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 16. ECONOMIC REGULATION PART IV. Texas Department of Licensing and Regulation CHAPTER 74. Elevators, Escalators, and Related Equipment 16 TAC sec.sec.74.20, 74.50, 74.100 The Texas Department of Licensing and Regulation adopts amendments to sec.sec.74.20, 74.50, and 74.100, concerning certification of elevators, escalators, and related equipment, without changes to the proposed text as published in the March 14, 1997, issue of the Texas Register (22 TexReg 2677) and will not be republished. The amendments clarify the requirements and responsibilities of registered inspectors and keeps them updated on the procedures of the department. The justification for the amendments to sec.74.20 and sec.74.50 is that the inspectors will have a clearer understanding of registration requirements and responsibilities. The justification for the amendment to sec.74.100 is to ensure test tags are attached to equipment in accordance to specific requirements and time frames. No comments were received regarding adoption of the amended sections. The amendments are adopted under the Health and Safety Code, Chapter 754, which provides the Texas Department of Licensing and Regulation with the authority to promulgate and enforce a code of rules and take all action necessary to assure compliance with the intent and purposes of the amended codes. The following article is affected by these amendments: sec.74.20 - Chapter 754, sec.754.017; sec.74.50 - Chapter 754, sec.754.016; sec.74.100 - Chapter 754, sec.754.015. 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 April 17, 1997. TRD-9705198 Tommy V. Smith Executive Director Texas Department of Licensing and Regulation Effective date: May 7, 1997 Proposal publication date: March 14, 1997 For further information, please call: (512) 463-7348 TITLE 19. EDUCATION PART II. Texas Education Agency CHAPTER 66.State Adoption and Distribution of Instructional Materials The Texas Education Agency (TEA) adopts amendments to sec.sec.66.27, 66.60, 66.66, 66.131, concerning state adoption and distribution of instructional materials, without any changes to the proposed text as published in the February 25, 1997, issue of the Texas Register (22 TexReg 1938). The sections establish definitions, requirements, and procedures related to the adoption and disposition of instructional materials. The adopted amendment to 19 TAC sec.66.27(c) would require that a public meeting be held with publishers 60-90 days prior to the scheduled adoption of a proclamation by the State Board of Education (SBOE) to provide an opportunity for publishers to receive clarification regarding language contained in the draft proclamation, as well as allowing representatives of the industry to provide additional information regarding maximum per-student costs. The amendment would also specify that the SBOE receive the draft proclamation and any revisions to the proclamation resulting from the meeting with publishers. The adopted amendment to 19 TAC sec.66.60(a)(2) and (3) would allow additional time for members of the public to review instructional materials and provide lists of alleged errors contained therein. On November 21, 1996, an Attorney General's opinion was issued finding that the SBOE has no authority under the Texas Education Code (TEC) to adopt rules establishing criteria for approval beyond the criteria contained in TEC, sec.31.023. The opinion further found that TEC, sec.28.002, allows the SBOE to identify the specific essential knowledge and skills that textbooks must include for each curriculum subject established by the legislature but does not allow the SBOE to establish general textbook content requirements. Therefore, 19 TAC sec.66.66(c)(4)(A) and (B) are being deleted. Under the former TEC, Chapter 12, publishers of adopted instructional materials were required to give the state an exchange allowance for textbooks, and ownership of out-of-adoption textbooks reverted to publishers who had reimbursed the state for this allowance. School districts were prohibited from selling out- of-adoption textbooks. Exchange allowances are not required by TEC, Chapter 31. However, publishers of some materials under current contract have already been billed for the exchange allowances included in their original bids. Upon expiration of these contracts, the materials would become property of the publishers. Therefore, since it will be several years before any out-of-adoption materials revert to state ownership, the adopted new 19 TAC sec.66.131(d) would add language clarifying that school districts and open-enrollment charter schools may not sell out-of-adoption textbooks. The following comment has been received regarding adoption of these amendments. Comment. A representative of the Texas Farm Bureau expressed disagreement with the Attorney General's opinion finding that the SBOE has no authority under the TEC to adopt rules establishing general content requirements for approval of textbooks. The representative also stated that House Bill 199, introduced by Representative Charles Howard, would reinstate SBOE authority and requested that adoption of the amendments be delayed until the close of the legislative session. Agency Response. The agency does not agree that House Bill 199 would reinstate SBOE authority in this area and does not recommend delay in consideration of these amendments. SUBCHAPTER B.State Adoption of Instructional Materials 19 TAC sec.sec.66.27, 66.60, 66.66 The amendments are adopted under the Texas Education Code (TEC), sec.31.003, which authorizes the SBOE to adopt rules, consistent with TEC, Chapter 31, for the adoption, requisition, distribution, care, use, and disposal of textbooks. 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 April 21, 1997. TRD-9705323 Criss Cloudt Associate Commissioner, Policy Planning and Research Texas Education Agency Effective date: September 1, 1997 Proposal publication date: February 25, 1997 For further information, please call: (512) 463-9701 SUBCHAPTER E.Disposition of Instructional Materials 19 TAC sec.66.131 The amendment is adopted under the Texas Education Code (TEC), sec.31.003, which authorizes the State Board of Education to adopt rules, consistent with TEC, Chapter 31, for the adoption, requisition, distribution, care, use, and disposal of textbooks. 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 April 21, 1997. TRD-9705324 Criss Cloudt Associate Commissioner, Policy Planning and Research Texas Education Agency Effective date: September 1, 1997 Proposal publication date: February 25, 1997 For further information, please call: (512) 463-9701 CHAPTER 109.Budgeting, Accounting, and Auditing SUBCHAPTER D.Uniform Bank Bid and Depository Contract 19 TAC sec.109.51, sec.109.52 The Texas Education Agency (TEA) adopts new sec.109.51 and sec.109.52, concerning a bid form required of school districts and a contract form required of banks when entering into depository contracts with independent school districts, without changes to the proposed text as published in the February 25, 1997, issue of the Texas Register (22 TexReg 1940). The new sections establish definitions, requirements, and procedures related to uniform depository bank bid forms that school districts are required to use to obtain bids from depository banks and depository contract forms that banks selected as school depository or depositories are required to complete when entering into a depository contract. School districts may add depository requirements to the uniform bank bid. No comments were received regarding adoption of the new sections. The new sections are adopted under the Texas Education Code, sec.7.102(b)(35), which authorizes the State Board of Education to prescribe uniform bid blanks for school districts to use in selecting a depository bank and sec.45.206 and sec.45.208, which establish requirements for bid notices, bid forms, and depository contracts. 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 April 21, 1997. TRD-9705325 Criss Cloudt Associate Commissioner, Policy Planning and Research Texas Education Agency Effective date: September 1, 1997 Proposal publication date: February 25, 1997 For further information, please call: (512) 463-9701 CHAPTER 137.Professional Educator Preparation and Certification The Texas Education Agency (TEA) adopts the repeal of sec.sec.137.1-137.6, 137.31, 137.61, 137.91, 137.121, 137.151-137.161, 137.191-137.200, 137.231, 137.261-137.271, 137.301-137.319, 137.361, 137.391, 137.411- 137.414, 137.431- 137.438, 137.461-137.463, 137.481-137.484, 137.501-137.512, 137.531, 137.532, 137.551-137.560, concerning professional educator preparation and certification, without changes to the proposed text as published in the February 25, 1997, issue of the Texas Register (22 TexReg 1941). The sections establish definitions, requirements, and procedures related to educator and administrator certificates, standards, and endorsements. These sections as applicable are under the authority of the State Board for Educator Certification (SBEC) as established by the 74th Texas Legislature. Chapter 137, Subchapter T, Reprimand, Suspension, Cancellation, and Reinstatement of Certificates, will remain under the TEA until the SBEC acquires resources and staff to assume functions for this subchapter. Texas Education Code, sec.21.031 and sec.21.041(b)(7), authorizes the SBEC to adopt rules to regulate and oversee all aspects of certification, continuing education, and standards of conduct of public school educators. As a result, the SBEC adopted new 19 TAC Chapter 230, Professional Educator Preparation and Certification, with an effective date of December 5, 1996. No comments were received regarding adoption of the repeals. SUBCHAPTER A.Educator Preparation Accountability System 19 TAC sec.sec.137.1-137.6 The repeals are adopted under Acts 1995, 74th Texas Legislature, Senate Bill 1, Conforming Amendment sec.63(h) and (j) which state that rules adopted by the State Board of Education under Subchapter B, Chapter 13, Texas Education Code, as that subchapter existed on January 1, 1995, continue in effect until the effective date of rules of the State Board for Educator Certification under Subchapter B, Chapter 21. 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 April 21, 1997. TRD-9705297 Criss Cloudt Associate Commissioner, Policy Planning and Research Texas Education Agency Effective date: May 12, 1997 Proposal publication date: February 25, 1997 For further information, please call: (512) 463-9701 SUBCHAPTER B.Commission on Standards for the Teaching Profession 19 TAC sec.137.31 The repeal is adopted under Acts 1995, 74th Texas Legislature, Senate Bill 1, Conforming Amendment sec.63(h) and (j) which state that rules adopted by the State Board of Education under Subchapter B, Chapter 13, Texas Education Code, as that subchapter existed on January 1, 1995, continue in effect until the effective date of rules of the State Board for Educator Certification under Subchapter B, Chapter 21. 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 April 21, 1997. TRD-9705298 Criss Cloudt Associate Commissioner, Policy Planning and Research Texas Education Agency Effective date: May 12, 1997 Proposal publication date: February 25, 1997 For further information, please call: (512) 463-9701 SUBCHAPTER C.Teachers' Professional Practices Commission 19 TAC sec.137.61 The repeal is adopted under Acts 1995, 74th Texas Legislature, Senate Bill 1, Conforming Amendment sec.63(h) and (j) which state that rules adopted by the State Board of Education under Subchapter B, Chapter 13, Texas Education Code, as that subchapter existed on January 1, 1995, continue in effect until the effective date of rules of the State Board for Educator Certification under Subchapter B, Chapter 21. 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 April 21, 1997. TRD-9705299 Criss Cloudt Associate Commissioner, Policy Planning and Research Texas Education Agency Effective date: May 12, 1997 Proposal publication date: February 25, 1997 For further information, please call: (512) 463-9701 SUBCHAPTER D.Local Cooperative Teacher Education Centers 19 TAC sec.137.91 The repeal is adopted under Acts 1995, 74th Texas Legislature, Senate Bill 1, Conforming Amendment sec.63(h) and (j) which state that rules adopted by the State Board of Education under Subchapter B, Chapter 13, Texas Education Code, as that subchapter existed on January 1, 1995, continue in effect until the effective date of rules of the State Board for Educator Certification under Subchapter B, Chapter 21. 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 April 21, 1997. TRD-9705300 Criss Cloudt Associate Commissioner, Policy Planning and Research Texas Education Agency Effective date: May 12, 1997 Proposal publication date: February 25, 1997 For further information, please call: (512) 463-9701 SUBCHAPTER E.Centers for Professional Development and Technology 19 TAC sec.137.121 The repeal is adopted under Acts 1995, 74th Texas Legislature, Senate Bill 1, Conforming Amendment sec.63(h) and (j) which state that rules adopted by the State Board of Education under Subchapter B, Chapter 13, Texas Education Code, as that subchapter existed on January 1, 1995, continue in effect until the effective date of rules of the State Board for Educator Certification under Subchapter B, Chapter 21. 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 April 21, 1997. TRD-9705301 Criss Cloudt Associate Commissioner, Policy Planning and Research Texas Education Agency Effective date: May 12, 1997 Proposal publication date: February 25, 1997 For further information, please call: (512) 463-9701 SUBCHAPTER F.Professional Educator Preparation 19 TAC sec.sec.137.151-137.161 The repeals are adopted under Acts 1995, 74th Texas Legislature, Senate Bill 1, Conforming Amendment sec.63(h) and (j) which state that rules adopted by the State Board of Education under Subchapter B, Chapter 13, Texas Education Code, as that subchapter existed on January 1, 1995, continue in effect until the effective date of rules of the State Board for Educator Certification under Subchapter B, Chapter 21. Control. 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 April 21, 1997. TRD-9705302 Criss Cloudt Associate Commissioner, Policy Planning and Research Texas Education Agency Effective date: May 12, 1997 Proposal publication date: February 25, 1997 For further information, please call: (512) 463-9701 SUBCHAPTER G.1987 Program Requirements for Preparation of School Personnel for Initial Certificates and Endorsements 19 TAC sec.sec.137.191-137.200 The repeals are adopted under Acts 1995, 74th Texas Legislature, Senate Bill 1, Conforming Amendment sec.63(h) and (j) which state that rules adopted by the State Board of Education under Subchapter B, Chapter 13, Texas Education Code, as that subchapter existed on January 1, 1995, continue in effect until the effective date of rules of the State Board for Educator Certification under Subchapter B, Chapter 21. 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 April 21, 1997. TRD-9705303 Criss Cloudt Associate Commissioner, Policy Planning and Research Texas Education Agency Effective date: May 12, 1997 Proposal publication date: February 25, 1997 For further information, please call: (512) 463-9701 SUBCHAPTER H.Alternative Certification of Teachers 19 TAC sec.137.231 The repeal is adopted under Acts 1995, 74th Texas Legislature, Senate Bill 1, Conforming Amendment sec.63(h) and (j) which state that rules adopted by the State Board of Education under Subchapter B, Chapter 13, Texas Education Code, as that subchapter existed on January 1, 1995, continue in effect until the effective date of rules of the State Board for Educator Certification under Subchapter B, Chapter 21. 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 April 21, 1997. TRD-9705304 Criss Cloudt Associate Commissioner, Policy Planning and Research Texas Education Agency Effective date: May 12, 1997 Proposal publication date: February 25, 1997 For further information, please call: (512) 463-9701 SUBCHAPTER I.Standards for Approval of Institutions Offering Graduate Education Programs for Professional Certification 19 TAC sec.sec.137.261-137.271 The repeals are adopted under Acts 1995, 74th Texas Legislature, Senate Bill 1, Conforming Amendment sec.63(h) and (j) which state that rules adopted by the State Board of Education under Subchapter B, Chapter 13, Texas Education Code, as that subchapter existed on January 1, 1995, continue in effect until the effective date of rules of the State Board for Educator Certification under Subchapter B, Chapter 21. 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 April 21, 1997. TRD-9705305 Criss Cloudt Associate Commissioner, Policy Planning and Research Texas Education Agency Effective date: May 12, 1997 Proposal publication date: February 25, 1997 For further information, please call: (512) 463-9701 SUBCHAPTER J.Graduate Education Programs for Professional Certification 19 TAC sec.sec.137.301-137.319 The repeals are adopted under Acts 1995, 74th Texas Legislature, Senate Bill 1, Conforming Amendment sec.63(h) and (j) which state that rules adopted by the State Board of Education under Subchapter B, Chapter 13, Texas Education Code, as that subchapter existed on January 1, 1995, continue in effect until the effective date of rules of the State Board for Educator Certification under Subchapter B, Chapter 21. 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 April 21, 1997. TRD-9705306 Criss Cloudt Associate Commissioner, Policy Planning and Research Texas Education Agency Effective date: May 12, 1997 Proposal publication date: February 25, 1997 For further information, please call: (512) 463-9701 SUBCHAPTER K.Alternative Certification of Administrators 19 TAC sec.137.361 The repeal is adopted under Acts 1995, 74th Texas Legislature, Senate Bill 1, Conforming Amendment sec.63(h) and (j) which state that rules adopted by the State Board of Education under Subchapter B, Chapter 13, Texas Education Code, as that subchapter existed on January 1, 1995, continue in effect until the effective date of rules of the State Board for Educator Certification under Subchapter B, Chapter 21. 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 April 21, 1997. TRD-9705307 Criss Cloudt Associate Commissioner, Policy Planning and Research Texas Education Agency Effective date: May 12, 1997 Proposal publication date: February 25, 1997 For further information, please call: (512) 463-9701 SUBCHAPTER L.Postbaccalaureate Requirements for Persons Seeking Initial Teacher Certification through Approved Texas Colleges and Universities 19 TAC sec.137.391 The repeal is adopted under Acts 1995, 74th Texas Legislature, Senate Bill 1, Conforming Amendment sec.63(h) and (j) which state that rules adopted by the State Board of Education under Subchapter B, Chapter 13, Texas Education Code, as that subchapter existed on January 1, 1995, continue in effect until the effective date of rules of the State Board for Educator Certification under Subchapter B, Chapter 21. 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 April 21, 1997. TRD-9705308 Criss Cloudt Associate Commissioner, Policy Planning and Research Texas Education Agency Effective date: May 12, 1997 Proposal publication date: February 25, 1997 For further information, please call: (512) 463-9701 SUBCHAPTER M.Certification of Educators in General 19 TAC sec.sec.137.411-137.414 The repeals are adopted under Acts 1995, 74th Texas Legislature, Senate Bill 1, Conforming Amendment sec.63(h) and (j) which state that rules adopted by the State Board of Education under Subchapter B, Chapter 13, Texas Education Code, as that subchapter existed on January 1, 1995, continue in effect until the effective date of rules of the State Board for Educator Certification under Subchapter B, Chapter 21. 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 April 21, 1997. TRD-9705309 Criss Cloudt Associate Commissioner, Policy Planning and Research Texas Education Agency Effective date: May 12, 1997 Proposal publication date: February 25, 1997 For further information, please call: (512) 463-9701 SUBCHAPTER N.Certificate Issuance Procedures 19 TAC sec.sec.137.431-137.438 The repeals are adopted under Acts 1995, 74th Texas Legislature, Senate Bill 1, Conforming Amendment sec.63(h) and (j) which state that rules adopted by the State Board of Education under Subchapter B, Chapter 13, Texas Education Code, as that subchapter existed on January 1, 1995, continue in effect until the effective date of rules of the State Board for Educator Certification under Subchapter B, Chapter 21. 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 April 21, 1997. TRD-9705310 Criss Cloudt Associate Commissioner, Policy Planning and Research Texas Education Agency Effective date: May 12, 1997 Proposal publication date: February 25, 1997 For further information, please call: (512) 463-9701 SUBCHAPTER O.Texas Teacher Certificates Based on Certification and College Credentials from Other States 19 TAC sec.sec.137.461-137.463 The repeals are adopted under Acts 1995, 74th Texas Legislature, Senate Bill 1, Conforming Amendment sec.63(h) and (j) which state that rules adopted by the State Board of Education under Subchapter B, Chapter 13, Texas Education Code, as that subchapter existed on January 1, 1995, continue in effect until the effective date of rules of the State Board for Educator Certification under Subchapter B, Chapter 21. 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 April 21, 1997. TRD-9705311 Criss Cloudt Associate Commissioner, Policy Planning and Research Texas Education Agency Effective date: May 12, 1997 Proposal publication date: February 25, 1997 For further information, please call: (512) 463-9701 SUBCHAPTER P.Requirements for Provisional Certificates and Specialized Assignments or Programs 19 TACsec.sec.137.481-137.484 The repeals are adopted under Acts 1995, 74th Texas Legislature, Senate Bill 1, Conforming Amendment sec.63(h) and (j) which state that rules adopted by the State Board of Education under Subchapter B, Chapter 13, Texas Education Code, as that subchapter existed on January 1, 1995, continue in effect until the effective date of rules of the State Board for Educator Certification under Subchapter B, Chapter 21. 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 April 21, 1997. TRD-9705312 Criss Cloudt Associate Commissioner, Policy Planning and Research Texas Education Agency Effective date: May 12, 1997 Proposal publication date: February 25, 1997 For further information, please call: (512) 463-9701 SUBCHAPTER Q.Permits 19 TAC sec.sec.137.501-137.512 The repeals are adopted under Acts 1995, 74th Texas Legislature, Senate Bill 1, Conforming Amendment sec.63(h) and (j) which state that rules adopted by the State Board of Education under Subchapter B, Chapter 13, Texas Education Code, as that subchapter existed on January 1, 1995, continue in effect until the effective date of rules of the State Board for Educator Certification under Subchapter B, Chapter 21. 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 April 21, 1997. TRD-9705313 Criss Cloudt Associate Commissioner, Policy Planning and Research Texas Education Agency Effective date: May 12, 1997 Proposal publication date: February 25, 1997 For further information, please call: (512) 463-9701 SUBCHAPTER R.Record of Certificates 19 TAC sec.137.531, sec.137.532 The repeals are adopted under Acts 1995, 74th Texas Legislature, Senate Bill 1, Conforming Amendment sec.63(h) and (j) which state that rules adopted by the State Board of Education under Subchapter B, Chapter 13, Texas Education Code, as that subchapter existed on January 1, 1995, continue in effect until the effective date of rules of the State Board for Educator Certification under Subchapter B, Chapter 21. 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 April 21, 1997. TRD-9705314 Criss Cloudt Associate Commissioner, Policy Planning and Research Texas Education Agency Effective date: May 12, 1997 Proposal publication date: February 25, 1997 For further information, please call: (512) 463-9701 SUBCHAPTER S.Paraprofessional Certification 19 TAC sec.sec.137.551-137.560 The repeals are adopted under Acts 1995, 74th Texas Legislature, Senate Bill 1, Conforming Amendment sec.63(h) and (j) which state that rules adopted by the State Board of Education under Subchapter B, Chapter 13, Texas Education Code, as that subchapter existed on January 1, 1995, continue in effect until the effective date of rules of the State Board for Educator Certification under Subchapter B, Chapter 21. 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 April 21, 1997. TRD-9705315 Criss Cloudt Associate Commissioner, Policy Planning and Research Texas Education Agency Effective date: May 12, 1997 Proposal publication date: February 25, 1997 For further information, please call: (512) 463-9701 CHAPTER 143.Assignment of Personnel SUBCHAPTER B.Assignment Requirements 19 TAC sec.143.11 The Texas Education Agency (TEA) adopts the repeal of sec.143.11, concerning assignment of personnel. The section establishes assignment requirements of professional school personnel without changes to the text published in the February 25, 1997, issue of the Texas Register (22 TexReg 1948). The section is under the authority of the State Board for Educator Certification (SBEC) as established by the 74th Texas Legislature. Texas Education Code, sec.21.031 and sec.21.041(b)(7), authorizes the SBEC to adopt rules to regulate and oversee all aspects of certification, continuing education, and standards of conduct of public school educators. As a result, the SBEC adopted new 19 TAC Chapter 230, Professional Educator Preparation and Certification, with an effective date of December 5, 1996. No comments were received regarding adoption of the repeal. The repeal is adopted under Acts 1995, 74th Texas Legislature, Senate Bill 1, Conforming Amendment sec.63(h) and (j) which state that rules adopted by the State Board of Education under Subchapter B, Chapter 13, Texas Education Code, as that subchapter existed on January 1, 1995, continue in effect until the effective date of rules of the State Board for Educator Certification under Subchapter B, Chapter 21. 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 April 21, 1997. TRD-9705316 Criss Cloudt Associate Commissioner, Policy Planning and Research Texas Education Agency Effective date: May 12, 1997 Proposal publication date: February 25, 1997 For further information, please call: (512) 463-9701 CHAPTER 149.Education Personnel Development The Texas Education Agency (TEA) adopts the repeal of sec.sec.149.2, 149.22, and 149.23, concerning education personnel development without changes to the text published in the February 25, 1997, issue of the Texas Register (22 TexReg 1948). The sections establish definitions, requirements, and procedures related to educational assistance for school personnel in the areas of acute teacher shortage and inservice education. The sections as applicable are under the authority of the State Board for Educator Certification (SBEC) as established by the 74th Texas Legislature. Texas Education Code, sec.21.031 and sec.21.041(b)(7), authorizes the SBEC to adopt rules to regulate and oversee all aspects of certification, continuing education, and standards of conduct of public school educators. As a result, the SBEC adopted new 19 TAC Chapter 230, Professional Educator Preparation and Certification, with an effective date of December 5, 1996. No comments were received regarding adoption of the repeals. SUBCHAPTER A.Education Personnel Development Program 19 TAC sec.149.2 The repeal is adopted under Acts 1995, 74th Texas Legislature, Senate Bill 1, Conforming Amendment sec.63(h) and (j) which states that rules adopted by the State Board of Education under Subchapter B, Chapter 13, Texas Education Code, as that subchapter existed on January 1, 1995, continue in effect until the effective date of rules of the State Board for Educator Certification under Subchapter B, Chapter 21. 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 April 21, 1997. TRD-9705317 Criss Cloudt Associate Commissioner, Policy Planning and Research Texas Education Agency Effective date: May 12, 1997 Proposal publication date: February 25, 1997 For further information, please call: (512) 463-9701 SUBCHAPTER B.Inservice Education 19 TAC sec.149.22, sec.149.23 The repeals are adopted under Acts 1995, 74th Texas Legislature, Senate Bill 1, Conforming Amendment sec.63(h) and (j) which state that rules adopted by the State Board of Education under Subchapter B, Chapter 13, Texas Education Code, as that subchapter existed on January 1, 1995, continue in effect until the effective date of rules of the State Board for Educator Certification under Subchapter B, Chapter 21. 