The Texas Department of Insurance proposes amendments to §§11.1, 11.2, 11.203, 11.204, 11.301, 11.302, 11.501, 11.503 - 11.506, 11.508 - 11.511, 11.602 ,11.706, 11.801, 11.804, 11.810, 11.901, 11.902, 11.904, 11.1201, 11.1206, 11.1301, 11.1302, 11.1401, 11.1403, 11.1600, 11.1605, 11.1607, 11.1702, 11.1703, 11.1801, 11.1901, 11.1902, 11.2103, 11.2201, 11.2207, 11.2303, 11.2315, 11.2402, 11.2405, 11.2406, 11.2501 - 11.2503, 11.2601 - 11.2604, 11.2608, and 11.2609, concerning the regulation of health maintenance organizations (HMOs). These amendments update statutory references, correct typographical errors and incorrect cross references within Chapter 11, replace references to the "Texas Health Maintenance Organization Act" with references to Insurance Code chapters and other applicable insurance laws and regulations of this state that apply to HMOs, amend the definitions of adverse determination and institutional provider, provide for the use of matrix filings, clarify fee amounts for evidence of coverage filings, remove restrictions on variable language allowed in evidence of coverage documentation, delete certain minimum worth requirements, amend copayment requirements, clarify the requirements of enrollee participation in quality improvement programs, adopt nationally recognized standards for physician and provider credentialing, amend the term specialty care to include specialty hospitals and single healthcare service plan physicians and providers, and waive access requirements for HMOs providing covered services to participants in the CHIP Perinatal Program as requested by the Health and Human Services Commission.

The proposed amendments to several sections delete references to the terms "Texas Health Maintenance Organization Act" and "Act" as a result of the enactment of the non-substantive Insurance Code revisions, Acts 2001, 77th Legislature, Regular Session, Chapter 1419 §1, effective April 1, 2003, and Acts 2003, 78th Legislature, Regular Session, Chapter 1274 §3, effective April 1, 2005, which reorganized the regulatory statutes that apply to HMOs into multiple statutes that are no longer organized as a single "Act." To address this, the proposed amendments to these sections replace the terms "Texas Health Maintenance Organization Act" and "Act" with references to the applicable chapters of the Insurance Code, including Chapters 843 (Health Maintenance Organizations), 1271 (Benefits Provided by Health Maintenance Organizations; Evidence of Coverage; Charges), 1272 (Delegation of Certain Functions by Health Maintenance Organizations), 1367 (Coverage of Children), 1452 (Physician and Provider Credentials), and other applicable insurance laws and regulations of this state that apply to HMOs. Therefore, since all statutory references to the Act no longer accurately identify all of the statutory regulations that apply to HMOs, this deletion and replacement is being made throughout Chapter 11, including those references in §§11.1, 11.2(a) and (b)(1), 11.203(d), 11.204, 11.301, 11.302, 11.504, 11.506, 11.508 - 11.511, 11.602, 11.706, 11.804, 11.810(b)(5), 11.901, 11.902, 11.904, 11.1201, 11.1301, 1302(a)(3) and (d)(4), 11.1401, 11.1600, 11.1605(c), (d), and (e), 11.1607, 11.1702, 11.1703, 11.1801, 11.2103, 11.2303, 11.2315, 11.2405 - 11.2406, 11.2501 - 11.2503, 11.2601(a) and (b), 11.2602(1) and (2), (4)(A), and (B), 11.2603(a), (e), and (g), 11.2604, 11.2608(b) and 11.2609.

The proposed amendment to §11.2(b)(3) changes the definition of adverse determination to be consistent with the definition contained in the Insurance Code §843.002(1) by replacing the term furnished with the term provided, by replacing the term adopted with the term proposed, by substituting the term enrollee for the term patient, and by adding the phrase by a health maintenance organization. The Legislature changed the definition of adverse determination during the 77th Legislative Session. The proposed amendment to §11.2(b)(24) deletes the terms infusion services centers and urgent care centers from the definition of institutional providers. This change is necessary for consistency with the credentialing requirements in proposed §11.1902(4) and (7), which require an institutional provider to be a licensed entity. Because infusion services centers and urgent care centers are not licensed entities, they are deleted in the definition of institutional providers. New regulations regarding the use of matrix filings have been included in the proposed amendments to §§11.501 and 11.505. Accordingly, the proposed amendment to §11.2 includes a new definition of matrix filing. Lastly, the proposed amendment to §11.2 re-numbers the remaining definitions accordingly.

In addition to updating statutory references, the proposed amendment to §11.301(4)(A) revises the term evidence of coverage to evidence of coverage filings. Section 11.301(4)(A) cross references §11.501 of Chapter 11 (relating to Forms Which Must Be Approved Prior to Use). The proposed changes to §11.501 of Chapter 11 relate to the term evidence of coverage. The proposed changes to §11.301(4)(A) are necessary for consistency with the terms included in §11.501 of Chapter 11 that are also being proposed for amendment in this proposal.

