• Increase Text Icon
  • Decrease Text Icon
  • Email Icon
  • Print this page
You are here: Home . rules . 2002 . entities
Archived File – for Reference Use.
Links and contact information may be outdated.

Subchapter AA. Delegated Entities 28 TAC §§11.2601-11.2612

The Texas Department of Insurance proposes new sections to Chapter 11 by adding Subchapter AA, §§11.2601-11.2612, relating to delegation agreements entered into by Health Maintenance Organizations (HMOs) with certain delegated entities. This proposal is necessary to implement provisions of House Bill (HB) 2828, 77th Texas Legislature. HB 2828 amends the definition of delegated entity in the Texas HMO Act, Texas Insurance Code (TIC), Article 20A.02(ee) and adds definitions for "delegated network," "delegated third party" and "limited provider network." HB 2828 also re-enacts and amends the original delegated entity section of the Texas HMO Act of the TIC (Article 20A.18C) by clarifying the requirements that must be met in order for an HMO to delegate certain functions to delegated entities as defined in the bill. The bill defines a "delegated entity" as any non-HMO entity to which an HMO delegates the responsibility to arrange for or to provide medical care or health care to an enrollee in exchange for a predetermined payment on a prospective basis and that accepts responsibility to perform on behalf of the HMO any function regulated by the Texas HMO Act. The bill requires that delegation contracts between HMOs and delegated entities, as well as contracts between delegated entities and other third parties involved in the delegation chain, contain clauses that require the delegated entity to provide sufficient information to the HMO to allow the HMO to monitor the solvency of the delegated entity and the ability of the delegated entity and any delegated third parties to perform the functions delegated by the HMO in the contract.

These contracts must also allow the department to conduct on-site examinations of the delegated entity and any delegated third parties to obtain information that the department believes is relevant to the issue of the delegated entity or the delegated third party's solvency or the delegated entity or delegated third party's ability to carry out any function delegated by the HMO. These examinations may be conducted based on information received from the HMO as a result of its monitoring or upon the department's own initiative if the department believes that circumstances so warrant. The bill also sets out specific solvency requirements that must be met by a delegated network that takes on full responsibility for the provision of services on behalf of the HMO. HB 2828 specifies that an HMO remains ultimately responsible for ensuring that any function delegated under Art. 20A.18C, including claims payment, is performed in compliance with the laws and rules governing that function. This does not mean that the HMO would be responsible, beyond what is explicitly required in this subchapter, for directing the day to day operations of the delegated entity or attempting to enforce or control contracts between a delegated entity and any third parties with whom a delegated entity has contracted. Instead, the HMO must develop and maintain a monitoring plan that enables the HMO to determine that all delegated functions are being performed appropriately and that all delegated entities and or third parties performing delegated functions have the financial ability to continue to perform the delegated functions. If an HMO cannot determine this through its monitoring plan, the HMO should either amend its agreement with the delegated entity or end the agreement and enter into an agreement with a delegated entity that includes an effective monitoring plan. In the event that the HMO does not or cannot comply with its responsibilities under the subchapter, the commissioner is explicitly authorized to take any action necessary, including the ability to order an HMO to resume any delegated function, up to and including, in accordance with applicable statutes and rules, the payment of claims that a delegated entity has failed to pay. The commissioner has the authority, in entering these orders, to take into account the extent to which the HMO monitored the delegated entity and took any actions required under this subchapter.