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 April 21, 1997. TRD-9705318 Criss Cloudt Associate Commissioner, Policy Planning and Research Texas Education Agency Effective date: May 12, 1997 Proposal publication date: February 25, 1997 For further information, please call: (512) 463-9701 TITLE 28. INSURANCE PART I. Texas Department of Insurance CHAPTER 3. Life, Accident, and Health Insurance and Annuities SUBCHAPTER Y. Standards for Long-Term Care Insurance Coverage Under Individual and Group Policies 28 TAC sec.sec.3.3801, 3.3802, 3.3804, 3.3805, 3.3807, 3.3810, 3.3812, 3.3815, 3.3818, 3.3820, 3.3822-3.3824, 3.3826, 3.3828-3.3832, 3.3837-3.3849 The Commissioner of Insurance adopts amendments to sec.sec.3.3801, 3.3802, 3.3804, 3.3805, 3.3807, 3.3810, 3.3812, 3.3815, 3.3818, 3.3820, 3.3822-3.3824, 3.3826, 3.3828-3.3832, 3.3837-3.3840, and 3.3849 and new sec.sec.3.3841-3.3848, concerning standards for long-term care insurance coverage under individual and group policies. The Commissioner adopts these amendments and additions to Subchapter Y with changes to the proposed text as published in the December 6, 1996, issue of the Texas Register (21 TexReg 11728) in response to public comment. Sections 3.3801, 3.3802, 3.3807, 3.3810, 3.3812, 3.3815, 3.3822-3.3824, 3.3828, 3.3830-3.3831, 3.3837-3.3843, 3.3845-3.3846 and 3.3848 are adopted without changes and will not be republished. The adopted amendments to 28 TAC Subchapter Y are necessary to: (1) ensure, in accordance with the Insurance Code, Article 3.70-12 sec.sec.3(d) and 7, that consumer protection standards for long-term care insurance contracts sold in Texas are no less favorable than standards adopted in nationally recognized model laws and regulations; (2) allow the sale of long-term care insurance contracts which will qualify insureds, under certain conditions, for favorable tax treatment under the Health Insurance Portability and Accountability Act of 1996, Pub. L. 104-191, Subtitle C - Long-Term Care Services and Contract, 110 Statutes 1936, 2054-2066 (1996) (hereinafter sometimes referred to as "the Act"); and (3) require disclosure by insurers as to whether or not a policy is intended to be a contract qualified for favorable tax treatment under the Act. Existing sec.sec.3.3806, 3.3808, 3.3809, 3.3811, 3.3813, and 3.3814, which refer to policy definitions, are being repealed simultaneously pursuant to a separate order, because these adopted sections move the definitions contained in the repealed sections to sec.3.3804 (relating to definitions) for purposes of organization and clarity. Under the Act, premiums paid for a long-term care insurance contract meeting the qualifying criteria set forth in the Act are tax deductible, with certain limitations, to the same extent as other medical expenses. The Act also excludes certain proceeds from qualified long-term care insurance contracts from consideration as taxable income. The adopted amendments revise existing definitions and standards to allow for the sale of a long-term care insurance contract that will be qualified for favorable tax treatment under the Act. Insurers in Texas also will be able to sell long-term care insurance contracts that do not qualify for federal tax treatment, as long as the contracts comply with Texas law. The adopted amendments require insurers to disclose to potential insureds whether or not a contract is intended to qualify for favorable federal tax treatment. The Act also provides that to qualify the insured for favorable tax treatment, a long-term care insurance contract must contain a number of consumer protection provisions at least as favorable to the consumer as certain provisions in model acts and regulations promulgated by the National Association of Insurance Commissioners (NAIC). Subchapter Y contains many comparable provisions, but does not presently contain all consumer protection provisions referenced in the Act. The adopted amendments modify existing consumer protection provisions and add several new provisions, thus making minimum standards governing long-term care in Texas at least as favorable to Texas consumers as the standards contained in the Act and in certain nationally recognized model acts and regulations. In Insurance Code, Article 3.70-12, sec.7, the legislature specifically directed the department to ensure conformance with nationally recognized standards when promulgating rules under Article 3.70-12. The sections as adopted differ in some respects from the proposed sections, based on further study generated by the comments received, and the need to correct minor clerical errors. Significant changes include the following: In sec.3.3804, the definition of "certificate" has been revised to mirror statutory language excluding from regulation under Subchapter Y certificates that are delivered or issued for delivery in Texas under a single employer or labor union group policy that is delivered or issued for delivery outside of Texas. Also in sec.3.3804, the definition of "home health care services" has been revised to explicitly state that both medical and nonmedical services are included in the definition, and the definitions of "long-term care insurance contract" and "maintenance or personal care services" have been reorganized and reworded for the purpose of clarity. In paragraph (1) of sec.3.3818, the word "substantial" has been deleted from the phrase "substantial assistance. . [with] any two activities of daily living," because the word may add an unintended subjectivity to the factual determination of whether or not an insured can perform an activity of daily living ("ADL") without assistance. Section 3.3820(f) has been revised to clarify that an insurer may offer alternative forms of inflation protection not delineated in this section to a prospective insured only after the insurer has offered, and the prospective insured has rejected, one of the three delineated forms of protection. In sec.3.3826, provisions relating to long-term care coverage when Medicare is the secondary payor, and to coordination of long-term care coverage with Medicare coverage, have been deleted and moved to sec.3.3847. In the required provisions for Outlines of Coverage in sec.3.3832(b)(10) has been amended to clarify that a long-term care insurance contract will cover Alzheimer's and other biologically based brain diseases and serious mental illnesses, if such conditions cause an insured to meet the eligibility criteria of the contract (as explained in the provision required by sec.3.3832(b)(6)). The grandfathering provisions of sec.3.3849 have been revised to conform to grandfathering provisions of the Act. Under sec.3.3849 as adopted, a grandfathered group policy cannot be interpreted to lose its grandfathered status if it issues certificates on the policy after the effective date of these amendments. The grace period in sec.3.3849 has been extended to June 30, 1997 for marketing and selling policies meeting standards of Subchapter Y prior to the effective date of this adoption order. Any such policies sold during the grace period must guarantee issuance by July 1, 1997 of a policy conforming to the amendments to Subchapter Y adopted in this order. The grace period provisions are included solely to facilitate the transition of minimum standards for policies sold in Texas with the least amount of impact on marketing abilities during product modification. The amendments to sec.sec.3.3801, 3.3828 and 3.3831 remove references to the State Board of Insurance and replace them with references to the department or the commissioner, as appropriate. The amendments to sec.3.3802 state that part of the purpose of Subchapter Y is to allow the sale of long-term care insurance contracts which will qualify insureds, under certain conditions, for favorable tax treatment under federal law. New subsection (a) to sec.3.3804 states that unless otherwise provided by law, a long-term care insurance contract delivered or issued for delivery in Texas must contain definitions that conform with the definitions in sec.3.3804 and Subchapter Y. New subsection (b) to sec.3.3804 adds definitions for acute condition, adult day care facility, bathing, continence, dressing, eating, home health care services, maintenance or personal care services, toileting, and transferring. It also contains an amended definition of long-term care insurance contract, which will allow the sale in Texas of both contracts that qualify for favorable tax treatment under the Act and contracts that do not qualify for favorable tax treatment. For purposes of organization and clarity, the amendments to sec.3.3804 also include definitions which previously were contained in sec.sec.3.3806, 3.3808, 3.3809, 3.3811, 3.3813 and 3.3814 (which are being repealed pursuant to a separate adoption order), including: adult day care, home health agency, Medicare, mental or nervous disorder, and preexisting condition. The amendments to sec.3.3805 provide that no long-term care insurance policy may contain provisions regarding the matters set forth in sec.sec.3.3812, 3.3815, and 3.3818 that are less favorable to the policyholder than the standards contained in those sections. The amendments to sec.3.3807 clarify the standards for guaranteed renewability and provide that the policyholder retains the right to cancel the contract with the required notice and that upon such cancellation the insurer must return any unearned premium to the policyholder. The amendments to sec.3.3810 clarify the standards for noncancellability and provide that the policyholder retains the right to cancel the contract with the required notice and that upon such cancellation the insurer must return any unearned premium to the policyholder. The amendments to sec.3.3812 clarify the policy standards for the term "provider." The amendments to sec.3.3815 clarify the standards for home health and adult day care benefits, adding provisions required by the Act to be included in qualified long-term care contracts. The amendments also delete the definition of "home health agency," from this section, because the definition was moved to sec.3.3804. The amendments to sec.3.3818 provide that the impairment of cognitive ability shall not be defined more restrictively than requiring substantial supervision for the protection of self and others. Subsection (f) is added to sec.3.3820, which clarifies that if an insurer offers, and the insured rejects, a form of inflation protection required to be offered under sec.3.3820, the insurer may offer other forms of inflation protection. The amendments to sec.3.3822 require long-term care policies or certificates to contain renewal provisions no less favorable than guaranteed renewability or noncancellability, as those terms are defined, respectively, in sec.sec.3.3807 and 3.3810. The amendments to sec.3.3823 delete the requirement that every insurer selling long-term care insurance must maintain a record of all policy, contract, or certificate rescissions and furnish it to the department. For purposes of organization and clarity, this requirement is now contained in sec.3.3837. The amendments to sec.3.3824 delete the definition of preexisting condition in this section, because that definition now is contained in sec.3.3804. The amendments to sec.3.3826 qualify the allowed exclusion for treatment in a governmental facility with "unless otherwise required by law." The amendments to sec.3.3828 cross-reference the guaranteed renewability provisions of sec.3.3807 and the non-cancellability provisions of sec.3.3810. The amendments to sec.3.3829 require long-term care insurance policies and certificates to: appropriately caption and describe the nonforfeiture benefit, if elected; contain and appropriately caption a claim denial provision; disclose in all policies and certificates the criteria utilized to determine eligibility for benefits (in the manner prescribed by sec.3.3818); include a statement that the long-term care insurance contract either is intended to be a qualified long- term care contract or is not intended to be a qualified long-term care contract; and that if the policy is not intended to be a qualified long-term care contract, that the policy will not qualify the insured for favorable tax treatment. The amendments to sec.3.3830 clarify that this section applies to group long-term insurance coverage and require the inclusion of additional questions to be included in an application for a long-term care insurance contract regarding whether the applicant had another long-term care insurance policy or certificate in force during the last 12 months. The amendments to sec.3.3832 clarify that this section applies to group long- term care insurance coverage and require the outline of coverage to be in no smaller than 12 point type. The amendments to sec.3.3832 also revise the provisions regarding the type of coverage long-term care insurance is designed to provide; revise the language describing eligibility for payments of benefits in the outline of coverage; describe the permissible policy renewability provisions; and disclose that the policy provides coverage for insureds diagnosed with biologically based brain diseases and serious mental illnesses, if such conditions trigger the eligibility criteria set forth in the contract. The amendments to sec.3.3832 also provide disclosure in the outline of coverage regarding the Texas Department of Insurance's Consumer Helpline, the refund of premium in the event of the denial of an application, the offer of inflation protection, the offer of nonforfeiture benefits, and the federal tax treatment of long-term care insurance policies. The amendments to sec.3.3837 contain the requirement to report to the commissioner a record of all long-term care policy, contract, or certificate rescissions, which previously was contained in sec.3.3823(d). The amendments to sec.3.3837 also require an insurer to maintain a record of the number of claims for long-term care benefits denied during the preceding calendar year and to submit this information to the commissioner by June 30th of every year. The amendments to sec.3.3838 cross-reference the requirement to retain advertisements contained in sec.21.116 of this title (relating to Special Enforcement Procedures for Rules Governing Advertising and Solicitation of Insurance). The amendments to sec.3.3839 require entities marketing long-term care insurance coverage in Texas to establish mandatory procedures to assure that no person shall misrepresent a material fact in selling or offering to sell a long-term care policy, and that the policy shall be delivered no later than 30 days after the application for the long-term care insurance policy or certificate is approved. The amendments to sec.3.3840 clarify that until the department prepares a shopper's guide on long-term care coverage, insurers must provide the long term care insurance shopper's guide developed by the National Association of Insurance Commissioners ("NAIC") to all prospective applicants of a long-term care insurance policy or certificate. The amendments to sec.3.3849 establish the effective date for this subchapter as twenty days after the Commissioner files the adopted order with the Secretary of State. However, these amendments also provide for a grace period through June 30, 1997, allowing insurers to continue to issue policies or certificates meeting the requirements of Subchapter Y prior to these amendments, provided that any such policy or certificate contains a provision that guarantees the issuance of a replacement policy or certificate meeting the requirements of the newly adopted sections on or before July 1, 1997 without regard to claim experience, health status or medical history. New sec.3.3841 imposes requirements regarding unintentional lapse and reinstatement on each insurer offering long-term care insurance. New sec.3.3842 requires companies and agents, in recommending the purchase or replacement of any long-term care insurance policy, to make reasonable efforts to determine the appropriateness of the recommended purchase. New sec.3.3843 requires that premium rates may not be raised for a covered individual unless either the covered individual requests and receives a change of benefits or the increase is made for all members of the class to which the individual has been assigned. New sec.3.3844 imposes requirements on the mandatory offer of nonforfeiture benefits. New sec.3.3845 imposes requirements on long-term care policies that contain a refund of premium provision. New sec.3.3846 imposes requirements regarding the incontestability period for a long-term care insurance policy or certificate which incorporate Texas case law. New sec.3.3847 states that in marketing and issuing long-term care contracts in Texas, no person shall state that the contract is intended to be a "qualified long-term care insurance contract" under the Act, unless the contract meets the criteria for such a contract set forth in the Act and incorporated into these rules. New sec.3.3848 adopts by reference the form utilized in reporting the rescission of long-term care insurance policies. All commenters expressed general support for the amendments to the long-term care rules, as proposed by the Department. However, each commenter had either general or specific suggestions or concerns. GENERAL. Consumer Protection Provisions and Standardization. One commenter expressed support for the inclusion of new consumer protection provisions contained in nationally recognized model regulations. The commenter also supported standardization of long-term care insurance contracts through uniform definitions and standard benefit packages. Agency Response: The Department agrees that the consumer protection provisions will benefit Texas residents, as well as fulfill the statutory requirement that consumer protection provisions for long-term care insurance contracts sold in Texas are no less favorable than standards incorporated into the Act and adopted in nationally recognized model laws and regulations. The Department also agrees that the rules as adopted will require more uniformity in definitions and disclosures contained in long-term care insurance policies, while still allowing insurers flexibility in designing products. Splitting Rules to Expedite Process. One commenter stated that the only substantive change to Texas law necessary to ensure that Texas residents can buy federally tax-qualified long-term care insurance policies is the elimination of "mobility" from the Texas definition of activities of daily living (ADLs). The commenter urges the Department to expedite the rulemaking procedure on this particular change, and make other changes in a later proceeding. Agency Response: The Department disagrees that the rulemaking process should be split. The purpose of this rulemaking procedure is both to allow the sale of qualified long-term care insurance contracts in Texas and to meet Texas statutory requirements that consumer protection standards for long-term care insurance contracts sold in Texas are no less favorable than standards adopted in nationally recognized model laws and regulations or required by federal law. The Department believes that it is most efficient and beneficial to Texas insurers and consumers to get all of these provisions in place as soon as possible through one adoption order. The Department acknowledges that there are transitional issues faced by carriers. The Department is working to facilitate timely approval of new forms and has included a transitional grace period to permit continued marketing during the transitional period. Existing Sections Omitted from Proposal. One commenter was concerned that the Department had deleted altogether sec.3.3825 (relating to Prior Hospitalization or Institutionalization). Agency Response: The Department did not propose deletion of this section. In a rule proposal amending a subchapter, the Texas Register does not publish sections in the subchapters that are not amended by the proposal. The existing sec.3.3825 will remain effective and unchanged. COMMENTS ON SPECIFIC SECTIONS IN PROPOSAL. sec.3.3804 Definitions. Title of Section. One commenter suggested titling this section "Policy Definitions," because the section identifies minimum standards for definitions contained in a long-term care insurance contract. Agency Response: The Department disagrees with the commenter. The section defines terms both for use in policies and for use in this subchapter. Activities of Daily Living. One commenter expressed support for the Department's decision to maintain the six ADLs relating to benefit triggers--bathing, continence, dressing, eating, toileting and transferring--as defined in this section, and not to give insurers the option of using only five of the six, as allowed by the Act. Agency Response: The Department agrees with the commenter. Under the Act, a long-term care insurance contract cannot qualify for favorable federal tax treatment unless the insurer under the contract takes into account at least five of the six listed ADLs. The rules as adopted require insurers in Texas to take into account all six of the ADLs listed in the Act, and thus is consistent with the Act. The Department believes that allowing insurers to take into account only five ADLs would overly restrict access of Texas insureds to long-term care benefits. The Department does not believe that a more restrictive access to benefits is a desirable result for Texas insureds. Adult Day Care Facility. A commenter pointed out a clerical error in subsection (b)(4)--a reference to "Adult Date Care" should instead refer to "Adult Day Care." Agency Response: The Department agrees with the commenter and has made the suggested correction. Certificate. One commenter expressed concern that the rules, as proposed, conflict with the Insurance Code, Article 3.70-12 sec.1(d), which excludes from the Department's jurisdiction certificates that are delivered or issued for delivery in this state under a single employer or labor union group policy that is delivered or issued for delivery outside of Texas. Agency Response: The Department does not agree that the rules as proposed conflict with Article 3.70-12. The definition of certificate in subsection (b)(8), which was not altered in the proposed amendments, is consistent with the definition of certificate in section 2 of Article 3.70-12. Section 1(d) of Article 3.70-12 simply declares certain certificates outside the requirements of the article. The rules, as proposed and adopted, recognize this limitation by inclusion of the provisions in subsection (a) of this section. However, for clarification, the adopted subsection (b)(8) of the section includes language mirroring the provisions of Article 3.70-12, sec.1(d). Home Health Care Services. A commenter suggested that the Commissioner broaden the scope of services included within this policy definition, contained in subsection (b)(14), to reflect emerging industry practices and consumer needs. The commenter suggested adding the words "Medical and nonmedical" to the beginning of the definition, and adding "case management services, and maintenance or personal care services" to the list of services included within the definition. Agency Response: The Department disagrees that the suggested language must be added to this paragraph. The definition as proposed does not limit services to only medical services, and the list of services that may be defined by the insurer as home health care services is not exclusive. However, for the sake of clarity, the Department has made the recommended changes. Maintenance or Personal Care Services. A commenter disagreed with the reference to "disabilities" in this definition, contained in subsection (b)(16), because the rule pertains to assisting individuals with ADLs, not with disabilities. The commenter suggested tracking the language relating to ADLs in sec.3.3818. Agency Response: The Department disagrees that the language is inaccurate. The term "disabilities" refers to either category of impairments under sec.3.3818 that trigger eligibility for long-term care insurance--the inability, without substantial assistance, to perform two of the six ADLs, or the impairment of cognitive ability. However, since the word "disabilities" is not contained in sec.3.3818, the Department agrees that deleting the reference to disabilities in this definition may avoid confusion. The adopted section does not contain the phrase "with any of the disabilities as a result of which the individual is eligible for benefits." The paragraph, as adopted, defines "maintenance or personal care services" as follows: "Any care the primary purpose of which is the provision of needed assistance under sec.3.3818 of this title (relating to Standards for Eligibility for Benefits), including the protection from threats to health and safety due to impairment of cognitive ability." sec.3.3807. Policy or Certificate Standards for Guaranteed Renewability. A commenter expressed support and believes that the amendments to this section clarify the meaning of the term "guaranteed renewable" and will help to ensure that consumers are not misled when purchasing a long-term care insurance contract. Agency Response: The Department agrees that the amendments contain necessary clarifications that will be helpful to Texas consumers. sec.3.3810. Policy or Certificate Standards for Noncancellability. A commenter believes that the amendments clarify the meaning of noncancellability. The commenter stated that standard definitions are particularly important in regards to optional benefits. Agency Response: The Department agrees that the amendments contain necessary clarifications that will be helpful to Texas consumers. sec.3.3812. Policy Standards for Provider. A commenter agreed with these amendments, asserting that they would ensure coverage for any insured in a licensed facility or receiving licensed services. Another commenter expressed concern that elimination of the present list of allowed limitations on policy definitions--such as the one allowing insurers to require that the home or facility provide continuous, 24-hour nursing services under supervision of a registered nurse--could raise the expense of offering alternatives to nursing home care, particularly if state and federal standards are relaxed from their present levels. The commenter also stated that an insured who is eligible for long-term care benefits might not get the services the insured needs without the limitations in the present rule. This commenter asked whether a definition of a nursing home could include the list of limitations deleted by the amendment, if Texas licensure requirements included the same limitations. Agency Response: The Department agrees with the first commenter that the amendments will have the positive effect of not allowing definitions of long- term care service providers to be narrower than those promulgated by the state and federal bodies with jurisdiction over such facilities. For the same reasons, the Department disagrees with the second commenter. The list in the present statute was never intended to allow insurers to set more restrictive standards than set by law. Indeed, the present subsection (a) of this section already requires that definitions used by insurers be no more restrictive than those contained in the Insurance Code or otherwise in legislative enactments for the State of Texas. The elimination of the referenced language only avoids confusion, thus simplifying the efforts of insureds to make informed choices. Tying minimum standards in the rule to those of applicable state and federal law also avoids the time and expense of amending the rule each time licensure standards change. Not allowing definitions of a home or facility that are any narrower than the licensing standards expands, rather than restricts, an insured's access to health care. An insurer may maintain in its policy definitions restrictions deleted by these amendments, if the restrictions are no more stringent than those set by existing law. The amended section will allow definitions that are not more restrictive than a requirement that the facility be operated pursuant to state and federal law. sec.3.3815. Standards for Home Health and Adult Day Care Benefits. Home Health Aide. One commenter asked for an explanation of why subsection (b) would require insurers offering coverage for home health care or adult day care services to provide coverage for maintenance or personal care services provided by a home health aide. The commenter says that such a requirement is not a part of the NAIC model or the Act. The commenter also asserts that the section contains no definition for "home health aide." Agency Response: The Department disagrees with the commenter. Both the Act and the model regulation cited by the Act prohibit the exclusion of personal care services provided by a home health aide. Moreover, subsection (b) does not change existing law--under subsection (b)(4) of the existing sec.3.3815 (subsection (a)(4) of the adopted section), an insurer cannot require that services which lawfully can be provided by a home health aide be provided by a nurse or therapist. The Department also disagrees with the commenter's assertion that meaning of "home health aide" is not clear from the text of this section. Under both the existing and adopted sections, "home health aide" is a person working for a home health agency with proper licensure or certification to perform home health care services. Coverage for Home Health and Adult Day Care Services. A commenter stated that the new subsection (c) would perpetrate a bias in long-term care towards nursing homes, because insurers would be required under the subsection to provide coverage for home health or adult day care services equal to only one-half the dollar amount provided for nursing home services. The commenter recommends changing the provision to a two-to-one ratio of home care versus institutional care. Agency Response: The Department disagrees with the commenter. This provision improves consumer protection of Texas residents by setting a minimum standard where one did not previously exist. An insurer may offer benefits that exceed the minimum standard. This minimum standard for home health care benefits echoes the requirements in the Act and the model regulation incorporated by reference into the Act. sec.3.3818. Standards for Eligibility of Benefits. One commenter expressed concern that the section did not expressly require that a licensed health care practitioner make the determination that an insured could not perform, without substantial assistance, at least two of six ADLs. Accordingly, the commenter believes that insurers, and not licensed health care practitioners, could make this decision, thus creating a large loophole through which to deny coverage or deny reinstatement of coverage under sec.3.3841 (relating to unintentional lapse and reinstatement). The commenter also suggested that the word "substantial," as used in relation to the amount of assistance with ADLs necessary to trigger benefits, should be defined, to more clearly delineate the parameters of eligibility. The commenter suggested that the Commissioner adopt language reflecting the Act, which requires tax-qualified contracts to have provisions requiring that licensed health care practitioners make the ADL determinations. Agency Response: The Department disagrees with the commenter's interpretation that the section as proposed would allow insurers to make the determination that an insured could not perform, without substantial assistance, at least two of six ADLs. The language that concerns the commenter was not changed by the proposed amendments. The Department consistently has interpreted the language to require the ADL determination to be made by a licensed health care practitioner authorized by law to make such determinations. The phrase "as set forth by the insurer" in paragraph (1) of this section refers only to the insurer's ability to set the ADLs in a long-term care insurance policy, subject to the minimum requirements set forth in paragraph (1). The Department also disagrees that the word "substantial" in paragraph (1) could be used by insurers to deny valid claims for benefits. The Department views the determination as an objective, factual one--can or cannot the insured perform the ADL without assistance? It is the Department's understanding that industry agrees with this assessment. Because addition or deletion of the word "substantial" does not affect the application of the eligibility standard in paragraph (1), the word has been deleted from sec.3.3818(1). sec.3.3820. Requirement to Offer Inflation Protection. Mandated Offer vs. Mandated Benefit. One commenter suggested that inflation protection should be a mandatory benefit, rather than just a mandatory offer. Agency Response: The Department disagrees that inflation coverage should be a mandatory benefit. Inflation protection has been a mandatory offer in Texas for four years without any consumer complaints. The mandated offer of coverage is consistent with the Act and nationally recognized model laws. The section gives the consumer the flexibility of obtaining inflation protection or opting for a lower-priced product without the protection. Mandating coverage would add significantly to the cost of long-term care insurance products in Texas. On the other hand, a mandatory offer ensures the availability of such an option, while permitting each individual to evaluate the appropriateness of the purchase. Premium Disclosure. A commenter commended the Department for proposing in subsection (e) that the disclosure that premiums may change in the future unless guaranteed otherwise must be printed in 12 point type, rather than 10 point type. The commenter stated that the larger type will increase readability, particularly for prospective insureds with less than perfect vision. Agency Response: The Department agrees with the commenter. Other Forms of Inflation Protection. Two commenters stated that the proposed subsection (f) weakened the section by allowing insurers to devise any form of inflation protection they choose. The commenters suggested that insurers should not be allowed to offer an inflation protection benefit that provides less than a 5% increase in benefit levels, compounded annually. Agency Response: The Department disagrees that subsection (f) would allow insurers to offer whatever form of inflation protection they choose. Insurers must first offer the option to purchase one or more of the three forms of protection set forth in subsection (a). If the consumer rejects that offer, the insurer may offer alternative forms of protection, or no protection. For clarification, subsection (f) has been revised as follows: "Upon rejection of the inflation protection set forth in subsection (a) of this section, an insurer may offer other forms of inflation protection." Staff disagrees with the commenters' suggestion that all offers of inflation protection should provide no less than a 5% increase in benefit levels, compounded annually. The section will continue to require the offer of forms of protection that provide at least such a minimum benefit level. Presently, the