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Subchapter A. Small Employer Health Insurance Portability and Availability Act Regulations

28 TAC §26.4 and §26.14

Subchapter C. Large Employer Health Insurance Portability and Availability Act Regulation 28 TAC §26.312

The Texas Department of Insurance proposes amendments to §26.4 and §26.14 and new §26.312, concerning point-of-service plans. These amendments and new section are necessary to implement legislation enacted by the 76 th Texas Legislature in House Bill 1498 which amended the Insurance Code as follows: Subchapter A, Chapter 26 was amended by adding Art 26.09; Subchapter F, Chapter 3, was amended by adding Art 3.64; Section 2; Art. 20A.02 was amended by amending Subsection (i) and adding Subsections (aa) and (bb); and Section 6, Art. 20A.06 was amended by amending Subsection (a) and adding Subsection (c).

The purpose and objective of the proposed new section and amendments are to develop provisions relating to point-of-service plans offered by small and large employer carriers pursuant to Chapter 26 of the Texas Administrative Code (TAC). A point-of-service (POS) plan is a health care plan that combines managed care and indemnity coverage. A POS plan is a health care plan that combines managed care and indemnity coverage. An enrollee in a POS plan can choose to obtain health care through the managed care delivery system or from a physician or provider outside of the delivery system on a fee for services basis. Proposed amendments to §26.04(35) replace the former definition of a "point-of-service contract" with a new definition of "point-of-service coverage" which reflects the expansion of the types of point-of-service plans authorized by House Bill 1498 that can now be issued by large and small employer carriers under Texas Insurance Code Chapter 26. The proposed amendment to §26.14 clarifies that a small employer carrier may issue POS plans provided that the carrier complies with applicable provisions of TAC Chapters 11 and 21 that are also being proposed elsewhere in this issue of the Texas Register. Proposed new §26.312 makes the same clarification for large employer carriers. Proposed new §26.312 also creates standards for POS coverage options that large employer carriers issuing HMO coverage to large employers are required by House Bill 1498 to offer to eligible employees if the only coverage available to the employees is through a managed care plan or plans.

As is stated above, contemporaneously with this proposal, proposed new §§11.2501-11.2503, 21.2901, and 21.2902 are published elsewhere in this issue of the Texas Register. The separately published proposed new sections added to Chapter 11 implement provisions of House Bill 1498 relating to the issuance of a "point-of-service rider plan" by an HMO which contains an indemnity rider that is underwritten by the HMO. That proposal also sets forth the financial criteria an HMO must meet in order to issue these point-of-service rider plans. The separately proposed new sections added to Chapter 21 implement the provisions of HB 1498 which provide that a POS plan can be created jointly by indemnity carriers and HMOs, either by issuing "a blended contract point-of-service plan," in which one contract is issued by either the HMO or indemnity carrier that contains the terms of both the indemnity and managed care components of the plan; or through a "dual contracts point-of-service plan." A dual contracts point-of-service plan is composed of two separate contracts, one of which is issued by the HMO to the enrollee and contains the terms of the managed care portion of the plan; and the other which is issued by the indemnity carrier to the enrollee and contains the terms of the indemnity portion of the plan.

Kim Stokes, senior associate commissioner for Life, Health & and Licensing, has determined that for each year of the first five years the proposed amendments and new section will be in effect, there will be no fiscal impact to state and local governments as a result of the enforcement or administration of the rule. There will be no measurable effect on local employment or the local economy as a result of the proposal.

Ms. Stokes has determined that for each year of the first five years the amendments and new section are in effect, the public benefits anticipated as a result of the proposal will be to ensure increased availability of health benefit options for eligible employees, and if applicable their dependents, of large employers, who offer health care exclusively through managed care provider panels by allowing these eligible employees to elect and pay for optional coverage which will allow them access to physicians and other providers from outside of the HMO delivery network. In addition, by clarifying that the provisions of the proposed new sections in Chapter 21 TAC apply to large and small employer plans, the proposed new sections allows HMO and indemnity carriers more flexibility to join together to create new products for the large and small employer markets that combine the cost-containment features of a managed care plan with the freedom to go outside of the managed care services delivery network. Finally, by clarifying that the proposed new sections to Chapter 11 TAC concerning POS riders apply to small and large employer carriers issuing POS plans, the proposed new sections will ensure that the department will be able to monitor HMOs offering these unique plans for compliance with the requirements of HB 1498 for POS riders. All of the economic costs to persons required to comply with the proposal for each year of the first five years it will be in effect are the result of the legislative enactment of House Bill 1498 and not the result of the adoption, enforcement, or administration of the proposed amendments or new section. The adoption of these proposed amendments and section will have no adverse economic impact on regulated entities that are required to comply with the proposed amendments and new section and that qualify as small and micro-businesses under the Government Code, §§2006.001-2006.002. Regardless of the fiscal effect, the requirements of this rule are mandated by th e underlying state statutes, and considering the statute's purposes, it is neither legal nor feasible to waive or modify the requirement of these sections for small and micro-businesses, as doing so would result in a disparate effect on persons obtaining coverage from large and small employer carriers that constitute small and micro-businesses and would not be consistent with the purpose of House Bill 1498.