Proposed §11.2601 explains the purpose and scope of the subchapter. Proposed §11.2602 defines terms within the subchapter. Proposed §11.2603 describes the requirements for an HMO that delegates any function pursuant to Art. 20A.18C of the Texas Insurance Code. Proposed §11.2604 describes the requirements that must be included in any delegation agreement entered into by an HMO as well as the information that must be provided to the HMO by the entity with which the HMO has entered into a delegation agreement. Proposed §11.2605 describes the information that an HMO must provide to an entity with which the HMO has entered into a delegation agreement. Proposed §11.2606 sets forth the actions an HMO must take if, as a result of its monitoring of the delegated entity or for any other reason, the HMO becomes aware that the delegated entity is not operating in accordance with the delegation agreement or is operating in a condition that may impair its ability to perform its duties under the agreement. Proposed §11.2607 sets forth the manner in which the department shall perform any examinations of delegated entities or delegated third parties conducted pursuant to this subchapter. Proposed §11.2608 describes the types of actions the department may take to ensure that: (1) delegated functions are performed in compliance with the department's statutory and regulatory requirements; (2) the delegating HMO is performing in compliance with statutory and regulatory requirements that relate to the matters delegated by an HMO; and (3) any delegated functions are being performed by an entity with the solvency to carry out those functions. Proposed §11.2609 sets forth the reserve requirements for delegated networks as defined by HB 2828. Proposed §11.2610 sets forth the penalties for non-compliance with the subchapter. Proposed §11.2611 relates to the filing of delegation agreements entered into by an HMO. Proposed §11.2612 establishes a compliance date for the subchapter.

The department will consider the adoption of the proposed §§11.2601-11.2612, relating to delegation agreements entered into by Health Maintenance Organizations (HMOs) with certain delegated entities, in a public hearing under Docket No. 2519 scheduled for April 23, 2002, at 9:30 a.m. in Room 100 of the William P. Hobby Jr. State Office Building, 333 Guadalupe Street in Austin, Texas.

Kimberly Stokes, Senior Associate Commissioner for the Life, Health and Licensing Program, has determined that for each year of the first five years the proposed sections will be in effect, there will be no fiscal impact to state and local governments as a result of the enforcement or administration of the rule. There will be no measurable effect on local employment or the local economy as a result of the proposal.

Ms. Stokes has also determined that for each year of the first five years the proposed new sections are in effect, the public benefits anticipated as a result of the proposed sections will be that by clarifying the responsibility and accountability that an HMO retains for all functions that it has chosen to delegate, HMOs will be required to monitor the delegated entity's ability to comply with the delegation agreement, including required solvency and performance of delegated functions in compliance with applicable statutes and rules. If an HMO is unable through its monitoring to ensure that the delegated entity and any delegated third parties are in compliance with the delegation agreement, the HMO may request corrective action and/or amend the agreement or, if necessary, terminate the agreement. This in turn will enable an HMO to avoid adverse effects arising from situations in which a delegated entity becoming financially insolvent or otherwise unable to carry out the functions delegated to it. This will optimally decrease the overall costs of health care coverage as well as improve the quality of the care and coverage offered by HMOs to enrollees.

Ms. Stokes has determined that the majority of economic costs to an HMO complying with the new sections for each year of the first five years the proposed sections will be in effect are the result of the legislative enactment of HB 2828 rather than the result of the adoption, enforcement, or administration of the proposed new sections. One component of these rules which is expected to result in costs in excess of the requirements imposed by HB 2828 is the requirement in §11.2611(c) that the HMO provide a table of contents with the filed delegation agreement. The department estimates that the required table of contents will be no more than three pages. The printing cost and paper is estimated to be $.02 per page, thereby increasing the overall cost of the filing by a maximum of $.06 per filing. Because the table of contents is required along with the filed agreements, there should be no additional mailing costs. The department estimates that preparation of the table of contents will require no more than two hours. The department has made available on its webpage a checklist of requirements for delegation agreements. This should result in a reduction of time spent preparing a table of contents. The cost to the HMO will vary depending upon the individual or individuals who prepare the table of contents. The department estimates that the labor costs will be from $23 - $40 per hour of labor. The labor figures are based upon the 2000 Occupational Wage Data collected by the Texas Workforce Commission, with figures adjusted for 2002. The range of figures represents the cost, per hour, for preparation of the table of contents by an administrative service manager at the low end of the range and for preparation by an attorney at the high end of the range. Both small businesses and the largest businesses affected by these sections would incur the same cost per hour of labor. Therefore, it is the department's position that the adoption of these proposed sections will have no adverse economic effect on small or micro businesses. Regardless of the fiscal effect, the requirements of this rule are mandated by the underlying statute, and considering the statute's purposes, it is neither legal nor feasible to waive or modify the requirement of these sections for small or micro businesses, as doing so would not achieve the purposes intended by the legislation.

