applicable to pre-existing condition waiting periods, elimination periods, and probationary periods in the new Medicare supplement policy or certificate to the extent such time was spent under the original policy. (ii) If a Medicare supplement policy or certificate replaces another Medicare supplement policy or certificate which has been in effect for at least six months, the replacing policy or certificate shall not provide any time period applicable to preexisting conditions, waiting periods, elimination periods and probationary periods for benefits. (B)-(D) (No change.) (E) Each Medicare supplement policy shall be guaranteed renewable and shall comply with the provisions of clauses (i) -- (iv) of this subparagraph. (i) (No change.) (ii) If the Medicare supplement policy is terminated by the group policyholder and is not replaced as provided in clause (iv) of this subparagraph, the issuer shall offer certificate holders Medicare supplement coverage which provides benefits as set out in subclauses (I) or (II) of this clause, as follow: (I) an individual Medicare supplement policy which (at the option of the certificate holder): (-a-) provides for continuation of the benefits contained in the group policy; or (-b-) provides for benefits that otherwise meet the requirement of this subsection; or (II) continuation of benefits under the group plan until there are no longer any certificate holders remaining who have opted for continuation of benefits under the group policy terminated by the policyholder. (iii) (No change.) (iv) If a group Medicare supplement policy is replaced by another group Medicare supplement policy purchased by the same policyholder, the issuer of the replacement policy shall offer coverage to all persons covered under the old group policy on its date of termination. Coverage under the new policy shall not result in any exclusion of preexisting conditions that would have been covered under the group policy being replaced. (F) (No change.) (G) A Medicare supplement policy or certificate shall provide that benefits and premiums under the policy or certificate shall be suspended at the request of the policyholder or certificate holder for the period (not to exceed 24 months) in which the policyholder or certificate holder has applied for and is determined to be entitled to medical assistance under Title XIX of the Social Security Act, but only if the policyholder or certificate holder notifies the issuer of such policy or certificate within 90 days after the date the individual becomes entitled to such assistance. (i) If suspension occurs and if the policyholder or certificate holder loses entitlement to medical assistance, the policy or certificate shall be automatically reinstituted (effective as of the date of termination of entitlement) as of the termination of entitlement if the policyholder or certificate holder provides notice of loss of entitlement within 90 days after the date of loss and pays the premium attributable to the period, effective as of the date of termination of entitlement. (ii) (No change.) (2) Standards for the basic (core) benefits common to all benefit plans. Every issuer shall make available a policy or certificate including only the basic "core" package of benefits described in subparagraphs (A)-(E) of this paragraph to each prospective insured. An issuer may make available to prospective insureds any of the other Medicare supplement insurance benefit plans in addition to the basic core package, but not in lieu of it. The basic core benefits shall consist of the following: (A)-(E) (No change) (3) Standards for Additional Benefits. The additional benefits as uniformly defined in subparagraphs (A)-(K) of this paragraph shall be included in Medicare Supplement Benefit Plans "B" through "J" only as provided in paragraph (5)(A)- (J) of this section. (A)-(E) (No change.) (F) Basic Outpatient Prescription Drug Benefit -- Coverage for 50 percent of outpatient prescription drug charges, after a $250 calendar year deductible, to a maximum of $1,250 in benefits received by the insured per calendar year, to the extent not covered by Medicare. (G) Extended Outpatient Prescription Drug Benefit -- Coverage for 50 percent of outpatient prescription drug charges, after a $250 calendar year deductible to a maximum of $3,000 in benefits received by the insured per calendar year, to the extent not covered by Medicare. (H) (No change.) (I) Preventive Medical Care Benefit or Services--Coverage for the preventive health services described in clauses (i)-(iv) of this subparagraph. Coverage for preventive medical care benefits or services shall be for the actual charges up to 100% of the Medicare-approved amount for each service, as if Medicare were to cover the service as identified in American Medical Association Current Procedural Terminology (AMA CPT) codes, to a maximum of $120 annually under this benefit. This benefit shall not include payment for any procedure covered by Medicare: (i) (No change.) (ii) any one or a combination of the following preventive screening tests or preventive services, the frequency of which is considered medically appropriate: (I) fecal occult blood test and/or digital rectal examination, or both. (II)-(VII) (No change.) (iii)-(iv) (No change.) (J) At-Home