28 TAC §§11.2601 - 11.2612
The Texas Department of Insurance proposes new sections to
Chapter 11 by adding Subchapter AA, §§11.2601-11.2612, relating
to delegation agreements entered into by Health Maintenance Organizations
(HMOs) with certain delegated entities. This proposal is necessary to implement
provisions of House Bill (HB) 2828, 77th Texas Legislature. HB 2828 amends
the definition of delegated entity in the Texas HMO Act, Texas Insurance Code
(TIC), Article 20A.02(ee) and adds definitions for "delegated network," "delegated
third party" and "limited provider network." HB 2828 also re-enacts and amends
the original delegated entity section of the Texas HMO Act of the TIC (Article
20A.18C) by clarifying the requirements that must be met in order for an HMO
to delegate certain functions to delegated entities as defined in the bill.
The bill defines a "delegated entity" as any non-HMO entity to which an HMO
delegates the responsibility to arrange for or to provide medical care or
health care to an enrollee in exchange for a predetermined payment on a prospective
basis and that accepts responsibility to perform on behalf of the HMO any
function regulated by the Texas HMO Act. The bill requires that delegation
contracts between HMOs and delegated entities, as well as contracts between
delegated entities and other third parties involved in the delegation chain,
contain clauses that require the delegated entity to provide sufficient information
to the HMO to allow the HMO to monitor the solvency of the delegated entity
and the ability of the delegated entity and any delegated third parties to
perform the functions delegated by the HMO in the contract.
These contracts must also allow the department to conduct on-site examinations
of the delegated entity and any delegated third parties to obtain information
that the department believes is relevant to the issue of the delegated entity
or the delegated third party's solvency or the delegated entity or delegated
third party's ability to carry out any function delegated by the HMO. These
examinations may be conducted based on information received from the HMO as
a result of its monitoring or upon the department's own initiative if the
department believes that circumstances so warrant. The bill also sets out
specific solvency requirements that must be met by a delegated network that
takes on full responsibility for the provision of services on behalf of the
HMO.
HB 2828 specifies that an HMO remains ultimately responsible for ensuring
that any function delegated under Art. 20A.18C, including claims payment,
is performed in compliance with the laws and rules governing that function.
This does not mean that the HMO would be responsible, beyond what is explicitly
required in this subchapter, for directing the day to day operations of the
delegated entity or attempting to enforce or control contracts between a delegated
entity and any third parties with whom a delegated entity has contracted.
Instead, the HMO must develop and maintain a monitoring plan that enables
the HMO to determine that all delegated functions are being performed appropriately
and that all delegated entities and or third parties performing delegated
functions have the financial ability to continue to perform the delegated
functions. If an HMO cannot determine this through its monitoring plan, the
HMO should either amend its agreement with the delegated entity or end the
agreement and enter into an agreement with a delegated entity that includes
an effective monitoring plan. In the event that the HMO does not or cannot
comply with its responsibilities under the subchapter, the commissioner is
explicitly authorized to take any action necessary, including the ability
to order an HMO to resume any delegated function, up to and including, in
accordance with applicable statutes and rules, the payment of claims that
a delegated entity has failed to pay. The commissioner has the authority,
in entering these orders, to take into account the extent to which the HMO
monitored the delegated entity and took any actions required under this subchapter.
Proposed §11.2601 explains the purpose and scope of the subchapter.
Proposed §11.2602 defines terms within the subchapter. Proposed §11.2603
describes the requirements for an HMO that delegates any function pursuant
to Art. 20A.18C of the Texas Insurance Code. Proposed §11.2604 describes
the requirements that must be included in any delegation agreement entered
into by an HMO as well as the information that must be provided to the HMO
by the entity with which the HMO has entered into a delegation agreement.
Proposed §11.2605 describes the information that an HMO must provide
to an entity with which the HMO has entered into a delegation agreement. Proposed §11.2606
sets forth the actions an HMO must take if, as a result of its monitoring
of the delegated entity or for any other reason, the HMO becomes aware that
the delegated entity is not operating in accordance with the delegation agreement
or is operating in a condition that may impair its ability to perform its
duties under the agreement. Proposed §11.2607 sets forth the manner in
which the department shall perform any examinations of delegated entities
or delegated third parties conducted pursuant to this subchapter. Proposed §11.2608
describes the types of actions the department may take to ensure that: (1)
delegated functions are performed in compliance with the department's statutory
and regulatory requirements; (2) the delegating HMO is performing in compliance
with statutory and regulatory requirements that relate to the matters delegated
by an HMO; and (3) any delegated functions are being performed by an entity
with the solvency to carry out those functions. Proposed §11.2609 sets
forth the reserve requirements for delegated networks as defined by HB 2828.