To be considered, written comments on the proposal must be submitted no later than 5:00 p.m. on April 23, 2002, to Lynda H. Nesenholtz, General Counsel and Chief Clerk, Mail Code 113-2A, Texas Department of Insurance, P. O. Box 149104, Austin, Texas 78714-9104. An additional copy of the comment must be simultaneously submitted to Barbara Holthaus, Director of Project Development for the Life, Health and Licensing Program, Mail Code 107-2A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104.

The sections are proposed under the Insurance Code Article 20A.18C and Section 36.001. Article 20A.18C provides that the commissioner shall adopt reasonable rules to implement this article as it relates to the delegation of certain functions by an HMO. Section 36.001 provides that the Commissioner of Insurance may adopt rules to execute the duties and functions of the Texas Department of Insurance only as authorized by statute.

The following article is affected by this proposal: Insurance Code Article 20A.18C.

§11.2601. General Provisions.

(a) Purpose. The purpose of this subchapter is to set forth the requirements that must be met by any HMO that delegates any function as described in Texas Insurance Code Art. 20A.18C. These requirements are designed to ensure that a delegating HMO:

(1) identifies all responsibilities relating to the function being delegated;

(2) creates an agreement that enables the HMO and department to monitor both the delegated entity's financial solvency and performance or subsequent delegation of all delegated functions; and

(3) retains ultimate responsibility for ensuring that all delegated functions are performed in accordance with applicable statutes and rules.

(b) Severability. Where any terms or sections of this subchapter are determined by a court of competent jurisdiction to be inconsistent with the Act, as identified by this subchapter, the Act will apply and the remaining terms and provisions of this subchapter shall continue in effect.

(c) Applicability to Group Model HMO. This subchapter does not apply to a group model HMO, as defined by Texas Insurance Code Art. 20A.06A.

§11.2602. Definitions. The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Act--The HMO Act, Texas Insurance Code, Chapter 20A.

(2) Delegated entity--An entity, other than an HMO authorized to do business under the Act, that by itself, or through subcontracts with one or more entities, undertakes to arrange for or to provide medical care or health care to an enrollee in exchange for a predetermined payment on a prospective basis and that accepts responsibility to perform on behalf of the HMO any function regulated by the Act. The term does not include an individual physician or a group of employed physicians practicing medicine under one federal tax identification number and whose total claims paid to providers not employed by the group is less than 20 percent of the total collected revenue of the group calculated on a calendar year basis.

(3) Delegated network--Any delegated entity that assumes total financial risk for more than one of the following categories of health care services: medical care, hospital or other institutional services, or prescription drugs, as defined by Section 551.003, Occupations Code. The term does not include a delegated entity that shares risk for a category of services with an HMO.

(4) Delegated third party--A third party other than a delegated entity that contracts with a delegated entity, either directly or through another third party, to:

(A) accept responsibility to perform any function regulated by the Act; or

(B) receive, handle, or administer funds, if the receipt, handling, or administration of the funds is directly or indirectly related to a function regulated by the Act.

(5) Health Care--Any services, including the furnishing to any individual of pharmaceutical services, medical, chiropractic, or dental care, or hospitalization, or incident to the furnishing of such services, care, or hospitalization, as well as the furnishing to any person of any and all other services for the purpose of preventing, alleviating, curing or healing human illness or injury.

§11.2603. Requirements for Delegation by HMOs.

(a) Any delegation of any function pursuant to Texas Insurance Code Art. 20A.18C by an HMO shall comply with this subchapter.

(b) Oversight by the department does not relieve the HMO of responsibility for monitoring and oversight of its delegated entities.

(c) Prior to entering into, renewing or amending a delegation agreement, an HMO shall make a reasonable effort to evaluate the delegated entity's current and prospective ability to perform the functions to be delegated, including, but not limited to, the solvency and financial operations of the delegated entity and the projected financial effects of the agreement upon the delegated entity.

(d) An HMO that delegates functions to a delegated entity must have a written contingency plan to resume any and all delegated functions, including, as applicable:

(1) quality of care;

(2) continuity of care, including a plan for transferring enrollees to new providers in the event of termination of the delegation agreement; and

(3) processing, adjudication and payment of claims.