Recovery Benefit--Coverage for services to provide short-term, at- home assistance with activities of daily living for those recovering from an illness, injury, or surgery. (i) For purposes of this benefit, the following definitions in subclauses (I)- (IV) of this clause shall apply. (I) (No change.) (II) Care provider means a duly dualified or licensed home health aide or homemaker, personal care aide, or nurse provided through a licensed home health care agency or referred by a licensed referral agency or licensed nurses registry (III)-(IV) (No change.) (ii)-(iii) (No change.) (K) New or Innovative Benefits -- Any benefit which an issuer may, with the prior approval of the commissioner, offer in addition to the benefits provided in a policy or certificate that otherwise complies with the applicable standards. The new or innovative benefits may include benefits that are appropriate to Medicare supplement insurance, new or innovative, not otherwise available, cost-effective, and offered in a manner which is consistent with the goal of simplification of Medicare supplement policies. (4) Requirement of uniformity for all Medicare supplement benefit plans. An issuer shall make available only those groups, packages or combinations of Medicare supplement benefits as described in this section, unless otherwise permitted by provisions of paragraph (3)(K) of this section and in sec.3.3325 of this title (relating to Medicare Select Policies, Certificates and Plans of Operation). Benefit plans shall be uniform in structure, language, designation and format to the standard benefit plan "A", defined as the basic core plan of benefits in paragraph (2) of this section and described in paragraph (5)(A) of this section, and benefit plans "B" through "J", described in paragraph (5)(B)- (J) of this section. All benefit plans shall conform to the definitions set out in sec.3.3303 of this title (relating to Definitions) and sec.3.3304 of this title (relating to Policy Definitions and Terms). Each benefit shall be structured in accordance with the format provided in paragraphs (2) and (3) of this section. Each benefit plan shall list the benefits in the order shown in paragraph (5)(A)-(J) of this section. For purposes of this paragraph, "structure, language, and format" means style, arrangement and overall content of a benefit. In addition to the benefit plan designations required in this paragraph, an issuer may use other designations to the extent permitted by law. (5) Make-up of Benefit Plans. Subparagraphs (A)-(J) of this paragraph set out the composition of benefit plans. Each benefit plan shall meet the requirements of this subchapter. (A) Standardized Medicare Supplement Benefit Plan "A". Medicare supplement benefit Plan "A" shall include only the Core Benefits common to All Benefit Plans, as defined in paragraph (2) of this section. (B) Standardized Medicare Supplement Benefit Plan "B". Medicare supplement benefit Plan "B" shall include only the Core Benefits as defined in paragraph (2) of this section, plus the Medicare Part A Deductible as defined in paragraph (3) of this section. (C) Standardized Medicare Supplement Benefit Plan "C". Medicare supplement benefit Plan "C" shall include only the Core Benefit as defined in paragraph (2) of this section, plus the Medicare Part A Deductible, Skilled Nursing Facility Care, Medicare Part B Deductible and Medically Necessary Emergency Care in a Foreign Country as defined in paragraph (3) of this section. (D) Standardized Medicare Supplement Benefit Plan "D". Medicare supplement benefit Plan "D" shall include only the Core Benefit as defined in paragraph (2) of this section, plus the Medicare Part A Deductible, Skilled Nursing Facility Care, Medically Necessary Emergency Care in a Foreign Country and the At-Home Recovery Benefit as defined in paragraph (3) of this section. (E) Standardized Medicare Supplement Benefit Plan "E". Medicare supplement benefit Plan "E" shall include only the Core Benefit as defined in paragraph (2) of this section, plus the Medicare Part A Deductible, Skilled Nursing Facility Care, Medically Necessary Emergency Care in a Foreign Country and Preventive Medical Care as defined in paragraph (3) of this section. (F) Standardized Medicare Supplement Benefit Plan "F". Medicare supplement benefit Plan "F" shall include only the Core Benefit as defined in paragraph (2) of this section, plus the Medicare Part A Deductible, the Skilled Nursing Facility Care, the Part B Deductible, One Hundred Percent of the Medicare Part B Excess Charges, and Medically Necessary Emergency Care in a Foreign Country as defined in paragraph (3) of this section. (G) Standardized Medicare Supplement Benefit Plan "G". Medicare supplement benefit Plan "G" shall include only the Core Benefit as defined in paragraph (2) of this section, plus the Medicare Part A Deductible, Skilled Nursing Facility Care, Eighty Percent of the Medicare Part B Excess Charges, Medically Necessary Emergency Care in a Foreign Country, and the At-Home Recovery Benefit as defined in paragraph (3) of this section. (H) Standardized Medicare Supplement Benefit Plan "H". Medicare supplement benefit Plan "H" shall include only the Core Benefit as defined in paragraph (2) of this section, plus the Medicare Part A