Proposed §11.2610 sets forth the penalties for non-compliance with the
subchapter. Proposed §11.2611 relates to the filing of delegation agreements
entered into by an HMO. Proposed §11.2612 establishes a compliance date
for the subchapter.
The department will consider the adoption of the proposed §§11.2601-11.2612,
relating to delegation agreements entered into by Health Maintenance Organizations
(HMOs) with certain delegated entities, in a public hearing under Docket No.
2519 scheduled for April 23, 2002, at 9:30 a.m. in Room 100 of the William
P. Hobby Jr. State Office Building, 333 Guadalupe Street in Austin, Texas.
Kimberly Stokes, Senior Associate Commissioner for the Life, Health and
Licensing Program, has determined that for each year of the first five years
the proposed sections will be in effect, there will be no fiscal impact to
state and local governments as a result of the enforcement or administration
of the rule. There will be no measurable effect on local employment or the
local economy as a result of the proposal.
Ms. Stokes has also determined that for each year of the first five years
the proposed new sections are in effect, the public benefits anticipated as
a result of the proposed sections will be that by clarifying the responsibility
and accountability that an HMO retains for all functions that it has chosen
to delegate, HMOs will be required to monitor the delegated entity's ability
to comply with the delegation agreement, including required solvency and performance
of delegated functions in compliance with applicable statutes and rules. If
an HMO is unable through its monitoring to ensure that the delegated entity
and any delegated third parties are in compliance with the delegation agreement,
the HMO may request corrective action and/or amend the agreement or, if necessary,
terminate the agreement. This in turn will enable an HMO to avoid adverse
effects arising from situations in which a delegated entity becoming financially
insolvent or otherwise unable to carry out the functions delegated to it.
This will optimally decrease the overall costs of health care coverage as
well as improve the quality of the care and coverage offered by HMOs to enrollees.
Ms. Stokes has determined that the majority of economic costs to an HMO
complying with the new sections for each year of the first five years the
proposed sections will be in effect are the result of the legislative enactment
of HB 2828 rather than the result of the adoption, enforcement, or administration
of the proposed new sections. One component of these rules which is expected
to result in costs in excess of the requirements imposed by HB 2828 is the
requirement in §11.2611(c) that the HMO provide a table of contents with
the filed delegation agreement. The department estimates that the required
table of contents will be no more than three pages. The printing cost and
paper is estimated to be $.02 per page, thereby increasing the overall cost
of the filing by a maximum of $.06 per filing. Because the table of contents
is required along with the filed agreements, there should be no additional
mailing costs. The department estimates that preparation of the table of contents
will require no more than two hours. The department has made available on
its webpage a checklist of requirements for delegation agreements. This should
result in a reduction of time spent preparing a table of contents. The cost
to the HMO will vary depending upon the individual or individuals who prepare
the table of contents. The department estimates that the labor costs will
be from $23 - $40 per hour of labor. The labor figures are based upon the
2000 Occupational Wage Data collected by the Texas Workforce Commission, with
figures adjusted for 2002. The range of figures represents the cost, per hour,
for preparation of the table of contents by an administrative service manager
at the low end of the range and for preparation by an attorney at the high
end of the range. Both small businesses and the largest businesses affected
by these sections would incur the same cost per hour of labor. Therefore,
it is the department's position that the adoption of these proposed sections
will have no adverse economic effect on small or micro businesses. Regardless
of the fiscal effect, the requirements of this rule are mandated by the underlying
statute, and considering the statute's purposes, it is neither legal nor feasible
to waive or modify the requirement of these sections for small or micro businesses,
as doing so would not achieve the purposes intended by the legislation.
To be considered, written comments on the proposal must be submitted no
later than 5:00 p.m. on April 23, 2002, 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 comment must be
simultaneously submitted to Barbara Holthaus, Director of Project Development
for the Life, Health and Licensing Program, Mail Code 107-2A, Texas Department
of Insurance, P.O. Box 149104, Austin, Texas 78714-9104.