(e) The department may require an HMO to immediately terminate any delegation agreement to ensure that the HMO is in compliance with the Act.

(f) The HMO retains ultimate responsibility for any and all functions delegated.

(g) A delegated entity's failure to comply with applicable statutes or rules constitutes a violation of the Act by the delegating HMO.

(h) An HMO is responsible for monitoring each delegated entity with which it contracts to ensure compliance with all applicable statutes and rules, as well as for solvency.

(i) An HMO shall report to the department, within a reasonable time, all penalties assessed against a delegated entity under the provisions of the delegation agreement.

(j) If an HMO cannot ensure that a delegated entity is performing all delegated functions in accordance with all applicable statutes, rules, or an order issued by the department pursuant to this subchapter, the HMO shall resume all delegated functions from the delegated entity.

(k) If a license is required for any function delegated by an HMO, the HMO must ensure that the delegated entity or third party performing the function has a current appropriate license.

(l) Upon termination of a delegation agreement by either party, the HMO shall notify the department.

§11.2604. Delegation Agreements - General Requirements and Information to be Provided to HMO.

(a) An HMO that delegates to a delegated entity any function required by the Act shall execute a written agreement with that delegated entity.

(b) Written agreements shall include the following:

(1) a provision that the delegated entity and any delegated third parties must agree to comply with all statutes and rules applicable to the functions being delegated by the HMO;

(2) a provision that the HMO shall monitor the acts of the delegated entity through a monitoring plan. The monitoring plan shall be set forth in the delegation agreement, and must contain, at a minimum:

(A) provisions for the review of the delegated entity's solvency status and financial operations. This shall include, at a minimum, review of the delegated entity's financial statements, consisting of at least a balance sheet, income statement, and statement of cash flows for the current and preceding year;

(B) provisions for the review of the delegated entity's compliance with the terms of the delegation agreement as well as with all applicable statutes and rules affecting the functions delegated by the HMO under the delegation agreement;

(C) a description of the delegated entity's financial practices in sufficient detail that will ensure that the delegated entity tracks and timely reports to the HMO liabilities including incurred but not reported obligations;

(D) a method by which the delegated entity shall report monthly a summary of the total amount paid by the delegated entity to physicians and providers under the delegation agreement; and

(E) a monthly log, maintained by the delegated entity, of oral and written complaints from physicians, providers, and enrollees regarding any delay in payment of claims or nonpayment of claims pertaining to the delegated function, including the status of each complaint;

(3) a statement that the HMO shall utilize the monitoring plan on an ongoing basis. Compliance with this requirement shall be documented by the HMO maintaining, at a minimum:

(A) periodic signed statements from the individual identified by the HMO in paragraph (23) of this subsection that the HMO has reviewed the information required in the monitoring plan; and

(B) periodic signed statements from the chief financial officer of the HMO acknowledging that the most recent financial statements of the delegated entity have been reviewed.

(4) a provision establishing the penalties to be paid by the delegated entity for failure to provide information required by this subchapter;

(5) a provision requiring quarterly assessment and payment of penalties under the agreement, if applicable;

(6) a provision that the agreement cannot be terminated without cause by the delegated entity or the HMO without written notice provided to the other party and the department before the 90th day preceding the termination date, provided that the commissioner may order the HMO to terminate the agreement under §11.2608 of this subchapter (relating to Department May Order Corrective Action);

(7) a provision that requires the delegated entity, and any entity or physician or provider with which it has contracted to perform a function of the HMO, to hold harmless an enrollee under any circumstance, including the insolvency of the HMO or delegated entity, for payments for covered services other than copayments and deductibles authorized under the evidence of coverage;

(8) a provision that the delegation agreement may not be construed to limit in any way the HMO's responsibility, including financial responsibility, to comply with all statutory and regulatory requirements;

(9) a provision that any failure by the delegated entity to comply with applicable statutes and rules or monitoring standards shall allow the HMO to terminate delegation of any or all delegated functions;

(10) a provision that the delegated entity must permit the commissioner to examine at any time any information the department reasonably considers is relevant to:

