Adopted Sections 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 28. INSURANCE Part I. Texas Department of Insurance Chapter 11. Health Maintenance Organizations Subchapter A. General Provisions 28 TAC sec.11.1, sec.11.2 The State Board of Insurance of the Texas Department of Insurance adopts amendments to sec.11.1 and sec.11.2. Section 11.2 is adopted with changes to the proposed text as published in the February 11, 1992, issue of the Texas Register (17 TexReg 1193).Section 11.1 is adopted without changes and will not be republished. The amendments are necessary to add definitions and make editorial changes. The definitions added by these amendments to sec.11.2 are "admitted assets", "agent", "excess surplus", and "surplus". As a result of comment, the phrase "net admitted assets" in the definition of "surplus" was changed to omit the word "net"; the definition of "admitted assets" has been changed to specifically relate to the rule which sets out the assets which are permitted to be listed as admitted assets; the definition of "agent" has been changed to refer specifically to Insurance Code, Articles 20A.15 and 20A.15A; and the phrase "net of uncovered liabilities" has been removed from the definition of "excess surplus". Section 11.1 describes the general provisions of the rules in this subchapter and sec.11.2 contains definitions of terms used in this subchapter. No comments were received in connection with sec.11.1. Comments were received in connection with sec.11.2. A comment was received suggesting that the phrase "net of uncovered liabilities" be removed from the definition of "excess surplus", and that the word "net" be removed from the phrase "net admitted assets" in the definition of "surplus" in order to better correlate the definitions with the use made of them in this subchapter. The board agrees with these comments and the changes are made in the rules finally adopted. A comment was received which suggested that because the definition of excess surplus would exclude from surplus any amount attributable to assets "a health maintenance organization finds necessary for its operations as set forth in sec.11.803(5)", the definition is redundant, unnecessary and is a mechanism for increasing minimum surplus requirements by "the back door". The board disagrees with this comment because the definition as written allows staff to discount, for this purpose, funds necessary for operations which means that the definition only takes into account funds that are actually available over and above those required for uncovered liabilities. The commenter's approach would allow more liberal investments under sec.11.803(2) and it is possible that an HMO would not have sufficient assets to meet uncovered liabilities under sec.11.803(1) if the changes requested in this comment were adopted. A comment suggested that the definition of "admitted assets" which excluded assets specifically "excluded by this act and chapter" was too vague. The comment suggested that the assets which were specifically excluded should be enumerated or reference to the sections of the act or chapter which excluded such assets be included in the definition. The board agrees that the definition should be changed. The new definition of "admitted assets" references the rule which specifically sets out the assets which are permitted to be listed as admitted assets. This approach will be easier for everyone to use and will achieve the objective sought by the comment. A comment suggested that the definition of "agent" be the definition found in Article 20A.15 of the Act. The board agrees that the definition of agent as originally proposed is confusing. The new definition will refer to both Insurance Code, Articles 20A.15 and 20A.15A. The definition will indicate that the word agent applies to both articles unless the context of the rule clearly indicates the applicability of only one of those articles. The board believes it is necessary to refer to both articles as the word agent can be applicable to both articles. No comments were received in favor of these sections. Texas Health Maintenance Organization Association and one single service HMO commented against the amendments. The amendments are adopted under Insurance Code, Articles 20A.22 and 1.04. Article 20A.22 authorizes the board to promulgate rules to carry out the provisions of the Act and Insurance Code, Article 1.04 provides the board with the authority to determine policy and rules in accordance with the laws of this state. sec.11.2. Definitions. (a) The definitions found in the Texas Health Maintenance' Organization Act, sec.2, as amended, codified as the Texas Insurance Code, Article 20A.02, are hereby incorporated in this chapter. (b) The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. (1) Act-The Texas Health Maintenance Organization Act, Senate Bill 180, enacted by Acts 1975, 64th Legislature, Chapter 214, Pages 514-530, first effective December 1, 1975, as amended, codified as the Texas Insurance Code, Chapter 20A. (2) Admitted assets-All assets as defined by generally accepted accounting principles, as permitted and valued in accordance with sec.11.803 of this title (relating to Investments, Loans, and Other Assets). (3) Affiliate-A person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified. (4) Agent-A health maintenance organization agent as defined in Insurance Code, Articles 20A.15 and 20A.15A, unless the context of the ruleclearly indicates applicability to any agents licensed under one specific article. (5) Capitation-The average amount of money required per enrollee to administer the health maintenance organization and to provide covered services to an enrollee for a specified time period. (6) Code-The Texas Insurance Code, 1951, as amended. (7) Copayment-An additional charge to an enrollee for a service which is not fully prepaid. (8) Excess surplus-The surplus that is in excess of the minimum surplus required by the Insurance Code, Article 20A.13, excluding from surplus those assets a health maintenance organization finds necessary for its operations as set forth in sec.11.803(5) of this title (relating to Investments, Loans and Other Assets). (9) HMO-A health maintenance organization which has been issued a certificate of authority under the Act. (10) Out of area benefits-The benefits that the HMO covers when its members are outside the geographical limits of the HMO service area. (11) Premium-The prospectively determined rate, based on the capitation, that is paid by or on behalf of a subscriber for specified health services. (12) Primary care physician-A physician who is responsible for providing initial and primary care to patients, maintaining the continuity of patient care, and initiating referral for care. (13) Qualified HMO-An entity which has been federally approved under Title XIII of the Public Health Service Act, Public Law 93-222, as amended. (14) Rules-All sections under this chapter. (15) Schedule of charges-The specific rates or premiums to be charged for a single enrollee, a two-member family, three-member family, etc. (16) Service area-The geographical area within which direct service benefits are available and accessible to HMO enrollees. (17) Subscriber-If nongroup coverage, the person who is the policyholder and is responsible for payment of premiums to the HMO; or if group coverage, the person who is the certificate holder and whose employment or other status, except for family dependency, is the basis for eligibility for membership in the HMO. (18) Surplus-The admitted assets minus uncovered liabilities. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 27, 1992. TRD-9210156 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: August 17, 1992 Proposal publication date: February 11, 1992 For further information, please call: (512) 463-6327 Subchapter B. Name Reservation Procedure 28 TAC sec.sec.11.101, 11.102, 11.106, 11.107 The State Board of Insurance of the Texas Department of Insurance adopts amendments to sec.sec.11.101, 11.102, 11.106, and 11.107, without changes to the proposed text as published in the February 11, 1992, issue of the Texas Register (17 TexReg 1194). The amendments are necessary to amplify or clarify the requirements of the sections. The sections provide for a name reservation procedure. The amendment to sec.11.101 provides the complete address to which requests for reservation of name forms should be directed. The amendment to sec.11.102 makes an editorial change to the wording. The amendment to sec.11.106 provides that a requested name is reserved for 365 days from the date the name is accepted, rather than approved, by the commissioner of insurance. The amendment to sec.11.107 clarifies the date on which a name reservation is cancelled in the event of denial of a certificate of authority. No comments were received regarding adoption of the amendments. The amendments are adopted under Insurance Code, Articles 20A.22 and l.04. Article 20A.22 authorizes the board to promulgate rules to carry out the provisions of the Act and Insurance Code, Article l.04 provides the board with the authority to determine policy and rules in accordance with the laws of this state. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 27, 1992. TRD-9210157 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: August 17, 1992 Proposal publication date: February 11, 1992 For further information, please call: (512) 463-6327 Subchapter C. Application for Certificate of Authority 28 TAC sec.sec.11.201, 11.203-11.206, 11.208 The State Board of Insurance of the Texas Department of Insurance adopts amendments to sec.sec.11.201, sec.11.203-11.206, and sec.11.208. Sections 11.203 and 11.204 are adopted with changes to the proposed text as published in the February 11, 1992, issue of the Texas Register (17 TexReg. 1194). Sections 11.201, 11.205-11.206 and sec.11.208 are adopted without changes and will not be republished. These amendments are necessary to clarify procedures followed in connection with review of an application for certificate of authority to become an HMO. The amendment to sec.11.201 adds a reference to the board's rule governing regulatory fees. The amendment to sec.11.203 clarifies the timing of the application review process in the event of required revisions. The amendment to sec.11.204 clarifies and makes changes to the requirements for the contents of an application for certificate of authority and deletes the provisions that authorizes the commissioner to require additional information relating to the itemized contents. The amendment to sec.11.205 makes editorial changes. The amendment to sec.11.206 deletes some specific steps in the application review process and refers the reader to the board's rules concerning notice and processing periods for permit applications. The amendment to sec.11.208 adds a statutory reference with respect to delay of final action on an application. Comments were received on sec.11.203 and sec.11.204. No comments were received on the rest of the sections contained in this subchapter. Comments related to sec.11.203. A commenter has stated that removing the word "substantial" from this section would require an HMO to restart the application process for any revision and would place a barrier on revisions. The board responds to the concerns of this commenter by making a change to the rule which will provide for a simple procedure to allow an applicant to seek a delay where appropriate without requiring resubmission of the application. Comments Related to sec.11.204. A commenter noted that the proposed rules ask that all subcontracts be furnished. The commenter believed that HMOs could not obtain such subcontracts and that only direct contracts with providers should be provided. The board responds to this comment by noting that it is necessary to require the subcontracts in order to forward them to the Health Department for review and certification as provided for in the proposed sections in order to provide an assurance that the provisions of Insurance Code, Article 20A. 05(a)(3) can be met. A commenter stated that sec.11.204(15) should be changed to require the filing of "any agreement" rather than "reinsurance" agreements and the section should then contain wording adding "reinsurance" to the series of examples. The board agrees that clarification is needed. The change to the rule will reference reinsurance agreements and any other agreements covering excess of loss, stop- loss, and/or catastrophes. No comments were received in favor these sections. Texas Health Maintenance Organization Association and one health maintenance organization commented against adopting the amendments. The amendments are adopted under the Insurance Code, Articles 20A.22 and 1. 