Department believes that cost-effective options may include alternatives providing less than a 5% increase compounded annually (e.g., a 5% increase using simple interest principles), which provide an alternative to those consumers that might otherwise reject inflation protection. sec.3.3826. Limitations and Exclusions. One commenter objected to the language of subsection (a)(5) as inconsistent with the Act, because it would require carriers to provide coverage in situations in which Medicare pays as a secondary payor. The commenter also recommended that this section include a provision on nonduplication of Medicare deductibles and copayments. Agency Response: The Department disagrees with the commenter's interpretation of the provision. However, the Department agrees that placement of the provision within sec.3.3826 could cause confusion. The provision has been deleted from sec.3.3826 and moved to sec.3.3847 of this title (relating to Qualified Long- Term Care Insurance Contracts: Prohibited Representations). The Department also disagrees that this section needs additional language about nonduplication of Medicare deductibles and copayments. The definition of a long-term care insurance contract in sec.3.3804(15) expressly excludes Medicare supplement coverage from the definition. sec.3.3829. Required Disclosure Provisions. sec.3.3832. Outline of Coverage. Tax Consequences. One commenter stated that the text of the disclosure regarding tax consequences should be determined by the insurer, rather than the Department. The commenter included proposed language for its disclosure within the comment. Agency Response: The Department does not agree that it should alter its disclosure provisions. Both sec.3.3829(j), (k) and sec.3.3832(b)(16) require insurers to make disclosures about whether the long-term care insurance contract is or is not intended to be federally tax-qualified, and require that such disclosures be substantially similar to the disclosures contained in these sections. As the provisions establish a minimum standard for disclosure, an insurer does not have to use identical language to that promulgated by the Department. Moreover, if the insurer believes it is necessary, it can provide additional disclosures that are consistent with the promulgated language. The proposed disclosure included in the comment contains substantially similar content to the disclosures in sec.3.3829 and sec.3.3832, except that in the Outline of Coverage, the insured also must be advised to consult with a qualified tax advisor. sec.3.3832. Outline of Coverage. Biologically Based Brain Diseases and Serious Mental Illnesses. One commenter objected to proposed subsection (b)(10), which requires a description in the Outline of Coverage of biologically based brain diseases and serious mental illnesses that are covered by the policy, as inconsistent with the Act and describing matters not actually required to be covered in long-term care insurance contracts. Agency Response: The Department disagrees with the commenter. The amendments to subsection (b)(10) reflect the existing Texas requirement, set forth in sec.3.3826(a)(2)(B), that such biologically based brain diseases and mental illnesses cannot be excluded from coverage under a long-term care insurance contract. The prohibition against exclusion of such diseases does not mean that an insurer automatically must provide benefits upon a diagnosis, but an insurer will have to provide benefits if such brain diseases or mental illnesses result in impairment meeting the standards of sec.3.3818 of this subchapter. For purposes of clarity, the Department agrees that subsection (b)(10) should be amended to tie in the standards of eligibility in sec.3.3818, and the adopted section reflects this revision. The Department also disagrees that prohibiting insurers from excluding such brain diseases and mental illnesses is inconsistent with federal law. The exclusion is at least as favorable, and does not conflict with, provisions contained in national model regulation incorporated by reference into the Act. The Act provides that if a state imposes any policy requirement which is more stringent than those in the model regulations incorporated by reference into the Act, the requirements of the Act are deemed to be met if the state requirements have been met. Offer of Nonforfeiture Benefits: One commenter recommended deletion of the numerical example required by subsection (b)(15). The commenter stated that the example will be confusing, because it may have little relevance to the premium paid by the policyholder. Agency Response: The Department disagrees. A numerical example provides the prospective insured with a concrete explanation of how the nonforfeiture benefits will work. The numerical example supplied by the Department is illustrative. An insurer is permitted to design its own numerical examples that more closely reflect the options it is offering. sec.3.3837. Reporting Requirements. sec.3.3843. Premium Rate Restrictions. "Class of Business": One commenter supported the requirement that insurers report to the Commissioner, by class of business, the percentage of claims denied. The commenter likewise supported the premium rate restrictions proposed in sec.3.4843, which prohibits rate increases unless the insured requests and receives new benefits or the increase is made for all members of the class to which the individual has been assigned by the insurer. However, the commenter expressed concern that "class of business" was not defined in either section, and that the lack of definition could allow insurers to set unreasonably small classes. The commenter suggested that the Commissioner establish minimum standards for a credible class of business. Agency Response: The Department agrees that the amendments to sec.3.3837 and the addition of sec.3.3843 will benefit and protect consumers. In regards to the commenter's concerns with "class of business," any application of "class of business" would require tenable similarities and relationship between the members of the class and sufficient size, or the Department would not view the grouping as a "class of business" for purposes of these rules. The Department recognizes the commenter's concerns, and will continue to evaluate for possible future rulemaking. sec.3.3837. Reporting Requirements. sec.3.3849. Effective Date; Grace Period and Guarantee Issue Requirement. One commenter expressed concern about the requirement in sec.3.3849 that insurers file their first sec.3.3837 reports on June 30, 1997, for calendar year 1996. The commenter stated that the requirement was unduly burdensome because it covered a year in which these amended rules were not in effect, and many insurers may not have kept records of information required by sec.3.3837. The commenter recommended making the first reports for calendar year 1997, due on June 30, 1998. Agency Response: The Department disagrees that reporting period or deadlines should be changed. The Department has required reporting of some of the information sought by this rule since 1992, so such information should have been compiled by insurers during 1996. For newly required information, the Department will accept, for calendar year 1996 only, a statement in the report that the information was not tracked and is unavailable. sec.3.3839. Standards for Marketing. One commenter applauded the amendments prohibiting persons from misrepresenting a material fact in selling or marketing long-term care products and requiring that a policy be delivered no later than 30 days after approval of an application for insurance. The commenter stated that these amendments would benefit consumers, but also suggested that the amendments could be improved by requiring submission of marketing procedures to the Department for review. Agency Response: The Department agrees that these changes will benefits consumers. However, the Department does not agree that prior approval of procedures is within the present purview of the submissions required by the rule. Moreover, the Department already has authority to institute effective enforcement procedures, such as requiring submission of advertising materials, inquiry and subpoena power and the ability to seek significant penalties and restitution through enforcement actions. The Department also can review marketing procedures through its examination powers. sec.3.3840. Requirements to Deliver Shopper's Guide. A commenter disagreed with the section as proposed, stating that to comply with the NAIC model regulations, the section must require delivery of the NAIC Shopper's Guide to all prospective insureds in Texas, rather than allow the Department to require delivery of its own guide in lieu of the NAIC Guide, at such time as the Department develops such a guide. Agency Response: The Department disagrees. The model provision in question expressly contemplates that a Commissioner may promulgate a different guide than the one issued by the NAIC. For federal tax qualification, the Act requires that a long-term care insurance contract contain a provision at least as favorable as that contemplated by the NAIC Model Regulation. Section 3.3840 is consistent with the Act and the model regulation. sec.3.3841. Unintentional Lapse and Reinstatement. A commenter expressed support for these new protections against unintentional lapse. Agency Response: The Department agrees that the provisions in this section will enhance protection of consumers buying long-term care insurance contracts. sec.3.3842. Appropriateness of Recommended Purchase. Two commenters suggested replacing proposed sec.3.3842 with sec.21 of the most recent version of the NAIC's Long-Term Care Insurance Model Regulation. The commenters stated that this model provision is more helpful to consumers, because it contains more specific requirements, including provision of a detailed personal worksheet to prospective insureds. Agency Response: The Department disagrees with the commenters. Section 3.3842 is consistent with the Act, because it duplicates sec.22 of the January 1993 version of the NAIC model regulation, which is the provision incorporated by reference into the Act. The Department disagrees with the recommendation, because the Department does not believe that the alternative provision cited by the commenters accomplishes its intended result. However, the Department encourages insurers to develop appropriate suitability requirements to assist agents in making the determination required by the adopted section. The Department will continue to evaluate the issue of suitability of purchase for possible future rulemaking. sec.3.3844. Nonforfeiture Benefits. Consumer Choice of Benefit Options. Two commenters suggested that the proposed nonforfeiture protections could be enhanced by allowing the insured, rather than the insurer, to choose which nonforfeiture option would be included in a policy. Although the commenters acknowledge that the text of the Act requires only that the insurer choose at least one of the delineated options, the commenters, citing the Act's Conference Committee report, stated that Congress actually intended that the consumer be given the choice. Agency Response: The Department disagrees. The Department's nonforfeiture rule is at least as favorable to consumers as the nonforfeiture provision in the Act. The plain language of the Act gives insurers the option to choose at least one of the delineated options. Under the basic rules of statutory construction, the Act cannot be interpreted instead to give consumers that choice. Moreover, the Department does not believe that requiring insurers to offer all of the benefit options delineated in sec.3.3844 would benefit consumers, because the administrative costs of such a requirement likely would drive up the cost of insurance. Presently, long-term care issuers in Texas appear to have fully developed only the shortened benefit option. It would be premature at this time to mandate the offer of all of the benefit options. Standards for Determining Benefits. Two commenters suggested that the Department promulgate standards for determination of nonforfeiture credits to be applied under the reduced paid-up and extended term benefit options. One commenter further suggested that the Department include policyholder equity and interest in the calculation of the standard nonforfeiture benefit under the shortened benefit option. Agency Response: The Department disagrees that the suggested changes are necessary at this time. Section 3.3844 provides for the first time in Texas a mandated offer of at least one nonforfeiture benefit option, and contains appropriate standards for options presently available in the marketplace. Promulgation of further standards will require additional study and evaluation. The Department will continue to monitor these issues for possible future rulemaking. Timetable for Availability of Benefit Options. One commenter stated that the section as proposed conflicted with minimum requirements for tax qualification under the Act, because the section requires that insurers only offer nonforfeiture benefits beginning after the third year of coverage, and the Act has no such time limitation. Agency Response: The Department disagrees. The section does not require benefits to begin after the third year of coverage; it requires benefits to begin no later than the third year. This is consistent with the Act, and with nationally recognized model regulation. sec.3.3845. Permitted Refunds of Premium Provisions. One commenter supported this section, stating that the new standards would insure that all policyholders are treated similarly in regards to premium refunds. Agency Response: The Department agrees with the commenter. sec.3.3849. Effective Date; Grace Period and Guarantee Issue Requirement. New Certificates on Pre-1997 Policies. One commenter expressed concern that subsection (a) would apply amended Subchapter Y to certificates issued on or after January 1, 1997, on policies sold before January 1, 1997. Citing a report from the Congressional Joint Committee on Taxation, the commenter stated that under the Act, a group contract issued before 1997 did not lose its "grandfathered" status because new certificates were issued on or after January 1, 1997. Agency Response: The Department agrees with the commenter that the proposed language could have a retroactive effect on group policies issued before 1997, and that such an effect is inappropriate in this circumstance. The section has been changed to apply grandfathering provisions consistent with those applied under the Act. Grace Period and Guaranteed Issue of New Policy. A commenter stated that the grace period in subsection (b), which runs through March 31, 1997, is too short, and will not give insurers sufficient time to get new forms approved. The commenter suggests extending the grace period to June 30, 1997. The commenter also expressed concern that the guaranteed issue provisions required under subsection (b) to be in policies or certificates issued during the grace period would require refiling the entire contract for approval. The commenter suggested either allowing an insurer to certify to the Department that it would guarantee the issue of a contract meeting the requirements of amended Subchapter Y, or allowing the guaranteed issue provision to be filed separately for expedited consideration as an amendment to the form. Agency Response: The Department agrees that the grace period should be extended to June 30, 1997, and has made this change. Also, because this order is being adopted after January 1, 1997, the section has been revised to reflect an effective date of twenty days after entry of the order. The guaranteed issue provisions required by subsection (b) may be filed as an amendment and used in accordance with the file and use procedures set forth in the Insurance Code, Article 3.42. NAMES OF THOSE MAKING COMMENTS FOR AND AGAINST THE SECTIONS. For with changes: Aid Association for Lutherans, Blue Cross/Blue Shield of Texas, Consumers Union, GE Capital Assurance Company, John Hancock Mutual Life Insurance Company, Office of Public Insurance Counsel. Against: None. STATUTORY AUTHORITY. The amendments to Subchapter Y are adopted pursuant to the Insurance Code, Articles 3.70-12 and 1.03A. Article 3.70-12 provides that the department may adopt rules that are necessary and proper to implement the article. Under sections 3(d) and 7 of the article, any rules adopted by the Commissioner regarding long-term care insurance shall include requirements no less favorable than the minimum standards of benefits for long-term care insurance adopted in any model laws or regulations relating to minimum standards for benefits for long-term care insurance and in accordance with all applicable federal law. Article 1.03A provides that the Commissioner of Insurance may adopt rules and regulations to execute the duties and functions of the Texas Department of Insurance only as authorized by a statute. sec.3.3804. Definitions. (a) Except as otherwise provided by law or this subchapter, no long-term care insurance policy or certificate or group hospital service corporation subscriber contract may be delivered or issued for delivery in this state, unless it complies with, and contains definitions in conformance with, this subchapter. (b) The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise. (1) Activities of daily living--Bathing, continence, dressing, eating, toileting and transferring, as those terms are defined in this subsection. (2) Acute condition--The individual's medical condition is medically unstable. Such an individual requires frequent monitoring by medical professionals, such as physicians and registered nurses, in order to maintain his or her health status. (3) Adult Day Care--A social and health-related services program provided during the day in a community group setting, for the purpose of supporting frail, impaired elderly, or other disabled adults who can benefit from care in a group setting outside the home. (4) Adult Day Care Facility--Provider of Adult Day Care services, operated pursuant to the provisions of the Human Resources Code, Chapter 103 (concerning licensing and quality of care requirements in the provision of adult day care). (5) Applicant--The person who seeks to contract for benefits or services, in the instance of an individual long-term care insurance policy; or the proposed certificate holder or enrollee, in the instance of a group long-term care insurance policy. (6) Bathing--Washing oneself by sponge bath or in either a tub or shower, including the task of getting into or out of the tub or shower. (7) Care--Terms referring to care, such as "home health care, "intermediate care," "maintenance or personal care," "skilled nursing care," and other services, shall be defined in relation to the level of skill required, the nature of the care, and the setting in which the care must be delivered. (8) Certificate--Any certificate issued under a group long-term care insurance policy, which certificate has been delivered or issued for delivery in this state. For purposes of these sections, the term: (A) Also includes any evidence of coverage issued pursuant to a group health maintenance organization contract for long-term care health coverage. (B) Does not include certificates that are delivered or issued for delivery in this state under a single employer or labor union group policy that is delivered or issued for delivery outside this state. (9) Continence--The ability to maintain control of bowel and bladder function; or, when unable to maintain control of bowel or bladder function, the ability to perform associated personal hygiene (including caring for catheter or colostomy bag). (10) Dressing--Putting on and taking off all items of clothing and any necessary braces, fasteners or artificial limbs. (11) Eating--Feeding oneself by getting food into the body from a receptacle (such as a plate, cup or table) or by a feeding tube or intravenously. (12) Group long-term care insurance--A long-term care insurance policy or certificate of group long-term care insurance which is delivered or issued for delivery in this state, and issued to an eligible group as defined by the Insurance Code, Article 3.51-6, sec.1(a). (13) Home health agency--A business which provides home health service and is licensed by the Texas Department of Health under Texas Civil Statutes, Article 4447u. (14) Home health care services--Medical or nonmedical services provided to ill, disabled or infirm persons in their residences. Such services may include homemaker services, assistance with activities of daily living, respite care services, case management services, and maintenance or personal care services. (15) Long-term care insurance contract--Any insurance policy, group certificate, rider to such policy or certificate, or evidence of coverage issued by a health maintenance organization subject to the Texas Health Maintenance Organization Act (Texas Insurance Code, Chapter 20A) which is advertised, marketed, offered, or designed to provide coverage for not less than 12 consecutive months for each covered person on an expense-incurred, indemnity, prepaid, per diem or other basis, and which provides insurance protection only for one or more necessary or medically necessary services of the following types, administered in a setting other than an acute care unit of a hospital: diagnostic, preventive, therapeutic, curing, treating, mitigating, rehabilitative, maintenance or personal care. The term "long-term care insurance contract" shall not include any insurance policy, group certificate, subscriber contract, or evidence of coverage which is offered primarily to provide basic Medicare supplement coverage, basic hospital expense coverage, basic medical-surgical expense coverage, hospital confinement indemnity coverage, major medical expense coverage, disability income protection coverage, accident only coverage, specified disease or specified accident coverage, or limited benefit health coverage. The term includes a policy or rider, other than a group or individual annuity or life insurance policy, that provides for payment of benefits based on the impairment of cognitive ability or the loss of functional capacity. (16) Maintenance or Personal Care Services--Any care the primary purpose of which is the provision of needed assistance under sec.3.3818 of this title (relating to Standards for Eligibility for Benefits), including the protection from threats to health and safety due to impairment of cognitive ability. (17) Medicare--"The Health Insurance for the Aged Act, Title XVIII of the Social Security Amendments of 1965 as Then Constituted or Later Amended," or "Title I, Part I of Public Law 89-97, as Enacted by the Eighty-Ninth Congress of the United States of America and popularly known as the Health Insurance for the Aged Act, as then constituted and any later amendments or substitutes thereof," or words of similar import. (18) Mental or Nervous Disorder--A neurosis, psychoneurosis, psychopathy, psychosis, or mental or emotional disease or disorder of any kind. (19) Policy--Any policy, contract, subscriber agreement, rider, or endorsement, delivered or issued for delivery in this state by an insurer, fraternal benefit society, nonprofit group hospital service corporation, or health maintenance organization subject to the Texas Health Maintenance Organization Act (Texas Insurance Code, Chapter 20A). (20) Preexisting Condition--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. (21) Qualified long-term care insurance contract--A long-term care insurance contract meeting the requirements as contained in Internal Revenue Code of 1986, sec.7702B(b). (22) Qualified long-term care services--As the term is defined in Internal Revenue Code of 1986, sec.7702B(c). (23) Toileting--Getting to and from the toilet, getting on and off the toilet, and performing associated personal hygiene. (24) Transferring--Sufficient mobility to move into or out of a bed, chair or wheelchair or to move from place to place, either via walking, a wheelchair or other means. sec.3.3805. Standards in Policies. Except as otherwise provided by law or this subchapter, no long-term care insurance policy or certificate or group hospital service corporation subscriber contract, delivered or issued for delivery in this state, may contain provisions respecting the matters set forth in sec.sec.3.3812 (relating to Policy Standards for Provider), 3.3815 (relating to Standards for Home Health and Adult Day Care Benefits), and 3.3818 (relating to Standards for Eligibility for Benefits) of this title. sec.3.3818. Standards for Eligibility for Benefits. A long-term care insurance policy or certificate shall contain provisions conditioning eligibility for benefits or services upon the occurrence of the following events: (1) the inability to perform, without assistance, any two activities of daily living, as set forth by the insurer; provided, however, that such activities of daily living must include at a minimum those which are set forth and defined in sec.3.3804 of this title (relating to Definitions); or (2) the impairment of cognitive ability. For purposes of this subchapter, the term "impairment of cognitive ability" shall not be defined more restrictively than the deterioration or loss in intellectual capacity requiring substantial supervision for protection of self and others, as established by the clinical diagnosis of any licensed practitioner in this state authorized to make such a diagnosis. Such diagnosis shall include the patient's history and physical, neurological, psychological and/or psychiatric evaluations, and laboratory findings. sec.3.3820. Requirement To Offer Inflation Protection. (a) No insurer or other entity may offer a long-term care insurance policy or certificate in this state unless such insurer or other entity also offers to the prospective insured, or to the group policyholder, if the group policy will be issued to an employer, labor union, or continuing care retirement center, the option to purchase a policy that provides for benefit levels to increase throughout the interval of coverage to account for reasonably anticipated increases in the costs of long-term care services covered by the policy. Insurers must offer to each applicant, at the time of purchase, the option to purchase a policy that provides the inflation protection set out in paragraphs (1), (2), or (3) of this subsection. (1)-(2) (No change.) (3) The policy shall cover a specified percentage of actual or reasonable charges throughout the interval of coverage and not include a maximum specified indemnity or per diem amount or limit. (b) (No change.) (c) Where the policy is offered to a group, the offer required by provisions of this subsection shall be made to the group policyholder; except that in the instance where the group policy will not be issued to an employer, labor union, or continuing care retirement community, the offering shall be made to each prospective covered individual. (d) Inflation protection benefit increases under a policy which contains provisions for such increases, whether automatic or optional with the insured, shall continue without regard to an insured's age, claim status or claim history, or the length of time the person has been insured under the policy. (e) An offer of inflation protection providing for automatic benefit increases shall include an offer of a premium which the insurer expects to remain constant. Such offer shall disclose in a conspicuous manner, in no smaller than 12-point (where one point is 1/72 of an inch) boldface type, that the premium may change in the future unless the premium is guaranteed to remain constant. (f) Upon rejection of the inflation protection set forth in subsection (a) of this section, an insurer may offer other forms of inflation protection. sec.3.3826. Limitations and Exclusions. (a) No policy or certificate may be delivered or issued for delivery in this state as a long-term care insurance policy or certificate if such policy or certificate limits or excludes coverage by type of illness, treatment, medical condition, or accident, except as follows: (1) a preexisting condition or disease, as defined in sec.3.3804(b) of this title (relating to Definitions); and sec.3.3824 of this title (relating to Preexisting Conditions Provisions); (2)-(4) (No change.) (5) treatment provided in a governmental facility (unless otherwise required by law); benefits provided under Medicare or other governmental program (except Medicaid); any state or federal workers' compensation, employer's liability or occupational disease law, or any motor vehicle no-fault law; services performed by a member of the covered person's immediate family and services for which no charge is normally made in the absence of insurance. (b) Provisions of this section are not intended to prohibit exclusions and limitations by type of provider or territorial limitations. sec.3.3829. Required Disclosure Provisions. (a) Long-term care insurance policies and certificates shall contain a renewability provision as required by sec.3.3822 of this title (relating to Minimum Standard for Renewability of Long-term Care Coverage). Such provision shall be appropriately captioned, shall appear on the first page of the policy, and shall clearly state the duration, where limited, of renewability and the duration of the coverage for which the policy is issued and for which it may be renewed. (b)-(e) (No change.) (f) A long-term care insurance policy or certificate containing any limitations or conditions for eligibility other than those prohibited in the Insurance Code, Article 3.70-12, or sec.3.3824 of this title (relating to Preexisting Conditions Provisions) shall set forth a description of such limitations or conditions in a separate paragraph of the policy and certificate and shall label each paragraph "Limitations or Conditions on Eligibility for Benefits." (g) Long-term care insurance policies and certificates shall appropriately caption and describe the nonforfeiture benefit provision, if elected. (h) Long-term care insurance policies and certificates shall contain a claim denial provision which shall be appropriately captioned. Such provision shall clearly state that if a claim is denied, the insurer shall make available all information directly relating to such denial within 60 days of the date of a written request by the policyholder or certificate holder, unless such disclosure is prohibited under state or federal law. (i) Criteria utilized to determine eligibility for benefits shall be disclosed in all long-term care insurance policies and certificates, in the manner prescribed by sec.3.3818 of this title (relating to Standards for Eligibility). (j) If the insurer intends for a long-term care insurance policy or certificate to be a qualified long-term care insurance contract as defined by the Internal Revenue Code of 1986, sec.7702B(b), the policy or certificate shall include disclosure language substantially similar to the following. "This policy is intended to be a qualified long-term care contract as defined by the Internal Revenue Code of 1986, sec.7702B(b)." (k) If the insurer does not intend for the policy to be a qualified long-term care insurance contract as defined by the Internal Revenue Code of 1986, sec.7702B(b), the policy or certificate shall include disclosure language substantially similar to the following. "This policy is not intended to be a qualified long-term care insurance contract. This long-term care insurance policy does not qualify the insured for the favorable tax treatment provided for in the Internal Revenue Code of 1986, sec.7702B." sec.3.3832. Outline of Coverage. (a) An outline of coverage shall be delivered to an applicant for an individual or group long-term care insurance policy or certificate at the time of initial solicitation through means which prominently direct the attention of the recipient to the document and its purpose. In the case of agent solicitations, the