(A) the financial solvency of the delegated entity; or

(B) the ability of the delegated entity to meet the entity's responsibilities in connection with any function delegated to the entity by the HMO;

(11) a provision that the delegated entity, in contracting with a delegated third party directly or through a third party, shall require the delegated third party to comply with the requirements of paragraph (10) of this subsection;

(12) a provision that the delegated entity shall provide the license number of any delegated third party performing any function that requires a license as a third party administrator under Texas Insurance Code Art. 21.07-6, or a license as a utilization review agent under Texas Insurance Code Art. 21.58A, or that requires any other license under the Texas Insurance Code or another insurance law of this state;

(13) if utilization review is delegated, a provision stating that:

(A) enrollees will receive notification at the time of enrollment identifying the entity that will be performing utilization review;

(B) the delegated entity or delegated third party performing utilization review shall do so in accordance with Texas Insurance Code Art. 21.58A and related rules; and

(C) utilization review decisions made by the delegated entity or a delegated third party shall be forwarded to the HMO on a monthly basis;

(14) a provision that any agreement in which the delegated entity directly or indirectly delegates to a delegated third party any function delegated to the delegated entity by the HMO pursuant to Texas Insurance Code Art. 20A.18C, including any handling of funds, shall be in writing;

(15) a provision that upon any subsequent delegation of a function by a delegated entity to a delegated third party, the executed updated agreements shall be filed with the department and enrollees shall be notified of the change of any party performing a function for which notification of an enrollee is required by this chapter or the Act;

(16) an acknowledgment and agreement by the delegated entity that the HMO is not precluded from requiring that the delegated entity provide any and all evidence requested by the HMO or the department relating to the delegated entity's or delegated third party's financial viability;

(17) a provision acknowledging that any delegated third party with which the delegated entity subcontracts will be limited to performing only those functions set forth and delegated in the agreement, using standards approved by the HMO and that are in compliance with applicable statutes and rules;

(18) a provision that any delegated third party is subject to the HMO's oversight and monitoring of the delegated entity's performance and financial condition under the delegation agreement;

(19) a provision that requires the delegated entity to make available to the HMO samples of each type of contract the delegated entity executes or has executed with physicians and providers to ensure compliance with the contractual requirements described by paragraphs (6) and (7) of this subsection, except that the agreement may not require that the delegated entity make available to the HMO contractual provisions relating to financial arrangements with the delegated entity's physicians and providers;

(20) a provision that requires the delegated entity to provide information to the HMO on a quarterly basis and in a format determined by the HMO to permit an audit of the delegated entity and to ensure compliance with the department's reporting requirements with respect to any functions delegated by the HMO to the delegated entity and to ensure that the delegated entity remains solvent to perform the delegated functions, including:

(A) a summary:

(i) describing any payment methods, including capitation or fee-for-services, that the delegated entity uses to pay its physicians and providers and any other third party performing a function delegated by the HMO; and

(ii) of the breakdown of the percentage of physicians and providers and any other third party paid by each payment method listed in clause (i) of this subparagraph;

(B) the period of time that claims and any other obligations for health care filed with the delegated entity, under this and any other delegation agreements to which the delegated entity is a party, have been pending but remain unpaid, divided into categories of 0-45 days, 46-90 days, and 91 or more days. The summary shall include aggregate information for all delegation agreements entered into by the delegated entity and information for the specific delegation agreement entered into between the parties;

(C) the aggregate dollar amount of claims and other obligations for health care owed by the delegated entity to any physician or provider;

(D) information that the HMO requires in order to file claims for reinsurance, coordination of benefits, and subrogation; and

(E) documentation, except for information, documents, and deliberations related to peer review that are confidential or privileged under Subchapter A, Chapter 160, Occupations Code, that relates to:

(i) any regulatory agency's inquiry or investigation of the delegated entity or of an individual physician or provider with whom the delegated entity contracts that relates to an enrollee of the HMO; and

(ii) the final resolution of any regulatory agency's inquiry or investigation;