Deductible, Skilled Nursing Facility Care, Basic Prescription Drug Benefit and Medically Necessary Emergency Care in a Foreign Country as defined in paragraph (3) of this section. (I) Standardized Medicare Supplement Benefit Plan "I". Medicare supplement benefit Plan "I" shall include only the Core Benefit as defined in paragraph (2) of this section, plus the Medicare Part A Deductible, Skilled Nursing Facility Care, One Hundred Percent of the Medicare Part B Excess Charges, Basic Prescription Drug Benefit, Medically Necessary Emergency Care in a Foreign Country and At-Home Recovery Benefit as defined in paragraph (3) of this section. (J) Standardized Medicare Supplement Benefit Plan "J". Medicare supplement benefit Plan "J" shall include only the Core Benefit as defined in paragraph (2) of this section, plus the Medicare Part A Deductible, Skilled Nursing Facility Care, Medicare Part B Deductible, One Hundred Percent of the Medicare Part B Excess Charges, Extended Prescription Drug Benefit, Medically Necessary Emergency Care in a Foreign Country, Preventive Medical Care and At-Home Recovery Benefit as defined in paragraph (3) of this section. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on October 17, 1996. TRD-9615258 Robert Carter Assistant General Counsel Texas Department of Insurance Effective date: January 1, 1997 Proposal publication date: May 24, 1996 For further information, please call: (512) 463-6327 TITLE 34. PUBLIC FINANCE PART IV. Employees Retirement System CHAPTER 63.Board of Trustees 34 TAC sec.63.4 The Employees Retirement System of Texas (ERS) adopts an amendment to sec.63.4, concerning the election of Trustees, without changes to the proposed text as published in the August 13, 1996, issue of the Texas Register (21 TexReg 7644). The amendment clarifies when the special edition of the ERS newsletter, which is devoted to the Trustee election, will be made available to the electorate. The amendment provides that this newsletter will be made available to the electorate at the time of ballot distribution. No comments were received regarding the adoption of this amendment. The amendment is adopted under the Government Code, sec.815.003 and sec.815.102, which provides authorization for the board to adopt rules necessary to nominate and elect trustees and to carry out other business of the board. This adopted amendment does not affect any other statutes, articles, or codes. 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 October 21, 1996. TRD-9615345 Sheila W. Beckett Executive Director Employees Retirement System Effective date: November 11, 1996 Proposal publication date: August 13, 1996 For further information, please call: (512) 867-3336 CHAPTER 85.Flexible Benefits 34 TAC sec.85.3 The Employees Retirement System of Texas (ERS) adopts amendments to sec.85.3, concerning the Flexible Benefits (Cafeteria Plan), without changes to the proposed text as published in the September 3, 1996, issue of the Texas Register (21 TexReg 8433). The rule is being amended to make technical changes necessary to make the language consistent throughout the rules. The amendments relate to the effective date of an election based on when the election is made and the ability to elect to participate in the health care reimbursement plan after the start of a new plan year upon becoming eligible or as a result of a change in family status. No comments were received regarding adoption of the amendment. The amendment is adopted under the Insurance Code, Article 3.50-2, sec.4A, which provides the ERS with the authority to promulgate all rules and regulations necessary to implement and to administer a Flexible Benefits (Cafeteria Plan). The Insurance Code, Article 3.50-2 is affected by these amendments. 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 October 21, 1996. TRD-9615346 Sheila W. Beckett Executive Director Employees Retirement System Effective date: November 11, 1996 Proposal publication date: September 13, 1996 For further information, please call: (512) 867-3336 CHAPTER 87.Deferred Compensation 34 TAC sec.sec.87.1, 87.7, 87.9, 87.11, 87.13, 87.15, 87.17, and 87.19 The Employees Retirement System of Texas (ERS) adopts amendments to sec.sec.87.1, 87.7, 87.9, 87.11, 87.13, 87.15, 87.17, and 87.19, concerning the Deferred Compensation plan, without changes to the proposed text as published in the August 20, 1996, issue of the Texas Register (21 TexReg 7788). The rules are being amended to change obsolete language and clarify the responsibilities of vendors. The rules change obsolete language and clarify the responsibilities of vendors. No comments were received regarding adoption of these amendments. The amendments are adopted under the Government Code, Title 6, Subtitle A, Chapter 609, sec.609.508, which provides authorization for the board to adopt rules, regulations, plans, and procedures to carry out the purposes of this Act. Statutes affected by these amendments are Government Code, Title 6, Subtitle A, Chapter 609, Subchapter C. 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 October 21, 1996. TRD-9615347 Sheila W. Beckett Executive Director Employees Retirement System Effective date: November 11, 1996 Proposal publication date: September 20, 1996 For further information, please call: (512) 867-3336