04. Insurance Code, Article 20A.22 authorizes the State Board of Insurance to promulgate rules to carry out the provisions of the Act and Article 1.04 provides the State Board of Insurance with the authority to determine policy and rules in accordance with the laws of this state. sec.11.203. Revisions during Review Process. (a) Revisions during the review of the application must be addressed to: HMO Unit, Mail Code 106-3A, Texas Department of Insurance, 333 Guadalupe, P.O. Box 149104, Austin, Texas 78714-9104. The applicant must include an original and one copy of the transmittal letter, plus the number of copies of any revision specified in this subchapter. (b)-(c) (No change.) (d) If, after the Texas Department of Health review or Texas Department of Insurance qualifying examination, either the Texas Department of Health or Texas Department of Insurance staff notifies the applicant of the need for revisions as a result of the examination or review, that application does not meet the requirements of the Act and will have to be denied, absent corrections. If the time required for the revisions will exceed the time limits set out in Chapter l, Subchapter G, sec.1.809 of this title (relating to HMO Certificate of Authority), the applicant must request additional time within which to make the revisions. The applicant must specifically set out the length of time requested which may not exceed 90 days. The commissioner may grant or deny the request for an extension of time in his or her discretion under sec.1.809(d) of this title. Additional delays may be requested. The request for any additional delays must set out the need for the additional delay in sufficient detail for the commissioner to determine if good cause for such delay exists. The commissioner may grant or deny any additional request for an extension of time in his or her discretion. sec.11.204. Contents. Contents of the application must include the following items in the order listed: (1) a completed HMO Form #1, name reservation along with any certificate of reservation of corporate name issued by the secretary of state; (2)-(5) (No change.) (6) separate organizational charts or lists, as described in subparagraphs (A)-(C) of this paragraph: (A)-(C) (No change.) (7) fidelity bond or deposit for officers and employees, which must comply with either subparagraph (A) or subparagraph (B) of this paragraph, as appropriate. (A) A bond must be in compliance with the Texas Insurance Code, Article 20A.30, and must be either the original bond or a copy of the bond with notarized certification bearing the original signature of an officer of the applicant that the copy is a true, accurate, and complete copy of the original bond. (B) A cash deposit must be held under a joint control agreement, acceptable to the commissioner, in the same amount and subject to the same conditions as a bond. (8) information related to out-of-state licensure and service of legal process for all applicants. (A) An applicant licensed as an HMO in another state must furnish a copy of the certificate of authority from the domiciliary state's licensing authority, and a power of attorney executed by the applicant appointing the commissioner and his or her successors in office, or a duly authorized deputy, as the attorney of such applicant in and for the state, upon whom all lawful processes in any legal action or proceedings against the HMO on a cause of action arising in this state may be served. (B) All applicants must furnish a statement acknowledging that all lawful process in any legal action or proceeding against the health maintenance organization on a cause of action arising in this state is valid if served in accordance with Texas Insurance Code, Article 1.36. (9) the evidence of coverage to be issued to enrollees, and any group agreement which is to be issued to employers, unions, trustees, or other organizations as described in Subchapter F of this chapter (relating to Evidence of Coverage); (10) financial information, consisting of the following: (A) a current financial statement, including balance sheet reflecting assets and liabilities, statement of income and expenses, and sources and application of funds; (B) projected financial statements for the 18-month period from the start of operations using quarterly balance sheet projections based on calendar quarters, quarterly cash flow schedules reflecting capital expenditures, and monthly revenue and expense projections, which financial statements must include the identity and credentials of the person making the projections; and (C) the most recent audited financial statements of any sponsoring organization; (11) the schedule of charges as defined in sec.11.2 of this title (relating to Definitions) to be used through the first 12 months of operation; (12) (No change.) (13) a sample copy of the form of any contract executed or to be executed between the applicant and: (A) any person listed on the officers and directors page; (B) any physician, medical group, or association of physicians, or any other provider, plus a sample copy of the subcontract between the medical group, physicians' association, any physician, or provider, who has contracted with any physician, medical group, association of physicians, or any other provider to provide health care services. If such contracts include a hold-harmless provision, it shall be no less favorable to enrollees than that outlined in sec.11.1102 of this title (relating to Hold-Harmless Clause). Such contracts must be in accord with the Texas Department of Health rules, and will be furnished by Texas Department of Insurance to the Texas Department of Health for their review and certification; (C) any exclusive agent or agency; and (D) any person who will perform management, marketing, administrative, data processing services, or claims processing services. A bond or deposit meeting the requirements of the Texas Insurance Code, Article 20A.18, is required for management contracts. If a bond, the original must be submitted, or a copy of the bond must be accompanied by notarized certification that the copy is a true, accurate, and complete copy of the original; (14) a description of the quality assurance program, including a peer review program required by the Texas Insurance Code, Article 20A.05. Arrangements for sharing pertinent medical records between physicians and/or providers contracting or subcontracting pursuant to paragraph (13)(B) of this section with the HMO and assuring the record's confidentiality must be explained; (15) insurance and other protection against insolvency: (A) any reinsurance agreement and any other agreement described in the Texas Insurance Code, Article 20A.05(b)(2)(C) (iii), covering excess of loss, stop- loss, and/or catastrophes. The agreement must provide that the commissioner and HMO will be notified no less than 60 days prior to cancellation or reduction of coverage by the insurer; (B) any conversion policy or policies which will be offered by an insurer to an HMO enrollee in the event of the HMO's insolvency; (C) any other arrangements offering protection against insolvency; (16) authorization for disclosure to the commissioner of the financial records of the applicant. Disclosure of financial records of affiliates may also be required. The individual to be contacted for a qualifying examination must be identified. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 27, 1992. TRD-9210158 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: August 17, 1992 Proposal publication date: February 11, 1992 For further information, please call: (512) 463-6327 Subchapter D. Regulatory Requirements for an HMO Subsequent to Issuance of a Certificate of Authority 28 TAC sec.sec.11.301-11.306 The State Board of Insurance of the Texas Department of Insurance (TDI) adopts amendments to sec.sec.11.301-11.306. Section 11.301 is adopted with changes to the text as published in the February 11, 1992, issue of Texas Register (17 TexReg 1197). Sections 11.302-11.306 are adopted without changes and will not be republished. The amendments are necessary to conform the subchapter to legislative revisions to the Texas HMO Act and provide for clarification of the regulatory process subsequent to the issuance of a certificate of authority. The amendment to sec.11.301 provides for the filing of additional information for approval with respect to management contracts, certain dividends, notice of loans, and amendments to organizational documents. The amendments provide that changes in the principal administrative office, and certain financial and solvency information must be filed for information. There are also editorial changes made to this section relating to form numbers and the number of copies of certain documents to be filed; and clarifying that any changes in certain documents should be filed. The amendment to sec.11.302 provides that items filed with respect to service area expansion requests should be filed either for approval or for information as determined in sec.11. 301 and adds new requirements for the filing of financial information and information related to protection against insolvency, as well as providing for the filing of the formula or method for calculating the schedule of charges for any new or amended evidence of coverage. Section 11.303 is amended to provide that the expenses of examinations, both by the Texas Department of Insurance and the Texas Department of Health, are offset against premium taxes. That section also provides that the documents set out in sec.11.205 shall be available on site unless the HMO has been authorized to move documents out of state. If such authority exists, the expenses of examination of those out-of-state records are not allowed as an offset against premium taxes. The amendment also provides that electronic access to documents meets the requirements of this section except that the Texas Department of Insurance or the Texas Department of Health have the authority to request paper copies of such records be produced within a reasonable time period. Section 11.304 is amended to clarify the filing processes for the HMO's annual statement, the annual audited financial report where required by the Texas Insurance Code, Article 1.15A, and an annual audit report of the sponsoring organization for those HMOs who have such an organization. An amendment to this section requires that all HMOs file quarterly reports. This section is also amended to provide for the payment of premium taxes and maintenance taxes to the Texas Department of Insurance pursuant to Texas Insurance Code, Articles 4.11, 20A. 32 and 20A.33 and the regulations promulgated thereunder and the tax forms promulgated by the board. The premium taxes are subject to the adjustments set forth in the amendment. Editorial changes are made to sec.11.305. Section 11. 306 is amended to provide clarification and notice that failure to comply with the Act, regulations, or orders of the commissioner or board are subject to actions authorized under the Texas Insurance Code, Article 1.10. Supervision, conservation, or receivership for failure to comply with the Act are also available remedies described in sec.11.306. Comments were received on sec.11.301 and sec.11.304. No comments were received on the rest of the sections contained in this subchapter. Comments related to sec.11.301. A commenter has suggested that the words "any new" in this section be omitted so that only substantive changes in contracts must be filed. The board agrees that only substantive changes must be filed, but believes that copies of the forms of all new contracts should be filed. The board also wishes to make it clear that only a sample form of the contracts must be filed. The new section will so provide. Comments related to sec.11.304. Two commenters stated that the requirement for filing of quarterly reports contained in sec.11.304 should be deleted. Both commenters noted that HMOs voluntarily supply this information for the use of the Solvency Surveillance Committee and also noted that employers wanted copies from the HMOs of the reports filed with the board which would mean that HMOs would be furnishing copies of the reports to the employers who would not treat them as confidential. One commenter also stated that TDI did not have the staff to review them. The board disagrees. Not all HMOs always voluntarily furnish these quarterly reports and HMOs may not do so in the future. The reports are needed for the Solvency Surveillance Committee and the staff to determine if any problems are developing which might affect insolvency. If they must be specially requested, a gap in the reports may occur. The difficulty which HMOs might have with employers will have to be dealt with through the HMO contracts, if necessary, but this difficulty does not outweigh the benefits to be gained by the furnishing of the quarterly reports. The TDI staff do review these quarterly reports. The quarterly reports are not treated as confidential; therefore, the question of confidentiality is not a bar to this filing. The life and property and casualty insurers all file quarterly reports. In the opinion of the board, the benefits to be gained by receiving the quarterly reports outweigh the difficulties involved in filing them. No comments were received in favor these sections. Texas Health Maintenance Organization Association and one health maintenance organization commented against adoption of the amendment. The amendments are adopted under Insurance Code, Articles 20A.22 and 1.04. Article 20A.22 authorizes the board to promulgate rules to carry out the provisions of the Act and Insurance Code, Article 1.04 provides the board with the authority to determine policy and rules in accordance with the laws of this state. sec.11.301. Filing Requirements. Subsequent to the issuance of a certificate of authority, each health maintenance organization (HMO) is required to file certain information with the commissioner, either for approval prior to effectuation or for information only, as outlined in paragraphs (4) and (5) of this section and in sec.11.302 of this title (relating to Service Area Expansion Requests). These requirements include filing any changes necessitated by federal laws or regulations. (1) (No change.) (2) Identifying form numbers required. Each