(21) a provision relating to enrollee complaints that requires the delegated entity to ensure that upon receipt of a complaint, as defined in the Act, a copy of the complaint shall be sent to the HMO within two business days, except that in a case in which a complaint involves emergency care, as defined in the Act, the delegated entity shall forward the complaint immediately to the HMO, and provided that nothing in this paragraph prohibits the delegated entity from attempting to resolve a complaint;

(22) a provision that the HMO, the delegated entity and any delegated third party shall comply with the provisions of Chapter 22 of this title;

(23) a provision identifying an officer of the HMO as the representative of the HMO for all matters related to the delegation agreement; and

(24) a provision identifying which party to the agreement shall bear the expense of compliance with each requirement set forth in this subsection, including the cost of any examinations performed pursuant to this subchapter.

§11.2605. Delegation Agreements - Information to be Provided by HMO to Delegated Entity.

(a) An HMO shall provide to each delegated entity with which the HMO has a delegation agreement, at least monthly unless otherwise stated in the agreement and provided in standard electronic format agreed to by the parties, the following information:

(1) the name and either the date of birth or social security number of each enrollee of the HMO who is eligible or assigned to receive health care from the delegated entity, including the enrollees added and terminated since the previous reporting period;

(2) the age, sex, evidence of coverage and any riders to that evidence of coverage, and if applicable the name of the employer, for the enrollees of the HMO who are eligible or assigned to receive health care from the delegated entity;

(3) a summary of the number and amount of claims paid by the HMO on behalf of the delegated entity during the previous reporting period. However, an HMO is not precluded from providing, upon request, additional nonproprietary information regarding such claims, if the HMO pays any claims for the delegated entity;

(4) a summary of the number and amount of pharmacy prescriptions paid for each enrollee for which the delegated entity has taken partial risk during the previous reporting period, provided that an HMO is not precluded from providing, upon request, additional nonproprietary information regarding such claims, if the HMO pays any claims for the delegated entity;

(5) information that is needed by the delegated entity to file claims for reinsurance, coordination of benefits, and subrogation; and

(6) patient complaint data that relates to the delegated entity.

(b) An HMO shall provide to each delegated entity with which the HMO has a delegation agreement the following information, as applicable, provided in standard electronic format agreed to by the parties at least quarterly unless otherwise stated in the agreement:

(1) detailed risk-pool data, reported quarterly and on settlement, sufficient to allow the delegated entity to adequately monitor its position in the risk pool; and

(2) the percent of premium attributable to hospital or facility costs, if hospital or facility costs impact the delegated entity's costs and, if there are changes in hospital or facility contracts with the HMO, the projected impact of those changes on the percent of premium attributable to hospital and facility costs within 30 days of such changes.

§11.2606. Reporting Requirements.

(a) Upon receipt of a financial statement indicating that a delegated entity or delegated third party has an amount of total liabilities greater than its total assets, the HMO shall immediately forward a copy of the financial statement to the department.

(b) An HMO that becomes aware of any information, including the information described in subsection (a) of this section, that suggests or indicates that the delegated entity or delegated third party is not operating in accordance with its written agreement or is operating in a condition that may render the continuance of its business hazardous to the enrollees, shall immediately:

(1) notify the delegated entity in writing of those findings; and

(2) request, in writing, a written explanation with supporting documentation of:

(A) the delegated entity's or delegated third party's apparent noncompliance with the written agreement; or

(B) the existence of the condition that apparently renders the continuance of the delegated entity's or delegated third party's business hazardous to the enrollees.

(c) A delegated entity shall respond in writing to a request from an HMO under subsection (b) of this section not later than the 30th day after the date the request is received. The response shall include a corrective action plan.

(d) A copy of all written communications required by subsections (b) and (c) of this section shall be sent to the department simultaneously with transmission to the HMO or delegated entity or delegated third party.

(e) The HMO shall cooperate with the delegated entity to correct any failure by the delegated entity to comply with the applicable statutes and rules relating to any matters:

(1) delegated to the delegated entity by the HMO; or

(2) necessary for the HMO to ensure compliance with statutory or regulatory requirements.

§11.2607. Examinations of Delegated Entities.