outline of coverage shall be delivered prior to the presentation of an application or enrollment form. In the case of direct-response solicitations, the outline of coverage shall be delivered in conjunction with any application or enrollment form. The outline of coverage shall comply with the following standards and standard format. The contents of the outline of coverage shall include the following prescribed text. (1) The outline of coverage shall be a freestanding document, in no smaller than 12-point type. (2)-(4) (No change.) (b) The outline of coverage shall be in the following format. FIGURE 1: 28 TAC sec.3.3832(b) (1) POLICY DESIGNATION. This policy is (an individual policy of insurance) (a group policy which was issued in (indicate jurisdiction in which group policy was issued)). (2) PURPOSE OF OUTLINE OF COVERAGE. This outline of coverage provides a very brief description of some of the important features of your policy. This is not the insurance contract and only the actual policy provision will control the rights and obligations of the parties to it. The policy itself sets forth in detail those rights and obligations applicable to both you and your insurance company. It is very important, therefore, that you READ YOUR POLICY OR CERTIFICATE CAREFULLY. (3) TERMS UNDER WHICH THE POLICY OR CERTIFICATE MAY BE RETURNED AND PREMIUM REFUNDED. (A)-(B) (No change.) (4) MEDICARE SUPPLEMENT INSURANCE DISCLAIMER. THIS IS NOT MEDICARE SUPPLEMENT COVERAGE. If you are eligible for Medicare, review the Guide to Health Insurance for People with Medicare available from the insurance company. (A)-(B) (No change.) (5) LONG-TERM CARE COVERAGE. Long-term care insurance is designed to provide coverage for necessary or medically necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, and rehabilitative services, and maintenance or personal care services, provided in a setting other than an acute care unit of a hospital, such as in a nursing home, in the community, or in the home. Coverage is provided for the benefits outlined in paragraph (6) of this subsection. The benefits described in paragraph (6) of this subsection may be limited by the limitations and exclusions in paragraph (7) of this subsection. (6) BENEFITS PROVIDED BY THIS POLICY. (A) (Describe covered services and benefits, related deductible(s), waiting periods, elimination periods, and benefit maximums.) (B) (Describe institutional benefits, by skill level.) (C) (Describe noninstitutional benefits, by skill level.) (D) Eligibility for Payment of Benefits (NOTE: This portion of the outline of coverage must include an explanation of any instance in which provision of benefits is predicated upon the insured's having met a specific standard of eligibility for that benefit under the terms of the policy. The procedural requirements must be stated for such screening for the provision of benefits. The inability to perform activities of daily living and the impairment of cognitive ability shall be used to measure an insured's eligibility for long- term care and must be defined and described as part of the outline of coverage in conformance with the provisions of sec.3.3804 of this title (relating to Definitions). The outline of coverage also shall specify when an attending physician or other specified person must certify that the insured has a certain level of functional dependency in order for the insured to be eligible for benefits. If the policy or certificate contains provisions allowing for additional benefits (such as waiver of premiums, respite care, etc.) upon the occurrence of a certain contingency or contingencies, this paragraph also shall delineate each such benefit and specify the criteria for eligibility for each benefit. (7) LIMITATIONS AND EXCLUSIONS. (State the principal exclusions, reductions, limitations, restrictions, or other qualifications to the payments of benefits contained in the policy, including: (A)-(E) (No change.) (8) RELATIONSHIP OF COST OF CARE AND BENEFITS. Because the costs of long-term care services will likely increase over time, you should consider whether and how the benefits of this plan may be adjusted. (As applicable, indicate the following: (A)-(E) (No change.) (9) TERMS UNDER WHICH THE (POLICY) (CERTIFICATE) MAY BE CONTINUED IN FORCE AND IS CONTINUED. (For long-term care insurance policies or certificates, describe one of the following permissible policy renewability provisions.) (A) (Policies and certificates which are guaranteed renewable shall contain the following statement: (i) RENEWABILITY: THIS POLICY (CERTIFICATE) IS GUARANTEED RENEWABLE. This means you have the right, subject to the terms of your policy (certificate), to continue this policy as long as you pay your premiums on time. (Company Name) cannot change any of the terms of your policy on its own, except that, in the future, IT MAY INCREASE THE PREMIUM YOU PAY. (ii) (Policies and certificates that are noncancellable shall contain the following statement:) RENEWABILITY: THIS POLICY (CERTIFICATE) IS NONCANCELLABLE. This means that you have the right, subject to the terms of your policy, to continue this policy as long as you pay your premiums on time. (Company Name) cannot change any of the terms of your policy on its own and cannot change the premium you currently pay. However, if your policy contains an inflation protection feature where you choose to increase your benefits, (Company Name) may increase your premium at that time for those additional benefits.) (B) (for group coverage, a specific description of continuation/ conversion provisions applicable to the certificate and group policy); and (C) (a description of waiver of premium provisions or a statement that there are no such provisions.) (10) ALZHEIMER'S DISEASE, OTHER ORGANIC BRAIN DISORDERS, AND BIOLOGICALLY BASED BRAIN DISEASES/SERIOUS MENTAL ILLNESS. (State that the policy provides coverage for insureds who meet the eligibility requirements explained above in paragraph (6) of this subsection because of a clinical diagnosis of Alzheimer's disease or related degenerative illnesses and illnesses involving dementia, or due to biologically based brain diseases/serious mental illnesses, including schizophrenia, paranoid and other psychotic disorders, bipolar disorders (mixed, manic, and depressive); major depressive disorders (single episode or recurrent); and schizo-affective disorders (bipolar or depressive). Specifically describe each benefit screen or other policy provision which provides preconditions to the availability of policy benefits for such an insured.) (11) PREMIUM. (A)-(C) (No change.) (12) TEXAS DEPARTMENT OF INSURANCE'S CONSUMER HELP LINE. An insurer shall include notification that the prospective insured may call the Texas Department of Insurance's Consumer Help Line at 1-800-252-3439 for agent, company, and any other insurance information, and 1-800-599-SHOP to order publications related to long-term care coverage, and the Texas Department of Aging at 1-800-252-0240 to receive counseling regarding the purchase of long-term care or other health care coverage. (13) DENIAL OF APPLICATION. A long-term care insurer shall state that within 30 days of denial of an application, it will refund any premiums paid by a long- term care applicant. (14) OFFER OF INFLATION PROTECTION. Insurers shall include the information set out in subparagraphs (A) and (B) of this paragraph regarding the offer of inflation protection. (A) A graphic comparison of the benefit levels of a policy and certificate, if applicable, that increases benefits due over the policy interval with a policy that does not increase benefits, depicting benefit levels over at least a 20- year period, shall be provided. (B) A disclosure of any expected premium increases or additional premiums to pay for automatic or optional benefit increases shall be made. If premium increases or additional premiums will be based on the attained age of the applicant at the time of the increase, the insurer shall also disclose the magnitude of the potential premiums the applicant would need to pay at ages 75 and 85 for benefit increases. An insurer may use a reasonable hypothetical or a graphic demonstration for the purposes of this disclosure. (15) OFFER OF NONFORFEITURE BENEFITS. Insurers shall include the information set out in subparagraphs (A) and (B) of this paragraph regarding the offer of nonforfeiture benefits. (A) A complete and clear explanation of each nonforfeiture option being offered, including an actual numerical example (See Figure Number 2). FIGURE 2: 28 TAC sec.3.3832(b)(15)(A) (B) Disclosure of the premium and percentage increase in premium associated with each of the non-forfeiture benefits offered. (16) DISCLOSURE REGARDING FEDERAL TAX TREATMENT OF LONG-TERM CARE INSURANCE POLICY. (A) Policies intended to be qualified long-term care insurance policies. Include disclosure language substantially similar to the following: "This policy is intended to be a qualified long-term care contract as defined by the Internal Revenue Code of 1986, sec.7702B(b). There may be tax consequences associated with the purchase of a qualified long-term care insurance contract, such as the tax deductibility of premiums and the exclusion from taxable income of benefits. The prospective insured is urged to consult with a qualified tax advisor." (B) Policies which are not intended to be a qualified long-term care insurance contract. Include disclosure language substantially similar to the following: "This policy is not intended to be a qualified long-term care insurance contract as defined by the Internal Revenue Code of 1986, sec.7702B(b). This policy will not qualify the insured for the favorable tax treatment provided for in the Internal Revenue Code of 1986, sec.7702B. The prospective insured is urged to consult with a qualified tax advisor." Additionally, the insurer shall disclose the criteria which result in the policy or certificate not being classified as a qualified long-term care insurance contract. (17) ADDITIONAL FEATURES. (A) (Indicate if medical underwriting is used.) (B) (Describe other important features such as: unintentional lapse as provided by sec.3.3841 of this title (relating to unintentional lapse and reinstatement) sec.3.3844. Nonforfeiture Benefits. (a) Required Offering of Nonforfeiture Benefits. No insurer or other entity may offer a long-term care insurance policy or certificate in this state unless such insurer or other entity also offers to the prospective insured, or to the group policyholder, the option to purchase a policy that contains nonforfeiture benefits. (b) Nonforfeiture Benefit Provisions. (1) The nonforfeiture provision shall provide for a benefit available in the event of a default in the payment of any premiums. The amount of the benefit may be adjusted subsequent to being initially granted only as necessary to reflect changes in claims, persistency, and interest as reflected in changes in rates for premium paying contracts approved by the commissioner for the same contract form. (2) The nonforfeiture provision shall be clearly and conspicuously captioned. (c) Nonforfeiture Benefit Options. Insurers shall offer at least one of the following nonforfeiture options: (1) reduced paid-up; (2) extended term; (3) shorten benefit period; or (4) other offerings approved by the U.S. Secretary of Health and Human Services as provided by the Internal Revenue Code sec.7702B(g)(4)(B). (d) Nonforfeiture Benefit Standards/Requirements. (1) No policy or certificate shall begin a nonforfeiture benefit later than the end of the third year following the policy or certificate issue date except that for a policy or certificate with attained age rating, the nonforfeiture benefit shall begin on the earlier of: (A) The end of the tenth year following the policy or certificate issue date; or (B) The end of the second year following the date the policy or certificate is no longer subject to attained age rating. For purposes of this section, attained age rating is defined as a schedule of premiums starting from the issue date which increases with increasing age. (2) Nonforfeiture credits may be used for all care and services qualifying for benefits under the terms of the policy or certificate, up to the limits specified in the policy or certificate. (3) All benefits paid by the insurer while the policy or certificate is in premium paying status and in the paid up status will not exceed the maximum benefits which would have been payable if the policy or certificate had remained in premium paying status. (4) There shall be no difference in the minimum nonforfeiture benefits as required under this section for group and individual policies. (5) Premiums charged for a policy or certificate containing nonforfeiture benefits shall be subject to the loss ratio requirements of sec.3.3831 of this title (relating to Loss Ratio Standards and Rates) treating the policy as a whole. (6) A qualified actuary shall certify as to the reasonability of rates charged for each nonforfeiture benefit and the reserving required by sec.3.3819 of this title (relating to Requirement for Reserve) shall include reserving for the nonforfeiture options. (e) Additional Requirements for Shortened Benefit Period. An insurer offering a shorten benefit period shall comply with the following: (1) The shortened benefit period shall provide paid-up long-term care insurance coverage after lapse. The same benefits (amounts and frequency in effect at the time of lapse but not increased thereafter) will be payable for a qualifying claim, but the lifetime maximum dollars or days of benefits shall be determined as specified in paragraph (2) of this subsection. (2) The standard nonforfeiture credit will be equal to 100% of the sum of all premiums paid, including the premiums paid prior to any changes in benefits. The insurer may offer additional shortened benefit period options, as long as the benefits for each duration equal or exceed the standard nonforfeiture credit for that duration. However, the minimum nonforfeiture credit shall not be less than 30 times the daily nursing home benefit at the time of lapse. In either event, the calculation of the nonforfeiture credit is subject to the limits specified in the policy or certificate. (f) Disclosure of Nonforfeiture Benefits. The application or a separate form shall include an election to accept or reject the nonforfeiture benefit. The rejection notice shall state: "I have reviewed the outline of coverage and the explanation of nonforfeiture benefits and I reject the nonforfeiture option." The agent shall provide information to assist the prospective policyholder in accurately completing the rejection statement. sec.3.3847. Qualified Long-Term Care Insurance Contracts: Prohibited Representations. (a) In marketing and issuing long-term care insurance contracts in Texas, no person shall state that any such contract is intended to be a "qualified long- term care insurance contract" as defined in sec.3.3804 of this title (relating to Definitions) unless the contract: (1) provides insurance protection only for services which are "qualified long- term care services," as defined in sec.3.3804 of this title (relating to Definitions); (2) does not provide for a cash surrender value or other money that can be paid, assigned or pledged as collateral for a loan or borrowed, except on a complete surrender or cancellation of the contract; (3) provides that all refunds of premium and all policyholder dividends or similar amounts are applied as a reduction in future premiums or to increase future benefits, except for any refund on the death of the insured, or on a complete surrender or cancellation of the contract, which cannot exceed the aggregate premiums paid under the contract; (4) does not pay or reimburse expenses incurred under Medicare or which would be reimbursable under Medicare but for the application of a deductible or coinsurance amount, except expenses which are reimbursable under Medicare only as a secondary payor; and (5) otherwise meets the applicable requirements of this subchapter. (b) Neither this section, nor any other provision of law, shall be construed or applied so as to prohibit the offering of a long-term care insurance contract on the basis that the contract coordinates its benefits with those provided under Medicare. sec.3.3849. Effective Date; Grace Period and Guarantee Issue Requirement. (a) Except as otherwise provided, the sections of this subchapter, as amended and adopted by the commissioner, shall become effective 20 days from the date they are filed with the Office of the Secretary of State and shall be applicable to all long-term care insurance policies and subscriber contracts of hospital and medical service associations filed for approval on and after that date. These sections as amended or added apply to all policies delivered or issued for delivery on or after the effective date. The first reporting period for the requirements set out in sec.3.3837 of this title (relating to Reporting Requirements) shall be calendar year 1996, with the first report due to the department not later than June 30, 1997. The minimum standards contained in this subchapter that were enacted prior to the adoption of these amendments shall remain in effect until the effective date of these sections. (b) Notwithstanding subsection (a) of this section, a long-term care insurance policy or certificate meeting the requirements of this subchapter, as effective until the effective date of these amendments, may be delivered or issued for delivery on or before June 30, 1997, even if the policy or certificate does not comply with the amendments to this subchapter, provided that such policy or certificate contains a provision: (1) guaranteeing the issuance at the option of the policyholder, on or before July 1, 1997, of a replacement policy or certificate meeting the requirements of this subchapter as of the effective date of these amendments; and (2) stating that the replacement policy or certificate will be issued without regard to claim experience, health status or medical history. FIGURE 1: 28 TAC sec.3.3849(b)(2) 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 April 18, 1997. TRD-9705293 Caroline Scott General Counsel and Chief Clerk Texas Department of Insurance Effective date: May 8, 1997 Proposal publication date: December 6, 1996 For further information, please call: (512) 463-6327 SUBCHAPTER Y. Minimum Standards for Benefits for Long-Term Care Coverage Under Individual and Group Policies 28 TAC sec.sec.3.3806, 3.3808, 3.3809, 3.3811, 3.3813 and 3.3814 The Commissioner of Insurance adopts the repeal of sec.sec.3.3806, 3.3808, 3.3809, 3.3811, 3.3813 and 3.3814, without changes to the proposed text as published in the December 6, 1996, issue of the Texas Register (21 TexReg 11727). The repealed sections each contained definitions, or incorporated a definition by reference. The substance of each of these definitions has been placed with other definitions in sec.3.3804 of this title, which is adopted elsewhere in this issue of the Texas Register. The repeal of sec.sec.3.3806, 3.3808, 3.3809, 3.3811, 3.3813 and 3.3814 will not substantively affect Subchapter Y, because the substance of these provisions has been moved to another section. The Department received no comments on the proposal. The repeal of sec.sec.3.3806, 3.3808, 3.3809, 3.3811, 3.3813 and 3.3814 is adopted pursuant to the Insurance Code, Articles 3.70-12 and 1.03A. Article 3.70-12 provides that the department may adopt rules that are necessary and proper to implement the article. Article 1.03A provides that the Commissioner of Insurance may adopt rules and regulations to execute the duties and functions of the Texas Department of Insurance only as authorized by a statute. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on April 18, 1997. TRD-9705292 Caroline Scott General Counsel and Chief Clerk Texas Department of Insurance Effective date: May 8, 1997 Proposal publication date: December 6, 1996 For further information, please call: (512) 463-6327 CHAPTER 21. Trade Practices SUBCHAPTER K. Medical Child Support, Unfair Practices 28 TAC sec.sec.21.2001, 21.2002, and 21.2004 - 21.2011 The Commissioner of Insurance adopts new subchapter K, sec.sec.21.2001, 21.2002, and 21.2004 - 21.2011, concerning medical child support. Sections 21.2001, 21.2002, 21.2004-21.2006, and 21.2008-21.2010 are adopted with changes to the proposed text as published in the October 18, 1996, issue of the Texas Register (21 TexReg 10272). Sections 21.2007 and 21.2011 are adopted without changes and will not be republished. A public hearing was requested on the proposal and held January 22, 1997. Under Article 3.96-10, the commissioner shall adopt rules necessary to implement Article 3.96-1, et seq., enacted by the 74th Legislature, 1995, in Senate Bill 793 relating to the enforcement of certain child support and medical support obligations and the requirements of 42 U.S.C. sec.1396a(a)(60). The sections are necessary to set forth requirements and to define certain acts of insurers with regard to medical child support that constitute unfair or deceptive practices, including practices concerning enrollment of a child for dependent health coverage, cancellation or nonrenewal of coverage of a child entitled to enrollment, notice of availability of continuation or conversion coverage, assignment of medical support rights to a state agency, the submission of information to custodial parents and state agencies, the payment of claims, and service area restrictions. New Subchapter K is necessary to clarify certain provisions of Article 3.96-1, et seq. For instance, Subchapter K clarifies the procedures for the enrollment of a child who is the subject of a medical support order and for the submission and payment of claims. Subchapter K also clarifies that a child entitled to enrollment under this subchapter does not include a child whose eligibility has terminated due to nonpayment of premium and that in the event notification is to be provided to a custodial parent, the custodial parent shall notify the insurer of any change of address for the purpose of providing notification. Additionally, Subchapter K clarifies that insurers may use an alternative delivery system, such as, other indemnity insurers or reciprocal agreements with other HMOs to provide coverage to a child who is the subject of a medical support order and lives outside the insurer's service area. Section 21.2001 contains definitions used in this subchapter. Section 21.2002 contains prohibitions against the denial of enrollment of a child who is the subject of a medical support order under the health coverage of the child's parent based on certain grounds. Section 21.2004 requires an insurer to permit the parent to enroll the child who is the subject of a medical support order without regard to any enrollment period. This section also requires that enrollment shall be automatic for the first 31 days after receipt of a medical support order by the employer. Section 21.2005 sets forth prohibitions on cancellation or nonrenewal of coverage of a child subject to a medical support order. Section 21.2006 requires an insurer in the event health coverage is terminated to provide notice of availability of continuation or conversion coverage to a custodial parent and the child support agency of the costs and other requirements for extending or converting such coverage. Section 21.2007 prohibits an insurer from imposing requirements on a state agency that has been assigned the rights of a child who is the subject of a medical support order which are different from the requirements applicable to an agent or assignee of any other covered individual. Section 21.2008 sets forth the information an insurer shall provide to a state agency providing medical assistance or to a child support agency enforcing medical support and to a custodial parent. Section 21.2009 prohibits the insurer from requiring the approval of the insured or enrollee parent for the submission of claims. This section also requires an insurer to make payments on covered claims directly to the custodial parent, health care provider, adult child or state agency making the claim. Section 21.2010 prohibits an insurer from enforcing otherwise applicable policy provisions that would deny, limit, or reduce payment for claims for a covered child who is the subject of a medical support order and lives outside the insurer's service area. Section 21.2011 defines acts that constitute unfair or deceptive practices and provides that a violation of these sections shall subject the insurer to the penalties provided in the Insurance Code. General Comment: A commenter stated that sec.1301(B)(a) of the Federal HMO Act prohibits a federally qualified HMO from having more than 10% of its physician charges by non-participating providers. The commenter asked if this provision was given any consideration when the rules were drafted. Response: The agency did take into consideration this requirement for federally qualified HMOs prior to proposal of these rules. Article 3.96-2 states that an insurer may not deny enrollment on the ground that the child does not reside with the parent or in the insurer's service area. Article 3.96-8 states that an insurer may not enforce otherwise applicable policy provisions that would deny, limit, or reduce payment for claims for a covered child who lives outside the insurer's coverage territory but inside the United States. The statute requires that an HMO provide coverage outside the service area. Although there is a possibility that more than 10% of its physician charges will be from non- participating providers, it is also possible that expenses outside of the service area will not exceed 10%. Additionally, an HMO may use an alternative delivery system by contracting with an indemnity insurer to provide coverage for a child who lives outside the service area to avoid going over the 10% federal requirement. Comment: A commenter requested that the entire rule should only address "children" with the exception of those circumstances where parents are required by State law to support a child who has reached his majority age. Response: The agency agrees with this comment. The definition of child includes a person under 18 years of age who is not married and who has not had the disabilities of minority removed for general purposes. There was a typo in the proposed rule sent to the Texas Register in the definition of child. The definition of child is amended to state "(B) in the context of child support, 'child' includes a person over 18 years old for whom a person may be obligated to pay child support." Comment: A commenter stated it is unnecessary and inappropriate to mirror the statutory language and it may result in confusion as to what is expected of industry through minor verb and adjective changes. Response: The agency disagrees and does not believe it will be confusing to mirror statutory language with minor changes. For the sake of completeness, a large portion of the statutory language was included to allow carriers a single location for complete insurance requirements pertaining to Medical Child Support. Comment: A commenter supports the rules as published on behalf of the 150,000 Texas children who will receive greater access to care by virtue of these rules and compliments staff for the work performed on the rules. The commenter stated that during the 74th legislative session, there were three public hearings before separate legislative committees concerning the medical child support provisions. The health insurance industry did not testify at any of these hearings nor were any objections raised during the full Senate's consideration of Senate Bill 793. The commenter requested the rules be adopted as proposed. Response: The agency appreciates these comments. Section 21.2001. Comment: A commenter stated that the rule defines "child" as a person under 18 years of age or over 18 for whom a person may be obliged to pay child support. The commenter stated they currently have numerous policies which cite an age of majority for all purposes. A commenter asked if for instance, a medical support order is received for a 23 year old, can the carrier deny enrollment because contractually the child would not be eligible for coverage? Response: Carriers could deny coverage to a child if the child did not meet the eligibility requirements of the contract, such as age. However, other eligibility or underwriting requirements such as enrollment periods or preexisting conditions could not be utilized for denying coverage to a child. Comment: A commenter stated that the rules have two definitions of "group health plan" - one contained as a stand-alone definition in the rule and the second within the definition of "insurer". The commenter suggested the deletion of the stand alone definition of "group health plan." Response: The agency agrees with the commenter. The definition for "group health plan" is used only in sec.21.2003(b). Since sec.21.2003(b) has been deleted, the definition of group health plan has also been deleted. Comment: A commenter questioned if the term "health coverage" within the definition of medical support would include court-mandated dental coverage. Response: The term "health coverage" within the definition of medical support order would not include court mandated dental coverage because the definition of health insurer in Article 3.96-1, Insurance Code, means "any insurance company, group hospital service cooperation, or HMO that delivers, or issues for delivery an individual, group, blanket or franchise insurance policy ... that provides benefits for medical or surgical expenses incurred as a result of an accident or sickness." (emphasis added). Sections 21.2001 and 21.2005(c). Comment: A commenter requested a definition of "parent" be included. The commenter suggested that the definition include natural or adoptive parents and not step-parents unless the court order says otherwise. The following question was asked: if the only parent eligible for coverage thorough an insurer is a step-parent is the step-child eligible for coverage?" Another commenter stated it is unclear in sec.21.2005(c) whether the "parent" includes the employee/parent as well as the spouse of the employee/parent. Agency Response: Specifically, Article 3.70-2(M)(2) prohibits a group or individual accident or sickness policy that provides coverage for dependent children of a person insured from excluding or discontinuing coverage or setting a different premium for the natural born or adopted child of the spouse of the insured, provided the child resides with the person insured. (emphasis added). If a child of the spouse resides with the person insured, then that step-child would be eligible for dependent health coverage and the provisions of Articles 3.96-1, et seq. would apply. However, the provisions of Articles 3.96-1, et seq., Texas Insurance Code would not otherwise apply to a step-parent's policy. Carriers are encouraged to allow step-children to be added even if the step- child does not reside with the insured. Section 21.2002. Comment: A commenter requested clarification regarding reconciling sec.21.2002(a)(1) with sec.21.2002(b) when a preexisting condition exists. Does this rule mean a carrier must enroll the child but may deny claims relative to a pre-existing condition for the time period specified in the policy? Response: An insurer cannot deny enrollment of a child based on a preexisting condition as provided in sec.21.2002(a)(1). However, under sec.21.2002(b), an insurer may enforce otherwise applicable policy limitations on preexisting conditions, provided such provisions comply with federal and state law. Section 21.2002(b). Comment: Another commenter suggested the following change "This section does not prohibit an insurer from enforcing otherwise applicable policy provisions, such as waiting period limitations or other applicable limitations on pre-existing conditions so long as such provisions are in accordance with federal