The proposed amendments to §11.501 include new provisions relating to the use of matrix filings. The proposed amendments designate the current text as subsection (a) and add new subsections (b) and (c). The proposed amendment to newly designated §11.501(a) adds matrix filings to the list of forms that are considered part of an evidence of coverage. The existing rule does not address matrix filings, and this proposal is the first formal recognition of their acceptability for HMO evidence of coverage filings. The proposed new §11.501(b) clarifies that each of the listed forms in subsection (a) must be identified with a unique form number and must be individually approved by the commissioner before being issued, delivered, or used in Texas.

Additionally, the proposed new §11.501(b) clarifies that each of the forms listed in subsection (a), except for matrix filings, are considered individual evidence of coverage filings and are subject to the filing fees prescribed in 28 Texas Administrative Code §7.1301(g)(4) (relating to Regulatory fees). Section 7.1301(g)(4) prescribes that a fee of $100 be assessed for evidence of coverage filings that require approval. The proposed amendment is necessary to provide clarification, fairness, and consistency regarding the amount of the filing fees that will be charged for the filing of these types of forms. The proposed new §11.501 makes clear that a fee of $100, as prescribed in §7.1301(g)(4), will be assessed for each form listed in subsection (a), except for a matrix filing, that is filed with the Department, and that a fee of $50 will be assessed for each form that is resubmitted to the Department after withdrawal or disapproval. A review of all evidence of coverage form filings received by the Department from five major HMOs during the past year reveals that all of the evidence of coverage filings were received as individual filings, rather than one filing containing multiple evidence of coverage form filings linked together under one form number. While some HMOs may have filed a small number of their evidence of coverage filings as one document linked together under a single form number in order to pay $100 for the entire filing, that does not appear to be the standard practice. Therefore, the proposed clarification does not substantially alter the current practice of the Department or the industry. The proposed new §11.501(c) prescribes the fees for matrix filings as $50 per individual evidence of coverage provision, with a maximum fee of $500, whether the filing be an initial filing or a resubmission. Unlike the current structure for single evidence of coverage filings that require an HMO to refile the entire document whenever any provision within the document must be changed to accommodate new business needs, matrix filings allow HMOs to file various individual provisions at one time that may be combined in a variety of ways to create new evidences of coverage. Once the various provisions are approved by the Department, an HMO has much more flexibility to create new evidences of coverage by combining the approved provisions into new documents, and this flexibility will contribute to increased speed to market for new products. An additional benefit of matrix filings is a cost savings to HMOs. Currently, the Department only accepts single evidence of coverage filings and assesses a fee of $100 per filing. Therefore, an HMO filing 12 single evidence of coverage filings will be assessed filing fees totaling $1200 for those filings. However, under the proposed matrix filing approach, an HMO will be able to file multiple provisions that are adequate for many more than 12 evidences of coverage in a single filing. If the HMO files more than 10 evidence of coverage provisions in its matrix filing, it will only be assessed $500, since the maximum fee allowed for a matrix filing is $500. This will save the HMO $700 compared to the filing of 12 single evidence of coverage filings and will allow more flexibility for creating many more evidences of coverage. In addition, the Department anticipates the use of matrix filings will streamline and expedite the Department's overall review process.

The proposed amendments to §11.503 amend the term evidence of coverage to evidence of coverage filing. These proposed changes are necessary for consistency with the terms in §§11.301 and 11.501 of Chapter 11 (relating to Filing Requirements and Forms Which Must Be Approved Prior to Use) that are also proposed to be amended in this proposal.

The specifications for filing a matrix filing are set out in the proposed new §11.505(h)(1) and (2). Each matrix filing must comply with the filing requirements of §11.301 (relating to Filing Requirements) and must include a unique form number that is sufficient to distinguish the filing as a matrix filing. The proposed new §11.505(h)(2) describes the requirements relating to provision language. While variable language must still be enclosed in brackets and must include the range of variable information or amounts, the proposed amendment to §11.505(f) eliminates the remaining restrictions on variable language allowed in evidence of coverage filings.

The proposed amendment to §11.506(2)(A) eliminates the current copayment charge requirement that a basic service HMO may not impose copayment charges that exceed 50 percent of the total cost of providing any single service to its enrollees, nor in the aggregate more than 20 percent of the total cost to the HMO of providing all basic health care services. The proposed amendment to §11.506(2)(A) also eliminates the current copayment charge requirement that a basic service HMO may not impose copayment charges on any enrollee in any calendar year, when the copayments made by the enrollee in that calendar year total 200 percent of the total annual premium cost which is required to be paid by or on behalf of that enrollee. Instead, the proposed amendment to §11.506(2)(A) prescribes a copayment charge requirement modeled after the Insurance Code §1301.0046 (regulating preferred provider benefit plans). The proposal provides that each HMO may establish one or more reasonable copayment options and specifies that a reasonable copayment option may not exceed 50 percent of the total covered amount applicable to the medical or health care services. Although §1301.0046 of the Insurance Code relates specifically to preferred provider benefit plans, the Department is proposing this standard as a fair and reasonable standard that will adequately protect the interest of HMO enrollees.