(a) On receipt of a notice under §11.2606 of this title (relating to Reporting Requirements), or as otherwise permitted under the Texas Insurance Code or rules adopted thereunder, the department may examine any matter relating to the financial solvency of the delegated entity or delegated third party or the delegated entity's ability to meet its responsibilities under the delegation agreement.

(b) The department may request documents, perform on-site examinations and require any other action of the delegated entity and any delegated third party that the department determines necessary to perform an examination under this section.

(c) A delegated entity's failure to comply with a request under subsection (b) of this section may result in:

(1) notification to the HMO that the delegated entity is subject to penalties pursuant to the delegation agreement;

(2) entry of an order by the commissioner to resume or redelegate any functions delegated to the delegated entity or terminate the agreement in its entirety.

(d) The department shall issue a report to the delegated entity and HMO upon completion of the department's examination. The report shall detail the results of the examination and any corrective actions necessary by the delegated entity and/or the HMO.

(e) The delegated entity and the HMO shall respond to the department's report and submit a corrective action plan to the department not later than the 30th day after the date of receipt of the department's report.

§11.2608. Department May Order Corrective Action.

(a) The department may require at any time that a delegated entity take corrective action to comply with the department's statutory and regulatory requirements that:

(1) relates to any matters delegated by the HMO to the delegated entity;

(2) is necessary to ensure the HMO's compliance with statutory and regulatory requirements; or

(3) relates to the financial solvency and operations of the delegated entity.

(b) The commissioner may order the HMO to take any action the commissioner determines is necessary to ensure that the HMO maintains compliance with the Act, including but not limited to:

(1) resumption of any or all functions delegated to the delegated entity, including claims processing, adjudication, and payments for health care previously rendered to enrollees of the HMO;

(2) temporarily or permanently ceasing assignment of new enrollees to the delegated entity;

(3) temporarily or permanently transferring enrollees to alternative delivery systems to receive health care; or

(4) termination of the HMO's delegation agreement with the delegated entity.

§11.2609. Reserve Requirements for Delegated Networks. In addition to any other requirements set forth in this subchapter, HMOs that contract with delegated networks shall ensure that the delegated network complies with Texas Insurance Code Art. 20A.18D. The HMO's agreement with the delegated network shall include a provision:

(1) that records related to the requirements of Texas Insurance Code Art. 20A.18D shall be accessible at all times to the HMO;

(2) requiring all financial records and related information necessary to show the delegated network's compliance with the requirements of Texas Insurance Code Art. 20A.18D;

(3) making the records described in paragraph (1) of this section available to the department upon request; and

(4) that records be kept providing evidence that the HMO has adequately monitored the delegated network for compliance with the requirements of Texas Insurance Code Art. 20A.18D.

§11.2610. Penalties for Non-Compliance.

(a) Failure of any party to any agreement under this subchapter to comply with any requirement of this subchapter may result in an order from the commissioner that the HMO must terminate the delegation agreement and/or resume or redelegate any or all delegated functions as well as the imposition of penalties provided under the Texas Insurance Code and applicable rules adopted thereunder.

(b) Any action by an HMO relating to a delegation agreement that does not comply with this subchapter or takes place pursuant to a provision of a delegation agreement not in compliance with this subchapter constitutes a violation under this subchapter.

§11.2611. Filing of Delegation Agreements.

(a) An HMO shall file the written executed agreement described in this subchapter and any subsequently executed amendments to the agreement with the department not later than the 30th day after the date the agreement or amendment is executed.

(b) The copy of the executed agreement shall be filed for information in accordance with §11.301 of subchapter D of this title (relating to Filing Requirements).

(c) Every agreement shall include, as an attachment, a table of contents that allows the department to track the agreement's compliance with the requirements of §§11.2604 (relating to Delegation Agreements - General Requirements and Information to be Provided to HMO) and 11.2605 (relating to Delegation Agreements Information to be Provided by HMO to Delegated Entity) of this subchapter.

(d) Upon notification from the department of a deficiency in a delegation agreement or filing required under this subchapter, the HMO shall respond within ten business days with a proposed correction for the defect.

§11.2612. Applicability. This subchapter applies to all contracts entered into, renewed or amended on and after the effective date of these rules.



For more information, contact:

Contact Information and Other Helpful Links