and state laws." Response: The agency agrees with this comment and has incorporated the recommended change into the language of sec.21.2002(b). Section 21.2003. Comment: The commenter stated the Texas Department of Insurance has no basis for adopting this section of the rule because Subchapter J of Chapter 3, Texas Insurance Code, addresses Medical Support Orders, not adopted children, and 29 U.S.C. sec.1169(c) is part of ERISA and ERISA is not applicable to all group plans. Response: Section 21.2003 was added for the purpose of additional clarification. Due to comments received, the agency has deleted sec.21.2003 to avoid confusion. However, if an adoption order specifies medical coverage shall be provided to an adopted child, then that child shall be subject to this subchapter. The agency has also deleted the definition of "child placed for adoption" in sec.21.2001 because it is only referenced in sec.21.2003. Section 21.2004. Comment: A commenter stated it was unclear if a parent eligible for dependent coverage must also be covered in order for coverage for the child to be effective. The commenter pointed out that without such requirements the regulation would be mandating dependent-only coverage and that they know of no plan or insurer that offers such coverage. The commenter suggested the following language be deleted from the rule: "a parent eligible for dependent health coverage through an insurer." Response: The agency disagrees with the recommended change to the language of sec.21.2004. Dependent-only coverage is not being mandated. However, carriers are required by sec.21.2004(a) to allow the parent, who is eligible for coverage, to enroll along with the child without regard to any enrollment period restrictions that might otherwise be applicable to the parent or the child. Article 3.96-3(a) states that enrollment should be allowed without regard to any enrollment period restrictions. Restricting enrollment of the parent would restrict the enrollment of the child. The language of the rule clarifies this. Section 21.2004(a). Comment: A commenter stated that the term "change in family circumstances" is not normally seen in insurance contracts except in connection with cafeteria plans under sec.125 of the Internal Revenue Code ("IRC"). The commenter suggested that to clarify that the purpose of the inclusion of this language is to prevent potential violations of IRC provisions regulating revocations of benefit elections under cafeteria plans, language should be added to the rule clarifying this position. A different commenter stated that deleting this language was inappropriate because the language regarding change in family circumstances mirrors the language contained in TEX. FAM. CODE sec.154.184(a). Response: The agency disagrees with the first commenter's reason for the purpose of the language. The sentence in sec.21.2004(a) stating that the receipt of a medical support order shall be considered a change in family circumstances was added to mirror the language in TEX. FAM. CODE sec.154.184(a). The purpose of the inclusion of this language was not as stated by the commenter, to prevent potential violations of Internal Revenue Code provisions regulating revocations of benefit elections under cafeteria plans. Consequently, it is not appropriate to add language to the rule clarifying that the purpose of this language is to prevent potential violations of the Internal Revenue Code. Section 21.2004(c). Comment: To avoid adverse selection, a commenter suggested that sec.21.2004(c) be modified to require the employee, custodial parent or child support agency to present the medical support order to the employer or insurer within 31 days of the date of the order. Another commenter stated that there would be problems with modifying the rule to require the presentation of the order within 30 days of the date of the order due in part to the lengthy time period it can take to get a medical child support order back from a court. A commenter stated it would also be problematic to make such a modification to the rule if, for example, there was a change of employment 10 years from the date of the order. If the language to the rule is changed as suggested, the employer would not be required to immediately enroll the child subject to the medical child support order 10 years after the date of the order due to the parent's change of employment because the order would be presented to the employer more than 30 days from the date of the order. Response: The agency disagrees with the comment suggesting modification to the language of the rule because this area is controlled by sec.154.184(b) of the Family Code. Under sec.154.184(b) of the Family Code, a child shall be automatically enrolled for the first 31 days after the receipt of the order by the employer. Due to this provision in the Family Code, the change as suggested by the commenter is not appropriate. Section 21.2004(a). Comment: A commenter stated that sec.21.2004(a) appears to conflict with Article 3.70-2(M)(3). The commenter stated that Article 3.70-2(M)(3) allows underwriting of late entrants, even those under a medical support order. The commenter suggested the conflict be reconciled by considering the date of the support order as the original eligibility date and not applying any potential late enrollment criteria because the child could have been enrolled earlier. The commenter further stated that applying late enrollment underwriting when the child is not enrolled in a timely fashion (from the date of the order) would be appropriate. Response: The agency disagrees with this comment. Section 21.2004(a) mirrors the language contained in TEX. INS. CODE ANN. Art. 3.96-3(a). Article 3.96-3 is an exception to Article 3.70-2(M)(3) which provides in the event of late enrollment, the insurance company may require evidence of insurability before inclusion of the dependent child for coverage under the policy. Under Article 3.96-3, the insurer shall permit the parent to enroll a child subject to a medical support order without regard to any enrollment period restriction. In the event there is a conflict between Article 3.70-2(M)(3) and Article 3.96- 3(a), Article 3.96-3 prevails because under TEX. GOV'T CODE sec.311.025, the statute latest in enactment prevails. Comment: To ensure timely establishment of automatic coverage, a commenter suggested the regulation be modified to require employers to immediately notify insurers upon receipt of the medical support order. Response: The agency disagrees that modification is necessary because TEX. FAM. CODE sec.154.184(c) already addresses this. Additionally, this agency does not have regulatory authority over employers. Comment: A commenter asked who is responsible for the contribution associated with enrolling a child in the event an insurer enrolls a child upon application from a custodial parent as proposed in sec.21.2004(b)? If the parent subject to the medical support order refuses to pay the contribution, must the employer remit the contribution or will the insurer be forced to incur the costs of obtaining a garnishment order or litigating the matter with the refusing parent? The commenter stated they would prefer the burden of payment be directed toward the employer as contemplated by the Family Code sec.154.187(b). Response: If there is an employer, the Family Code sec.154.187(b) answers these questions. If additional premiums are incurred due to adding the child, the employer shall deduct the health premiums from the employee's earnings. If there is no employer, the parent eligible for dependent coverage is responsible for remitting the premium. Additionally, the commenter should refer to sec.21.2004(c), which addresses payment of premiums, and TEX. FAM. CODE sec.sec.154.187(g) and 158.206 which address the withholding of premiums from an employee's income for the payment of insurance coverage ordered by the court. Comment: A commenter requested the term "required premium" be clarified. A commenter assumed the term allows the company to charge a premium from the first day of enrollment, even if the insurer's billing cycle does not coincide with the 31-day period associated with the enrollment date. Response: Carriers may charge premiums from the first day of enrollment and should refer to sec.21.2004(c) which clarifies that carriers may require payment of premium within 31 days of the employer's receipt of the medical support order. The rule further clarifies that carriers may not terminate coverage of a child subject to a medical support order if the insurer's billing cycle does not coincide with the 31 day premium payment requirement. Comment: A commenter asked if the company must pay for coverage for the first 31 days even if the company is not paid any premium for that period. Response: It appears to the agency that this question is related to claims. Carriers are not required to provide "free coverage." If a premium is not paid and a claim is filed, carriers may deduct the premium due from the claim payment if the contract contains such a provision or collect the premium retrospectively. Section 21.2004(d). Comment: A commenter stated these requirements will place a significant administrative cost on insurers in excess of the $10,000 amount suggested by the department in the introduction to the rules. A commenter stated industry would prefer this section not be included. In the alternative, commenters suggested that the section only provide for notification to one of the three parties (the custodial parent; the child support agency; or the child, if over 18 years of age). Additionally, the commenter requested language be added to the rule clarifying that the standard notification of non-payment would be adequate; and that an additional 30 day notice would not be necessary. Response: The agency appreciates this comment and other comments concerning the proposed notices in sec.21.2004(d) which are not mandated by the statute. The agency agrees that this requirement creates unanticipated administrative complications and has deleted sec.21.2004(d) from the sections which will reduce the cost of implementation. However, carriers are encouraged to provide notification to one of the persons/entity proposed. Comment: A commenter suggested the following items be included in the rule: (a) guidelines on how an HMO will be notified when a medical support order has been issued and (b) the verification process or direction as to whom the HMO will contact once the support order has been received. Response: The agency disagrees that it is necessary to include such items in this rule because the notification process is addressed in the Family Code sec.sec.154.184 and 154.186 which state the obligee, obligor, or a child support agency may send a copy of the order to the employer and the employer shall notify the insurer of the automatic enrollment. The department has not included this in its rules because the department does not have enforcement authority over employers. To verify the order, an insurer could request a certified copy of the order from the court. Once the support order has been received, the insurer could contact the employer or a parent of the dependent child. Section 21.2005. Comment: A commenter recommended that sec.21.2005(c) be clarified that the child may be terminated if the employee no longer has coverage for himself or herself. Response: The agency disagrees that such clarification is necessary. If coverage of the parent is terminated, coverage of the child may be terminated subject to the requirements of sec.21.2006 which requires notice of continuation or conversion. Comment: A commenter stated that providing comparable or equivalent coverage to a child outside the service area or in another state will be extremely costly to an HMO. The commenter stated they are not aware of any other state that interprets "comparable" and "equivalent" as having the same meaning and that most other states allow these services to be provided in the same manner that out of area emergency care services are provided. The commenter recommends deleting the term equivalent and defining "comparable" in sec.21.2001. Response: The agency agrees with this comment only for the purposes of sec.21.2005 which relates to when coverage can be terminated. Section 21.2005(b) has been changed as follows: "For purposes of this section, health coverage will be considered comparable coverage if it is similar coverage...." Comment: A commenter asked the following questions: (1) If the child resides in another state, will Texas or the state of residence have jurisdiction over the policy? (2) Which state's mandates will be in force? (3) Which state's premium and copayment laws will apply? Response: Texas will have jurisdiction over the original insurer to ensure the terms of Articles 3.96-1, et seq. are met. In response to question number 1, if an individual policy is issued in another state, then that policy must be in compliance with that state's laws and regulations. In response to question numbers 2 and 3, if an individual policy is issued out-of-state, then the benefits, premium and copayments would need to comply with the state of issuance. Comment: A commenter expressed concern that the rule does not contain flexibility to allow the custodial parent or a child over 18 to purchase less coverage than what the HMO is providing and that the HMO will be put in an awkward position of being unable to cease covering the child even if the parent and child desire less coverage. Response: The agency disagrees with this comment. If the insured has opted for less coverage than that provided by the HMO, then the parent will no longer be remitting premium to the HMO and the coverage may be terminated. Comment: Several commenters requested that sec.21.2005 be clarified that a child's coverage may be terminated for non-payment of premium. Response: The agency agrees with this comment and sec.21.2005(c) has been changed to read as follows: ". . . a child entitled to enrollment or enrolled under this subchapter does not include a child whose eligibility has terminated because the parent eligible for dependent health coverage is no longer eligible for such coverage due to nonpayment of premium, or other reasons as permitted by law and the terms of the policy." Section 21.2006. Comment: A commenter stated the regulation does not mention COBRA and asked if they can assume that children are not considered qualified beneficiaries entitled to COBRA continuation coverage. Response: The department does not have regulatory authority over COBRA continuation coverage. COBRA continuation coverage shall be provided in accordance with federal law. Section 21.2006(a). Comment: A commenter suggested amending sec.21.2006(a) to require notification of availability of continuation or conversion coverage to "the custodial parent, the child support agency, if applicable, or the child if the child is over 18 years of age and does not have a custodial parent." Response: The agency disagrees with this comment because to change sec.21.2006(a) to require notice to only one of the three parties is contrary to Article 3.96-5. To avoid confusion, the agency has deleted sec.21.2006(a) as the notification of continuation or conversion is controlled by Article 3.96-5, which requires the insurer to notify both the custodial parent and the child support agency of the availability of continuation or conversion coverage in the event dependent coverage is terminated. Section 21.2008(a). Comment: A commenter asked whether the information necessary to facilitate reimbursement is the information listed in sec.21.2008(b). A commenter asked, "When should this information be provided, automatically or only upon request?" A commenter suggested the rule be amended to require the information be provided "upon request." Response: The information necessary to facilitate reimbursement is the information listed in sec.21.2008(b). The agency agrees with the suggestion that sec.21.2008(a) be changed as follows: Upon request, an insurer shall provide to a state agency providing medical assistance, or to a child support agency enforcing medical support, information necessary to facilitate reimbursement of medical services . . . ." Section 21.2008(b). Comment: A commenter requested clarification as to when the information required by this subsection should be provided. The commenter suggested the regulation be revised to require the information be furnished within 31 days after coverage has been made permanent or upon written request, whichever occurs first. Response: The agency agrees with the suggested language and has changed sec.21.2008(b) as follows: "An insurer providing coverage for a child through a parent of the child shall provide information and documents type- name="italic">within 31 days after coverage has been made permanent or upon written request, whichever occurs first, to each custodial parent . . . . " Sections 21.2006 and 21.2008. Comment: A commenter stated sec.21.2008 creates a problem because the insurer has no way of knowing the address of each of the custodial parents. The commenter offered several suggestions: (a)The obligation would seem better placed with the employer as the employer would have this information or could request it from the insured, or (b) Add the following language to the rule: ". . . as may be necessary for the child to obtain benefits through that coverage, provided that each custodial parent provide the insurer with a written request for such information which lists a return address . . . " or (c) Amend the rule to state that the carrier can satisfy the requirements of this rule by delivering the information/booklets to the employer. Response: The agency agrees with this comment and has changed sec.21.2006(b) as follows to address this concern: " For the purpose of providing notification to the custodial parent under Article 3.96-5 and sec.21.2008 of this title (relating to Information Provided by an Insurer), the custodial parent shall notify the insurer of any change of address If no such change of address is submitted by the custodial parent to the insurer, then the insurer shall comply with the provisions of Article 3.96-5 and sec.21.2008 of this title (relating to Information provided by an Insurer) regarding notification to the custodial parent if such notice is sent to the last known address of the custodial parent." Section 21.2009(b). Comment: Commenters stated they assumed the intent of sec.21.2009(b) was because of the department's concerns that payors may inadvertently pay the noncustodial parent for any claim submitted. However, the commenter stated an unintentional result of this provision may subject insurers to dual payment in the event both parents claim reimbursement. The commenter requested clarification of how the insurer can be discharged from liability for double payment. A commenter stated that a number of HMOs pay only the provider directly and requested the following language be added at the beginning of sec.21.2009(b): "If an HMO's policy allows direct reimbursement to the member, an HMO . . . . " Response: The agency agrees with the commenters that additional clarification is necessary. The provisions of (b) are not intended to require duplicate payments to beneficiaries, but rather to permit the custodial parent, health care provider, child over 18 years of age, or state agency submitting a claim to receive benefit payments directly when making a valid claim. To clarify the intent of this section, the agency has changed the subsection as follows: (b) An insurer shall not refuse or fail to make payments on covered claims directly to the custodial parent, health care provider, child over 18 years of age, or state agency submitting the claim, in accordance with the terms of the policy. Nothing in this section shall require an insurer to make duplicate payments on covered claims. The agency believes that the clarification added "in accordance with the terms of the policy or evidence of coverage" is adequate to address the commenters' concerns with payment structures of HMOs. If payments are made directly to the physician then the issue of claims filing is probably not applicable. Section 21.2010(b). Comment: A commenter suggested that for fairness and in an effort to limit the administrative expense of providing coverage, the rule should be modified to allow all managed care organizations and insurers (not just HMOs) the opportunity to provide coverage for services obtained outside the service area through indemnity insurers or managed care organizations. Response: The agency generally does not agree with the comment. The provisions of Article 3.96-8 clearly prohibit the denial, limitation or reduction of payment of claims on the basis that a child lives outside of the service area. The agency understands the intent of this language is to achieve a level of coverage for court - ordered dependents residing outside of the service area that is equivalent to that of a child residing inside of the service area. Although the legislation creates numerous challenges to the existing delivery systems utilizing networks of preferred providers, the statutory language is clear. The agency does not agree that insurers other than HMOs require alternative delivery systems to achieve the coverage requirements set forth in the statute. Indemnification arrangements already contain a claims payment/reimbursement mechanism that can accommodate the out-of-network adjustments. However, the agency has revised the language and permits all insurers to contract for other arrangements to facilitate flexibility in the manner in which compliance is achieved and to allow for efficient market place response to the requirements of this statute. Sections 21.2010(b) and 21.2010(c) have been changed to accomplish this result. Section 21.2010. Comment: A commenter requested clarification of the term "alternative coverage." The commenter asked if carriers could assume that "alternative coverage" does not necessarily mean "comparable coverage" since a straight indemnity policy cannot really be considered comparable to HMO coverage. The commenter asked if an 80/20 indemnity coverage with an out-of-pocket maximum satisfies this section even where one parent is covered by a HMO or PPO with no network where the child is located? A commenter suggested that sec.21.2010(c) be modified to clarify that an indemnity contract that contains a coinsurance amount (rather than a fixed copayment amount) shall not constitute a denial, limitation or reduction of payment of claims. Another commenter stated that if an HMO uses an indemnity policy option for a child who is the subject of a medical support order and lives outside the service area then the child is subject to the policy limits of that indemnity policy, including deductibles and coinsurance, rather than subject to the terms of the HMO policy. A commenter stated the rules place added administrative burdens on insurers and provide different types of coverage for children in different locations than the parent. As a result, carriers will be required to make benefit and system adjustments. The commenter stated that they assumed these are legitimate expenses to consider in the development of rates. Additionally, commenters inquired as to whether an additional premium may be charged where the child does not reside in the same service area as the covered parent or to cover the Plan's cost to provide rich HMO benefits through an indemnity policy. Response. The agency recognizes the practical difficulties in providing coverage to dependent children that live outside the service area and consequently, indemnity coverage is available as an option. If a carrier utilizes an indemnity contract to provide the coverage, the carrier has the responsibility of ensuring that the indemnity policy does not constitute a denial, limitation, or reduction in the payment of claims. The agency disagrees with the comment that if an HMO uses an indemnity policy option for a child who lives outside the service area, then the child is subject to the policy limits of that indemnity policy, rather than subject to the terms of the HMO policy. In response to the comments regarding premium, the agency recognizes that carriers will have additional administrative issues and system adjustments to address. However, the issues and adjustments are a result of the legislation, not as a result of the rules. Medical support order children that live outside of the service area may be charged additional or separate premium only if it is permitted by state law, such as for individual policies. However, if for instance, an insurer is subject to the Small Employer Act, an additional premium could not be charged. In instances where an additional premium is not permitted to be charged by state law, the agency agrees that carriers can take these expenses into consideration generally in developing rates. A carrier may actuarially project the number of children that may reside outside the service area and the cost to the carrier in setting rates for all insureds/enrollees. Section 21.2010(b). Comment: A commenter stated that even though (b) allows an HMO to utilize an alternative delivery system to provide equivalent/comparable coverage to a child that lives outside of the service area, the cost may be substantial. The commenter asked the department to revise the language so that insurers and HMOs can provide coverage without increasing cost. Response: The agency agrees that there will be potentially significant cost impact to achieve compliance and understands the commenter's concern over increased cost. However, the cost impact is due to Articles 3.96-1, et. seq., and the rule serves to implement these statutory provisions. The rules do not impose additional requirements in excess of what is required by Articles 3.96-1, et seq. Section 21.2010(d). Comment: One commenter stated that because this section requires insurers to provide network benefits to children who live and obtain services outside the service area, a new subsection (e) should be added. This new subsection should clarify that sec.21.2010 shall not be construed to mean an insurer or managed care organization: 1) should pay benefits in excess of the usual and customary charge; 2) cannot require payment of a patient copayment by withholding the copayment amount from the benefit amount; and 3) must directly pay a noncontracting or nonnetwork provider, instead of electing to pay the employee, custodial parent, child support agency, or the child over 18 years of age. If this change is made, the commenter also requested adding language to sec.21.2009(b): "Except as provided in sec.21.2010(e), an . . . . " Response: The agency does not agree with the recommendation. It does not appear necessary to specifically address the recommended provisions in the rule because the recommendations can be addressed through specific policy or evidence of coverage terms. (1) Generally, an insurer would not be obligated to pay benefits in excess of usual, customary and reasonable charges in accordance with the terms of a policy or evidence of coverage. Since this maximum level of coverage would apply to both in-network and out-of-network healthcare providers, it would not appear to be a limitation based solely on whether or not a child resides in a service area. (2) The provisions regarding claims payment and the withholding of applicable copayments can be achieved through policy or evidence of coverage terms. (3) Payments will continue to be required in accordance with the requirements of other sections of these rules. Use of out-of-network providers would not appear to create unique payment circumstances warranting mandatory provider payments not otherwise required. Section 21.2010. Comment: Another commenter stated that this section goes too far and is unnecessary in view of nationwide efforts to control health care costs. If the parent has chosen a PPO option, the premium rate is discounted so the insured will seek care from providers in the network. If there is no inducement to seek non-emergency care from network providers, there is no justification for reduced premiums. The commenter suggested the rule be amended to reflect that a child subject to a court order should be required to seek non-emergency treatment from providers within the network to obtain full benefits. The commenter agreed that a distinction should be drawn between elective and emergency situations. Response: The agency appreciates the commenter's view and concerns. However, the agency disagrees with the suggestions made as they do not comply with the requirements of Article 3.96-8, Insurance Code, which state that an insurer may not enforce otherwise applicable provisions that would deny, limit or reduce payment for claims for a covered child who lives outside the insurer's coverage territory. Section 21.2011. Comment: A commenter suggested the rules be promulgated and incorporated under Chapter 3 of the Texas Administrative Code; not under Chapter 21. The commenter suggested that a sentence be included in the proposed rule stating that violations of the rules will be subject to Article 21.21. Response: The agency disagrees with this comment. The rules were proposed under Chapter 21 of the Texas Administrative Code because Chapter 21 is applicable to both insurers and HMOs. Chapter 3 of the Texas Administrative Code is primarily applicable to health insurers. The rule already contains a sentence that certain violations of these rules are subject to Article 21.21. For with changes: Attorney General's Office, Child Support Division; Office of the Public Insurance Counsel, PCA Health Plans, Insurance Alliance of America, Blue Cross Blue Shield of Texas, Golden Rule, and the Prudential Insurance Company of America. For: Representative Nancy McDonald. Against: Texas Health Maintenance Organization Association. The new subchapter is adopted under the Insurance Code, Articles 3.96-1 et seq., 1.03A, 3.51-13 and 21.21; and the Family Code sec.sec.154.181 - 154.192. The Insurance Code, Articles 3.96-1 et seq., enacted by the 74th Legislature, 1995, in Senate Bill 793, prohibit the denial of enrollment of a child based upon certain grounds; require the enrollment, without enrollment period restrictions, of a child who is the subject of a medical support order; prohibit cancellation or nonrenewal coverage of a child except under certain circumstances and require notification of requirements for continuation or conversion of coverage; assign certain rights to state agencies and custodial parents; require that certain information be provided to state agencies and custodial parents; prohibit the imposition of service area restrictions for covered children living outside the insurer's service area and provide for penalties under the Insurance Code, Article 21.21, sec.16. Article 3.96-10 directs the Commissioner of Insurance to adopt reasonable rules as necessary to implement the subchapter and the requirements of 42 U.S.C. sec.1396a(a)(60), including rules defining acts that constitute unfair or deceptive practices under Insurance Code, Article 21.21, sec.13. 