The sections are proposed under the Insurance Code Article 20A.18C
and Section 36.001. Article 20A.18C provides that the commissioner shall adopt
reasonable rules to implement this article as it relates to the delegation
of certain functions by an HMO. Section 36.001 provides that the Commissioner
of Insurance may adopt rules to execute the duties and functions of the Texas
Department of Insurance only as authorized by statute.
The following article is affected by this proposal: Insurance Code Article
20A.18C.
§11.2601.General Provisions.
(a)
Purpose. The purpose of this subchapter is to set forth
the requirements that must be met by any HMO that delegates any function as
described in Texas Insurance Code Art. 20A.18C. These requirements are designed
to ensure that a delegating HMO:
(1)
identifies all responsibilities relating to the function
being delegated;
(2)
creates an agreement that enables the HMO and department
to monitor both the delegated entity's financial solvency and performance
or subsequent delegation of all delegated functions; and
(3)
retains ultimate responsibility for ensuring that all delegated
functions are performed in accordance with applicable statutes and rules.
(b)
Severability. Where any terms or sections of this subchapter
are determined by a court of competent jurisdiction to be inconsistent with
the Act, as identified by this subchapter, the Act will apply and the remaining
terms and provisions of this subchapter shall continue in effect.
(c)
Applicability to Group Model HMO. This subchapter does
not apply to a group model HMO, as defined by Texas Insurance Code Art. 20A.06A.
§11.2602.Definitions.
The following words and terms, when used in this subchapter, shall
have the following meanings, unless the context clearly indicates otherwise.
(1)
Act--The HMO Act, Texas Insurance Code, Chapter 20A.
(2)
Delegated entity--An entity, other than an HMO authorized
to do business under the Act, that by itself, or through subcontracts with
one or more entities, undertakes to arrange for or to provide medical care
or health care to an enrollee in exchange for a predetermined payment on a
prospective basis and that accepts responsibility to perform on behalf of
the HMO any function regulated by the Act. The term does not include an individual
physician or a group of employed physicians practicing medicine under one
federal tax identification number and whose total claims paid to providers
not employed by the group is less than 20 percent of the total collected revenue
of the group calculated on a calendar year basis.
(3)
Delegated network--Any delegated entity that assumes total
financial risk for more than one of the following categories of health care
services: medical care, hospital or other institutional services, or prescription
drugs, as defined by Section 551.003, Occupations Code. The term does not
include a delegated entity that shares risk for a category of services with
an HMO.
(4)
Delegated third party--A third party other than a delegated
entity that contracts with a delegated entity, either directly or through
another third party, to:
(A)
accept responsibility to perform any function regulated
by the Act; or
(B)
receive, handle, or administer funds, if the receipt, handling,
or administration of the funds is directly or indirectly related to a function
regulated by the Act.
(5)
Health Care--Any services, including the furnishing to
any individual of pharmaceutical services, medical, chiropractic, or dental
care, or hospitalization, or incident to the furnishing of such services,
care, or hospitalization, as well as the furnishing to any person of any and
all other services for the purpose of preventing, alleviating, curing or healing
human illness or injury.
§11.2603.Requirements for Delegation by HMOs.
(a)
Any delegation of any function pursuant to Texas Insurance
Code Art. 20A.18C by an HMO shall comply with this subchapter.
(b)
Oversight by the department does not relieve the HMO of
responsibility for monitoring and oversight of its delegated entities.
(c)
Prior to entering into, renewing or amending a delegation
agreement, an HMO shall make a reasonable effort to evaluate the delegated
entity's current and prospective ability to perform the functions to be delegated,
including, but not limited to, the solvency and financial operations of the
delegated entity and the projected financial effects of the agreement upon
the delegated entity.
(d)
An HMO that delegates functions to a delegated entity must
have a written contingency plan to resume any and all delegated functions,
including, as applicable:
(1)
quality of care;
(2)
continuity of care, including a plan for transferring enrollees
to new providers in the event of termination of the delegation agreement;
and
(3)
processing, adjudication and payment of claims.
(e)
The department may require an HMO to immediately terminate
any delegation agreement to ensure that the HMO is in compliance with the
Act.
(f)
The HMO retains ultimate responsibility for any and all
functions delegated.
