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Subchapter C. Application for Certificate of Authority

28 TAC §11.204

The Texas Department of Insurance proposes an amendment to §11.204(15)(A), concerning the notice that an insurer is required to give the commissioner and a health maintenance organization (HMO) prior to the termination or reduction of coverage by the insurer of any reinsurance agreement and any other agreement covering excess of loss, stop-loss, and/or catastrophes as prescribed in Insurance Code Article 20A.05(a)(4)(C). The purpose of the amendment is to correct an incorrect cite to the Insurance Code contained in §11.204(15)(A). Section 11.204(15)(A) currently refers to any reinsurance agreement and any other agreement described in Insurance Code Article 20A.05(b)(2)(C)(iii). No such provision exists in the Insurance Code. Section 11.204(15)(A) should cite to Insurance Code Article 20A.05(a)(4)(C), which states that the commissioner considers any agreement that an HMO enters into with an insurer, group hospital service corporation, a political subdivision of government, or any other organization for insuring the payment of the cost of health care services or the provision for automatic applicability of alternative coverage in the event of discontinuance of the plan. Section 11.204(15)(A) requires that an agreement entered into between an HMO and an insurer provide that the commissioner and the HMO will be notified no less than 60 days prior to termination or reduction of coverage by the insurer.

Betty Patterson, CPA, CFE, Senior Associate Commissioner, Financial Program, has determined that for each year of the first five years the proposed amendment is in effect, there will be no fiscal implications for state or local government as a result of enforcing and administering the section as proposed. There is no anticipated effect on local employment or local economy.

Ms. Patterson also has determined that for each year of the first five years the proposed amendment is in effect, the public benefit anticipated as a result of the adoption of the amendment will be the more efficient identification of the statutory requirement that an HMO is responsible for and may reasonably be expected to meet its obligations to enrollees and prospective enrollees and identification of the factors the commissioner shall consider in determining whether an HMO has complied with this requirement. Ms. Patterson has also determined that, for each year of the first five years that this proposed section is in effect, there will be no anticipated economic cost to persons required to comply with the proposed section.

To be considered, written comments on the proposal must be submitted no later than 5:00 P.M. on March 8, 2002, to Lynda H. Nesenholtz, General Counsel and Chief Clerk, Mail Code 113-2A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104. An additional copy of the comments should be submitted simultaneously to Betty Patterson, CPA, AFE, Senior Associate Commissioner, Financial Program, Mail Code 305-2A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104. A request for a public hearing on the proposal should be submitted separately to the Office of the Chief Clerk.

The amendment is proposed under the Insurance Code, Article 20A.22 and §36.001. Article 20A.22 authorizes the commissioner to adopt rules as necessary to carry out the provisions of Insurance Code, Chapter 20A. Section 36.001 provides the commissioner of insurance with the authority to adopt rules for the conduct and execution of the powers and duties of the department as authorized by statute.

Insurance Code Article 20A.05 is affected by this section.

§11.204. Contents.

Contents of the application must include the following items in the order listed:

(1) ­ (14) (No change.)

(15) insurance, guarantees, and other protection against insolvency:

(A) any reinsurance agreement and any other agreement described in the Insurance Code Article 20A.05(a)(4)(C) [ 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 termination 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, including guarantees, as specified in §11.806 of this title (relating to Liabilities), §11.808 of this title (relating to Guarantee from a Sponsoring Organization), and §11.1804 of this title (relating to guarantee);

(16) ­ (24) (No change.)



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