The proposed amendment to §11.801(a) eliminates the requirement that an HMO licensed before September 1, 1999, must comply with the minimum net worth requirements specified in the Insurance Code §843.4031. This change is necessary to reflect the fact that §843.4031 is no longer law. Insurance Code §843.4031 was enacted by the 76th Texas Legislature as a temporary provision and expired on January 1, 2003. Also, an amendment to §11.810(b)(20) to delete the reference to the Insurance Code §843.4031 is proposed for the same reason.

The proposed amendment to §11.1206(b) deletes the reference to the "Act" and replaces it with a specific reference to the Insurance Code §843.105. For clarity and accuracy, the proposed amendment to §11.1206(b) replaces the phrase defined with the phrase provided for. This change is necessary because the Insurance Code §843.105 provides for the use of management and exclusive agency contracts, but does not define these terms.

The proposed amendment to §11.1403 corrects a typographical error in the toll-free complaint number in the Spanish language notice and corrects the misspelling of the term complaint.

The proposed amendment to §11.1605(c) clarifies that small employer plans, as defined by Insurance Code §1501.002, are exempt from the requirement that HMOs that provide coverage for prescription drugs under an individual or group health benefit plan must comply with Insurance Code Chapter 1369 Subchapter A and Department rules.

The proposed amendment to §11.1607(h)(2) clarifies that the term specialty care includes specialty hospitals and single healthcare service plan physicians and providers, such as vision and dental care. There has been some industry confusion and Department inconsistency regarding the treatment of vision and dental care providers with regards to access of care requirements. The proposed amendment is necessary to make clear that vision and dental care providers are subject to the access of care requirements prescribed in §11.1607(h)(2) and not those prescribed in (h)(1). The proposed new §11.1607(i) originates from a request from the Commissioner of the Health and Human Services Commission. The Health and Human Services Commission recently implemented a new program, the CHIP Perinatal Program. Eligible participants in this program will receive care from HMOs for certain covered services. Pursuant to the Health and Safety Code §62.051(c) and (d), the Commissioner of the Health and Human Services Commission requested that the access of care requirements for HMOs participating in this program be waived. The Health and Safety Code §62.051(c) provides that the Health and Human Services Commission oversee the implementation of a child health plan program and coordinate the activities of each agency necessary to the implementation of the program, including the Texas Department of Insurance. Additionally, the Health and Safety Code §62.051(d) provides that the Health and Human Services Commission may, with the consent the Texas Department of Insurance, delegate to the Texas Department of Insurance the authority to adopt, with the approval of the Health And Human Services Commission, any rules necessary to implement the program. The proposed new §11.1607(i) waives the access of care requirements for an HMO that has a contract with the Health and Human Services Commission and provides covered services to participants in the CHIP Perinatal Program. The proposed amendments to §11.1607 also re-designate remaining subsections.

The proposed amendment to §§11.1901(a) and (b)(1) specifies that an enrollee, unless the HMO has no enrollees, must be actively involved in an HMO's quality improvement program, but eliminates the requirement that an enrollee must be appointed to the HMO's quality improvement committee. This amendment is needed to provide flexibility in enrollee participation in an HMO's quality improvement program. An enrollee may participate in the HMO's program in a variety of ways, and therefore, the rule still requires an enrollee's active participation in the HMO's program to ensure better service for all enrollees in the plan.

Pursuant to the Insurance Code §1452.006, the proposed amendments to §11.1902(4) and (7) eliminate the current requirements relating to the credentialing process for contracted physicians and providers. In lieu of these requirements, the Department is proposing to adopt by reference the credentialing standards of the National Committee on Quality Assurance (NCQA). Section 1452.006 of the Insurance Code requires that rules adopted by the Commissioner under the Insurance Code §843.102, which regulates HMO quality assurance, that relate to implementation and maintenance by an HMO of a process for selecting and retaining affiliated physicians and providers must comply with the Insurance Code Chapter 1452 Subchapter A and standards adopted by the NCQA, to the extent those standards do not conflict with other laws of this state. The Department has determined that the standards do not conflict with the laws of this state. These proposed amendments will also streamline the Department's health plan oversight while maintaining the HMO's plan accountability. Also, as a result of the Department's adoption of the NCQA's standards by reference, the Department will not need to update its regulations each time the NCQA amends its standards, which is approximately once a year. This will ensure that the Department's credentialing regulations for contracted physicians and providers are current and accurate, resulting in more efficient industry regulation and better service to plan enrollees.

