28 TAC §11.2200, §11.2206
The Texas Department of Insurance proposes amendments to
§11.2200 and new §11.2206 concerning dental health maintenance organizations
(HMOs). These proposed amendments and new section are necessary to implement
legislation enacted by the 75th Legislature in Senate Bill 385 which requires
dental HMOs with more than 10,000 enrollees in Texas to offer a dental point-of-service
plan to an employer, association, or other private group arrangement that
employs or has 25 or more employees or members. The rules set out disclosure
requirements about the point-of-service plan that must be included in the
group enrollment application, allowing a consumer to make informed, objective
decisions in selecting dental care coverage.
Section 11.2200 is amended to include definitions for "insurer," "point-of-service
group enrollment application," "point-of-service plan," and "qualified actuary."
New §11.2206 is proposed to set forth the disclosure requirements required
as part of each group enrollment application and the requirement that the
HMO retain certification that the indemnity benefits correspond with benefits
arranged or provided by the HMO.
Karen Thrash, Deputy Commissioner, HMO/URA Division, has determined that
for each of the first five years the proposed new amendment and new section
will be in effect there will be no fiscal implications for state and local
government. There will be no measurable effect on local government, local
employment, or the local economy as a result of the proposal.
Ms. Thrash has also determined that for each year of the first five years
the proposed amended section and new section are in effect, the public benefits
anticipated as a result of the proposal will be increased consumer awareness
of available coverage for dental benefits.
Ms. Thrash estimates that the majority of the costs to persons required
to comply with the proposed amended section and the new section is the result
of the legislative enactment of Art. 20A.38. One component of these rules
which is expected to result in costs in excess of the requirements imposed
by statute are the costs of providing disclosures about the point-of service
plan and the benefits arranged or offered by the HMO in the group enrollment
application offered to the each employer, association, or other private group
arrangement required by proposed new §11.2206(a). Should the employer,
association, or other private group arrangement elect to accept the point-of-
service plan, the disclosure must also be included in each group enrollment
application offered to the prospective enrollees of the employer, association,
or other private group arrangement. The department estimates that the required
disclosure should take up no more than one page of the application. The printing
cost and paper is estimated by the department to be $.02 per page, thereby
increasing the cost of each application by two cents. Since the disclosures
are included in the group enrollment applications which are prepared by the
HMO there should be no additional mailing costs. The total cost to HMOs affected
by the proposed amended section and new section is not dependent upon the
size of the HMO, but rather is dependent on the number of employers, associations,
or other private group arrangements to whom the HMO offers coverage, and,
in turn, the number of potential enrollees associated with each employer,
association, or other private group arrangement that accepts the point-of-service
plan. Both small businesses and the largest businesses affected by these sections
would incur the same additional cost per application. The number of applications
distributed by an HMO would be dependent upon the entities each HMO targets
for its business and the potential enrollees associated with the entities
who accept the point-of-service plan marketed by the HMO. Article 20A.38 requires
each affected HMO, regardless of whether it is considered to be a small or
large business, to make this information available to consumers and potential
consumers of its services. Therefore, it is the department's position that
these rules are mandated by the underlying state statute, and considering
the statute's purposes, it would be neither legal nor feasible to reduce their
effect on small businesses as doing so would cause potential enrollees from
receiving the required disclosures.
Another potential cost could be generated if an HMO elected to utilize
a qualified actuary to prepare the certification that the indemnity benefits
and HMO coverage offered under the point-of-service plan are comparable as
provided by §11.2206(b). However, the rule does not require certification
to be done by an actuary. The statute requires each HMO to offer a point-of-service
plan that provides comparable indemnity and HMO benefits. This information
must be gathered and confirmed by the HMO in determining which indemnity insurer
to work with in making the comparable benefits available. The certification
is simply a confirmation that the HMO has in fact done what the statute requires
it to do. Section 11.2206(b) permits the certification to be prepared by an
HMO's own corporate officers. An HMO could also have the insurer with whom
the HMO contracts to provide the indemnity benefits to prepare the certification
as part of the process of negotiating the provision of the indemnity benefits
by the insurer. An HMO with an in-house actuary or an existing contract with
a qualified actuary who is working for the HMO in its preparation of a point-of-service
plan would also be able to produce a certificate as part of its day to day
business. Only if an HMO were to elect to retain a qualified actuary to produce
a certification would an additional cost be incurred. Since the information
must be obtained by the HMO in the course of preparing a point-of service
plan that complies with the statute, the cost of engaging a qualified actuary
to certify that the plan does offer comparable benefits is estimated to be
no more than $500 per certificate. Again, the underlying state statute requires
every affected HMO, regardless of size, to offer corresponding benefits. The
rules ensure that each HMO can confirm that it is in compliance with the law.