item required to be filed pursuant to paragraphs (4) and (5) of this section must be identified by a unique form number, adequate to distinguish it from other items. Such identifying form numbers shall be composed of a total of no more than 12 letters, numbers, symbols, and spaces. (A) The identifying form number must appear in the lower left-hand corner of the page. In the case of a multiple page document, the identifying form number must appear on the lower left-hand corner of the first page. Page numbers should appear on subsequent pages. (B) If an item is to be replaced or revised subsequent to issuance of a certificate of authority, a new identifying form number must be assigned. A new edition date added to the original identifying form number is an acceptable way of revising the number so that it is identifiable from any previously approved item; e.g., if G-100 was the originally approved number, the revision may be numbered G-100 12/79. Changing the case of the suffix is not considered to be a change in the number, e.g., "ED" and "ed" or "REV" and "rev" are the same for form numbering purposes. (3) Attachments for filings. The filings required in paragraph (4) and (5) of this section must be accompanied by the following: (A) four copies of an HMO Form #5 and #8 for each new, revised, or replaced item; (B) four copies of a transmittal letter including a statement of any prior approved forms to be replaced, with any applicable form number; (C) four copies of such supporting documentation as considered necessary by the commissioner for review of the filing; and (D) the applicable filing fee as required by the Texas Insurance Code, Article 20A.32, as determined by sec.7.1301 of this title (relating to Regulatory Fees). (4) Filings requiring approval. An HMO shall file with the commissioner a written request to implement or modify the following operations or documents and receive the commissioner's approval prior to effectuating such modifications: (A)-(B) (No change.) (C) the form of all contracts described in sec.11.204(13), (A), (C), and (D) of this title (relating to Contents), including any amendments to contracts described in sec.11.204 (A) and (C) of this title and prior approval of the cancellation of any management contracts in sec.11.204(13)(D) of this title. (D)-(E) (No change.) (F) dividends which do not meet the requirements of sec.11.807 of this title (relating to Dividends); (G) a notice of any intention to make a loan or to make multiple loans, or to make any amendments thereto, to a medical group or to a corporation under the control of the HMO. If the total amount loaned is incidental to the HMO's operation and does not exceed an amount expected to be equal to the charges to be paid to that medical group or corporation for contractual services to be provided for a 30-day period immediately following and provided that termination of services may not take place during that period of time, then such notice need not be filed; (H) a copy of any amendments to basic organizational documents which are proposed. Following approval by the commissioner a copy of the approved amendments must be filed with the secretary of state and an original, or a copy of such documents with notarized certification bearing the original signature of an officer that it is a true, accurate, and complete copy of the original file marked by the secretary of state, shall be filed with the commissioner; (I) a copy of any amendments to bylaws of the HMO, with a notarized certification bearing the original signature of an officer of the company that it is a true, accurate, and complete copy of the original; (J) any name, assumed name, service mark, or trademark on a reservation of name form, HMO Form #1; and (K) any agreement by which an affiliate agrees to handle an HMO's investments under sec.11.804 of this title (relating to Investment Management by Affiliate Companies). (5) Filings for information. Material filed under this paragraph is not to be considered approved but may be subject to review for compliance with Texas law and consistency with other HMO documents. Each item filed under this paragraph must be accompanied by a completed HMO Form #7-Certification of Compliance, referred to in of sec.11.1001(8) of this title (relating to Forms Adopted by Reference) in addition to those attachments required under paragraph (3) of this section. Within 30 days of the effective date, an HMO must file with the commissioner, for information only, additions, deletions, and modifications to the following previously approved or filed operations and documents: (A) the list of officers and directors and a biographical data sheet for each person listed under the Texas Insurance Code, Article 20A.4(a)(3), on HMO Form #3 and #4 referred to in sec.11.204(5)(A) and (B) of this title; (B) a copy of any notice of cancellation of bonds, new bonds, or amendments to bonds for officers and employees, including notarized certification by an officer that the material is true, accurate, and complete, as described in sec.11.204(7) and (13)(D) of this title; (C) the formula or method for calculating the schedule of charges as defined in Subchapter A, sec.11.2(b) of this title (relating to General Provisions); (D) any change in the principal administrative office within the approved service area(s) of the HMO; (E) any change of the certificate of authority from the domiciliary state's licensing authority and a power of attorney, if the HMO is a foreign-licensed HMO; (F) a copy of the form of any new contract or any substantive changes in previously filed copies of forms of all contracts between the HMO and any physicians, or other providers described in sec.11.204(13)(B) of this title, whether utilized with all contracts or on an individual basis; (G) any new or amendments to insurance or other protection against insolvency, including the stop-loss or reinsurance agreements if changing the carrier or description of coverage as described in sec.11.204(15) of this title; and (H) any change in the affiliate chart as described in sec.11.204(6)(A) of this title. (6) (No change.) This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 27, 1992. TRD-9210159 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: August 17, 1992 Proposal publication date: February 11, 1992 For further information, please call: (512) 463-6327 28 TAC sec.sec.11.403-11.409 The State Board of Insurance of the Texas Department of Insurance adopts an amendment to sec.11.403 and new sec.sec.11.404-11.409 without changes to the proposed text as published in the February 11, 1992, issue of the Texas Register (17 TexReg 1200). The amendment and new sections are necessary to conform the requirements of this subchapter to legislative revisions of the Texas HMO Act and to provide clearer and more effective regulation. The adoption of new sec.sec.11.404-11.409 is simultaneous with the repeal of present sec.sec.11.404-11.411. Notice of the repeal appears elsewhere in this issue of the Texas Register. The amendment to sec.11.403 clarifies terminology regarding nonresident individuals who are licensed to act as an agent for one or more HMOs in their state of residency and provides that individuals who reside in an adjoining state may be licensed as resident agents if their principal business office is to be maintained in Texas. New sec.11.404 replaces existing sec.11.405, concerning license application requirements and adds provisions with respect to corporate applicants. New sec.11.405 replaces existing sec.11.406, concerning the written license examination, and provides that, unless the examination is scheduled within nine months of the date an application is approved, the applicant must reapply. New sec.11.406 would replace old sec.11.407, concerning renewal of licenses, and would delete the provision that allows an individual whose license has expired to renew within one year without retaking the examination, at the commissioner's discretion. New sec.11.407 replaces existing sec.11.408, concerning additional and adds a provision regarding payment of a percentage of an HMO's revenues, net income, or profit to persons under contract with the HMO for administrative, management, or health care services. New sec.11.408 replaces old sec.11.409, concerning termination and additionally provides for suspension of the license of an HMO agent with New sec.11.409, concerning suspension or revocation of license, replaces existing sec.11.410. The proposed new section adds a showing of financial irresponsibility by an applicant or agent to the enumerated grounds for denial, suspension, or revocation of a license and adds requirements regarding notice of hearing on a license. No comments were received regarding adoption of the amendment and new sections. The amendment and new sections are adopted under the Texas Insurance Code, Articles 20A.15, 20A.15A, 20A.22 and 1.04. Insurance Code. Articles 20A.15 and 20A.15A authorize the State Board of Insurance to adopt reasonable rules necessary to provide for the licensing of agents under those articles. Article 20A.22 authorizes the board to promulgate rules to carry out the provisions of the Texas Health Maintenance Organization Act, and Article 1.04 authorizes the State Board of Insurance with the authority to determine policy and rules in accordance with the laws of this state. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 27, 1992. TRD-9210161 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: August 17, 1992 Proposal publication date: February 11, 1992 For further information, please call: (512) 463-6327 Subchapter E. Licensing and Regualtions of HMO Agents 28 TAC sec.sec.11.404-11.411 The State Board of Insurance of the Texas Department of Insurance adopts the repeal of 28 TAC sec.11.404-11.411, concerning the licensing and regulation of health maintenance organization (HMO) agents, without changes to the proposed text as published in the February 11, 1992, issue of the Texas Register (17 TexReg 1203). The repeal of these sections is necessary to provide implementation of legislative revisions to the Texas HMO Act and to provide clearer and more effective regulation. The repeal enables the board simultaneously to adopt new sections which replace these repealed sections with clearer language in conformance with amended statutory language. New sections will be adopted simultaneously with these repealed sections, except for sec.11.411 relating to temporary licenses which has not been replaced. No temporary license will be allowed for HMO agents after the effective date of the repeal of these sections. Notification of the adoption of the new sections which will substantially replace these sections appears elsewhere in this issue of the Texas Register. No comments were received regarding adoption of the repeals. The repeals are adopted under Texas Insurance Code, Articles 20A.22 and l. 04. Article 20A.22 authorizes the board to promulgate rules to carry out the provisions of the Texas Health Maintenance Organization Act. Article l.04 provides the State Board of Insurance with the authority to determine policy and rules in accordance with the laws of this state. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 27, 1992. TRD-9210160 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: August 17, 1992 Proposal publication date: February 11, 1992 For further information, please call: (512) 463-6327 Subchapter F. Evidence of Coverage 28 TAC sec.sec.11.502-11.504, 11.506, 11.509 The State Board of Insurance of the Texas Department of Insurance adopts amendments to sec.sec.11.502-11.504, 11.506, and 11.509. Sections 11.506 and 11. 509 are adopted with changes to the proposed text as published in the February 11, 1992, Texas Register (17 TexReg 1203). Sections 11.502-11.504, are adopted without changes and will not be republished. The amendments are necessary to conform the subchapter to legislative revisions to the Texas HMO Act and to clarify existing regulations to provide better regulation. The amendment to sec.11.502 contains references to form numbers, provides that any discrepancy between the language or form numbers of the final print and approved draft is grounds for revocation of the certificate of authority, provides for forms which are referenced in sec.11.1001(10), and makes minor editorial changes. The amendment to sec.11.503 provides for an additional form and requires four rather than three copies of the transmittal letter. The amendment to sec.11.504 adds references to Articles 21.21A, 21.21-1, and 21. 