(g)
A delegated entity's failure to comply with applicable
statutes or rules constitutes a violation of the Act by the delegating HMO.
(h)
An HMO is responsible for monitoring each delegated entity
with which it contracts to ensure compliance with all applicable statutes
and rules, as well as for solvency.
(i)
An HMO shall report to the department, within a reasonable
time, all penalties assessed against a delegated entity under the provisions
of the delegation agreement.
(j)
If an HMO cannot ensure that a delegated entity is performing
all delegated functions in accordance with all applicable statutes, rules,
or an order issued by the department pursuant to this subchapter, the HMO
shall resume all delegated functions from the delegated entity.
(k)
If a license is required for any function delegated by
an HMO, the HMO must ensure that the delegated entity or third party performing
the function has a current appropriate license.
(l)
Upon termination of a delegation agreement by either party,
the HMO shall notify the department.
§11.2604.Delegation Agreements - General Requirements and Information to be Provided to HMO.
(a)
An HMO that delegates to a delegated entity any function
required by the Act shall execute a written agreement with that delegated
entity.
(b)
Written agreements shall include the following:
(1)
a provision that the delegated entity and any delegated
third parties must agree to comply with all statutes and rules applicable
to the functions being delegated by the HMO;
(2)
a provision that the HMO shall monitor the acts of the
delegated entity through a monitoring plan. The monitoring plan shall be set
forth in the delegation agreement, and must contain, at a minimum:
(A)
provisions for the review of the delegated entity's solvency
status and financial operations. This shall include, at a minimum, review
of the delegated entity's financial statements, consisting of at least a balance
sheet, income statement, and statement of cash flows for the current and preceding
year;
(B)
provisions for the review of the delegated entity's compliance
with the terms of the delegation agreement as well as with all applicable
statutes and rules affecting the functions delegated by the HMO under the
delegation agreement;
(C)
a description of the delegated entity's financial practices
in sufficient detail that will ensure that the delegated entity tracks and
timely reports to the HMO liabilities including incurred but not reported
obligations;
(D)
a method by which the delegated entity shall report monthly
a summary of the total amount paid by the delegated entity to physicians and
providers under the delegation agreement; and
(E)
a monthly log, maintained by the delegated entity, of oral
and written complaints from physicians, providers, and enrollees regarding
any delay in payment of claims or nonpayment of claims pertaining to the delegated
function, including the status of each complaint;
(3)
a statement that the HMO shall utilize the monitoring plan
on an ongoing basis. Compliance with this requirement shall be documented
by the HMO maintaining, at a minimum:
(A)
periodic signed statements from the individual identified
by the HMO in paragraph (23) of this subsection that the HMO has reviewed
the information required in the monitoring plan; and
(B)
periodic signed statements from the chief financial officer
of the HMO acknowledging that the most recent financial statements of the
delegated entity have been reviewed.
(4)
a provision establishing the penalties to be paid by the
delegated entity for failure to provide information required by this subchapter;
(5)
a provision requiring quarterly assessment and payment
of penalties under the agreement, if applicable;
(6)
a provision that the agreement cannot be terminated without
cause by the delegated entity or the HMO without written notice provided to
the other party and the department before the 90th day preceding the termination
date, provided that the commissioner may order the HMO to terminate the agreement
under §11.2608 of this subchapter (relating to Department May Order Corrective
Action);
(7)
a provision that requires the delegated entity, and any
entity or physician or provider with which it has contracted to perform a
function of the HMO, to hold harmless an enrollee under any circumstance,
including the insolvency of the HMO or delegated entity, for payments for
covered services other than copayments and deductibles authorized under the
evidence of coverage;
(8)
a provision that the delegation agreement may not be construed
to limit in any way the HMO's responsibility, including financial responsibility,
to comply with all statutory and regulatory requirements;
(9)
a provision that any failure by the delegated entity to
comply with applicable statutes and rules or monitoring standards shall allow
the HMO to terminate delegation of any or all delegated functions;
(10)
a provision that the delegated entity must permit the
commissioner to examine at any time any information the department reasonably
considers is relevant to:
(A)
the financial solvency of the delegated entity; or
(B)
the ability of the delegated entity to meet the entity's
responsibilities in connection with any function delegated to the entity by
the HMO;
(11)
a provision that the delegated entity, in contracting
with a delegated third party directly or through a third party, shall require
the delegated third party to comply with the requirements of paragraph (10)
of this subsection;
(12)
a provision that the delegated entity shall provide the
license number of any delegated third party performing any function that requires
a license as a third party administrator under Texas Insurance Code Art. 21.07-6,
or a license as a utilization review agent under Texas Insurance Code Art.