42 U.S.C. sec.1396a(a)(60) requires a state to have in effect certain laws relating to medical child support as part of its plan for medical assistance to receive federal funds. State laws concerning insurers required by 42 U.S.C. sec.1396a(a)(60) are embodied in Insurance Code Articles 3.96-1 et seq. Article 1.03A provides that the Commissioner of Insurance may adopt rules and regulations to execute the duties and functions of the Texas Department of Insurance only as authorized by statute. Article 3.51-13 provides that an insurer or group hospital service company that provides coverage for a minor child who otherwise qualifies as a dependent of a person who is a member of the group may pay benefits on behalf of the child to the person who is not a member of the group if a court order providing for the managing conservator of the child has been issued by a court of competent jurisdiction in this or any other state. Article 21.21 authorizes the department to promulgate rules defining acts which constitute unfair competition and unfair practices. The Family Code, sec.sec.154.181 - 154.192 contain provisions concerning medical support orders, including sec.154.184 which establishes a requirement for the automatic enrollment of a child who is the subject of a medical support order. The Government Code, sec.sec.2001.004 et seq. authorizes and requires each state agency to adopt rules of practice setting forth the nature and requirement of available procedures and prescribes the procedures for adoption of rules by a state administrative agency. sec.21.2001. Definitions. The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise. Child - (A) a person under 18 years of age who is not and has not been married or who has not had the disabilities of minority removed for general purposes; or (B) in the context of child support, "child" includes a person over 18 years of age for whom a person may be obligated to pay child support. Child support agency - As defined in the Family Code, sec.101.004. Custodial parent - (A) a managing conservator of a child or a possessory conservator of a child who is a parent of the child; or (B) a guardian of the person of a child, or another custodian of a child if the guardian or custodian is designated by a court or administrative agency of this or another state. Health insurer - Any insurance company, stipulated premium company, fraternal benefit society, group hospital service corporation, or health maintenance organization that delivers or issues for delivery an individual, group, blanket, or franchise insurance policy or insurance agreement, a group hospital service contract, or an evidence of coverage that provides benefits for medical or surgical expenses incurred as a result of an accident or sickness. Insurer - (A) a health insurer; (B) a governmental entity subject to: (i) Insurance Code, Articles 3.51-1, 3.51-2, 3.51-4, 3.51-5 or 3.51-5A; or (ii) Section 1, Chapter 123, Acts of the 60th Legislature, 1967 (the Insurance Code, Article 3.51-3); (C) a multiple employer welfare arrangement, as that term is defined by the Insurance Code, Article 3.95-1; or (D) a group health plan, as defined by the Employee Retirement Income Security Act of 1974, sec.607(1) (29 U.S.C. sec.1167). Medical assistance - Medical assistance under the state Medicaid program. Medical support order- A court or administrative judgment, decree or order whether temporary, final or subject to modification for the benefit of a child that provides for health coverage of the child. Policy - Includes an individual, blanket, or franchise insurance agreement or contract, a certificate issued under a group policy, a group hospital service contract, or evidence of coverage issued by a health maintenance organization. sec.21.2002.Prohibition against denial of enrollment. (a) An insurer shall not deny enrollment of a child who is the subject of a medical support order under the health coverage of the child's parent on the ground that the child: (1) has a preexisting condition; (2) was born out of wedlock; (3) is not claimed as a dependent on the parent's federal income tax return; (4) does not reside with the parent or in the insurer's service area; or (5) is or has been an applicant for or recipient of medical assistance. (b) This section does not prohibit an insurer from enforcing otherwise applicable policy provisions, such as waiting period limitations or other applicable limitations on preexisting conditions so long as such provisions are in accordance with federal and state law. sec.21.2004. Enrollment of child who is the subject of a medical support order. (a) If a parent eligible for dependent health coverage through an insurer is required by a medical support order to provide health coverage for a child, the insurer shall permit the parent to enroll the child without regard to any enrollment period restriction that might otherwise be applicable to the parent or the child. Receipt of a medical support order requiring that health coverage be provided for a child shall be considered a change in the family circumstances of the employee or member, for health coverage purposes, equivalent to the birth or adoption of a child. (b) If a parent eligible for dependent health coverage through an insurer is required by a medical support order to provide health coverage for a child and fails to apply to obtain the health coverage for the child, the insurer shall enroll the child on application of a custodial parent of the child, a child support agency having a duty to collect or enforce support for the child, or the child over 18 years of age without regard to any enrollment period restriction that might otherwise be applicable to the parent or the child. (c) Enrollment shall be automatic for the first 31 days after receipt of a medical support order by the employer or the insurer if there is no employer. During the 31-day period, the insurer shall complete all necessary forms and procedures to make the enrollment permanent or shall report in accordance with the Family Code, Chapter 154, Subchapter D, the reasons the coverage cannot be made permanent. To continue coverage beyond 31 days, the required premium shall be paid within 31 days of the employer's receipt of the medical support order. If there is no employer, to continue coverage beyond 31 days, the required premium shall be paid within 31 days of the insurer's receipt of the medical support order. An insurer shall not terminate coverage of a child that is the subject of a medical support order if such insurer's billing cycle does not coincide with this 31-day premium payment requirement, until the next billing cycle has occurred and there has been nonpayment of the additional required premium, within 30 days of the due date of such premium. sec.21.2005. Prohibition on Cancellation or Nonrenewal. (a) An insurer shall not cancel or refuse to renew coverage of a child entitled to enrollment or enrolled under this subchapter unless satisfactory written evidence is filed with the insurer by the parent or the employer demonstrating that: (1) the court order or administrative order that required the coverage is no longer in effect; or (2) the child is enrolled in comparable health coverage or will be enrolled in comparable coverage that will take effect not later than the effective date of the cancellation or nonrenewal. (b) For purposes of this section, health coverage will be considered comparable coverage if it is similar coverage and does not result in any significant reduction or limitation in benefits. (c) As used in this section, "a child entitled to enrollment or enrolled under this subchapter" does not include a child whose eligibility has terminated because the parent eligible for dependent health coverage is no longer eligible for such coverage, due to nonpayment of premium, or other reasons as permitted by law and the terms of the policy. sec.21.2006. Notice of availability of continuation or conversion coverage. (a) For the purpose of providing notification to the custodial parent under Article 3.96-5 and sec.21.2008 of this title (relating to Information Provided by an Insurer), the custodial parent shall notify the insurer of any change of address. If no such change of address is submitted by the custodial parent to the insurer, then the insurer shall comply with the provisions of Article 3.96-5 and sec.21.2008 of this title (relating to Information Provided by an Insurer) regarding notification to the custodial parent if such notice is sent to the last known address of the custodial parent. (b) The insurer shall enroll or continue enrollment of the child on application of a parent of the child, a child support agency, or the child over 18 years of age. sec.21.2008. Information provided by an insurer. (a) Upon request, an insurer shall provide to a state agency providing medical assistance, or to a child support agency enforcing medical support, information necessary to facilitate reimbursement of medical services provided to or paid on behalf of a child. (b) An insurer providing coverage to a child through a parent of the child shall provide information and documents within 31 days after coverage has been made permanent or upon written request, whichever occurs first, to each custodial parent or a child over 18 years of age as may be necessary for the child to obtain benefits through that coverage, including: (1) the name of the insurer; (2) the number of the policy; (3) a copy of the policy and schedule of benefits; (4) a health insurance membership card; (5) claim forms; and (6) any other information or document necessary to submit a claim in accordance with the insurer's policies and procedures. sec.21.2009. Submission and payment of claims. (a) An insurer shall not require the approval of the insured or enrollee parent for the submission of claims for covered services or for the appeal of a denial of any benefit by a custodial parent, a health care provider, a child over 18 years of age, or a state agency that has been assigned medical support rights. (b) An insurer shall not refuse or fail to make payments on covered claims directly to the custodial parent, health care provider, child over 18 years of age, or state agency submitting the claim, in accordance with the terms of the policy. Nothing in this section shall require an insurer to make duplicate payments on covered claims. sec.21.2010. Prohibition on service area restrictions. (a) An insurer shall not enforce otherwise applicable policy provisions that would deny, limit, or reduce payment for claims for a covered child who is the subject of a medical support order and lives outside the insurer's service area but inside the United States. (b) An insurer may use alternative delivery systems, such as, other indemnity insurers or reciprocal agreements with other health maintenance organizations to provide coverage for a child who is the subject of a medical support order and lives outside the insurer's service area. (c) If an insurer uses an indemnity policy to provide coverage for children who are the subject of a medical support order and live outside the insurer's service area, then the insurer shall file with the following areas of the Texas Department of Insurance, if applicable: Life/Health Group, Filings Intake, Mail Code 106-1E, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104 or 333 Guadalupe, Austin, Texas 78701 and the HMO Unit, Mail Code 108-6A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104 or 333 Guadalupe, Austin, Texas 78701 a certification that the provisions of this section and Insurance Code, Article 3.96-8 have been met. A copy of the indemnity policy shall also be filed with the Life/Health Group, Filings Intake, Mail Code 106-1E, Texas Department of Insurance, P. O. Box 149104, Austin, Texas 78714-9104. (d) An insurer whose policy contains preferred provider provisions for the purposes of offering a network of preferred providers as defined in sec.3.3702 of this title (relating to Definitions) shall provide reimbursement for services for a child who is the subject of a medical support order and lives outside the insurer's service area at the preferred provider level of benefits. 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 April 18, 1997. TRD-9705256 Caroline Scott General Counsel and Chief Clerk Texas Department of Insurance Effective date: May 8, 1997 Proposal publication date: October 18, 1996 For further information, please call: (512) 463-6327 TITLE 31. NATURAL RESOURCES AND CONSERVATION PART I. Texas Natural Resource Conservation Commission CHAPTER 101. General Rules 30 TAC sec.101.12 The commission adopts new sec.101.12, concerning Temporary Exemptions During Drought Conditions, with changes to the proposed text as published in the December 10, 1996, issue of the Texas Register (21 TexReg 11813). EXPLANATION OF ADOPTED RULE. The new section is adopted to allow the agency flexibility regarding air quality requirements when emergency drought conditions dictate the need for conservation of the state's water resources. The new section would allow owners and operators of sources which are required to suppress emissions, such as dust, through the application or use of water to receive a temporary exemption from air quality requirements upon written request. A source must be located in an area classified as severe or extreme under the Palmer Drought Severity Index for a minimum of 30 days to be eligible for this exemption. The types of requirements from which an exemption may be granted are permit conditions, standard exemption conditions, permit representations, air quality rules, and commission orders. The rule will not relieve a source from compliance with any applicable Prevention of Significant Deterioration (PSD) permit, New Source Performance Standards (NSPS), or National Emission Standards for Hazardous Air Pollutants (NESHAPs) requirement. The rule specifies the type of information to be submitted for consideration of whether such relief will be granted and the period of time for which the exemption is valid. The rule also limits the length of time the executive director may authorize this temporary exemption and specifies that commission approval is required for long-term exemptions. TAKINGS IMPACT ASSESSMENT. The commission has prepared a Takings Impact Assessment for this rule in accordance with Texas Government Code, sec.2007.043. The following is a summary of that assessment. The specific purpose of the rule is to afford flexibility related to air regulations which require the use of water when it is necessary to maximize conservation of the state's water resources during specific drought conditions. The rule will substantially advance this specific purpose by providing a mechanism to request a temporary exemption from the requirement to apply water when complying with rules, permit or standard exemption conditions, or orders of the commission. Promulgation and enforcement of the rule will not burden private real property which is the subject of the rule because it offers a temporary exemption from requirements which would otherwise require the application of water. COASTAL MANAGEMENT PROGRAM CONSISTENCY REVIEW. The commission has determined that this rulemaking action is subject to the Texas Coastal Management Program (CMP) in accordance with the Coastal Coordination Act of 1991, as amended (Texas Natural Resources Code, sec.sec.33.201 et. seq.), the rules of the Coastal Coordination Council (31 TAC Chapters 501-506), and the commission's rules in 30 TAC Chapter 281, Subchapter B, concerning Consistency with the Texas Coastal Management Program. As required by 31 TAC sec.505.11(b)(2) and 30 TAC sec.281.45(a)(3) relating to actions and rules subject to the CMP, agency rules governing air pollutant emissions must be consistent with the applicable goals and policies of the CMP. The commission has reviewed this action for consistency, and has determined that this rulemaking is consistent with the applicable CMP goals and policies. The proposed section will allow only a temporary exemption from air quality requirements which require the use of water during a drought if certain criteria can be met. No new sources of air contaminants will be authorized by this section. Therefore, in compliance with 31 TAC sec.505.22(e), the commission affirms that this rule is consistent with CMP goals and policies. HEARING AND COMMENTERS. A public hearing was held on January 6, 1997, in Austin. The comment period closed January 10, 1997. Comments were received from an individual and from the United States Environmental Protection Agency, Region 6 (EPA). The individual was opposed to the rule because it is so broad in scope and in theory would allow exemptions for operations unaffected by drought conditions. The commenter also noted that the term "reasonably available alternative control measures" is not defined and is left to subjective interpretation and that there is no provision in the rule which prevents a nuisance condition from occurring. The commission agrees with the commenter that the language is broad in scope, and intends for the language to be broad to allow the commission to consider an exemption from any state air requirement that may impede conservation of water during a drought. However, the commission does not agree that the rule will allow operations not affected by drought conditions to qualify for an exemption under the rule. The commission believes that the rule language is clear with respect to the conditions under which an exemption would be granted. The term "reasonably available alternative control measures" is not defined because of the wide variety of sources which could potentially request an exemption, and to define the term could limit the intended flexibility of the rule. During the review of a request, the executive director will evaluate the type of industry and the types of control techniques associated with the specific industry. For example, an acceptable alternative for a concentrated animal feeding operation controlling dust emissions through the application of water may be to increase the number of animals per square foot of pen space and clean the pens of loose materials more frequently. The commission does not believe it is necessary to specifically address nuisance conditions in the rule, because the nuisance potential of a source operating under an exemption will be considered in the review of any request prior to an exemption being granted. The commission believes that the language of the rule and the case-by-case review of such requests are sufficient to avoid abuses of the rule. EPA suggested the establishment of alternate means of control (AMOC) strategies to replace existing control strategies that rely on the use of water for areas of the state which are anticipated to experience severe or extreme drought conditions frequently. The commission believes that it is impractical to anticipate areas of the state which would experience severe or extreme drought conditions more frequently than other areas of the state. The current commission rules do not allow the necessary flexibility to deal with drought conditions on a statewide basis. The commission also believes that the addition of language to provide for the use of area specific AMOC would not add greatly to the rule. The rule is intended to be a temporary alternative to the use of water, which in many cases may be the most effective control strategy. The use of an AMOC would be a permanent change in control strategy that may not be appropriate. EPA also requested the identification of procedures or practices that are currently being used in areas where water conservation is necessary and the potential for these procedures to be used in the alternative during drought conditions. Because there is no requirement for communities to report mandatory or voluntary water conservation efforts, the commission cannot identify what practices are being used at any one time. EPA suggested the addition of "for at least 30 days" after the phrase "Palmer Drought Severity Index" in the opening paragraph of the section and the addition of "Palmer Drought Severity Index" to paragraph (2)(A) for purposes of clarification. The commission agrees that the suggestion could clarify the length an area must have been classified as severe or extreme and has made the suggested change. EPA commented that the criteria for determining significant health concerns should be addressed and that the rule should include language referencing that increased emissions will not cause or contribute to an exceedance of the National Ambient Air Quality Standard (NAAQS). EPA requested that the record address that the rule does not exempt a source from compliance with any applicable NSPS or NESHAP standard unless the applicable standard specifically provides for an exemption which must be approved on a case-by-case basis by EPA. Requests for an exemption will be subject to a health-related review which meets the requirements of protection of public health and safety as required by the Texas Clean Air Act. The commission does not believe that it is necessary to include language related to exceedances of the NAAQS. The commission agrees that the rule does not exempt a source from compliance with applicable federal requirements and has added language to the rule to clarify this point raised by EPA. EPA further commented that a relaxation of the State Implementation Plan (SIP) generally would require approval from EPA. However, in this case, EPA agrees that approval by the executive director for exemptions of 180 days or less may not necessarily require EPA approval. Relaxations of the SIP granted by the commission for longer than 180 days should follow some form of EPA review and approval. EPA would desire a process similar to the current AMOC and including a provision for a 30-day review. The commission agrees with EPA's comment regarding review and approval of exemptions extended beyond 180 days and agrees that it would be appropriate to afford EPA the opportunity to review and comment. The commission has included language to incorporate this change. STATUTORY AUTHORITY. The new section is adopted under Texas Water Code, sec.5.103 and Texas Health and Safety Code, Texas Clean Air Act (TCAA), sec.382.017, which provides the commission with the authority to adopt rules consistent with the policy and purposes of the TCAA. sec.101.12. Temporary Exemptions During Drought Conditions. Owners and operators of sources located in an area or region which has been classified by the National Weather Service as being in a severe or extreme drought condition under the Palmer Drought Severity Index for at least 30 days that are required to control emissions through the application or use of water may request a temporary exemption from any commission air quality rule, permit condition, permit representation, standard exemption condition, or commission order. This section does not allow for an exemption from any federal requirement. (1) The request must be submitted in writing to the Office of Air Quality, New Source Review Division, and include at a minimum the following information: (A) the site-specific circumstances that prevent the continued or limited use of water; (B) the specific rule, permit condition, permit representation, standard exemption condition, or commission order from which an exemption is being requested; and (C) the reasonably available alternative control measures which will be undertaken to minimize emissions. (2) The executive director may authorize by written permission a temporary exemption of up to 120 days upon finding that: (A) the source or facility is located in an area or region which has been classified as severe or extreme for at least 30 days under the Palmer Drought Severity Index; (B) such an exemption is necessary to aid in the conservation of the area's water resources; (C) any additional emissions which may result from the exemption will not cause a significant health concern in the opinion of the executive director; and (D) the requesting owner and operator of the source will utilize reasonably available alternative control measures to minimize emissions during this time. (3) The executive director may specify alternative procedures or methods for controlling emissions when an exemption is granted under this section. (4) The executive director may issue one 60-day extension of an exemption authorized under this section. A commission order is required for any exemption which would extend beyond a total of 180 days and approval shall be based on the criteria contained in this section. The executive director shall notify EPA of exemptions which will be considered for extension beyond 180 days. The executive director shall notify EPA at least 30 days prior to the commission's consideration of such an extension. 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 April 16, 1997. TRD-9705157 Kevin McCalla Director, Legal Division Texas Natural Resource Conservation Commission Effective date: May 8, 1997 Proposal publication date: December 10, 1996 For further information, please call: (512) 239-1966 CHAPTER 210.Use of Reclaimed Water SUBCHAPTER E.Special Requirements for Use of Industrial Reclaimed Water 30 TAC sec.sec.210.51-210.55 The Texas Natural Resource Conservation Commission (commission) adopts sec.sec.210.51-210.55, Subchapter E, relating to special requirements for use of industrial reclaimed water. Sections 210.51-210.55 are adopted with changes to the proposed text as published in the October 22, 1996, issue of the Texas Register (21 TexReg 10370). EXPLANATION OF ADOPTED RULE The sections establish criteria for authorization of reclaimed water activities which adequately protect the health of persons who might normally come into contact with industrial reclaimed water, will protect against adverse effects from reclaimed water should crops be irrigated with industrial reclaimed water, and will ensure that the conveyance, storage, and use of reclaimed water will not pose adverse effects upon surface water, ground water, and soil resources. These sections will not in any way establish new or different requirements for the producer, provider, and/or user to hold the appropriate water rights allowing the use of state water. These sections do not affect any current requirements necessitating the need for a commission permit for a water right or amendment, if applicable to a particular industrial reclaimed water use or activity. TAKINGS IMPACT ASSESSMENT The commission has prepared a Takings Impact Assessment for these rules pursuant to Texas Government Code Annotated, sec.2007.043. The following is a summary of that assessment. The specific purpose of the proposed rule is to ease the burden on the commission and those regulated by the rule in authorizing the use of reclaimed water. Promulgation and enforcement of these rules will not affect private real property which is the subject of the rules. CONSISTENCY WITH THE COASTAL MANAGEMENT PROGRAM (CMP) The commission has reviewed this rulemaking for consistency with the Coastal Management Program (CMP) goals and policies in accordance with the regulations of the Coastal Coordination Council, and has determined that the rulemaking is consistent with the applicable CMP goals and policies. HEARING AND COMMENTERS No public hearing was held. The public comment period closed on December 17, 1996. The commission received written comments on the proposal from the following: San Antonio Water System (SAWS), the University of Texas (UT), and the American Water Works Association Committee on Conservation and Reuse (AWWA). GENERAL COMMENTS: The text of the rule was reorganized for clarity and to facilitate readability, therefore some of the references discussed in the comments that follow have been moved to different locations within the rule. Additionally, the following changes were made to the proposed rule to provide clarity and to add necessary language for consistency with current industry practices. New definitions for "discharge" and "commingled wastewater" were added in response to public comment. The definitions for "Minimum Analytical Level" and "Priority Pollutants" were also revised. References to metals were eliminated throughout the proposed rule as metals are already listed as priority pollutants in 40 CFR 122, Appendix D, Tables 2 and 3 which is referenced in the revised definition for priority pollutants. The word "diversion" was replaced with "disposal" in sec.210.51 for clarification purposes. The first sentence of sec.210.55(b) was revised to correct a typographical error. In order to clarify the term "beneficial use," and its relationship to domestic wastewater, the term "beneficial use" was changed to "reuse" throughout the entire chapter. The commission believes that this term more accurately describes the proposed uses and the intent of this subchapter. The provisions relating to executive director approval were clarified throughout the proposed rule to add that applications for authorization must be submitted on forms provided by the commission. APPLICABILITY SAWS commented that if industrial generated wastewater flows can be returned back into the Publicly Owned Treatment Works (POTW) as an alternate means of disposal, then the wastewater should not adversely impact the POTW's treatment system. The commission agrees with the commenter and notes that this subchapter does not affect the authority of the POTW to regulate discharges into its system. RELATIONSHIP TO REQUIREMENTS FOR DOMESTIC RECLAIMED WATER: SAWS commented that the rule, while appropriate in its goal of maximizing the beneficial use of industrial wastewater, would require changes to insure that additional safeguards are in place to prevent inappropriate uses that could result in environmental degradation of soil and water resources. Specifically, SAWS commented that "Subchapter E reduces some notification and reporting requirements for the industrial reclaimed water producer, provider, and user which, as a whole, could impair monitoring and enforcement of federally mandated programs, including the continuing implementation of National General Pretreatment requirements and Stormwater program requirements (40 CFR Part 403, and Part 122, 122.26, respectively)." The commenter states that the proposed rules "could result in an industrial producer, provider or user employing inappropriate disposal practices." The commission agrees with the commenter in that the rules are not intended to pose an impact to the operation of POTWs. A provision has been added at sec.210.54(a)(2) which requires that facilities intending to reuse their wastewater and who are within the service area of a POTW, be required to notify the POTW prior to commencement of operating under this rule. AWWA proposed adding a provision which would require a producer of industrial wastewater to 1) notify all water purveyors and POTW operators within whose service area the applicant is located, 2) require the producer to provide assurances that all local regulations and ordinances concerning construction, water quality and provision of recycled water service are followed, and where applicable, 3) provide in the application upon submittal to the executive director verification of local authorization. The commission agrees in part with the commenter and has added language requiring the producer of industrial wastewater to provide notification to the local water purveyor if applicable. A requirement was not added, however, that would require the industrial producer to verify to the commission that such notification was made. It is the belief of the commission that this information is more appropriately addressed on a local level. SAWS commented that "industrial reclaimed water that is piped from a producer and/or provider to a user...should follow the design requirements as outlined in sec.210.25." The commenter asked whether piping leaving the facility site was required to meet the color coding requirements, and questioned how required installation practices would be ensured in public rights-of-way, how the integrity of the distribution system would be ensured for the transfer of industrial reclaimed effluent over the Edwards Recharge Zone, and whether it would be the industrial provider or user who would be responsible for monitoring this. The commission notes that the exemption from piping requirements only applies to piping on-site or within the boundaries of property contiguous to the producer's property, and the producer, provider, and user are subject to all the requirements of 30 TAC Chapter 213. SAWS recommended that sec.210.25(e), (f), and (h) be included as requirements for piping on-site and off-site. The commission agrees that off-site piping should meet those requirements and notes that sec.210.53(d) states that only on-site piping is exempt from sec.210.25(e), (f), and (h). AWWA recommended that industries be defined