21- 3 and provides that violations of such statutes are grounds for disapproval of an evidence of coverage. The amendment to sec.11.506 makes changes in the mandatory provisions for both group and non-group agreements and certificates covering formatting, use of the legislatively mandated toll free number, variable co-payments or deductibles, cancellation and cancellation time limits, conversion and continuation of coverage provisions; eligibility requirements, including those of dependents, and mandating coverage of certain dependents; changes to rates; service area descriptions; conformity with state law and with Medicare supplement minimum standards and long-term care minimum standards and other miscellaneous provisions dealing with mandatory provisions. The amendment to sec.11.509 makes certain editorial changes; provides that the subrogation provision may include a statement that the HMO may recover attorneys' fees and court costs, and contain rules which must be followed by an HMO which chooses to provide coverage for work-related injuries or illness. An editorial change has been made to remove the word "insurance" from the first sentence of sec.11.509(3)(B). That word was erroneously typed in that sentence as the HMO evidence of coverage is not technically an insurance coverage. Comments were received related to sec.11.506. A commenter stated that the requirement that provisions be included to conform with Medicare supplement minimum standards and long-term care minimum standards would require that all group and non-group agreements conform and suggested using the phrase "as applicable" to avoid this result. The board is of the opinion that this change is not necessary because the phrase "where applicable" is already included at the end of the sentence. A comment was received suggesting that the reference to the commissioner's bulletin be deleted. The board is of the opinion that this reference should be left in the rule as some transactions which occurred during the period in which the bulletin was in force may become an issue and it should be clear in the rules that the bulletin was the regulation in force at that time. A commenter also suggested that the reference to sec.1.601 should read "(Relating to Notice of Policyholder Complaint Procedures)" due to changes made since the original publication of these proposed rules. The board agrees with this comment and the rule will be changed show the new title which is slightly different from the one listed by the commenter, to reflect the final version of sec.1.601. No comments were received in favor these sections. Texas Health Maintenance Organization Association commented against adoption of these amendments. The amendments are adopted under Insurance Code, Articles 20A.22 and l.04. Insurance Code, Article 20A.22 authorizes the board to promulgate rules to carry out the provisions of the Act and Insurance Code, Article 1.04 provides the board with the authority to determine policy and rules in accordance with the laws of this state. sec.11.506. Mandatory Provisions: Group and Non-Group Agreement and Group Certificate. Each group and non-group agreement and group certificate must contain the following provisions. Use of the standard language for each provision as presented in Subchapter L of this chapter (relating to Standard Language for Mandatory and Other Provisions) shall exempt from review that portion of the evidence of coverage where standard language is contained. Such standard language shall not be the only language accepted by the State Board of Insurance for such provisions: (1) name, address, and phone number of the HMO-, the toll-free number referred to in Texas Insurance Code, Article 21.71, where applicable, and notice of any provision requiring arbitration, indicating the location of such provisions within the evidence of coverage, must appear on the face page. (A) The face page of an agreement is the first page that contains any written material. (B) If the agreements or certificates are in booklet form the first page inside the cover is considered the face page. (C) The information regarding the toll fee number referred to in Article 21.71 must be in accordance with sec.1. 601 of this title (relating to Notice of Toll- Free Telephone Numbers and Procedures for Obtaining Information and Filing Complaints). (D) HMOs who wish to be exempt from Article 21.71 requirements for fiscal year 1991 must have filed for the exemption in accordance with the commissioner's bulletin of August 31, 1991. Exemptions will be governed by Texas Insurance Code, Article 21.71, sec.1.601 of this title and the information contained in the instructions for the filing of the annual statement. (2) arbitration-a statement of any required arbitration procedure. If enrollee complaints and grievances are resolved through a specified arbitration agreement, the arbitration must be conducted pursuant to the Texas Arbitration Act, Texas Civil Statutes, Articles 224-238; (3) benefits-a schedule of all health care services that are available to enrollees under the health care plan or single health care service plan, including any copayments or deductibles and a description of where and how to obtain services. A variable copayment or deductible schedule may be used. The copayment schedule must clearly indicate the benefit to which it applies. (4) cancellation-a statement specifying the grounds for cancellation of coverage and the minimum notice period that will apply. The notice period will be as described in subparagraphs (A) and (B) of this paragraph: (A) for an enrollee, or if a subscriber, the subscriber and subscriber's enrolled dependents, in the case of: (i)-(iii) (No change.) (iv) failure to meet eligibility requirements, coverage may be cancelled immediately, subject to continuation of coverage and conversion privilege provisions; (v)-(vi) (No change.); (B) for a group, in the case of: (i) (No change.) (ii) fraud on the part of the group, after 15 days written notice; or (iii) any cancellation other than described in Clause (i) or (ii) of this subparagraph the HMO must give the group at least 60 days prior notice; (5) claim filing procedure-a provision that sets forth the procedure for filing claims, including: (A) any required notice to the HMO of a claim; (B) how, when, and where to obtain claim forms, if required; (C) requirements for filing proper proofs of loss; (D) any time limit for payment of claims which must be in accordance with Texas Insurance Code, Article 21.55 and Article 20A.09(i); (E) notice of any requirement for arbitration of disputed claims; (6) complaint procedure-a description of the HMO's method for resolving enrollee complaints, including the address, phone number to which complaints must be directed, and toll free telephone number required by Article 21.71, where applicable; and notice of time limits, appeal procedures, and any requirement for arbitration; (7) conversion privilege-group and non-group agreements and group certificates for an HMO must contain a conversion privilege which provides that, upon termination of eligibility for membership, each enrollee who resides in the service area has the right to convert within 31 days to a non-group agreement issued by the HMO without presenting evidence of insurability. No conversion privilege is required when the entire group withdraws from the HMO or is cancelled by the HMO or for any member whose coverage is cancelled pursuant to paragraph (4)(A) (i)-(iii), (v), or (vi) of this section or for any enrollee covered under a Medicare risk or Medicare cost contract; (8)-(10) (No change.) (11) eligibility-a statement of the eligibility requirements for membership, including: (A) that the subscriber must live in the service area and the permanent legal residence of any enrolled dependents must be the same as the subscriber, or the subscriber must live in the service area and the residence of any enrolled dependents must be: (i) in the service area with the person having temporary or permanent conservatorship or guardianship of such dependents, where the subscriber has legal responsibility for the health care of such dependents; or (ii) in the service area under other circumstances where the subscriber is legally responsible for the health care of such dependents; or (iii) in the service area with the subscriber's spouse; (B) the conditions under which dependent enrollees may be added to those originally covered; (C) any limiting age for subscriber and dependents, including effects of Medicare eligibility; (D) a clear statement regarding the coverage of newborn children. No evidence of coverage may contain any provision excluding or limiting coverage for a newborn child of the subscriber or the subscriber's spouse. Congenital defects must be treated the same as any other illness or injury for which coverage is provided. The HMO may require that the subscriber notify the HMO during the initial 31 days after the birth of the child and pay any premium required to continue coverage for the newborn child; (E) a clear statement regarding the coverage of the subscriber's grandchildren under the conditions under which such coverage is required by Texas Insurance Code, Article 3.70-2, Subsection (L); (12)-(15) (No change.) (16) incontestability-in the absence of fraud, all statements made by a subscriber are considered representations and not warranties. During the first two years, coverage can be voided for material misrepresentation contained in a written application. After two years, coverage can be voided only in the event of a fraudulent misstatement contained in the written application. A copy of the written application must have been furnished to the subscriber if the terms of the application or enrollment form are to be applied; (17) schedule of charges-a statement that discloses the HMO's right to change the rate charged with 30 days written notice pursuant to the Texas Insurance Code, Article 3.51-10; (18) service area-a map or clear description of the service area indicating major primary and emergency care delivery sites. A zip code map and a provider list may be used to meet this requirement; (19) (No change.) (20) conformity with state law-a provision that if the agreement or certificate contains any provision not in conformity with the Act or other applicable laws it shall not be rendered invalid but shall be construed and applied as if it were in full compliance with the Act and other applicable laws. (21) conformity with Medicare supplement minimum standards and long-term care minimum standards-each group and non-group agreement and group certificate must comply with Chapter 3, Subchapter T of this title (relating to Medicare Supplement Minimum Standards), referred to in this paragraph as Medicare supplement rules, and Chapter 3, Subchapter Y of this title (relating to Long- Term Care Minimum Standards), referred to in this paragraph as long-term care rules, where applicable. If there is a conflict between the Medicare supplement rules and/or the long-term care rules and the HMO rules, the Medicare supplement rules or long-term care rules shall govern to the exclusion of the conflicting provisions of the HMO rules. Where there is no conflict, both the Medicare supplement rules and/or the long-term care rules and the HMO rules shall be followed where applicable. sec.11.509. Optional Provisions. Group and non-group agreements and group certificates may contain the following optional provisions; (1) coordination of benefits-a provision that the value of any benefits or services provided by the HMO may be coordinated with any other type of group insurance plan or coverage under governmental programs so no more than 100% of eligible expenses incurred is paid. (A)-(B) (No change.) (C) Requirements of the Texas Insurance Code and rules promulgated by the State Board of Insurance relating to coordination of benefits by insurers should be followed by HMOs that wish to coordinate benefits. (2) subrogation-a provision that the HMO receives all rights of recovery acquired by an enrollee against any person or organization for negligence or any willful act resulting in illness or injury covered by HMO benefits, but only to the extent of such benefits. Upon receiving such benefits from the HMO, the enrollee is considered to have assigned such rights of recovery to the HMO and to have agreed to give the HMO any reasonable help required to secure the recovery. The provision may include a statement that the HMO may recover attorney fees and court costs; (3) sale of substitutes to Workers' Compensation Insurance -if an HMO chooses to market a product which provides coverage for on-the-job injuries or illness, the following provisions shall apply. (A) No person, agent, or entity may represent any nongroup or group agreement or other evidences of coverage as a substitute for a policy of workers' compensation insurance nor may any person, agent, or entity represent to an employer that purchase of a nongroup or group agreement or other evidence of coverage providing benefits to the employer's employees: (i) provides the same benefits for either the employee or the employer as are provided by workers' compensation insurance; or (ii) limits such employees to a claim for benefits under such agreements as the employees' sole remedy against the employer in the event the employee suffers a job related injury or disease. (B) All nongroup or group agreement or other evidences of coverage which provide benefits to employees and which are marketed to or through employers that have elected, or may in the future elect, to be nonsubscribers to the workers' compensation system shall include the following statement in 10-point bold-face type on the first page of the agreement and on the first page of all materials used in advertising, marketing, and explaining the agreement: "THIS IS NOT A POLICY OF WORKERS' COMPENSATION INSURANCE. THE EMPLOYER DOES NOT BECOME A SUBSCRIBER TO THE WORKERS' COMPENSATION SYSTEM BY PURCHASING THIS AGREEMENT, AND IF THE EMPLOYER IS A NON-SUBSCRIBER, THE EMPLOYER LOSES THOSE BENEFITS WHICH WOULD OTHERWISE ACCRUE UNDER THE WORKERS' COMPENSATION LAWS. THE EMPLOYER MUST COMPLY WITH THE WORKERS' COMPENSATION LAW AS IT PERTAINS TO NON-SUBSCRIBERS AND THE REQUIRED NOTIFICATIONS THAT MUST BE FILED AND POSTED." (c) The group agreements described in subsection (b) of this section shall include the following statement in 10-point bold-face type on the certificate or other evidence of coverage issued to the employees: "THE GROUP AGREEMENT UNDER WHICH THIS CERTIFICATE IS ISSUED IS NOT A POLICY OF WORKERS' COMPENSATION INSURANCE. YOU SHOULD CONSULT YOUR EMPLOYER TO DETERMINE WHETHER YOUR EMPLOYER IS A SUBSCRIBER TO THE WORKERS' COMPENSATION SYSTEM." This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 27, 1992. TRD-9210162 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: August 17, 1992 Proposal publication date: February 11, 1992 For further information, please call: (512) 463-6327 Subchapter G. Advertising and Sales Material 28 TAC sec.11.602, sec.11.603 The State Board of Insurance of the Texas Department of Insurance adopts amendments to sec.11.602 and sec.11.603 concerning advertising and sales material, without changes to the proposed text as published in the February 11, 1992, issue of the Texas Register (17 TexReg 1206). The amendments are necessary to clarify the requirements of the sections. These sections relate to advertising and sales materials. The amendment to sec.11.602 adds Article 21.21-1 as a statute to which an HMO is subject. The amendment to sec.11.603 retitles the section "Filings" to indicate that the required filings which are to be made are not necessarily filings subsequent to certificate of authority. No comments were received regarding adoption of the amendments. The amendments are adopted under Insurance Code, Articles 20A.22 and 1.04. Insurance Code, Article 20A.22 authorizes the board to promulgate rules to carry out the provisions of the Texas Health Maintenance Organization Act, and Article 1.04 provides the board with the authority to determine policy and rules in accordance with the laws of this state. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 27, 1992. TRD-9210163 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: August 17, 1992 Proposal publication date: February 11, 1992 For further information, please call: (512) 463-6327 28 TAC sec.sec.11.701-11.707 The State Board of Insurance of the Texas Department of Insurance adopts amendments to sec.sec.11.701-11.704 and new sec. sec.11.705, 11.706, and 11.707. Section 11.701 and sec.11.703 are adopted with changes to the proposed text as published in the March 13, 1992, issue of the Texas Register (17 TexReg 1900). Section 11.702 and sec.11.704 and new sec.sec.11.705, 11.706, and 11.707 are adopted without no changes and will not be republished. The amendments and new sections are necessary to conform the subchapter to legislative revisions to the Texas HMO Act and to provide clarification of the regulations related to the schedule of charges. The amendment to sec.11.701 provides for the filing of the formula or method for calculating the schedule of charges and the required supporting documentation and clarifies the contents of the schedule of charges. The amendment to sec.11.702 provides that the formula or method for calculating the schedule of charges must be accompanied by certification of a qualified actuary that it is appropriate to produce rates that are not excessive, inadequate, or unfairly discriminatory. The amendment to sec.11.703 provides that each formula or method for calculating the schedule of charges must be accompanied by adequate detail including assumptions to justify that the charges produced are not excessive, inadequate or unfairly discriminatory. That amendment also provides that the calculations must be available in the HMO's office and that any changes in the assumptions in the formula or method for calculating the schedule of charges for a particular group need not be filed but justification of the variances must be retained at the HMO's office. The amendment to sec.11.704 establishes the standards for establishing conversation rates and prohibits charges based on any individual's health status. New sec.11.705 establishes requirements concerning a one-time enrollment fee or a reinstatement fee for lapsed contracts. Section 11.706 provides standards for determining reasonableness of HMO rates with respect to benefits. Section 11.707 requires review of an HMO's formula or method for calculating its schedule of charges after a one-year period. The existing sec.11.705 and sec.11.706, concerning rate variations and schedule of charges projected in application for certificate of authority, have been proposed for repeal and the final action on such repeal appears elsewhere in this issue of the Texas Register. No comments were received regarding adoption of the amendment and new section. The amendments and new sections are adopted under the Texas Insurance Code, Article 1.04, which provides the State Board of Insurance with the authority to determine policy and rules in accordance with the laws of this state; and under the Texas Insurance Code, Article 20A.22, which authorizes the board to promulgate rules to carry out the provisions of the Texas Health Maintenance Organization Act. sec.11.701. Must Be Filed Prior to Use. (a) No formula or method for calculating the schedule of charges for enrollee coverage, as defined in sec.11.2(b) of this title (relating to Definitions), may be used until a copy of such formula or method for calculating the schedule of charges with the required supporting documentation as defined in sec.11.703 of this title (relating to Supporting Documentation) has been filed with the commissioner. (b) The schedule of charges governed by this section includes all charges made for group or individual coverage except that any fee collected as an administrative service only fee, whereby the HMO assumes no risk, shall not be governed by this section. (c) Each filing must be accompanied by HMO Form #6 (SC#1) as referenced in sec.11.1001 of this title (relating to Forms Adopted by Reference). This information may be submitted in the form of a computer printout. sec.11.703. Supporting Documentation. Each formula or method for calculating the schedule of charges must be accompanied by adequate detail including assumptions to justify that the charges produced by the formula or method are not excessive, inadequate, or unfairly discriminatory as defined in sec.11.706 of this title (relating to Factors to be Considered in Determination of Reasonability of Rates). (1) The calculations used to produce any schedule of charges as defined in sec.11.2(b) of this title (relating to Definitions) must be available at the HMO's office. (2) Any changes in the assumptions in the formula or method for calculating the schedule of charges due to special characteristics of a particular group need not be filed, but justification of the variances must be retained at the HMO's office so that compliance with sec.11.706 of this title (relating to Factors to be Considered in Determination of Reasonability of Rates) may be checked. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 27, 1992. TRD-9210165 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: August 17, 1992 Proposal publication date: March 13, 1992 For further information, please call: (512) 463-6327 Subchapter H. Schedule of Charges 28 TAC sec.11.705, sec.11.706 The State Board of Insurance of the Texas Department of Insurance adopts the repeal of sec.11.705 and sec.11.706, without changes to the proposed text as published published in the February 11, 1992 Texas Register (17 TexReg 1209). The repeal of these sections is necessary to allow the publication of new sec.11.705 and sec.11.706 to provide implementation of legislative revisions to the Texas Health Maintenance Organization Act and to provide clarification of the regulations under the Act. The repeal of these sections will allow the board to simultaneously adopt new sec.11.705 and sec.11.706 which replace these repealed sections. Notification appears elsewhere in this issue of the Texas Register of the adoption of the new sections. No comments were received regarding adoption of the repeals. The repeals are adopted under the Texas Insurance Code, Article 20A.22 and 1.04. Texas Insurance Code, Article 20A.22 authorizes the board of promulgate rules to carry out the provisions of the Texas Health Maintenance Organization Act, and Article 1.04 provides the State Board of Insurance with the authority to determine policy and rules in accordance with the laws of this state. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 27, 1992. TRD-9210164 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: August 17, 1992 Proposal publication date: February 11, 1992 For further information, please call: (512) 463-6327 Subchapter I. Financial Requirements 28 TAC sec.11.801 The State Board of Insurance of the Texas Department of Insurance adopts an amendment to sec.11.801, concerning financial requirements, without changes to the proposed text as published in the February 11, 1992, issue of the Texas Register (17 TexReg 1209). The amendment is necessary to provide clearer and more effective regulation of foreign health maintenance organizations. This amendment adds a new subsection (e) to sec.11.801 and provides that foreign HMOs seeking admission to this state which are actively conducting business in other states and are applying for a certificate of authority shall be required to maintain only the minimum surplus requirement net of uncovered liabilities and may hold assets allowed existing certified HMOs at the time of the qualifying examination. This amendment is necessary because an existing HMO cannot be examined in the same way as a prospective HMO which cannot conduct business without a certificate of authority. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Insurance Code, Articles 20A.22 and 1.04. The Insurance Code, Article 20A.22, authorizes the board to promulgate rules to carry out the provisions of the Texas Health Maintenance Act, and Article 1.04 provides the State Board of Insurance with the authority to determine policy and rules in accordance with the laws of this state. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 27, 1992. TRD-9210166 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: August 17, 1992 Proposal publication date: February 11, 1992 For further information, please call: (512) 463-6327 Subchapter J. Requirements of the Texas Department of Health 28 TAC sec.11.901 The State Board of Insurance of the Texas Department of Insurance adopts an amendment to sec.11.901, concerning requirements of the Texas Department of Health with respect to health maintenance organizations, without changes to the proposed text as published in the February 11, 1992, issue of Texas Register (17 TexReg 1209). This amendment is necessary to change a numerical reference to regulations of the Department of Health and to make editorial changes. This section references the authority of the Texas Department of Health under the Act and references their rules. The amendment was necessary to refer to the title of the rules and eliminate the specific references to the specific sections as these section numbers are subject to change and a reference to them might cause confusion for the public. The reference to the title will enable the public to locate the proper volume of the Texas Administrative Code which will contain an up-to-date index so that the appropriate rules can be located. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Insurance Code, Article 1.04, which provides the State Board of Insurance with the authority to determine policy and rules in accordance with the laws of this state; and under the Texas Insurance Code, Article 20A.22, which authorizes the board to promulgate rules to carry out the provisions of the Texas Health Maintenance Organization Act. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 27, 1992. TRD-9210167 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: August 17, 1992 Proposal publication date: February 11, 1992 For further information, please call: (512) 463-6327 Subchapter K. Forms Adopted by Reference 28 TAC sec.11.1001 The State Board of Insurance of the Texas Department of Insurance adopts an amendment to sec.11.1001, concerning forms adopted by reference for use by health maintenance organizations (HMOs), with changes to the proposed text as published in the February 11, 1992, issue of the Texas Register (17 TexReg 1210). The amendment is necessary to change the names of three forms, to add revision dates to the form numbers, and to make Forms Numbers 5 and 6 consistent with changes to the rules in Subchapter H. Schedule of Charges. This section adopts forms by reference. The amendments to this section will change the names of the forms referred to in paragraphs (1), (7), (8), and (10). The notation "Rev. 7/90" is added to each form except for Forms 5 and 6 which were changed as a result of comment and will show a revision date of "4/92." The forms changed as a result of comment will be refiled with the Office of the Secretary of State. A commenter has suggested that Form Number 5 be changed to delete the line for schedule of charges because it is the formula, not the schedule of charges, that is required to be filed by sec.11.701 of this title (relating to Must be Filed Prior to Use). The board agrees with this comment and the title of the line in question will be changed to "the formula or method for calculating the schedule of charges" in order to clarify what must be filed. A commenter noted that it was unclear as to the purpose of Form Number 6 and has asked for changes to it. The board has made changes to the form in order to alleviate the confusion. FOR: none; AGAINST: Texas Health Maintenance Organization Association. The amendment is adopted under the Texas Insurance Code, Article 1.04, which provides the State Board of Insurance with the authority to determine policy and rules in accordance with the laws of this state; and under the Texas Insurance Code, Article 20A.22, which authorizes the board to promulgate rules to carry out the provisions of the Texas Health Maintenance Organization Act. sec.11.1001. Forms Adopted by Reference. The Texas Department of Insurance adopts by reference certain application and filing forms, instructions, checklists, and other blanks to be used in conjunction with the rules adopted under this chapter. Copies of these forms may be obtained by contacting the HMO Unit, Mail Code 106-3A, Texas Department of Insurance, 333 Guadalupe, P.O. Box 149104, Austin, Texas 78714-9104. Each HMO or other person or entity shall use such form or forms as are required by the rules adopted in this chapter and as are appropriate to its particular activities. The forms which are adopted by reference are more specifically identified as follows: (1) HMO Form #1 Rev. 7/90-Name reservation; (2) HMO Form #2 Rev. 7/90-Application for a certificate of authority to do business in the State of Texas; (3) HMO Form #3 Rev. 7/90-State of Texas officers and directors page; (4) HMO Form #4 Rev. 7/90-Biographical data for the Texas Department of Insurance; (5) HMO Form #4A Rev. 7/90-Instructions for completion of biographical data forms; (6) HMO Form #5 Rev. 4/92-Texas Certified HMO, Article 20A.04 (b) filing; (7) HMO Form #6 Rev. 4/92-Reconciliation of benefits to schedule of charges. (8) HMO Form #7 Rev. 7/90-Certification (of compliance); (9) HMO Form #8 Rev. 7/90-Texas Department of Insurance transmittal form for submissions; and (10) HMO Form #9 Rev. 7/90-Certification (of language). This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 27, 1992. TRD-9210168 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: August 17, 1992 Proposal publication date: February 11, 1992 For further information, please call: (512) 463-6327 Subchapter N. Health Maintenance Organization Solvency Surveillance Committee Plan of Operation sec.sec.28 TAC sec. sec.11.1301-11.1306 The State Board of Insurance of the Texas Department of Insurance adopts amendments to sec.sec.11.1301-11.1306, concerning HMOs, without changes to the proposed text as published in the February 11, 1992, issue of the Texas Register (17 TexReg 1210). These amendments are necessary to conform the subchapter to the Texas HMO Act and to make editorial changes. These sections set forth the composition, plan of operation, operations, records and reports, and appeals for the HMO Solvency Surveillance Committee. The amendments are editorial in nature except for the amendment to sec.11.1302 which adds provisions concerning membership on the committee and the meetings of the committee. No comments were received regarding adoption of the amendments. The amendments are adopted under the Texas Insurance Code, Article 1.04, which provides the State Board of Insurance with the authority to determine policy and rules in accordance with the laws of this state; and under the Texas Insurance Code, Article 20A.22, which authorizes the board to promulgate rules to carry out the provisions of the Texas Health Maintenance Organization Act. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 27, 1992. TRD-9210169 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: August 17, 1992 Proposal publication date: February 11, 1992 For further information, please call: (512) 463-6327 Subchapter O. Administrative Procedures 28 TAC sec.11.1401, sec.11.1402 The State Board of Insurance of the Texas Department of Insurance adopts new sec.11.1401 and sec.11.1402. Section 11.1402 is adopted with changes to the proposed text as published in the February 11, 1992 issue of the Texas Register (17 TexReg 1211). Section 11.1401 is adopted without changes and will not be republished. The new sections are necessary to amplify and clarify the requirements of the Texas Health Maintenance Organization Act, Texas Insurance Code, Chapter 20A, meet new statutory requirements, and provide for more effective regulation under the Act. Section 11.1401 sets out the ability of the commissioner to require additional information. Section 11.1402 sets forth the necessity for HMOs to provide an annual 20-day period each calendar year during which providers and physicians may apply to participate in providing health care services or medical care. No comments were received on sec.11.1401. Comments were received on sec.11. 1402 and are summarized in this paragraph. Representatives of an association and an HMO testified in favor of the proposed section. They testified that the proposed language was in accord with legislative intent and wording and pointed out that a pharmaceutical association is advising its members to write to HMOs and apply. They also pointed out that HMOs must remain cost-effective and have preferential pricing arrangements. If there are too many providers so that some do not have enough patients, the provider drops out. The HMOs must also oversee quality and service. The HMOs are seeking the largest number of providers possible that will still be cost-effective and be capable of being monitored for quality and access. These same concerns apply to pharmacy costs according to the representative of the HMO. Representatives of two associations and several health care providers, chiropractors and pharmacists, including home care pharmacists, commented against the proposed rule. These commenters wanted the rule to mandate that the HMO accept any provider who met their practice standards and qualifications. They stated that was the legislative intent of Texas Insurance Code, Article 20A.14(h) and stated that the legislature intended to provide a level playing field for all competitors. Some of the commenters stated that the patient should have freedom of choice in choosing health care providers. Some pharmacists testified that there is too little competition and that small pharmacies are frozen out of the market. One pharmacist testified that he could not meet the low price paid by the HMO. Pharmacists also testified that patients could not get good services from the pharmacies under the current system of contracting by the HMOs. Another pharmacist testified that the owner of the HMO also owned pharmacies. The board believes that the rule should be adopted as published. The rule as proposed uses the language which the legislature intended and allows for bona fide choices to be made by both sides to the transaction; i.e., HMOs and potential providers. The HMO system provides selling a package of services and in accepting those services, the consumer may bargain away some choices. The proposed rule allows for bargaining between potential providers and HMOs. If health care providers feel there is insufficient bargaining in some areas and that there is a lack of competition, the providers may go to the Office of the Attorney General and ask that office to determine if anti-trust violations have occurred. Commenting in favor of the new sections were the Texas Health Maintenance Association and five HMOs. Commenting against were the Texas Pharmacy Coop; Texas Chiropractic Association; Texas Pharmaceutical Association; and 17 pharmacies. The new sections are adopted under the Texas Insurance Code, Articles 20A. 22 and 1.04. Insurance Code, Article 20A.22 authorizes the board to promulgate rules to carry out the provisions of the Act. Article 1.04 provides the State Board of Insurance with the authority to determine policy and rules in accordance with the laws of this state sec.11.1402. Notification to Providers. (a) A health maintenance organization that provides coverage for health care services or medical care through one or more providers or physicians is required by the provisions of Texas Insurance Code, Article 20A.14(h), to provide a 20 calendar day period each calendar year during which any provider or physician in the geographic service area may apply to participate in providing health care services or medical care under the terms and conditions established by the health maintenance organization for the provision of such services and the designation of such providers and physicians. Article 20A. 14(h) may not be construed to: (1) require that a health maintenance organization utilize a particular type of provider or physician in its operation; (2) require that a health maintenance organization accept a provider or physician of a category or type that does not meet the practice standards and qualifications established by the health maintenance organization; or (3) require that a health maintenance organization contract directly with such providers or physicians. In order to effectively notify providers or physicians of the opportunity to apply to provide services, after January 1, 1992, an HMO which is covered by the Texas Insurance Code, Article 20A.14(h) must publish a notice of an application period to physicians and providers in the public notice section of at least one major newspaper with general circulation in each of its service areas. The notice must be published for five consecutive days during the period of January 2-January 23 of each calendar year and must include: this caption in bold type: Notice to Physicians and Providers, the name and address of the HMO, what type of services the HMO provides, and the specific dates of the 20 day period during which physicians and providers may make application to be a participating physician or provider. (b) A health maintenance organization must notify a physician or provider of acceptance or non-acceptance, in writing, no later than 90 days from receipt of an application for participation by that physician or provider. (c) A health maintenance organization must file a copy of the published notice with the HMO Unit, for information, within 15 days of publication. The filing must include the following: (1) the name of the newspaper; and (2) the beginning and ending date of the publication. (d) During the year 1992, HMOs must publish a notice meeting the requirements of this section within 60 days of the effective date of this section, and file a copy of the notice with the HMO Unit in accordance with subsection (c) of this section and must comply with subsection (b) of this section. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 27, 1992. TRD-9210170 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: August 17, 1992 Proposal publication date: February 11, 1992 For further information, please call: (512) 463-6327 Chapter 19. Agents' Licensing Subchapter I. Licensing Fees 28 TAC sec.19.802 The State Board of Insurance of the Texas Department of Insurance adopts an amendment to sec.19.802, with changes to the proposed text as published in the May 5, 1992, issue of the Texas Register (17 TexReg 3230). This amendment is necessary to implement the provisions of the Insurance Code, Article 21.58A. This amendment adds a new paragraph (22) to subsection (b) setting the application and renewal fees for utilization review agents. Six comenters stated that the original application and renewal fee set in the proposed amendment was too high given the nature of the statute and proposed regulations. One commenter stated that the proposed fee would be the highest in the nation. Two commenters stated that the proposed fee would be a strain on utilization review agents with a small portion of their business in Texas. All commenters recommended lowering the fee. One commenter recommended a graduated fee structure, and one commenter stated that their fee should be waived as they did a small amount of business based in Texas and recommended a waiver for all utilization review agents having only a small amount of business in Texas. One commenter suggested that the licensing fee should not be published in this section of the Texas Register as this section covers other licensing fee requirements, including those for property and casualty entities which are exempt from the Insurance Code, Article 21.58A. The commenter felt that placing the fee in this section caused confusion. The board responds that the fee will be lowered because the agency has been able to merge functions which dealt with the utilization review agents' licensing process, thus saving on administrative costs and allowing a reduction in the fees. As the statute requires that the fee is to cover the cost of administration of the Act, Insurance Code, Article 21.58A, and the costs for administration are the same for firms who have only a small amount of business in Texas, it is not feasible to allow for graduated fees, or to waive the fee for firms having only a small amount of business in Texas. The fee is placed in this section because the agency is seeking to place all fees for agents' licensing in a single statute for easy access. FOR: No comments were received for these sections. AGAINST: Alliance of American Insurers, American Managed Care and Review Association, Texas Professional Benefit Administrators Association, and four utilization review agents. The amendment is adopted under the Insurance Code, Articles 21.58A and 1.04, and Texas Civil Statutes, Article 6252-13a, sec.4 and sec.5. The Insurance Code, Article 21.58A, sec.13 grants the board authority to adopt rules and regulations to implement the provisions of Article 21.58A relating to health care utilization review agents. Article 1.04(b) authorizes the board to determine rules. Texas Civil Statutes, Article 6252-13a, sec.4 and sec.5 authorize and require each state agency to adopt rules of practice setting forth the nature and requirements of available procedures and prescribe the procedures for adoption of rules by a state administrative agency. sec.19.802. Amounts of Fees. (a) (No change.) (b) The amounts of fees are as follows: (1)-(21) (No change.) (22) utilization review agent: (A) original application-$2,157; (B) renewal-$2,076. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 23, 1992. TRD-9210083 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: August 13, 1992 Proposal publication date: May 5, 1992 For further information, please call: (512) 463-6427 TITLE 31. NATURAL RESOURCES AND CONSERVATION Part X. Texas Water Development Board Chapter 355. Research and Planning Fund Subchapter B. Economically Distressed Areas Facility Engineering 31 TAC sec.355.73 The Texas Water Development Board (the board) adopts an amendment to sec.355.73, concerning funding for economically distressed areas facility engineering under the research and planning fund, without changes to the proposed text as published in the June 12, 1992, issue of the Texas Register (17 TexReg 4235). Section 355.73 replaces the "ability to pay" formula in the board's rules relating to financial assistance with a buy-in calculation which will result in an amount that includes financial assistance for capacity in a political subdivision's water or wastewater system. The board had been using the "ability to pay" formula in determining the amount of financial assistance to political subdivisions under the Economically Distressed Areas Program. The amendment expands the information to be submitted to the board in planning reports funded under the Economically Distressed Areas Program. The additional information in the planning reports will allow the board to use the buy-in calculation to determine the amount of financial assistance to a political subdivision under the Economically Distressed Areas Program. The amendment will allow the board to continue the efficient implementation of the Economically Distressed Areas Program which provides financial assistance to those eligible counties which contain residential areas without any or with seriously inadequate water supply and sewer services creating serious and unacceptable health hazards and threatening the public health, safety, and welfare. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Water Code, sec.6.101, which requires the board to adopt rules necessary to carry out the powers and duties of the board provided by the Texas Water Code and sec.16.342, which requires the board to adopt rules to carry out the Economically Distressed Areas Program. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 24, 1992. TRD-9210134 Suzanne Schwartz General Counsel Texas Water Development Board Effective date: August 14, 1992 Proposal publication date: June 12, 1992 For further information, please call: (512) 463-7981 Chapter 363. Rules Relating to Financial Programs Subchapter A. General Provisions Prerequisites to Release of State Funds 31 TAC sec.363.44 The Texas Water Development Board (board) adopts new sec.363.44, concerning the movement of funds between approved projects for financial assistance, with minor changes to the proposed text as published in the June 12, 1992, issue of the Texas Register (17 TexReg 4235). Section 363.44 provides that with the approval of the executive administrator, borrowers may transfer funds remaining from one board-approved project to another board-approved project without returning to the board for separate approval. The new rule saves the political subdivisions time and costs associated with preparing additional engineering and financial information for submission to the board when the borrower's ability to repay the loan has already been established for the funds remaining, and when the project the funds would be transferred to has already been approved by the board. The minor changes make clear that transfer of funds is from one project to another project of the same borrower. No comments were received regarding adoption of the new section. The new section is adopted under the Texas Water Code, sec.6.101, which authorizes the board to adopt rules necessary to carry out its powers and duties. sec.363.44. Movement of Funds Between Approved Projects. If approved by the executive administrator, a borrower may transfer remaining excess funds from one or more of the borrower's board-approved projects to other of the borrower's board-approved projects. Applicants must comply with any new requirements triggered by the transfer of funds. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 24, 1992. TRD-9210131 Suzanne Schwartz General Counsel Texas Water Development Board Effective date: August 14, 1992 Proposal publication date: June 12, 1992 For further information, please call: (512) 463-7981 Subchapter E. Economically Distressed Areas Program 31 TAC sec.363.502, sec.363.505 The Texas Water Development Board (the board) adopts an amendment to sec.363.502 and sec.363.505, concerning rules relating to financial programs, without changes to the proposed text as published in the June 12, 1992, issue of the Texas Register (17 TexReg 4236). The amendment to sec.363.502 deletes the definition of the phrase "ability to pay" which is no longer used in the board's rules relating to financial programs and replaces the "ability to pay" formula, which the board has been using in determining the amount of financial assistance to political subdivisions under the Economically Distressed Areas Program, with a calculation which will result in an amount that includes financial assistance for capacity in a political subdivision's water or wastewater system. The amendment to sec.363.505 details how the board will determine the amount of financial assistance to an applicant under the Economically Distressed Areas Program. The amendments will allow the board to continue the efficient implementation of the Economically Distressed Areas Program which provides financial assistance to those eligible counties which contain residential areas without any or with seriously inadequate water supply and sewer services creating serious and unacceptable health hazards and threatening the public health, safety, and welfare. No comments were received regarding adoption of the amendments. The amendments are adopted under the Texas Water Code, sec.6.101, which requires the board to adopt rules necessary to carry out the powers and duties of the board provided by the Texas Water Code and sec.16.342, which requires the board to adopt rules to carry out the Economically Distressed Areas Program. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 24, 1992. TRD-9210133 Suzanne Schwartz General Counsel Texas Water Development Board Effective date: August 14, 1992 Proposal publication date: June 12, 1992 For further information, please call: (512) 463-7981 Chapter 375. State Water Pollution Control Revolving Fund Prerequisites to Release of Funds 31 TAC sec.375.72 The Texas Water Development Board (board) adopts an amendment to sec.375. 72, concerning the state water pollution control revolving fund (SRF), without changes to the proposed text as published in the June 12, 1992, issue of the Texas Register (17 TexReg 4237). Section 375.72 provides for early loan closing in order to fund the costs of planning and design prior to obtaining construction bids for a wastewater project. The section primarily assists small communities which can not undertake the costs of planning and design and, therefore, can not seek a permit without financial assistance. However, most communities can not take advantage of early closing because the section requires that prior to closing, the applicant obtain all required permits from the Texas Water Commission. The amendment allows for early loan closings to pay for the costs of planning, application, and design before all permits have been issued by the Texas Water Commission. Applicants must present documentation that the permits are expected to be issued. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Water Code, sec.6.101, which authorizes the board to adopt rules necessary to carry out its powers and duties and under the Texas Water Code, sec.15.605, which requires the board to adopt rules necessary for the SRF. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 24, 1992. TRD-9210132 Suzanne Schwartz General Counsel Texas Water Development Board Effective date: August 14, 1992 Proposal publication date: June 12, 1992 For further information, please call: (512) 463-7981 TITLE 40. SOCIAL SERVICES AND ASSISTANCE Part I. Texas Department of Human Services Chapter 15. Medicaid Eligibility Subchapter F. Budget and Payment Plans 40 TAC sec.15.503 The Texas Department of Human Services (DHS) adopts an amendment to sec.15. 503, concerning protection of spousal income and resources in its Medicaid Eligibility chapter. The justification for the amendment is to comply with Public Law 100-360, "the Medicare Catastrophic Coverage Act of 1988." The amendment increases the base amount used to calculate the dependent allowance for spousal impoverishment policy. The new base amount is 150% of the federal poverty level for a family of two. The amendment will function by extending to Medicaid applicants the new base amount, which will benefit applicants. The amendment is adopted under the Human Resources Code, Title 2, Chapters 22 and 32, which provides the department with the authority to administer public and medical assistance programs. The amendment is adopted in compliance with federal requirements effective July 1, 1992. sec.15.503. Protection of Spousal Income and Resources. (a) Effective September 30, 1989, Public Law 100-360 provided for the protection of income for the community spouse and certain dependent family members when the other spouse is institutionalized. A standard spousal allowance is diverted to the community spouse whose income is less than the allowance. The allowance is deducted from the couple's combined monthly income. (1) The dependent allowance is calculated by subtracting the dependent's income from 150% of the monthly federal poverty level (FPL) for a family of two, and dividing by three. A dependent family member may be the couple's child (minor or adult), or a parent or sibling (including half-sibling, step-sibling, or adopted sibling), of either member of the couple. The dependent family member must have been living in the client's home before the client's absence, must continue to live with the community spouse, and must be unable to support himself outside the home because of medical, social, or other reasons. There must be a community-based spouse for there to be a dependent allowance. (2)-(3) (No change.) (b)-(h) (No change.) This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 24, 1992. TRD-9210108 Nancy Murphy Agency Liaison, Policy and Document Support Texas Department of Human Services Effective date: July 1, 1992 For further information, please call: (512) 450-3765 Chapter 49. Child Protective Services Subchapter C. Eligibility for Child Protective Services The Texas Department of Human Services (DHS) adopts amendments to sec.sec.49.311, 49.501, 49.502, 49.511, and 49.1712; the repeal of sec.sec.49.505, 49.507, 49.510, 49. 513-49.517, 49.701, 49.702, and 49.1302- 49.1307; and new sec.sec.49.505, 49.507, 49.510, 49.513-49.518, 49.701, 49.702, and 49.1301-49.1306 in its Child Protective Services (CPS) rules chapter. New sec.49.516 is adopted with a change to the proposed text as published in the June 2, 1992, issue of the Texas Register (17 TexReg 3973). The amendments to sec. sec.49.311, 49.501, 49.502, 49.511, and 49.1712; the repeal of sec.sec.49.505, 49.507, 49.510, 49. 513-49.517, 49.701, 49.702, and 49.1302- 49.1307; and new sec.sec.49.505, 49.507, 49.510, 49.513-49.515, 49.517, 49.518, 49.701, 49.702, and 49.1301-49.1306 are adopted without changes and will not be republished. The justification for most of the amendments, repeals, and new sections is to establish policies for a statewide system of providing services based on assessments of risk. The justification for repealing sec.sec.49.515-49.517 is to renumber them as sec.sec.49.516-49.518 in a retitled subchapter concerning intake, investigation, and assessment services. The amendments, repeals, and new sections will enable staff to offer, plan, and provide services to families, not only when abuse or neglect has already occurred, but also when a family is facing stresses that are likely to lead to abuse or neglect (as defined in sec.34.012 of the Texas Family Code) in the foreseeable future. The amendments, repeals, and new sections will encourage staff to concentrate on protecting children who are in danger of immediate harm and on helping parents to understand and manage those elements of family functioning that are placing their children at risk. The amendments, repeals, and new sections will function by improving services to children at risk of abuse or neglect by enabling CPS caseworkers to better identify them, to concentrate on protecting them from immediate harm, and to help their families learn to Child Protective Services manage the circumstances that have placed them at risk. The department received no comments regarding adoption of the amendments, repeals, and new sections. The department, however, has initiated one change to the text of sec.49.516 to correct a typographical error. In the last sentence of sec.49.516(d), the department has replaced the word "interview" with the word "review." 