21.58A, or that requires any other license under the Texas Insurance Code
or another insurance law of this state;
(13)
if utilization review is delegated, a provision stating
that:
(A)
enrollees will receive notification at the time of enrollment
identifying the entity that will be performing utilization review;
(B)
the delegated entity or delegated third party performing
utilization review shall do so in accordance with Texas Insurance Code Art.
21.58A and related rules; and
(C)
utilization review decisions made by the delegated entity
or a delegated third party shall be forwarded to the HMO on a monthly basis;
(14)
a provision that any agreement in which the delegated
entity directly or indirectly delegates to a delegated third party any function
delegated to the delegated entity by the HMO pursuant to Texas Insurance Code
Art. 20A.18C, including any handling of funds, shall be in writing;
(15)
a provision that upon any subsequent delegation of a function
by a delegated entity to a delegated third party, the executed updated agreements
shall be filed with the department and enrollees shall be notified of the
change of any party performing a function for which notification of an enrollee
is required by this chapter or the Act;
(16)
an acknowledgment and agreement by the delegated entity
that the HMO is not precluded from requiring that the delegated entity provide
any and all evidence requested by the HMO or the department relating to the
delegated entity's or delegated third party's financial viability;
(17)
a provision acknowledging that any delegated third party
with which the delegated entity subcontracts will be limited to performing
only those functions set forth and delegated in the agreement, using standards
approved by the HMO and that are in compliance with applicable statutes and
rules;
(18)
a provision that any delegated third party is subject
to the HMO's oversight and monitoring of the delegated entity's performance
and financial condition under the delegation agreement;
(19)
a provision that requires the delegated entity to make
available to the HMO samples of each type of contract the delegated entity
executes or has executed with physicians and providers to ensure compliance
with the contractual requirements described by paragraphs (6) and (7) of this
subsection, except that the agreement may not require that the delegated entity
make available to the HMO contractual provisions relating to financial arrangements
with the delegated entity's physicians and providers;
(20)
a provision that requires the delegated entity to provide
information to the HMO on a quarterly basis and in a format determined by
the HMO to permit an audit of the delegated entity and to ensure compliance
with the department's reporting requirements with respect to any functions
delegated by the HMO to the delegated entity and to ensure that the delegated
entity remains solvent to perform the delegated functions, including:
(A)
a summary:
(i)
describing any payment methods, including capitation or
fee-for-services, that the delegated entity uses to pay its physicians and
providers and any other third party performing a function delegated by the
HMO; and
(ii)
of the breakdown of the percentage of physicians and providers
and any other third party paid by each payment method listed in clause (i)
of this subparagraph;
(B)
the period of time that claims and any other obligations
for health care filed with the delegated entity, under this and any other
delegation agreements to which the delegated entity is a party, have been
pending but remain unpaid, divided into categories of 0-45 days, 46-90 days,
and 91 or more days. The summary shall include aggregate information for all
delegation agreements entered into by the delegated entity and information
for the specific delegation agreement entered into between the parties;
(C)
the aggregate dollar amount of claims and other obligations
for health care owed by the delegated entity to any physician or provider;
(D)
information that the HMO requires in order to file claims
for reinsurance, coordination of benefits, and subrogation; and
(E)
documentation, except for information, documents, and deliberations
related to peer review that are confidential or privileged under Subchapter
A, Chapter 160, Occupations Code, that relates to:
(i)
any regulatory agency's inquiry or investigation of the
delegated entity or of an individual physician or provider with whom the delegated
entity contracts that relates to an enrollee of the HMO; and
(ii)
the final resolution of any regulatory agency's inquiry
or investigation;
(21)
a provision relating to enrollee complaints that requires
the delegated entity to ensure that upon receipt of a complaint, as defined
in the Act, a copy of the complaint shall be sent to the HMO within two business
days, except that in a case in which a complaint involves emergency care,
as defined in the Act, the delegated entity shall forward the complaint immediately
to the HMO, and provided that nothing in this paragraph prohibits the delegated
entity from attempting to resolve a complaint;
(22)
a provision that the HMO, the delegated entity and any
delegated third party shall comply with the provisions of Chapter 22 of this
title;
(23)
a provision identifying an officer of the HMO as the representative
of the HMO for all matters related to the delegation agreement; and
(24)
a provision identifying which party to the agreement shall
bear the expense of compliance with each requirement set forth in this subsection,
including the cost of any examinations performed pursuant to this subchapter.