To be considered, written comments on the proposal must be submitted no later than 5:00 p.m. on February 5, 2001 to Lynda H. Nesenholtz, General Counsel and Chief Clerk, Mail Code 113-2A, Texas Department of Insurance, P. O. Box 149104, Austin, Texas 78714-9104. An additional copy of the comment must be simultaneously submitted to Patricia Brewer, Mail Code 113-6A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104. A request for a public hearing should be submitted separately to the Office of the Chief Clerk.

The amendments are proposed under the Insurance Code, Article 26.04 and §36.001. Article 26.04 provides that the commissioner shall adopt rules as necessary to implement Chapter 26 of the Insurance Code. Section 36.001 provides that the commissioner may adopt rules to execute the duties and functions of the Texas Department of Insurance only as authorized by statute.

The following articles are affected by this proposal: Articles 26.09, 26.44, 26. 44A, 26.48, 26.83 of the Insurance Code.

Subchapter A. SMALL EMPLOYER HEALTH INSURANCE PORTABILITY AND AVAILABILITY ACT REGULATIONS.

§26.4. Definitions. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) - 34) (No change.)

(35) Point-of-service coverage (POS coverage) [contract]-- Coverage provided under a POS plan as defined in Articles 3.64(a)(4), 20A.02(bb), 26.09(a)(2) of the Code and as permitted by Article 26.48 of the Code. [ A benefit plan offered through an HMO that:]

[ (A) includes corresponding indemnity benefits in addition to benefits relating to out-of area or emergency services provided through insurers or group hospital service corporations; and]

[ (B) permits the insured to obtain coverage under either the HMO conventional plan or the indemnity plan as determined in accordance with the terms of the contract.]

(36) - (55) (No change.)

§26.14. Coverage.

(a) - (j) (No change.)

(k) A small employer carrier that offers point-of-service coverage shall comply, as applicable, with the requirements set forth in either Chapter 11, Subchapter Z of this title (relating to Point-of-service Riders) or Chapter 21, Subchapter U of this title (relating to Arrangements between Indemnity Carriers and HMOs for Point-of-Service Coverage).

Subchapter C. LARGE EMPLOYER HEALTH INSURANCE PORTABILITY AND AVAILABILITY ACT REGULATION.

§26.312. Point-of-service Coverage.

(a) Definitions. The following words and terms when used in this section shall have the following meanings.

(1) In-plan covered services--Health care services, benefits, and supplies to which an enrollee is entitled under an evidence of coverage issued by an HMO, including emergency services, approved out-of-network services and other authorized referrals.

(2) Non-participating physicians and providers--Physicians and providers that are not part of an HMO delivery network.

( 3) Out-of-plan covered benefits-All covered health care services, benefits, and supplies that are not in-plan covered services. Out-of-plan covered benefits include health care for services, benefits and supplies obtained from participating physicians and providers under circumstances in which the enrollee fails to comply with the HMO´s requirements for obtaining in-plan covered services.

(4) Participating physicians and providers--Physicians and providers that are part of an enrollee´s HMO delivery network.

(5) Point-of-service (POS) option--Coverage that complies with the out-of-plan coverage set forth in either Chapter 11, Subchapter Z of this title (relating to Point-of-service Riders) or Chapter 21, Subchapter U of this title (relating to Arrangements between Indemnity Carriers and HMOs for Point-of-Service Coverage) and that allows the enrollee to access out-of-plan coverage at the option of the enrollee.

(6) Point-of-service (POS) plan--As defined in Article 26.09(a)(2) of the Code.

(b) A large employer carrier that offers POS coverage shall comply, as applicable, with the requirements set forth in either Chapter 11, Subchapter Z of this title or Chapter 21, Subchapter U of this title.

(c) If an HMO issues coverage to a large employer and eligible employees have access only to in-plan covered services through one or more HMOs, each of the HMOs issuing such coverage must offer the eligible employees the option of obtaining coverage that complies with the out-of-plan coverage set forth in either Chapter 11, Subchapter Z of this title or Chapter 21, Subchapter U, and that allows the enrollee to access out-of-plan coverage at the option of the enrollee.

(d) All HMOs offering coverage to eligible employees of a large employer may enter into a written agreement designating one or more of the HMOs to offer the POS option required under this section.

(1) A copy of the agreement must be retained on file by each of the HMOs participating in the agreement and be made available to the department upon request.

(2) If an HMO participating in the agreement ceases to offer coverage to the large employer, a new agreement that complies with all of the requirements of this section must be entered into by all remaining HMOs offering coverage to employees of the large employer.

(3) If for any reason, an agreement is not in existence that ensures that all eligible employees have the option of selecting out-of-plan covered benefits under this section from at least one of the HMOs offering coverage to the eligible employees, each HMO must offer the eligible employees the option of selecting out-of-plan coverage as required by this section.

( e) An eligible employee that selects a POS option is responsible for paying all costs, including premiums, coinsurance, copayments, deductibles and any other cost sharing provisions imposed by the POS option, including any administrative cost imposed by a large employer as permitted by Article 26.09(e) of the Code.

(f) The premium for coverage required to be offered under this section shall be based on the actuarial value of that coverage and may be different than the premium for the in-plan covered services provided by the HMO through the enrollee´s evidence of coverage.



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