40 TAC sec.49.311 The amendment is adopted under the Human Resources Code, Title 2, Chapter 22, which authorizes the department to administer public assistance programs, and Chapter 41, which authorizes the department to enforce laws for the protection of children. The amendment is also adopted under the Texas Family Code, Title 2, Chapter 34, which authorizes the department to provide services to alleviate the effects of child abuse and neglect. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 27, 1992. TRD-9210197 Nancy Murphy Agency Liaison, Policy and Document Support Texas Department of Human Services Effective date: September 1, 1992 Proposal publication date: June 2, 1992 For further information, please call: (512) 450-3765 Subchapter E. Intake, Investigation, and Assessment 40 TAC sec.sec.49.501, 49.502, 49.511 The amendments are adopted under the Human Resources Code, Title 2, Chapter 22, which authorizes the department to administer public assistance programs, and Chapter 41, which authorizes the department to enforce laws for the protection of children. The amendments are also adopted under the Texas Family Code, Title 2, Chapter 34 which authorizes the department to provide services to alleviate the effects of child abuse and neglect. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 27, 1992. TRD-9210198 Nancy Murphy Agency Liaison, Policy and Document Support Texas Department of Human Services Effective date: September 1, 1992 Proposal publication date: June 2, 1992 For further information, please call: (512) 450-3765 Subchapter E. Intake and Investigation Services 40 TAC sec.sec.49.505, 49.507, 49.510, 49.513-49.517 The repeals are adopted under the Human Resources Code, Title 2, Chapter 22, which authorizes the department to administer public assistance programs, and Chapter 41, which authorizes the department to enforce laws for the protection of children. The repeals are also adopted under the Texas Family Code, Title 2, Chapter 34 which authorizes the department to provide services to alleviate the effects of child abuse and neglect. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 27, 1992. TRD-9210200 Nancy Murphy Agency Liaison, Policy and Document Support Texas Department of Human Services Effective date: September 1, 1992 Proposal publication date: June 2, 1992 For further information, please call: (512) 450-3765 40 TAC sec.sec.49.505, 49.507, 49.510, 49.513-49.518 The new sections are adopted under the Human Resources Code, Title 2, Chapter 22, which authorizes the department to administer public assistance programs, and Chapter 41, which authorizes the department to enforce laws for the protection of children. The new sections are also adopted under the Texas Family Code, Title 2, Chapter 34 which authorizes the department to provide services to alleviate the effects of child abuse and neglect. sec.49.516. Administrative Review of Investigation Findings. (a) Anyone whom Child Protective Services (CPS) designates as an alleged perpetrator may request an administrative review of investigation findings unless the case involves a court determination consistent with a disposition of reason-to-believe. The alleged perpetrator must request the review in writing within 15 days after receiving the Texas Department of Human Services' (DHS's) written notice of findings. (b) If court proceedings related to the abuse or neglect or to a custody dispute are pending at the time or are started after a review is requested, CPS may postpone the review until the court proceedings are completed. (c) Civil suits to remove a child or to obtain a protective order to remove an alleged perpetrator are not delayed by a request for an administrative review. (d) The alleged perpetrator may appear in person at the review and may have a representative. The alleged perpetrator may submit written material that is relevant to the case. If the alleged perpetrator does not speak English or is deaf, DHS provides a certified interpreter unless the alleged perpetrator prefers to choose his own certified interpreter. The alleged perpetrator is responsible for any costs he may incur for the review, except for interpreter services provided by DHS. (e) The regional director for CPS or his designee conducts the review. The reviewer must decide to sustain, alter, or reverse CPS's original findings. The reviewer bases his decision on the same requirements and criteria that workers and supervisors use in conducting intake services and investigations of allegations of child abuse or neglect. Within 30 days after the review is completed, the reviewer notifies the alleged perpetrator of the review decision. (f) If the person conducting the review alters or reverses the findings or specifies other action for the worker to take, the worker: (1) changes the designation of the alleged perpetrator and/or case disposition on CANRIS to match any changes made by the reviewer; (2) notifies each person who was told of the original findings about the findings established by the administrative review; and (3) takes any other action specified by the reviewer. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 27, 1992. TRD-9210203 Nancy Murphy Agency Liaison, Policy and Document Support Texas Department of Human Services Effective date: September 1, 1992 Proposal publication date: June 2, 1992 For further information, please call: (512) 450-3765 Subchapter G. In-home Protective Services 40 TAC sec.49.701, sec.49.702 The repeals are adopted under the Human Resources Code, Title 2, Chapter 22, which authorizes the department to administer public assistance programs, and Chapter 41, which authorizes the department to enforce laws for the protection of children. The repeals are also adopted under the Texas Family Code, Title 2, Chapter 34 which authorizes the department to provide services to alleviate the effects of child abuse and neglect. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 27, 1992. TRD-9210201 Nancy Murphy Agency Liaison, Policy and Document Support Texas Department of Human Services Effective date: September 1, 1992 Proposal publication date: June 2, 1992 For further information, please call: (512) 450-3765 Subchapter G. Family Preservation Services 40 TAC sec.49.701, sec.49.702 The new sections are adopted under the Human Resources Code, Title 2, Chapter 22, which authorizes the department to administer public assistance programs, and Chapter 41, which authorizes the department to enforce laws for the protection of children. The new sections are also adopted under the Texas Family Code, Title 2, Chapter 34 which authorizes the department to provide services to alleviate the effects of child abuse and neglect. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 27, 1992. TRD-9210204 Nancy Murphy Agency Liaison, Policy and Document Support Texas Department of Human Services Effective date: September 1, 1992 Proposal publication date: June 2, 1992 For further information, please call: (512) 450-3765 Subchapter M. Substitute-care Placement Services 40 TAC sec.sec.49.1302-49.1307 The repeals are adopted under the Human Resources Code, Title 2, Chapter 22, which authorizes the department to administer public assistance programs, and Chapter 41, which authorizes the department to enforce laws for the protection of children. The repeals are also adopted under the Texas Family Code, Title 2, Chapter 34 which authorizes the department to provide services to alleviate the effects of child abuse and neglect. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 27, 1992. TRD-9210202 Nancy Murphy Agency Liason, Policy and Document Support Texas Department and Human Services Effective date: September 1, 1992 Proposal publication date: June 2, 1992 For further information, please call: (512) 450-3765 40 TAC sec.sec.49.1301-49.1306 The new sections are adopted under the Human Resources Code, Title 2, Chapter 22, which authorizes the department to administer public assistance programs, and Chapter 41, which authorizes the department to enforce laws for the protection of children. The new sections are also adopted under the Texas Family Code, Title 2, Chapter 34 which authorizes the department to provide services to alleviate the effects of child abuse and neglect. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 27, 1992. TRD-9210205 Nancy Murphy Agency Liaison, Policy and Document Support Texas Department of Human Services Effective date: September 1, 1992 Proposal publication date: June 2, 1992 For further information, please call: (512) 450-3765 Subchapter Q. Purchased Protective Services 40 TAC sec.49.1712 The amendment is adopted under the Human Resources Code, Title 2, Chapter 22, which authorizes the department to administer public assistance programs, and Chapter 41, which authorizes the department to enforce laws for the protection of children. The amendment is also adopted under the Texas Family Code, Title 2, Chapter 34 which authorizes the department to provide services to alleviate the effects of child abuse and neglect. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 27, 1992. TRD-9210199 Nancy Murphy Agency Liaison, Policy and Document Support Texas Department of Human Services Effective date: September 1, 1992 Proposal publication date: June 2, 1992 For further information, please call: (512) 450-3765 Part VIII. Children's Trust Fund of Texas Council Chapter 201. Child Abuse and Neglect Prevention Subchapter B. Children's Trust Fund 40 TAC sec.sec.201.1-201.9 The Children's Trust Fund of Texas Council adopts the repeal of sec.sec.201. 1-201.10, concerning child abuse and neglect prevention, without changes to the proposed text as published in the June 19, 1992, issue of the Texas Register (17 TexReg 4433). The repeal of these sections will implement new rules in response to the establishment of the Children's Trust Fund of Texas Council as a state agency on May 19, 1991. The Children's Trust Fund of Texas Council received administrative support from the Texas Department of Human Resources prior to May 19. The adopted repeal and new sections will consolidate into two chapters the rules governing the Council and its policies and procedures for funding child abuse and neglect prevention programs, service, and awarding contracts. No comments were received regarding adoption of the repeals. The repeals are adopted under the Human Resources Code, Title 3, Chapter 74, sec.74.003(a)(11), which provides the Children's Trust Fund of Texas Council with the authority to adopt rules governing the administration of the agency and it programs. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 23, 1992. TRD-9210181 Janie D. Fields, MPA Executive Director Children's Trust Fund of Texas Council Effective date: August 17, 1992 Proposal publication date: June 19, 1992 For further information, please call: (512) 458-1281 40 TAC sec.sec.201.1-201.10 The Children's Trust Fund of Texas Council adopts the new sec.sec.201.1-201. 10, concerning council administration: policies and procedures, without changes to the proposed text as published in the June 19, 1992, issue of the Texas Register (17 TexReg 4433). The Children's Trust Fund of Texas Council adopts new rules Chapter 201, sec.sec.201.1-201.10 in response to the establishment of the Children's Trust Fund of Texas Council as a state agency (May 19, 1991). The new chapter will consolidate and clarify the administrative policies, procedures, and authority of the Children's Trust Fund of Texas Council. No comments were received regarding adoption of the new sections. The new sections are adopted under the Human Resources Code, Title 3, Chapter 74, sec.74.003(a)(11), which provides the Children's Trust Fund of Texas Council with the authority to adopt rules governing the administration of the agency and it programs. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 23, 1992. TRD-9210182 Janie D. Fields, MPA Executive Director Children's Trust Fund of Texas Council Effective date: August 17, 1992 Proposal publication date: June 19, 1992 For further information, please call: (512) 458-1281 Chapter 202. Funded Program Awards and Contracts 40 TAC sec.sec.202.1-202.18 The Children's Trust Fund of Texas Council adopts new sec. sec.202.1-202.18, concerning funded program awards and contracts, without changes to the proposed text as published in the June 19, 1992, issue of the Texas Register (17 TexReg 4433). The sections will increase the public's awareness of the availability of and procedures related to the Children's Trust Fund of Texas Council's funds to support community programs to prevent child abuse and neglect. The new sections consolidate with Chapter 201 the necessary policies and procedures for allocating funds to eligible public entities, nonprofit organizations, and individuals providing child abuse and neglect prevention services to families, children, and professionals statewide. No comments were received regarding adoption of the new sections. The new sections are adopted under the Human Resources Code, Title 3, Chapter 74, sec.74.003(a)(11), which provides the Children's Trust Fund of Texas Council with the authority to adopt rules governing the administration of the agency and it programs. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 23, 1992. TRD-9210179 Janie Fields, MPA Executive Director Children's Trust Fund of Texas Council Effective date: August 17, 1992 Proposal publication date: June 19, 1992 For further information, please call: (512) 458-1281