Therefore, it would be neither legal nor feasible to reduce their effect on
small businesses in this respect.
Comments on the proposal must be submitted in writing within 30 days after
publication of the proposal in the Texas Register to Lynda H. Nesenholtz,
General Counsel and Chief Clerk, Mail Code 113-2A, Texas Department of Insurance,
P.O. Box 149104, Austin, Texas 78714-9104. An additional copy of the comments
should be submitted to Linda Von Quintus, Deputy Commissioner, Regulation
and Safety, Mail Code 107-2A, Texas Department of Insurance, P.O. Box 149104,
Austin, Texas 78714-9104. Any requests for a public hearing should be submitted
separately to the Office of the Chief Clerk.
The amendment and new section are proposed under the Insurance
Code Articles 20A.38, 20A.22, and 1.03A. Article 20A.38 requires an HMO with
more than 10,000 enrollees in Texas that offers dental benefits to offer a
dental point-of-service plan to an employer, association, or other private
group arrangement that employs or has 25 or more employees or members. In
addition an HMO must offer a point-of-service plan to an employer if its dental
provider panel is the sole delivery system of dental benefits to its employees.
Insurance Code Article 20A.38 Section (c)(1) requires an HMO to provide disclosure
statements in the group enrollment application as required by rules adopted
under the Insurance Code for each dental plan offered. Insurance Code Article
20A.22 Section (a) authorizes the Commissioner of Insurance to promulgate
rules and regulations to carry out the provision of the Act. Insurance Code
Article 1.03A provides that the Commissioner of Insurance may adopt rules
and regulations to execute the duties and functions of the Texas Department
of Insurance as authorized by statute.
Insurance Code, Chapters 3, 10, 20, 20A, 22, and Article 21.21 are affected
by this proposal.
§11.2200.Definitions.
The following words and terms, when used in this subchapter, shall
have the following meanings, unless the context clearly indicates otherwise.
(1)-(5)
(No change.)
(6)
Insurer -- An insurance company,
a group hospital service corporation operating under Chapter 20 of the Texas
Insurance Code, a fraternal benefit society operating under Chapter 10 of
the Code, or a stipulated premium insurance company operating under Chapter
22 of the Code.
(7)
Point-of-service group enrollment
application -- An application provided by an HMO that provides dental benefits
which the HMO must provide to:
(A)
an employer, an association or other private
group arrangement to whom the HMO must offer a dental point-of-service plan;
and
(B)
any prospective enrollees in a dental
point-of service plan.
(8)
Point-of-service plan -- A plan
provided through a contractual arrangement under which indemnity benefits
for the cost of dental care services other than emergency care or emergency
dental care are provided by an insurer in conjunction with corresponding benefits
arranged or provided by an HMO that provides dental benefits and under which
an enrollee may choose to obtain benefits or services under either the indemnity
plan or the HMO plan in accordance with specific provisions of Insurance Code,
Article 20A.38.
(9)
Qualified actuary -- An actuary who
is either:
(A)
a Fellow of the Society of Actuaries,
or
(B)
a Member of the American Academy of Actuaries.
§11.2206.Group Enrollment Applications for Point-of-Service Plans, Mandatory Disclosure Statements, Certificates.
(a)
Each point-of-service group enrollment application shall
include a disclosure statement written in readable and understandable format
that includes the following information:
(1)
a statement that the dental indemnity benefits are provided
through an insurer and that the dental care services are offered or arranged
by the HMO;
(2)
the name of the insurer and the name of the HMO offering
the benefits;
(3)
an explanation that, in order to receive benefits:
(A)
from the HMO, an enrollee must utilize only network providers,
except for emergency dental care, and pay the copayments specified in the
evidence of coverage;
(B)
under the indemnity plan, the enrollee may utilize any
provider but prior to receiving reimbursement, the enrollee must meet the
required deductible and is responsible for the coinsurance amount specified
in the policy or certificate; and
(4)
separate listings of the premium applicable to
the indemnity contract and the premium applicable to the HMO evidence of coverage.
(b)
Each HMO offering a point-of-service plan shall retain
on file a certification by an HMO officer that the point-of-service plan includes
dental indemnity benefits that correspond to the benefits contained in the
HMO evidence of coverage. The HMO may enter into agreement with the insurer
or a qualified actuary to prepare the certification, provided that the HMO
retains responsibility for obtaining the certification and shall keep the
certification in its possession.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on December
14, 1998.
TRD-9818326
Lynda H. Nesenholtz
General Counsel and Chief Clerk
Texas Department of Insurance
Earliest possible date of adoption: January 24, 1999
For further information, please call: (512) 463-6327