§11.2605.Delegation Agreements - Information to be Provided by HMO to Delegated Entity.
(a)
An HMO shall provide to each delegated entity with which
the HMO has a delegation agreement, at least monthly unless otherwise stated
in the agreement and provided in standard electronic format agreed to by the
parties, the following information:
(1)
the name and either the date of birth or social security
number of each enrollee of the HMO who is eligible or assigned to receive
health care from the delegated entity, including the enrollees added and terminated
since the previous reporting period;
(2)
the age, sex, evidence of coverage and any riders to that
evidence of coverage, and if applicable the name of the employer, for the
enrollees of the HMO who are eligible or assigned to receive health care from
the delegated entity;
(3)
a summary of the number and amount of claims paid by the
HMO on behalf of the delegated entity during the previous reporting period.
However, an HMO is not precluded from providing, upon request, additional
nonproprietary information regarding such claims, if the HMO pays any claims
for the delegated entity;
(4)
a summary of the number and amount of pharmacy prescriptions
paid for each enrollee for which the delegated entity has taken partial risk
during the previous reporting period, provided that an HMO is not precluded
from providing, upon request, additional nonproprietary information regarding
such claims, if the HMO pays any claims for the delegated entity;
(5)
information that is needed by the delegated entity to file
claims for reinsurance, coordination of benefits, and subrogation; and
(6)
patient complaint data that relates to the delegated entity.
(b)
An HMO shall provide to each delegated entity with which
the HMO has a delegation agreement the following information, as applicable,
provided in standard electronic format agreed to by the parties at least quarterly
unless otherwise stated in the agreement:
(1)
detailed risk-pool data, reported quarterly and on settlement,
sufficient to allow the delegated entity to adequately monitor its position
in the risk pool; and
(2)
the percent of premium attributable to hospital or facility
costs, if hospital or facility costs impact the delegated entity's costs and,
if there are changes in hospital or facility contracts with the HMO, the projected
impact of those changes on the percent of premium attributable to hospital
and facility costs within 30 days of such changes.
§11.2606.Reporting Requirements.
(a)
Upon receipt of a financial statement indicating that a
delegated entity or delegated third party has an amount of total liabilities
greater than its total assets, the HMO shall immediately forward a copy of
the financial statement to the department.
(b)
An HMO that becomes aware of any information, including
the information described in subsection (a) of this section, that suggests
or indicates that the delegated entity or delegated third party is not operating
in accordance with its written agreement or is operating in a condition that
may render the continuance of its business hazardous to the enrollees, shall
immediately:
(1)
notify the delegated entity in writing of those findings;
and
(2)
request, in writing, a written explanation with supporting
documentation of:
(A)
the delegated entity's or delegated third party's apparent
noncompliance with the written agreement; or
(B)
the existence of the condition that apparently renders
the continuance of the delegated entity's or delegated third party's business
hazardous to the enrollees.
(c)
A delegated entity shall respond in writing to a request
from an HMO under subsection (b) of this section not later than the 30th day
after the date the request is received. The response shall include a corrective
action plan.
(d)
A copy of all written communications required by subsections
(b) and (c) of this section shall be sent to the department simultaneously
with transmission to the HMO or delegated entity or delegated third party.
(e)
The HMO shall cooperate with the delegated entity to correct
any failure by the delegated entity to comply with the applicable statutes
and rules relating to any matters:
(1)
delegated to the delegated entity by the HMO; or
(2)
necessary for the HMO to ensure compliance with statutory
or regulatory requirements.
§11.2607.Examinations of Delegated Entities.
(a)
On receipt of a notice under §11.2606 of this title
(relating to Reporting Requirements), or as otherwise permitted under the
Texas Insurance Code or rules adopted thereunder, the department may examine
any matter relating to the financial solvency of the delegated entity or delegated
third party or the delegated entity's ability to meet its responsibilities
under the delegation agreement.