by SIC code in order to differentiate between industrial facilities and sites such as universities, which provide wastewater services to campuses and require these users to use purple pipe. The commission agrees that institutions such as universities should meet color coding requirements for piping, and language has been added at sec.210.53(b) for clarification purposes. The industries were not defined by SIC code, but by narrative description. AWWA commented that clarification is needed to ensure that any on-site retrofits provide adequate cross-connection prevention. The commission concurs with the comment; however, at this time the commission has no design criteria for industrial facilities. The commission does note that industrial producers who transport reuse water off-site are required to provide notification to the executive director, which will include a required operation and maintenance plan. SAWS commented that the "marketing of industrial reclaimed water by individual industrial producers could reduce the viability of some municipal utilities' and other large POTW operator's reuse programs," and that an individual industrial reclaimed water system would not promote efficient water resource planning. The commission notes that a producer operating under this subchapter will continue to be subject to local ordinances and requirements of the POTW, and this rule is not intended to interfere with that authority. AWWA recommended that sec.210.53(b) be amended to include contiguous properties owned by the same owner in the definition of on-site reuse. The commission agrees, and this information has been included at sec.210.54(b)(2)(A) and (B) of the revised version of the rule. AUTHORIZATION OF INDUSTRIAL RECLAIMED WATER USE: AWWA recommended that the types of industries not required to provide notification to the commission should be revised to ensure minimal contact by the public with industrial reclaimed water. The commission agrees in part with the commenter. These uses listed have been determined by staff to be sufficiently restrictive regarding public access. A provision has been added at sec.210.54(c)(2) which includes uses other than those specifically listed in the rule. The intent of this provision is to ensure that uses not specifically listed in the rule must be reviewed by the executive director. Additionally, the commission notes that producers who are required to obtain authorization to operate under this rule may be subject to public access limitations upon review of their application. Accordingly, a provision was added at sec.210.54(c)(2) stating that an authorization issued by the executive director may contain additional requirements beyond those that are expressly stated in the rule. SAWS commented that the waste streams listed "could contain pollutants at levels which could have adverse impact at point of use," and that "no quality standards are established for the above waste streams." The commission agrees in part with the commenter. The waste streams, which are listed at sec.210.54(b)(2)(A) of the revised version of the rule, were chosen because they are known to typically contain levels of pollutants below that which is considered acceptable for the uses being proposed. The commission recognizes that the inclusion of "Water treated by Supercritical Oxidation" does not describe a specific waste stream, but rather a treatment technology, and has removed this from the list. A facility utilizing this type of treatment may still be eligible to operate under sec.210.54(b)(2)(B) or sec.210.54(c) of this rule. The commission has communicated this information to the known industry in Texas that is utilizing this technology, and no objections were raised. AWWA commented that the list of pollutants "should be amended to clarify that the intent is to allow for minimal pollutant loading from the various sources. For example, fruit and vegetable washing should be limited to rinsing only and not result in the addition of organic matter to industrial reclaimed water." The commenter recommended that parameters for stormwater should also be established. The commission agrees in part with the commenter. Section 210.54(b)(2)(A), which, in the revised version of the rule, contains the list of pollutants referenced above, has been amended to include only the wastewater that results from the washing of whole fruits and vegetables. The inclusion of stormwater runoff from non-process areas was not revised, as non-process area stormwater generally contains pollutants at acceptable levels for the intended uses, and has been adequately defined in the rule. As stated above, "Supercritical Oxidation" was removed, as it describes a type of treatment rather than a type of wastewater. Other listed wastewaters are retained, as these wastes generally do not contain significant amounts of pollutants. SAWS questioned whether it is an appropriate standard for industrial reuse to consider the wastewater equivalent to Type I for the purpose of storage. The commission notes that Type I storage requirements are appropriate for the wastes covered under this subchapter, as the wastes were deemed to be equivalent to Type I domestic wastes as described in 30 TAC 210, Subchapters A through D. AWWA recommended that water quality of the industrial reuse water should meet the appropriate Type I and Type II uses for the beneficial uses listed, and that producers should be required to meet the more stringent storage requirements for Type II reclaimed water, as they are more appropriate than the requirements for Type I waters for certain industrial reclaimed waters, particularly in those areas with sensitive groundwater sources. The commission disagrees with the commenter. As noted above, the commission maintains that Type I lining requirements are appropriate for wastewater covered under this subchapter. AWWA commented that the definition of commingled wastewater should be revised to state that any domestic wastewater contribution should be incidental to the industrial component of the wastewater to be reused. They recommend that if the flow is more than incidental, then all Type I or II parameters must be met before reuse is allowed. The commission agrees with the commenter. Section 210.53(h) was added to clarify that an industrial wastewater that is commingled with "any amount of domestic wastewater," will be required to meet all the requirements of Subchapters A through C of this Chapter, in addition to Subchapter E. SAWS commented that the quality requirements for conventional pollutants are significantly lower than the requirements for municipal reuse water. The commission agrees that the water quality requirements for certain conventional pollutants in industrial wastewater are not the same as the requirements for municipal reuse water. Appropriate levels of pollutants were established based on knowledge of industrial wastewater characteristics. AWWA recommended that sampling and analyses requirements for certain industrial reclaimed waters be amended to ensure that water quality is appropriate for the intended end use. They note that it is especially important that industries which are currently required to meet more stringent requirements of the local pretreatment programs due to the constituents in their discharge be required to meet the same level of pollution prevention for wastewater which is reused. The commenter believes that annual sampling is not adequate and recommends that if the uses listed as acceptable in sec.210.54(d) are implemented, especially residential and park irrigation, then the same quality and sampling requirements in sec.sec.210.22-210.34 should be required. AWWA also suggested that the sampling must be complimentary to Safe Drinking Water Act requirements and should not supersede the Clean Water Act requirements for sampling industrial effluents discharged to POTWs. The commission agrees in part with the commenter. A requirement for notification to the POTW was added to the rule, with the intent that local ordinances would continue to regulate the pollutants that are routed to the POTW. The quality limitations proposed in this rule are appropriate for the listed uses, and since a producer is required to maintain an alternate method of disposal. The commission recognizes that annual sampling may not be appropriate to completely characterize those waste streams that require sampling. The sampling requirements been adjusted to require sampling once per year for all of the constituents listed, and once per month for all constituents for which there was a measurable quantity during any sampling event. Additionally, a sampling requirement for pH was included at a frequency of once per week. UT requests clarification on sec.210.55(a)(2), which suggests that the industrial provider must keep a copy of the contract for five years only for industrial reclaimed water users that do not have separate distribution lines for potable water, which implies that it is possible to distribute industrial reclaimed water through potable water lines. The commission agrees and has deleted the parenthetical comment in this sentence and at sec.210.55(a)(3). UT also requested clarification on sec.210.55(a)(3) as to whether this subparagraph refers to bulk, discrete deliveries to ponds, tanks, or other storage media via tanker cars, trucks or dedicated piping systems. The commission agrees that clarification is needed and has reworded this provision to delete the reference to "per delivery." It is expected that complete records will be kept of all water that is transported off-site. STATEMENT OF AUTHORITY The new rules are adopted under the Texas Water Code, sec.5.102, which provides the commission with general powers to carry out duties under the Texas Water Code and sec.5.103, which provides the commission with the authority to adopt any rules necessary to carry out the powers and duties under the provisions of the Texas Water Code and the laws of this state. sec.210.51.When authorization is required and how to obtain it; effect on permitted discharges. (a) A person who produces, provides, or uses industrial wastewater as industrial reclaimed water must obtain agency authorization if the use constitutes a discharge. A conveyance or use of industrial reclaimed water that does not constitute a discharge does not require authorization. (b) This subchapter authorizes the use of industrial reclaimed water if the requirements of the subchapter are met. If a use of industrial reclaimed water is authorized by this subchapter then an amendment to any related wastewater discharge permit is not required. (c) The requirements of this subchapter do not apply to the use of industrial reclaimed water when the use is authorized by permit or by commission rules other than those in this subchapter. However, when a use of industrial reclaimed water is regulated under Chapter 335 of this title (relating to Industrial Solid Waste and Municipal Hazardous Waste) the use shall comply with the requirements of Chapter 335 and this subchapter. (d) The use of industrial wastewater as industrial reclaimed water as authorized by this subchapter shall not be considered a violation of the related permit for the discharge of industrial wastewater. Except as provided by sec.210.54 of this title (relating to the Authorization of Industrial Reclaimed Water Use), effluent limitations provided in the permit remain in effect for the discharge of the industrial wastewater. (e) Nothing in this subchapter shall alter any requirement to obtain a water right authorization. sec.210.52.Definitions. The following words and terms when used in this subchapter have the following meanings unless the context indicates otherwise. Blowdown-The discharge of recirculating water for the purpose of discharging materials contained in the water, the further buildup of which would cause concentration in amounts which could damage or impair machinery, equipment, or systems. Commingled Wastewater-Industrial wastewater that contains any amount of domestic wastewater. Discharge-to release or disposal of waste into or adjacent to any water in the state which in itself or in conjunction with any other discharge or activity causes, continues to cause, or will cause pollution of any of the water of the state. Industrial Reclaimed Water-Any industrial wastewater which has been treated, if necessary, to a quality suitable for reuse. Industrial Wastewater-A non-domestic or non-municipal wastewater. Minimum Analytical Level or MAL-The lowest concentration at which a particular substance can be quantitatively measured in the matrix of concern (i.e., wastewater) with a defined precision level, using approved analytical methods. Non-process Area Stormwater- Stormwater which has not come into direct contact with manufacturing or process areas, and has not come into direct contact with manufacturing or process materials. Non-contact Cooling Water-Water used for cooling which does not come into direct contact with any raw material, intermediate product, waste product, or finished product. Once-Through Cooling Water-Water passed through the main cooling condensers in one or two passes for the purpose of removing waste heat. POTW-Publicly Owned Treatment Works Priority Pollutants-The pollutants as listed in 40 CFR 122, Appendix D, Tables 2 and 3, plus 2,3,7,8-TCDD and asbestos. Producer-An entity or person that produces industrial reclaimed water as identified in this subchapter. sec.210.53.Requirements in Other Subchapters. (a) Except as specified in this section, the requirements for a reclaimed water producer, provider, or user described in Subchapters A, B, C, and D of this Chapter of this title (relating to Use of Reclaimed Water) apply to a producer, provider, or user of industrial reclaimed water. (b) The producer or user of industrial reclaimed water is not required to hold a permit for treatment and disposal as described in sec.210.1 of this title (relating to Applicability). (c) A producer that uses industrial reclaimed water only within the boundaries of the industrial facility, or within the boundaries of properties contiguous to the facility and owned by the producer, is not required to comply with sec.210.4 of this title (relating to Notification). However, the producer must comply with all applicable requirements of this chapter pertaining to the industrial reclaimed water use. Unless the facility provides domestic water or wastewater services to the public, such as at a university, hospital, hotel, or similar institution, all exposed or buried piping receiving industrial reclaimed water constructed within the boundaries of the industrial facility is exempt from the color coding requirements of sec.210.25 of this title (relating to Special Design Criteria for Reclaimed Water Systems). (d) The requirements of sec.210.5(d) of this title (relating to Authorization for the Use of Reclaimed Water) do not apply to a provider or user of industrial reclaimed water. (e) The requirements of sec.210.25(e), (f), and (h) of this title (relating to Special Design Criteria for Reclaimed Water Systems) do not apply to the producer, provider, or user of industrial reclaimed water within the boundaries of the industrial facility or within the boundaries of properties contiguous to the facility and owned by the producer. (f) The requirements of sec.210.31 of this title (relating to Applicability), sec.210.32 of this title (relating to Specific Uses of Reclaimed Water), sec.210.33 of this title (relating to Quality Standards for Using Reclaimed Water), sec.210.34 of this title (relating to Sampling and Analysis), sec.210.35 of this title (relating to Guidelines for Certain Distribution Systems), and sec.210.36 of this title (relating to Record Keeping and Reporting), do not apply to the producer, provider, or user of industrial reclaimed water. (g) For purposes of applying the requirements of sec.210.23 of this title (relating to Storage Requirements for Reclaimed Water) to the authorized uses of industrial reclaimed water identified in sec.210.54 of this title (relating to Authorization of Industrial Reclaimed Water Use), industrial reclaimed water which is exempt from authorization will be considered equivalent to Type I reclaimed water. If authorization is required, then the executive director may determine whether other lining requirements are needed. (h) Notwithstanding subsections (b) through (f) of this section, industrial reclaimed water that consists of industrial wastewater commingled with domestic wastewater is subject to all requirements of sec.sec.210.1-210.9 of this title (relating to General Provisions), sec.sec.210.21-210.25 of this title (relating to General Requirements for the Production, Conveyance, and Use of Reclaimed Water), and sec.sec.210.31-210.36 of this title (relating to Quality Criteria and Specific Uses for Reclaimed Water). sec.210.54.Authorization of Industrial Reclaimed Water Use. (a) In addition to the other requirements in this section, a producer must: (1) provide an authorized alternative means of disposing of the industrial wastewater when the user cannot use industrial reclaimed water; and (2) if the producer is within the service area of a POTW, give notice to the POTW of the intent to reuse industrial wastewater under this subchapter. (b) This subsection authorizes the use of industrial reclaimed waters if the requirements of paragraphs (1) and (2) of this subsection are met: (1) The use is for one of the following activities: (A) Residential or industrial irrigation, including landscape irrigation. (B) Urban uses, including but not limited to irrigation of parks, golf courses with restricted or unrestricted public access, school yards, athletic fields, right-of-ways. (C) Fire protection. (D) Dust suppression and soil compaction. (E) Maintenance of impoundments. (F) Irrigation of non-food crops, including but not limited to sod farms and silviculture. (2) The use of the industrial reclaimed waters satisfies the following: (A) The industrial reclaimed waters are used within the boundaries of the producer's facility or within the boundaries of property that is contiguous to the producer's facility and owned by the producer, and are derived from one or more of the following sources: air conditioning condensate, cooling tower blowdown, washwater from washing whole fruits and vegetables, non-contact cooling water, non-process area stormwater, once through cooling water, or steam condensate; or (B) The industrial reclaimed waters are used within the boundaries of the producer's facility or within the boundaries of property that is contiguous to the producer's facility and owned by the producer, and meet the following criteria: (i) Chemical Oxygen Demand less than or equal to 150 mg/l, (ii) Total Organic Carbon less than or equal to 55 mg/l, (iii) Oil and Grease less than or equal to 10 mg/l, (iv) Nitrate Nitrogen less than or equal to 10 mg/l, (v) Priority Pollutant concentrations less than or equal to the MAL (2,3,7,8- TCDD and asbestos are only required to be sampled if believed to be present), and (vi) pH not less than 6.0 nor greater than 9.0 standard units. (vii) If the industrial reclaimed water is commingled with any amount of domestic wastewater, then the fecal coliform concentration measured from a grab sample must be less than or equal to 75 CFU/100 ml. (c) The executive director may authorize uses of industrial reclaimed waters for other types of use, locations of use, and of other water quality, in addition to those uses authorized under subsection (b) of this section. (1) The executive director may approve the use of industrial reclaimed waters at sites other than within the boundaries of the producer's facility and at sites other than within the boundaries of property that is contiguous to the producer's facility. (2) The executive director will review any proposed use of industrial reclaimed waters for consistency with the wastewater generated. The executive director may impose additional controls on the proposed use. (3) The executive director may approve of the reuse of industrial reclaimed water if the concentration of a priority pollutant exceeds a MAL. The executive director will consider the concentration of the constituent and its potential for an adverse impact upon human health or waters in the state in making a determination to approve the use and may include additional monitoring and/or reporting requirements. (4) A user shall submit an application to the executive director on a form provided by the executive director. The user shall not begin use of industrial reclaimed waters before obtaining the executive director's written authorization. sec.210.55.Record Keeping and Reporting. (a) The industrial reclaimed water provider shall maintain records on site for a period of five years. The records to be maintained by the provider include: (1) copies of notifications made to the commission concerning industrial reclaimed water projects. (2) copies of contracts made with each industrial reclaimed water user. (3) daily records of volume of water delivered to each reclaimed water user. (b) For industrial reclaimed waters authorized under sec.210.54(b)(2)(B) or (c) of this title (relating to Authorization of Industrial Reclaimed Water Use), records of water quality analyses must be kept on-site for a period of at least five years. A grab sample of the reclaimed water must be taken and analyzed at least once per year for all of the constituents listed in sec.210.54(b)(2)(B) of this title (relating to Authorization of Industrial Reclaimed Water Use), and once per month for only those pollutants that are expected to be present in any detectable amount. Additionally, field measurement of pH is required at a frequency of once per week. 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 April 22, 1997. TRD-9705348 Kevin McCalla Director, Legal Division Texas Natural Resource Conservation Commission Effective date: May 12, 1997 Proposal publication date: October 22, 1996 For further information, please call: (512) 239-4640 TITLE 31. ENVIRONMENTAL QUALITY PART X. Texas Water Development Board CHAPTER 353. Introductory Provisions The Texas Water Development Board (the board) adopts the repeal of sec.353.11 and new sec.353.11, concerning charges for public records, without changes to the proposed text as published in the March 7, 1997, issue of the Texas Register (22 TexReg 2486) and will not be republished. The new section establishes a fee schedule consistent with the schedule of charges for providing copies of public information set forth by the General Services Commission to implement the provisions of Government Code, Chapter 552, with respect to the cost of providing public information, and the charges that state agencies and other governmental bodies may set to recover costs. No comments were received on the proposal. General Provisions 31 TAC sec.353.11 The repeal is adopted pursuant to Texas Water Code, sec.6.101, which requires the board to adopt rules necessary to carry out its powers and duties, and Chapter 428, Acts, 73rd Legislature, 1993, which requires state agencies to adopt rules that specify the charges that the agency will make for copies of public records. 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 April 17, 1997. TRD-9705249 Craig D. Pedersen Executive Administrator Texas Water Development Board Effective date: May 8, 1997 Proposal publication date: March 7, 1997 For further information, please call: (512) 463-7981 General Provisions 31 TAC sec.353.11 The new section is adopted pursuant to Texas Water Code, Section 6.101, which requires the board to adopt rules necessary to carry out its powers and duties, and Chapter 428, Acts, 73rd Legislature, 1993, which requires state agencies to adopt rules that specify the charges that the agency will make for copies of public records. 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 April 17, 1997. TRD-9705489 Craig D. Pedersen Executive Administrator Texas Water Development Board Effective date: May 8, 1997 Proposal publication date: March 7, 1997 For further information, please call: (512) 463-7981 TITLE 40. SOCIAL SERVICES AND ASSISTANCE PART I. Texas Department of Human Services CHAPTER 19.Nursing Facility Requirements for Licensure and Medicaid Certification SUBCHAPTER U.Inspections, Surveys, and Visits 40 TAC sec.sec.19.2008, 19.2010, 19.2011 The Texas Department of Human Services (DHS) adopts amendments to sec.19.2008, sec.19.2010, and sec.19.2011 without changes to the proposed text published in the February 4, 1997, issue of the Texas Register (22 TexReg 1388). Justification for the amendments is to give a particular resident or his legal representative the option of allowing the department to release an abuse and neglect investigation report involving that resident without removing the resident's name. The amendments will function by allowing the department to release reports of an abuse and neglect investigation involving a particular resident, without removing the resident's name, but only upon the request of the resident or his legal representative. The department received comments from Texas Health Care Association and Davis & Wilkerson. Comment: sec.19.2010 needs to be expanded to specify that the same document that the resident agreed to have released is also provided to the nursing facility where the investigation occurred. The nursing facility should have a copy of all information released regarding that facility. In sec.19.2010(a)(2), change (D) to (E) and add a new (D) to read "Specify the same documents will be provided to the facility." Comment: Due process requires the facility be informed of the release of information and be provided the opportunity to obtain copies of whatever information is being released and to whom it is being released. One-sided release strongly favors plaintiff's attorneys. In sec.19.2010, add (a)(2)(E) to read "permit release of the information to any facility where the resident resides or whose employees, contractors or agents are involved in such investigation and report" and (3) to read "The authorization will inform the resident or the resident's legal representative that the facility will receive a copy of all information to be released and will be notified of all those to whom the information is to be released." Response: The department disagrees with the comments. The current rule provides that a de-identified completed investigation report is public information releasable to anyone who requests it. The public information law does not require the department to notify any other entities when information is released currently, nor would it require notification under the conditions specified in the proposed rule. The de-identified report is available to the facility if it makes a public information request. The amendment allows the department to release a completed report with the resident's name left in to any entity, including a facility, that provides a written authorization from the resident or legal representative with the request for information. If there is litigation pending, it is the responsibility of the attorneys involved in the litigation to comply with any notice requirements to other parties when they are requesting or subpoenaing information from the department. The amendment to the rule is not intended to favor any person or entity, but rather to state the circumstances under which the resident's name will remain in the report when the report is released in response to any request. The amendments are adopted under the Health and Safety Code, Chapter 242, which provides the department with the authority to license nursing facilities; and the Human Resources Code, Title 2, Chapter 22, which authorizes the department to administer public assistance programs. The amendments implement the Health and Safety Code, sec.sec.242.001 - 242.268, and the Human Resources Code, sec.sec.22.001-22.030. 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 April 16, 1997. TRD-9705131 Glenn Scott General Counsel, Legal Services Texas Department of Human Services Effective date: June 1, 1997 Proposal publication date: February 7, 1997 For further information, please call: (512) 438-3765 PART III. Texas Commission on Alcohol and Drug Abuse CHAPTER 142.Investigations and Hearings 40 TAC sec.142.22 The Texas Commission on Alcohol and Drug Abuse adopts an amendment to sec.142.22, relating to hearings and investigations, without changes to the proposed text as published in the March 4, 1997, issue of the Texas Register (22 TexReg 2417) and will not be republished. The rule is being adopted to make commission rules consistent with the Texas Human Resources Code, Chapter 48. The amendment specifies activities included in the investigative process. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Health and Safety Code, sec.461.012(15), which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules governing the functions of the commission, including rules that prescribe the policies and procedures followed by the commission in administering any commission programs. The code affected by the adopted amendment is the Texas Health and Safety Code, Chapter 461. 