The proposed amendments to §§11.2201(b) and 11.2402(b) correct cross references to other rule provisions within Chapter 11.

The proposed amendment to §§11.2207(a) and (b)(1) are necessary for consistency with the proposed amendments to §§11.1901(a) and (b)(1) and clarify that an enrollee must be actively involved in an HMO's quality improvement program but does not have to be appointed to the HMO's quality improvement committee. The proposed amendments to §11.2207(d)(4) and (d)(7) are necessary for consistency with the proposed amendments to §11.1902(4) and (7) and eliminate the current credentialing requirements relating to the retention of contracted physicians and providers, and in lieu of those requirements, adopt by reference the credentialing standards of the NCQA.

The proposed amendment to §11.2602 re-numbers the paragraphs setting out definitions.

Jennifer Ahrens, Associate Commissioner for the Life, Health & Licensing Division, has determined that for each year of the first five years the proposed amendments will be in effect, there will be no fiscal implications for state or local government as a result of enforcing and administering the amendments. The proposal will have no anticipated effect on local employment or local economy.

Ms. Ahrens has determined that for each year of the first five years the proposed amendments are in effect, the public benefits anticipated as a result of the proposed amendments will be better quality of service for HMO enrollees, increased regulatory efficiency, and reduced industry confusion resulting from prior inconsistent interpretations. Any economic costs to HMOs will result from compliance with proposed §§11.501, 11.1902(4) and (7) and 11.2207(d)(4) and (d)(7).

Proposed §11.501(c) requires a filing fee of $50 for each evidence of coverage provision included in a matrix filing with a maximum fee of $500, whether the filing is an initial filing or a resubmission. However, the proposal does not require HMOs to use matrix filings. Those opting not to do so will not be affected by the filing fee, as they may continue to pay the existing rate for each single evidence of coverage filing submitted for review. A matrix filing is one which contains a number of various provisions which an HMO may use to create multiple evidences of coverage. The existing rule does not address matrix filings, and this proposal is the first formal recognition of their acceptability for HMO evidence of coverage filings. Accordingly, when the Department currently accepts evidence of coverage filings, it assesses the standard single filing fee of $100 for each reviewed filing. The proposed fee reflects the fact that an HMO can create more than one evidence of coverage through the combination of various matrix provisions. The provision for matrix filings actually allows an HMO to better manage its filing costs by taking advantage of filing multiple evidence of coverage provisions for a single maximum fee of $500, resulting in potential savings.

Under proposed §11.501(c), HMOs that re-submit an evidence of coverage filing after withdrawal or disapproval will be required to pay a fee of $50.

Proposed §§1902(4) and (7) and 11.2207(d)(4) and (d)(7) adopt the credentialing standards of the National Committee for Quality Assurance (NCQA) by reference and require all HMOs to follow these credentialing standards. At a minimum, an HMO will have to obtain these credentialing standards in order to comply with proposed §§1902(4) and (7) and 11.2207(d)(4) and (d)(7). For the year 2007, these credentialing standards will be published by the NCQA at a cost of $180. It is anticipated that the NCQA will publish these standards each year at a similar cost.

There will be no difference in the cost of compliance between a large and small business as a result of the proposed amendments. A matrix filing fee will only be charged to an HMO that opts to make a matrix filing, regardless of the HMO's size. The cost of purchasing the NCQA publication containing the applicable credentialing standards will be the same for each HMO required to comply with these standards, regardless of its size. The agency has considered the purpose of the Insurance Code §§843.102 and 1452.006, which is to maintain effective regulation of HMOs by ensuring that health care services are provided to enrollees under reasonable standards of quality of care that are consistent with prevailing professionally recognized standards of medical practice. The agency has considered the purpose of the Insurance Code §843.154, which is to collect fees sufficient to administer the proper review of evidence of coverage filings. Accordingly, the Department has determined that it is neither legal nor feasible to waive the provisions of the proposed amendments for small or micro businesses. Additionally, it is the Department's position that the applicable statutes require equal application to all HMOs, regardless of their size, and that the applicable statutes do not contemplate any disparate effect on enrollees of HMOs based on the size of the HMO.

To be considered, written comments on the proposal must be submitted no later than 5:00 p.m. on September 18, 2006, to Gene C. Jarmon, 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 Jennifer Ahrens, Associate Commissioner for the Life, Health & Licensing Program, Mail Code 107-2A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104. Any request for a public hearing should be submitted separately to the Office of the Chief Clerk before 5:00 p.m. on September 18, 2006. If a hearing is held, oral and written comments presented at the hearing will be considered.

Subchapter A. GENERAL PROVISIONS