(b)
The department may request documents, perform on-site examinations
and require any other action of the delegated entity and any delegated third
party that the department determines necessary to perform an examination under
this section.
(c)
A delegated entity's failure to comply with a request under
subsection (b) of this section may result in:
(1)
notification to the HMO that the delegated entity is subject
to penalties pursuant to the delegation agreement;
(2)
entry of an order by the commissioner to resume or redelegate
any functions delegated to the delegated entity or terminate the agreement
in its entirety.
(d)
The department shall issue a report to the delegated entity
and HMO upon completion of the department's examination. The report shall
detail the results of the examination and any corrective actions necessary
by the delegated entity and/or the HMO.
(e)
The delegated entity and the HMO shall respond to the department's
report and submit a corrective action plan to the department not later than
the 30th day after the date of receipt of the department's report.
§11.2608.Department May Order Corrective Action.
(a)
The department may require at any time that a delegated
entity take corrective action to comply with the department's statutory and
regulatory requirements that:
(1)
relates to any matters delegated by the HMO to the delegated
entity;
(2)
is necessary to ensure the HMO's compliance with statutory
and regulatory requirements; or
(3)
relates to the financial solvency and operations of the
delegated entity.
(b)
The commissioner may order the HMO to take any action the
commissioner determines is necessary to ensure that the HMO maintains compliance
with the Act, including but not limited to:
(1)
resumption of any or all functions delegated to the delegated
entity, including claims processing, adjudication, and payments for health
care previously rendered to enrollees of the HMO;
(2)
temporarily or permanently ceasing assignment of new enrollees
to the delegated entity;
(3)
temporarily or permanently transferring enrollees to alternative
delivery systems to receive health care; or
(4)
termination of the HMO's delegation agreement with the
delegated entity.
§11.2609.Reserve Requirements for Delegated Networks.
In addition to any other requirements set forth in this subchapter,
HMOs that contract with delegated networks shall ensure that the delegated
network complies with Texas Insurance Code Art. 20A.18D. The HMO's agreement
with the delegated network shall include a provision:
(1)
that records related to the requirements of Texas Insurance
Code Art. 20A.18D shall be accessible at all times to the HMO;
(2)
requiring all financial records and related information
necessary to show the delegated network's compliance with the requirements
of Texas Insurance Code Art. 20A.18D;
(3)
making the records described in paragraph (1) of this section
available to the department upon request; and
(4)
that records be kept providing evidence that the HMO has
adequately monitored the delegated network for compliance with the requirements
of Texas Insurance Code Art. 20A.18D.
§11.2610.Penalties for Non-Compliance.
(a)
Failure of any party to any agreement under this subchapter
to comply with any requirement of this subchapter may result in an order from
the commissioner that the HMO must terminate the delegation agreement and/or
resume or redelegate any or all delegated functions as well as the imposition
of penalties provided under the Texas Insurance Code and applicable rules
adopted thereunder.
(b)
Any action by an HMO relating to a delegation agreement
that does not comply with this subchapter or takes place pursuant to a provision
of a delegation agreement not in compliance with this subchapter constitutes
a violation under this subchapter.
§11.2611.Filing of Delegation Agreements.
(a)
An HMO shall file the written executed agreement described
in this subchapter and any subsequently executed amendments to the agreement
with the department not later than the 30th day after the date the agreement
or amendment is executed.
(b)
The copy of the executed agreement shall be filed for information
in accordance with §11.301 of subchapter D of this title (relating to
Filing Requirements).
(c)
Every agreement shall include, as an attachment, a table
of contents that allows the department to track the agreement's compliance
with the requirements of §§11.2604 (relating to Delegation Agreements
- General Requirements and Information to be Provided to HMO) and 11.2605
(relating to Delegation Agreements - Information to be Provided by HMO to
Delegated Entity) of this subchapter.
(d)
Upon notification from the department of a deficiency in
a delegation agreement or filing required under this subchapter, the HMO shall
respond within ten business days with a proposed correction for the defect.
§11.2612.Applicability.
This subchapter applies to all contracts entered into, renewed or amended
on and after the effective date of these rules.
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 March 7, 2002.
TRD-200201397
Lynda Nesenholtz
General Counsel and Chief Clerk
Texas Department of Insurance
Earliest possible date of adoption: April 21, 2002
For further information, please call: (512) 463-6327