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 April 18, 1997. TRD-9705238 Mark S. Smock Deputy for Finance and Administration Texas Commission on Alcohol and Drug Abuse Effective date: May 8, 1997 Proposal publication date: March 4, 1997 For further information, please call: (512) 349-6609 CHAPTER 143.Awards SUBCHAPTER A.Funding Mechanisms 40 TAC 143.1-143.12, 143.31, 143.32 The Texas Commission on Alcohol and Drug Abuse adopts new sec.sec.143.1-143.12, 143.31 and 143.32, concerning procedures for awarding funds for client services. Sections 143.2-143.12, 143.31, and 143.32 are adopted with changes to the proposed text as published in the January 3, 1997 issue of the Texas Register (22 TexReg 32). Section 143.1 is adopted without changes and will not republished. These rules are adopted to implement changes resulting from a comprehensive review of the commission's funding process. They replace rules which are repealed concurrently. The text has been revised to include section subdivisions. Section 143.8 (relating to Application Criteria) has been modified to remove the 12-month time frame relating to suspension or termination by a State or Federal agency. A provider who has been suspended or terminated by a State or Federal agency at any time in the past must have all issues satisfactorily resolved at the time of application. The sections describe the allocation of funds, establish parameters for selection criteria used to determine best value, and describe the competitive funding process including advertisement, request for proposals, application, application criteria and application information requirements, screening, peer review, and funding decision procedures. Additional sections explain conditions under which the commission may cancel a solicitation, describe procedures used for emergency purchases, and explain limitations on funding unsolicited proposals. The commission received comments from a number of individuals regarding the peer review process. These individuals felt that a peer review panel should include individuals who are familiar with Texas communities and programs. The commission has revised sec.143.10 (relating to Peer Review) to include in-state peer reviewers. The new sections are adopted under the Texas Health and Safety Code, sec.461.012(15), which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules governing the functions of the commission, including rules that prescribe the policies and procedures followed by the commission in administering any commission programs. The code affected by the new sections is the Texas Health and Safety Code, Chapter 461. sec.143.2.Allocation of Funds. (a) Funds available for regional services are allocated to each of the 11 Health and Human Services Commission (HHSC) regions through a formula approved by the board of commissioners. (b) Funds are regionally allocated for general adult treatment, court commitment services, youth prevention, and youth treatment. An executive order will be issued annually describing services for which funds will not be allocated regionally. (c) The commission establishes restrictions and stipulations needed to fulfill state and federal funding mandates. (d) The commission notifies the Regional Advisory Consortia (RAC) of estimated available funds and any restrictions and stipulations. The Regional Advisory Consortia have an opportunity to request recommendations regarding service needs and priorities unless the funds must be dispersed immediately. (e) The commission considers RAC recommendations when it develops the statements of work and selection criteria for regional requests for proposal. sec.143.3.Selection Criteria. (a) The commission develops selection criteria for each request for proposals which reflect applicable state and federal mandates. Selection criteria are designed to select applications which provide best overall value to the state. (b) The award criteria include: (1) program quality as determined by the peer review process; and (2) the cost of proposed service. (c) The commission may consider additional factors in determining best value, including: (1) financial ability to perform services; (2) state and community investment; (3) regional service needs and priorities; (4) access for underserved areas and populations; (5) ability to provide service continuity; and (6) past performance and compliance. (d) Selection criteria include the scoring system(s) to be used and the weight assigned to each factor. (e) Selection criteria are approved by the board of commissioners and listed in the request for proposals. sec.143.4.Advertisement. (a) The commission publishes a notice of the intent to purchase services through a competitive process in the Texas Register. The notice includes: (1) the service to be purchased; (2) the geographic area to be served; (3) funding limitations; (4) method of payment; (5) contract period; (6) any limitations on who is eligible to submit an application; and (7) the requirements and deadline for submitting a letter of intent. (b) In order to be eligible to compete, applicants who are not already funded by the commission must submit specified documents with the letter of intent that demonstrate the applicant's financial ability to perform services. (c) The commission will issue a request for proposals if at least two eligible applicants submit a letter of intent by the specified deadline. sec.143.5.Request for Proposals (RFP). (a) The request for proposals includes: (1) goals describing the purpose of the funds; (2) a clear and accurate description of the services to be purchased; (3) all requirements that must be met for an application to be considered; (4) an estimate of the funds available; (5) applicable priorities and restrictions; (6) application forms, procedures, and timeframes; and (7) the selection criteria and the process used to evaluate proposals and select award recipients. (b) For regional funds, the request for proposals is targeted to individual Health and Human Services Commission regions. The goals and statement of work address regional needs and priorities established by the Regional Advisory Consortia. sec.143.6.Application. (a) An organization shall apply for funding using forms and procedures specified by the commission. (b) The application shall be signed by the organization's authorized official. (c) Applicants seeking financial assistance from the commission shall comply with the Texas Review and Comment System (TRACS) as described in the request for proposal. A favorable Texas Review and Comment System recommendation is not required for applicants to submit proposals to the commission. (d) Applications shall be submitted by mail or in person. The commission does not accept applications by facsimile. (e) Applications shall be received at the commission by the date and time stated in the request for proposal. The commission will not consider any material related to an application (except for Texas Review and Comment System comments) that is received after the due date. sec.143.7. Application Information. (a) The commission shall not fund an applicant who does not provide all requested information. (b) An applicant shall disclose to the commission in writing any pending or threatened litigation which might prevent the applicant from meeting funding requirements, if funded. This includes but is not limited to: (1) an action, suit, or proceeding before any court or governmental body, including environmental and civil rights matters; and (2) employee labor disturbances. (c) All applicants shall supply the following information, if requested: (1) identifying information; (2) documentation of legal basis for operation; (3) ownership or control information; (4) information on business transactions and relationships; (5) information on financial status; and (6) information on persons convicted of crimes. sec.143.8.Application Criteria. (a) An application shall not be considered for competitive funding unless the applicant meets the following criteria on the application due date and continues to meet them throughout the selection and funding process. (1) The applicant shall be a legally established public, private nonprofit, or for-profit organization. For-profit entities are only eligible to be considered for funding to provide treatment services and shall not be funded through a financial assistance payment mechanism. (2) Applicants seeking funding for treatment services shall be licensed to provide the requested services (detox, residential, or outpatient) to the proposed target population. (3) The applicant shall be in compliance with any commission agreed order. (4) he applicant shall have a Texas address. A post office box address may be used when the application is submitted, but the applicant must be able to conduct business out of a physical location in Texas before funds will be released. (5) The applicant shall have a governing body that provides oversight which is separate and different from staff who operate the program. Staff members, including the executive director, shall not serve on the governing board. (6) The applicant shall be in good standing with any State or Federal agency that has a contracting relationship with the applicant. If a State or Federal agency has suspended or terminated an applicant's award for deficiencies in performance of the award, that applicant is not eligible to apply through a request for proposals unless all issues have been satisfactorily resolved as demonstrated by written documentation from the State or Federal agency. Additionally, an applicant is not eligible if it is debarred from participation in federal assistance programs. (7) Applicants who have previously been funded by the commission shall be in compliance with the following requirements: (A) if the applicant has been suspended or terminated by the commission at any time in the past all issues shall be satisfactorily resolved (demonstrated by written documentation from the commission); (B) if the applicant owes a refund to the commission, the applicant shall be on schedule with the terms of the repayment agreement; (C) the applicant shall have submitted an annual audit as required by the grant agreement or contract and corrected all deficiencies or submitted a corrective action plan that the commission has accepted. (b) The commission may establish additional eligibility standards in a request for proposals or other form of solicitation. (c) Organizations that do not meet the application criteria may be considered for developmental funds if such funds become available, provided the organization has corrected identified deficiencies. (d) Providers shall continue to meet application criteria after funds are awarded or be subject to sanctions. (e) The commission may deny funding to an applicant if any person who has an ownership or controlling interest in the provider organization, or who is an agent or managing employee of the provider, has been convicted of a criminal offense related to involvement in any program established under Medicare, Medicaid, or the Title XX block grant. (f) The commission may refuse to fund an applicant who cannot demonstrate that the location where services will be provided is in compliance with all applicable local and state zoning, building, health, fire, and safety standards. sec.143.9.Screening. (a) Commission staff screen the applications for completeness and conduct an evaluation using application criteria stated in the request for proposals. (b) An application shall meet all application criteria to qualify for further consideration. (c) The commission notifies applicants eliminated through the screening process within 45 days of the submission deadline. sec.143.10.Peer Review. (a) The commission uses peer reviewers to evaluate the quality of applications. (b) The commission solicits applications from professionals to serve as peer reviewers. Peer reviewers shall demonstrate appropriate training and experience and shall not have a conflict of interest. (c) The commission provides written procedures and training for all peer reviewers. (d) The peer reviewers score each application according to the review criteria stated in the request for proposal. sec.143.11.Funding Decisions. (a) The commission applies the selection criteria to determine which applications will be funded. (b) Lobbying of commission staff or commissioners is prohibited. (c) The commission sends successful applicants written notice within 30 days of the funding decision. (d) The commission may negotiate with selected applicants to determine the terms of the award. To receive an award, the applicant shall accept any additional or special terms and conditions listed in the grant award notice and any changes in the funding application. Terms and conditions shall be limited to items required to ensure compliance with requirements stated in the request for proposals and applicable commission rules. (e) A provider shall not enter into an agreement with the commission if legal action that might impact the provider's ability to meet the requirements of the award is pending or threatened. (f) The commission notifies unsuccessful applicants in writing within 30 days of the funding decision. Upon written request, the commission will provide written feedback on unsuccessful proposals within 30 days of receipt of the written request. If this time frame cannot be met the applicant will be informed of the date of response. (g) Applicants shall not make public announcements about the commission funds until they have received written award notification from the commission. sec.143.12.Cancellation or Suspension of Solicitation. The commission has the right to reject all offers and cancel a solicitation. Reasons for cancellation include: (1) the specifications given in the request for proposals were inaccurate, inadequate, or ambiguous; (2) the services are no longer required; (3) the offers received indicated that the services can be purchased by a less expensive method; (4) evidence is received that the bids/offers are collusive or were submitted in bad faith; (5) none of the applicants are considered responsive; and (6) funds are no longer available. sec.143.31.Emergency Purchase. (a) Emergency treatment services may be purchased from licensed treatment providers on a non-competitive basis when clients will suffer adverse consequences unless services are secured immediately. (b) The executive director shall approve the transaction, including a statement of justification which: (1) describes the emergency situation and what caused it; (2) describes the damage that will occur if needs are not satisfied immediately; and (3) states why the needs were not or could not be anticipated. (c) The initial funding period shall last no longer than 90 days. Funding can be approved for additional 90-day periods until the emergency no longer exists or a provider is selected through other procedures as provided in this chapter. The commission has no real or implied commitment to the provider for on-going contractual obligations. (d) During the first 90-day period, the commission will evaluate the provider in relation to federal state requirements and its own application criteria. If the provider does not meet relevant requirements or the commission's application criteria, the commission will terminate the services as soon as possible. (e) Upon approval by the executive director of an emergency service transaction, the commission shall promptly initiate procedures to secure the needed services on a long-term basis. sec.143.32.Unsolicited Proposals. (a) The commission's executive director may authorize funding for unsolicited proposals when sufficient and proper funds are available. (b) Unsolicited proposals are accepted only for prevention services. (c) Total cost shall not exceed $25,000 and the project shall be completed within a 12-month period. (d) Unsolicited proposals do not include late or advance proposals for known commission requirements that can be obtained through procedures. (e) Ongoing programs are not eligible for awards through this process. 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 April 18, 1997. TRD-9705240 Mark S. Smock Deputy for Finance and Administration Texas Commission on Alcohol and Drug Abuse Effective date: May 8, 1997 Proposal publication date: January 3, 1997 For further information, please call: (512) 349-6609 40 TAC sec.sec.143.11-143.14, 143.16, 143.17 The Texas Commission on Alcohol and Drug Abuse adopts the repeals of sec.sec.143.11-143.14; 143.16 and 143.17, concerning procedures for awarding funds for services, without changes to the proposed text as published in the January 3, 1997, issue of the Texas Register (22 TexReg 34). These sections are repealed to allow adoption of new funding rules. These sections describe methods of purchase, competitive negotiation, noncompetitive negotiation, unsolicited proposals, categorical awards, and emergency purchase procedures. No comments were received regarding adoption of the repeals. The repeals are adopted under the Texas Health and Safety Code, sec.461.012(15), which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules governing the functions of the commission, including rules that prescribe the policies and procedures followed by the commission in administering any commission programs. The code affected by the repealed sections is the Texas Health and Safety Code, Chapter 461. 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 April 18, 1997. TRD-9705243 Mark S. Smock Deputy for Finance and Administration Texas Commission on Alcohol and Drug Abuse Effective date: May 8, 1997 Proposal publication date: January 3, 1997 For further information, please call: (512) 349-6609 40 TAC sec.143.15 The Texas Commission on Alcohol and Drug Abuse adopts an amendment to sec.143.15, concerning noncompetitive renewal, without changes to the proposed text as published in the November 26, 1996, issue of the Texas Register (21 TexReg 11472). The amendment is proposed in order to implement new policies regarding the annual performance report and application cycles. The amendment specifies that a provider must pass the annual performance report to be eligible for noncompetitive renewal, and removes the four-year limit on noncompetitive renewal. The section describes the process for a noncompetitive renewal award. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Health and Safety Code, sec.461.012(15), which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules governing the functions of the commission, including rules that prescribe the policies and procedures followed by the commission in administering any commission programs. The code affected by the adopted amendment is the Texas Health and Safety Code, Chapter 461. 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 April 18, 1997. TRD-9705245 Mark S. Smock Deputy for Finance and Administration Texas Commission on Alcohol and Drug Abuse Effective date: May 8, 1997 Proposal publication date: November 26, 1996 For further information, please call: (512) 349-6609 40 TAC sec.143.18, sec.143.19, The Texas Commission on Alcohol and Drug Abuse adopts new sec.143.18, concerning annual report card and sec.143.19, concerning application cycles, with changes to the proposed text as published in the November 26, 1996, issue of the Texas Register (21 TexReg 11472). The new sections are being adopted to require an annual report card for awards and to allow the commission to renew awards with satisfactory performance annually during a three-year application cycle. The title of sec.143.18 has been changed from Annual Performance Report to Annual Report Card. The text of sec.143.18 has been revised to state that the annual report card will include required program performance measures and that the commission will receive input from providers before establishing performance standards. The reference in sec.143.19 has been revised to reflect the title change in sec.143.18. The new sections describe the process used for the annual report card and the application cycles. The commission received comments from the City of Dallas, Department of Environmental and Health Services, and the South Texas Substance Abuse Recovery Services, Inc. Comments and responses are summarized below. Comment: All providers should know in advance what is covered in the annual report card. Response: The commission agrees with the comment. One reason for adopting these rules is to give providers formal notice of the process used for the annual report card. In addition, current providers will receive individualized letters describing the annual report card and application cycles, and new award packets will also include this information. Comment: There should be a process to appeal if funding is not granted. Response: Providers will have an opportunity to contest the accuracy of the report card, but further appeal is not warranted. Funded providers sign a contract to fulfill certain standards of performance. If the provider fails to meet those standards, the state has an obligation to seek other organizations interested in competing for the funds to ensure services are available to the impacted area. Providers receive feedback on their performance during the award period and have an opportunity to implement corrective action. Comment: Required standards should be established through collaboration with providers. Response: The commission agrees with the comment. The rule has been revised to reflect that providers will have input into the standards, beginning with the standards applied in fiscal year 1998 to determine fiscal year 1999 funding. Comment: Measures should be culturally sensitive and community specific. Response: The purpose of the report card is to provide comparable data on all providers. By definition, measures that are community specific cannot be used to compare one provider to another. The report card will include required performance measures. Although basic targets for performance measures are established for all providers, programs that provide sufficient justification may negotiate alternate targets. It should be noted that program evaluation is not limited to the items covered in the annual report card. Comment: The provider should receive feedback prior to severe sanctions or consequences. Response: The report card compiles a number of measures, and each measure has its own feedback loop. Providers receive information about their performance during the award period and have an opportunity to implement corrective action. In addition, the commission will implement a scoring system in fiscal year 1999 that differentiates multiple performance levels (as opposed to a simple pass/fail system) so that the report card can reward excellence. Comment: The items included in the report card are not independent measures; they all directly or indirectly reflect fiscal performance. The report card should include qualitative, treatment-related program measures. Response: Although the version of the report card initially proposed focused on administrative issues, the report card has been expanded to include performance measures that reflect program outputs and/or outcomes. The rule has been revised to reflect this addition. In addition, the commission plans to develop more measures of quality in the future. The new sections are adopted under the Texas Health and Safety Code, sec.461.012(15), which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules governing the functions of the commission, including rules that prescribe the policies and procedures followed by the commission in administering any commission programs. The code affected by the adopted amendments is the Texas Health and Safety Code, Chapter 461. sec.143.18.Annual Report Card. The commission compiles an annual report card on each service award. The commission notifies providers of the report card results in writing. The annual report card includes criteria that are scored on organizational performance and criteria that are scored on individual award performance. The commission establishes a minimum standard for each criterion after receiving input from providers. An award must achieve a passing score on each of the criteria to pass the report card. If the failing score is given for an organizational criterion, all of the provider's awards are subject to competition. If the failing score is for an award-based criterion, only that specific award is subject to competition. The commission compiles the annual report card in the first quarter of each fiscal year using data related to the previous fiscal year. The report card includes the following elements: timeliness and accuracy of reports; funding status; sanctions status; compliance with payment plans and agreements for providing services in lieu of payment; and required program performance measures. The elements of the report card, standards for each element, and notification timelines are specifically defined each year in an executive order. The commission shall request and consider input from providers before issuing the executive order. Providers that fail the report card will have an opportunity to present evidence if they believe the commission's data are erroneous, but the report card may not be appealed on any other grounds. sec.143.19.Application Cycles. (a) The commission places each service award that is subject to competition in a three-year application cycle. An executive order will be issued each year to identify awards that are not subject to competition. (b) An award is not required to compete for renewal funds during its application cycle if the award maintains satisfactory performance as measured by the annual performance report described in sec.143.18 of this title (relating to Annual Report Card). (c) Transition to application cycles will occur in fiscal year 1997 for awards subject to competition. (1) Existing awards that began in fiscal year 1996 will be assigned to application cycles ending in fiscal year 1998, fiscal year 1999, and fiscal year 2000. These assignments will be distributed so that approximately one-third of the treatment awards and one-third of the prevention/intervention awards in a region are placed in each application cycle. (2) For awards issued later than fiscal year 1996, the first fiscal year of funding is the first year of the application cycle. 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 April 18, 1997. TRD-9705244 Mark S. Smock Deputy for Finance and Administration Texas Commission on Alcohol and Drug Abuse Effective date: May 8, 1997 Proposal publication date: November 26, 1996 For further information, please call: (512) 349-6609 SUBCHAPTER B.Eligibility 40 TAC sec.sec.143.21, 143.23-143.25 The Texas Commission on Alcohol and Drug Abuse adopts the repeals of sec.sec.143.21 and 143.23-143.25, concerning procedures for awarding funds for services, without changes to the proposed text as published in the January 3, 1997, issue of the Texas Register (22 TexReg 35). These sections are repealed to allow adoption of new funding rules. These sections describe eligibility criteria, required application information, requirements for compliance with other agencies, and provisions regarding litigation. No comments were received regarding adoption of the repeals. The repeals are proposed under the Texas Health and Safety Code, sec.461.012(15), which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules governing the functions of the commission, including rules that prescribe the policies and procedures followed by the commission in administering any commission programs. The code affected by the repealed sections is the Texas Health and Safety Code, Chapter 461. 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 April 18, 1997. TRD-9705242 Mark S. Smock Deputy for Finance and Administration Texas Commission on Alcohol and Drug Abuse Effective date: May 8, 1997 Proposal publication date: January 3, 1997 For further information, please call: (512) 349-6609 SUBCHAPTER C.Competitive Funding Process 40 TAC sec.sec.143.31-143.46 The Texas Commission on Alcohol and Drug Abuse adopts the repeals of sec.sec.143.31-143.46, concerning procedures for awarding funds for services, without changes to the proposed text, as published in the January 3, 1997, issue of the Texas Register (22 TexReg 35). These sections are repealed to allow adoption of new funding rules. These sections describe the competitive funding process, including award criteria, request for proposals, conditions for cancellation or suspension of solicitation, provisions regarding competition and collusion, advertisement, procedures for obtaining information about the funding process, application process, the Texas Review and Comment System Review, screening, internal review, peer review, funding decisions, negotiation, acceptance, funding announcements, and notification of unsuccessful applicants. No comments were received regarding adoption of the repeals. The repeals are adopted under the Texas Health and Safety Code, sec.461.012(15), which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules governing the functions of the commission, including rules that prescribe the policies and procedures followed by the commission in administering any commission programs. The code affected by the repealed sections is the Texas Health and Safety Code, Chapter 461. 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 April 18, 1997. TRD-9705241 Mark S. Smock Deputy for Finance and Administration Texas Commission on Alcohol and Drug Abuse Effective date: May 8, 1997 Proposal publication date: January 3, 1997 For further information, please call: (512) 349-6609 CHAPTER 144.Funding Requirements SUBCHAPTER G.Funding Requirements 40 TAC sec.144.611 The Texas Commission on Alcohol and Drug Abuse adopts amendments to sec.144.611, concerning audits, with changes to the proposed text as published in the March 4, 1997, issue of the Texas Register (22 TexReg 2418). The rule is being amended to clarify that Circular A-133 applies only to public and non-profit organizations. The amendments to the rule revise audit requirements regarding funding thresholds and applicable circulars to make commission rules consistent with the federal Single Audit Act Amendments of 1996. No comments were received regarding adoption of the amendment. The amendments are adopted under the Texas Health and Safety Code, sec.461.012, which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules governing the functions of the commission, including rules that prescribe the policies and procedures followed by the commission in administering any commission programs. The code affected by the adopted amendments is the Texas Health and Safety Code, Chapter 461. sec.144.611.Annual Single or Program-Specific Audit. (a) For providers whose fiscal years begin before July 1, 1996: Providers who receive $25,000 or more of total federal financial assistance during their fiscal year shall have an annual single or program-specific audit for that year. (1) Providers receiving at least $25,000 but less than $100,000 in federal funds may have a program-specific audit in accordance with the statues and regulations governing the program if the provider receives funding for only one federal financial assistance program. (2) State and local governments shall comply with the Single Audit Act and requirements of Office of Management and Budget (OMB) Circular A-128. (3) All other organizations, including commercial or for-profit organizations, shall comply with the single audit requirements of OMB Circular A-133. (b) For providers whose fiscal years begin after June 30, 1996: Providers who expend $300,000 or more of total federal financial assistance during their fiscal year shall have an annual single or program-specific audit for that year. (1) If funds are expended in only one federal financial assistance program, the provider may have a program-specific audit in accordance with the Single Audit Act Amendments for 1996 and other statutes and regulations governing the program. (2) If funds are expended in two or more federal financial assistance programs, the provider shall have a single audit. (3) All public and non-profit organizations shall comply with the single audit requirements of OMB Circular A-133. 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 April 18, 1997. TRD-9705239 Mark S. Smock Deputy for Finance and Administration Texas Commission on Alcohol and Drug Abuse Effective date: May 8, 1997 Proposal publication date: March 4, 1997 For further information, please call: (512) 349-6609 CHAPTER 150.Counselor Licensure 40 TAC sec.sec.150.3, 150.32, 150.33, 150.36-150.38 The Texas Commission on Alcohol and Drug Abuse adopts amendments to sec.sec.150.3, 150.32, 150.33 and 150.36-150.38, concerning definitions, requirements for licensure, background investigations, issuing licenses, and license renewal, without changes to the proposed text as published in the March 4, 1997, issue of the Texas Register (22 TexReg 2418) and will not be republished. These amendments are being adopted to clarify licensure requirements relating to practicums, payments, and licensure renewal. Section 150.3 defines terms used in the chapter. A new definition is adopted for graduate, and an amendment is adopted to the definition of cultural awareness and sensitivity which expands its scope beyond issues of race and ethnicity. The amendments in sec.150.32 clarify requirements relating to practicum providers and describe conditions under which graduates can provide counseling before receiving their licenses. Section 150.33 clarifies that the criteria for background investigations are used to process renewal as well as initial licensure applications. A statement has been added to sec.150.36 to clarify that an individual who has failed the examination four times may not perform counseling, assessments, or interventions. Section 150.37 is amended to require payment within one year. The amendments sec.150.38 specify that a criminal background check is required for renewal, replace the renewal license with a renewal sticker, and state that a person who is denied a renewal license due to criminal conviction may apply for a new license after the appropriate time has elapsed. No comments were received regarding adoption of the amendments. The amendments are adopted under the Texas Civil Statutes, Article 4512o, which provides the Texas Commission on Alcohol and Drug Abuse with the authority to establish procedures for the licensure of chemical dependency counselors. The code affected by the amendments is Texas Civil Statutes, Article 4512o. 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 April 18, 1997. TRD-9705246 Mark S. Smock Deputy for Finance and Administration Texas Commission on Alcohol and Drug Abuse Effective date: May 8, 1997 Proposal publication date: May 4, 1997 For further information, please call: (512) 349-6609